BAR REVIEWER

ON
LABOR LAW

Annotation
Based on the Topics in the Latest Supreme-
Court-Prescribed Syllabus for Labor Law

By

JOSELITO GUIANAN CHAN

Legal Practitioner, Professor of Law
and Bar Reviewer

Managing Partner
Chan Robles Law Firm
www.chanrobles.com
ChanRobles Internet Bar Review
www.chanroblesbar.com

3rd Revised Edition

2017
 i CHAPTER I
ii BAR REVIEWER ON lABOR lAW ~- FUNDAMENTAL PRINCIPLES AND CONCEPTS iii

Bar Reviewer on Labor Law

FOREWORD
Third Revised Edition, 2017 ,,.. To the 3rd Revised Edition
2017
© Philippine Copyright i
2012, 2014 & 2017 The issuance of this latest edition of this book becomes imperative
in the light of recent laws, labor issuances and rulings of the Supreme
by Court affecting some of the topics prescribed in the Syllabus for labor law
which, earlier this year, was revised by the Supreme Court Bar
PROF. JOSELITO GUIANAN CHAN Examination Committee for the forthcoming 2017 bar examinations.

All Rights Reserved The author is grateful for the favorable feedbacks he received from
bar reviewees who have used this book in preparing for the bar
ISBN 978-621-8079-00-7 examination in labor law and from undergraduate law students who used
this book as supplement to their curriculum-prescribed labor law
..... subjects.

The commentaries in this book. though expansive and broad,

remain focused on the topics and sub-topics prescribed in the labor law
syllabus. This, the author believes, is what makes this book unique and
helpful to bar. reviewees and law students who are constantly faced with
,.,..~
stressful deadlines and short timelines in their preparation for the
examination in the bar and in the classroom.
/
This book, together with the updated 3-Volum.e series by the
author on the Labor Code, would greatly enhance the chances of its
Authorized Signature readers in hurdling the labor law examinations.
Serial No. _ __
JOSELITO GUIANAN CHAN
Published & Distributed by: Managing Partner
Chan Robles Law Firm
ChanRobles Publishing Company 22/F, Philippine Stock Exchange Centre
22nd Floor, Philippine Stock Exchange Centre, Tektite East Tower Tektite East Tower, Exchat).ge Road, Ortigas Center
Exchange Road, Ortigas Center, Pasig City Pasig City, Metro Manila, Philippines
Metro Manila, Philippines
Tel. Nos.: (632) 634-!Yl-41/42/43/44/45 I Fax No.: (632) 634-07-36
Website: www.chanrobles.com I E-mail: aalaw@chanrobles.com July 15, 2017

~
Printed by:

A Division ofChanRobles Publishing Company

-~

.J....
iv BAR REVIEWER ON LABOR LAW
FOREWORD
To the 2nd Revised Edition
201'4
This latest revision of this book was occasioned by the chief
changes introduced in the 2013 syllabus for Labor Law which were
replicated in toto in the 2014 syllabus and presumably in the next
syllabus for subsequent bar examination in this subject.
Structurally, the eight (8) major topical classifications in the 2011
and 2012 syllabi remain unperturbed. However, some topics and sub-
topics were either expanded or pruned down or merely re-arranged or
relocated.
For better and more effective presentation, the author took the
liberty of re-organizing some topics which, in his view, is extremely
necessary. Appropriate notes pointing out the changes are indicated in
the comments of the author.
Additionally and most significantly, the passage of new
amendatory laws and promulgation of new doctrinal pronouncements by
the Supreme Court in this subject have made this latest revision very
compelling. The author has thus expanded in no small measure his
commentaries on each and every topic in the syllabus, in the hope that
law students and reviewees preparing for the bar examinations of 2014
and beyond will have a comprehensive reference material in Labor Law
that is focused on the syllabus-prescribed topics.
Notably, this book appears to be thus far the first and only attempt
at annotating and commenting on the Supreme Court-prescribed
syllabus for a bar subject. Examinees for the 2012 and 2013 bar exams
who had used this book had given it their stamp of approval as a worthy
reference material for Labor Law. To this, the author expresses his
utmost thanks and sincere appreciation.
Before ending, it bears stressing that unknown to so many
practitioners and students, the Labor Code has been ordered renumbered
in 2011 by Republic Act No. 10151,1 However, until this writing, only very
1 EntiUed 'An Act Allowing the Employment of N~ht Wori<ers, Thereby Repealing Articles 130 and 131 of
Presidential Decree Number Four Hundred Forty-Two, As Amended, Otherwise Known as the Labor Code of
the Philippines.' This was approved on June 21, 2011.
t
I
CHAPTER I
FUNDAMENTAL PRINCIPLES AND CONCEPTS
few decisions of the Supreme Court have cited the new renumbering
scheme prescribed by this law. Labor tribunals have likewise continued
·v
LI to cite the old numbering - as if the mandate of R.A. No. 10151 does not
exist in our statute books.
This led the author to write to the Office of the Secretary of Labor
and Employment in 2013 to suggest that it come out with a definitive
issuance on this matter in order to provide for a uniform re-numbering of
the affected provisions of the Labor Code. A DOLE Undersecretary
promptly replied that the DOLE will look into this matter. However,
almost a year had passed from that letter, and almost three (3) years
from the enactment of R.A. No. 10151, but no such issuance has been
made by the DOLE - the government agency primordially tasked to
implement and enforce the Labor Code. Hopefully, an Explanatory
Bulletin, Circular or similar issuance will be released by the DOLE as
J,.... soon as possible to dispel the mix-up.
For purposes of guiding the readers of this book on the
renumbering of the Labor Code, the author is reproducing in full his
paper submitted to the Office of the DOLE Secretary, entitled
"CLARIFYING THE NEW RENUMBERING OF THE LABOR CODE." A
copy of this material is presented after this Foreword.
. r·~
However, to avoid confusion, the new renumbering of the Labor
Code will not be used in this edition. One reason for this hesitancy is that
even the 2014 syllabus for Labor Law does not use or make reference
thereto.
JOSEUTO GUIANAN CHAN
Managing Partner
Chan Robles Law Firm
22/F, Philippine Stock Exchange Centre
Tektite East Tower, Exchange Road, Ortiga5 Center
Pasig City, Metro Manila, Philippines
June15,2014
~
li.o•
vi BAR REVIEWER ON lABOR lAW L CHAPTER I
FUNDAMENTAL PRINClrLES AND CONCErTS vii

FOREWORD
To the 1st Edition
,,..
I

The dramatic and substantial revision of the format of the 2011 bar !

examinations by the Supreme Court triggered the publication of this

book. From the previous open-ended format, the Supreme Court has laid
down a syllabus for every bar subject in the 2011 bar examinations and in Citing the Renumbered Provisions
the forthcoming examinations this 2012. With the syllabus prescribing of the Labor Code
specific major topics and sub-topics for every point of law, preparation
for the bar exams becomes systematic, precise, clear-cut and well-
defined. In the light of the renumbering of certain
This book seeks to discuss in a simple and concise manner, each provisions of the Labor Code, as mandated under
topic and sub-topic mentioned in the syllabus for labor law. Pertinent ~A. No. 101511 and DOLE Department
provisions of law, rules and regulations and other issuances, as well as Advisory No. 01, Series of 2015/ both the
the applicable jurisprudential precepts, are cited in the discussion of each renumbered and old provisions of the affected
and every major topic and sub-topic. This manner of presenting the Labor Code provisions are cited in this book
'.J\'JA;
discussions would, in the humble view of the author, assure the bar
alongside each other. ·
reviewee of a broader and more methodical understanding and
comprehension of the important aspects of the topic under
consideration. Example:
The contents of this book are based on the more-than-a-decade of
pre-bar and pre-week review lectures of the author on the subject. Some .-.,.,.~
Article 130 [132] 3
I
relevant commentaries of the author in his two (2) volumes on the Labor ~-

Code of the Philippines are likewise cited in this book. For a more where "130" is the new renumbering while
extended and authoritative discussion on the topics prescribed in the "[132]" is its counterpart old number.
syllabus, his commentaries in these 2 volumes would certainly prove
helpful. By so presenting together both the new and the old
In the light of the introduction of multiple choice questions numbers, the reader would be well guided on the proper
(MCQs) in the 2011 bar examinations and in subsequent ones, sample provision to cite.
MCQs for each topic are presented at the end of this book. These MCQs
could well be used by the bar reviewees in honing their skill at answering
this type of questions.
It is hoped that this book would serve as a useful tool of bar
reviewees in hurdling the bar examination in labor law in the
forthcoming bar examinations in 2012 and beyond.
JOSELITO GUIANAN CHAN
Managing Partner
Chan Robles Law Firm ,~ ..
22/F, Philippine Stock Exchange Centre
Tektite East Tower, Exchange Road, Ortigas Center t This liM was enaded on June 21, 2011. tt is entilled 'AN ACT ALLOWING THE EMPLOYMENT OF NIGIIT WORKERS,
Pasig City, Metro Manila, Philippines THEREBY REPEALING ARTICLES 130 AND 131 OF PRESIDENTIAL DECREE NUMBER FOUR HUNDRED FORTY-
lWO,AS AMENDED, OTHERVv'ISE KNOWN AS THE LABOR CODE OF THE PHIUPPINES.'
March 19, 2012 Entlled'Renumbering ollhe LaborCodeollhe Philippines, as Amended' issuedbylhe DOLE SecrelalyonJu~21, 2015.
.,., 2
3 This arlk:le is enlilled 'Faclilies !or Women.' This is lhe fusl arti:le affected bylhe renumbering underRA. No.10151.
viii BAR REVIEWER ON' lABOR lAW
TABLE OF CONTENTS
Topics are based on the
Supreme Court-prescribed
SYLLABUS FOR LABOR LAW
CHAPTER ONE
FUNDAMENTAL PRINCIPLES AND CONCEPTS ..................................................1
A. LEGAL BASIS
1. 1987 CONSTITUTION............... .....................................................................1
(State Policies, Bill of Rights &Socia/ Justice)
I. STATE POL/C/ES ..................................................................................1
(Artie/ell of the Constitution)
II. BILL OF RIGHTS........................................................................ :.......... 5
(Article Ill of the Constitution)
Ill. SOCIAL JUSTICE... .............................................................................16
(Article XIII of the Constitution)
IV. EXAMPLE OF ALAW WHICH VIOLATES
SEVERAL CONSTITUTIONAL PRINCIPLES ..............................................21
V. CONSTITUTIONAL PROVISIONS NOT APPLICABLE
· TO COMPANY-LEVEL ADMINISTRATIVE CASES...................................... 24
2. ARTICLES 1700 AND 1702, CIVIL CODE..................................................... 31
B. CONSTRUCTION IN FAVOR OF LABOR ......................................................34
C. SOCIAL JUSTICE ......................................................................................39
CHAPTER TWO
RECRUITMENT AND PLACEMENT ..................................................................40
A. ILLEGAL RECRUITMENT ............................................................................40
1.1LLEGAL RECRUITMENT/N LOCAL EMPLOYMENT .................................... 43
2.1LLEGAL RECRUITMENT IN OVERSEAS EMPLOYMENT ..............................45
3. TYPES OF ILLEGAL RECRUITMENT AND THEIR ELEMENT .......................... 49
3-A.SIMPLE ILLEGAL RECRUITMENT ..............................................................49
3-8. ILLEGAL RECRUITMENT INVOLVING ECONOMIC SABOTAGE ...............53
3-C. SOME PRINCIPLES ON ILLEGAL RECRUITMENT ................................. 57
4.1LLEGAL RECRUITMENT VERSUS ESTAFA ................................................60
5. LIABILITY OF LOCAL RECRUITMENT AGENCY
AND FOREIGN EMPLOYER ......................................................................63
a. SOLIDARY LIABILITY ............................................................................ 63
..I CHAPTER!
fUNDAMENTAl PRINCIPlES AND CONCEPTS ix
b. THEORY OF IMPUTED KNOWLEDGE ..................................................... 65
6. TERMINATION OF CONTRACT OF MIGRANT WORKER
' '""' WITHOUT JUST OR VALID CAUSE ............................................................ 67
6-1. AWARD OF MONETARY CLAIMS
AND DAMAGES TO OFWs ..................................................................75
7. DIRECT-HIRING ......................................................................................83
B. REGULATION OF RECRUITMENT AND PLACEMENT ACTIVITIES ................... 85
C. EMPLOYMENT OF NON-RESIDENT ALIENS ................................................. 89
D. TRAINING AND EMPLOYMENT OF SPECIAL WORKERS ............................... 95
1. APPRENTICES AND LEARNERS .............................................................. 95
2. DISABLED WORKERS (PERSONS WITH DISABILITY) .................................. 98
a. EQUAL OPPORTUNITY ...................................................................... 100
b. DISCRIMINATION ON EMPLOYMENT ................................................... 101
:>!'.:._. CHAPTER THREE
LABOR STANDARDS ................................ . 103
A. CONDITIONS OF EMPLOYMENT ...............................................................104
1. SCOPE ................................................................................................ 104
2. HOURS OF WORK ................................................................................ 105
;._-.,...,
a. PRINCIPLES IN DETERMINING HOURS WORKED ................................. 105
b. NORMAL HOURS OF WORK ............................................................... 106
i. COMPRESSED WORK WEEK .......................................................... 108
ii. POWER INTERRUPTIONS/BROWNOUTS .......................................... 112
c. MEAL BREAK ....................................................................................112
d. WAITING TIME .................................................................................. 115
e. OVERTIME ..-; ....................................................................................118
f. NIGHT SHIFT DIFFERENTIAL .............................................................. 122
g. REST PERIODS ......................................................................, ......... 123
1. WEEKLY REST DAY ....................................................................... 123
2. EMERGENCY REST DAY WORK ...................................................... 124
h. HOLIDAY PAY, 13TH MONTH PAY ....................................................... 125
1. HOLIDAY PAY ................................................................................125
1-A. HOLIDAY PAY/PREMIUM PAY OF TEACHERS,
PIECE WORKERS, TAKAY, SEASONAL WORKERS,
SEAFARERS ......... ...................................................................131
...... 2. 13TH MONTH PAY .......................................................................... 135
i. SERVICE CHARGE .............................................................................138
B. WAGES ........................................................:.........................................139
1. WAGE VERSUS SALARY .......................................................................139
2. PAYMENT OF WAGES ...........................................................................140
Ill-•
J.
 BAR REVIEWER ON' LABOR LAW
X
3. FACILITIES VERSUS SUPPLEMENTS ...................................................... 143
4. NON-DIMINUTION OF BENEFITS ............................................................ 145
5. PROHIBITIONS REGARDING WAGES ...................................................... 155
6. WAGE ORDER, WAGE DISTORTION ....................................................... 163
6.1. WAGE ORDER ...............................................................................163
6.2. WAGE DISTORTION ........................................................................ 167
C. LEAVES .................................................................................................173
1. SERVICE INCENTIVE LEAVE ..................................................................173
2. MATERNITY LEAVE ..............................................................................174
3. PATERNITY LEAVE .............................................................................. 177
4. PARENTAL LEAVE FOR SOLO PARENTS ................................................ 178
5. SPECIAL LEAVES FOR WOMEN WORKERS
(MAGNA CARTA FOR WOMEN) .............................................................. 181
D. SPECIAL GROUPS OF EMPLOYEES ........................................................182
1. WOMEN ..............................................................................................182
a. DISCRIMINATION ............................................................................ 182
b. ST/PULA T/ON AGAINST MARRIAGE ................................................... 184
c. PROHIBITED ACTS ........................................................................... 185
d. SEXUAL HARASSMENT ..................................................................... 188
2. MINORS ..............................................................................................192
3. KASAMBAHAY ......................................................................................195
4. HOMEWORKER$ .................................................................................213
5. NIGHT WORKERS ................................................................................215
CHAPTER FOUR
POST EMPLOYMENT ...................................................................................220
A. EMPLOYER·EMPLOYEE RELATIONSHIP ................................................... 220
1. TESTS TO DETERMINE
EMPLOYER-EMPLOYEE RELATIONSHIP ................................................. 220
2. KINDS OF EMPLOYMENT ......................................................................224
a. PROBATIONARY EMPLOYMENT .........................................................225
b. REGULAR EMPLOYMENT ..................................................................229
c. PROJECT EMPLOYMENT ...................................................................231
d. SEASONAL EMPLOYMENT .................................................................238
e. CASUAL EMPLOYMENT .....................................................................239
f. FIXED-TERM EMPLOYMENT ...............................................................239
3. SUBCONTRACTING VERSUS
LABOR-ONLY CONTRACTING ................................................................241
1. CONTRACTING VS. SUBCONTRACTING .............................................. 243
2. TRILATERAL RELATIONSHIP ..............................................................244
3. PERMISSIBLE CONTRACTING
l CHAPTER I
FUNDAMENTAL PRINCIPLES AND CONCEPTS xi
OR SUBCONTRACTING ARRANGEMENTS ........................................... 248
,_ 4. LABOR-ONLY CONTRACTING ............................................................251
5. OTHER ILLICIT FORMS OF EMPLOYMENT ........................................... 253
6. EFFECTS OF LABOR-ONLY CONTRACTING
AND ENGAGING IN OTHER ILLICIT FORMS
OF EMPLOYMENT ............................................................................. 255
7. SUBCONTRACTING VS. LABOR-ONLY CONTRACTING .......................... 255
8. SOLIDARY LIABILITY .........................................................................256
B. TERMINATION OF EMPLOYMENT............................................................. 261
1. TERMINATION BY EMPLOYEE ...............................................................261
I. RESIGNATION, IN GENERAL .............................................................261
II. VOLUNTARY RESIGNATION
(TERMINATION BY EMPLOYEE WITHOUT JUST CAUSE) ....................... 263
Ill. INVOLUNTARY/FORCED RESIGNATION
OR CONSTRUCTIVE DISMISSAL
..... (TERMINATION BY EMPLOYEE WITH JUST CAUSE) ............................. 272
2. TERMINATION BY EMPLOYER ............................................................... 288
I. TWO-FOLD DUE PROCESS REQUIREMENT ......................................... 288
a. JUST CAUSES ..............................................................................289
I. SERiOUS MISCONDUCT ............................................................ 292
il. INSUBORDINATiON
(-o
OR WILLFUL DISOBEDIENCE OF LAWFUL ORDERS ...................... 296
Ill. GROSS AND HABITUAL NEGLECT OF DUTIES .............................. 298
IV. ABANDONMENT OF WORK ........................................................300
V. FRAUD ....................................................................................302
VI. WILLFUL BREACH OF TRUST AND CONFIDENCE ......................... 303
VII. COMMISSION OF CRIME OR OFFENSE ....................................... 311
VIII. OTHER ANALOGOUS CAUSES .................................................. 312
IX. OTHER JUST CAUSES RECOGNIZED
UNDER OTHER PROVISIONS OF THE LABOR CODE ...... .............. 313
b. AUTHORIZED CAUSES .................................................................. 314
I. INSTALLATION OF LABOR-SAVING DEVICE .................................316
II. REDUNDANCY ..........................................................................317
Ill. RETRENCHMENT ......................................................................319
111-A. REDUNDANCY VS. RETRENCHMENT ......... .......................... 324
IV. CLOSURE OR CESSATION OF BUSINESS OPERATIONS ............... 326
IV-A. RETRENCHMENT VS. CLOSURE OF BUSINESS ..................... 328
V. DISEASE ...................................................................................329
c. DUE PROCESS ................................ :..-.......................... :................ 336
1. TWIN-NOTICE REQUIREMENT ..................................................... 336
2. HEARING; AMPLE OPPORTUNITY TO BE HEARD ........................... 336
d. RELIEFS FOR ILLEGAL_DISMISSAL ................................................ 347

BAR REVIEWER ON lABOR lAW
xii
1. REINSTATEMENT ..................................................................... 348
2. SEPARATION PAY IN LIEU OF REINSTATEMENT .......................... 349
3. BACKWAGES ........................................................................... 355
e. PREVENTIVE SUSPENSION ......................................................... .363
C. RETIREMENT .......................................................................................... 365
1. AMOUNT OF RETIREMENT PAY .............................................................375 ·
2. RETIREMENT BENEFITS OF WORKERS PAID BY RESULTS ...................... 379
3. RETIREMENT BENEFITS OF PART-TIME WORKERS ................................. 380
CHAPTER FIVE
MANAGEMENT PREROGATIVES ...................................................................381
A DISCIPLINE .........................................................................................382
B. TRANSFER OF EMPLOYEES .................................................................385
C. PRODUCTIVITY STANDARD ................................................................390
D. BONUS ...............................................................................................394
E. CHANGE OF WORKING HOURS ............................................................396
F. MARRIAGE BETWEEN EMPLOYEES
OF COMPETITOR-EMPLOYERS ............................................................. 397
G. POST-EMPLOYMENT BAN .................................................................... 399
I. NON-COMPETE CLAUSE ................................................................... 399
II. OTHER POST-EMPLOYMENT PROHIBITIONS ...................................... .404
CHAPTER SIX.
SOCIAL WELFARE LEGISLATION ..................................................................406
A. SSS LAW ................................................................................................406
1. COVERAGE .........................................................................................406
2. EXCLUSIONS FROM COVERAGE ...........................................................409
3. DEPENDENTS, BENEFICIARIES .............................................................410
4. BENEFITS ...........................................................................................411
4.1. SOCIAL SECURITY BENEFITS .........................................................411
4.2. EMPLOYEES' COMPENSATION BENEFITS ........................................426
B. GSIS LAW ...............................................................................................426
1. COVERAGE .........................................................................................426
2. EXCLUSIONS FROM COVERAGE ...............................,.......................... .428
3. DEPENDENTS, BENEFICIARIES .............................................................428
4. BENEFITS ...........................................................................................429
C. LIMITED PORTABILITY LAW .....................................................................444
D. EMPLOYEE'S COMPENSATION
·COVERAGE AND WHEN COMPENSABLE.................................................449
CHAPTER l
"""' FUNDAMENTAl PRINCIPlES AND CONCEPTS xiii
CHAPTER SEVEN
,._ LABOR RELATIONS.....................................................................................476
A. RIGHT TO SELF-ORGANIZATION .............................................................. .477
1. WHO MAY EXERCISE THE RIGHT... ........................................................ 478
2. WHO CANNOT FORM, JOIN OR ASSIST
LABOR ORGANIZATIONS.......................................................................482
3. DOCTRINE OF NECESSARY IMPLICATION .............................................. .483
4. COMMINGLING/MIXTURE OF MEMBERSHIP............................................ .487
5. RIGHTS AND CONDITIONS OF MEMBERSHIP ......................................... .489
A. NATURE OF RELATIONSHIP ..............................................................489
i. MEMBER-LABOR UNION ................................................................489
ii. LABOR UNION-FEDERATION ..........................................................493
1. AFFILIATION ..............................................................................493
2. DISAFFILIATION .........................................................................495
- 3 SUBSTITUTIONARY DOCTRINE .................................................. .497
B. BARGAINING UNIT...................................................................................501
C. BARGAINING REPRESENTATIVE ..............................................................505
1. DETERMINATION OF REPRESENTATION STATUS ................................... 505
a. REQUEST FOR SEBA CERTIFICATION .
(WHICH REPEALED AND REPLACED
,-.. "VOLUNTARY RECOGNITION") ...........................................................508
b. CERTIFICATION ELECTION ................................................................513
b-1. CERTIFICATION ELECTION
IN ORGANIZED &UNORGANIZED ESTABLISHMENTS ..................... 515
b-1-A. CERTIFICATION ELECTION
IN ORGANIZED ESTABLISHMENTS ...................................... 516
b-1-B. CERTIFICATION ELECTION
IN UNORGANIZED ESTABLISHMENTS .................................. 518
b-2. SOME PRINCIPLES ON CERTIFICATION ELECTION ....................... 518
b-3. BAR RULES ...............................................................................522
I. CONTRACT BAR RULE ........................................................... 523
II. STATUTORY BAR RULE ..........................................................526
Ill. CERTIFICATION YEAR BAR RULE .................... ,.......................528
IV. NEGOTIATIONS BAR RULE ..................................................... 530
V. BARGAINING DEADLOCK BAR RULE ....................................... 531 .
c. CONSENT ELECTION ........................................................................ 534
d. RUN-OFF ELECTION ......................................................................... 536
e. RE-RUN ELECTION ........................................................................... 537
D. RIGHTS OF LABOR ORGANIZATIONS........................................................540
1. CHECK-OFF, ASSESSMENT, AGENCY FEES ........................................... 540
xiv BAR REviEWER ON lABOR lAW
i. CHECK-OFF .................................................................................... 540
ii. DUES AND ASSESSMENTS ............................................................... 542
iii. AGENCY FEES .................................................................................545
2. COLLECTIVE BARGAINING .................................................................... 548
a. DUTY TO BARGAIN COLLECT/VEL Y.................................................... 548
i. DUTY TO BARGAIN COLLECT/VEL Y
WHEN THERE IS NO CBA YET ......................................................... 549
ii. DUTY TO BARGAIN COLLECT/VEL Y
WHEN THERE IS ACBA ..................................................................550
3. COLLECTIVE BARGAINING AGREEMENT (CBA) ....................................... 552
1. MANDA TORY PROVISIONS OF CBA ....................................................555
i. GRIEVANCE PROCEDURE ...........................................................556
ii. VOLUNTARY ARBITRATION ........................................................... 557
iii. "NO STRIKE, NO LOCKOUT" CLAUSE ..............................................557
iv. LABOR-MANAGEMENT COUNCIL .................................................... 558
E. UNFAIR LABOR PRACTICE ......................................................................562
1. NATURE, ASPECTS .............................................................................. 562
2. ULP BY EMPLOYERS ............................................................................ 564
I. INTeRFERENCE WITH, RESTRAINT OR
COERCION OF EMPLOYEES IN THE EXERCISE OF THEIR
RIGHT TO SELF-ORGANIZA T!ON .......................................................566
II. YELLOW DOG CONTRACT ...... .......................................................... 576
Ill. CONTRACTING OUT OF SERVICE$ AND FUNCTIONS .......................... 576
IV. COMPANY UNION ............................................................................ 580
V. DISCRIMINATION ..............................................................................582
VI. FILING OF CHARGES OR GIVING OF TESTIMONY ............................... 586
VII. CBAcRELATED ULPs ........................................................................ 587
VIl-A. PAYMENT OF NEGOTIATION AND ATTORNEY'S FEES ............... 587
V/1"8. VIOLATION OF THE CBA .........................................................589
VIII. BURDEN OF PROOF IN ULP CASES UNDER ARTICLE 259 [248] ...........590
IX. PERSONS CRIMINALLY LIABLE
FOR ULPs OF EMPLOYER ............................................................... 590
3. ULP BY LABOR ORGANIZATIONS ...........................................................591
I. RESTRAINT AND COERCION OF EMPLOYEES
IN THE EXERCISE OF THEIR RIGHTTO SELF-ORGANIZATION .............. 592
II. DISCRIMINATION .............................................................................593
Ill. DUTY OF UNION TO BARGAIN COLLECTIVELY ..... ~ .............................. 594
IV. FEATHERBEDDING LAW ..................................................................596
V. DEMAND OR ACCEPTANCE
OF NEGOTIATION FEES OR ATTORNEY'S FEES .................................600
VI. VIOLATION OF THE CBA ..................................................................601
VII. BURDEN OF PROOF
.... CHAPTER I.
FUNDAMENTAL PRINCIPLES AND CONCEPTS ·
XV
IN ULP CASES UNDER ARTICLE 260 [249] ...... .................................... 601
VIII. CRIMINAL AND CIVIL LIABILITY
FOR ULPs OF LABOR ORGANIZATION ............................................. 602
F. PEACEFUL CONCERTED ACTIVITIES .........................................................602
1. BY LABOR ORGANIZATION ...................................................................602
a. STRIKE ............................................................................................602
i. VALID VERSUS ILLEGAL STRIKES ................................................... 607
i-a. PROCEDURAL BUT MANDATORY REQUISITES
FOR A VALID AND LEGAL STRIKE OR LOCKOUT .......................... 607
i-b. REASONS FOR DECLARING ASTRIKE ILLEGAL ........................... 613
i-c. LIABILITY OF UNION OFFICERS
AND ORDINARY MEMBERS ....................................................... 617
b. PICKET ...... ......................................................................................622
2. BY EMPLOYER ....................................................................................626
- a. LOCKOUT ........................................................................................626
3. ASSUMPTION OF JURISDICTION ........................................................... 628
a. NATURE ..........................................................................................628
b. EFFECTS OF ASSUMPTION OF JURISDICTION ....................................636
CHAPTER EIGHT
JURISDICTION AND REMEDIES.....................................................................642
'"'
PRELIMINARY CONSIDERATIONS
ON JURISDICTION AND REMEDIES ........................................................... 643
A. LABOR ARBITER .................................................................................646
1. JURISDICTION .................................................................................646
I. JURISDICTION OVER UNFAIR LABOR PRACTICE CASES .................... 649
II. JURISDICTION OVER ILLEGAL DISMISSAL CASES ............................ 650
Ill. JURISDICTION OVER MONEY CLAIMS CASES .................................652
a. JURISDICTION OF LABOR ARBITER
VERSUS REGIONAL DIRECTOR ................................................. 654
IV. JURISDICTION OVER CLAIMS FOR DAMAGES ................................. 658
V. JURISDICTION OVER
LEGALITY OF STRIKES AND LOCKOUTS ........................................ 659
V-A. JURISDICTIONAL INTERPLAY
IN STRIKE OR LOCKOUT CASES ............................................. 660
VI. JURISDICTION OVER CASES INVOLVING
LEGISLATED WAGE INCREASES AND WAGE DISTORTION ............... 662
VII. JURISDICTION OVER ENFORCEMENT OR ANNULMENT
OF COMPROMISE AGREEMENTS .................................................. 663
VIII. JURISDICTION OVER EXECUTION AND ENFORCEMENT
OF DECISIONS OF VOLUNTARY ARBITRATORS ............................. 664
 CHAPTER!

xvi
BAR REVIEWER ON lABOR lAW ' FUNDAMENTAl PRINCIPlES AND CONCEPTS xvii

IX. JURISDICTION OVER CASES 3. REINSTATEMENT PENDING APPEAL .........................................................697

OF OVERSEAS FILIPINO WORKERS (OFWs) ....................................665 ..,. B. NATIONAL LABOR RELATIONS COMMISSION (NLRC) ................................701
X. OTHER ISSUES OVER WHICH LABOR ARBITERS
HAVE JURISDICTION .....................................................................666 1. JURISDICTION ....................................................................................701
X-A. JURISDICTION OVER CASES INVOLVING EMPLOYEES
H. COURT OF APPEALS...............................................................................703
OF GOVERNMENT-OWNED AND/OR
CONTROLLED CORPORATIONS ............................ 667 1. APPEAL VIA RULE 65, RULES OF COURT ................................................ 703
X-B. JURISDICTION OVER DISPUTES 2. JUDICIAL REVIEW BY CA OF DECISIONS
INVOLVING ALIEN PARTIES ................ 667 OF VOLUNTARY ARBITRATORS ............................................................711
X-C. JURISDICTION OVER LABOR CASES D. SUPREME COURT .....................................................................................713
INVOLVING PRIESTS AND MINISTERS ....... 668
1. RULE 45, RULES OF COURT ..................................................................713
X-D. JURISDICTION OVER CASES OF
DOMESTIC WORKERS OR KASAMBAHAY .................................669 E. BUREAU OF LABOR RELATIONS ......................... 717
X-E. JUR!SDICTION OVER CASES OF I. LABOR OFFICIALS HAVING JURISDICTION
EMPLOYEES OF COOPERATIVES .. ..................... 670 OVER ARTICLE 232 [226] CASES ............................................................717
X-F. JURISDiCTION OVER COUNTER-CLAIMS II. CASES PROVIDED UNDER ARTICLE 232 [226] ...................................... .719
OF EMPLOYERS ....................................................................671 11-A. INTER-UN/ON AND INTRA-UN/ON DISPUTES .................................... 720
XI. ISSUES AND CASES OVER WHICH !1-B. OTHER RELATED LABOR RELATIONS DISPUTES .............. ;............. .723
LABOR ARBITERS HAVE NO JURISDICTION .............. 571 Ill. ORIGINAL AND EXCLUSIVE JURISDICTION
XI-A. CLAIMS FOR DAMAGES ARISING OF MED-ARBITERS, DOLE DIRECTORS AND BLR DIRECTOR ................... 726
FROM BREACH OF NON-COMPETE CLAUSE IV. APPELLATE JUF~ISD/CTION OF THE BLR DIRECTOR
AND OTHER POST-EMPLOYMENT PROHIBITIONS ............ ........ 672 <-' AS DISTINGUISHED FROM THAT OF THE DOLE SECRETARY .................. 733
XI-B. EMPLOYER'S CLAIMS FOR CASH ADVANCES, V. REMEDIES FROM DECISIONS OF
CAR, APPLIANCE AND OTHER PERSONAL BLR DIRECTOR AND DOLE SECRETARY
LOANS OF EMPLOYEES ......................................................... 672 RENDERED IN THEIR APPELLATE JURISDICTION ................................... 739
XI-C. DISMISSAL OF DIRECTORS AND CORPORATE OFFICERS ........ 673 VI. ADMINISTRATIVE FUNCTIONS OF THE BLR AND LRDs .......................... .739
XI-D. LABOR CASES INVOLVING ENTITIES IMMUNE FROM SUIT ........ 677 F. NATIONAL CONCILIATION AND MEDIATION BOARD ...................................740
XI-E. DOCTRINE OF FORUM NON CONVENIENS ............................... 679
1. NATURE OF PROCEEDINGS .................................................................,740
XI-F. QUASI-DELICT OR TORT CASES .............................................681
2. CONCILIATION VS. MEDIATION .............................................................741
XI-G. CRIMINAL AND CIVIL ACTIONS ARISING FROM
3. PREVENTIVE MEDIATION .....................................................................743
VIOLATIONS OF THE PENAL PROVISIONS OF
THE LABOR CODE ................................................................682 G. DOLE REGIONAL DIRECTORS .................................................................747
XI-H. CONSTITUTIONALITY OF LABOR CONTRACT 1. JURISDICTION
STIPULATIONS .....................................................................683 (Recovery/Adjudicatory Power) ................................................................747
2. REQUIREMENTS TO PERFECT APPEAL TO NLRC .......................................684 I. LABOR STANDARDS ENFORCEMENT CASES ...................................... 750
/. APPEAL IN GENERAL ...........................................................................684 II. SMALL MONEY CLAIMS CASES ........................................................ .753
II. PERFECTION OF APPEAL .....................................:.............................. 685 Ill. OCCUPATIONAL SAFETY AND HEALTH VIOLATIONS ........................... 757
Ill. REGLEMENTARY PERIOD ....................................................................686 IV. COMPLAINTS AGAINST PRIVATE RECRUITMENT
IV. APPEAL FEE AND LEGAL RESEARCH FEE .............................................689 AND PLACEMENT AGENCIES (PRPAs)
V. MEMORANDUM OF APPEAL ..................................................................690 FOR LOCAL EMPLOYMENT .............................................................. 758
VI. PROOF OF SERVICE TO ADVERSE PARTY ............................................691 V. CASES SUBMITTED TO REGIONAL DIRECTORS
VII. POSTING OF BOND ............................................................................ 692 AND ASSISTANT REGIONAL DIRECTORS FOR
V/1-A. MOTION TO REDUCE APPEAL BOND ...........................................695
xviii BAR REVIEWER ON lABOR lAW

VOLUNTARY ARBITRATION IN THEIR CAPACITY

-
AS EX-OFFICIO VOLUNTARY ARBITRATORS (EVAs) ............................ .758 CHAPTER ONE
H. DOLE SECRETARY...................................................................................760 ""='
FUNDAMENTAL PRINCIPLES
1. VISITORIAL AND ENFORCEMENT POWERS ............................................ 760
2. POWER TO SUSPEND EFFECTS OF TERMINATION ................................ .764
AND CONCEPTS
3. REMEDIES ..........................................................................................767
i. JURISDICTION ...................................................................................767 TOPICS PER SYLLABUS
i-1. ORIGINAL JURISDICTION ............................................................. .767
i-1-A. ADMINISTRATIVE INTERVENTION
FOR DISPUTE AVOIDANCE {AIDA) ......................................... .768
I.
i-1-B. VOLUNTARY ARBITRATION BY DOLE SECRETARY .................. 770 FUNDAMENTAL PRINCIPLES AND POLICIES
i-2. APPELLATE JURISDICTION OF THE DOLE SECRETARY ................... .772 A. Legal basis
i-2-A. APPEALS FROM DOLE REGIONAL DIRECTORS ......................... 774
1. 1987 Constitution (State Policies, Bill of Rights & Social
i-2-B. APPEALS FROM MED-ARBITERS ..............................................777 Justice)
i-2-C. APPEALS FROM BLR DIRECTOR ............................................... 777 2. Articles 1700 and 1702, Civil Code
i-2-D. APPEALS FROM POEA ............................................................778
...,
B. Construction in Favor of Labor
I. VOLUNTARY ARBITRATOR. .......................................................................779 C. Social Justice
1. JURiSDICTION ..................................................................................... .781 -- ·-------------------------··'"'·----------------------------...................
....
I. JURISDICTION OVER UNRESOLVED GRIEVANCES ................................ 782
II. JURISDICTION OVER VIOLATION OF CBA ........................................... 785 A.
Ill. JURISDICTION OVER OTHER LABOR DISPUTES .................................. 786 ~ LEGAL BASIS
IV. JURISDICTION OVER NATIONAL INTEREST CASES .............................. .786
V. JURISDICTION OVER WAGE DISTORTION CASES ................................. 787 1.
VI. JURISDICTION OVER DISPUTES INVOLVING
THE PRODUCTIVITY INCENTIVES PROGRAM ......................................787
1987 CONSTITUTION
2. REMEDIES .....................................................................................................788 (State Policies, Bill of Rights & Social Justice)
2-A. PROCEDURE .................................................................................,793
In contrast to the past Syllabi in Labor Law, from the inception of the
J. PRESCRIPTION OF ACTIONS ....................................................................795 Syllabus-type of bar examinations in 2011 untl2016, the 2017 Syllabus does not
1. MONEY CLAIMS ...................................................................................795 mention the relevant specific provisions of the 1987 Constitution but merely
2.1LLEGAL DISMISSAL .............................................................................796 mentions the same three (3) topics of State Policies, Bill of Rights and Social
3. UNFAIR LABOR PRACTICE ....................................................................796 Justice. In the discussion below, the specific sections and articles of the
4. OFFENSES UNDER THE LABOR CODE ...................................................797 Constitution pertaining to these topics are expounded more comprehensively.
5./LLEGAL RECRUITMENT .......................................................................798
I.
STATE POLICIES
(Article II of the Constitution)
-----------000---------- 1. TWO DIVISIONS OF ARTICLE II.

2
BAR REVIEWER ON lABOR lAW
The provisions on State Policies fall under the second part of the 2-part
Article II of the 1987 Constitution, namely: (a) Principles,' and (b) State 3
Policies.2 Seven (7) sections under State Policies are relevant to Labor Law and
they are Sections 9, 10, 11, 13, 14, 18 and 20 whose specific provisions are as
follows:
ARTICLE II
DECLARATION OF PRINCIPLES AND STATE POLICIES
STATE POLICIES
Section 9. The State shall promote a just and dynamic
social order that will ensure the prosperity and independence
of the nation and free the people from poverty through policies
that provide adequ::te social services, promote full
~mployment, a rising standard of living, and an improved
quality of life for all.
Section 10. The State shal! promote social justice in all
phases of national development.
Section 11. The State values the dignity of every human
person and guarantees full respect for human rights.
Section 13. The State recognizes the vital role of the youth
in nation-buildin2 and shan promote and protect their
physical, moral, spiritual, intellectual, and social well-being. It
shall inculcate in the youth patriotism and nationalism, and
encourage their involvement in public and civic affairs.
Section 14. The State recognizes the role of women in
nation-buildinJ!, and shall ensure the fundamental equality
before the law of women and men.
Section 18. The State affirms labor as a primarv social
economic force. It shall protect the rights of workers and
promote their welfare.
Section 20. The State recognizes the indispensable role of
the private sector, encourages private enterprise, and provides
incentives to needed investments.
\ CO'Iering Sectioos 11o 61hereof.
2 Cove ling SectionS 7to 28 thereof.
These seven (7) sections were specifically cited in all past syllabi for Labor Law..
CHAPTER I
FUNDAMENTAL PRINCIPLES AND CONCEPTS
"""' 3
2. STATE POLICIES ARE NOT SELF-EXECUTING PROVISIONS.
-- By its very title, Article II of the Constitution is a "declaration of
principles and state policies." These provisions are not intended to be self-
executing tenets ready for enforcement through the courts. 1 They are used by the
judiciary as aids or as guides in the exercise of its power of judicial review, and
by the legislature, in its enactment of laws. The disregard of these provisions
cannot give rise to a cause of action in the courts. The reason is that they do not
embody judicially enforceable constitutional rights but mere guidelines for
2
legislation. These broad constitutional principles need legislative enactments to
implement them. 3 The reasons for denying a cause of action based on alleged
infringement of broad constitutional ·principles are sourced from basic
considerations of due process and the lack of judicial authority to wade "into the
uncharted ocean of social and economic policy-making."4
3. DISCUSSION OF SELECTED SIGNIFICANT STATE POLICIES.
......
Since most of the provisions under this topic are self-explanatory, only
certain provisions will be discussed herein by reason of their constitutional
significance and relevance to labor cases and situations.
a. Section 10 (Social Justice).
Central Ban!C pronounces that equality is one ideal which cries out for
-r-- bold attention and action in the Constitution. The Preamble proclaims
"equality" as an ideal precisely in protest against crushing inequities in
Philippine society. The command to promote social justice in Article II, Section
10, in "all phases ofnational development," further expounded in Article XIII,6
are clear commands to the State to take affirmative action in the direction of
greater equality. There is thus in the Philippine Constitution no lack of doctrinal
support for a more vigorous state effort towards achieving a reasonable measure
of equality.
Our present Constitution has gone further in guaranteeing vital social
and economic rights to marginalized groups of society, including labor. Under
1 Ta'lada v. MJ!rll, G.R ~- 118295. t.'ay 2, 1997, citiij Bernas, The Constitution oflhe Philippines: A Commentary,
Vol. II, 1988 Ed., p. 2. In lhe very recent case of Manna Prince Hotel vs. GSIS, G.R ~. 122156, Feb. 3, 1997, it
was held that 'A provision wlidllays down a general prilciple, such as those bJnd in Art II of the 1987
Constitution, is usually notself.executing.' See also Tendo Medical Center Employees Association v. CA, G.R No.
167324, July 17, 2007 (En Bane).
• a
2 f.s held ii the leading case Kilsbayill, incoqxJated vs. M:lrakl, G.R No. 118910, July 17, 1995 246 SCRA 540, 564.
See also Tolentinovs. SeaefayctFnance, G.R No. 115455and<XX!SOiidated cases, Aug.25,1995.
3 Bascovs. Pagcor, G.R No. 91649, May 14, 1991, 197 SCRA52, 68.
4 Tmma v. Angara, supra; See also Oposa vs. Fac!ooln, Jr., G.R No. 101083, July 30, 1993, 224 SCRA 792, 817.
5 Central Bank (OON Bangko Sent!l ng Piipilas) Efr4lloyees AssociaOOo, h:. v. Boogko Sentll ng Pipinas, GR. No.
148208, Dec.15, 2004.
6 Entil!ed "Social Juslk:e and Humil! Ri]hts."
I
L
 ,.,..i
BAR REVIEWER ON lABOR lAW
4 !
the policy of social justice, the law bends over backward to accommodate the
interests of the working class on the humane justification that those with less
privilege in life should have more in law. And the obligation to afford protection -..
!
to labor is incumbent not only on the legislative and executive branches but also
on the judiciary to translate this pledge into a living reality. Social justice calls
for the humanization of laws and the equalization of social and economic forces
by the State so that justice, in its rational and objectively secular conception, ·
may at least be approximated!
b. Section 18 (Protection-to-Labor Clause).
Among the provisions afore-quoted, it is Section 18 which is often
cited in labor cases. Along with Section 3 of Article XIII, infra, it is often
referred to as the protectio11-to-labor clause in the Constitution. It is often
invoked in resolving doubts or ambiguities in the interpretation of the law,
employment contracts, collective bargaining agreements and appreciation of
evidence. The constitutional tenet embodied in this provision is the basis for the
1"'
following provisions in the law: i
! II.
(I) Article 1702 of the Civil Code which provides that all labor
legislation and labor contracts should be construed in favor of the
safety and decent living for the laborer; artd
(2) Article 4 of the Labor Code which states that all doubts in the
-...
implementation and interpretation of its provisions, including its
implementing rules and regulations, shall be resolved in favor of
labor. 2
Thus, when conflicting interests of labor and capital are to be weighed
on the scales of social justice, the heavier influence of the latter should be
counter-balanced by sympathy and compassion the law must accord the
underprivileged worker. 3 In interpreting the protection to labor and social justice
provisions of the Constitution and the labor Jaws or rules and regulations
implementing the constitutional mandates, the liberal approach, which favors the
4
exercise oflabor rights, should always be adopted.
The same provision is the constitutional touchstone for the State's
discharge of its avowed duty of protecting and promoting the exercise of all the
rights granted to workers, such as the right to full employment and equality of
caa1ang vs. Wil'iams, G.R No. 47800, Dec. 2, 1940,70 Phil 726.
r
1
We9e/OO UnMlfsily-Ptlii~Jpiles v. Wesleyan UnWelsily·Philippines Faculty and Stall Associalioo, GR. No. 181806, Marth
12, 2014; Hdf Cross of Davao College, Inc. v. Hdf Cross of Davao Faculty \Mlm- KfiMIIPI, G.R. No. 156098, JiJle 27,
2005; Plastic TaMl Center Corporation v. NLRC, GR. No. 81176, Aprn 19, 1989.
3 flmopper MnilJ Corpolalion v. NLRC, G.R. No. 103525, Marth 29, 1996; Zoo, Sr. v. NLRC, G.R. No. 103679, Dec.
17, 1993,228SCRA556;Hoiday Inn Manlav. NLRC, G.R. No.109114,Sept 14, 1993;226 SCRA417.
• Adamson &Adansoo, Inc. v. CIR, G.R. No.L-35120, Jan. 31, 1984, 127 SCRA 268.
I 2
(
CHAffiRl
FUNDAMENTAL PRINCIPLES AND CONCEPTS
5
employment opportunities, self-organization, collective bargaining and
negotiations, strike and other peaceful concerted activities, security of tenure,
humane conditions of work, and a living wage, including the right to participate
in policy and decision-making processes affecting their rights and benefits as
may be provided by law. 1
c. Section 18, not meant to oppress employers.
The constitutional policy to provide full protection to labor is not
meant to be a sword to oppress employers. The commitment of the Court to
the cause of labor does not prevent it from sustaining the employer when it is
in the right. Certainly, an employer should not be compelled to pay employees
for work not actually performed and in fact abandoned. 2 The employer should
not be compelled to continue employing a person who is admittedly guilty of
misfeasance or malfeasance and whose continued employment is patently
inimical to the employer. The law, in protecting the rights of the laborer,
authorizes neither oppression nor self-destruction of the employer. 3
BILL OF RIGHTS
(Article III of the Constitution)
1. SEVEN (7) RELEVANT SECTIONS.
Out of the total of 22 Sections of the Bill of Rights (Article Ill), only
seven (7) are relevant to Labor Law, to wit: Sections 1, 4, 7, 8, 10, 16 and 18(2),
whose provisions are as follows:
ARTICLE III
BILL OF RIGHTS
Section I. No person shall be deprived of life, liberty, or
property without due process of law, nor shall any person be
denied the equal protection of the laws.
Section 4. No law shall be passed abridging the freedom of
speech, of expression, or of the press, or the right of the people
peaceably to assemble and petition the government for redress
of grievances.
1 See Section 3, Article XIII of lhe Constilulion and Article 3of lhe Labor Code. See also Phii~Jpi'le National Bank v. Padao,
G.R. Nos. 180849 and 187143, Nov. 16, 2011; Spic N' Spa1 Secvices Colporalion v. Paje, G.R. No. 174084, Aug. 25,
2010, 629 SCRA 261, 26~270; Bank of lhe Philippine islaids v. BPI Employees Uflion.Oavao Chapter-Federation of
Unions i1 BPIUnibank, G.R. No. 164301, Aug. 10, 2010; GSISv. CA. G.R. No. 132648, Mcrch4, 1999.
3
Agabon v. NLRC, GR No. 158693, Nov. 17, 2004, dling Capi v. NLRC, G.R No. 117378, Marth 26, 1997,270 SCRA
488,495.
ld., citing Fiipro,lnc. v. NLRC, G.R. No. L-70546, Oct. 16, 1986, 145 SCRA 123.

6 BAR REviEWER. ON lABOR lAW
Section 7. The right of the people to information on
matters of public concern shall be recognized. Access to official
records, and to documents and papers pertaining to official
acts, transactions, or decisions, as well as to government
research data used as basis for policy development, shall be
afforded the citizen, subject to such limitations as may be
provided by law. 1
Section 8. The right of the people, including those
employed in the public and private sectors, to form unions,
associations, or societies for purposes not contrary to law shall
not be abridged.
Section 10. No law impairing the obligation of contracts
shall be passed.
Section 16. All persons shall have the right to a speedy
disposition of their cases before all judicial, quasi-judicial, or
administrative bodies.
Section 18. xxx (2) No involuntary servitude in any form
shall exist except a~ a punishment for a crime whereof the
party shall have been duly convicted.
2. DISCUSSION OF SELECTED SIGNIFICANT PROVISIONS OF
ARTICLE lll.
a. Section 1 (Right to Due Process and Equal Protection ofthe
Law)
The constitutional due process and equal protection provision in
Section 1 of Article III has been declared not proper to be invoked in company-
level administrative cases leading to the imposition of certain sanctions, such as
termination of employment. The reason is that these twin rights may only be
invoked when the party depriving an individual of such rights is the government
and not when it is a private party such as an employer.
(NOTE: See discussion below on this topic entitled "V. CONSTITUTIONAL
PROVISIONS NOT APPLICABLE TO COMPANY-LEVEL ADMINISTRATIVE CASES").
1
The Freedool ci Information (FOQ Bill 1\!th sooght to proiTK)Ie and implement this ConstiWtional ~h~ has yet 1D be passed
intllaw.Hs YefSion 11 the Senate, Senate Bill No. 1733, olherMse knO\\n as the 'People's Freedom a lnfonnatioo (FOI) Ad
ci2013,' wac; passed Mil 21 a1!irmaWe votes from all sena1ors present on Mard110, 2014.11s counteqlartversion in the
House ci RepresenfaWes, House Bill No. 3237, otheMise knolll1 as ".Ali Ad to Strengthen the RiJht ci Ciizens to
lnfoonation held by the G<Mlmmenf has yet to be approved as of this Yoliting (May03, 2014).
I
I 7
~
b. Section 4 (Freedom of Speech, of Expression and of the Press
and Peaceably to Assemble and Petition the Government for
Redress of Grievances).
This provision is the constitutional basis for the exercise of the right to
picket provided in the Labor Code, 1 as distinguished from its twin right to strike
which fmds its constitutional mooring in another provision thereof, particularly,
Section 3 of Article XIII. Broadly speaking, the right to picket is part of the right
guaranteed under the law "to engage in concerted activities for purposes of
collective bargaining for their mutual benefit and protection" but it is
principally guaranteed under · the freedom of speech principle in the
Constitution. 3
To strike is to withhold or to stop work by the concerted action of
I 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
cumpounJ. While a strike focuses on stoppage of work, picketing focuses on
li- publiciz!ng the labor dispute and its incidents to infonn the public of wilat is
happening in the company struck against. A picket simply means the marching
to and fro in front of the employer's premises, usually accompanied by the
displ!ly of placards and other signs making known the facts involved in a labor
dispute. It is a strike activity separate :u1d different from the actual stoppage of
work.
According to Phimco Industries, Inc. v. Phimco Industries Labor
Association (PILA), 4 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 (entrance) and egress from
(exit) 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.
c. Section 8 (Right to Organize Unions).
This provision is the constitutional basis for the exercise of the right to
self-organization by workers in both public5 and private1 sectors. To breathe life
to this constitutional tenet, the Labor Code: ·
1 Artide 279 [264],l.abor Code.
2 M31ayang Mlngg&;~awa sa Esse v. Esse Staldard Eastern, Inc., GR No. L-24224, Jutj ll, 1965, 14 SCRA 801.
3 De Leon v. Nama Labor Urian, G.R No. L·7586, Jan. 30, 1957, 100 Phi. 789; The llslD' l1e AssulalCe Co, Ltd.
Enipklyees AssodaOOn • NATU v. The Insula' life Assurance Co., Ltd., G.R No.l-25291, J<r~. 30, 1971, 37 SCRA 244.
4 G.R. No. 170830, Aug. 11, 2010.
5 See Execu!Ne Older No. 180, Series of 1987 v.llidl proWles 11e guideines fa' the exen:ise of the l'ght ID cxganize d
90'.-emmenl e!T'(lloyees.
8 BAR REVIEWER ON IJ\BOR IJ\W
(1) protects the right of workers to self-organization and to fonn, join,
or assist labor organizations of their own choosing. 2
(2) declares as a policy of the State the fostering of a free and
voluntary organization of a strong and united labor movement. 3
(3) declares that it shall be unlawful for any person to restrain, coerce,
discriminate against or unduly interfere with employees and
workers in their exercise of the right to self-organization, which
includes the right to fonn, join, or assist labor organizations for the
purpose of collective bargaining through representatives of their
own choosing and to engage in lawful concerted activities for the
same purpose or for their mutual aid and protection. 4
d. Section 10 (Non-Impairment of Obligation of Contracts).
A law authorizing interference, when appropriate, in the contractual
relations between or among parties is deemed rt::ad into the contract and its
implementation cannot successfully be resisted by force of the non-impairment
guarantee. There is, in that instance, no impingement of the non-impairment
clause. 5
The purpose of the non-impainnent clause of the Constitution is to
safeguard the integrity of contracts against unwarranted interference by the
State. As a rule, contracts should not be tampered with by subsequent laws that
would change or modify the rights a..'ld obligations of the parties. 6 Impairment is
~mything that diminishes the efficacy of the contract. There is an impairment if a
subsequent law changes the terms of a contract between the parties, imposes
new conditions; dispenses with those a~ed upon or withdraws remedies for the
enforcement of the rights of the parties. The non-impainnent clause is limited in
application to laws that derogate from prior acts or contracts by enlarging,
abridging or in any manner changing the intention of the parties.8 Necessarily,
the constitutional proscription would not apply to laws already in effect at tl1e
time ofcontract execution.9
1 The LOOor Code is tie g<Mllllilg law on the exen:ise of tile riJit to seii-<Xganizalioo i1 the pMte sector.
2 Arti:les 3llld 253(243J; labor Code.
3 Mk:le 218(A)(c) (211(A)(c)J, l.abor Code.
• Mk:le 257 [246], Labor Code.
s Hacienda luisita, klc. v. PARC, G.R. No.171101,July 5, 2011.
s Goldenway Metdlandisil;! Corporcrtion v. Equitable PCI Bcrlk, G.R No. 195540, M3rd113, 2013, citing Siska Development
Corporalioo v. Ofli::e of the PresK!e!ltofthe Phiippines, G.R No. 93176,Ap!i 22, 1994,231 SCRA674, 680.
7 Gdderr.vdy Merdlandisilg Corporation v. Equilable PCI Bcrlk, supta; Siska Develqlment Caporalioo v. Office of the
Presklentol the Phiippiles, dti1Q Clemons v. Nolting, G.R No. 17959. Jan. 24, 1922, 42 Phi 702, 717. See also Phiippi'le
AloosementlKld Gaming~~ (PAGCOR)v. Thelllleauoflolemal Revenue, G.R No.\72087, Mardl15, 2011.
a Barcflgay Assodatioo lor Na1iooal Advancement and TranspaalC)' (SANAT) Pcrly-tist v. Camissi:ln on Elections, G.R.
No.\77508, Aug. 7, 2009, cif.i'IJ Senanov. GaRmtMaliline SeM:es, Inc., G.R. No. 167614, Marth 24,2009.
9 Haciendal.uisila, Inc. v. PARC, G.R. No. 171101, JulyS, 2011.
....l CHAPTER I
9
I FUNDAMENTAL PRINCIPLES ANO CONCEI'TS
Anucension v. National Labor Union. 1 - R.A. No. 33502 exempts
members of any religious sects, which prohibit affiliation of their members in
..l- any labor organization, from being covered by a union security clause. The
' union contends that R.A. No. 3350 is unconstitutional for impairing the
obligation of its contract, specifically, the "union security clause" embodied in
its Collective Baigaining Agreement (CBA) with the company, by virtue of
which "membership in the union was required as a condition for employment for
all pennanent employees and workers." This agreement was already in existence
at the time RA. No. 3350 was enacted on June 18, 1961, and it cannot,
therefore, be deemed to have been incorporated into the agreement. But by
reason of this amendment, Anucension as well as others similarly situated, could
no longer be dismissed from his job even if he should cease to be a member, or
disaffiliate from the union, and the company could continue employing him
notwithstanding his disaffiliation from the union. The Act, therefore, introduced
a change into the express tenns of the union security clause; the company was
... partly absolved by law from the contractual obligation it had with the union of
employing only union members in permanent positions. It cannot be denied,
therefore, that there was indeed an impainnent of said union security clause.
The Supreme Court, however, ruled that the prohibition to impair the
obligation of contracts is not -absolute and unqualified. In spite -of the
constitutionai prohibition, the State continues to possess authority to safeguard
·- the vital interests of its people. Legislation appropriate to safeguard said interest
may modify or abrogate contracts already in effect. Otherwise, important and
valuable refonns may be precluded by the simple device of entering into
contracts for the purpose of doing that which otherwise may be prohibited. It
follows that not all legislations which have the effect of impairing a contract are
obnoxious to the constitutional prohibition as to impairment, and a statute
passed in the legitimate exercise of police power, ··although it incidentally
destroys existing contractual rights, must be upheld by the courts. This has
special application to contracts regulating relations between capital and labor
which are not merely ordinary but impressed with public interest and therefore
must yield to the common good.
What then was the purpose sought to be achieved by R.A. No. 3350?
Its purpose was to insure freedom of belief and religion, and to promote the
general welfare by preventing discrimination against those members of religious
sects which prohibit their members from joining labor unions, confrrming
,.
G.R No. L-26097, N<w. 29, 1977.
~on June 18, 1961, anendi1g SecOOn 4(a), paragraph 4of RA No. 875, flus: '(4} Plwided, That nothing illhis />C.
oc i1 ?Irf Ad or s1alule of 1he Reptillic of the Phlippiles shall preclude ill~ fran making an I)Jreement lli1h a labor
OfQMizalioo kli8:Jilie as acondi!i:Jn of err¢'tment membership llereil, if such lim' Ofgallizafion is the represeotatr.re of
the el11lklYees as proWled il Section twelve, but such &;Jreement shal not cover rnenters of aey rel'gioos sedS 'Mlich
P!Ohilitaflirm alheirmembels i1 mt such labor 01ganiza!ion.'
l
10 BAR REVIEWER ON lABOR lAW
thereby their natural, statutory and constitutional right to work. It cannot be
gainsaid that said purpose is legitimate. It may not be amiss to point out here
that the free exercise of religious profession or belief is superior to contract
rights. In case of conflict, the latter must, therefore, yield to the former.
In another case where this issue was raised, Abella v. NLRC/
petitioner leased a farm land for a period of ten (1 0) years, renewable, at her
option, for another ten (1 0) years. During the existence of the lease, she
employed herein private respondents. Upon the expiration of her leasehold
rights, petitioner dismissed private respondents and turned over the hacienda to
its owners who continued the management, cultivation and operation of the
farm. In the illegal dismissal case filed by private respondents, petitioner claims
that she is not liable to pay separation pay because the basis for the award
thereof is Batas Pambansa Blg. 130 which was enacted only on August 21,
1981, amending Article 298 [283] of the Labor Code which grants separation
pay in case of closure of business operations. Petitioner contends that this
amendatory law violates the constitutional guarantee against impairment of
obligations and contracts because when she leased the hacienda on June 27,
1960, neither she nor the lessor contemplated the creation of the obligation to
pay separation pay to workers at the end of the lease. In debunking 2this posture
of petitioner, the Supreme Court cited the above case of Anucension where this
issue has been laid to rest. The purpose of Article 298 [283], as amended, is
obvious - the protection of the workers whose employment is terminated
because of the closure of establishment and reduction of personnel. Without said
law, employees like private respondents in the case at bar will lose the benefits
to which they are entitled - for the thirty-three years of service in the case of
Dionele and fourteen years in the case of Quitco. Although they were absorbed
by the new management of the hacienda, in the absence of any showing that the
latter has assumed the responsibilities of the former employer, they will be
considered as new employees and the years of service behind them would
amount to nothing. Moreover, to come under the constitutional prohibition, the
law must effect a change in the rights of the parties with reference to each other
and not with reference to non-parties. As correctly observed by the Solicitor
General, Article 298 [283] as amended refers to employment benefits to farm
hands who were not parties to petitioner's lease contract with the owner of the
hacienda. That contract cannot have the effect of annulling subsequent
legislation designed to protect the interest of the working class.
As held in the 2009 en bane case of Serrano v. Gallant Maritime
Services, lnc.: 3
, G.R No. 71813, Ju~ 20, 1987.
2 Mucensionv. National Labor Union, G.R No. L-26097, Nov. 29,1977.
3 Senanov. Gallant Maritime Selvk:es, h:., G.R. No. 167614, Mirch 24, 2009.
-
\
i
i
CHAPTER I
FUNDAMENTAL PRINCIPLES AND CONCEPTS
"The prohibition [against impairment of the obligation of contracts]
11
I is aligned with the general principle that laws newly enacted have only a
4- prospective operation, 1 and cannot affect acts or contracts already
perfected; 2 however, as to laws already in existence, their provisions are
read into contracts and deemed a part thereor.J Thus, the non-
impairment clause under Section 10, Article III [of the Constitution]
is limited in application to laws about to be enacted tbat would in any
. way derogate from existing acts or contracts by enlarging, abridging
or in any manner changing the intention ofthe parties thereto." 4
Thus, in this case, the enactment in 1995 of R.A. No. 8042, otherwise
known as the "Migrant Workers and O.;erseas Filipinos Act of 1995"
preceded the execution of the employment contract between petitioner and
respondents in 1998. Hence, it cannot be argued that R.A. No. 8042,
particularly the subject clause, 5 impaired the employment contract of the
parties. Rather, when the parties executed their 1998 employment contract,
they were deemed to have incorporated bto it !!11 the provisions of RA. No.
8042.
Police Power vs. Non-Impairment Clause.
It must be borne in mind that police power is superior to the non-
impairment clause. 6 The constitutional guarantee of non-impairment of contracts
is limited by the exercise of the police power of the State, in the interest of
-- public health, safety, morals, and general welfare of the community. 7
Thus, in the same en bane case of Serrano, 8 it was further held that
even if the Court were to disregard the timeline when the law was enacted vis-a-
vis the contract, the subject clause may not be declared unconstitutional on the
ground that it impinges on the impairment clause, for the law was enacted in the
exercise of the police power of the State to regulate a business, profession or
calling, particularly the recruitment and deployment of OFWs, with the noble
1 OltiJao; &Co., Ul. v. CA, G.R No. 126102, De.c4, 2000, 346 SCRA 748.
2 1b:41 ResoorteS, Inc. v. Base t1eta1s ~ Reswtes Colpaatm, G.R No. 163509, Dec. 6, 2006,510 SCRA400.
3 W...er v. Wilehead, 63 U.S. 314 (1873); Wood v. Lcvet!, 313 U.S. 362, 370 (1941); lnfrala.AssullllOO Caporalioo v.
Reptji; d toe Pli!ppines, G.R No. 156571, Julf 9, 2008; Sm!rt Coomri:aOOns, Inc. v. Ciy of Darclo, G.R No. 155491,
Sept 16, 2008.
4 lJndefsaxi1g supplied. .
5 The SliJjecl clause is toe last clause illle Sf' paragraph of Sec6on 10 of RA No. 8042, b:> wit 'Sec. 10. Mx1ey Clains.-
xxx In ra;e d lem1i1aOOn d oveseas ~ Mthout jJst, valkl oc auG1olized cause ao; dEfued by law oc CMtract. lhe
'Mlkelsshal be entitled b:> toe till rei"rWsernentofhis placement lee 'M1h illerest of twet.<e pen:eill (12%) per annum, pluS
,. his sal!lies b" lhe unexpired portioo of his~ oontract or tJr ttree (3) roonths tJr every yea- of the tmexpied term,
'Midlewr is ess. xxx (8nphasis aid l.l1derscoli1g sup~ied illhe OOjilal text of the decision). This clause was declared
uncoostMonal in !his case.
6
Philip!ile National Bank v. Remgk>, G.R No. 78508, 21 Mirch 1994, 231 SCRA 362; MQkrFil Tra:flllQ
ColporU v. Lazaro, G.R No. L·54958, Sept 2, 1983,209 Phi. 400 (1983); Ortgas &Co., Ltd. Pamership v. Feati Bank
and Trust Co., G.R No. L-24670, Dec.14, 1979., 183 Phil. 1761979.
I Barangay Assodatioo for Nationa AdVcr1cement and Transpamcy (BANAl) Pcrty.USt v. Coo1missioo on Elections,
~ Se!Tanov. Galla1t Maritime SeM::es, klc., GR No. 167614, Mcrch 24, 2009.
l
 12 BAR REVlEWER ON LABOR LAW
end in view of ensuring respect for the dignity and well-being of OFWs
wherever they may be employed. 1 Police power legislations adopted by the State
to promote the health, morals, peace, education, good order, safety, and general
welfare of the people are generally applicable not orJy to future contracts but
even to those already in existence, for l!ll private contracts must yield to the
superior and legitimate measures taken by the State to promote public welfare. 2
3
The Conference of Maritime Manning Agencies, Inc. v. POEA,
illustrates this point. The POEA issuances 4 were assailed, inter alia, as being
violative of the non-impairment clause in the Constitution as they were made
applicable to any Filipino seafarer already on-board any vessel. In upholding
their validity, the Supreme Court pronounced that the constitutional prohibition
against impairing contractual obligations is not absolute and is not to be read
with litem! exactness. It is restricted to contracts with respect to property or
some object of value and which confer rights that may be asserted in a court of
justice; it has no application to statutes relating to public subjects within the
domain of the general legislative powers of th~ State and involving the public
rights and public welfare of the entire community affected by it. It does not
prevent the proper exercise by the State of its police power by enacting
regulations reasonably necessary to secure the health, safety, morals, comfort, or
general welfare of the community, even though contracts may thereby be
affected, for such matters cannot be placed by contract beyond the power of the
State to regulate and control. Thus:
"Verily, the freedom to contract is not absolute; all contracts and all rights
are subject to the police power of the State and not only may regulations
which affect them be established by the State, but all such regulations must
be subject to change from time to time, as the general well-being of the
community may require, or as the circumstances may change, or as
experience may demonstrate the necessity. And under the Civil Code,5
contracts of labor are explicitly subject to the police power of the State
because they are not ordinary contracts but are impressed with public
interest. The challenged resolution and memorandum circular being valid
1 See Executive Soo"e!ay v. CA., G.R. No. 131719, May 25, 2004, 429 SCRA 81, dtirVj JM\l Promo00n an:! Mana;Jement,
Inc. v. CA, G.R No. 120095, Aug. 5, 1996, 260 SCRA319.
2 OrtiJas&Co.,UI.v.CA,GR No.126102,Dec.4,2000, 346SCRA748.
3 G.R. No.114714,Apm21, 1995.
4 POfA Govemhg 8uatd Resolution No. 01, Series o11994, Issued oo 14 J111. 1994 Clld POEA MemorandtJn CiraJiar No.
05, Sefies r! 1994, issood oo 19 Jan.19941111ich ~ lhe rates o1 compensation Md other benefits i1 Part II, SectkY1 C.
IJOO'J~ 1; Sectioo L, ~caphs 1!r1d 2; llld Appendix 1·A of U1e POEA S!rodali8nployment Cootracfs for Seafa"ers,
lll1idl oojustmeo5 tool: effedoo 20 Marth 1994.
5 Article 1700 lh!reof expresstt pl"ll'Mes: 'M 1700. The relaticrJs belween capftalllld-labor are not merely coofrnctJaJ. They
are so iT1J!essed ~ publk: inlerest that labor cootlcl9lfust yield Ill lhe cormm good. Therefore, such coolracls are
subject klltle speca laws oo labor Wlioos, cd!ecWe bargOOilg, sH<es and k:ckout!, closed shop, wages, ~
cooditions, hrus of labtT and srniar subjeds..
CHAPTER!
TI
L.)
FUNDAMENTAL PRINCIPlES AND CONCEPTS
implementations of E.O. No. 797, 1 which was enacted under the police
power of the State, they cannot be struck down on the ground that they
r
violate the contract clause. To hold otherwise is to alter long-established
constitutional doctrine and to subordinate the police power to the contract
clause."
The stipulations in the contract must be valid.
I While the contracting parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient, such stipulations should not
be contrary to law, morals, good customs, public order or public policy. 2
Maynilad Water Supervisors Association v. Maynifad Water
3
Services, Inc. - The agreement or contract between the parties is the fonnal
expression of the parties' rights, duties and obligations. It is the best evidence of
the intention of the parties. Thus, when the terms of an agreement have been
reduced in writing, it is considered as containing all the terms agreed upon and
there can be no evidence of such tenns other than the ccntents of the written
agreement between the parties and their successors-in-interest. Time and again,
r the rule has been stressed that 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
Jaw, morals, good customs or public policy. Otherwise, courts would be
interfering with the freedom of contr:Jct of the parties. Simply put, courts
j_ cannot stipul"'te for the parties or amend the latter's agreement, for to do so
would be to alter the real intention of the contracting parties when the primary
function of courts is to give force and effect to the intention of the parties. 4
e. Section 16 {Speedy Labor Justice).
"Speedy disposition of cases" or "speedy labor justice" is a relative term
and a flexible concept It is consistent with delays and depends upon the
circumstances of each case. What the Constitution prohibits are unreasonable,
arbitrary and oppressive delays which render rights nugatory. 5
Speedy labor justice, in terms of period, is provided under Article 292(i)
[277(i)] of the Labor Code, thus:
"{i) To ensure speedy labor justice, the periods provided in this Code
within which decisions or resolutions of labor relations cases or matters
should be rendered shall be mandatory. For this purpose, a case or matter
shall be deemed submitted for decision or resolution upon the filing of the
. 1
EnliUOO 'ReorgCYiizing Ule J.il6ty d Labor and ~ CreaOOg lt1e Pli!ppile Ovetseas En"4lloyment Administration,
and ((lr Oti1er Purposes.'
2
Article 1300, CMI Code.
3 G.R. No. 198935, Nw. 27, 2013.
No001 Resoorces and ~Corporation v. ,AJI Asia lllllk Colpolalkxt, G.R. No. 162523, Nov. 25, 2009, 605 SCRA
4
370,380.
5
Cadain v. POf:A, NLRC, G.R. Nas.104776, 104911-14 and 105029-32, Dec. 05, 1994.
l
 I
14 BAR REVIEWER ON LABOR LAW
-r'
last pleading or memorandum required by the rules of the Commission or
by the Commission itself, or the Labor Arbiter, or the Director of the
Bureau of Labor Relations or Med.Arbiter, or the Regional Director."
In the detennination of whether or not the right to a "speedy triaC' has
......
been violated, certain factors may be considered and balanced against each
other. These are the length of delay, reason for the delay, assertion of the right
or failure to assert it, and prejudice caused by the delay. The same factors may
also be considered in answering the judicial inquiry as to whether or not a
person officially charged with the administration of justice has violated the
1
speedy disposition of cases.
While the speedy disposition of labor cases may be the policy of the
law, it must be emphasized that speed alone is not the chief objective of a trial.
It is the careful and deliberate consideration for the administration of justice, a
genuine respect for the rights of all parties and the requirements of procedural
due process, and an adherence to the principle that the disposition of cases
should always be predicated on the consideration t1.at more than the mere
convenience of the courts and of the parties in the case, the ends of justice and
fairness would be served. These are more important than a race to end the trial.
2 absorption by BPI of a former FRBTC employee without the consent of the
f. Section 18[2] (Involuntary Servitude).
"Involuntary servitude" is every condition of enforced or compulsory
service of one to another, no matter under what fonn such servitude may be
disguised. 3 The 1987 Constitution categorically prohibits involuntary servitude.
4 L
It is on the basis of this constitutional precept that employees are granted the
right to tenninate their employment relationship with their employers under
Article 300 [285]5 of the Labor Code. This article recognizes the equality of the
parties to an employment relationship. Thus, an employee may resign from
employment at any time he wishes and with or without just cause, subject only
6
to certain minimum conditions imposed by law.
Bank of the Philippine islands v. BPI Employees Union-Davao
Chapter-Federation of Unions in BPI Unibank,7 involves the merger of BPI
with FEBTC, where the Voluntary Arbitrator ruled that, in accordance with
Section 80 of the Corporation Code, the emp){)yees of FEBTC form part of the
Cabalerov. A!ronso, Jr., 153 SCRA 153 [1987; Goozalesv. ~Cilbaycvl. 199SCRA 298.
Habanav. NLRC, G.RNo. 129418, Sept 10,1999.
3 Rubi v. Provilcial Board oiMndcro, G.R. No. L-14078. Mard17, 1919, 391'tlft. 660.
4
5
Section 18 [2], Article Ill [Bil of Rights], 1987 Consti1ulioo.
Enlilled 'Temmioo by Employee." This is CO!l'lll"Ol~ knO'M1 as 'resignalion."l>.s rerurilered pursuant to Section 5, R.A.
.
No. 10151, June 21, 2011 illd DOLE Depa!bnent Advisoly No. 01, Se!ies ol2015 (Rerlmileli1g of the labor Code of the
Philippines, as .Aroended), issued on Ju~ 21, 2015.
6 Such as v.i1en oo en1Jioyee resgns tt tenninales v.itilOOI~cause the~ rela\ionSil~ by~ allliltro
nOO::e on the empbyer at least one (1) monlh il advaoce (See Mide 300 [285]. Laxr Code).
7 G.R. No. 164301. Alg. 10, 2010.
r
CHAPTER I 15
FUNDAMENTAL PRINCirLES AND CONCEPTS
"assets and liabilities" transferred to the surviving bank, petitioner BPI, by
virtue of the merger. The Supreme Court, however, did not agree to this
postulation. In legal parlance, human beings are never embraced in the tenn
"assets and liabilities." It is contrary to public policy to declare the former
FEBTC employees as fonning part of the assets or liabilities of FEBTC that
were transferred and absorbed by BPI in the Articles of Merger. Assets and
liabilities, in this instance, should be deemed to refer only to property rights and
obligations of FEBTC and do not include the employment contracts of its
personnel. A corporation cannot unilaterally transfer its employees to another
employer like chattel. Certainly, if BPI as an employer had the right to choose
who to retain among FEBTC's employees, FEBTC employees had the
concomitant right to choose not to be abgorbed by BPI. Even though FEBTC
employees had no choice or control over the merger of their employer with BPI,
they had a choice whether or not they would allow themselves to be absorbed by
BPI. Certainly nothing prevented the FEBTC's employees from resigning or
retiring and seeking employment elsewhere instead of goL11g along with the
· proposed absorption. Employment is a personal consensual contract and
employee is in violation of an individual's freedom to contract It would have
been a different matter if there was an express provision in the Articles of
Merger that as a condition for the merger, BPI was being required to assume all
the employment contracts of all existing FEBTC employees with the conformity
of the employees. In the absence of such a provision in the Articles of Merger,
then BPI clearly had the business management decision as to whether or not to
employ FEBTC's employees. FEBTC employees likewise retained the
prerogative to allow themselves to be absorbed or not; otherwise, that would be
tantamount to involuntary servitude.
Compulsory (ul(illment ofmilitary or civic dutv.
Article 301 [286]1 of the Labor Code which provides for compulsory
fulfillment of military or civic duty, may well be considered as the exception to
this constitutional proscription. This is so because the constitutional prohibition
should be subordinated to the right of the government to call upon its citizens to
protect their State as provided under Section 4, Article II of the Constitution.
The survival of the State is the paramount justification for such involuntary
servitude.
1 En1med 'When ~Not Deemed Temlina!ed.' Under lhis ri:le, elf4lloyees may be caled to !ulfiH cerfatt1111!1itary or
cMc duly but sud! shall not lenni1a1e employment
16 BAR REviEWERON.IABOR lAW

m.
- CHAPTER I
FUNDAMENTAL PRINCIPLES AND CONCEPTS

The State shall regulate the relations between workers and

17

SOCIAL JUSTICE
(Article XIll of the. Constitution)
....__
1. FIVE (5) RELEVANT SECTIONS OF ARTICLE XIII.
Article XIII embodies 19 Sections but only five (5) are relevant to Labor
II
Law, viz.: Sections 1, 2, 3,13 and 14. Their provisions are as follows:
ARTICLE XIII
SOCIAL JUSTICE AND HUMAN RIGHTS
Section 1. The Congress shall give highest priority to tbe
enactment of measures that protect and enhance the right of all
the people to human dignity, reduce social, economic, and
political inequalities, and remove cultural inequities by
equitably diffusing wealth a11d political power for the common
good.
employers, recognizing the right of labor to its just share in the
fruits of production and the right of enterprises to reasonable
returns to investments, and to expansion and growth.
WOMEN
Section 14. The State shall protect working women by
providing safe and healthful working conditions, taking into
account their maternal functions, and such facilities and
opportunities that will enhance their welfare and enable them
to realize their full potential in the service ofthe nation.
2. DISCUSSION OF SELECTED SIGNIFICANT PROVISIONS OF
ARTICLE XIIL
a. Section 1 (Human Dignity, Inequality and Discrimination).

To this end, the State shall regulate the acquisition,

ownership, use, and disposition of property and its increments.
r This provision speaks of the constitutionally enshrined abhorrence to
inequality and discrimination for which Congress is mandated to prevent by
enacting laws that "enhanl:e the right of all people to human dignity, reduce
Section 2. The promotion of social justice shall include the
commitment to create economic opportunities based on
I social, economic, and political inequalities.''

freedom of initiative and self-reliance.

LABOR
Sectwn 3. The State shall afford full protection to labor,
local and overseas, organized and unorganized, and promote
full employment and equality of employment opportunities for
all.
It shall guarantee the rights of all workers to self-
organization, collective bargaining and negotiations, and
peaceful concerted activities, including the right to strike in
accordance with law. They shall be entitled to security of
tenure, humane conditions of wor~ and a living wage. They
shall also participate in policy and decision-making processes
affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared
responsibility between workers and employers and the
preferential use of voluntary modes in settling disputes,
including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.
L International School Alliance of Educators liSAEJ v. Quisumbing/
illuminates on this principle. The Supreme Court declared In this case that the
point-of-hire classification employed by respondent School to justify the
distinction in the salary rates of foreign-hires and local hires is an invalid
classification. There is no reasonable distinction between the services rendered
by foreign-hires and local-hires. The practice of the School of according higher
salaries to foreign-hires contravenes public policy and, certainly, does ·not
deserve the sympathy of the Cotut. In so holding, the Court cited Section I of
Article XIII that public policy abhors inequality and discrimination; Our
Constitution and laws reflect the policy against these evils. Thus, the
Constitution, in the Article on Social Justice and Human Rights, exhorts
Congress to "give highest priority to the enactment of measures that protect and
enhance the right of all people to human dignity, reduce socia~ economic, and
political inequalities." Moreover, the very broad Article 19 of the Civil Code
requires every person, "in the exercise of his rights and in the perfonnance of his
duties, [to] act with justice, give everyone his due, and observe honesty and
good faith."
• b. Section 3 (Protection-to-Labor Clause).
The most important provision among the 5 sections above is Section 3
of Article XIII which, along with Section 18 of Article II, is the principal

I G.R No. 128845, .hr1e 1, 2000.

I
18 BAR REVIEWER ON LABOR LAW
protection-to-labor clause in the Constitution. The underlined keywords are
worthy to be taken note of considering that they reflect the rights and principles
that encompass almost all of the provisions of the Labor Code and other related
laws.
Section 3. Article XIII. not selfexecuting/actuating nor judiciallv
en(orceable.
While all the provisions of the 1987 Constitution are presumed self-
executing,' there are some which the Court has declared not judicially
enforceable, Article XIII being one, 2 particularly Section 3 thereof, the nature
3
of which the Court, in Agabon v. NLRC, has described to be not self-
actuating:
"Thus, the constitutional mandates of protection to labor and
security of tenure may be deemed as self-executing in the sense that these
are automatically acknol'lledged and observed without need for any
enabling legislation. Hol'lever, to declare that the constitutional provisions
ar~ enough to guarali tee the full ex~rcis;: of the rights embodied therein,
and the realiw.tion of ideals therein expressed, would be impractical, if not
unrealistic. The espousal of such view presents the dangerous tendency of
being overbroad and exaggerated. The guarantees of 'full protection to
labor' and 'security of tenure', when examined in isolation, are facially
unqualified, and the broadest interpretation possibk suggests a blanket
shield in favor of labor against any form of removal regardiess of
circumstance. This interpretation implies an unimpeachable right to
continued employment - a utopian notion, doubtless - but still hardly
within the contemplation of the framers. Subsequent legislation is still
needed to define the parameters of these guaranteed rights to ensure the
protection and promotion, not only of the rights of the labor sector, but of
thf employers' as well. Without specific and pertinent legislation, judicial
~Jlies will be at a loss, formulating their own conclusion to approximate
at least the aims of the Constitution.
"Ultimately, therefore, Section 3 of Article XIII cannot, on its
own, be a source of apositive enforceable right to stave off the dismissal
of an employee for just cause owing to the failure to serve proper notice or
hearing. As manifested by several framers of the 1987 Constitution, the
provisions on social justice require legislative enactments for their
c
en1orce ab"l"
1 1ty.,4
I Serranov. Gallant Marmme SeMces, Inc, G.R No. 167614, M3rch 24,2009, citing Mlli\a Piince Hotel v. GSIS, G.R. No.
122156, Feb. 3,1997, '}fj7 SCRA408.
2 ld., tiling Bascov. Pll~ippine Amusementand{3aming Qxporatioo, G.R No. 91649, May 14, 1991, 197 SCRA 52.
3 G.R. No.158693, NcN.17,2004, 442 SCRA 573. This quotation wa<l lifted from the SepaJate Opklooof JusticeDMte T1119a
i1 kjaboo v. NI..RC.
4 Empha'iis added illhe Oliginal dedsioo il Senano v. Gam\ ~ SeMces, Inc. IW!ich quoled !his pOf1ion of the
Separate Opft101 of Jm Dante TIV,la i1 ,6{laboo v. NLRC, sup!ll.
- CHAPTER I
FUNDAMENTAL PRINCirLES AND CONCErTS
Thus, Section 3, Article XIII cannot be treated as a principal source
19
of direct enforceable rights, for the violation of which the questioned clause
...- may be declared unconstitutional. It may unwittingly risk opening the
floodgates of litigation to every worker or union over every conceivable
violation of so broad a concept as social justice for labor. 1 Section 3, Article
XIII merely clothes it with the status of a sector for whom the Constitution
urges protection through executive or legislative action and judicial
recognition. Its utility is best limited to being an impetus not just for the
executive and legislative departments, but for the judiciary as well, to protect
the welfare of the working class. 2
Interpretation of some principles.
In the workplace, where the relations between capital and labor are
often skewed in favor of capital, inequality and discrimination by the
employer are all the more reprehensible. 3 Section 3, Article XIU of the
.~.,.
Constitution specifically provides that labor is entitled to "humane
conditions of work." These conditions are not restricted to the physical
workplace - the factory, the office or the field - but include as well the manner
by which employers treat their employees. 4 The same provision of the
Constitution also directs the State to promote "equality of emplo)ment
opportunities for all." Similarly, the Labor Code5 provides that the State shall
"ensure equal work opportunities regardless of sex, race or creed." It would be
·- an affront to both the spirit and letter" of these provisions if the State, in spite
of its primordial obligation to promote and ensure equal employment
opportunities, closes its eyes to unequal and discriminatory terms and
conditions of employment. 6
Discrimination, particularly in tenns of wages, is frowned upon by
the Labor Code. Article 133 [135], for example, prohibits and penalizes7 the
payment of lesser compensation to a female employee as against a .male
employee for work of equal value. Article 259 [248] declares it an unfair labor
practice for an employer to discriminate in regard to wages in order to
encourage or discourage membership in any labor organization.
1 Semulo v. Galoot Miriine SeMces, Inc., G.R. No.167614, Malth 24, 2009.
.. 2
3
ld.
Mtemaliooal SdlodAiianceofEduca!ols[ISAE}v. Quisoolbing, GR. No.128845,June 1,2000 .
ld.
In A1X:Ie 3thereof.
6 lntemafiona' Scllod A1iance of Educal!xs PSAE.l v. Quisul!'bing, suprcl; E.g., Miele 133 [135] of !heLm Code dedares it
unlavriul for 11e erT1IIoYer 1o require, nOt on~ as acondition of empbymeo~ but also as acond"rtion for lhe axltinualion of
empioymenl1hat aWllll"IOO shall not get mallied.
7 In relalion Ill Arlicles 303 (288] and 304 [289] of the same Code.
"'
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20 BAR REVIEWER ON. lABOR lAW CHAffiRI 21
""'" FUNDAMENTAL PRINCIPLES AND CONCEPTS

Last paragraph o{Section 3, Article XIII as basis. IV.

It bears noting that unlike all the rights granted thereunder, the last
paragraph1 of Section 3 of Article XIII has not been implemented by any
provision in the Labor Code or in any other laws. It was, however, cited in
Asia Brewery, Inc. v. Tunay na Pagkakaisa ng mga Manggagawa sa Asia
(TPMAl/ in declaring that the DOLE Secretary has gravely abused her .
discretion when she relied on the unaudited financial statements of petitioner
corporation in determining the wage award because such evidence is self-
serving and inadmissible. Not only did this violate the December 19, 2003
Order of the DOLE Secretary herself to petitioner corporation to submit its
complete audited fmancial statements, but this may have resulted to a wage
award that is based on an inaccurate and biased picture of petitioner
corporation's capacity to pay - one of the more significant factors in making a
wage award. Petitioner corporation has offered no reason why it failed and/or
refused tc submit its audited fmancial statements for the past five years
relevant to this case. This only further casts doubt as to the veracity and
accuracy of the unaudited financial statements it submitted to the DOLE
Secreta.ry. Verily, this procedure cannot be countenanced because this could
unduly deprive labor of its right to a just share in the fruits of production3
and provide employers with a means to understaie their profitl\bility in order
to defeat the right of labor to a just wage.
b. Section l4(Protection ofWoroen).
The provision of Section 14 of Article XIII which mandates that the
State should accord recognition to the protection of working women, is also non
self-executory like' the other provisions in the Constitution as pronounced in a
number of cases. 4 It is a mere statement of principles and policies. As such, it is
a mere directive addressed to the executive and the legislative departments. If
unheeded, the remedy will not lie with the courts; but rather, the electorate's
displeasure may be manifested in their votes. 5
1 kjXtlllides: 'The State shal regulate lhe relaOOns between WllkeiS illd err(lk:rfers, leW,lnizing lhe 1\lht of labor Ill iL> ¢
shae illhe fruls of productioo ood lhe ~hi of en\elplises to ~ relums ID imsfrnenl\ ood i> expMSion illd
2
3
groNih."
G.R. Nos.171594-96, Sept 18,2013.
Miele XIII, Section 3 of lhe ConstihJiioo states il part XXX 'The State shaN regulate lhe relations between l'ttllters illd
E01lfoyers, reroJniziYJ lhe 1\Jht aleW lc its jist share illhe tuils d producOOn and lhe rJ,Jht of enfefprises Ill reasonable
IWns on ilvesmenls, !lld to~ ood gi'O'Mh.'
4 Such as lhe cases of Basco v. Pllifippine Amusementilld Garttg CorporaOOo, G.R No. 91649, May 14, 1991, 197 SCRA
5211ld Tolenlilovs. Seaetay ofFmnce, G.R No.115455 and consti1ated cases, Aug. 25, 1995.
5 Tondo Medical Center ~eesAssociaOOn v. CA, G.R No. 167324, Ju~ 17, 'lfJJ7 (En Bane).
EXAMPLE OF A LAW WHICH VIOLATES
... _ SEVERAL CONSTITUTIONAL PRINCIPLES
l. THE SERRANO CASE WHERE THE PROVISION OF THE sm
PARAGRAPH, SECTION 10 OF R.A. NO. 8042 WAS DECLARED
VIOLATIVE OF SEVERAL CONSTITUTIONAL MANDATES.
Serrano v. Gallant Maritime Services, Inc./ is illustrative of a case
where a single provision of law has been declared violative of several provisions
of the Constitution. Here, the following underlined clause of the 5th paragraph of
Section 10 of R.A. No. 8042 has been declared unconstitutional for
transgressing three (3) provisions of the Constitution, to wit: (I) Section 1,
Article III; (2) Section 18, Article II; and (3) Section 3, Article Xlll, in
relation to labor as a protected sector:
"Ir. case of tennination of overseas employment without jus~
.., valid or authorized cause as defined by la·.v or contract, or any
unauthorized deductions from the migrant worker's salary, the worker
shall be entitled to the full rdmbursement of his placement fee and the
deductions made with interest at twelve percent (12%) per annu~
his salaries for the unexpired portion of his employment cvntr~
for three (3) months for every year of the unexpirerl term,
whichever is less."
·- Petitioner worked as Second Officer for respondent recruitment agency
and its foreign principa~ Marlow Navigation Co., Ltd. (herein respondents),
under a POEA-approved Contract of Employment with a fixed term of 12
months. At the time of his repatriation, he had served oth.y two (2) months and
seven (7) days of his contract, leaving an unexpired portion of nine (9) months
and twenty-three (23) days. Petitioner's dismissal was declared illegal and he
was awarded, under the rule then prevailing, US$8,770.00, ·representing his
salary for three (3) months of the unexpired portion of the aforesaid contract of
employment, his contract being for one year, in accordance with the afore-
quoted provision ofR.A. No. 8042. Petitioner claims that he is entitled to all his
salaries for the unexpired portion of his contract and not just to 3 months of the
unexpired portion thereof. He further questioned the constitutionality of said
clause in Section 10 contending, inter alia, that:
(1) it unduly impairs the freedom ofOFWs to negotiate for and stipulate in
.. their overseas employment contracts a determinate employment period
and a fixed salary package;
1 GR No. 167614, Ma!th 24, 2009.
•
_L__
22 BAR REVIEWER ON lABOR lAW
(2) It impinges on the equal protection clause, for it treats OFWs
differently from local Filipino workers (local workers) by putting a cap
on the amount of lump-sum salary to which OFWs are entitled in case
of illegal dismissal, while setting no limit to. the same monetary award
for local workers when their dismissal is declared illegal;
(3) The disparate treatment is not reasonable as there is no substantial
distinction between the two groups; and that it defeats Section 18;
Article II of the Constitution which guarantees the protection of the
rights and welfare of all Filipino workers, whether deployed locally or
overseas.
In upholding petitioner, the Supreme Court cited the following
ratiocinations:
(l) The subject clause has a discriminatory intent against, and an invidious
impact on, OFWs at three levels: First, OFWs with employment
contracts of less than one year vi:;-a-vis OFWs with employment
contracts of one year or rnore; Second, among OFWs with employment
contracts of more than one year; and Third, OFWs vi:;-a-vis local
workers with fixed-period employment.
On the jir:;t, the illegally dismissed OFW with employment contract of
less than one year will be paid all his salaries for the unexpired portion
thereof; while the OFW with employment contract of at least one year
(like that of herein petitioner) !!I..!!!Q.!] will only be awarded whichever
is less between three months' salary for every year of the unexpired
term or the salary for the unexpired portion thereof.
On the second, the subject clause creates a sub-layer of discrimination
among OFWs whose contract periods are for more than one year: those
who .are illegally dismissed with less than one year left in their
contracts shall be entitled to their salaries for the entire unexpired
portion thereof, while those who are illegally dismissed with one year
or more remaining in their contracts shall be covered by the subject
clause, and their monetary benefits limited to their salaries for three
months only.
On the third, prior to R.A. No. 8042, OFWs and local workers with
fixed-term employment who were illegally discharged were treated
alike in terms of the computation of their money claims; they were
uniformly entitled to their salaries for the entire unexpired portions of
their contracts. But with the enactment of R.A. No. 8042, specifically
the adoption of the subject clause, illegally dismissed OFWs with an
unexpired portion of one year or more in their employment contract
have since been differently treated in that their money claims are
CHAPTER I 23
iO
FUNDAMENTAL PRINCIPLES AND CONCEPTS
subject to a 3-month cap, whereas no such limitation is imposed on
local workers with fixed-term employment.
- (2) The Court concludes that the subject clause contains a suspect
classification in that, in the computation of the monetary benefits of
fiXed-term employees who are illegally discharged, it imposes a 3-
month cap on the claim of OFWs with an unexpired portion of one year
or more in their contracts, but none on the claims of other OFWs or
local workers with fixed-term employment. The subject clause singles
out one classification of OFWs and burdens it with a peculiar
disadvantage.
There being a suspect classification involving a vulnerable sector
protected by the Constitution, the Court, after subjecting the
classification to a strict judicial scrutiny, has determined that there is no
compelling state interese that the subject clause may possibly serve. In
,. fine, the Government has failed to discharge its burden of proving the
existenc~ of a compelling state interest that would justify the
perpetuation of the discrimination against OFWs under the subject
clause. Thus, the subject clause is violative of the right of petitioner and
other OFWs to equal protection.
(3) The declaration of the unconstitutionality of the subject clause cannot
- be approached from the lone perspective that the clause directly
violates state policy on labor under Section 3, Article XIIl of the
Constitution. This is so because this provision is not self-executing.
Article XIII should be applied in conjunction with the equal protection
clause. Article XIII, by itsel~ without the application of the equal
protection clause, has no life or force of its own..
(4) The subject clause does not state or imply any defmitive governmental
purpose; and it is for that precise reason that the clause violates not just
petitioner's right to equal protection, but also his right to substantive
due process under Section 1, Article lli of the Constitution, for it
deprives him of property, consisting of monetary benefits, without any
existing valid governmental purpose.
1
Wnat coostiwtes canpellilg stale interest is meamd by Ule scale .(i "Jilt; and Jl(l'tWIS arrayed i1 V1e Coosti1ution and
caib!ated by history. It is akin 1o V1e ~ ilterest ci \he state b' v.llich some indMdual Uberties must gM! wey, such
as \he pubic ilterest in safegu~ heat! oc mainlainilg medk:al strlldards, oc in main\aining access tl ilfomlalion on
matters of public concern.
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24 BAR REVIEWER ON lABOR lAW
ill
v.
CONSTITUTIONAL PROVISIONS NOT APPLICABLE
TO COMPANY-LEVEL ADMINISTRATIVE CASES
1. INAPPLICABILITY PER JURISPRUDENCE.
- the notice requirement before he dismisses an employee does not
Certain constitutional rights and precepts may NOT be invoked in
labor cases, particularly in company-level administrative investigations leading
to the termination of employment because they can only be asserted against the
government or the state but not against a private party like an employer. More
particularly, the following rights, per well-entrenched jurisprudence, generally
fmd no application in company-level administrative proceedings by the
employer against an erring employee:
(a) Right to due process;
(b) Right to equal protection of the laws;
(c)
(d)
(e)
Right against seif-incrimination;
Right to counsel und to remain silent; and
Right against unreasonable searches and seizures and to privacy of
.•
communication and correspondence.
2. CONSTITUTIONAL DUE PROCESS.
a. The Se"ano case.
In the en bane decision in Serrano v. NLRC,' the Supreme Court
distinguished denial of due process by the State and denial of due process by the
- not been observed properly by an employer, it would not be right to order either
employer. It thus .concluded that the violation by the employer of the notice
requirement cannot be considered a denial of due process as would result in the
nullity of the employee's dismissal or layoff. The following reasons were cited:
I. The Due Process Clause of the Constitution is a· limitation on
governmental powers. It does not apply to the exercise of private
power, such as the termination of employment under the Labor
Code.
2. The notice and hearing required under the Due Process Clause
applies before the powers of organized society are brought to bear
upon the individual. This is obviously not the case of tennination of
employment under Articles 297 (282] and 298 [283] of the Labor
Code because the employee is not faced with an aspect of the
adversary system. The purpose for the requirement of notice and
hearing is not to comply with the Due Process Clause of the
Constitution. The time for notice and hearing is at the trial stage.
1 G.R. No. 117040, Jan. 27, 2000.
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CHAPTER! 25
FUNDAMENTAL PRINCIPLES AND CONCEPTS
Then that is the time we speak ofnotice and hearing as the essence
of procedural due process. Thus, compliance by the employer with
foreclose the right of the latter to question the legality of his
dismissal.
3. The notice requirement under Articles 297 [282] and 298 [283] of
the Labor Code cannot be considered a requirement of the Due
Process Clause since the employer cannot really be expected to be
entirely an impartial judge ofhis own cause.
b. The Agabon case.
In the en bane decision in the subsequent case of Agabon v. NLRC, 1
the Supreme Court further expounded on the doctrine laid down in Serrano by
making a distinction between constitutional due process and statutory due
process. Thus:
"Constitutional due process protects the individual from
the government and assures him of his rights in criminal, civil or
administrative proceedings; while statutory due process found in the
Labor Code and Implementing Rules protects employees from being
unjustly terminated without just cause after notice and hearing.
Resultantly, where there is just cause for dismissal but due process has
the reinstatement of the dismissed employee or the payment of backwages to
him. In failing, however, to comply with the procedure prescribed by law
(Article 292(b) [277(b)] of the Labor Code) in terminating the services of the
employee, the employer must be deemed to have opted or, in any case, should
be made liable, for the payment of•separation pay. It might be pointed out that
the notice to be given and the hearing to be conducted generally constitute the
two-part due process requirement of law to be accorded to the employee by the
employer. Nevertheless, peculiar circumstances might obtain in certain
situations where to undertake the above steps would be no more than a .useless
formality and where, accordingly, it would not be imprudent to apply the res
ipsa loquitur rule and award, in lieu .of separation pay, nominal damages to the
employee.
c. The Abbott Laboratories case.
A new doctrine on contractual due process, as distinguished from
statutory due process, has been enunciated in the 2013 en bane decision in
Abbott Laboratories, Philippines v. Pearlie Ann F. Alcaraz. 2 Thus, in a
1 G.R. No. 158693, Nov.17, 2004.
2 G.R No. 192571, July 23, 2013.

26 BAR REVIEWER ON lABOR lAW
situation where there is an existing company policy enunciating the procedural
due process that must be observed in termination of emplo(lllent, compliance
alone with the statutorily-prescribed procedural due process, would not suffice.
Additionally, there must be compliance too with the company-prescribed due
process procedure or the so-called contractual due process. Otherwise, the
same consequence as in Agabon will ensue, that is, the termination shall be
considered legal and valid but for lack of contractual due process, the employer
will be penalized with indemnity in the form of nominal damages in the amount
ofP30,000.00.
In this case, it was found that respondent Alcaraz, 2 who was hired as a
probationary managerial employee, was afforded both substantive and statutory
procedural due process, when she was terminated3 for failure to qualify as a
regular employee. Nonetheless, despite the existence of a sufficient ground to
terminate Alcuraz's employment and Abbott's compliance with the Labor Code
termination procedure, it was found that petitioner Abbott breached its
contractual obligation to Alcaraz when it faiied to abide by its own procedure
prescribed in its company rules in evaluating the performance of a probationa.-y
employee.
Veritably, a company policy partakes of the nature of an implied
contract between the employer and employee. Hence, given such nature,
company personnel policies create an obligation on the part of both the
employee and the employer to abide by the same. While it is Abbott's
management prerogative to promulgate its own company rules and even
subsequently amend them, this right equally demands that when it does create
its own policies and thereafter notify its employee of the same, it accords upon
itself the obligation to faithfully implement them. Indeed, a contrary
interpretation would entail a disharmonious relationship in the work place for
, As JlfrM:Ied i1 Miele 292(b) !277(b)J d lie t.m cooe ll1d as i1terpleled illle case rJ Kilg d Kilgs Transport, klc. v.
Mcmac, GR No. 166208, Jll1e 29, 'JJYJ7.
2 RespcC1denl Ak:aaz was hied as Medk:al iiXl RegUaby Aflais t~a:JaJer (RegUatay Afl<irs. Manage!) d petitmer,
suqea b a 6-m:xltl piOOali:my ~ Upon bei'Q len'ni1aled, she fled a ~ !or ilegal disntsal Md
dana;les dai1ivJ l1at she sl1ol*l hcNe aeacly been allSklered as a regulcr Md oot a probalionay ~ gPien
PJJ!xts JaiMe b i1txm her d lhe leaSOOCille sli.l1dads b' her regularizatioo t.,oo her ergagement as reqlied under
Miele 296 [281] dthe LlixlrCode.ln 1his relation, she ax1lended tha!IW!ie her~ contract stated that she was to
be ergaged 011 a prOOalionay status, lhe same d'MI oot illf1Ca!21he sfaldards 011 Mttl her regulaizati:ln Wlltl be based.
She fll1ler avened that lie iidMdua petiOOne!s mcililusly coonived to ilegaly !ismiss her v.tlen: (a) trey ttm!ned her
Yli1h tenrilaOOn; (b) she was Oldeled ootID enter~ prenises e\11!11 Jshe was stil an ~ lhereof; iiXl (c) they
pubtly MI100!lCed flat she ~ resgned il ader b hurriale her. On the conbay, petili:xlels maillailed l1at Alcaraz
was Vl!id~ lenrinated frcxn her probationary en1jiJyment gNe!l her failure to salisfy lhe presai>ed sta1dcrds !or her
regularization 1\!li:tl v.m nafe krlaMllo her at the lined her engagement
3
As the recads show, Alcarais d'ISilissal was ekted tlrough a letter dated May 19, 2005 v.tlich she received oo May 23,
2005 and agaiiOII May 27' 2005. Slated therein v.m the reasoos for her temi1ation, i.e., that after piqlel' Mluation,
.. Abbott detmniled lhal she failed 1D meet the reasoo001e stMdanls for her regulaization consideli1g her lacK ct time and
people nmagement and decisiorHnaking sldls, 1\!li::h ere necessary illhe pelfamance of her functions as RegtMloly
Atlairs Manager. Undeniallti. IllS v.m!en notice S!l'fl:ienfty mee1s the criteria set la1h me, tlereby legitimizi'9the cause
and rrooner of Abraz's dismissal as aprdlationaly ~ee under the paraiOOiefs set by the L.OOor Code.
CHAPTER! 27
110 FUNDAMENTAL PRINCIPLES AND CONCEPTS
the laborer should never be mired by the uncertainty of flimsy rules in which the
latter's labor rights and duties would, to some extent, depend.
..... d. The only relevant aspect of Section 1, Article ill, to labor cases.
The doctrine that labor is considered a "property" within the
constitutional guarantees remains constant to this day. Despite the changes in
the concept of due process introduced by Serrano and Agabon, the Supreme
Court continues to recognize to this day that labor is "property" falling within
the ambit and protection of the due process clause in the Constitution.' In other
words, even if it is not the constitutional due process that is violated if an
employee is dismissed sans due process, the legal notion that labor or
employment is "property" under the Constitution continues to be adhered to
and respected. 2 A worker cannot be deprived of his job, a property right, without
satisfying the requirements of due process. As enshrined in our bill of rights, no
person shall be deprived of life, liberty or property without due process of law. 3
e. Constitutional due process, when neces8ary.
'"'
Observance of the constitutional due process becomes necessary once a
case ripens into a full-blown case in proceedings before Labor Arbiters, the
Commission (NLRC) and other labor tribunals. As distinguished from
employer's company-level due process, the government is now involved; hence,
any deprivation of due process of either party to the labor suit by such labor
- officials/tribunals would constitute a violation of the constitutional due process
under Section I of Article HI of the Constitution.
3. RIGHT TO EQUAL PROTECTION OF THE LAWS.
. It is a settled principle that. the commands of the equal protection
clause4 are addressed only to the state or those acting under the color of its
authority. The equal protection clause erects no shield against merely private
conduct, however, discriminatory or wrongful it may have been.5
1 Sectix11, Altide 111 of lhe Bil ct Rig his pa1ly prcNk1es: 'til peiSOO shal be de¢ied of lfe, lilelty or plqlel!y wi1hoot due
process of law xxx"; See S<ijales v. ~·s Coorneldal Colp., G.R No. 166554, N111. 27, m. cling Phif~ MMe
Pictures Wcxke!S Association v. Premiere Productions, Inc., G.R No.l-5621, ~ 25, 1953, 92flhl. 843; RMce v. NI.RC,
G.R No.l~147, June 30, 1988, 163 SCRA 279; Asia WOO:! Recnitmenl.lnc. v. Nl.RC, G.R. No. 113363, Aug. 24, 1999,
313 SCRA 1; Phiippine-Si'gapore Tmnsport SeMces, Inc. v. NtRC, G.R No. 95449, Aug. 18, 1997, 277 SCRA 506;
Tolentroo v. NlRC, G.R No.l-75380, Juo/ 31, 1987, 152 SCRA 717; See alsoOpinakio v. Ra'li1a, GR No. 196573, Oct
16, 2013; Polsotiw. De Guia Enterplises,lnc., G.R No. 172624, Dec. 5, 2011.
2 S<ijales v. Rllsfan's Con1neltial Corp., supra, citing Slaugha Hoose Cases, 16 Wal. (83 US) 36, 127.
3 Polsolin v. De Guia Enleipfises.lnc., G.R No. 172624, Dec. 5, 2011; Opinaldo v. Ravina, G.R No. 196573, Oct 16,2013,
4
citing POOotin v. De 1ia £il1erjlffies, Inc., supra. and Sagaes v. Rustan's Coo'vneltial Corp., SI4J3.
Also found il Section ,Alticlde Ill of lhe Constitution, 1hus: 'Section 1. No person shall be de¢led of life, lilerty, or property
v.ilhout due process law, nor shall any peiSOI1 bed~ lhe equal protecOOn of 1l1e law3.'
5 Duncan Association of Delaiman.PTGWO v. Glaxo Welconle Phippiles, Inc., G.R No. 162994, Sepl17, 2004; Yrasuegui
v. Phifippine Airlines, Inc., G.R No.168081, Oct 17, 2008.
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28 BAR REviEWER ON l.ABOR l.AW
CHAPTER l 29
FUNDAMENTAl PRINCIPlES AND CONCEPTS
4. RIGHT AGAINST SELF-INCRIMINATION.
5. RIGHTS TO COUNSEL AND TO REMAIN SILENT.
It is enshrined in the Constitution that ''no person shall be compelled to
be a witness against himself." 1 This right against self-incrimination is accorded a. Rights to counsel and to remain silent may be asserted only in
to every person who gives evidence, whether voluntarily or under compulsion of ""' custodial interrogation; Distinguished from right against self-
subpoena, in any civil, criminal, or administrative proceeding. 2 incrimination.
a. Only an accused in a criminal case and by way of exception, a The rights to remain silent and to counsel apply to persons "under
respondent in an administrative case that partakes of the nature investigation for the commission of an offense," i.e., "suspects" under
of, or analogous to, a criminal proceeding can refuse to testify. investigation by police authorities; and this is what makes these rights different
from the right against self-incrimination which, as afore-stated, indiscriminately
But as distinguished from a mere witness, the accused in a criminal applies to any person testifying in any proceeding, civil, criminal, or
case or a respondent in an administrative case that partakes of the nature of, or administrative. 1
analogous to, a criminal proceeding, can refuse to testify altogether. As held in
Rosete v. Lim/ it is clear that only an accused in a criminal case can refuse to b. Effect of failure of employer to inform employee of his right to
take the witness stand. The right to refuse to take the stand does not generally counsel.
apply to parties in administrative cases or proceedings. The parties thereto can Would the failure of the employer to infonn the employee who is
only refuse to answer if incri.11inatir.g questions are propounded. The Suprerr,e undergoing administrative investigation of his right to counsel amount to
·Court applied the P,xception- a party who is not l!Il accused in a criminal case is '"' deprivation of due process?
allowed not to take the witness stand- in administrative cases/proceedings that
This was answered in the negative in Lopez v. Alturas Group of
partook of the nature of a criminal proceeding or analogous to a criminal
Companies/ where the Supreme Court pronounced that: "The right to counsel
proceeding. 4
and the assistance of one in investigations involving termin~tion cases is
b. No obligation on the part of the employer to advise respondent neither indispensable nor mandatory, except when the employee himself
employee or a witness of his right agai11st self-incrimination. requests for one or that he manifests that he wants a formal hearing on the
~

The Constitutions does not impose on the judge, or other officer
presiding over a trial, hearing or investigation, any affirmative obligation to
advise a witness of his right against self-incrimination. It is a right that a witness
knows or should know, in accordance with the well-known axiom that everyone
is presumed to know the law and that ignorance of the law excuses no one.
Furthermore, in the very nature of things, neither the judge nor the witness cah
be expected to know in advance the character or effect of a question to be put to
the latter.6
1 Sectioo 17, Mal Ill [811 of Ri;lhfs), 1987 Coostihrtion. This was si11b1y p!fMlOO i1 Section 20 oflhe 1973 Consti1ulion and
Sectioo 18, Arti::le Ill ofl1e 1935 Constitution. This is siniar tl flat IICOllded by lhe Fllh Amel1dment oflhe AmeOCan
Constitution. (See Tcmda &Femcmo, Constitution oflhe Phi., An noW, 2d ed., pp. 378-379).
2 P• oflhe Phiippines v. Hon. RJJben Aysoo, G.R No. 85215, July 7, 1989. This case was deci:led lJ1der lhe re;~ime r1.
lhe 1973 Coosliutioo v.ttere lle ~htagailstseiHlainilatioo was pro'liJed lltderlhefifstsenlenee r1. Sectioo 20, Arti::le rv
lhen!ol. See also Bermldez v. Castilkl, 64 Phil. 483; Gonzales v. Secretay of Lalor, 94 Phi. 325; Suarez v. Tengco, 2
SCRA 71; Pascual, Jr. v. Board of Medk:al Exanilels, G.R No. L-25018, t&y26, 1969,28 SCRA344; 138 Phi. 361; Cabal
v. Hon. Kapunan, Jr., G.R No. L-19052, Dec. 29,1962, 116 Phi. 1361.
3 Rosetev. Lin, G.R No.136051,June 8, 2006. This isacMicase.
4 Cililg cabal v. Hon. Kapunan, Jr., supra, 116 Phi. 1361, 1367·1368; Pascua, Jr. v. Board of Medical Exanilers, supm 28
SCRA 344; 138 Phi. 361, 363.
5
See fist sentence of Section 20, Article rv alhe 1973 Constitution llld now SediJn 17, Article 111 oflhe 1987 CoostibJtion.
6 See Cruz, ~ali A., Consti1utional Law, 1987 ed., p. 275.
charges against him. In petitioner's case, there is no showing that he
requested for a formal hearing to be conducted or that he be assisted by
counsel."3
6. RIGHT AGAINST UNREASONABLE SEARCHES AND SEIZURES
AND RIGHT TO PRIVACY OF COMMUNICATION AND
CORRESPONDENCE.
The question of whether the right against unreasonable searches and
seizures4 and right to privacy of communication and correspondences guaranteed
under the Constitution may be invoked by an employee against his employer has
People of the Phiippk1es v. Hon. Ruben Aysoo, supra
GR No.191008,.A¢111,2011,647 SCRA568.
En1>flasis suppied.
4 Seclion2 d ArtX:Ie Ill (BilofRighis)o!tle 1987 Ca1stitJtia1 proiides: "SecOOn 2. The ~tt<tllle people to beseo.ue in their
persons, houses, papers, llld etfecls against uoreasonable seMChes and seizues rl. M1aleYer nalu~ and for <rtf pu!pOSe
~
shall be inviolable, !lld no searth warr..nt or wamrnt of arrest shall issue except upoo proballe cause to be detennined
personaltf by lhe jJG,Je after exanilation under oalh or affilll13tion of lhe COII'qliaMlt and lhe l'<itnesses he may produce,
il1d partio.Jiaf1y desatirg lhe place to be searthed llld !he per.;oos or lhi"gs to be seized.'
5 Section 3 of ArtX:Ie 111 (Bill a Ri;lhfs) of lhe 1987 Coosti1ulion prcMdes: "SecOOn 3. (1) The p!Mq of communication and
oonespondence shaR be iMllable except upon lawful order oflhe court, or v.t1en public saety or Older requires olhe!wise,
as presaibed by law. (2) PJrf evidence oblained in violation of this or lhe precediY,J sectioo shaH be i1admissible ltv ~
purpose in !lly proceeding.'
~·
\

L
30 BAR REviEWER ON lABOR lAW
been answered in the case of Waterous Drug Corporation v. NLRC and
Antonia Melodia Catolico. 1 In this case, private respondent Catolico was a
pharmacist at petitioner company. She was charged and investigated for an
irregularity involving her and a supplier, Yung Shin Pharmaceuticals, Inc.
(YSP), consisting in the overpricing of certain medicines. Catolico received a
check issued in her name corresponding to the amount of the refund for the
overprice. The check was placed in an envelope which, when received by
Catolico, was already open. Catolico asked Saldaii.a, the pharmacy clerk who
received the envelope, if she opened it to which the clerk answered "talagang
ganyan, bukas. " Because Catolico pocketed the amount of the refund for the
overprice which was covered by the check, she was asked to explain her side
and was placed under preventive suspension. In Catolico's reply, she protested
Saldana's invasion of her privacy when Saldaii.a opened the envelope addressed
to her. She further explained, through her counsel, that the check she received
from YSP was a Christmas gift and not a "refund of overprice." Consequentiy,
she was terminated on the ground of dishonesty.
The Labor Arbiter declared her dismissal and preventive suspension
illegal because petitioners failed to "prove what [they] alleged as complainant's
dishonesty," and to show that any investigation was conducted. On appeal, the
NLRC affrrmed the fmdings of the Labor Arbiter on the ground that petitioners
were not able to prove a just cause for Catolico's dismissal. It found that
petitioners' evidence consisted only of the check for P640.00 drawn by YSP in
favor of private respondent, which Saldana, her co-employee, saw when the
latter opened the envelope. But, it declared that the check was inadmissible in
evidence Jlursuant to Sections 22 and 33 of Article III of the Constitution. The
NLRC thus concluded: "With the smoking gun evidence of respondents 4 being
rendered inadmissible, by virtue of the constitutional right invoked by
complainant,5 respondents' case falls apart as it is bereft of evidence which
cannot be used as a legal basis for complainant's dismissal."
While the Supreme Court afftrmed the ruling of the NLRC that
Catolico's dismissal was illegal, it disagreed with the NLRC's reason for
upholding the Labor Arbiter's decision, viz., that the evidence against private
respondent was inadmissible for having been obtained in violation of her
constitutional rights of privacy of communication and against unreasonable
searches and seizures. It reasoned: "As regards the constitutional violation upon
which the NLRC anchored its decision, we find no reason to revise the doctrine
G.RNo.113271,0ct.16, 1997,280SCRA735.
See Seclkxl2 of Article Ill (8il oiRiJhls) orlhe 1987 Constib.rtioo, suprc1.
See SectiJn 3of Article Ill (8il oiRiJhls) ollhe 1987 Constib.Jtioo, SUpla.
PeliOOners illlis case.
s P!tia!e respondent illhis case.
CHAI'TER I 31
FUNDAMENTAL PRINCIPLES AND CONCEPTS
laid down in People v. Andre Marti/ that the Bill of Rights does not protect
citizens from unreasonable searches and seizures perpetrated by private
individuals. It is not true, as counsel for Catolico claims, that the citizens have
no recourse against such assaults. On the contrary, and as said counsel admits,
such an invasion gives rise to both criminal and civil liabilities."
Alleged violations against unreasonable search and seizure may only be
invoked against the State by an individual unjustly traduced by the exercise of
sovereign authority. To agree with appellant that an act of a private individual in
violation of the Bill of Rights should also be construed as an act of the State
would result in serious legal complications and an absurd interpretation of the
constitution. Similarly, the admissibility of the evidence procured by an
2
individual effected through private seizure equally applies, in pari passu, to the
alleged violation, non-governmental as it is, of appellant's constitutional rights
il to privacy and communication.
l
~
2.
ARTICLES 1700 AND 1702, CML CODE
1. ON ARTICLE 1700.
Article 1700 of the Civil Code provides:
"Art. 1700. The relations between capital and labor are not merely
~'~
contractual. They are so impressed with public interest that labor contracts
I l~
mu~ yield to the common good. Therefore, such contracts are subject to
the special laws on labor unions, collective bargaining, strikes and
g
~ lockouts, closed shop, wages, working conditions, hours of labor and
similar subjects."3
'~;"'
Although provided in the Civil Code, the foregoing civil law principle
~":
has been applied in a catena oflabor cases.
~
§
I II
m
i ii!
1 G.R No.81561, .la1.18, 1991,193 SCRA57.1n lhiscase, aa:used-appelalAndre Mcrtisentlhrough the"Mria Packing
illd Export FO!Waldels" b.r (4) gift Ytft!PilEld ~to a ftiend il Zlri:h, SMzerlood. Alita Reyes, the prqnietress of lhe
~ aJI11lillY, asked 11e ~ Wshe coukf exanine and ilspect the pactages. ~~ however, refused, assumg her
~ l1at lhe packages siJW contailed books, cigars, Cl1d gloves and were gifts ID tis ftiend hi ZlJiich. Before def!Ve!Y of
~ appeaoors box 1o 111e !mal o1 Cusloms Md/or ball of Posts, M"..100 Re,.es (prqlrieb) and OOsband or Anila (Reyes),
fdk1Mng standard ~ procedure, opened lhe boxes for final ilspeclioo and bind fM1uana therein. He repor1ed ~ kl
lhe NBI and requested alallolaby emmion !hereof. Fortwith, Job Reyes Clld flree (3) NBl agenls, aJd a phobgrapher,
went to lhe Reyes' aoce at Ennila, Mania and upon ilspedion of lhe box, foond dried marijuana leaves contained inskie lhe
cellophooe wrappers. The NBI agents made an iwenll:xy and ll:d charge ollhe box and ollhe contents lhereof, after
siJning a'Receipr ~OJ cus100y of !he said effecls.
Pari passu is aLatin ptvase 1hat literally means 'v,;ih equal pace or progress; side by side' or '¥.ithout partiality, equably or
fairty.· See dictioo31y.can athllp1/dictionaly.reference.comlo~-tpaSSU. Last accessed: May 06, 2014.
Section 2.- Contract of Labor, Chapter Ill (Work and Labor),TIIe VIII, Book IV (Obi;lations or Conlracls), Civil Code.
t
,L..,.
32 BAR REVIEWER ON lABOR lAW ,
In Becmen Service Exporter and Promotion, Inc. v. Spouses
Simplicio and Mila Cuaresma, 1 the above rule was stressed thus, it was held
that the relations between capital and labor are so impressed with public
interest/ and neither shall act oppressively against the other, or impair the
interest or convenience of the public.3 In case of doubt, all labor legislation and
all labor contracts shall be construed in favor of the safety and decent living for
the laborer. 4
In Innodata Philippines, Inc. v. Quejada-Lopez,S it was pronounced
that in the intetpretation of contracts, obscure words and provisions shall not
favor the party that caused the obscurity. Consequently, the terms of the contract
6 phase of work for which they were hired, with a fixed period of employment. As
of employment should be construed strictly against petitioner, which prepared
it. Indeed, a contract of employment is impressed with public interest. For this
reason, provisions of applicable statutes are deemed written into the contract.
Hence, the "parties are not at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply
coatracting with each other." 7 Moreover, in case of doubt, the tenns of a
contract should be construed in favor oflabor. 6
In Leyte Geot!:Jermal Power Progressive Employees Union-ALU-
TUCP v. Philippine National Oil Company-Energy Development
Corporation/ which involves the issue of whether the members of petitioners
are project employees or regular employees, it was pronounced that Article 295
10
[280] of the Labor Code, as worded, establishes that the nature of the
t GR Nos. 182973-79 &184298-99, April7, 2009.
2 CM Code, Article 1700.
3 ld., Article 1701.
• ld., Mcle 1702.
5 GR No. 162839, Oct 12, 2006.
6 The coOOads d ~ il VIis case provide for w.o perilds. Asile ioollle fixed cre-ye~r em set il PM~Qraph 1,
pn;Jraph 7.4 prMies for alfvee.lroolh peOOd dutb;l v.tlch petibler has lhe 191t t> prHJnnlna1e lhe ~for lhe
'lailre c1 t.e el1lJioyees t> meet em pass lhe ~ em str1datls set by lhe ~ 5ld made ~<na.m t> 11e
~prier to' llei' ~ TM, allhough cooched 11 i!ITtliJuous ~uage. ~ 7.4 nm 11 really Ill a
probi6Jnay peOOd. Cleirtt. to II'IOi! regldarization, peliixler has !WJail sooght tl resat lilmaWely to probationcry
~ Md Efl1llctfmert for afixed em. Fnatj, 1ism nr:OY:Jilat after is pas1 ~ ma::ts 1100 been
decli.ml Vlli:! by lhe Supfene Coot petitioner was expeded b enSlll! llallhe ~ma:ts woofd a1reaat oornptj
v.ilh lhe str1datls set by ~a>~ em by llis Court. Regretlal!f, petitioner failed to do so.
1 k1nodafa f'liwi1es, he. v. ~ G.R No. 162839, Oct 12. 21Xl6, d1i1g Pcidsla1 M1es Cctporalioo v. Ople,
G.R No. 61594, Sept 28, 1990, 190 SCRA 90, 99; See also t,1aJsarn v. Natiooal Olgaizatioo ofWorkiYJ Men, G. R No.
148492, ~9. 2003,451 PIW.254; Benwdov. NLRC,GR No. 122917,July 12, 1999,369Phl.443.
See Ph~ile FedEia!ioo d Cre<it CooperaWes, he. v. NLRC, G.R No. 121071, Dec. 11, 1998, 360 Phil. 254, 261.
s G.R No. 170351, Marth 30,2011.
10 Miele 295 [280J. Regula' and Casual ~ - The proo.isioos of 'Millen WJreemenl kl the oonllal'f nolwi1hsllming
cl1d ~ d the aal ~~of the parties, an ef1llbyment shal be deEmed kl be regulcr where the employee has
been engaged to pelform adM1ies \\t1ich are usualt)' neressay or desiable 111he usual busi1ess or !Jade d lhe emplcrfer,
except v.i1ere 1he employment has been fixed for aspOOfic ~or under1akiij lhe COfl'llleli:xl or ..-roh13tion cl whi:h has
been detemli1ed at the line of t1e etlQWJemenl of the eR'jibyee or where lhe \100: or service to be pecfonned is
seasooa111 nature em the employment is for tie duration of 11e seasoo.
L
CHAI'TER I 33
FUNDAMENTAl PRINCIPlES AND CONCEPTS
employment is determined by law, regardless of any contract expressing
otherwise. The supremacy of the law over the nomenclature of the contract and
the stipulations contained therein is to bring to life the policy enshrined in the
Constitution to "afford full protection to labor." 1 Thus, labor contracts are placed
on a higher plane than ordinary contracts; these are imbued with public interest
and therefore subject to the police power of the State.2 .However,
notwithstanding the foregoing iterations, project employment contracts which
fix the employment for a specific project or undertaking remain valid under the
law. In the case at bar, the records reveal that the officers and the members of
petitioner union signed employment contracts indicating the specific project or
clearly shown by petitioner union's own admission, both parties had executed
the contracts freely and voluntarily without force, duress or acts tending to
vitiate the workers' consent. Thus, there is no reason not to honor and give
effect to the terms and conditions stipuiated therein.
Davao Inte::rated Port Stevedoring Services v. Abarguez.3 • The
CBA in Article 263 [252] 4 of the Labor Code, refers to a contract executed upon
request of either the employer or the exclusive bargaining representative
incorporating the agreement reached after negotiations 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. While the terms and conditions of a CBA constitute the law between
the parties, it is not, however, an ordinary contract to which is applied the
principles of law governing ordinary contracts. A CBA, as a labor contract
within the contemplation of Article 1700 of the Civil Code, is not merely
contractual in nature but impressed with. public interest, thus, it must yield to the
common good. 5
2. ON ARTICLE 1702 OF THE CML CODE,
IN RELATION TO ARTICLE 4 OF THE LABOR CODE.
(NOTE: See discussion below on these two (2) kindred articles).
An ~shall be deemed 1D be casua II is not oovered by l1e preced'rg paragraph: Provided, That any emplOyee
who has rendered at least cne yecr of service, vt.et.er &JCh service is coolilJoos or broken, shal be oonsileled aregula'
eJI1lklyee will1 respect to lhe aciMty 11 'llilk:h he is empk7fed em his~ sha'l oonlilue vt1e sud1 ac:tivcy exists.
(As rentMrilered ptJISUMIID Section 5, RA No.10151, June 21,2011 em DOLE Depa1mertMvisory No. 01, Series of
2015 {ReniJIT'berirrJ of the LalxrCodeofthePh~. ~Amended), issuedooJuly21, 2015).
1
See Section 3, Miele XIII, 1987 Constihl100.
See Articles 1700 em 1702oflhe CM Code; Vilav. NLRC, G.R No.117043,Jan.14, 1998,348 Phil. 116,140-141.
G.R No. 102132. March 19,1993.
4 As renurrllered pursuant to Section 5, RA No. 10151, June 21. 2011 em DOLE Department Mvisory No. 01, Series cl
2015 ~ oflhe Labor Code of the Phfllpiles, ~.Amended), issued oo Ju~ 21, 2015.
5 SeealsoCi1ek~LaborUnKJn.fFWv. CftkElecl!ooics, Inc., GRNo. 190515, N<N.15, 2010.
34 BAR REYIEWER.ON lABOR lAW
B.
CONSTRUCTION IN FAVOR OF LABOR
1. ARTICLE 1702 VS. ARTICLE 4.
Both Article 1702 of the Civil Code and Article 4 of the Labor Code
speak of the rule on interpretation and construction provisions of law and labor
contracts. Because of their close interrelation, these two important provisions
will be discussed herein jointly.
Article 1702 of the Civil Code provides:
"Article 1702. In case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety and decent living for the
laborer."1
Congruently, Article 4 of the Labor Code states:
"Article 4. Construction in Favoi' of Labor. - All doubts in the
implementation and interpretation of the provisions of this Code, including
its implementing rules and regulations, shall be resolved in favor of
labor."
Article 4 of the Labor Code enunciates the time-hcnored principle that
all doubts in the implementation and interpretation of its provisions should be
resolved in favor of labor. 1 This rule applies not only in the interpretation of the
provisions of the Labor Code but also of its Implementing Rules. 3 It applies to
all workers - whether in the government or in the private sector- in order to give
flesh and vigor to the pro-poor and pro-labor provisions of the Constitution. 4
It is in ·keeping with the constitutional. mandate of promoting social
justice and affording protection to labor. 5 Thus, when conflicting interests of
labor and capital are to be weighed on the scales of social justice, the heavier
1 RlWle NatKx1al Ccoslrtsdbl Colpcxalion v. NLRC, GR No. 101535, Jal. 22, 1W3, 217 SCRA 455; Ph~ Airiles
~ AssOOaOOn v. ~i'le Aitiles, R:. Md Ph~ Anles, klc. v. Phiippile M1es ~Association,
GR Nos. L-31341 Cl1d 31343, March 31, 1976.
2 kB1 TltllSillission Caporatkxw. CA, G.R No. 144664, IJath 15, 2004; Aquino v. Nl.RC, G.R No. 87653, Feb. 11, 1992,
200 SCRA 118; kltematiooall'hcrma:eu1ical, Inc. v. Secreay of Lm, GR Nos. 92981-83, Jill. 9, 1992, 205 SCRA 59;
Abella v. NLRC, G.R No. 71812, July 20, 1987, 152 SrnA 140, 146; Perezv. NLRC, G.R No. 71813, .kl~ 20, 1987,152
SCRA140.
3 Mk:le 4, tm Code; Section 3. Preiminaly l'ro'lisklns, IU!s t> ~ 1t1e t.axr Code; Insula' BCI1k a ASa Cl1d
AmeOCa Employees Union PBAAEU] v. lnciong, G.R No. L-52415, Oct 23, 1984.
~ LMd IJld Housi1g DeYelopment Colp. v. Esquillo, G.R No. 152012, Sept 30, 2005 citg PPA Employees Hied Afilr Ju~
1, 1989v. CoomssiononAud'rt, G.R. No.160396, Sept 6, 2005.
5 See Section 18, AIOCie II of the Conslitution. Manila Eledric ConlJCI1Y v. NLRC, {3.R. No. 78763, Jufj 12, 1989; Em!
~Liles, Inc. v. POEA, G.R. No. L-76633, Oct 18, 1988, 100 SCRA 533;fu'o.tilea, Phis., Inc. v. NLRC, G.R No.
7fi182, Dec. 1, 1987; Abela v. NLRC, G.R. No. 71812, J\Jy 20, 1987; The Chartered Balk Employees Association v. Ople,
G.R. No. L-44717, AIJJ. 28, 1985.
CHAPTER! 35
FUNDAMENTAL PRINCIPLES AND CONCEPTS
influence of the latter should be counter-balanced by sympathy and compassion
the law must accord the underprivileged worker. 1
Compared to the provision of Article 4 of the Labor Code, it appears
that Article 1702 is broader in scope in that it pertains to "all labor legislation
and all labor contracts" and not merely to the "implementation and
interpretation of the provisions of the Labor Code, including its implementing
rules and regulations," as enunciated in Article 4. Moreover, the Civil Code
mentions a standard which would justify the invocation of the rule of
interpretation in favor of labor in that the same should be done "in favor of the
safety and decent living for the laborer."
Having made the foregoing observation, it may well be said that the
provisions of the Civil Code and the Labor Code do not really differ in essence
since the policy of the law is clear- any doubt should always be interpreted or
construed in favor of labor - which means, in more specific terms, the safety and
decent living for the laborer. 2
This is, of course, not a harsh rule. The framers of the law (Labor Code
and the Civil Code) had fully taken cogr.izance of the disparity in terms of
resources and standing between labor and capital. In any legal controversy
between them, the former always suffers the most. Hence, the common adage
that those who have less in life should have more in law is best exemplified and
made real in Articles 4 and 1702 of the Labor Code and Civil Code,
respectively. The worker must look up to the law for his protection. The law
regards him with tenderness and even favor and always with faith and hope in
his capacity to help in shaping the nation's future. He must not be taken for
granted.3
~
;!i"
In the area of employment bargaining, the employer stands on higher
footing than the employee. The law must protect labor to the extent, at least, of
~
i raising him to equal footing in bargaining relations with capital and to shield
him from abuses brought about by the necessity to survive.
4
I
~ Certainly, this rule of interpretation and construction in favor of labor
~
~
does not mean that capital should, at all times, be at the losing end of a
li
~
~
controversy. The law does not say so. For while the Constitution and the law
~ tend to favor the working man, protection to the employer is also assured.
~
~ Protection of the rights of the laborer authorizes neither the oppression nor self-
destruction of the employer. While the Constitution is' committed to the policy
1 Martopper t.i1ilg Corporation v. tolRC, G.R No. 103525, March 29, 1996; Zllbcrlo, Sr. v. NLRC, G.R No. 103679, Dec.
17, 1993, 228 SCRA 556; Holiday mMcllia v. NLRC, G.R No. 109114, Sept 14, 1993, 226 SCRA 417.
2 Philippile National Coostruction Colpaa1ion v. NLRC, G.R No. 101535, Jal. 22, 1993, 217 SCRA 455; Plastic Ta.m
Cenll!rCapaaroov. NLRC, G.R No.81176,Apri119,1989, 172SCRA580.
3 Cebu Roya Plant ]Sa:! Mguel Capoatoo] v. Mnister of Labor, G.R No. 58639, ~· 12. 1987.
I ~ Soochezv. Hilly Lyons ConslriJcOCvt CO!paation, G.R No.L-2799, Oct 19, 1950.
L __
36 BAR REVIEWER ON lABOR lAW
of social justice and the protection of the working class, it should not be
supposed that every labor dispute will be a~tomatically decided ill favor of
labor. Management also has its own rights, which, as such, are entitled to
respect and enforcement in the interest of simple fair play. Out of its concern
for those with less privilege in life, the Supreme Court has inclined more often
l~·
than not towards the worker and upheld his cause with his conflicts with the
~
employer. Such favoritism, however, has not blinded the Court to rule that
justice is, in every case, for the deserving, to be dispensed in the light of the
established facts and applicable law and doctrine.'
The Philippine Constitution, while inexorably committed towards the
protection of the working class from exploitation and unfair treatment,
nevertheless mandates the policy of social justice so as to strike a balance
between an avowed predilection for labor, on the one hand, and the maintenance
of the legal rights of capital, the proverbial hen that lays the golden egg, on the
other. The Supreme Court, in Philippine Long Distance Telephor.e Co. v.
NLRC/ underscored that although it is bound by the social justice mandate of
the Constitution and the laws, such policy of social justice is not intended to
countenance wrongdoing.
2. DOUBT OR AMBIGUITY IN LABOR CONTRACTS.
In case of doubt or ambiguity, labor contracts should be interpreted
liberally in favor of the worker. 3 Article 1702 of the Civil Code and Article 4 of
the Labor Code should be applied in resolving such. doubt or ambiguity in
contracts between management and the union. 4 Contracts which are not
ambiguous are to be interpreted according to their literal meaning and not
beyond their obvious intendment.5 In Colegio de San Juan de Letran -
Calarnba v. Villas/ the Supreme Court re-affrrmed the rule that the ambiguity
in labor contracts should be strictly construed against whoever is the author
thereof.'
1 RoiMdo Re.ml v. NI.RC Md Alloo&:, Gulf and Pacific <:on1)ai1Y of Mria, klc., G.R No. 111105, June 'll, 1995;
Horneort.TlEis SaWgs Md l.oM Association, klc. v. NLRC, G.R No. 97ffil, Sept 26, 1900; Pa'gasilill HI EJecmc
~. Inc. v. NL.RC, GR No. 89876, Nov. 13, 1992, 215 SCRA 669; Ulbl Callide I.Jilor Unkxi v. Llnkln C11b«1e
Phfclpiles, klc., G.R No. 41314, NaJ. 13, 1992, 215 SCRA 554; Mro..IIY !Aug COipor.llion v. NL.RC, G.R No. 75662, Sept
m
15, 1989, SCAA 580.
2 G.R No. L~.Aug. 23, 1988, 164 SCAA671.
3 D1ir1 v. POEA, GR No. 79560, Dec. 3, 1990, 191 SCRA 823.
4 Biix:ock-Hi1a:hi [Phils.llnc. v. Baboock-Hitachi [Phis.], Inc. Maka1i Enl!loyees lkOOn [BHPIMEU]. GR No. 156200, Matth
10, 2005; ~SEe! QxporatMln v. t.i1Sieel Free W<rteiSO!glllizaOOn [MiNf'RE'M).NFL] Ca;jayoo de()Io, GR No.
130693, Mcrch 4, 2004.
5 Biix:ock-Hitaclli (Phils-1 Inc. v. Biix:ock-Hillm [Phils.J, Inc. Makati Err!Jioyees tmi:ln IBHPIMEU], Sllfllll; Mndoooo Steel
Caporali:Jn v. MI1Sieet Free WO!ke!S OrgMizaOOn [M!NfREWO.NFL] CWJt!'fcll de Oro, supra; Plastic TIMTI Centre
C<xporalion v. NlRC, G.R No. 81176, Apii 19, 1989; Herrera v. Petrophil Cap., GR No. L-48349, Dec. 29, 1986, 146
SCRA385.
G.R No.137795, Matth 26, 2003.
Ci1i1g Article 1377, CMI Code.
! 4 ~suppled.
L
CHAPTER I 37
FUNDAMENTAL PRINCIPLES AND CONCEPTS
In the case of a CBA, the Highest Court laid down the rule that while
its terms and conditions constitute the law between the parties, it is not an
ordinary contract to which is applied the principles of law governing ordinary
contracts. Not being an ordinary contract as it is impressed with public interest,
a CBA must be construed liberally rather than narrowly and technically, and the
courts must place a practical and realistic construction upon it, giving due
consideration to the context in which it is negotiated and the purpose for which
it is intended to serve.'
Insofar as overseas employment is concerned, the POEA Standard
Employment Contract (POEA-SEC) which is required to be signed by every
OFW deployed abroad, should be construed liberally in favor of the OFW. A
strict and literal construction of the 2010 POEA-SEC, 2 especially when the same
would result into inequitable consequences against labor, is not subscribed to in
this jurisdiction. Concordant with the State's avowed policy to give maximum
aid and full protection to labor a:; enshrin~d in Article XIII of the 1987
Philippine Constitution, contracts of labor, such as the 2010 POEA-SEC, arc
deemed to be so impressed with public interest that the more beneficial
conditions must be endeavored in favor of the laborer. The rule ther~fore is one
of liberal construction. As enunciated in the case of Philippine Transmarine
Carriers, Inc. v. JVLRC)
"The POEA Standard Employment Contract for Seamen is designed
primarily for the protection and benefit of Filipino seamen in the
pursuit of their employment on board ocean-going ves5els. Its
provisions must [therefore] be construed and applied fairly,
reasonably and liberally in their favor (as it is only) then can its
4
beneficent provisions be fully carried into effect."
Applying the rule on liberal construction, the Court is thtis brought·to
the recognition that medical repatriation cases should be· considered as an
exception to Section 20 of the 2000 POEA-SEC. Accordingly, the phrase
"work-related death of the seafarer, during the term of his employment
contract" under Part A (1) of the said provision should not be strictly and
literally construed to mean that the seafarer's work-related death should have
precisely occurred during the term of his employment. Rather, it is enough that
the seafarer's work-related injury or illness which eventually causes his death
1 Marcopper Mni1g Corpaati:Jn v. N\.RC, G.R. No. 103525, Mrdl 29, 1996, citing D<Noo lnlegraBI Port Stevedoring
SeM:es v. Pbarquez. 220 SCRA 197 (1993].
Amended Strldard Tenns and Cond'llions Governing the <Nerseas Erl1>1oyment of Fifipino Sealaers CJn.8oald Ocean-
Going ShiJ!; (POEA Merllo!a1dtJm CiitUiar No. 10, Series of 2010, Ocb:lber 26, 2010). FOII1lellt, 2000 POEA-SEC
(Stlnda'd Tenns and CondiOOns Govemi1Q the Employment of ~ro Seafarers On Boald ~ Vessels, issued
pulSI.a1t lo DOLE Oepartmenl Older No. 4, Series of 2000 (May 31, 2000]).
3
G.R.No.123891.Feb.28,2001,405Phn.487.
 CHAPTER! 39
38 BAR REviEWER ON lABOR lAW fUNDAMENTAL PRINCIPLES AND CONCEPTS

"xxx Unsubstantiated suspicions, accusations, and conclusions of

should have occurred during the tenn of his employment. Taking all things into employers do not provide for legal justification for dismissing employees.
account, the Court reckons that it is by this method of construction that undue In case of doubt, such cases should be resolved in favor of labor, pursuant
1
prejudice to the laborer and his heirs may be obviated and the State policy on to the social justice policy of labor laws and the Constitution."
labor protection be championed. For if the laborer's death was brought abouf t
•f
Consequently, if the employer failed to adduce substantial evidence to
(whether fully or partially) by the work he had harbored for his master's profit, prove that the employees' dismissal from their employment was for a just or
then it is but proper that his demise be compensated. Hence, if it has been ~
~:;:
~ authorized cause, the conclusion is ihescapable that they were illegally
established that (a) the seafarer had been suffering from a work-related t
injury or illness during the term of his employment, (b) his injury or illness ~
dismissed. 2
was the cause for his medical repatriation, and (c) it was later determined
~
J
c.
that the injury or illness for which he was medically repatriated was the SOCIAL JUSTICE
proximate cause of his actual death although the same occurred after the The following are the social justice provisions in the Constitution
term of his employment, the above-mentioned rule should squarely apply. which were already cited and/or discussed above:
3. DOUBT OR AMBIGUITY IN EVIDENCE. (1) Section 10, Article II; and
The rule emmciated in Article 4 of the Labor Code likewise applies in (2) Section 2, Article XIII.
the appreciation of evidence in labor proceedings. Consequently, when there is a
doubt between the evidence presented by the employer and the employee, such
doubt should be resolved in favor of the latter. 1 Time and again, the Supreme
----oOo------
Court has pronounced that "if doubt exists between the evidence presented by
the employer and the employee, the scales of justice must be tilted in favor of
the latter." 2 The policy is to extend the doctrine to a greater number of
employees who can avail themselves of the benefits under the law, which is in
consonance with the avowed policy of the State to give maximum aid and
protection to labor.
3
I
In illegal dismissal cases, the consistent rule is that the employer must I1
affrrmatively show rationally adequate evidence that the dismissal was for a
justifiable cause, failing in which makes the termination illegal. 4 As aptly stated ;l;
in Century Canning Corporation v. Ramil: 5 :f.
:1
~
:;;
~
~~
\_~

:!i··~
1 South East klll!maliooaiRatlal, lnc:.v. JesusJ. Cooi"g, G.R No. 186621, M:lfch 12, 2014; Masilg 1l1d SmiDeYelopment
Caporalion v. flDJEil, GR No. 161787, Jut)' 27, 2011, 654 SCRA 490, 502; Dealoo Flll11S, h:. v. NLRC, G.R No.
153192, Ja1. 30, 2009, 577 SCRA 280, 295;.Ptillflile En1Jk7/ SeNicesand Resooroes, Inc. v. Plmlb, G.R No. 144786, "
!&
-.~
April15, 2004 ci!i1g Asunciln v. NL.RC, G.R No. 129329, July 31, 2001, 362 SCRA 56; See aso ())casta v.l.ilerty
BroadcasliVJ Nelv«rt. klc., G.R No.165153,Aug.25, 2010. '
i
IA'ecmand Ho1e1 Rescxt v. Johnsoo, G.R No. 191455, Mard112, 2014; SHS flerfom\ed Matelials, Inc. v. [Mz, G.R No.
2
185814, Oct 13, 2010, 633 SCRA 258, 275; Dalsart Security Folte &Ali!d SetW:esCo. v. -Balpf, -G.R No.168495, Julf !
2, 2010; Lina l..ood, k1c. v. CUevas, G.R No. 169523, June 16, 2010; 1m;, Heavy lndusl!ies and Consboctioo Co, L.kl. v.
llmez, GR No.170181, June 26, 2008; Bele Clxp. v. Macasusi, G.R. No.168116, April22, 2008; MwTv.HilOOJ, Inc. v.
NL.RC, G.R No. 169600, June 26, 2007, 525 SCRA 708, 731; G & Mf'hiiWines, Inc. v. OJanilot, G.R No.
162308, Nov. 22, 2006,507 SCRA 552, 569-570.
3 Webopo1i1an 1mk 31d Trust Corr!Jany v. Nl.RC, G.R no. 152928, June 18, 2009; l.epan!o Consoidaled Mllilg Co. v.
I:Mnapis, G.R No. 163210, Aug. 13, 2008; Travelai"e &Tours Corp. v. NLRC, G.R No. 131523, Aug. 20, 1998, 294 SCRA 1 See also DJty Free f'hiWileS Se!vieeS, Inc., v. Tlia, G.R No. 174809, June 27, 2012; CeniJJiy CaYling Coqxxation v.
505, 511;VIOietav.Nl.RC, G.R No.119523,0ct. 10,1997,280 SCRA520, 531; LT. DaiJJ and Co., lnc.v.NLRC, G.R No. Rani!, G.R No. 171630, Aug. 8, 2010, 627 SCRA 192, 202; t.andlex lndus1ries v. CA, G.R No. 150278, Aug. 9, 2007;
113162, Feb. 9, 1996, 253 SCRA 440, 44S. Skippers Pacific, Inc. v. Mra, GR No. 144314, Nov. 21,2002.
HantexTil!di'I:J Co., Inc. v. CA. G.R No.148241, Sept 27,2002. Ncrarjo v. Biomedica Heallh care, h:., G.R No 193789, Sept 19, 2012.
G.R. No. 171630, Aug. 8, 2010,627 SCRA 192, 202.
i
L
40
f\i
CHAPTER II
RECRUITMENT AND PLACEMENT
41
~
i
CHAPTER Two I. employment is concerned, the sole basis thereof is Article 38 and nothing more,
unlike recruitment for overseas employment where new laws' have been enacted to
RECRillTMENTANDPLACEMENT govern and regulate it, if not to supersede it. Under these new laws2 as well as their
I implementing rules,3 the concept of illegal recruitment under the Labor Code has
~~~ been broadened.4 Thus, while under the original rendering of the Labor Code, the
TOPICS PER SYLLABUS ., prohibited activities enumerated in Article 34 constitute illegal recruitment only
II.
',,
:~
when undertaken by non-licensees or non-holders of authority, 5 the commission
-~;
thereof is now considered illegal recruitment, in cases of recruitment for ~
RECRUITMENT AND PLACEMENT ~ employmen~ both under RA. No. 8042 and its amendatory law, RA. No. 10022,
~
when the same are committed by "any person, whether a non-licensee, non-holder,
A. Illegal recruitment
licensee or holder ofauthority.',6
1. Elements
2. Prohibited Activities Although there is no similar corresponding amendment to Article 38 that
3. Types of Illegal Recruitment would have justified the same "broadening" of its application to illegal recruitment
4. Illegal Recruitment Versus Eotafa involving local employment, the 2014 Rules1 have now likewise reflected the same
5. Liability of Local Recruitment Agency and Foreign Employer broadened coverage as to include prohibited acts when committed by "any person,
a. Solidary Liability whether or net a holder of a license or authority." 8 This is as it should be since
b. Theory of Imputed Knowledge the intendment of the law can never be enl!vened and vivified unless such co·;erage
6. Termination of Contract of Migrant Worker Without Just or is broarlened as is now provided in the prevailing Rules.
Valid Cause 2. WHAT CONSTITUTES RECRUITMENT AND PLACEMENT
7. Direct Hiring ACTMTIES.
B. Regulation of Recruitment and Placement Activities a. As defined in the Labor Code.
C. Employment of Non-Resident Aliens The Labor Code, in its Article 13(b), defines "recruitment and placement"
D. Training and Employment of Special Workers
1. Apprentices and Learners
i" activity as referring to any act of:
:~ (a) canvassing,
2. Disabled Workers s
~ (b) enlisting,
a. Equal Opportunity ·.~
(c) contracting,
b. Discrimination on Employment
-----------· ---------------- J
_;~

,.:~
(d) transporting,
(e) utilizing, or
·J. (f) hiring procuring workers.
A.
ILLEGAL RECRUITMENT ~
:!
(NOTE: The presentation of the topics In this portion of the Syllabus 1 4 1 Suchaslle 1995lal¥, RA No.8042, and itamendabylaw, RA. No. 10022, Yttthwas passedi12010.
ld.
1 2
has been altered to provide for amore comprehensive and orderly discussion). dj 3 Such as 11e Orrius rues and Regurams ~ 11e !Ji:l1311 Wtrtas and Ovelseas Fqli1os M. d 1995, as
Amended by RA No. 10022, issued on July 8, 2010; Revised POEA ~les and Regulations GovmJi1g lt1e Reauibnent
1. APPLICATION OF ARTICLE 38 TO BOrn LOCAL AND OVERSEAS ~ and ~ dla1dilased Overseas Fipilo Woltlers d 2016; 2016 ReVIsed POEA Rules and Regulalions GovemirYJ
EMPLOYMENT. l1e Reauitrnentcnl ~to! Sealarers issued on Febnay 26, 2016.
4
The S14Jreme ewt has declcred that R. A. No. 8042 has broadened 11e cm:ept ct ikiga reaUtment undEr 1t1e t.a1xr
The concept of "illegal recruitmel?!." under Article 38 applies to Code. (Poople Y. Tolentil:J, G.R No. 208686, Julf 01, 2015; People v. Daud, G.R No. 197539, June 02. 2014; People v.
recruitment and placement for both local ~~:>overseas employment But a Oalen, G.R No. 173198, June 1, 2011; People v. Trilml, GR No. 181244, Aug. 09, 2010; People v. Nqjla, G.R No.
distinction must be pointed out at the very outset :i:hat as far as recruitment for local 170834, Aug. 29, 2008).
it 5 People v. Ccilacq, G.R No. 113917, Ju1y 17, 1995, 246 SCRA 530.
See Section 6o!RA No. 8042, as !l11ellded by Section 5d RA No. 10022.
Revised~ cnl RegufaOOos Govemilg Recruitnent and Pfacemenlfur Local ~ ~ O!der No. 141-
.\:
Retermg to 1t1e 2017 Syllabus. 14, SeOOs of2014[Noverrber20, 20141
1

j 8
See Section 4211lereof.

L
42 BAR REVIEWER ON lABOR lAW
I
~•
It also includes:
(a) referrals,
(b) contract services,
(c) promising, or
(d) advertising for employmen~ locally or abroad, whether for profit or
'
'·
not.
b. No change in meaning as these terms are defined in special laws and
rules.
Both the applicable laws for recruitment and placement for local
employment1 and~ employmenf have retained the above definition and
concept of recruitment and placement as originally rendered in Article 13(b) of the
Labor Code.3
3. MEANING OF THE PROVISO IN ARTICLE 13(B).
Article ·13(b) contains a proviso that states: "Provided, That any person
or entity which, in any manner, offers or promises for a fee, employment to two
or more persons shall ~deemed engaged in recruitment and placement."
The bottcmline element is such recruitment and placement activities are
generally legal and valid when undertaken by licensees or holders ofauthority. Only
when the same are under+.aken by non-licensees or non-holders of authority when
they· become acts cf illegal recruitment. Thus, the above-quoted proviso simply
makes a presumption, as far as non-licensees or non-holders of authority are
concerned, that they are engaged in recruitment and placement activity for local or
overseas employment when, in any manner, they offer or promise for a fee
employment to two (2) or more persons. Evidence should be presented by them to
debunk such legal presumption. 4
It bears to stress that the number of persons so offered or promised
employment is not an essential element of the act of recruitment and
placement of workers. Only one person recruited is sufficient to convict one for
illegal recruitment. Thus, in a case involving recruitment for overseas employmen~
I SedOO 42, 1ist~,ld.; SedOO 1, Rule IV, OrmixJs Rlresilld RegUalklns ~the Mgr.rrtWorkersand
CNelseas Aipi1os lv:i. ct 1995, as M1ended by RA No. 10022. issued oo Jutt 8, 2010; See aso Sectial 76, Rule x.
Revised POEA Rules il1d RegulaliJns GoYemilg Die Reauitment Clld Empkr,ment ct Land-Based Ovelseas Fd~
WOOrels of 2016; Sectial 72, Rule X. 2016 ReJised POEA Rlres Md Regulatioos GovemiBJ the Recruitment and
~or Seafarels issued oo Februaly 26, 2016.
2 SedOO 6ofRA No.8042, as amended by Section 5ofRA No.10022.
3 ~. i1 the definition i1 lhe 2014 Rules kr klcal ~ of -Mlat oonstitiJtes illegal recruilment. the \\\lid
'transpor&lg' is missilg. (See Seciion 42, Re'lised Rules and Regulalions GovemW1g Recruibneot and Aacerneot for Local
Employment. Department Order No. 141·14, Series ci 2014 [N.7<errber 20, 2014D.
4
Seclioo 6ci RA No. 8042, as oo1ellded by SectiJn 5d R.A. No. 10022; See also Section 1, Rule IV, Omnibus Rules em
Regulation!; kropiemeotir1J lhe Mgrant':'.'oi'~ers and Ove!seas Fipilos M ci 1995, as Amended by RA. No. 10022, issued
oo Jilif 8, 2010. See also Seclioo 76, Rule X. Revised POEA Rules and RegulaOOns Governing the Recrui1ment and
En'(lloyment of land-Based 0/erseas Fiipilo Wooers ci 2016; Section 72, Rule X. 2016 Re<lised POEA Rlres and
Reg~ Govemrg lhe Reauib'nent and Employment aSeafarers issued onfebrual}' 26,2016.
CHAPTER II
RECRUITMENT AND PlACEMENT
43
People v. Panis/ the issue of whether there is recruitment and placement was raised
considering that the four (4) separate criminal informations filed against the accused
for operating a fee-charging employment agency without being duly licensed to do
so, merely mentioned one person in each of the information as having been recruited
by him. The accused contends that under Article 13(b) of the Labor Code, there
could only be illegal recruitment when two or more persons in any manner were
promised or offered any employment for a fee.
The Supreme Court declared that the above-quoted proviso in Article 13(b)
was intended neither to impose a condition on the basic rule nor to provide an
exception thereto but merely to create a presumption. The presumption is that the
individual or entity is engaged in recruitment and placement whenever he or it is
dealing with two or more persons to whom, in consideration of a fee, an offer or
promise of employment is made in the course of the "canvassing, enlisting,
contracting, transporting, utilizing, hiring or procuring of workers."
The number of persons dealt with is not an essential ingredient of the act of
recruitment and placement of workers. Any of the acts mentioned in the basic rule in
Article 13 [b] will constitute recruitment and placement even if only one prospective
worker is involved. The proviso merely lays down a rule of evidence that where fee
is collected in consideration of a promise or offer of employment to two or more
prospective workers, the i..'ldividual or entity dealing with them shall be deemed to
be engaged ilL the act of recruitment and placement The words "shall be deemed"
should, by the same token, be given the force of a disputable presumption or of a
prima facie evidence of engaging in recruitment and placement
1.
aLEGALRECR~NT
IN LOCAL EMPLOYMENT
I. LOCAL ILLEGAL RECRUITMENT.
Local illegal recruitment is committed under any of the following
situations, to wit:
(1) When any of the following acts are undertaken by a non-licensee or
~~ non-holder o[authorl!v:
• · Any act of canvassing, enlisting, contracting, utilizing, hiring or
~~ procuring workers, and includes referrals, contract senices,
promising or advertising for local employment, whether for profit
ornot.1
1
G.R Nos. L-58674-n,Ju~11,1986,142SCRA664.
2 Section 42, Revised Rules em Regulations Governing Reauitment em f'lac:emoot 1or local Employment. Department
L
Order No. 141-14, Se!ies or 2014 [NoYerrber 20. 2014].

44 BAR REviEWER ON lABOR lAW
(2) When any of the following acts which have been declared by law as
prohibited are committed by any person, whether or not a holder o(a license or
authority:
a) To charge or accept directly or indirectly any amount or to make a J
worker pay the agency or its representatives any amount greater than
that actually loaned or advanced to him;
b) To furnish or publish any false notice or information in relation to
recruitment or employment;
c) To give any false notice, testimony, information or document or
commit any act of misrepresentation for the purpose of securing a
license or authority;
d) To induce or attempt to induce a worker already employed to quit his
employment in order to offer him another unless the transfer is
designed to liberate a worker from oppressive terms and conditions of
employment;
e) To influence or attempt to influence any person or entity not to employ
any worker who has not applied for employment through his agency;
f) To engage in the recruitment or placement of workers in jobs harmful
to public health or morality or to the dignity of the Republic of the
Philippines;
g) To obstruct or attempt to obstruct inspection by the DOLE Secretary or
by his/her duly authorized representatives;
h) To substitute or alter to the prejudice of the worker, employment
contract prescribed by the DOLE from the time of actual signing
thereof by the parties up to and including the period of the expiration of
the same without the approval of the DOLE.' . any amount greater than that actually received by him as a loan or
All the foregoing acts are embodied in Article 34 of the Labor Code, with
the exception of certain acts which apply exclusively to overseas employment 2
2. DISTINCTION BETWEEN THE TWO (2) SETS OF ACfS.
The acts described in No. 1 above are, as a general rule, lawful and valid
acts of recruitment and placement of workers for local employment when
undertaken by licensees or holders of authority to recruit. What makes it unlawful
and therefore constitutive of illegal recmitment is when the same acts are undertaken
1
2
by any of the following: (a) A non-licensee; or (b) A non-holder ofauthority.
ld.
Such as the~ ac1s:
/l
'(h) To fail to file reports on the status of~ placaneot vacancies, remillllnre cl ~n exchange eamilgs,
~!rom )lls, depa1ures ir1d such olher matters a mrrnaoon as may be requred lrf the Sel:relal)' of lalxJ.
'fj) To become M officer a member of the ~load of trrt caporation engaged i'llravel ~ oc mbe engaged direclly or
i~'
L
-.,~
ildirectly illtle ~of atravel agency; and
·~)To v.ithhold or deny travel doo.Jmenls from appicanl Y«llKees before depmefor nmeay or finMcial cooside!ations
other 11an !lose auttlorizg;f under lh5 Code and its~ rules and regulalions."
~
,q
~
f
~
CHAI'TERll
RECRUITMENT AND PLACEMENT
45
~ The acts enumerated in No. 2 above, being unlawful, well constitute illegal
recruitment when the same are committed by anyofthe following: (a) Any person;
~ (b) A licensee; (c) A holder of authority; (d) A non-licensee; or (e) A non-holder of
~•:, authority.
The word "person" in letter (a) above may refer to an "individual" or
"entity" per Article 34 of the Labor Code. 1
2.
ILLEGAL RECRUITMENT
IN OVERSEAS EMPLOYMENT
1. ACTS CONSTITUTING ILLEGAL RECRUITMENT.
RA. No. 8042, as amended by RA. No. 10022, 2 classifies the acts
constituting illegal recruitment in accordance with the offender, viz.:
(1) When any of the following acts are undertaken by a non-licensee or
non-holder o(authoritv:3
• Any act of canvassing, enlisting, contracting, transporting, utilizing,
hiring, or procuring workers, and includes reft!rring, contract
services, promising or advertising for employment abroad, whether
for profit or not. 4
(2) When ar.y of the following acts which have been declared
prohibited by law,5 are committed by anv person, whether a non-licensee, non-
i holder, licensee or holder ofauthoritv:
I (a) To charge or accept directly or indirectly any amount greater than that
SPecified in the schedule of allowable fees prescnbed by the Secretary
of Labor and Employment, or to make a worker pay or acknowledge
advance;
1 The openrg paagraph d Article 34 (11001li!ed Pradices) stares: 't shal be ooi<MU for atl'f ilcividual, El1tily, li:ensee, or
holderd dlorilyl.r
2 Sediln6dRA.No.8042,asanendedlrfSeclion5dRANo.10022.
3
The tern 'aJhriy' is defiled it Artie 13(1) of 11e Latxr Code v.ti:h relefs1D a!bunent issued by ltle llepiltment d
Labor a:toizilg aperson or association merY:Jage it recruilmoot ir1d placementadivities as apMie recruitment entity.
~ Sedioo 6cf RA. No. 8042, as amended lrf Seclion 5d RA No. 10022; See
5
aso
Sedion 1, Rule IV, Ormllus ~les and
Regulam ~ting the M,jran!Worke!S and <Ne'seas ~Pdd1995, as Amended byRA tb.10022, issued
on Jlif a, 2010. See also Section 76, Rule x, RevisEd POEA Rules ir1d P.egwms Govemi1g the Reauirrent and
En1Jioyment d l..and-8ased Oiefseas AiJito WOOie!S of 2016; Seclion 72, ~ X, 2016 Re't'ised POEA Rules and
Regulations Governing Ule Reallirnenl and Empbymeot of Se<mrs issued on Fexuay 26, 2016.
As e1Ull'l1e!lEd under Article 34 of ltle t.m Code Wid now pll'Jided IJ1der Seclion 6 of RA No. 8042, as amended by
Section 5 d RA. No. 10022: See also Section 1, Rule IV, Otmbls Rules Wid Regulations hnplementilg the M;Jrant
WOOie!S and Overseas Alpines Act ol1995, as Amended lrf RA No. 10022, issued on Ju~ 8, 2010. See also Section 76,
Rule X. RMed POEA Rules and RegOOlions Governing lhe Recruilment and ~ cll..ald-llased Overseas
Aipino Wcxkers of 2016: Section 72, Rule X, 2.016 Re\ted POEA Rli!s and Regllati:lns Govemrg llie Reauiment and
~of Seafarels issued on February 26, 2.016.
'- . •.. . ·-·-.
46 BAR REviEWER ON lABOR lAW
. (b) To furnish or publish any false notice or information or document in
relation to recruitment or employment;
(c) To give any false notice, testimony, information or document or
commit any act of misrepresentation for the purpose of securing a
license or authority under the Labor Code, or for the purpose of
documenting hired workers with the POEA, which include the act of
reprocessing workers through a job order that pertains to non-eXistent
work, work different from the actual overseas work, or work with a
different employer, whether registered or not with the POEA;
(d) To induce or attempt to induce a worker already employed to quit his
employment in order to offer him another unless the transfer is
designed to liberate a worker from oppressive tenus and coi1ditions of
employment;
(e) To influence or attempt to influence any person or entity not to
employ any worker who has not applied for employment through his
agency or who has formed, joined or supported, or has cuntacted or is
supported by any union or workers' organization;
(t) To engage in the recruitment or placement of workers in jobs harmful
to public health or morality or to the dignity of the Repubiic of the
Philippines;
(g) To obstruct or attempt to obstruct inspection by the Secretary of Labor
and Employment or by his duly authorized representative;
(h) To fail to submit reports on the status of employment, placement
vacancies, remittance of foreign exchange earnings, 5eparation from
· jobs, departures and such other matters or information as may be
required by the Secretary of Labor and Employment;
(i) To substitute or alter to the prejudice of the worker, employment
contracts approved and verified by the Department of Labor and
.Employment from the time of actual signing thereof by the parties up
to and including the period of the expiration of the same without the
approval of the Department of Labor and Employment;
G) For an officer or agent of a recruitment or placement agency to
become an officer or member of the Board of any corporation engaged
in travel agency or to be engaged directly or indirectly in the
management of travel agency;
(k) To withhold or deny travel documents from applicant workers before
departure for monetary or financial considerations, or for any other
reasons, other than those authorized under the Labor Code and its
inlplementing rules and regulations;
(1) Failure to actually deploy a contracted worker without valid reason as
determined by the Department of Labor and Employment;
I
~ CHAI'TERII
~
RECRUITMENT AND PlACEMENT 47
I
ri
(m) Failure to reimburse expenses incurred by the worker in connection
~
with his docwnentation and processing for purposes of deployment, in
cases where the deployment does not actually take place without the
'
worker's fault;; and
i
(n) To allow a non-Filipino citizen to head or manage a licensed
l
recruitment/manning agency. 1
2. DISTINCTION BETWEEN THE TWO (2) SETS OF ACTS.
The distinction applicable to illegal recruitment for local employment
earlier cited equally applies to the above two (2) sets of acts constituting illegal
!
I recruitment in overseas employment Consequently, the acts described in No. 1
'
above constitute illegal recruitment only when they are undertaken by any of the
following: (a) a non-licensee; or (b) a non-holder of authority; and the acts
enumerated in No. 2 above, being prohibited, are considered illegal recruitment
when they are committed by any of the following: (a) any person/ regardless of
whether: (b) a licensee; (c) a holder of authority; (d) a non-licensee; or (e) a non-
holder of auihority.
3. PROHIBITED ACTIVITIES.
To the above enumeration of acts constituting illegal recruitment, the
following prohibited acts wem added by R.A. No. 10022: 3
(1) Grant a loan to an overseas Filipino worker with interest exceeding
eight percent (8%) per annum, which will be used for payment of
I legal and allowable placement fees and make the migrant worker
i issue, either personally or through a guarantor or accommodation
i party, post-dated checks in relation to the said loan;
! (2) Impose a compulsory and exclusive arrangemellt whereby an
overseas Filipino worker is required to avail of a loan only from·
specifically designated institutions, entities or persons;
i
(3) Refuse to condone or renegotiate a loan incurred by an overseas
Filipino worker after the latter's employment conttact has been
II prematurely terminated through no filult of his or her own;
(4) Impose a compulsory and exclusive arrangement whereby an
overseas Filipino worker is required to undergo health examinations
only from specifically designated medical clinics, institutions, entities
"
t ld.;kl.;ld.;ld.;ld.
2
The w.xd 'person' may ref;!r to eiU1er "' 'ildMduar or 'entity' per Ali:le 34 d !he 11tor Code. This is so be:ause lhe
opening paa;Jraph of this aJ1ide (ProhiJited Practices) slates: 'K shal be unlawful for artf ~ enliy, l.icensee, or
( holder d authorily[.r
-e: 3
Sec00n 6 of RA No. 8042, as amended by Section 5 d RA No. 10022; See also Se<fu11, RUe IV, Qml)us Rules illd
RegutaOOns lmplemeoting lhe Mgrant Wake!S il1d OvefSeas Fipinos M. of 1995, as Amended by RA No. 10022, issued
on Ju~ 8, 2010. See also Section 76, Rule X. Revised POEA Rules Mel Regulations ~ l1e Reauiboont and
~
Ernpt;r,mant of land-Based 0Jerseas Flipino Wodle!S d 2016; Section 72, Rule X, 2016 Revised POEA Rules ard
RegUialixls Governing the Reauilmen!Md Employment of Seaf!m issued on Februaly 26,2016.
L.
48 BAR REVIEWER ON lABOR lAW
I
~
CHAI'TER II
RECRUITMENT AND. PlACEMENT
49

or persons, except in the case of a seafarer whose medical

examination cost is shouldered by the principaVshipowner;
(5) Impose a compulsory and exclusive arrangement whereby an
overseas Filipino worker is required to undergo training, seminar,
instruction or schooling of any kind only from specifically designated
institutions, entities or persons, except for recommendatory trainings
mandated by principals/shipowners where the latter shoulder the cost
of such trainings;
(6) For a suspended recruitment/manning agency io engage in any kind
of recruitment activity including the processing of pending workers'
applications; and
(7) For a recruitment/manning agency or a foreign principaVemployer to
pass on the overseas Filipino worker or deduct from his or her salary
the payment of the cost of insurance fees, premium or other
insurance related charges, as provided under the compulsory worker's
insurance coverage. 1
An example of a case where the accused was convicted for com.-nitting the
acts enumerated under the provisions of Section 6 (a), (l) and (m) above is Suliman
v. People/ when: (1) they separately charged the private complainants the amounts
of Pi32,460.00, Pl20,000.00 and P21,400.00 as placement fees; (2) they failed to
actually deploy the private complainants without valid reasons, and; (3) they failed
to reimburse the said complainants after such failure to deploy.
4. CONSTITUTIONALITY OF "ILLEGAL RECRUITMENT" AS
DEFINED IN SECTION 6 OF R.A. NO. 8042.
In Republic v. PASEI,l respondent PASEI filed on August 21, 1995, a
petition for declaratory relief and prohibition with prayer for issuance of TRO and
writofpreliminacy injunction before the RTGofManila, seeking to annul Section 6,
among others, of R.A. 8042 for being unconstitutional. Section 6 defines the crime
I
~
However, the Supreme Court ruled that Section 6 is constitutional and thus
ratiocinated:
"But 'illegal recruitment' as defined in Section 6 is clear and
\ unambiguous and, contrary to the RIC's finding, actually makes a
distinction between licensed and non-licensed recruiters. By its terms,
1 persons who engage in 'canvassing, enlisting, contracting, transporting,
utilizing, hiring, or procuring workers' without the appropriate
I I
government license or authority are guilty of illegal recruitment whether
or not they commit the wrongful acts enumerated in that section. On the
other hand, recruiters who engage in the canvassing, enlisting, etc. of
!; OFWs, although with the appropriate government license or authority,
are gJilty of illegal recruitment only if they commit any of the wrongful
acts enumerated in Section 6."
Earlier, the Supreme Court, in the case ofThe Executive Secretary v. The
Hon. CA, 1 has declared that any issue of validity or constitutionality of the same
Section 6 and Section 72 of R.A. No. 8042 has been rendered moot and academic
since the Court, from R.A. No. 8042's effectivity on July 15, 1995, had, in a catena
of cases, applied the penal provisions· in Section 6 and imposed the penalties
provided in Section 7 thereof. By its rulings, the Court thereby affirmed the validity
of the assailed penal and procedural provisions of R.A. No. 8042, including the
imposable penalties therefor. 3
3.
~: TYPES OF ILLEGAL RECRUITMENT
i AND THEIR ELEMENTS
~
ii 1. TWO (2) TYPES OF ILLEGAL RECRUITMENT.
There are two (2) types of illegal recruitment, to wit:
I (1) Simple illegal recruitment; and
(2) Illegal recruitment involving economic sabotage consisting ofeither:

I
a) illegal recruitment committed by a syndicate; or
of"illegal recruitment" and enumerates the acts constituting the same. The RTC of
b) illegal recruitment committed in large scale.
Manila declared Section 6 unconstitutional after hearing on the ground that its
definition of "illegal recruitment'' is vague as it fails to distinguish between licensed Further discussion of these topics follows.
and non-licensed recruiters and for that reason gives undue advantage to the non-
licensed recruiters in violation of the ript to equal protection of those that operate
with government licenses or authorities.
I SIMPLE ILLEGAL RECRUITMENT
3-A.

J I. CONCEPT.
1 Jd.;ld.;ld.;ld. Simple illegal recruitment or simply, illegal recruitment, covers any
2 Su1imir1 v. People, G.R No. 190970, Nov. 24, 2014. recruitment and placement activity undertaken by a non-licensee or a non-holder of
Republic of 1l1e PllirqlPiles v. Phq>pile Assodation of Seivice Exporte!s, Inc. (PASEI), G.R No. 167500, Nov. 13, 2012.
This is ooe of 1l1e cases consolidated -Mth olha' siniar cases in Hon. Slo. Tomas v. Sal<¥:, GR Nos. 152642, 152710,
167500,18297S.79&184m.99, Nov.13,2012. 1 GRNo.131719,May25,2004.
4 NOOl: As deli1ed in People v. EfV. Diaz, 328 Phil. 794, 806 [1996J, a I'IOO-I'mlsee or norHloldef of d10fity means any 2 Enlitled 'Penalties.'
peiSOI'I, caponmn or entity v.ilich has n<t been issued a valid lkense or aJihority kl enQWJe In reauilment illd placement 3
For ilslance, 1l1e validity of Sedion 6 IX RA No. 8042 v.l1ich proWies llat eJ1'4lloyees of reauilment CJJencies may be
by lhe Secrelay of l..lilor, or v.1lose license 01' authOOty has been suspended, reo.ded or canceled by the POEA or lhe
~ aimilaly lmle for illegal recnilmenthasbeen upheld in Peqllev.Olow:lliiY, G. R Nos.129577~. Feb. 15,2000.

L_.
Secretay.
 so BAR REviEWER ON lABOR lAW
authority. It also includes the commission of prohibited acts as enumerated under
the law, 1 not only by a non-licensee or a non-holder of authority but also by a
licensee or holder ofauthority.
2. ELEMENTS PER JURISPRUDENCE.
Most pieces of jurisprudence2 have, over the years, consistently declared
that simple illegal recruitment is committed when two (2) essential elements concur,
viz.:
(1) that the offender has no valid license3 or authorit/ required by law to
enable him to lawfully engage in the recruitment and placement of
workers; and
(2) that the offender undertakes any activity within the meaning of
''recruitment and placement" defined under Article 13(b),5 or any
prohibited practices enumerated under the law. 6
3. ADDITITIONAL ELEMENTS PER LAW.
A survey indicates that the criminal cases where the foregoing elements
were used as the guidepost in determining the culpability of the accused for illegal
recruitment, involve persons who are non-licensees and non-holders of authority.
1 Spedficaly, as enumernted under Article 34 ci the Labor Code Cl1d 001'! prOOied under Sec1ion 6 of RA No. 8042, as
<Jnended by Secli:ln 5 of RA No. 10022; See also SecOOn 1, Rule r-J, Cllmilus Rules <Vld REgufatioos ~lemen1i'lg the
M,jr.rt Wal<efs a1d Ovefseas ~Pd. ci 1995, as Amended by RA No.10022, issued oo Jut; 8, 2010. See also
Sedil1 76, RIJe X. Revised POEA Rules a1d Regulations GoYemi'g the Reauibnent and ~ ci l.sH3ased
~ Fi'~ Wodle!S ct 2016; Sedioo 72, Rule X. 2016 RIMsed POEA Rules and Reguiatioos Golemi'g the
RecMnentald ~~of Se<mls issued on Febru<ry26, 2016.
2 Jioosl a1 cases l'tt!ere these elenells ere mentioned iMile reauib1Jer( b" cwerseas erJ1lb(menl. Mlst noleiWI1hy of
these cases ere: Cameo ~ v. People, G.R No. 178337, JIJ'Ie 25, 2009; See also People v. Chua, G.R No. 187052,
Sept 13, 2012; Romero v. People, G.R No.171644, Nov. 23, 2011; Nasi-Vibv. People, G.R No. 176169, NaY. 14, 2008,
571 SCRA 202, 208; People v. Qtiz~e, G.R Nos. 115338-39, Sept 16, 1997, 279 SCRA 180, 193; People v. Pasrua,
GR No. 125081. Oct 3, 2001; PEqlle v. Navarra, G.R No. 119361. Feb. 19, 2001; Abaca v. Hoo. CA. G.R No. 127162.
..lllle 5, 1WS; People v. COOaarlQ, G.R No. 113917, Ju1i 17, 1995, 246 SCRA 530; People v. Cola!, G.R Nos. 97849-54,
Mlth 1, 1994, 230 SCRA 499; f'ecPe v. Sendoo, G.R Nos. L-1015m2, ~ 15, 1993, 228 SCRA 489; People v. Ondo,
GR No. 101361, NaY. 8, 1993, 'OJ SCRA 562; ~ v. ~.Jr., G.R No. 98443, Aug. 30, 1993, 225 SCRA 714;
Peqllev. Bodozo, G.R No. 96621. O:t.21, 1992,215 SCRA33.
3 Deti1ed i1 Altide 13 (d) ci toe Llilcr COOe, as anended, as 'a doameot issued by the IJepartnent ct labor authori2i1g a
..
peson oc entity tl ~a Jlli'.'* af4ll7jment agency.' (See People v. <:alacmg, G.R No. 113917, Jutj 17, 1995, 246
SCRA530).
4 Deti1ed i1 Altide 13 (f) ctthe laborCOOe, as amended, as 'a dooJmentissued by the Depar1meot ci labor authori2i1g a
peson oc association t> enga:~e i1 reauilment md pa:ement ~as a¢.'ate recruilroont entity.' (See People v.
~ ).
5 Article 13(b) ci D1e labor Code deli1es 'iecrui1ment a1d placemenf as: lvrf act of canvassi"g, ~. contacli'g,
mpor&YJ, utilzilg, hii'g, (J ~ 'MX!Ie!S, a1d i1dudes refeq;, <Xlll1Iact sel'lk:es, prorrisiY;! (J Mtsirg b'
• employment. b3ly oc abroad, Ytt1elher lor profit oc not Provi:led,llal2lrf PefSOI1 or entity m, i12lrf manner, <A!ers or
proo1ses b" afee efl'4llcyment 10 tv.o or more petSOOS shall be deemed E".Ja:Jed il reauirnent ood placement
6
See ern.meration IJ1der Article 34 ct l1e labor Code a1d oo.v pltM:led ll1der Section 6 ci RA. No. 8042, as llnended by
Sedion 5 ci RA No. 10022; See also Section 1, Rule IV, OrrniJus R!ils a1d Regulations ~ the Mgrant
Wolkefs Md ~ Fiipilos Pd. of 1995, as Amended by RA No. 10022, issued oo Ju~ 8, 2010. See also Section 76,
Rule X. Revised POEA Rules in! Regulations GMmi1g the Recninent a1d ~ ct l.ald-Based 0ie1seas
~ WOike!S It 2016; Section 72, IUl X. 2016 Revised POEA RUes Md RegulaOOns ~ U1e Ra:ruilment and
Employmeot ci Seafllel5 issued on Februaly 26, 2016.
f~ CHAPTER II
RECRUITMENT AND PlACEMENT
51
~-~·
The above enumeration of the elements curiously failed to consider that under the
broadened' concept of illegal recruitment under the 1995 2 law, RA. No. 8042,
Il which, it must be noted, has not been changed by the latest amendment introduced
3
thereto in 2010 by RA. No. 10022, the term "illegal recruitment", unlike illegal
recruitment as defined under the Labor Code which is limited to recruitment
i ij
activities undertaken by non-licensees or non-holders of authority, 4 now includes the
commission of the prohibited acts enumerated thereunder, "whether committed
by any person, whether a non-licen~ non-bolder, licensee or holder of
I 5
authority." Therefore, under Section 6 of RA. No. 8042, as amended, 6 illegal
If recruitment (for overseas employment) may be committed not only by non-licensees
or non-holders of authority but also by licensees or holders of authority. 7 Section 6,
8
as ar.:J.ended, enumerates fourteen (14) acts or practices [(a) to (n)] plus seven (7)
additional prolubited acts, which constitute illegal recruitment, whether committed
by any person, whether a non-licensee, non-holder, licensee or holder of authority.
Except for the last three (3) acts [(1), (m) and (n)] as well as the seven (7) additional
prohibited acts, on the list under Article 6 ofRA 8042, as amended,9 the first ele·.ren
(11) acts or practices are also listed in Article 34 of the Labor Code under the
heading "Prohibited practices." Thus, under Article 34 of the Labor Code, it is
unlawful for any individual, entity, licensee or holder of authority to engage in any
of the enumerated prolnbited practices, but such acts or practices do not constitute
illegal recruitment when undertaken by a licensee or holder of authority. 10 However,
under Article 38(a) of the Labor Code, when a non-licensee or non-holder of
authority undertakes such ''prohibited practices," he or she is liable for illegal
recruitment. RA. No. 8042, as amended, broadened the definition of illegal
recruitment for overseas employment by including the afore-said prohibited acts or
practices which now constitute as illegal recruitment, whether committed by a non-
licensee, non-holder, licensee or holder of authority. 11 .
Simply put, under RA. No. 8042, as amended, a non-licensee or non-
holder of authority commits illegal recruitment for overseas employment in two
1
~ The Supreme Court has decBed llat R A. No. 8042 has broadened the concept ci ilegal recruitment lllder the Labor
~
~ COOe. (People v. Abella, G.R ttl. 195666, Jan. 20, 2016; People v. Daud, G.R No. 197539, June 02, 2014; People v.
!i' Oalen, G.RNo.173198,.111le1, 2011; ~v. Nogra, G.R No.110834,Aug. 29, 2008).
2 JIJle 7, 1995.
~
;;. 3
Mirth 10, 2010.
~ 4
People v. Tolentilo, G.R No. :aJ8686, Ju~{)1, 2015.
5
See e!1IM11efl!b1 under SecbJ 6 ci RA No. 8042, as amerded by Sec00n 5 of RA No. 10022; See also Section 1, Rule
r-J, Ormibus Rules Cl1d RegiAa&x1s ~ling V1e l.tJr.rt WOikers Md Ovelseas F~ hl of 1995, as Amended by
RA No. 10022, issued oo .kif 8, 2010. See also Secli:ln 76, RUe X. Revised POEA Rules Cl1d Reg(ja(joos GovemiYd the
Reat.ifment Mel ~ ci l.il1d-Based Overseas ~ WOikers ci 2016; SecOOn 72, RUe X. 2016 Revised POEA
6
Rtk.s Mel Reguialioos ~ the Retrui!ment and ~of Seafarels issued on February 26, 2016.
Sedion6ofRA.No.8042,asanendedbySection5ofRA.No.10022: .
7
People v. Tolentino, SUjlfa
8
SecOOn 6 of RA No. 8042, as anended by Section 5of RA No. 10022.
9 ld.
10
Peoplev. Tolentino, supra.
11 ld.
L
52 BAR REviEWER ON lABOR lAW

ways: (1) by any act of canvassing, enlisting, contracting, transporting, utilizing,

II CHA~TER
RECRUITMENT AND PlACEMENT
II
53

i! (3) The number of recruiters and/or recruitees should not be more than two
hiring, or procuring workers, and includes referring, contract services, promising or ~. (2) persons. 1
advertising for employment abroad, whether for profit or not; and (2) by undertaking

'I
any of the acts enumerated under Section 6 ofRA. No. 8042, as amended. On the
other hand, a licensee or holder of authority is also liable for illegal recruitment for
overseas employment when he or she undertakes any of the prolubited acts or
practices listed under Section 6 of RA 8042, as amended. 1 Consequently, if a
recruiter is charged with violation of any of the prohibited acts uuder Section 6, as
amended, there is no more need to prove whether he is a licensee or holder of
authority or not because it is no longer an element of the crime.2
And it bears noting that this broadened concept of illegal recniitment also
applies to recruitment for local employment where the 2014 Revised Rules explicitly
states that the acts enumerated thereunder "shall be unlawful when committed by
any person, whether or not a holder of a license or authority.,J
Moreover, since illegal recruitment becomes qualified if committed by
three (3) or more recmiters (syndicated) or when there are three (3) 01 more
recruitees (large-scale), as the case may be, the total number of recruiters and/or
rew1itees in order for a case to remain one for simple illegal recruitment should not
No. 3 above is a significant element considering that in illegal recruitment
cases, the tota! number of recruiters or the persons victimized is detenninative of the
nature of the crime. Thus, where illegal recruitment is committed against a lone
victim, the accused may be convicted of simple illegal recruitment only, which is
punishable with a lower penalty. 2 Corollarily, where the offense is committed by or
against three (3) or more persons, it is qualified to illegal recruitment involving
I~ economic sabotage which provides a higher penalty.3
4. APPLICABILITY TO BOffi LOCAL AND OVERSEAS
~
EMPLOYMENT.
Although the cases surveyed where the foregoing elements were asserted
by the High Court involve recruitment and placement activities for overseas
employment, the same concept and principles may well apply with t.i.e same force
and effect to those conunitted for local employment.
3~.

be more than two (2) persons. aLEGALRECR~NT

3.1. RE-STATEMENT OF THE ELEMENTS. INVOLV1NGECONON:UCSABOTAGE

In the light of the foregoing disquisition, the elements of simple illegal ,.~

it 1. ELEMENTS.
recruitment should now be re-stated as follows: r,
~ The first two (2) elements for simple illegal recruitment as cited ar..d
(l) That the offender has no valid license or authority required by law to ii
~ discussed above likewise apply to illegal recruitment involving economic sabotage.
enable him to lawfully engage in the recruitment and placement of ~
A third element is added4 regarding the requirement that there be at least three (2)
workers; li recruitees, in the case of large-scale illegal recruitment, or at least three (3)
~
(2) That the offender undertakes any activity within the meaning of ~ recruiters, in the case of syndicated illegal recruitment.
recruitment and placement defined under Article l3(b), or any ~ 2. WHEN CONSIDERED ECONOMIC SABOTAGE.
prohibited practices enumerated under the law, 4 irrespective of whether ~
ii To iterate, illegal recruitment is considered a crime involving economic
the offender is a non-licensee, non-holder, licensee or holder of ~ sabotage when the commission thereof is attended by any of the following
authority; and ~
w
qualifying circumstances:
II
m

1
2
ld.
People v. Jimly Ari;J, GR No. 181245, Aug. 06, 2008; ~le v. tb;}1a, GR No. 170834, Aug. 29, 2008; People
Iw
v.Gasac<Kl, GR No.168445, No¥.11, 2005.
See Sedi:xl42, Revised Rules MC1.Regulations Go'lemil:! Reatinenl ood Placement l:lr Local Erqlkrjmenl, Depment
O!t!er No. 141-14, Series of 2014 JNCNel1'ller 20, 20141. foc kJcat efl'llklyment.
4 See enumeralioo under Artide 34 of lhe labor Code ood OON plrMded under Sedion 6 of RA No. 8042, as amended by
Sedioo 5 of R.A. No. 10022; See also Section 1, Rule IV, OnriJus RuleS !l1d Regulalioos Implementing lhe Mgrant
WO!Ker.; Clld OlefSeas Flipi'losActof 1995, as Amended by RA. No. 10022, issued 011 Ju~ 8, 2010. See aSo Section 76,
Rule X. Revised POEA Rules and RegulaOOns GaJemi'g lhe Reauiment and Et1'!lklyment of Land-Based Qve:seac;
Fqlioo WOO.e!S a! 2016; Sedioo 72, Rule X. 2016 R~ POEA Rules and Regulatioos Gove~rir~Jile Reaui1ment and
~of Seafcms issued 011 Februaly 26, 2016.
1
Accolding kl People v. Sadiosa, G.R No. 107084, Miff 15, 1998: 'Wlen 1he peiSOIIS recruited ae lllee or 100re, 1he aine
llecanes ilega J'e'l\li1mentillalge scale under M. 38 (D) of the Labor Code.'
2 See People v. Or1iz-Mjake, G.R Nos. 11533S-39, Sept 16, 1997, 344 Phil. 598, ~. tl ~ case, f1e proolision
refen'ed loIs pa<rJraph (c)o!Artide 39 o!lhe LOOOI'Code, OONpaagraph(a), Section 7,o!RA. No. 6042, as amended by
Section6ofRA No.10022.
3 SeePeoplev. Or1iz-My<J<e, SJ.Vo!. ThepnM;Dl referred ilispaagraph(a) of Ar0Cie39cllle tmCode, llCNipalaJI1lph
(b), Section 7, of R.A. No. 8042, as ll!lel'ded by Sedion 6of R.A. No. 10022. ·
~ See People v. Pascua, G.R No.125081. Oct. 3, 2001, v.llerelwasstaEd lhai"Theee is lcrge-S!3e Alegal reauitmeotl ~is
<XlOYTiitled agilinst llvee (3) or more pelSOIIS ild'M:Iualy or as a910!41: its elements, lherebe, ae lhe tv.o abcMHnen!ioned
plus !he !act lhat ~is axmilled against lhree or 100re pelSOIIS.' See also Peoplev. Salvaliem!, G.R No. 200884, June 4,
2014, v.11ele it is stated: 'xxx a tllid elemelllls added: that lhe offender COO'iTils <rrf ollhe a:Z of recrui1ment and
Pllcement agcinst lhree or more pelSOIIS, ildMdually a as a g~.· See also People v. Olua, G.R No. 187052, Sept 13,

L
2012,680 SCRA 575, 587, v.Me lhe same pronouncement was eiriermade.

54 BAR REviEWER ON LABOR LAW
I) when conunitted by a syndicate; or
2) when committed in large scale. 1
2.1. SYNDICATED ILLEGAL RECRUITMENT.
lUegal recruitment is deemed committed by a syndicate if it is carried out
by a group of three (3) or more persons conspiring or confederating with one
another. 2 The law, it must be emphasized, does not require that the syndicate should
recruit more than one (l) person in order to constitute this crime. Recruitment of one
(1) person would suffice to qualify the illegal recruitment act as having been
committed by a syndicate.
The core of this kind of illegal recruitment is the conspiracy among the
perpetrators, without which, no syndicated illegal recruitment could be committed.
Under Article 8 of the Revised Penal Code, there is conspiracy when two or· more
persons come to an agreement concerning the commission of a felony and decide to
commit it. 3 Thus, in finding the accused-appellants guilty of syndicated illepl
recruitment in People v. Lalii, 4 the High Court noted that Lalli, Aringoy and
Relampagos have conspired and confederated wit.1 one another to recruit and place
Lolita for work in Malaysia, without a POEA license. The three elements of
syndicated illegal recruitment are present in this case, in particular: (1) the accused
have no valid license or authority required by law to enable them to lawfully engage
in the recruitment and placement of workers; (2) the accused engaged in this activity
of recruitment and placement by actually recruiting, deploying and transporting
1 M:le 38(b), l..lilor Code; See aso Sectioo 2. Rule rv. Oimibus Rules em Regootions ~ ttte Mgla'lt WorKers
ald Overseas Ff~pinosActof1995, as Amended by RA No.10022, issued on Julf8, 2010.llms klpointoutthatlherei;
no sirlb' proviSion on illegal recMiment i'IvWirg econorric sabolage (large-scale oc syndk:ated) i1 both 1he Revised POEA
Rules em Regulations GoveiTt;;llle Reauilmert ald EfTllklyment of la1<Hlased Oveseas ~ Wallers d 2016 ald
the 2016 Rellised POEA Rules axl ReglMtions Go'iemi'g the Recruibnent !lid ~ d Seafcrers issued on
Februay 26, 2016. See Peqlle v. ND;jra, G.R No. 170834, Aug. 29, 2008; People v. Sadilsa, G.R No. 107084, May 15,
1998; People v. Goce, GR No. 113161, Aug. 29, 1995, 247 SCRA 780; Peqlle v. Avenda'lo, GR Noo. 96277-82, Dec. 2,
1992,216 SCRA 187.
z M:1e 38(b}, l..lilor Code; Sectkr16, RA No. 8042, as anended by SecOOn 5, RA No. 10022 J.1irdi 8, 2010]; SecOOn 6,
RA No. 8042, as anended by Sectioo 5, RA No. 10022 [Mcrth 8, 2010]; See also Sectkrl2. IU! rv, OnriJus Rules ald
Re:J~ ~the tq.riWallers Md <Nerseas Fipiios Act or 1995, as AmeRied by RA No. 10022, issued
onJltf 8, 2010; See Peoplev.lid, G.R No. 195419, Oct 12, 2011;f'lqllev. Gallo, G.R ~ 187730,29 June 2010,622
SCRA439; Peoplev. Soliven, G.R No. 125081, Oct 3, 2001; Peoplev. BoOOzo, G.R No. 96621. Oct 21, 1992,215 SCRA
33.
3 kl People v.l.ago, G.R No. 121272, June 6, 2001, the H'gh COlli. discussed conspiacy i11Iis 1\ise: 'The elements of
conspiracy ere llle ~: (1} lw:l or more peiSOI1S came 1o Cll agreemoot, {2} the agreement concerned tie coornission
of afelony, and (3} llle execution d llle felony was deOOed upon. PlOOf of llle conspiracy need net be based on direct
eVidence, because l may be iiferred from 1he parties conduct i'I<i:atir'J aCOil1I10I1 uroderstlldiYJ among tlemselves IWh
respect 1D the oorrvrisskJn of llle airoo. Neither is l necessasy 1D show that two or more peslllS met lrx;lether ood entered
il1D Cll explicit agreement setti1g oot 1he detafts of oolllli8Nful scheme oc objecltie 1D be C!lli!d out. The conspiiacy may be
deduced tool 1he !rode 'l manner i1 v.ilich 11e aime was peq>ellaled; l may also be ilfe!red from l1e acts of the accused
~ e~orCOI11TOO ~ Md desi;!n, concerted adion oodronmu!Wf cifi:lterest.'
~ ~v.Lafti,G.RNo.195419,0ct.12,2011.
I
CHA~TER II
RECRUITMENT AND PlACEMENT
55
Lolita to Malaysia; and (3) illegal recruitment was committed by three persons
n (Aringoy, Lalli and Relampagos), conspiring and confederating with one another. 1
~ In People v. Guevarra/ the accused-appellants3 asserted that the offense
should not have been qualified into illegal recruitment by a syndicate since there was
no proof that they acted in conspiracy with one another. However, the acts of
accused-appellants showed unity of purpose. Guevarra would visit each of the
complainants in their houses for several times, convincing them to work abroad, and
giving them the impression that she had the capability of sending them abroad. She
would accompany them to the house of the other accused, spouses Bea, who, in tum,
would collect the placement fees and process the passports and plane tickets. All
these acts of the appellants established a common criminal design mutually
deliberated upon and accomplished through coorciinated moves.
2.2. LARGE-SCALE ILLEGAL RECRUITMENT.
Illegal recruitment is deemed committed in large scale if it is committed
against three (3) or more persons, individually or as a group. 4 Therefore, a
conviction for large scale illegal recruitment must be based on a finding in each case
of illegal recruitment of three {3) or more persons having been recruited, whether
individually or as a group. 5 The failure to prove at least three (3) persons recruited
makes the crime a case of simple illegal recruitment. 6 This is so because in offenses
in which the number of victims is essential, failure of the prosecution to prove
i
I
1
See also PEqlle v. Hema1dez, G.R Noo. 141221·36. !Joo:h 7, 2002 v.11ere llle 3 ~· IXllM:tion was
aflimed becaJse l has been sulli::ienlly shcMn that U!ey ronspi'ed wi1h eadi ~ il corwiic:i'g prM!Ie ~t; 1D
;wly for Cll overseas P> ood gNV'g them the gunty that 1hey v.OOd be hied as tbneslk: ~ il t1att al1hough Uiey
I were net l:ensed 1D do so. They were hekl iable lor legal reauilment aJilll'iEd by a syrD:ate and were meled 1he
I 2
penalty of lfe ir¢sarnent and afine of F'100,000.00 under Artk;le 39 ollhe t.axr Code.
Peoplevs.GUev!rta;GRNo.120141,Ap!i121, 1999.
I The three (3} ~ illhis case ere Lana B. Gueva'a, Josie Bea and flEOo Bea, Jr.
Article 38(b}, t.axr Code; Sedkx16, RA No. 8042. as !lllellded by SecOOn 5, RA. th 10022 !Marth 8, 2010]; See aso
Sedkx12, Rule t~~, cmmus Rules Cl1d ReglMtions ~the lliJr.lltWcrters ax1 CNerseas ~Act 1995, a
II
as Nnended by RA No. 10022, issued on Ju1i 8, 2010; Peoplev. Cagailgal, GR No. 198664, Nov. 23, 2016; Peqlle v.
Bayl<er, GR No. 170192, Feb. 10, 2016; People v. Abela, G.R No. 195666, Jat 20, 2016; PeqJie v. Taemno, G.R No.
208686,JII[01,2015; Peoplev. Fenmdez, G.R No.199211,Jt~~e4,2014, 725SCRA 152, 156-157; PEqllev. Rea, GR
No. 197049, June 10, 2013; PEqJie v. Espenla, G.R No. 193667, Feb. 29, 2012; People v. Tuglilay, G.R No. 186132,
Feb. 27, 2012; ~v. Ochoa, GR No.173792, Aug. 31, 2011; Cl1d Peoplev. Dalen, G.R No.173198,.11Jne 1, 2011;
Peoplev. Pbal, G.R No.168651, Mcrch 16, 2011; Peqllev. DOilingo, G.R No.181475,Apri 7, 2009; Peqlle v. Lo, G.R
I No. 175229, Jat 29, 2009; People v. GlrlgM, G.R No. 178204 [Formerly GR No.156497)] Aug. 20, 2008; People v.
Bartolome, GR No. 129486, Jltf 04, 2008; People v. Cesar, G.R No. 176737, Apri 16, 2008; People v. Olenro, G.R No.
I
~
127848. Jltf 17, 2003; People v. Ballesteros, G.R Nos. 116905-908, Aug. 6, 2002; People v. Oela Piedra, G.R No.
121m. Jan. 24,2001,350 SCRA 163; People v.l.ixem, G.R No. 132311. Sept 28, 21XX!; People v. G1rrboa. G.R No.
135382, Sept 29, 2(XX), 341 SCRA 451; People v. Castillon; GR No. 130940; Apli 21, 1999; People v. Too T1011Q Mef'9,
G.R. Nos. 120835-40, Apri 10, 1997; People v. Goce, G.R No. 113161, Aug. 29, 1995, 247 SCRA 780; People v.
I
~
Avendaiio, G.R Noo. 96W-a2, Dec. 2, 1992, 216SCRA 187.
5 People v. Jimny ~. G.R No. 181245, Aug. 06, 2008; People v. Honrada, GR Noo. 112178-79, April21, 1995, 243
SCRA 640; PEqllev. Reyes, G.R. No. 105204, Maid\9, 1995, 242 SCRA 264; See also Peqlle v. Oltiz-Miyake, G.R Nos.
I 115338-39, Sept 16, 1997,344Phil598, 608-009.
I 6
Peoplev. Hu, G.R No.182232, Od. 06,2008.
l~"~
s6 BAR REVIEWER ON IASOR lAW

by convincing evidence that the offense is committed against the minimum

number of persons required by law is fatal to its cause of action. ·
1
I
I
~
~-
CHAPTER II
RECRUITMENT AND PLACEMENT

An example of a case where persons were charged with violation of

Section 6 in relation to Section 7 of R.A. No. 8042 for "large scale illegal
57

recruitment committed by a syndicate" is People v. Trinidad. 1 After due

Moreover, there can be no illegal recruitment in large scale if the same is
....-b-ased--.-o_n_s-ev-e-ra,..,linformations filed by only one complainant This was the ruling in
People v. Hernandez/ where the High Court agreed with the accused-appellants'
l proceedings, accused Trinidad was ultimately found "guilty of illegal recruitment
large scale, sentencing her to suffer the penalty of life imprisonment and ordering
m
argument that the trial court erred in convicting them of illegal recruitment in large her to pay a fine and actual damages."
scale by cumulating the eight (8) individual informations filed by private 3. APPLICABILITY TO BOTH WCAL AND OVERSEAS
complainants. It noted that each information was filed by only one complainant As EMPWYMENT.
3
held in People v. Reyes: Albeit the illegal recruitment cases involving economic sabotage studied
"xxx When the Labor Code speaks of illegal recruitment
'committed against three (3) or more persons individually or as a group,'
I and surveyed involve recruitment and placement activities for overseas employment,
it must be understood as referring to the number of complainants in each i the same concept and principles may also apply with the same force and effect to
those committed for local employment Notably, however, there is no single
case who are complainants therein; otherwise, prosecutions for single I
!. provision in the 2014 Rulel dwelling or pertaining to large-scale or syndicated
crimes of illegal recruitment can be cumulated to make out a case of large ~:
illegal recruitment 3 But since the governing law, Article 38 of the Labor Code,
scale illegal recruitment In other words, a conviction for large scale
illeg:U recruitment must be based on a finding in each case of illegal
recruitment of three or more persons whether individually or as a group."
I
&
contains a provision thereon, th.e same should likewise apply to iocal illegal
recruitment cases.
2.3. SYNDICATED VS. LARGE-SCALE. 3-C.
As distinguished from illegal recruitment committed by a syndicate, illegal SOME PRINCIPLES ON JLl,EGAL RECRUITMENT
recruitment in large scale may be committed by only one (1) person. What is
important as a qualicying element is that there should be at least three (3) victims of 1. JURISPRUDENTIALLY DECLARED PRINCIPLES.
4
such illegal recruitnent, individually or as a group. • Mere impression is sufficient to eonstitute illegal recruitment To convict a
The number of offenders is not material in illegal recruitment in large scale. pei"oOn for illegal recruitment, it suffices to show that he gave the victim the
As held in People v. Laurel/ the number of offenders, whether an individual or a l distinct impression that he had the power or ability to send him abroad for work

II
syndicate, is clearly not considered a factor in the determination of the commission such that the latter was convinced to part with his money in order to be
of illegal recruitment in large scale. Counsel for accused-appellant was misled by the employed. 4
fact that illegal recruitment in large scale is defined immediately after illegal • Mere promise of employment abroad amounts to recruitment To .be
recruitment by a syndicate. However, the only reason therefor is that they are both engaged in the practice of recruitment and placement, it is plain that there must,
considered offenses involving economic sabotage as the law itself so provides.
In situations where there are three or more illegal recruiters and there are
three or more recruitees involved in one case, the illegal recruiters may be convicted i
either as a syndicate or in large-scale, depending on the evidence presented. In any
6
case, the penalty imposable is the same for both since the law does not make any I penaly sllall be irclooed f the persoo legatj recniled is less am ei;ID1 (18) yellS rJ. age " IXXII16ld by a1100-

I
distinction between these two. tensee "noo-tdler of arthorily.'
1 Thispronooncementwao; rnadeil Peqllev. Triri:lad, GR No. 181244,hJ;j. 09,2010, d&1g Peoplev. Gmla, G.R No.
135382. Sept 29, 2000, 395 Phi. 675,682,683.
1ld. 2 Revised rues and Reg~Mm Ga.oeni'G Rooumrem and f'lacerie1t tr 1..oca1 fnl*lyment, Depatret Order No. 141-
2 G.R.Nos.141221-36. Mild\7,2002 i! 14, Series r/.2014 (No¥errber 20, 2014!.
3 G.R. No. 105204, MM:h 9,1995,242 SCAA264.
4 Peojlle v. AAlaiz, G.R. No. 205153, Sept. 9, 2015; Peojlle v. Bautista, G.R. No. 113547, feb. 9, 1995, 241 SCRA 216;
~ 3 kt l1e scm! lllliM that although there is aprovision on ~ Md S')'OOk3ed ilaga recn1rnent il Sedioo 2, ~ rJ
~.
rJ. the ClrrrDJs Rules <H1d Regulations ln'4Jiernen!i'l;l the M;}Iant Wcxkers Md OveBeas A~os Pd. r/.1995, ao; Amended
Peojlle v. Taglba, G.R Nos. 95207-17, Jan. 10,1994,229 SCAA 188; Peqllev. Bodozo, G.R No. 96621. Oct 21, 1992, by RA No. 10022, issued on Jutt 8, 2010, there is aso no sinilcr p«Msixx on legal IeaUifJnert iMlNiv;l economc
215SCRA33;Peoplev. Bugaoan, G.RNo. 87542,MM:h6, 1990, 183SCRA62. ~
~ sabofage (1a'ge-stale " syndicated) i1 both the Reo.ised POEA rues and Rsgwms GalemilQ 11e Reauiment and
s G.R. No. 120353, Feb.12, 1998. /.;' Err(>loyrnent d l.a'd-Based Overneas Ripino WIXXers rJ. 2016 and the 2016 Re.tal POEA Rules Md Rei}Jations
Sedioo 7(b) of RA No. 8042, ao; anended by Secbl6 rJ. RA. No. 10022, jl(tNkleS: "(b) Tl'e penaty r/.lfe ~ ~~ GcNemi1g the Reauilmert and ~klyment rJ. SeamiS issued on February 26, 2016.
Md a me of rd. lesS than Two milion pesos (P2~~:00) ra mere tal FIVe mllion pesos (1'5,000,000.00) sha1 be
I•'
iq People v. Fem<lldez, G.R No. 199211, Jllle 04, 2014; People v. Abat, GR No. 168651, tiM:h 16, 2011; People v.l.aogo,
~ Wlegal recruilmert OOlSti1u1es eccaorrt S!ilciage as defiled tlereil; FW~kled, howe'ler, That toe ImXirum ~
GR No. 176264, Jan. 10, 2011; carmen Ritualov. People, G.R. No. 178337,.klle 25, 2009;
~

L
 Ii
58 BAR REVIEWER ON LABOR LAW
CHAPTER!!
RECRUITMENT AND PlACEMENT 59
at least, be a promise or an offer of employment from the person posing as a 1
or license from the POEA. Even in the absence of money or other valuables
recruiter whether locally or abroad.' '9. given as consideration for the "services" of the recruiter, he is considered as
• There is no need to show that accused represented himself as a liceused being engaged.in recruitment activities. 2
recruiter. Evidencewise, it suffices that the prosecution has established that the • Absence of receipt not essential. Receipt issued by the recruiter is a
POEA did not authorize or license the recruiter to engage in recruitment ( documentary evidence that proves that he/she is engaged in recruitment and
activities and that despite the absence of such authority or license, he still 3

recruited his victims. 2
• Referrals may constitute illegal recruitment. Article l3(b) of the Labor Code
includes "referrals" in the definition of what constitutes ''recruitment and
placement.',3 In convicting the accused-petitioner in Rodolfo v. People,4 the
Supreme Court declared that the act of referral within the contemplation of the
law, is "the act of passing along or forwarding of an apolicant for employment
after an initial interview of a selected applicant for employment to a selected
employer, placement officer or bureau." Petitioner's admission that she brought
private complainants to the agency whose owner she knows and her acceptance
of fees including those for processing betrays her guilt.5
• Cooduct of interviews may amount to illegal recruitment. The conduct of
interviews by the representatives of the foreign principal amounts to illegal
recruitment under Section 6 ofR.A. No. 8042. 6
• It is immaterial whether the recruitment is done for profit or not. The
argument of the accused-appellants that there was no proof that they received
money from the private complainants deserves no <;redence because money is
not material to a prosecution for illegal recruitment considering that the
definition of "illegal recruitment" under the law includes the phrase "whether
~ placement activities. However, the absence of receipts to prove payment of
recruitment fees is not material nor fatal. 4 The absence of receipts to evidence
I
N
~
~
payment to the recruiter would not warrant an acquitta~ a receipt not being fatal
to the prosecution's cause. 5
• Absence of documents evidencing the recruitment activities strengthens,
not weakens, tbe case for illegal recruitment.6
&
~~ • Non-prosecution of another suspect, immateriaL It is well settled that only
~
one person recruited is sufficient to convict one for illegal recruitment 7 The
~
non-prosecution of another suspect provides no ground for an accused-appellant
to fault the decision of the trial court convicting her. 8
• Execution of affidavit of desistance affects only the civil liability but has no
effect on the criminal liability for illegal recruitment. 9
2. ON NON-LICENSEE OR NON-HOLDER OF AUTHORITY.
a. Meaning.
The term ."non-licensee" or "non-holder of authority" refers to any
person, partnership or corporation With no valid licensei 0 or authority" to engage in
i recruitment and placement of OFWs or whose license or authority is revoked,
cancelled, terminated, expired or otherwise delisted from the roll of licensed

li
for profit or not. "7 recruitment/manning agencies registered with the POEA. 12
• Actual receipt of fee, not an element of the crime of illegal recruitment.
Thus, even if the accused recruiter did not actually receive any fee, his Peoplev.llallesleos, G.R Nos. 1169J5.9JS, Aug. 6, 2002.
representation that he had the capacity to secure employment for private • Peoplev.Jarilsa, G.R No. 169076,Jan. 27,2007.
complainants made him liable for illegal recruitment since he had no authority 3 Peoplev.~.G.RNo.198664,Nov.23,2016.
4 Peoplev.!miJJo, G.R No. 181475,.6l)Ii 7, 2009.
5
People v.1bal, G.R No. 168651, Mlfdi 16, 2011; People v. Bilaber. G.R Nos. 114967.s!. Jan. 26, 2004; People v.

Ii
1 People v. Laogo, G.R No. 176264, Jal. 10, ~11; People v.l:mlilgo, G.R No. 181475, April7, 2009; People v. Galardo,
G.R Nos. 140067-71, Aug. 29, 2002,436 Phi. 698, 711; People v. Angeles, G.R No. 132376, Apri111, 2002,380 SCRA
519, 526-527.
2 People v. Balemos, G.R Nos. 116905-00S,hlg. 6, 2002; People v. Clilac<nj, G.R. No. 113917, July 17, 1995, 2-16
SCRA530.
3 Article 13(b) a 11e LaJoc Co:le deftnes "recruiiment ood placement.' as '{a)\)' a:t 01 ~. enlisfug, ~.
~. uliizilJ, hiv-19 a procuring wern. ood mtdes referrals, mact services, jli'OOisilg or ~ ill'
erf1)io)moot.localy or cmJad, l'lilether for proft or not.'
I
~
~-
~ G.R No. 146964, kig. 10, 2006.
~ Mgllllt Wakes !lld CM!Iseas Fiq!ilos /Jd. d 1995, as Amended by RA No. 10022, issued m Jlij 8, ~10}.
s SeeaisoPeqllev. Goce, G.R No. 113161, Aug.29, 1995,247 SCRA 780; Peoplev. Alfale, G.R Nos. 91711·15, M3Jlt,'j,
1993,219 SCPJ. 458; See also Peq>le v. Buga<m, G.R No. 87542, Marth 6,1900, 183 SCRA 62. ''
c.rShai> erew tJooaJement. h1c. v. Hm. ~.Jr.. G.R No. 155903, Sept14, '!JJ7.
7 P~ v. iieteo, G.R.No. 19PJl12, ilpril22, 2015; People v. Chua, G. R No. 187052, &;pt. i~. ~12; Romero v. People,
G.R No.171644, Nr:Neii'dler 23,2011,661 SCRA 143, 154-155; carmen Ri11100v. People, GR No. 178337, June 25,
2009; People v. Valenciano, G.R No. 180926, Dec. 10, 2008; People 'i. J;rnOOsa, G.R No. 169076, Jan. 23, 2007, 512
SCRA 340, 352; Rodolfo v. People, GR No. 146964, Aug. lu, 2006; People v. Sagaydo, G.R Nos. 12-1671-75, Sept 29, f'
ForUla, GR. No.148137,Jal.16, 2003; Peoplev.Juego, G.R No.123162. Oct 13,1998.
s Peoplev. PatlaleM, G.R No.108107, .kl1819, 1997.
7
Peoplev. Pans, G.R Nos. L-58674-77, JlJtf 11, 1986,142 SCRA664.
8
People v. Sendon, G.R Nos. 101579-89, Dec. 15, 1993, 228 SCRA 489; See also People v. Goce, G.R No.113161, AIJJ.
29, 1995, 247 SCRA 780.
9 P.v.l..a.lei,G.RNo.120353,Feb.12,1998.
1
0 The tenn 'bnse' Iefeis tJ 11e document lisued by toe DOlE Secretly aJIIorizh;j apersoo, ~ (J oorporation to
operae ap!We ~ CJJeflCY. (Sectm1(w). RUe II, Qmi!us Rules ood RegiAaOOns ~ lhe
11 The tenn 'aJ!Ixriy' Iefeis ma doc:uiTell issued by lhe DOLE Seaelily aJfhcxizing the officers, perme1, agents a
representatives cia lcensed recruilmenlhnanning agency ID oondJct recruitment ood placement activities it apla:e slated
it the lkense (J it a specified pi:Ice. (Sectioo 1(b), Rire II, Onr.ilus Rules and RegulatO!s ~ the Mgrant
12
Wakets!lld Overseas Fipim Acta 1995, as hnended by RA No. 10022, issued m Ju~ a. 2010).
Ontj the tenn 'ncJn.i:ensee" ll'Jnot "nm-hoodera aufhcxi!y'l\tiich is defined il Section 1(o::), Rule II, Orrnbus Rules Md
Regulatioos ~ the Mgrnnt WalletS and <Nerseas Flipinos Acid 1995, as Amended by RA No. 10022, issued
on Jlij 8, 2010, See also lhe delilition ci the lelm "nooi::ensee' it No. 25, Rule II, Revised POEA Rules ood Regulations

L GwernnJ 111e Recrulment and ~~ a lMd-Based CNerseas Fipino WmefS a 2016; See a1so the delililion a
2000.
 BAR REVIEWER ON lABOR lAW CHAPTER I! 61
60 RECRUITMENT AND PlACEMENT

The acts mentioned in Article 13(b) of the Labor Code can lawfully be Illegal recruitment and estafa cases may be filed simultaneously or
undertaken only by licensees or holders of authority to engage in the recruitment and separately. 1 The filing of charges for illegal recruitment does not bar the filing of
placement of workers. 1 To reiterate for emphasis purposes, non-possession of a estafa, and vice versa.1 lllegal recruitment and estafa are entirely different offenses
license or authority to recruit is, under the law, an essential ingredient of the crime of
illegal recruitment penalized under the law.
2
I
!.(
and neither one necessarily includes or is necessarily included in the other?
2. CONVICTION FOR ILLEGAL RECRUITMENT, NOT A BAR TO
b. Recruiter may be a natural or juridical person. CONVICTION FOR ESTAFA.
A recruiter may be a natural person or juridical person like a partnership or In cases where swindling or estafa is committed in the process of illegal
corporation.
3 recruitment, conviction under the Labor Code, a special law, does not preclude
c. Certification from POEA, sufficient evidence. punishment therefor under the Revised Penal Code, a general law. 4 It is well
The certification issued by the POEA Licensing Branch that the offender established in jurisprudence that a r_rson may be charged and convicted for
has no valid license or authority required by law to enable him to lawfully engage in
the recruitment and placement of workers is sufficient evidence to prove this element
4
I*
,,
-~
both illegal recruitment and estafa. The reason therefor is not hard to discern:
illegal recruitment is malum prohibitum, while estafa is malum in se. In the first, the
criminal intent of the accused is not necessary for conviction; the fact alone that the
~-
of the crime of illegal recruitment. ~~ accused violated the law warrants his conviction.6 In the second, such an intent is
4. ~
(
imperative.7
ILLEGAL RECRUITMENT VERSUS ESTAFA It must be stressed that not all acts which constitute the felony of estafa
under the Revised Penal Code necessarily establish the crime of illegal recruitment
1. FILING OF ILLEGAL RECRUITMENT CASE, NOT A BAR TO FILING
under the Labor Code. Estafa is wider in scope and covers deceits, whether related
OFESTAFA. or not related to recruitment activities.8 This is clear from the following elements of
R.A. No. 10022 has introduced an amendment to R.A. No. 8042, which estafa, in general, to wit (1) the accused defrauded another by abuse of confidence
now statutorily recognizes the jurisprudentially settled fact that the filing of an or by means of deceit; and (2) the offended party or a third party suffered damage or
offense punishable under said law, such as for illegal recruitment, "shall be without prejudice capable of pecuniary estimation.9 However, the elements of estafa by
prejudice to the filing of cases punishable under other existittg laws, rules or
regulations," 5 such as swindling or estafa, under Article 315, paragraph 2(a) of the l means of deceit under Article 315, paragraph 2(a) of the Revised Penal Code are the
following, viz.: (a) that there must be a false pretense or fraudulent representation as
Revised Penal Code, or trafficking in persons, under R.A. No. 9208, as
6
8
amended I to his power, influence, qualifications, property, credit, agency, business or
by R.A. No. 10364,7 Clearly, illegal recruitment is an independent action.

I imaginary transactions; (b) that such false pretense or fraudulent representation was
made or executed prior to or simultaneously with the commission of the fraud; (c).
that the offended party relied on the false pretense, fraudulent act, or fraudulent
Ole em~· i1 No. 31, ~II, 2016 ReVIsed POEA Rules llld Regulalb"ls Gowmi"l;l Ole Reaui1Jnent llld
Efr4llcrimenl rJ. Seafarers issued on Febnay 26, 2016; See also Sedi:xl1(d), ~ ~lilg P.O. No. 1920, .ktj 12, I 1 Syv.People,GRNo.183879}4Jfl14,2010.
ld.

II
1984 Mlele 11e terns "11oMcenSee'llld 'rmholder of illlhorily' a-e defiled as re!eniYd ., etrt pei50I\ QlJlOI1Ition or 2
entityv.tlk:h has rn been issued avali:l il8lse cr aihait)' 1D engage il recniJ11ert Clld ~by 11e DOlE Secreay, 3 ld.
crv.tlose il8lse or IIJI1crily has been suspEilded, reYdr.ed cr coocelled by lie P0EA cr lhe DOLE Secrelary. ~ People v. Fanclldez, GR No. 199211,.krle 04, 2014; People v. Turda, G.R Nos. 97Q4.4..16, Jltf6, 1994, 233 SCRA 702;
1 Peqllev.Bodozll,GR No. 96621.Clct. 21,1992.215 SCRA33. Peoplev.~GRNo.100285,Nj.13, 1992,212SCRA607. .
z Peoplev. T~uba. GR Nos. 95207-17,Ji11.10, 1994,229 SCRA 188; Peoplev. Sendon, GR Nos.L-101579-82. Dec. 15, 5 Ci11nen RWl v. People, GR No. 178337, June 25, 2009; People v. Donilgo, G.R No. 181475, Apri 7, 2009; ~
v. People, GR. No. 179907, Feb.12, 2009; People v. Y!ilut, G.R Nos. 115719-26, Oct 5, 1999. .
3
1993,228 SCRA 489.
Peoplev. Saulo, GR No. 125903. NaY. 15,2000.
~ People v. Ca;jailgal, G.R No. 198664, Nov. 23, 2016; People v. Rea, G.R No. 197049, June 10, 2013; Cannen RibJalo v.
Ifi 6 People v. TeRllOfllda, G.R No. 173473, i)ec. 17, 2008; People v. Gil1toa, G.R. No. 135382, Sept 29, 2000, 341 SCRA
451,462.
~ 1
People v. Bafesleros, GR Nos. 11fi!K5.908, kg. 6, 2002, 435 f'llil. 205, 228; See also Peqlle v. Enriquez. GR. No.
People, G.R No.178337, June 25, 2009.
Section 6, RA. No. 8042, as IJT1el1ded by Seclion 5, RA No. 10022.
;!! 127159, Mf( 5, 1999; People v. Reyes. G.R Nos. 10473944, NaY. 18, 1997, 282 SCRA 105; See also People v. Cornia,
s Qt,erMse kllooMl as 'AnHraffickilg ill'e!sons Actol2003.' GR No. 171448, Feb. 28, 2007, 517 SCRA 153, 167-168; People v. Gharbia, G.R. No. 123010, Ju~ 20, 1999.
1 <Jt,er,o,ise kllooMl as lhe 'Elcpil1ded AnHraiOCkilg il Persoos AclrJ. 2012.' fiis ill Aclexpand'119 RA No. 9208 en1i1led
8 Peoplev. TUlda, G.R. Nos. 97()44.46,~6. 1994,233 SCRA 702. ·
'hi MID ~Policies Ill Elini:lale Traffickirg il Persons Espedaly Waneo arKI Children, Estabishing 1he Necesscry 9
l'eq>le v. Amaiz, G.R No. 205153, Sept 9, 2015; People v. Tolenlitlo, G.R No. 208686, JIAy 01, 2015; People v. Mateo,
k1stitutional Mechil1ismS b" lhe ProlecOOn llld Support of Trafficked Pernons, PrMliY;I PeMOOs for ils Vdations and for G.R. No. 198012, ~1 22, 2015; Peqlle v. &Watierra, G.R No. 200884, June 4, 2014; People v. Espenila. G.R No.
Other Pu!poses.' 193667, Feb. 29, 2012; Peoplev. Tlgli\:rf, G.R No. 186132, Feb. 27, 2012; ~lev. Ochoa. G.R No. 173792, Al1J. 31,
8 Seclion 8, Rille r-1, O!mbuS Rules and RegootionS ~ 1he tJqil1l WOOiers !lld Overseas Fiipilos M ol1995, ,, 2011; ll1d People v. Ocden, G.R No.173198, June 1, 2011; People v. Callais, G.R No. 129070, Mard116, 2001, 354
as Amended by RA No. 10022, issued on July 8, 2010. SCRA 553; Peoplev. Banzales, G. R No.132289, July 18,2000.

L

SAR REviEWER ON lABOR lAW
62
means and was induced to part with his money or property; and (d) that, as a result
thereof, the offended party suffered damage. 1 To emphasize, under this class of
estafa, the element of deceit is indispensable. Likewise, it is essential that the false
statement or fraudulent representation constitutes the very cause or the only motive
CHAPTER II 63
RECRUITMENT AND PlACEMENT
person is convicted for both illegal recruitment and estafa for one and the same act. 1
The initiation of an illegal recruitment case does not bar the filing of estafa against
one and the same person since these two crimes are entirely different offenses and
~
neither one necessarily includes or is necessarily included in the other. Double
~ jeopardy could not result from prosecuting and convicting the accused-appellant for

I
2
which induces the complainant to part with the thing ofvalue. both crimes considering that they were entirely distinct from each other not only
Thus, in convicting the accused spouses for estafa in People v. from their being punished under different statutes but also from their elements being
Cagalingan/ the High Court found that private complainants were led to believe by different. 2 A person who is convicted of illegal recruitment may, in addition, be
accused spouses that they possessed the power and qualifications to provide them
with work in Macau when in fact they were neither licensed nor authorized to do so.
Accused spouses made it appear to private complainants that Beatriz was requested
by her employer to hire workers for Macau, when in fact she was not They even
I"
!1:
~
convicted of estafa under Article 315 2(a) of the Revised Penal Code. There is no
problem ofjeopardy in this situation.3
5. SAME EVIDENCE TO PROVE ILLEGAL RECRUITMENT MAY BE
~ USED TO PROVE ESTAFA.
recruited their own relatives in the guise of helping them get better jobs with higher ~
'·1
[",_; To successfully prosecute the illegal recruiter for estafa, the prosecution
pays abroad for them to improve their standard of living. Likewise, private ~~
needs only to present t!J.e very same evidence proving his commission of the crime
complainants were deceived by accused spouses by pretending that the latter could
of illegal recruitment4 It is thus enough to show thct the recruiter and his cohort
arrange their employment in Macau, China. With these misrepresentations, false
acted with unity of purpose in defrauding the victims by misrepresenting that they
assurances and deceit, they suffered damag~s and they were forced to part with the!r
had the power, influence, agency and b1JSiness to obtain overseas employment for
hard-earned money, as one of them even testified to have mortgaged her house and
them upon payment of a placement fee, which they did pay and deliver to the
another, to have borrowed money from a lending institution just to raise the alleged recruiter. 5
processing fees.
5.
3. ACQlliTfAL IN THE ILLEGAL RECRUITMENT CASE, NOT A BAR
TO CONVICTION FOR ESTAFA. LIABILITY OF LOCAL RECRUITMENT AGENCY
Considering that illegal recruitment and estafa.are distinct crimes, a person AND FOREIGN EMPLOYER
4
acquitted of illegal recruitment may be held liable for estafa A person's acquittal in l
II
the illegal recruitment case does not prove that she is not guilty of estafa. Double a.
5
jeopardy will not set in as discussed below. SOLIDARY UABll.1TY
4. CONVICTION FOR BOTH ILLEGAL RECRUITMENT AND ESTAFA,
1. APPLICABILITY TO ALL FORMS OF LIABILITY.
NOT DOUBLE JEOPARDY.
For the same reason as above, that is, that illegal recruitment is malum
prohibitum, whereas estafa is malum in se, there can be no double jeopardy if a
I The joint and several nature of the liability of the principal/employer and
the recruitment/placement agency applies to any and all monetary claims arising out
of the implementation of the employment contract involving Filipino workers for

II overseas deployment'

, SUil1iJl v. P• • G.R. No. 1!10970, Nt:N. 24, 2014; P~ v. Chua, G.R No. 187052, Sepl13, 2012, 680 SCRA 575,

I
1
For dooble jecpMfy 1o exS, flee (3) requisites ll'liSt be present (1) a fist jeopaldy ll1JSt hale altd1ed prilr kl1he secood;
592; Syv. ~. G.R. No.183879,Apri 14, 2010,cililg RR l'iledesv. ~. G.R. No.156055, March 5, 2007,517

P.
seRA 369; Cosme. Jr. v. People, G.R No. 149753, Nt:N. 'll, 2006, 508 SCRA 190; Jm{)ec Ccnstruclion Corporafion v.
CA. G.R No. 146818, Feb. 6, 2006,481 SCRA 556; See also l'eqllev. Cornia, G.R. No. 171448, Foo. 28, 2007;
~ G.R. Nos. 141221-36. M!rth 7, 2002; Pef:411ev. Salb, G.R No.125903. Nov.15,2000; Peoplev. Till TIOilJ
MeriJ, G.R Nos. 12083540, Apri110, 1997; P . v. calonzo, G.R Nos. 11515().55, Sepl27, 1996; People v. Roolero,
v. ~
~
2
3
4
(2) tile fist jeopaldy ll'liSt M.oe been~ 1errrilated; ll1d (3) fie second jeopaldy l1liSt be fa'fle same offense as l1al i1
fie first
~v.Bayker,G.RNo.170192,feb.10,2016.
~ v. Billaber, G.R Nos. 114967-&, Jan. 26, 2004.
People v. ~atiena. G.R No. 200884, June 4, 2014; ~ v. Chua, G.R No. 187052, Sept. 13, 2012; Qrmen Riluab v.
G.R Nos. 97044-46. July 6, 1994, 233 SCRA 713; P~ v. MruYJas, Jr., GR Nos. 91552·55, March 10, 1994, 231 People, G.R No. 176337, J111e2S, 2009; People v. T~ G.R No. 173473, Dec. 17, 2008.
~ 5
People v. Alzona, G.R. No. 132029, Ju~ 30, 2004.
SCRA1. 6
2 Pec4lle v. Gw;Jalhgan, GR No. 198664, Nw. 23, 2016. Sectioo 10, RA No. 8042, as emended by Section 7, RA No. 10022; Section 3, Rule VII, OlmiJus Rules and Regulalioos
3 ld. ~
kllplementi1g tile ~rant W<Xke!S and ~ Fqlilos Pd. of 1995, as Amended by RA No. 10022, issued on July 8,
Syv. P~. G.R. No.183879, Apli 14,2010. 2010; See also No. 17, Rule II, Pert I, Revised POEA Rules and RegOOOOrls Gaiemirg the Recni1ment ll1d ~of
4
5 ld. i
L
 BAR REVIEWER ON lABOR lAW
64
2. A PRE-QUALIFICATION REQUIREMENT.
It is one of the pre-qualification requirements, both under the 2016 ~
Revised Rules for Land-based and Sea-Based OFWs, that any person applying for
a license to operate a recruitment agency/manning agency, should, together with the
written application, file with the POEA, a duly notarized undertaking by the sole I 5. CONTINUING LIABJLITY.
Ii
proprietor, the managing partner, or the president of the corporation stating that the
applicant• shall assume full and complete responsibility for all claims and liabilities
which may arise in connection with the use of the license2 and assume joint and
several liability with the employer/shipowner/principal for all claims and liabilities
which may arise in connection with the implementation of the contract, including, ~
but not limited to, unpaid wages, death and disability compensation and
repatriation.3 And in case of a corporation or partnership, it is further required that a
duly notarized undenaking be executed by the corporate officers and directors, or ~
<
partners, that they shall be jointly and severally liable with the corporation or ',~
partnership for claims and/or damages that may be awarded to the workers.
4
~
3. INCORPORATION IN THE EMPLOYMENT CONTRACT.
The joint and several obligation must be incorponted in tfJ.e contract for
5
uverseas employment and shall be a condition precedent for its approval.
4. WHO ARE LIABLE IN CASE OF JURIDICAL PERSONS?
If the recruitment/manning agency is a juridical being, the corporate
officers and directors and partners, as the case may be, shall themselves be jointly
and severally liable with the corporation or partnership for the aforesaid claims and
damages.' This is so because joint and several liability shall likewise refer to the
l..a1d-Based ~ Fiipilo Wtrte; of 2016; No. 20, RIJe II, Pat I, 2016 ReviSed POEA Riles Clld Regulations
G.:wemi'9 the Recruitment and ~of Seafcres issued oo Fellnay 26, 2016. See also
SectOO 4(1), Rule II, Pert II, Revised POEA Rules !lld RegUa!iooS QNerni1g the Recruitment iDI ~ ct Lm
Based <Ne!seaS ~ Worke; rJ. 2016; Section 4(F), Rule II, Pat I~ 2016 Revised POEA ~ Clld Regulations
Gowmi1g the Recruitment Cl1d ~of Seafcres issued oo Fellnay 26, 2016.
2 SectOO 4(F)(2), Rule II, Part II, 2016 Revised POEA Rules trld RegUalixls Govemi'g lhe RecnJiment Clld fnllloyment of
Seafarers issued oo Fellnay 26, 2016.
3 SectOO 4(1){8), Rule II, Pat II, Revised POEA Rules and Regulalioos G!Nemilg the Reauibnert Clld ~loyment of l.Md-
Based <Ne!seaS Flipilo Worke; of 2016; Section 4(F)(3), Rule II, Part II, 2016 Revised POEA IUls Clld Regulations
GoYemi1g the Recruitment il1d ~of Seaflms issued oo February 26, 2016.
4 SeealsoSeclion 4(g), Rule II, Pat II, Revised POEARulesiVld RegtJatms ~the Recruitmentclld Empk7jmentof
Lm&sed <Nerseas fii4lioo Worke; ct 2016; Section 4(G), Rule II, Pirt II, 2016 Re.ised POEA Rules Clld Regulations
GcNemi1g the Recruitment and Err!Jioyment of Seafarefs issued oo Fellnay 26, 2016. '"
s SectOO 10, RA No. 8042, as emended by Section 7, R.A. No. 10022; Section 3, Rule VII, OiMIJus Rules and RegulationS
~ling the Mglallt WorkeiS and CNE!ISOOS Fffipinos M of 1995, as Amended by R.A. No. 10022, issued oo Mj 8,
2010.
~ ~
6 Section 10, R.A. No. 8042, as crrended by Section 7, R.A. No.10022; Section 1(s) of Rule II and SecOOn 3, ~ parc¥Jicipll,
L
Ride VII, Olmilus Rules and Regulafals Implementing lhe Mglllll Worke; and CNerneas Fipilos Ad. of 1995, as
Amended by R.A. No. 10022, issued oo Ju~ 8, 2010.
CHAI'TERII 6s
RECRUITMENT AND PlACEMENT
nature of liability of partners, or officers and directors with the partnership or
corporation over claims arising from employer-employee relationship.•
The joint and several liabilities discussed above shall continue during the
entire period or duration of the employment contract and shall not be affected by any
substitution, amendment or modification made locally or in a foreign country of the
said contract 2
6. EFFECT OF COMPULSORY INSURANCE COVERAGE ON JOINT
AND SEVERAL NATURE OF LIABJLITY.
Under a new provision3 introduced by RA. No. 10022 to RA. No. 8042,
eve!)' OFW should now be compulsorily covered by insurance to answer, among
others, his/her monetary claims. 4 This compulsol)' insurance coverage, however,
should not affect the joint and several liability of the foreign employer and the
recruitment/manning agencf as provided in the law. 6 TIJs topic on insura11ce
coverage is discussed extensively below.
b.
THEORY OF IMPUTED KNOWLEDGE
This theol)' refers to a cognizance of a circumstance or fuct attributed to a
party because of its position, or its relationship with or responsibility for another
party. The relationship of the local recruitment agency/local manning agency vis-a-
vis its foreign principal is that of agent-principa~ the former being the agent and the
latter, the principal. Consequently, the theory of imputed knowledge ascribes the
knowledge of the agent to the principal.
1
No. 17, Rule II, Pert I, Revised POEA Rules and ~ Govemilg the Reauirnent iD1 ~of l..aJd.Based
Overseas ~ Worke; a 2016; No. 20, RiJe II, Pat I, 2016 Revised POEA Rules IVld Regulc'dioos Govemilg the
'Realimrtinl ~of Seafirefslssued 00 Febuay26, 2016.
2 Soctioo 10, R.A. No. 8042, as ;mended by Section 7, RA No. 10022; Section 3, Rule VII, cmmus IU!s !lld RegUa!ions
~the WiJill1t Workers !lld <Ne!seaS ~hi. ct 1995, as Amended by RA No. 10022, issued on Mf 8,
2010.
3 Soctioo 37-A, RA. No. 8042, as added by Sedion 23, R.A. No. 10022; Sedion 1, RiJe XVI, Oimllus Rle and
RegtAaOOns ~11ilg lle ~ Wort<e; and CNBseas Fipi1os hi. ct 1995, as Anmded by RA No. 10022, issued
00 .Mt 8, 2010.
4
See ~(f) ctSedion37-A, RA No.8042, asOOded bySection23, R.A. No.10022; SectOO 1(~, Rule XVI, OlmiJus
Rules Clld Regulations ~ the Mgrant Worke; iDI Overseas Flipilos Ad. ct 1995, as Amended by R.A. No.
10022, issued oo Ju~ 8, 2010.
5
See Section 37-A (6), RA No. 8042, as added by Sedion 23, RA No. 10022; Seem 10(6), RUe XVI, Ormbus Rules and
Regulations lmplementilgthe MgrantWcners and CNBseas Fipinos Mol 1995, asAmeoded by R.A. No. 10022, issued
6
oo Ju~ 8, 2010.
Section 10, R.A. No. 8042, as 8l11el1ded by Section 7, RA No. 10022; Section 3, Rule VR, Omnilus Rules and Regulations
ifllllementing the M'gnrtWorkers and Overseas ~Actof1995, as Amended by RA No.10022, issued on Juli 8,
~:' 201o; See a1so No. 11. rue n, Part 1. Revised POEA Rules and RegtAaOOns Governing 111e Recruiment and ~~ ot
LlvJd.Based CNerneas Fipi1o Wo!Xe; of 2016; No. 20, Rule II, Part I, 2016 Reo.ised POEA Rules and Regula!Xlns
G!Nerni1Q the Recruilmertinl ~loymerltof Seafcrels issued oo Februaly 26, 2016.
66 BAR REviEWER ON lABOR lAW
This was, however, not the case in Sunace,1 where the OFW (Divina), a
domestic helper in Taiwan, has extended her 12-month contract after its expiration
for two (2) more years after which she returned to the Philippines. It was established
by evidence that the extension was without the knowledge of the local recruitment
agency, petitioner Sunace. The CA, however, affirmed the Labor Arbiter's and
NLRC's finding that Sunace knew of and impliedly consented to the extension of
Divina's 2-year contract. It went on to state that "It is undisputed that [Sunace] was
continually communicating with [Divina's] foreign employer." It thus concluded
that "[a]s agent of the foreign principal, 'petitioner cannot profess ignorance of such
extension as obviously, the act of the principal extending complainant (sic)
employment contract necessarily bound it."'
In finding that the application of this theory of imputed knowledge was
misplaced, the High Court ruled that this theory ascribes the knowledge of the agent,
Sunace, to the principal, employer Xiong, not the other way around. The knowledge
of the principal-foreign employer cannot therefore be imputed to its agent Sunace.
There being no substantial proof that S•mace knew of and consented to be bound
under the 2-year employment contract extension, it cannot be said to be privy
thereto. A5 such, it and its "owner" cannot be held solidarily liable for any of
Divina's claims arising from the 2-year employment extension. As the New Civil
Code provides: "Contracts take effect only between the parties, their assigns, and
heirs, except in case where the rights and obligations arising from the contract are
not transmissible by their nature, or by stipulation or by provision oflaw."
Furthermore, as Sunace correctly points out, there was an implied
revocation of its agency relationship with its foreign principal when, after the
termination of the original employment contract, the foreign principal directly
negotiated with Divina and entered into a new and separate employment contract in
Taiwan. Article 1924 of the New Civil Code reading: "The agency is revoked if the
principal directly manages the blisiness entrusted to the agent, dealing directly with
third person.S" thus applies. As defined, a "principal" refers to an employer or
foreign placement agency hiring or engaging Filipino workers for overseas
2
employment through a licensed private recruitment/manning agency.
It bears stressing, however, that the nature of the liability of the local
recruitment agency/local manning agency and its principal is "joint and severaL"
This holds true for any and all claims arising out of the implementation of the
employment contract involving Filipino workers for overseas deployment. If the
local recruitment agency/local manning agency is a juridical being, the corporate
officers and directors and partners, as the case may be, shall themselves be jointly
1 Suna::e inEmational ManagementSeMces, Inc. v. N!RC, G.R No. 161757, Jal. 25,2006.
2 Sf£tion 1[poL Rule II, Ormilus Rules ~ Reglliatioo<; 1n1J1ementi19 the Mgrant Wal\eiS aoo <Nerseas Ripioos M of
1995, As Amended by RA No.10022 [Man:h 08, 2010].
I CHAPTER II
RECRUITMENT AND PlACEMENT
and severally liable with the corporation or partnership for the aforesaid claims and
damages. 1
6.
67
TERMINATION OF CONTRACT OF MIGRANT WORKER
WITHOUT JUST OR VALID CAUSE
1. OFWs DESERVE TO BE PROTECTED BY OUR LAWS.
OFWs belong to a disadvantaged class. Most of them come from the
poorest sectors of our society. Their profile shows they live in suffocating slums,
~ trapped in an environment of crimes. Hardly literate and in ill health, their oaly hope
~
lies in jobs they can hardly find with difficulty in our country. Their unfortunate
circumstance makes them easy prey to avaricious employers. They will climb
~ mountains, cross the seas, endure slave treatment in foreign lands just to Sllivive.
~ Out of despondence, they will work under sub-human conditions and accept salaries
~-
[ below the :ninLrnum. The least we can do is to protect t.iem with our laws.2
There is an extreme need for the strict enforcement of the law and the rules
and regulations governing Filipino contract workers abroad. Many hapless citizens
of this country who have soug."tt foreign employment to earn a few dollars to ens!lfe
for their fanlilies a life worthy of human dignity and provide proper education and a
decent future for their children have found themselves enslaved by foreign masters,
harassed or abused and deprived of their employment for the slightest cause. No one
should be made to unjustly profit from their suffering. Hence, recruiting agencies
must not only faithfully comply with government-prescribed responsibilities; they
must impose upon themselves the duty, home out of a social conscience, to help
citizens of this country sent abroad to work for foreign principals. They must keep
in mind that this country is not exporting slaves but human beings, and above all,
fellow Filipinos seeKing merely to improve their lives.3
2. APPLICABILITY OF TilE SECURITY OF TENURE DOCTRINE.
OFWs, regardless of their classifications, have the right to security of
tenure guaranteed under the Constitution,4 notwithstanding the fact that their place of
work is overseas.5 Thus, for the entire duration of employment agreed upon in their
contracts, they cannot be dismissed without observing both substantive and
1 Section 1[s], Rule II, Ormilus Rules and Regulations knplementing l1e ~ WlxkeiS and OJelseas Flipi1os M. of
t: 1995, AsAmendedbyRA No.10022 {Marr.f108, 2010].
t;
2 Yap v. Thenamais Ships M<mJement G.R. No. 179532, May 30, 2011, cilirq ~ v. Nayooa, G.R No. 148407, Na.t. 12,
I 3
2003; Chavezv. Bont!rPerez, GR. No.109808, Mard11, 1995,242 SCRA 73, 82, 312Phl88.
JSS lndochinaColp. v. femr, G.R No.156381, Oct 14,2005, citing TeW:a Sills nHrade SeMces, Inc. v. NLRC, G.R.
L
No.100399, Aug. 4, 1992,212 SCRA 132.
4
Ssdion 3, Article XIII, Phi~ Constib.JOOn.
5
SarneerCNelseasi'Lnmslt~ency. Inc. v.JoyC. Cables, G.R No.170139,Aug.05,2014.
68 BAR REviEWER ON LABOR LAW
procedural due process. If they were illegally dismissed, their right to security of
tenure is violated. 1
It bears underscoring that the rights violated when, say, a ftxed-period local
worker is illegally tenninated are neither greater nor iess than the rights violated
when a ftxed-period overseas worker is illegally tenninated. It is state policy to
protect the rights of workers without qualification as to their place of employment
In both cases, the workers are deprived of their expected salary, which they could
have earned had they not been illegally dismissed For both workers, this deprivation
translates to economic insecurity and disparity. 2
3. THE POEA STANDARD EMPWYMENT CONTRACT (POEA-SEC).
Under the POEA Rules, all employers and principals are required to adopt
the POEA- SEC. The provisions, however, differ for land-ba;;ed and sea-based
OFWs. They are discussed hereunder.
The POEA is tasked to secure the best possible terms and conditions of
employment for OFWs. As such, it shall develop and continually review
employment standards in accordance with policy thrusts and markP.t developmcnts. 3
The POEA-SEC for OFWs is designed primarily for their protection and
benefit in the pursuit of their employment overseas. It~ provisions must therefore be
construed and applied fairly, reasonably and liberaliy in their favor. Only then can its
beneficent provisions be fully carried into effect. 4
In Vir-Jen Shipping/ an issue was raised by the movants on wheth.er or
not the seamen violated their contracts of employment when they demanded 500/o
increase in salaries and benefits. The Supreme Court ruled that the fonn contracts
approved by the National Seamen Board (now POEA) are designed to protect
Filipinos, not foreign shipowners who can take care of themselves. 'The standard
forms embody the basic minimums .which must be incorporated as parts of the
employment cOntract.6 They are not collective bargaining agreements or irmnutable
contracts which the parties cannot improve upon or modi1Y in the course of the
agreed peril of time. To state therefore that the affected seamen cannot petition their
employer for higher salaries during the 12 months' duration of the contract runs
counter to established principles oflabor legislation. Thus, in Suzara,7 the Supreme
1 kl.
2 kl.
3 Sectioo 134, Rule I, Part V, Revised POEA Rules and Regulations Governing 1he Recruilmenl and Efillloyment of l.Md-
lmed<Nelseas Fiipilo WO!Kers of2016.
4
Pllirl)pine TIMSI1Bine Galiels, Inc. v. NLRC, G.R No. 123891, Feb. 28, 2001; Walem Maritine Se!vices Inc. v. NLRC,
G.R No. 130n2, NoY.19, 1999, 318 SCRA 623; 376 Pllil. 738.
s Vr.Jen Shippi1g cn1 Mrine SeiVicesv. NLRC, G.R Nos. 58011-12, .lui)' 20, 1982, 115SCRA.347.
s See Sec1ioo 15, ~ V, R1Aes cn1 Regulatioos lrnplerreltillJ fie Lalla Code.
7 &Jzaav.NLRC,G.R.No.57999,Aug.1, 1989.
CHAPTER !I 6g
RECRUITMENT AND PlACEMENT
Court ruled that the act of the dismissed seamen in asking for increases in their
salaries does not constitute a breach of their employment contracts. 1
Any ambiguity in the overseas employment contract shall be interpreted
against the parties that drafted it.2 Labor contracts must be interpreted liberally in
favor of the worker? The provisions contained in the POEA-SEC are manifestations
'I of the State in favor of the working class, consistent with the social justice and
protection of the working class provisions of the Constitution.4
4. PROHIBITION ON UNAUTHORIZED SUBSTITUTION OR
ALTERATION OF POEA-APPROVED EMPLOYMENT CONTRACT.
RA. No. 8042 explicitly prohibits the substitution or alteration, to the
I
r~
prejudice of the worker, of employment contracts already approved and verified by
the POEA from the time of aetna! signing thereof by the parties up to and including
the period of their expiration without the approval of the POEA.5 Consequently, it
w
~ was held in Chavez, 6 that the subsequently executed side agreement of an OFW with
her foreign employer which reduced her salary below the amou.•1t approved by the
~ f'OEA is void because it is against our existing laws, morals and public policy. The
~ said side agreement cannot supersede her standard employment contract approved
~
&
~'
by the POEA. 7 In addition w such voiding, disciplinary sanctions may be imposed
!: upon the errant employer/principal.8
5. PARTY INVOKiNG THE FOREIGN LAW HAS THE BURDEN TO
'
PROVE IT; APPLICATION OF THE DOCTRINE OF PROCESSUAL
PRESUMPTION.
It is a hornbook principle that the party invoking tiJ.e application of a
foreign law has the burden of proving such law, under the doctrine of processual
presumption or "presumed-identity approach "9 an International Law doctrine
1 SeeasoFIS!Asian TlliiSpOrtcnl Si1Wi1Q.&~Jencyv. Ople, G.R. No. L~.Ju~9, 1986,142 SCRA542.
2 Calai1 v. POEA's Admilislrator, G.R No.104n6, Dec. 5, 1995, 238 SCRA 721.
3 Oimv. POEA,GR No. 79560, Dec. 3,1900,191 SCRA823.
4 Easlem Sl~lileS, Inc. v. POEA,G.R No. L·76633,M18, 1988,166 SCRA533.
5 See Sec. 6[iJ, RA No. 8042, as il1lel1ded by Seclioo 5, RA No. 10022; See Seclioo 1(i), ROO IV, Olmilus Rules llld
I Reguicmns in1Jiementing the Mgllllt WaXers cn1 Overseas~ M of 1995, as .ArneOOed by RA. No. 10022, issued
on~8,2010.
I 6
7
8
Chavezv. Boo1o-P~ G.R No. 109808, Mcrth 1, 1995, 242 SCRA 73, 82; 312 Phil. 88.
See aso Placewelllnlemalional SeM:es COip. v. ~. G.R No. 169973, m 26, 2006.
For land-based OFWs, such subs1i1u1ion or aJielatOO of the ~ oordiact ID the pre;.xlice ci ll1e OFW will merit
i
lhe iJ1lOSiOOn ci lhe penally of pemmeot dsquablioo cnl deisting flan lle roster d acaded pli1¢ferr¢yers.
(Section 144(1)(i), Rule IV, RMied POEA Rules and Re;~ulalions GaJemirg lhe Realilment and ~~ of ~.and­
Based Overseas Fiipilo WOO:ers of 2016). For sea-based OFWs, sud! 5lMJtion or alteralioo ci ll1e POEA-approved
cootract Y.'iU be penalized as folows: 1d Offense· File of PSO,OOO.OO; 2'11 Offense· Fne ci P100,000.00; 3"' Offense •
Suspensi:ln tum pri:ipation n1he OYe!SI!8S errc>lo'fment prcgram (Six nmt11s kl One year); 4~ Of!eose • PeiTI1allellt
~ification em delisling from 1he roster of accredited (l!indpalslerrc>I:!Yers. {Section 127(BX2), Rule IV, 2016 Rellised
L
POEA Rl*ls and Regulations GcNemi1g lhe Recrui1mentcnl ~of Sealarefs issued on February 26, 2016).
9 ld.
.
70 BAR REviEWER ON lABOR lAW
which dictates that where a foreign law is not pleaded or, even if pleaded, is not
proved, the presumption is that such foreign law is the same as Philippine law. Thus,
under this situation, Philippine labor laws should apply in detennining the issues
presented in a case. 1
It must be noted that the Philippines does not take judicial notice of foreign
laws, hence, they must not only be alleged; they must be proven. This is so because
in international law, the party who wants to have a foreign law applied to a dispute
or case has the burden of proving the foreign law. The foreign law is treated as a
question of fact to be properly pleaded and proved as the judge or Labor Arbiter
cannot take judicial notice of a foreign law. He is presumed to know only domestic
or forum law. 2 To prove a foreign law, the pa1ty invoking it must present a copy
thereof and comply with Sections 243 and 25 4 of Rule 132 of the Revised Rules of
Court.
In EDI-Stajjbuilders, 5 the employment contract signed by the private
respondent OFW specifically states that the Saudi Labor Laws will govern matters
not provided for in the contract (e.g., specific causes for termination, termination
procedures, etc.). Being the law intended by the parties (lex loci intentiones) to apply
to the contrac~ Saudi Labor Laws should govern all matters relating to the
termination of the employment of the OFW. Unfortunately for petitioner, it did not
prove the pertinent Saudi Labor Laws on the matter; thus, the International Law
doctrine ofpresumed-identity approach or processual presumption comes into play.
Petitioners in ATCI Overseai contend that Philippine labor laws on
probationary employment are not applicable since it was expressly provided in
respondent's employment contract, which she voluntarily entered into, that the terms
of her engagement shall be governed by prevailing Kuwaiti Civil Service Laws and
Regulations, as in fact POEA Rules accord respect to such rules, customs and
practices of the host countiy. To prove the Kuwaiti law, petitioners submitted the
following: MOA between respondent and her foreign employer, the Ministry of
Public Health of Kuwait (the Ministry), as represented by ATCI, which provides
1 kl.• ~ E!JI.S1aflbut:l klimalional,lnc. v. NLRC, G.R !t1.14558,0ct. 26,2007.
2 8JI.S1afftxilel ~.he. v. M.RC, • ·
3 11is jii1Msion states: 'SEC. 24. Pmol ct ati:ial record. -The reaxd ct Pld: dtnmenls referred kl i1 paa;J~ (a) d
Section 19, m missille fa" any PlJPQSe, may be eWiena!d by oo ariCial pubi:alioo f1ereof or by acql)' ~by
f1e officer haW1g l1e legal rusiDdy ct l1e recoid. (J" by his deputy, a1d ~. llle recad is not kept illhe
1'1111qJpiles, will aCEftiftaE 1hal sud1 officer has the ~.file ollice il'Afli:tl lie record is kept is i1 a~ COI.mby,
the certificafe may be made by a~ d lle entassy oc legalioo, CIJI1Stj genera, amd, vk:e consul, oc COOSilar agoot
<r by IJTf officer ilthe fcxegn seNice ct the Phif~ statiooed illle forei;Jn IXU1by il\Wlidllle record is kept, Md
aJ1hen1k:ated by lle seal ct his alice.
~ This section provKles: 'SEC. 25. VIM! at1eslatioo d cql)' llllSI slate. - 'M1eneYer a CfYt1f d a doo.Jment a record is
attested for l1e pwpose ct 1he evidence, lhe mtestaOOn llllSI state, in subslillce, llat 1he copy is a cooect rtfr'/ a the
aiJilal, or aspd:: pat lheroof, as lhe case may be. The a!testaOOn l1lJSI be ll1der 1he olfidal seal of lhe attesli'lij dficer,
f 1here be fffi, <r Jhe be 1he cleit ct acourt haW1g aseal, under lhe seal ct such coot'
5 ~-
6 ATCI CNe!seasGaporalkxlv. Echil, G.R No.178551, Od. 11,2010.
CHAPTER II 7l
RECRUITMENT AND PlACEMENT
that the employee is subject to a probationary period of one (I) year and that the host
countcy's Civil Service Laws and Regulations apply; a translated copy (Arabic to
English) of the termination letter to respondent stating that she did not pass the
L probation terms, without specifying the grounds therefor, and a translated copy of
f:
the certificate of termination, both of which documents were certified by Mr.
Mustapha Alawi, Head of the Department of Foreign Affairs-Office of Consular
Affairs Islamic Certification and Translation Unit; and respondent's letter of
reconsideration to the Ministry, wherein she noted that in her first eight (8) months
of employmen~ she was given a rating of "Excellenf' albeit it changed due to
changes in her shift of work schedule. The Supreme Comt, however, ruled that these
documents, whether taken singly or as a whole, do not sufficiently prove that
respondent was validly terminated as a probationary employee under Kuwaiti civil
service laws. Instead of submitting a copy of the pertinent Kuwaiti labor laws duly
authenticated and translated by Embassy officials therea~ as required under the
Rules, what petitionerf submitted were mere certifications attesting only to the
correctness of the translations of the MOA and the termination letter which doe~ not
.. prove at all that Kuwaiti civil servke laws differ from Philippine laws and that under
I
f such Kuwaiti laws, respond~nt was v~lidly terminated.
[~
[
Indeed, the parties to an overseas employment contract may select the law
l by which it is to be governed. A basic policy of contract is to protect the expectation
! of the parties and such party expectation is protected by giving effect to the parties'
l own choice of the applicable law. In such a case, the foreign law is adopted as a
t "system" to regulate the relations of the parties, including questions of their capacity
to enter into the contr.!c~ the formalities to be observed by the parties, matters of
performance and the like. Instead of adopting the entire mass of the foreign law, the
parties may just agree that specific provisions of a foreign statute are to be deemed
incorporated in their contract "as a set of terms." By such reference to the
provisions of the foreign law, the contract does not become a foreign contract to be
governed by such foreign law since the said law does not operate as a statute but
merely as a set of contractual terms deemed written in the contract
The choice of law must, however, bear some relationship to the parties or
their transaction. For instance, as Cadalin1 pronounced, where the services of the
claimants were rendered in Bahrain, there is no question that the contracts sought to
be enforced have a direct connection with Bahrain. Consequently, where the claims
are for benefits granted under the Bahrain law, only the claimants who worked in
Bahrain should be entitled to file their claims in a class sui~ excluding those who
worked elsewhere.
i"
L
1 Cadaio v. POEA's Admi1Stratlr, GR No. 104776, Dec. 5, 1995, 238 SCRA 721.
72 BAR REVIEWER ON lABOR lAW
6. OFWs MAY ONLY BE TERMINATED FORA JUST ORAUTIIORIZED
CAUSE AND AFTER COMPLIANCE WITII PROCEDURAL DUE
PROCESS.
By our laws, OFWs may only be tenninated for a just or authorized cause
and after compliance with procedural due process requirements. 1 Article 297 [282]
of the Labor Code enumerates the just causes of tennination by the employer2 and
Articles 298 [283] and 299 [284] thereof enumerate the authorized causes. The
fundamental procedural rights afforded by Philippine laws to workers equally apply
toOFWs. 3
The 2014 en bane case of Sameer v. Cabiles, 4 is a classic example of
illegal dismissal of an OFW. Respondent's dismissal grounded on inefficiency and
negligence less than one year from hiring and her repatriation on the same day show
not only failure on the part of petitioner to comply with the requirement of the
existence ofjust cause for tennination; they patently show that t'Ie employers did not
comply with the due process requirement. Thusly:
"A valid dismissal rtxtuires both a valid caliSe and adherence
to the valid procedure of dismissal. 5 The employer is required to give the
charged employee at ieast two written notices before termhation. 6 One
of the written notices must inform the employee of the particular acts
that may cause his or her dismissal. 7 The other notice must '[inform]the
employee of the employer's decision.' 8 Aside from the notice
requirement, the employee must also be given 'an opportunity to be
heard.'9
"Petitioner failed to comply with the twin notices and hearing
requirements. Respondent started working on June 26, 1997. She was
told that she was terminated on July 14, 1997 effective on the same day
and barely a month from her first workday. She was also repatriated on
the same diiy that she was informed of her termination. The abruptness
of the termination negated any finding that she was properly notified and
given the opportunity to be heard. Her constitutional right to due process
oflaw was violated."
1 &mlerOverseas Plocement.AI;}ency, lnc.v. Joy C. Gables, G.R No.170139,AuJ. 05,2014.
2 ld.
3 ld.
4 Sarreer Overseas Placemeot Agency, Inc. v. Jaj C. Cabiles, G.R No. 170139, Aug. 05, 2014. The loregn empbye-
aleged illhis case flat respondeofs dismissal was due to i1elliciency i1 her'Mrt Cl1d neglgence i1 her duties.
5
6
7
ld., citi1g Skippers United Pdl:, Inc. v. Doza, etal., G.R No.175558, FebruayB, 2012,665 SCRA412,426.
ld., ld.
ld., ld.
6
9
ld., ld.
ld.,ld.
I CHAl'TERll
RECRUITMENT AND PLACEMENT
73
I
!
I
In PCL Shipping/ petitioners contend that the twin requirements of notice
and hearing apply strictly only when the employment is within the Philippines and
that the same need not be strictly observed in cases of international niaritime or
j
't, overseas employment. The Supreme Court, however, disagreed The provisions of
the Constitution as well as the Labor Code which afford protection to labor apply to
Filipino employees whether working within the Philippines or abroad Moreover,
the principle of lex loci contractus (the law of the place where the contract is made)
governs in this jurisdiction. In the present case, it is not disputed that the Contract of
Employment entered into by and between petitioners and private respondent was
executed here in the Philippines with the approval of the POEA. Hence, the Labor
Code, together with its implementing rules and regulations and other laws affecting
labor, apply in this case. Accordingly, as to the requirement of notice and hearing in
ihe case of a seafarer, the Court has already ruled in a number of cases that before a
seaman can be dismissed and discharged from the vessel, it is required that he be
given a written notice regarding the charges against him and that he be afforded a
formal investigation where he could defend himself personally or through a
representative. Hence, the employer should strictly comply with the twi.r1
requirements of notice and hearing without regard to the nature and situs of
employment or the nationality of the employer. Petitioners failed to comply with
these twin requirements.
7. DUE PROCESS"
a. In the absence of proof of applicable foreign law, OFWs are
entitled to due process in accordance with Philippine laws.
As a general rule, in the absence of proof of the applicable laws of the
foreign employer, it is the provisions of the Labor Code which govern
termination of employment of OFWs. This was the holding in the case of EDI,
Staffbuilders International, Inc. v. NLRC/ where no proof of the Saudi laws
was presented. In such absence, Philippine labor laws and regulations shall
govern the relationship between the OFW and his employer. Our laws and rules
on the requisites of due process relating to termination of employment should
3
therefore apply.
4
In Philemploy Services and Resources, Inc. v. Rodriguez, the
respondent employee was hired as a domestic helper in Taiwan under a one-year
contract, with 40 days probationary period before she would become a regular
domestic helper. Terminated after ten (10) days of work, she filed an illegal
dismissal case. The Supreme Court affirmed the validity of her termination
J within the probationary period but noted that the twin requirements of notice and
[~
~
I 1
2
PCI.~ Phif1ppiles, lnc.v.NlRC, G.R No.153031, Dec.14,200l.
G.R No. 14558, Oct 26, 2007.
I 3
4
See Oriental ShipmalagemertCo., Inc. v. Hoo. CA,G.R. No. 153750, Jeri. 25, 2001.
G.RNo.152616,M!fcl131,200l.
L.
74 BAR REviEWER ON lABOR lAW CHAPTER II 75
RECRUITMENT AND PLACEMENT

hearing were not observed. Respondent is therefore entitled to the award of
P30,000.00 as nominal damages for failure to observe due process. ·
b. Due process in case of termination of employment of seafarers.
PCL Shipping Philippines, Inc. v. NLRC. 1 - Contrary to petitioners'
contention that the twin requirements of notice and hearing apply strictly only
when the employment is within the Philippines and that the same need not be
strictly observed in cases of international maritime or overseas employment, the
provisions ofthe Constitution as well as the Labor Code which afford protection
to labor apply to Filipino employees whether working within the Philippines or
abroad. Moreover, the principle of lex loci contractus (the law of the place
where the contract is made) governs in this jurisdiction.
Centennial Transmarine, Inc. v. Dela Cruz/ however, is more
categorical in declaring that for officers and crew who are working in foreign
vessels involved in overseas shipping, there must be compliance with the
applicable laws on overseas employment as welt as with the regulations issued
by the POEA, such as thJse embodied in the Siandard Contract for Seafarers
Employed Abroad (Standard Contract).3
Skippers Pacific, Inc. v. Mira/ instructs that under the said Standard
Contract, the ''two-notice rule" is indicated. An erring seafarer is given a written
notice of the charge against him and is afforded an opportunity to explain or
defend himself. Should sanctions be imposed, then a written notice of penalty
and the reasons for it should be furnished the erring seafarer. It is only in the
exceptional case of clear and existing danger to the safety of the crew or vessel
that the required notices are dispensed with; but just the same, a complete report
should be sent to the manning agency, duly supported by substantial evidence of
the fmdings. 5
8. AWARD OF INDEMNITY IN THE FORM OF NOMINAL DAMAGES
IN CASE OF DISMISSAL OF OFWs FOR JUST OR AUTHORIZED
CAUSE BUT WITHOUT DUE PROCESS.
The Agabon doctrine6 of awarding indemnity in the form of nominal
damages in cases of valid termination for just or authorized cause7 but without
procedural due process also applies to termination ofOFWs. The amount of
indemnity of P30,000.00 was awarded in DMA Shipping Philippines, Inc. v.
Cabillar,' and PlO,OOO.OO in the case of PCL Shipoing Philippines, Inc. v.
NLRC. 2
..I 9. BURDEN OF PROOF IN TERMINATION CASES INVOLVING OFWs.
I The burden of proof devolves on both the foreign-based employer and
\ the local agent Because of the joint and solidary nature of the liability of the
foreign-based employer and the local recruitment agency, the burden of proof to
show that the dismissal of the OFW is legal and valid devolves upon the both of
them. Hence, in the case of EDI-Staffbuilders/ it was held that even though EDI
and/or ESI were merely the local employment or recruitment agencies and not the
foreign employer, they should have adduced additional evidence to convincingly
show that the OFW's employment was validly and legally terminated. The burden
devolves not only upon the foreign-based employer but also on the recruitment
agency for the latter is not only an agent of the former but is also solidarily liable
with the foreign principal for any claims or liabilities arising from the dismissal of
the worker.
10. QUANTUM OF EVrDENCE IN OFW CASES.
a. Substantial evidence required.
A fact may be deemed established in cases filed before administrative or
quasi-judicial bodies like the POEA, if it is supported by substantial evidence.
POEA is not bound by the technical rules of procedure and evidence and the rules
4
obtaining in the courts oflaw. Its proceedings are non-litigious innature.
6-1.
AWARD OF MONETARY CLAIMS
AND DAMAGES TO OFWs
t rfHE RELIEFS UNDER ARTICLE 294 [279] OF THE LABOR CODE
ARE NOT AVAILABLE TO OFWs; LEGAL BASIS FOR THEIR
RELIEFS IS SECTION 10, R.A. NO. 8042, AS AMENDED.
I Any and all money claims arising from the employment of OFWs,
including those for death, disability or illness benefits, are not rooted in the
I Labor Code.5 It is R.A. No. 8042, otherwise known as the "Migrant

,I
'
~
1 GR No. 153031, Dec. 14, 2006. ~
2 GR No. 180719, Aug. 22, 2008. li I G.R No. 155389,Feb. 28, 2005.
G.R. No.148418,J~ 28, 2005; See also Dela Rosav. Michaelmar Philippines, Inc., G.R No.182262, Apli 13,2011.
3 See Section 1711lereoii\!1K:h prescriles tile DisdprMy ProcedlRS" be followed in le!mination of seafarers.
~ GRNo.144314,NoY.21,2002,392SCRA371.
5 See also !lela Rosa v. Mchaemar Phifwines, Inc., G.R No. 182262, ~ 13, 2011; NFD lnlemamal Manni1g ~l!llls v.
I 2
J ErJt.S1allbui:! lillem<6:xlal, Inc. v. NLRC, G.R No. 14558, Oct 26, '}ffJ7. .
Rase v. NlRC, G.R. No. 110637, Oct. 7, 1994,237 SCRA 523; Manalo v. Roldal-Confesor, G.R No. 102358, Nov. 19,

I
4
NlRC, G.R No.165389, Oct 17, 2008;Centennial Transmarine, Inc. v. !lela Cruz, GR. No. 180719,AIJ;J. 22,2008. 1992,215 SCRA808.
6 Agabon v. NLRC, GR No.158693,NoY.17,2004. 5 NYK.fil Sh~ Managtll1ent, Inc. v. The NLRC, GR. No. 161104, Sept 27, 2000; See also Sealooes Marine SeMces, Inc., v.
7 Also per Jaka doctrine based on Jaka Food~ Corpora1ixl v. I'm, G.R 151378, MKth 28,2005.

L
NLRC, G.R. No. 84812, Oct 5, 1990, 190 SCRA 337, 346.
76 CHAPTER II
BAR REVIEWER. ON lABOR lAW 77
RECRUITMENT AND PlACEMENT

Workers and Overseas Filipinos Act of 1995, "1 and not Article 294 [279]2 of the 2. A VALIDLY DISMISSED OFW IS NOT ENTITLED TO IDS SALARY
Labor Code, which is the appropriate legal basis for such claims, thus: FOR THE UNEXPIRED PORTION OF IDS EMPLOYMENT
CONTRACT.
"SEC. 10. Money Claims. - Notwithstanding any provision of Jaw to
the contrary, the Labor Arbiters of the National Labor Relations Commission An OFW who is dismissed from employment for a valid cause is not
(NLRC) shall have the original and exclusive jurisdiction to hear and decide, entitled to any salary for the unexpired portion of his employment contract.
within ninety (90) calendar days after the filing of the complaint, the claims However, if he is dismissed without observance of procedural due process, he is
arising out of an employer-employee relationship or by virtue of any law entitled to an indemnity in the form of nominal damages. 1
or contract involving Filipino workers for overseas deployment including
claims for actual, moral, exemplary and other forms of damage. Consistent 3. THE SERRANO DOCTRINE: ILLEGALLY DISMISSED OFWs ARE
with this mandate, the NLRC shall endeavor to update and keep abreast with NOW ENTITLED TO ALL THE SALARIES FOR THE ENTIRE
the developments in the global services industry. UNEXPIRED PORTION OF THEm EMPLOYMENT CONTRACTS,
XXX IRRESPECTIVE OF THE STIPULATED TERM OR DURATION
"In case of termination of overseas employment without just, valid THEREOF.
or authorized cause as defined by law or contract, or any unauthorized
deductions from the migrant worker's salary, the worker shall be entitled Prior to the Serrano doctrine which was enunciated in the en bane
to the full reimbursement of his rtacement fee and the deductions made ruling in the 2009 ~ase of Ar.tonio M. Serrano v. Gallant Maritime Services,
with interest at twelve percent (12%) per annum, plus his salaries for the Inc} the following provision of the 51h par~graph of Section 10 of R.A. No.
unexpired portion of his employment contract or for three (3) months for 8042, which is again quoted below for ready reference, viz.:
every year ofthe unexpired term, whichever is less.
XXX;' "In case of termination of overseas employment without just,
valid or authorized cause as defmed by law or contract, or any
A plain reading of above-quoted section readily shows that it applies unauthorized deductions from the migrant worker's salary, the worker
only to cases of illegal dismissal or dismissal without any just, authorized or shall be entitled to the full reimbursement of his piacement fee and the
deductions made with interest at twelve percent (12%) per annum,h
valid cause and finds no application in cases where the OFW was not illegally
his salaries for the unexpired portion of his employment contract or
dismissed.3 for three (3) months for every year of the unexpired term,
To iterate, the remedies under Article 294 [279], such as reinstatement whichever is less."
or separation pay in lieu of reinstatement or full backwages, are not available to has been interpreted to mean that the entitlement to monetary claims of an
OFWs. This is as it should be since OFWs are contractual employees whose illegally dismissed OFW depends on the duration of his contract.3 Basically, the
rights and obligations are governed primarily by the POEA Standard rule then may be stated as follows:
Employment Contract (POEA-SEC), the Rules and Regulations Governing
Overseas Employment and more importantly, by said R.A. No. 8042, as lately 1. If the duration of the employment contract is less than one (1) year,
amended by R.A. No. 10022.4 an illegally dismissed OFW shall be entitled to all his salaries for the
unexpired portion thereof; 4 or
2. If the duration of the employment contract is at least one (1) year1
1
2

3
SeeSediat 10dRA tb.8042v.tlk:hwas IWilelldedcn MM:h8, 2010bySectioo 7.dRA No.10022.
apiMicls: 'Arlk:le 294 [279l Security ofTernre.- k1 cases a18JIW ~ 11e ~ sha1 not lemW1ale lhe
seNkEs d <11 ~except for aiJS1 cause« u aJihorized by tlis Tille. lvl en1Jbyee v.f10 is UljJSitf dismissed
tan Wllk shall be riUed " reilstalement v.ilhrul bss of seliority ,gtrts Cl1d dher prNisges S1d Ill his tJII ~.
idlsM! d alcMances, S1d kl his olher benefits« 8lei' lllOOeQy eqLWalent ~ toot 11e line lis~ was
Ylflhheld tom hin ~ kllhe line ahis actual reinstalement•
PoseOon ~ M1itire Selvices, Inc. v. TCillCIIa, GR No. 186475, June 26, 2013; See also k1lemational
I
~
i
1
or more,2 an illegally dismissed OFW shall be entitled to

DelaRosa v. Waemlrf'hilippiles, klc., supra; Sada;lnd. v. Rei1er Pdc k1Emationa ShWng, Inc., Sl.fJI3; Pl1ieflllkly
SefVices ard Resrut:es, tic. v. ~uez, G.R No. 152616, t.'arch 31, 2006.
G.R No. 167614, MM:h 24, 2009.
..

~ SeMces v.ID;Jcrfa, G.R tb. 163657, 1\pfj 18, 2012, 670 SCRA 22, 36-37; SadagiKt v. Reinief Pacific
See for ils1Mce: SkWem Pacific, Inc. v, Mra, G.R No. 144314, N<w. 21, 2002, 392SCRA 371; Alheona klEmalional
~ SeNDls, loc. v. ViMls, G.R No. 151303, April15, 2005; wasanm MCI1ni1g A~Jec'q, Inc. v. NLRC, G.R. tb.
~ ~. Inc., G.R tb. 152636, kYJ. 8, 75YJ7, 556 Pfll252, 262; ll1d Dela Rosa v. Mcl1aekTa' Ph~iles,
Inc., G.R tb.182262, Apli 13,2011,648 SCRA 721,731. 127195, ktg. 25, 1999, 313 SCRA 88; Ali. Ertllk7f Ser.tes Cl1d Resooltes, k1c. v. Plrcmio, G.R. tb. 144786, Aplil15,
2004; l!ii1ia SlWifg Selvices, klc. v. Chua, G.R No. 162195, Ap,i.S, 2008.
~ l.kred Pdt, loc. v. NLRC, G.R No. 148893, Jutj 12, 2006; Gu-Mro v. Ackx3lle, G.R tb. 160952, Aug. 20,
I
4
2004; Penlagon klenamal ShWilg, Inc. v. Ade!Ciltr, G.R No.157373, Jut,t 'll, 2004; Ra'/agov. ESSO Eastern Marne, • See for exBIJ1lle: Skippers Un~ed Pacific, Inc. v. Maguad, G.R. No. 166363, ~. 15, 2006; Skippers Pdlc, Inc. v.
ll!!, G.R tb. 158324, Marth 14, 2005, 453 SCRA 381, 402. tka, ~; Phi.~ SefVices Clld Resourtes, Inc. v. F'arllnio, supra

L ,._J,,.

78 BAR REVIEWER ON lABOR lAW
1
whichever is less" between his "salaries for the unexpired portion
'
of his employment contract" or his salaries 'for three (3) months for
every year o1·"h 'd term. " 3
t e unexprre
The· foregoing rule has been rendered nugatory by the Serrano tuling
which declared the afore-quoted qualification - "or (or three f11(Jnths (or every
vear o(the unexpired term, whichever is less" in paragraph 5, Section 10 of
R.A. No. 8042 null and unconstitutional for being discriminatory and violative
of the equal protection of the law clause, among other significant reasons cited .
therein, thusly:
"The Court concludes that the subject clause contains a suspect
classification in that, in the computation of the monetary benefits of
fixed-term employees who are illegally discharged, it imposes a 3-
month cap on the claim of OFWs with an unexpired portion of one
year or more i11 their contracts, but none on the claims of other OFWs
or local workers with fixed-term employment. The subject clause
singles out one classification of OFWs and burdens it with a peculiar
disadvantage."
Consequent to the Serrano ruling, an illegally dismissed OFW is now
entitled to all the salaries for the entire unexpired portion of their employment
contracts, irrespective of the stipulated term or duration thereof. 4 Resultantly, all
past decisions subjecting the monetary award to the afore-mentioned qualifying
clause no longer apply.
4. mE PROBLEM IS THE SAME UNCONSTITUTIONAL RULE WAS
REPLICATED IN THE AMENDATORY R.A. N0.10022 (MARCH 8,
2010).
Despite the 20095 en bane declaration of the Supreme Court in Serrano
that the said qualifying provision in the 5m paragraph of Section 10 of R.A. No.
8042 is uncOnstitutional, R.A. No. 10022 that was passed in 20106 to amend the
said sm paragraph still contained the same qualifying provision.
The insistence by Congress on this provision despite its earlier
declaration of unconstitutionality and nullity, certainly creates a constitutional
t See lor exa!llJie: Oriental Shipmanagement Co., Inc. v. Hon. CA, G.R. No. 153750, Jan. 25, 2006; Olarte v.
Nayona, G.R. No. 148407, Nov. 12, 2003; Talidano v. Falcon Maritime & Anied SefVices, Inc., G.R. No. 172031,
July 14, 2008.
Universal Staffing SeNices, Inc. v. NLRC, G.R. No. 177576, July 21, 2008; Flourish Maritime Sh~ping v. Almanzor,
G.R No. 177948, March 14, 2008; JSS Indochina Colporation v. Ferrer, G.R No. 156381, Oct. 14, 2005, 473
SCRA 120; Athenna International Manpower SeNices, Inc. v. Villanos, G.R. No. 151303, Aprtl15, 2005.
3 ld.
4 In other words, lhe Supreme Court reverted to lhe old rule prior to lhe effectivity of RA. No. 8042 on August 25,
1995.
5 Mml24, 2009.
s MarcM. 2010.
L
CHAPTER II
RECRUITMENT AND PlACEMENT
79
issue. Did such replication result in curing its patent nullity and
unconstitutionality?
In the light of the rationale behind such pronouncement of
unconstitutionality and nullity which was eloquently ventilated and articulated
in Serrano, it is opined that such replication does not operate to cure the nullity
and unconstitutionality of the provision. Notably, the very raison d' etre for so
nullifying it cannot be wiped out by the simple expedience of re-enacting it in
thenewlaw.
5. THE SAMEER DOCTRINE.
It was only in the 2014 en bane ruling in Sameer Overseas Placement
Agency, Inc. v. Joy C. Cabiles, 1 that the unconstitutionality of the said reinstated
2
clause introduced by R.A. No. 10022 in the 5lh paragraph of Section 10 ofRA. No.
8042, was finally declared by the Supreme Court. The finding in Serrano3 was
reiterated tl'.at limiting the wages that should be recovered by an illegally dismissed
OFW to three (3) months is both a violation of due process and the equal protection
clauses of the Constitution.4 Respondent Joy Cabiles is entitled to her salary for the
unexpired portion of her contract, in accordance with Section 10 ofR.A. No. 8042.
The award of the three-month equivalence of respondent's salary must be modified
accordingly. Since she started working on June 26, 1997 and was terminated on July
14, 1997, respondent is entitled to her salary from Jllly 15, 1997 to June25, 1998. To
rule otherwise would be iniquitous to petitioner and other OFWs, and would, in
effect, send a wrong signal that principalsiemployers and recruitment/manning
agencies may violaie an OFW's security of tenure which an employment contract
1
GR No. 170139, AIJJ. 05, 2014. Respondent Jaf Cabiles was recruited by peliOOner 8cmeef for a ooe-yea ~
CXJntractil Tai.wn. Hermon1hly my was NT$15,360.00. She alleged tha!Saneer required her to pay a piocementfeeof
t-70,000.00 ilflen she signed the ~conkact. She was depbyed r>'m for TaMa'l Ww:tJa. Co.lil. (N~ oo
June 26, 1997. She alleged lhat i1 her~ <OObacl. she agreed ID v.ak as quality conia for ooe ye;s. kl Taiw<rl,
ha.Yever, she was asked tl v.ak as a ruuer. Accad'RJ mSaneer, she was later d'tsmEsed due kl her i1e!&:iency,
negigence il her Wties, llld her '!abe b coow Ylith the v.ak requiemerlt [dl her forei;Jn ~-· On Octdler 15,
1997, Jaf lied aCOf1lllai1l wlh the NLRC 3Jiins! petitioner llld ~ S1e clai1led !1at she was ilegift lisrrissed. She
asked for lhe reun of her placement lee, the Mtlhekl cmmfor repalriaOOo coot, payment c1 her salaryb 2311D11hs as
well as nmlllld ~ danages. S1e iden!ified WCK;Oai as SMleer ().leseas Placement h}ero/s W;ln pilcipa.
The Laxr MliB dismissed Ja{s ~~ becaJse l was based oo mere alegations. On appeal, the NLRC ~ lhat
Jaf was legatj dismissed. The NLRC awaded Jl]f ooly 3 mooths \Qih cl Sliay ilthe lmJlllt cl NT$46,0SO, the
reiltursemfrtt cl the NT$3,000 Ylittlleld from her, llld atkxne/S fees rJ. NT$300. On cediorcri, the CA. afimed the decision
c1 the NLRC wiiJ1 respect m11e 1ildiY;I c1 ilegal disnissaf, Jf!ls entitfement mthe eqtMient of. 3monlhs m c1 salary,
reimwsement of IWhheld repa!rialion expense, and aU!xney's fees. Belote the 5upltme Court. petitioner rcised the issue
c1 v.llelher 11e Court of Appeals erred m kalfirmed 11e 1\fqJ d the NLRC ~ respondent JIJf 1eg~ aiSO'issed and
CMaiOOg her 3months' Ytllllh of salcly, 11e reirrblmrent of the oost ci her repa\Jiation, ood alklmey's fees desple the
aleged exisB1ce of~ causes of mri1ation.
2 The dispos(M! porOOr1 of lhe decisi:Jo ill1is case pal1ly s1a1es: 1he clause, 'oc lor U1ree (3) mooths for fNfJ'f year cl the
unexpired tmn, r.t1ichever is klss' i1 Sedioo 7cl Republic flD. No. 10022 ameod'lllQ Section 10 of Reptillic Ad. No. 8042 is
declared l.fiCrtiStitLdk ood, lherefcre, 001 and void.'
Antonio M. Serrlllo v. Gai!Mt Mlritine Selvices, Inc., and Marlow Navgation Co., Lid., supla.
Section 1, MD! Ill of the Coosti1utioo prMies: "No person shaD be deplived of life, libErty, or ~ without due process
of law, nor shall arrt person be denMld the equal protection of lhe lavts."
80 BAR REviEWER ON lABOR lAW
embodies and actually profit from such violation based on an unconstitutional
provision of law.
6. SOME PRINCIPLES ON MONETARY AWARDS TO OFWs.
• Monetary award to OFW is not in the nature of separation pay or
backwages but a fonn of indemnity. 1
• Only salaries are to be included in the computation of the amount due for
the unexpired portion of the contract. Overtime, holiday and leave pay2 and
allowances are not included. 3 However, this rule on exclusion of allowance
does not apply in case it is encapsulated in the basic salary clause. 4
• Entitlement to overtime pay of OFWs.- As far as entitlement to overtime
pay is concerned, the correct criterion in detennining whether or not sailors
are entitled to overtime pay is not whether they were on board and cannot
leave ship beyond the regular eight (8) working hours a day, but whether
they actually rendered service in excess of said number ofhours. 5 An OFW
is not entitlecl to overtime pay, even if guaranteed,' if he failed to present
any evidence to pi'Ove that he rendered service in excess of the regular eight
(8) working hours a day. 7
• In case of unauthorized deductions from OFW's salary, he shall be
entitled to the full reimbursement of the deductions made with interest at
twelve percent (12%) per annum. This is in addition to the full
reimbursement of his placement fee with the same interest of twelve percent
(12%) per annum plus his salaries for the unexpired portion of his
employment contract if he is terminated without just, valid or authorized
cause as defined by law or contract.8
• Costs ·of repatriation and transport of personal belongings should be
included in the monetary award to an illegally dismissed OFW. 9
• Right of the employer to recover cost of repatriation from OFW's wages
hinges on whether the latter was legally or illegally dismissed. If validly
discharged, employer has the right to recover therefrom; otherwise, he
cannot so recover. 10
t 5qlpels United PacifK:, "· v. NLRC, G.R No.148893, July 12,2006.
z Antonio M. Serrano v. Gallant Mafitime Selvices, Inc., G.R No. 167614, Mrch 24, 2009; See also flhiiWine
Tla1SI1l1Jile CMiefs, Inc. v. Cilia, G.R No. 157975, June 26, 'lfJJ7.
3 PCL Shipping Philippines, Inc. v. NLRC, G.R No. 153031, Dec.14, 2006.
4 Yap v. Thenamaris Ship's Management GR No. 179532, May 30, 2011.
5 Stolt-Nielsen Mri1e Se1Vi:es (Phis.), Inc. v. NLRC, GR No. 105396, Nov. 19, 1996, 264 SCRA 307; 332 Phl340, 352.
6 Elm ShWilg SeM:es, Inc. v. Chua, G.R No. 162195, Aptll8, 'lfJJS; &rl\iagov. CF Sharp Crew Mrlcgernent, Inc., G.R
No. 162419,Ju~ 10, 'lfJJ7; CKldlheearliercaseclStolt-Nielsen t,1aine Selvioos(Phis.), Inc. v. NLRC, supra
7 PCL Shipping Philippines, Inc. v. NLRC, G.R No. 153031, Dec. 14, 2006; See aso Centennial Transmame, Inc. v. Dela
Cruz, G.R No. 180719, Aug. 22, 'lfJJS.
a Section 10,RA No.8042,asanmdedbySectioo7, RA No.10022.
9
Sevil\ana v.\.T. [lntemalionaq COfJl., GR No. 99047,.A4Jnl16, 2001.
to PCL Shipping PhHippines, Inc. v. NLRC, G.R. No.153031, Dec.14, 2006.
CHA!'TER II 81
RECRUITMENT AND PLACEMENT
• Unauthorized substitution or alteration of POEA·approved employment
contract from the time of actual signing thereof by the parties up to and
including the period of their expiration without the approval of the POEA is
prohibited. 1
• Effect of a final and executory judgment against a foreign
employer/principal. - It shall be automatically disqualified, without further
proceedings, from participating in the Philippine Overseas Employment
Program and from recruiting and hiring Filipino workers until and unless it
fully satisfies the judgment award. 2
7. OFWs ARE NOT ENTITLED TO THE RELIEFS OF BACKWAGES,
REINSTATEMENT OR SEPARATION PAY IN LIEU THEREOF.
OFWs are not entitled to backwages, reinstatement or separation pay in
lieu thereof since these reliefs provided under Article 294 [279] of the Labor
Code, as earlier pointed out, are not available to them. Their employment being
purely fiXed tenn in character, they are entitled only to ALL the salaries for the
unexpired portion of their employment contract per Serrano doctrine.3
8. OFWs ARE ENTITLED TO ACTUAL OR COMPENSATORY
DAMAGES.
In the following cases, the OFWs were awarded actual or compensatory
damages becatise of the failure of the recruitment agency to deploy them abroad,
after signing a POEA-approved employment contract, an act constitutive of
breach of contract:
(1) Santiago v. CF Sharp Crew Management, lnc.,4 where
respondent recruitment agency was held liable to pay petitioner actual and
compensatory damages of US$4,635.00 in the fonn of the loss of nine
(9) months' worth of salary as provided in the contract.
(2) Bright Maritime Corporation v. Fantonial,s where petitioner
~ company was held liable for actual· damages for the loss of respondent's one-
year salary as provided in the contract.'
I
1 See Soc. 6{i], RA No. 8042; Placewellntemational Selvices Corp. v. Camote, GR No. 169973, June 26, 2006;
f Chavez v. BontcrPerez, GR ~.109808, Marth 1, 1995,242 SCRA 73, 82; 312 Phi. 88.
t 2 Secib110, R.A. No. 8042, as amended by Secfioo 7, RA No. 10022 \MKth 8, 2010.
3 In a 2001 case, ha.vever, ATCI <Nerseas Corpcxatioo v. CA, G.R. No. 143949, Aug. 9, 2001, lle tNo p!Mlle respondent
t OFWs were grooted ~ CK1d separation pay by lhe Supreme Couil on \he basis of ils ruivJ l1at lley were regtS
~ However, because of \he 2nd ruing illhe 'lfJJ2caseclM\Iaresv. NLRC, GR No.110524, J~29, 2002,385
SCRA 306, IW1ere lhe Court ruled 8lat 0FWs can never becoo1e regula' emplc7fees, lhe decisioo illhis case of ATCI may
no ~hokl ils validitf.
4
G.RNo. 162419,Ju~10,2007.
;
5
GR No. 165935, Feb. 8, 2012.
L
6
The roon\11~ salary stipulated illhe con1ract is US$670, ildustie of a\k1Nance.
82 BAR REviEWER ON lABOR lAW CHAffiRII 83
RECRUITMENT AND PLACEMENT

9. OFWs ARE ENTITLED TO MORAL AND EXEMPLARY DAMAGES c. Compulsory insurance policy covers repatriation due to illegal
AND ATTORNEY'S FEES. termination or death ofOFW.
Because of the attendant bad faith and breach of contract, an illegally The compulsory insurance policy coverage for an agency-hired OFW
dismissed OFW is entitled to moral and exemplary damages and attorney's fees. includes the payment of repatriation cost of the worker when his employment is
Additionally, because the OFW was compelled to litigate and thus incur terminated by the employer without any valid cause, or by the employee with
expenses to protect his rights and interests, he is entitled to attorney's fees just cause, including the transport of his personal belongings.
equivalent to ten percent {10%) of the total award. 1 Thus, in the same case of In case of death, the insurance provider shall arrange and pay for the
Bright Maritime, respondent, in addition to the actual and compensatory repatriation or return of the worker's remains. 1
damages, was awarded moral damages in the amount ofP30,000.00, 2 exempla.)'
damages ofP50,000.003 and 10% of all recoverable amounts as attorney's fees. 4 7.
Similarly, based on the same grounds of breach of contract and bad faith, the DIRECT-HIRING
respondent in Athenna International Manpower Services, Inc. v. Villanos,5
was awarded P50,000 as moral damages and P50,000 as exemplary damages, in 1. DEFINITION.
addition to attorney's fees of ten percent (10%) of the aggregate monetary "Direct Hiring" refers to the process of directly hiring workers by
awards. 6 employers for overseas employment as authorized by the DOLE Secretary and
pro~essed by the POEA, including:
iO. OTHER REMEDIES AVAILABLE TO OFWs.
I. Those hired by international organizations;
a. Repatriation as a remedy.
2. Those hired by members of the diplomatic corps;
Whatever ground is cited for the pre-termination of employment, the 3. Name hires or workers who are able to secure owrseas employment
OFW has the right to insist that he be repatriated to the Philippines. The only opportunity with an employer without the assistance Oi participation
exception is when he is charged for certain crimes or cases in foreign courts and of any agency. 2
thus may not be allowed to go home until the case is terminated in his favor.
2. BAN ON DIRECf-HIRING; EXEMPTION.
b. Repatriation when an OFW requests for early termination.
It is the general rule under Article 183 that no employer shall directly hire
A seafarer who requests for early termination of his contract shall be an OFW for overseas employment4 The following, however, are exempted from
liable for his repatriation cost as well as the transportation . cost of his this ban on direct hiring:
replacement. 7
a) Members of the diplomatic corps;
b) futernational organizations;
1 See also Sil11iago v. CF Shap Crew t.tmgement, klc., GR No. 162419, Ju)f 10, '1SIJ7; PCL ShWilg Pli~. Inc. v. c) Heads of state and government officials with the rank of at least deputy
NLRC, G.R. No. 153031, Dec. 14, 2006.
2 Based on lis flldilJ llat the breach d ~was tainted wilh bad faih, 001Sideri1g llat respondeot's Medical Ceni1icate minister; or
slaled flat he was rt tl wen on the day rt his scheduled depaUe, yet he was na alklwed to le<Ne alleged~ for medical
reasons.
3 This was ~ by Wti'f ci exanple or axredion for the p.lbl«: good i1 view ci petitiooel's act ci prevenli1g respondent
from bei'I;J deployed on the ground that he was na yet dedared ft tl m on lhe~ IX his depOOure, despm evidence tl 1 See paragraph (d) of the new Section 37-A of RA. No. 8042, as amended by Section 23 of R.A. No. 10022. See
lhe !XlllbiJy. &JCh act. wklle!ated, v.wkl ~d'ICe the ernpklyment ~ ct oor seafare!s v.t10 ire quaified to be also Section 2(d), Rule XVI (Compulsory Insurance Coverage of Agency-Hired Wtrters) and Section 1, Rule XIII
deployed, but prevented to do so by a rravilg agency for ~ reasons. Ex~ mages ire illJosed not to (Repattiation of Wor11ers), Omnibus Rules and Regulations Implementing the Mgm Walkers and Overseas
erri::h one party or iTlloYerish MOther, but kl ser1e as adelerrent agai1st or as a r.egative ilcen!Ne to QJ!b social~ Fnipinos Act of 1995, as Amended by R. A. No. 10022 {tach 08, 2010).
delemlus actions. 2 Section 1[i}, Rule II, Omnibus Rules and Regulations Implementing lhe M~grant Wor11ers and Overseas Filipinos Act
~ This a.van! is based on the fact lhat becaJse ci petitionet;' faiMe kl depby respondent based on <11 lfljuslli3d ground, of 1995, as Amended by R. A. No. 10022 (Man:h 08, 2010).
respondent was bt:ed kl fie this case. 3 Article 18 provides as folows: 'Miele 18. Ban on arect-HiiY;I. - No ~er may hire a Fif¢lo V«Jri<er for ove!Se8S
GR No.151303,April15, 2005.
See also Ofienlal Shipmanagement Co., Inc. v. Hon. CA, G.R No. 153750, Ja1. 25, 2006; ATCl CNelseas ColporaOOn
v. CA, G.R No. 143949, Aug. 9, 2001,414 PM. 883,893.
II
,.
empk7fment except through lhe Boilds and entities autliJized by lhe Secretay of labor. !Jirecl.lliirg by rrerrbers of lhe
diJion'aOC corps, illemaliofla cxg<11izations and such oller employe!s as may be ~ by the Seaetry of l..aba is
exempled !root this ptrNisioo.'
7 Section 19.G, Standard Terms and Conditions Governing 11le Employment of Fnipino Seafarers on Board Ocean- 4 Miele 18, Labor Code; See also SecOOn 123, rue II, Pill Ill, R!Msed POEA Rules Clld Regulations Governing lhe

L
Going Vessels. Recruilrnentand Employmentcii..Cild-Based Ovecseas Fiipilo W<rters of 2016.

~
84 BAR REVIEWER ON lABOR lAW
d) Other employers as may be allowed by the DOLE Secretary, such
as:
1) Those provided in (a), (b) and (c) above, who bear a lesser rank, if
endorsed by the POLO, or Head of Mission in the absence of the
POLO;
2) Professionals and skilled workers with duly executed/authenticated
contracts containing terms and conditions over and above the
standards set by the POEA. The number of professional and skilled
OFWs hired for the first time by the employer shall not exceed five
(5). For the purpose of determining the number, workers hired as a
group shall be counted as one; or
3) Workers hired by a relative/family member who is a permanent
resident of the host country .1
3. RATIONALE FOR THE BAN.
The reason for banning direct hiring of Filipinos for overseas employment
is to ensure that such employm\:nt is fully regulated by the government through its
agencies, such as the POEA. In this way, adverse exploitation of the migrant
workers by foreign employers is minimized, if not eradicated.
4. NATIONALITY OF EMPLOYER NOT MATERIAL.
rt must be emphasized that pertinent laws and regulations generally make
reference to employment of Filipinos overseas, i.e., outside the Philippines. They do
not limit the coverage to non-Filipino employers. Filipinos working overseas share
the same risks and burdens whether their employers be Filipino or foreign. 2 For
instance, it is well-known that foreign-owned and foreign-registered vessels have
frequently also secured Philippine registration where the interest of convenience of
the owners dictated such second or dual registration. The underlying regulatory
policy is that Filipino seamen working in ocean-going vessels should receive the
1 Miele 18, ld.; See li;o Section 124, Rule II, Pill Ill, ld.; The OFWs hied by hlse ~ exEfl1lled tom lle bcrl oo
cfrect IWi1g may be registered by the Mliisbatioo upoo Sl.lbrrUssioo dlle tlbWig doaJmenl\1:
a) Velified/aulhenticated Of\lilall!f11lloymenl oordract \\tlich is 0'1€1' ald iiloYe 8le POEA-presailed ~ c.ootr00;
b) Passpmvalid atleastsix{6) nmf1s from lle date ofiltended depatue;
c) Va!Kl and appropnare visa ora pemj;
d) Cef1ifica!e of medical hss; . 3
e) Proof of certiOCale of i'lsurcl1ce ~covering at least the benefits pllNided under Sedion 37-A of RA 8042, as
irnellded;
~ Cef1ifica!e d attendance i:l the requred ~ orienta~io~Wfie; Md
g) Clealance from the DOLE Secretary b' tlose covered under Section 124 (d) d these Rules. The Adnilistration shall
ensure that the WO!ker is made !ultj aware d the lelms and conditions of lle employment coolract and the advantages and
disadvcrl~ d d'!reCI-hirill;J. (Sedkxi 125, Rule II, Part Ill, Revised POEA Rules ami Regulatioos Governing the
Recruifment and Employment of lald-Based Overseas FriPino Wo!iern ct 2016.).
2 Phil~apore Ports Corpomtioo v. NlRC, G.R No. 67035, .lal. 29, 1993, 218 SCRA 77; Eastern Shipping Lrles,
Inc. v. POEA, G.R No. 77828, Feb. 8, 1989, 170 SCRA 54.
I CHAI'TERII
RECRUITMENT AND PlACEMENT
ss
I
l
I
same wages and benefits without regard to the nationality or nationalities of the
vessels on which they serve.
1
I 5. SUABILITY OF FOREIGN CORPORATIONS DIRECTLY lllRING
FILIPINO WORKERS.
1 A non-resident foreign corporation domiciled outside of the Philippines
I which recruits Filipino workers for employment abroad is, in law, doing business in
the Philippines. Indeed, if a foreign corporation not engaged in business in the
Philippines is not barred from seeking redress from courts in the Philippines, a
fortiori, that same corporation cannot claim exemption from being sued in Philippine
2
courts for acts done against a person or persons in the Philippines.
B.
REGULATION OF RECRUITMENT
AND PLACEMENT ACTIVITIES
J. PRIVATE SECTOR CAN PARTICiPATE IN BOTH LOCAL AND
OVERSEAS RECRUITMENT AND PLACEMENT.
Under Section 25 of the Labor Code, the private sector is allowed to
4
participate in the recruitment and placement of workers for locatl and overseas
employment. This is pursuant to national development objectives and in order to
harness and maXimize the use of private sector resources and initiative in the
development and implementation of a comprehensive employment program. This
participation., however, is subject to such guidelines, rules and regulations as may be
issued by the DOLE Secretary.
5
For local employment, the policy is to protect every citizen desiring to avail
of the services of private employment agencies by ensuring the best possible terms
and conditions of employment.6 For overseas employment, the POEA is mandated
to regulate private sector participation in the recruitment and overseas placement of
workers by setting up a licensing and registration system.' The private sector shall
thus participate in the recruitment of Filipino workers for overseas employment in
1 Eastern Shippilg Lrles, R:. v. POEA, G.R. No. 77828, Feb. 8, 1989, 170 SCRA 54.
2 Facirties~ement~v. DelaRosa,GR No. L-38649,Martt\26, 1979,89SCRA131.
Section 1(a), Revised Rules and Regulations <lovEmiYJ Recruibnent and l"'a:ement b' Local Employmen~ Depme0t
Older No. 141-14, Series of2014ll'JCNen'ber 20, 2014l
See Section 1, Rule I, Part ~ Revised POEA Rules and Regulmls Governing the Realinenl Mil ~~of f.a1d.
Based Overseas Ff!pino WOOiern of 2016; Seclion 1, Rule I, Pill II, 2016 Revised POEA IU!s and Regulations Ga.oelni:lg
the Recruitment and Empklymentof SeafcleiS issuedoo February 26, 2016.
5 See Article 25, labor Code.
6 Section 1(d), Revised Rules ald Regulations Governing Reauitment and Placefrent tr Local Employment, DepmeOt
OrderNo.141-14, Seresd2014 [Noverrber20,2014].
7 Section 3, Rule X[Role of DOLE], Omnilus Rules and Regulations Implementing the M,Jrant WorkeiS and <Ne;seas
Fiipinos Act of 1995, as Aroonded by R.A. No. 10022, issued oo Ju~ 8, 2010.
L
86 BAR REVIEWER ON lABOR lAW
accordance with the Rules and any subsequent guidelines that may be issued by the
POEA Governing Board and the Administration.1
2. GRANT OF POWER TO THE DOLE SECRETARY.
To achieve the purposes mentioned in Article 25, the DOLE Secretary is
empowered to issue such rules and regulations as may be necessary to regulate and
supervise private sector participation in the recruitment and placement of workers,
locally or overseas, in the context of a comprehensive national employment
program.2
3. RULES ISSUED PURSUANT TO TillS POWER.
The DOLE Secretary has issued several edicts on the private sector
participation in the local and overseas recruitment and placement of workers. Some
of the recent issuances are as follows:
(a) For local employment.
The latest major issuance for local employment is Deparunent Order No.
141-14, Series of 2014 [November 20, 20 14) which promulgated the Revi~ed Rules
and Regulations Governing Recruitment and Placement for Local Employment. 3
(b) For overseas employment.
In the past, there have been numerous issuances4 made by the DOLE
Secretary to implement the Labor Code's provisions on overseas recruitment and
placement of workers. Because of recent laws,5 the DOLE Secretary has issued new
rules to implement them, the latest of which are as follows:
1 Sectioo 1, Rule I, Part II, Revised POEA Rules Mel RegulaOOns GcNemilg the Recruitmeot and ~of l..a1d-Sased
CNerseas ~ ~ of 2016; Sectioo 1, Rule I, Part II, 2016 ReVised POEA Rules Md Regulations Govemilg lhe
Recni1ment Mel ~b;ment of Seafarelslssued oo February 26, 2016.
2 Section 1, Rule II, Book I, Rules 1D ~ lhe Labor Code.
3 Foonedy, the Rules Mel Regufali:Jns Govemilg I'IMite RecruimentMd P'anent Agencies b' Local ~Issued
by Seaetay RWen D. Torres oo A(lril4, 1991.
4 &Jdl as fie folk:NMg issuances tiat were made pOOl' kl the 00vert of RA No. 8042 ii 1995, kl wit (1) Rules and
Regulalms Govemilg CNerseas ~~ issued by Seaelay Rldlen D. Torres oo May 31, 1991; (2) Poftey
tnsmJcms such as Policy klstructions No. 22, Series of 1977 IGuidefi1es Govemilg the ~ of Cooslrudion
W~EIS Olelseas by Apri 1, 1977) Md it; ~lemenling Rules Md ReglAafioos; Poicy Instructions No. 34, Series of 1978
[Onrilus lnsbudions Gcmmi1g the Oepklyment of Conslrudi:xi Waters OVelseast and Pcky lnslrudims No. 45, Series
of 1981 [l)ieding the OEDB il tlooi\:J, Deveql Mel Adnilister the Hmg Mel ~ of rtl(lilos il F~n
liousehoij;); (3) Cio.dars such as Citula' No. 01-91, issued by Seaetay Ruben D. Torres oo Noveniler 20, 1991
~ additiooal requirement;, coodiOOns and procedures b' lhe dep~t at pedo!m'ng artists; and (4) DOLE
Order No. 35, Series of 1994, issued oo October 14, 1994 by Seaeay Ma. Nieves Con!esor regcrtli1g lhe CoolJrehensive
5
wem Program b' Artists Overseas.
&Jdl as: (1) Republic Act No. 8042, otherMse knct.m as the 't.i:Jr.WW~ers and Oie~SeaS ~Act of 1995," v.f!idi
became e!lecWe oo August 25, 1995 (approved oo June 7, 1995]; (2) RA No. 9422, enacted oo Apri 10, 2007,
~ lhe regulakxy functions of the POEA; and (3) RA No. 10022, enacted on fv4arch 8, 2010, emend~ certai1
pnMsions of RA No. 8042.
I CHAPTER 11
RECRUITMENT AND PLACEMENT
87
1) Omnibus Rules and Regulations Implementing the Migrant Workers
and Overseas Filipinos Act of 1995, as Amended by RA. No. 10022,
issued on July 8, 201 0; 1
2) Guidelines on Insurance Coverage, issued on September 8, 2010;2
3) Department Order No. 130, Series of 2013, issued on JW1e 14, 2013,
enunciating the Rules and Regulations on the Employment ofSeafarers
Onboard Philippine Registered Ships Engaged in International
Voyage;
4) Revised POEA. Rules and Regulations Governing the Recruitment and
Employment ofLand-Based Overseas Filipino Workers of2016;3 and
5) 2016 Revised POEA Rules and Regulations Governing the Recruitment
and Employment ofSeafarers issued on February 26, 2016. 4
4. REGULATORY AND VISITORIAL POWERS.
As far as recruitment and placement of workers for local and overseas
employment are concerned, the Labor Code contains two (2) separate provisions
on the regulatory and visitoriai powers of the DOLE Secretary, namely:
l. Article 36 - Regulatory Power; and
2. Article 37 - Visitorial Power.
4.1. REGULATORY POWER.
a. Article 36, Labor Code.
The regulatory power is embodied in Article 36, to wit:
"Article 36. Regulatory Power.- The Secretary of Labor shall have
the power to restrict and regulate the recruitment and placement activities
of all agencies within the coverage of this Title and is hereby authorized
to issue orders and promulgate rules and regulations to carry out the
objectives and implement the provisions of this Title."
b. Nature of regulatory power.
The power to regulate and restrict the recruitment and placement
activities of all agencies conferred by Article 36 to the DOLE Secretary is a
valid grant of police power.5
I
1 Formerlj, Omnbus RUes Mel Regulations ifr4Jiemenlilg R.A. No. 8042jlillly issuedl7flleSecrellllyofF!Xei;JnAifairS and
Seae!ary of l..aboc Md ErrCJioyment oo Febnay 29, 1996.
I
2 Entitled 'tnsumce Guideliles on Rule XVI or the arroous Rules and Regulam ~ Republc M 8042 {The
I Mg!Cilt ~EIS em 0/e!seas F~ilos M of 1995), as Alrended by RepubE M 10022 Relative il ConlXJisoly
I 3
Insurance Coierage b' Agency-Hied Oierseas Fapilo WatEIS."
FOITTIE!IIj, POEA Rilles and Regulations Governilg l1e Recrui1ment and ~of l.al:I-Based Overseas WatEIS
I 4
issued oo Februay 4, 2002.
FOITTIE!IIj, POEA Rules em Regulations Govern~ the Recruitment and ~of Seliaels issued on May 23, 2003.
L
5 Philippine Associatm of Se!vice Exponels, Inc. v. Torres, G.R No. 101279, Aug. 6, 1992, 212 SCRA 298.
88 BAR REviEWER ON lABOR lAW
Being regulatory, the DOLE Secretary may validly issue rules and
regulations restricting or otherwise regulating the recruitment and placement
activities of persons and entities engaged in the recruitment and placement of
workers locally or overseas.
c. Exercise of the regulatory power.
Pursuant to Article 36 and in accordance with other pertinent and
related provisions of the Labor Code, the DOLE Secretary has issued several
implementing rules, circulars, guidelines and regulations. 1
4.2. VISITORIAL POWER.
a. Article 37, Labor Code.
The visitorial power is found in Article 37, viz.:
"Article 37. Visitorial Power.- The Secretary of Labor or his duly
authorized representatives may, at any time, inspect the premises, books
of accounts and recurds of any person or ent:ty cover~d by this Title,
require it to submit report3 regularly on prescribed fonns, and act on
violation of any provisions of this Title."
b. Distinctions of the visitorial powers of the DOLE Secretary
under Articles 289 [274] and 128 of the Labor Code.
The visitorial power of the DOLE Secretary or his duly authorized
representatives described in Article 37 of the Labor Code should be
distinguished from the other visitorial powers granted to him by other provisions
of the Labor Code such as the ones provided for under Article 128 and Article
289 [274] thereof.
Here, the visitorial power pertains to the inspection of the premises,
books of accounts and records of persons and entities engaged in the recruitment
and placement of workers for local or overseas employment. It also includes the
power to require the submission of reports regularly on certain prescribed forms
and to act on any violation ofTitle I, Book I of the Labor Code.
The visitorial and enforcement power of the DOLE Secretary or the
DOLE Regional Directors, his duly authorized representatives, treated in Article
128 pertains to the inspection of premises, books of accounts and records of
local employers to determine violations of the Labor Code and any labor laws,
wage orders or rules and regulations issued pursuant thereto.3
1 Such as, iller alia, !he POEA Rules and Regulatioos GcNemi1g l!le Recruitment and ~of Land-Based Overseas
WOO<ers issued oo Febrlay 4, 2002; POEA Rules and RegUations Govelni"9 the Reaumneot and Employment of
Seafarers issued 00 May 23, 2003; and MemoranOOm CiaJiar No. 10, Series of 2010, Odcber 26, 2010 [Amended
St:r1dard Tenns and Conditions Govw.irg l!le Overseas ~loyment of Filipoo Seafarers On-Board Ocem-Going Sllips.
2 Mi:le 37 ,llilorCode.
3 Article 128,1lid.; Sal Josev. NLRC, G.R No. 121227,Aug.17,1998.
CHAPTER II 89
RECRUITMENT AND PlACEMENT
Article 289 [2741 dwells on the visitorial power of the DOLE Secretary
to inquire into the fmancial activities of legitimate labor organizations.
c. Effect of obstruction of exercise of visitorial power.
The act of any person, whether a non-licensee, non-holder, licensee or
holder of authority, in obstructing or attempting to obstruct inspection by the
DOLE Secretary or by his duly authorized representative under Article 37 of the
Labor Code is one of the prohibited practices and unlawful acts which
constitutes "illegal recruitment. "1
c.
EMPLOYMENT OF NON-RESIDENT ALIENS
1. POLICY DECLARATION.
The Alien Employment Permit (AEP) is not an exclusive authority for a
foreign national to work in the Philippin.es. It is just one of the requirements in the
issuance of a work visa (9g) to iegally engage in gainful employment in the COlh'1try.
'I11e foreign national must obtain the required Special Temporary Pennit (STP) from
the Professional Regulation Commission (PRC) in case the employment involves
practice of profession and Authority to Employ Alien from the Department of
Justice (DOJ) where the employment is in a nationalized or partially nationalized
industry.2
'
j 2. ALIEN EMPWYMENT PERMIT (AEP), DEFINED.
Ii An Alien Employment Permit (AEP) is a document issued by the DOLE
Secretary through the DOLE-Regional Director who has jurisdiction over the
intended place of work of the foreign nationa~ authorizing the foreign national. to
f work in the Philippines.
ti
•
~
3. WHO ARE REQUIRED TO PROCURE AEP?
"& All foreign nationals who intend to engage in gainful employment in the
~ Philippines are required to apply for AEP. The term "gainful employment" refers
I to a state or condition that creates an employer-employee relationship between the
i Philippine-based company and the foreign national where the former has the power
I
i
to hire or dismiss the foreign national from employment, pays the salaries or wages
.
~ 1 See Mi:le 34 ~]. bid; Section 6, RA. No. 8042; Section 9 (V~ Ormibus Rules Cl1d Regulalions iiTlJiementirl: 11e "<!rant
W00<ers and Overseas Fqli1os Act of 1995 dated Feb. 29, 1996.
2 See PdtyOecaation, Depment Older No. 146-15, Series of 2015 (August 20, 2015), Revised Rules fa lhe Issuance of
El11lloYment Pemits tl Rxegn Natic".Ms. This latest issucro! repeals ex- m:xfles aa:ordi'IJIY,ia' guideliles, rules and
regul<mns, procedures Clld a;Jreetneols incoosistent i1et'eM1h 'lXI (per i1s SecOOn 16. Repealirg Oalse). These Rules tool<
t
etlect 'c& (15) days fltm the dale ofils pubicalion" (per i1s Section 17. EffeciMiy).
L . -.·
go BAR REVIEWER ON lABOR lAW
thereof and has authority to control the perfonnance or conduct of the tasks and
duties. 1
4. EXEMPTED CATEGORIES OF FOREIGN NATIONALS.
The following categories of foreign nationals· are exempt from securing an
employment permit
a) All members of the diplomatic service and foreign government officials
accredited by and with reciprocity arrangement with the Philippine
government;
b) Officers and staff of international organizations of which the Philippine
government is a member, and their legitimate spouses desiring to work
in the Philippines;
c) All foreign nationals granted exemption by law;
d) Owners and representatives of foreign principals whose companies are
accredited by the Philippine Overseas Employment Administration
(POEA), who come to the Philippines for a li'llited period and solely
for the purpose of interviewing Filipino applicants for employment
abroad;
e) Foreign nationals who come to the Philippines to teach, present and/or
conduct research studies in universities a.'ld colleges as visiting,
exchange or adjUflct professors under formal agreements between the
universities or colleges in the Philippines and foreign universities or
colleges; or between the Philippine government and foreign
government: provided that the exemption is on a reciprocal basis; and
f) Permanent resident foreign nationals and probationary or temporary
resident visa holders under Section 13 of the Philippine Immigration
Act ofl940.Z
5. EXCLUDED CATEGORIES OF FOREIGN NATIONALS.
The following categories of foreign nationals are excluded from securing
an employment permit:
a) Members of the governing board with voting rights only and do not
intervene in the management of the corporation or in the day-t<Hiay
operation of the enterprise.
b) Corporate officers as provided under the Corporation Code of the
Philippines, Articles of Incorporation, and By.J.aws of the Corporation
such as President, Secretary and Treasurer.
, Section 1, Depa'tmelltOrder No. 14&-15, Sefiesof2015 (August20, 2015), Revised RUes for lhe lsstmce of~byment
Pennils 1o Forei;Jn NatiooaS.
2 Section 2, ld.
(HAPTIRll 91
RECRUITMENT AND PlACEMENT
c) Those providing Consultancy services who do not have employers in
the Philippines.
d) Intra-corporate transferee who is a manager, executive or specialist as
defmed below in accordance with Trade Agreements and an employee
of the foreign service supplier for at least one (1) year prior to
deployment to a branch, subsidiary, affiliate or representative office in
the Philippines:
(i) an Executive: a natural person within the organization who
primarily directs the management of the organization and
exercises wide latitude in decision making and receives only
general supervision or direction from higher level executives, the
board of directors, or stockholders of the business; an executive
would not directly perform tasks related to the actual provision of
the service or services of the organization;
(ii) a Manager: a natural person within the organization who
primarily directs the organization/department/subdivision and
exercises supervisory and control fimctions over other
supervisory, managerial or professional staff; does not include
ftrst-line supen~sors unless employees supervised are
professionals; does not include employees who primarily perform
· tasks necessary for the provision of the service; or
(iii) a Specialist: a natural person within the organization who
f
~
possesses knowledge at an advanced level of expertise essential to
the establishment/provision of the service and/or possesses
proprietary knowledge of the organization's service, research
equipment, techniques or management; may include, but is not
limited to, members of a licensed profession..
e) Contractual service supplier who is a manager, executive or specialist
and an employee of a foreign service supplier which has no commercial
presence in the Philippines:
(i) who enters the Philippines temporarily to supply a service pursuant
to a contract between his/her employer and a service consumer in
the Philippines; c
(ii) must possess the appropriate educational and professional
qualifications; and
(iii) must be employed by the foreign service supplier for at least one
( l) year prior to the supply of service in the Philippines.' ·
1 Section 3, ld.
L
92 BAR REVIEWER ON lABOR lAW
6. LABOR MARKET TEST AND OTHER OBJECTION AGAINST THE
FOREIGN NATIONAL. o
The DOLE Regional Office shall publish in a newspaper of general
circulation all applications for new AEP, change or additional position in the same
company or subsequent assignment in related companies within (2) two work days
from receipt of application. The same shall be published in the DOLE website and
posted in the PESO. Such publication and posting shall be for a period of thirty (30)
days and shall contain the name, position, employer and address, a brief description
of the functions to be performed by the foreign national, qualifications, monthly
salruy range and other benefits, ifthere are any.
It shall also indicate in the same notice of publication that any person in the
Philippines who is competent, able and willing at the time of application to perform
the services for which the foreign national is desired may file an objection at the
DOLE Regional Office. Any objection or information against the employment of the
foreign national relative to labor market test must be filed with the Regional Office
within thi.rty (30) days after publication.
The DOLE Regional Office shall refer to the DOLE Skills Registry
System, the Professional Regulation Commission's (PRC) registry of professionals,
and the Technical Education and Skills Development Authority (fESDA) registry of
certified workers to establish availability or non-availability of able and qualified
Filipino worker.
Information or criminal offense and grave misconduct in dealing with or ill
treatment of workers may be filed with the Regional Offices any time. 1
7. VALIDITY OF AEP.
The AEP shall be valid for the position and the company for which it was
issued for a period of one (1) year, unless the employment contract, or other modes
of engagement provides otherwise, which in no case shall exceed three (3) years. 2
8. RENEWAL OF AEP.
An application for renewal of AEP shall be filed not earlier than sixty (60)
days before its expiration. In the case of officers whose appointment or election
takes place before the expiration of AEP, the application must be filed not later than
fifteen (15) working days after appointment, or before its expiration, whichever
comes later. In case the appointment or election will take place after the expiration of
the AEP, the application for renewal must be filed before the expiration of the AEP
which can be renewed for one (1) year. Within fifteen (15) working days after the
1 Seclm6,1d.
2 Seclm9,1d.
CHAPTER[[
93
RECRUITMENT AND PlACEMENT
date of appointment or election, the foreign national shall submit to the issuing
,
~
I
Regional Office the Board Secretary's Certification.
The Regional Director shall revoke the AEP after one (1) month from its
issuance, if no Certification is filed. 1
9. DENIAL OF APPLICATION FOR NEW OR RENEWAL OF AEP.
An application for AEP or the renewal thereof may be denied by the
Regional Director based on any of the following grounds:
(a) Misrepresentation of facts in the application;
Misrepresentation offacts includes fraudulent misrepresentation that is
a false statement that will have a negative effect in the evaluation of the
application, was made knowingly, or without belief in its truth, or
recklessly whether it is true or false.
(b) Submission of falsified documents;
(c) The foreign national has been convicted of a criminal offense or a
fugitive fro:n justice in the country or abroad;
(d) Grave misconduct in dealing with or ill treatment of workers; or
(e) Availability of a Filipino who is competent, able and willing to do the
job intend~ for or being performed by the foreign national.
~ The Regional Director shall issue an Order denying the application for new
! or renewal of AEP which shall have the effect of forfeiture of the fees paid by the
f applicant. 2
~
10. CANCELLATION/REVOCATION OF AEP.
The Regional Director may, motu proprio or upon petition, cancel or
revoke an AEP a..fter due process, based on any of the following grounds:
(a) Non-compliance with any of the requirements or conditions for which
the AEP was issued;
(b) Misrepresentation of facts in the application;
Misrepresentation offacts includes fraudulent misrepresentation that is
a false statement that will have a negative effect-in the evaluation of the
application, was made knowingly, or without belief in its truth, or
recklessly whether it is true or false.
(c) Submission of falsified or tampered documents;
(d) Meritorious objection or information against the employment of the
foreign national;
(e) Foreign national has been convicted of a criminal offense or a fugitive
i from justice;
t
1 Section 10, ld.
2 Section 11' ld.
L'
 BAR REVIEWER ON lABOR lAW CHAPTERll 95
94 RECRUITMENT AND rLACEMENT

(t) Employer terminated the employment of foreign national; approval of the DOLE Secretary, is prohibited from committing any of the following
(g) Grave misconduct in dealing with or ill treatment of workers"; acts:
(h) Disapproval of the application for an Authority to Employ Alien by the
a) To transfer to another job; or
Department of Justice (DOJ) or Special Temporary Permit by the
b) To change his employer.
Professional Regulation Commission (PRC), if applicable.
Such transfer to another job or change in position or in employer requires
In such cases, the Regional Director shall issue an Order cancelling· or
1
the filing of an application for new AEP. 1
revoking the AEP .
11. EFFECT OF DENIAUCANCELLATION OR REVOCATION OF AEP. D.
TRAINING AND EMPLOYMENT OF SPECIAL WORKERS
A foreign national whose AEP has been denied or cancelled is disqualified
to re-apply within a period of ten (10) years, in case the grounds for denial or The term "special workers" under the law refers to the following:
cancellation is any of the following: 1. Apprentices;
(a) Conviction of criminal offense or fugitive from justice in the country or 2. Learners; and
abroad; or 3. Persons with Disability (Called Disabled Worleers, per Syllabui).
2
(b) Grave misconduct in dealing with or ill treatment ofworkers. These are discussed below.
12.APPEAL 1.
Tne aggrieved foreign national or his authorized representative may file an APPRENTICES AND LEARNERS3
appeal with the DOLE Secretary wit.1in ten (10) days after receipt of the copy of
denial/ cancellation/ revocation order. The decision of the DOLE Secretary shall be 1. DISnNCTIONS BETWEEN LEARNERSHIP AND
tmal and executory unless a motion for reconsideration is filed within ten (10) days3 APPRENTICESHIP.
after receipt of the decision. No second motion for reconsideration shall be allowed. The following are the distinctions:
13. PENALTY FOR WORKING WITHOUT AEP. 1) Practical training. Both ·leamership and apprenticeship involve
The Regional Director shall impose a fine ofPlO,OOO.OO for every year or a practical training on-the-job.
fraction thereof to foreign nationals found working without a valid AEP. Employers 2) Training agreement. Leamership is governed by a learnership
found employing foreign nationals without a valid AEP shall also pay a fine of agreement; while apprenticeship is governed by an apprenticeship
PlO,OOO.OO) for every year or a fraction thereof. agreement
Newly hired or appointed officers may file the application for new AEP 3) Occupation. Learnership involves learnable occupations consisting
without penalty thereof within fifteen (15) working days after signing of contract ~r of semi-skilled and other industrial occupations which are non-
appointment If the commencement of employment is later than the fifteen (15) apprenticeable; while apprenticeship concerns apprenticeable
working days grace period, the application for new AEP may be filed before the ~
occupations or any trade, form of employment or occupation
4
commencement of employment without penalty. approved for apprenticeship by the DOLE Secretary.
14. PROHIBITION AND GROUNDS FOR CANCELLATION OF THE AEP. !!
~<
4) Theoretical instructions. Learnership may or may not be
supplemented by related theoretical instructions; while
Paragraph (a) of Article 41 enunciates another ground for the cancellation
of the employment permit issued to an alien. Here, the alien, without the prior
II 1 Section 4(c), Depal1met1t Order No. 146-15, Series of 2015 (August 20, 2015), Revised PJJies kr lhe Issuance of

1 Section 12, ld. I Employment Pennits 1o Forego Nai:lnals. This paragraph slates: 'c) Adcfl1ional position ollhe berJn national in the same
~ or subsequent assgnment il related COO"jlallies dllilJ lhe vai:lity or renewal of l1e AEP \WI be subject for
pt.blk:aliori requi'emenl Acha1ge of position or emplafer shall reqlire an application for new AFP.'

L
2 Section 13, ld. 1
3 Sedion141d Remingllthe2017Sylla00s.
3 Section 8, Ibid.
~ Section 15: ld:
96 BAR REviEWER ON lABOR lAW CHAPTER II
97
RECRUITMENT AND PlACEMENT

apprenticeship should always be supplemented by related apprenticeship, the enterprise is given only an "option" to hire the
theoretical instructions. apprentice as an employee. 1
5) Ratio o{theoretical instructions and on-the-job training. For both 11) Wage rate. The wage rate of a Ieamer or an apprentice is set at
leamership and apprenticeship, the·· normal ratio is one hundred seventy-five percent (75%) of the statutory minimum wage. 2
(100) hours of theoretical instructions for every two thousand
12) Qualifications. The law does not expressly mention any
(2,000) · hours of practical or on-the-job training. Theoretical
qualifications for learners; while the following qualifications are
instruction time for occupations requiring less than two thousand
required to be met by apprentices under Article 59 of the Labor
(2,000) hours for proficiency should be computed on the basis of
Code:
such ratio. 1
(a) Be at least fourteen (14) years of age;
6) Competencv-based svstem. Unlike in apprentice&hip, it is required 2
(b) Possess vocational aptitude and capacity for appropriate tests;
in leamership that it be implemented based on the TESDA-
and
approved competency-based system.3
(c) Possess the ability to comprehend and follow oral and written
7) Duration o(training. Leamership involves practical training on the instructions.
job for a period not exceeding three (3) mor.ths; while
apprenticeship requires for proficiency, more than three (3) However, the Implementing Rules presciibe the following four (4)
months but not over six (6) monthi of practical training on the qua Iifications:
job. a) Be at least fifteen (15) years of age, provided those who are at
8) Circumstances justifving hiring of trainees. Unlike in least fifteen (15) years of age but less than eighteen (18) may be
apprenticeship, in leamership, the law, Article 74 of the Labor eligible for apprenticeship only in non-hazardous occupations;
Code, expressly prescribes the pre-requisites before learners may be b). Be physicaily fit for tlJ.e occupation in which he desires to be
validly employed, to wit: trained;

(a) When no experienced workers are available; I c) Possess vocational aptitude and capacity for the particular
occupation as established through appropriate tests; and
(b) The employment of learners is necessary to prevent curtailment
· of employment opportunities; and
(c) The employment does not create unfair competition in terms of
labor costs or impair or lower working standards.5
II d) Possess the ability to comprehend and follow oral and written
instructions.
• Conflict in the age requirement, how resolved.

9). Limitation on the number of trainees. In leamership, a
participating enterprise is allowed to take in learners only up to a
maximum of twenty percent (20%) of its total regular workforce. 6
No similar cap is imposed in the case of apprenticeship.
10) Option to emplov. In leamership, the enterprise is obliged to hire
i Notably, there is a difference in the age requirement between the 14-
I year old prescnbed in the law and the 15-year old enunciated in the
Implementing Rules. Generally, the well-settled rule of legal
! hermeneutics dictates that if there is a conflict between the law and its
I implementing rule or regulation, the provision of the former should

I
prevail over the latter. The implementing rule cannot certainly operate
the learner after the lapse of the leamership period; while in to amend the law. Consequently, the minimum age requirement
~ should have been fotnteen (14) years of age except for the fact that the
i
age requirement in the said Implementing Rules is based on and more

1 Se::tiJn 28, Rue VI, Book II, Ibid.

2 UndEr lhe 2004 TESDA RMe:t GuiOOiines illhe mperrentaiKln of ~m~ and Leamrsh~ flrogarrs.
th 11, lESDACirua"f-b. 16.Seresof2004, da81Aug.lst 12,2004.
1
• oo.E Cicula" f-b. 2. Seres of200i, [ftmendi1g Ceriain l'roYisiJns ofllepnrent Q1lEr No. Ql.Q4j issued on Augusl11, 200i by 1:xmer oo.E See No. 3.10 ofTESDA Circular No. 16, Seriesof2004 and DOLE Circular No.2, Serlesof2006.
Se::retl!y (na.v Associae.Justre oflhe &Jpere Cotr1) Ml1o D. BliJo
2
Se::00n 29, Ruia VI, Book II, llid.; Se::00n 5, Rep.Jti: f>d No. 6640; Section 10, Rules ~ RA f-b. 6640; Section 10, Rues
See al9.l SediJn 2, Rue VII, Book II, Rules tl mperrent the Lat;q Code ~ting RA No. f;/l/; No. I [HI. DCXE HaldxJol( oo Worl<ers Staluby ~ Benefit; No. 3.8. lESDA Citutar !lb. 16, Series of
[
No.3.7.,1bid 2004, dalld August 12,2004 [1leiised GuiOOiines nlhe mpemenlaiKln of Appenli:eship and Leanersh~l'lo!J;m;.

L
98 BAR REV! EWER ON lABOR lAW
congruent with latest legislation, more particularly, the 2003 law, R.A.
No. 9231, 1 where it is provided that:
(1) All persons under eigl)teen (18) years of age shall be considered
as a "child"; and
(2) Children below fifteen (15) years of age shall not be employed
except if he/she falls under any of the excepdon; mentioned and
enumerated in the law.3
Apprenticeship is not one of the exceptions, therefore, this prolnbition
on employing an apprentice below the age of fifteen (15) years applies
to apprentices. Consequently, the proper age qualification is fifteen
(15) years but not because of the Implementing Rules' provision as
mentioned above but by reason ofR.A. No. 9231.
2.
DISABLED WORKERS
(PERSONS WITH DISABILIT¥)4
1. LEGAL BASIS.
Prior to the advent ofR.A. No. 7277,5 otherwise known as the "Magna
Carta for Disabled Persons," the relevant provisions are found in the Labor
Code on handicapped workers, namely: Articles 78 to 81 thereof. R.A. No.
1 Entitled 'AN ACT PROVIDING FOR THE ELIM1NATION OF n£ WORST FORMS OF CHILD LABOR AND AFFORDING
SlRONGER PROTECTION FOR THE WORKING CHJU), AMeiDING FOR THIS PURPOSE REPUBLIC ACT NO. 7610,
~ MIENDED, OTHERWISE KNOWN AS THE 'SPECfAL PROTECTION OF CHILDREN AGAINST CHilD ABUSE,
EXPLOITATION AND DISCRIMINATION ACT'~ on Oealnilef 19, 2003.
2 Theexcepbls,asenllllelllledil Section12of RA No. 7610,ascmendedby SecOOn2ofRA No. 9231 oce as foiklw.;:
(1) \\l1en adlil V«rts d'~ lllderh! sae respoosiliily ofhis.tler p.nnts a !ega guaroian Clld rdlere rrlf mermers of
lt.!1e' firlit oce ~: P!Mled, hcMever, That~~ neither endqefs tis/her li!e, safely, heiflh, Clld
rmna
nmls, lXI' i11laifs hisil1er ~ flramed, UUler, That the paent a legal gucrdial sh?J pnMje the saKI
chid WG!Ile prescriled prin<ly lrldlcr seoonday ~;a
(2) W1ere a dlil's ~ a ~ it puli: ~ a i1foonation ftlroogh merna. theater, rad'10,
lefe>.tion oc oller bins of rredia is essential: Provkled, Thallle ~ c:ontr.n is aJlCklded by the chid's p!len6 oc
legal guard'oo, v.ilh tJe e'(JJil!SS agreement of the did COOCE!IlOO, WpossiJie. md lle ~ ci h! Depa1Vnent ofl..alxr
Clld ~ Pro'lkled, U1he", That lle ~ reqLi'emenls i1 al i1slances ae stJX:tty coolJied v.ith:
(a) The~ shal ensure h! proB:OOn, healh, safely, rraals Clld normal development oflhe ctild;aalaw
(b) The ~shall i1stilute mea9JI'eS to ~the chtrs exploilatioo or disainilatioo taki'l;! ilto acoount lle system
Clld level ci ll!m.J!'IelliOO, Clld the dun*xl Clld ~Emenl ci 'Mifu:l time; and
(c) The en1lio'fer shal bmJla1e Clld ir(Jiement. ~ to 11e app!MI Clld supervision of COfl1lEllenl au!horities, a
!XXIIiouilg pr<:1JflliTl for trainilg and skils acquisition oflhe chikl.
In lhe ~ceptional cases v.i1ere aey such chid may be ~ed. the erJllbyer shal first secure, before engagirg
ruch chid, a Yol)f1\ penni! from l1e Depa1ment of l..alxr Cl1d ~ 'Mlich shalt ensure 00se1vance of 11e me
~·
3 Article59,l..alxrCode; Section 11, ROO VI, Book. II, Rules to ~the Labor Code.
4 ReiMIII!rK. RA No. 7277, as anended byRA No. 9442.
5 ~mMath24, 1992.
CHAPTER II
RECRUITMENT AND PLACEMENT 99
7277 is now the prevailing law. Subsequently, however, R.A. No. 9442' was
enacted for purposes, inter alia, of changing the title ofR.A. No. 7277 to read as
the "Magna Carta for Persons with Disability," and all references in the said
law to "disabled person" were likewise amended to read as "person with
disability" or "PWD." The term "handicapped workers" therefore should no
longer be used to describe persons with disability as this is no longer legally
correct
It bears noting that despite the developments in the law as above
discussed, the latest Syllabui still describes these workers as "disabled
workers."
2. DEFINITION OF IMPORTANT TERMS.
The following terms are specifically defmed in the law:
1. "Persons with Disability" are those suffering from restriction or
different abilities, as a result of a menta~ physical or sensory
impainnent, to perfonn an activity in the ma!lller or within the range
considered nonnal for a human being.
2. "Impairment" refers to any loss, diminution or aberration of
psychological, physiological, or anatomical structure or function.
i 3. "Disability" means {1) a physical or mental impairment that
I
I
substantially limits one or more psychological, physiological or
anatomical functions of an individual or activities of such
individual; (2) a record of such an impairment; or (3) being
regarded as having such an impairment.
4. "Handicap" refers to a disadvantage for a given individual,
resulting from an impairment or a disability that limits or prevents
the function or activity that is considered nonnal given the age and
sex of the individual.
5. "Marginalized Disabled Persons" or more appropriately,
"Marginalized Persons with Disability" refer to persons with
disability who lack access to rehabilitative services and
I
opportunities to be able to participate fully in socio-economic
activities and who have no means of livelihood and Whose incomes
fall below the poverty threshold.
' See SectiJn 41teoof. Tiis tr« b&;ane elb:tive oo ~ ll, YJI. Sectioo 4stalls: 'SEC. 4. The tile of RA No. 7iJ7 is t'eeby il'lla'1dld tl
read asfle 'Mag1a Catll:rPmons v.iflllisatit(, and al reiJenoosoo f1e sai:llawll'disalled persons' shalllteMse oo l¥reflded tl read
as'\lefsonsllilhdisabi.~.' ·
~lolhe2017~.
2
 CHAPTER II 101
BAR REVIEWER ON lABOR lAW
100 RECRUITMENT AND PLACEMENT

"All qualified handicapped workers shall receive the full amount of

a. the minimum wage rate prescribed herein pursuant to Republic Act No.
EQUAL OPPORTUNITY 7277, otherwise known as the Magna Carta for Disabled Persons. "1
1. EQUAL OPPORTUNITY FOR EMPLOYMENT. Moreover, in case of legally-mandated wage increases enunciated in
Under the law, 1
PWDs are entitled to equal opportunity for wage orders issued by the RTWPBs, the employment agreements with persons
employment. Consequently, no PWD shall be denied access to opportunities for with disability are deemed automatically modified insofar as their wage clauses
suitable employment. A qualified employee with disability shall be subject to are concerned to reflect the said increases. 2
the same terms and conditions of employment and the same compensation, 4. WAGE RATE AS APPRENTICE OR LEARNER.
privileges, benefits, fringe benefits, incentives or allowances as a qualified able-
A PWD hired as an apprentice or learner shall be paid not less than
bodied person.
seventy-five percent (75%) of the applicable minimum wage.
Five percent (5%) of all casual emergency and contractual positions in ~
the Departments of Social Welfare and Development, Health, Education and
other government agencies, offices or corporations engaged in social
2
I
ff"
If the PWD, however, is hired as a learner and employed in piece or
incentive-rate jobs during the training period, he shall be paid one hundred
percent (100%) ofthe applicable minimum wage.
development shall be reserved for PWDs. ~
2. PWDs ARE ELIGIBLE FOR APPRENTICESHIP AND ~ DISCRIMINATION ON EMPLOYMENT
b.
LEARNERS HIP.
Under R.A. No. 7277,3 it is provided that subject to the provisions of 1. DISCRIMINATION ON EMPLOYMENT PROHIBITED.
the Labor Code, as amended, PWDs shall be eligible as apprentices or learners; No entity, whether public or private, shall discriminate against a
ptovided that their handicap is not as much as to effectively impede the qualified PWD by reason of disability in regard to job application pro~dures,
performance of job operations in the particular occupation for which they are the hiring, promotion, or discharge of employees, employee compensation, job
hrred and provided further that after the lapse of the period of apprenticeship, if training, and other terms, conditions and privileges of employment. The
found satisfactory in the job performance, they shall be eligible for following constitute acts of discrimination:
employment.
(a) Limiting, segregating or classifying a job applicant with disability
3. WAGE RATE. in such a manner that adversely affects his work opportunities;
Under Article 80 of the Labor Code, handicapped workers are entitled (b) Using qualification standards, employment tests or other selection
to not less than seventy-five percent (75%) of the applicable adjusted minimum criteria that screen out or tend to screen out a PWD unless such
wage. 4 In view, however, ofR.A. No. 7277,5 the wage rate ofPWDs is 100% of standards, tests or other selection criteria are shown to be job-
the applicable minimum wage. related for the position in question and are consistent with business
necessity;
Wage orders issued by the Regional Tripartite Wages and Productivity
Boards (RTWPBs) normally reflect this principle. To cite an example, Section 7 (c) Utilizing standards, criteria, or methods of administration that:
6
of Wage Order No. NCR-20, which was approved on May 17, 2016 by the (1) have the effect of discrimination -on the basis of disability; or
RTWPB-National Capital Region, states:
Ili
~·

i
(2) perpetuate the discrimination of others who are subject to
common administrative control.
(d) Providing less compensation, such as salary, wage or other forms
of remuneration and fringe benefits, to a qualified employee with
1 UnOOrRA No. rm,otmire l<roMl as te'Ma<}la cata u~Persons' [nowl<roMl as 'Ma!Jia catauPerronsWtil ~lit(. ~
2 Se:m 5, ChapEl 1, Tile II, RA No. Tm. ~
r
l Sdln 7, 01ape" I, Tile Ht.ereol 1
SeealooSecfun8,Rtlleii,RuEs~Wa;JeQMNo.NCR·20iljl!X1lWdbyteOO£~oolo1ay27,2016.
M:le 00 [bl, l.rb:r Code; Se:&:xl 5, llepuli: hi No. 6640; Se:li:ln 10, RuEs mpiefreniriJ fl.etluiM: hi No. 6640; £ectill10, RUes
~ Repubic hiNo. IS/'ll; No.I[H]. DOlE Ha!dxxll<oo Wa\<8S Sta1utri !.bnetay llel1elm;.
rr, 2 Mde 124, LabJ Code as M1ellded by Sec1Xx13, ReptiJfr; tv;t No. &27; Seci:ln 10, RUes ~ling RepJ!Jii: PC. No. fjf'll; Seclkln 5,
I' Republi: PC. No. 6640; SecOOn 10, Rues inpmenfng Repubic hi No. 6640 [~ by analogy silU ~ns appli:able 'D
s Se:m5, ChapU 1, TilE 1\ofRA No. 7277. appenliresh~ ir1d meship~ rrenlbned lhereil.

L
• Thewagecni!Jv.as pJiilshed il The PhifiWine Slaroo May 18,2016. ~is rue\!ectMloo 2. 2016.
102 BAR REviEWER ON lABOR lAW
CHAI'TER III
LABOR STANDARDS 103
disability, by reason of his disability, than the amount to which a
non-disabled person performing the same work is entitled; CHAPTER THREE
(e) Favoring a non-disabled employee over a qualified employee with
disability with respect to promotion, training opportunities, study LABOR STANDARDS
and scholarship grants solely on account of the latter's disability;
(f) Re-assigning or transferring an employee with a disability to a job TOPICS PER SYLLABUS
or position he cannot perform by reason ofhis disability;
(g) Dismissing or tenninating the services of an employee with
disability by reason ofhis disability unless the employer can prove Ill.
that he impairs the satisfactory performance of the work involved LABOR STANDARDS
to the prejudice of the business entity; provided, however, that the
employer frrst sought to provide reasonable accommodations for A. Conditions of Employment
persons with disability; I. Scope
2. Hours of Work
(h) Failing to select or administer in the most effective manner
employment tests which accurately reflect the skills, aptitude or a. Principles in Determining Hours Worked
b. Normal Hours of Work
other factor of the applicant or employee with disability that such
tests purports to measure, rather thun t~e Lrr1paired sensory, manual i. Compressed Work Week
or speaking skills of such applicant or employee, if any; and ii. Power Interruptions/Brownouts
c. Meal Break
(i) Excluding PWD from membership in labor unions or similar d. Waiting Time
organizations. 1 e. Overtime
f. Night Shift Differential
g. Rest Periods
---<oOo--- b. Holiday Pay, 131h Month Pay
i. Service Charge
B. Wages
1. Wage Versus Salary
2. Payment of Wages
3. Facilities Versus Supplements
4. Non-Diminution of Benefits
5. Prohibitions Regarding Wages
6. Wage order, Wage Distortion
C. Leaves
1. Service Incentive Leave
2. Maternity Leave
3. Paternity Leave
4. Parental Leave for Solo Parents
5. Special Leaves for Women Workers (Magna Carla for Women)
D. Special Groups of Employees
1. Women
a. Discrimination
b. Stipulation Against Marriage
I Seci:ln32,0iapllri,Ttlel\i,ltid. c. Prohibited Acts

L
 CHAPTER Ill 105
BAR REVIEWER ON lABOR lAW
104 lABOR STANDARDS

e. Workers paid by results;

d. Sexual Harassment £ Non-agricultural field personnel; and
2. Minors g. Members of the family of the employer.
3. Kasambahay
4. Homeworkers 2.
5. Night workers HOURS OF WORK
------------------------------------------------
A. a.
PRINCIPLES IN DETERMINING HOURS WORKED
CONDITIONS OF EMPLOYMENT
1. COMPENSABLE HOURS WORKED.
1.
SCOPE The following shall be considered as compensable hours worked:
1. PROVISIONS ON WORKING CONDITIONS. a) All time during which an employee is required to be on duty or to
be at the employer's premises or to be at a prescribed workplace;
The provisions on working conditions in the Labor Code are as follows. and
A.iticle 83- Nonnal hours of work; b) All time during which an employee is suffered or permitted to
Article 84 - Hours worked; work. 1
Article 85 - Meal periods; 2. SOME PRINCIPLES IN DETERMINING HOURS WORKED.
Article 86- Night shift differential;
Article 87 - Overtime work; The following general principles shall govern in determining whether
Articie 88 - Undertime not offset by overtime; the time spent by an employee is considered hours worked:
Article 89 - Emergency overtime work; a) All hours are hours worked which the employee is required to give
Article 90 - Computation of additional compensation;
to his employer, regardless of whether or not such hours are spent in
Article 91 - Right to weekly rest period; productive labor or involve physical or mental exertion;
Article 92 - When employer may require work on a rest day;
Article 93- Compensation for rest day, Sunday or holiday work; b) An employee need not leave the premises of the workplace in order
Article 94 - Right to holiday pay; · that his rest period shall not be counted, it being enough that he
Article 95 - Right to service incentive leave; and stops working, rests completely and leaves his worJcplace to go
elsewhere, whether within or outside the premises of his workplace;
Article 96 - Service charges.
c) If the work performed was necessary or it benefited the employer or
2. COVERAGE. the employee could not abandon his work at the end of his nonnal
Employees in all establishments, whether operated for profit or not, are working hours because he had no replacement, all time spent for
covered by the law on labor standards. such work shall be considered as hoW'S worked if the work was with
the knowledge of his employer or immediate supervisor;
3. EXCLUSIONS. d) The time during which an employee is inactive by reason of
The following are excluded from the coverage of the law on labor interruptions in his work beyond his control shall be considered
standards: working time either if the imminence of the resumption of work
requires the employee's presence at the p{ace of work or if the
a. Government employees; '

I
L . . . ,. . .
b. Managerial employees;
c. Other officers or members of a managerial staff;
d. Domestic servants and persons in the personal service of another; I 1
Alti:le 34, labor Code; Section 3, Rille I, BOO\ Ill, Rilles kl ~Iemen! the Labor Code; Rada v. Nt.RC, GR. No. 96078, Jan.
~,

--'~·---¢
 BAR REVIEWER ON lABOR lAW
106
interval is too brief to be utilized effectively and gainfully in the
1
employee's own interest.
It bears emphasizing that .the employer retains the management
prerogative, whenever exigencies of the service so require, to change the
working hours of its employees.
2 Staggered Working Time in the Executive Department in relation to the other
Moreover, the age-old rule which governs the relationship between
labor and capital or management and employee of a "fair day's wage for a fair
day's labor," remains the basic factor in determining the employees' wages a.'ld
3
backwages.
b.
NORMALHOURSOFWORK
1. NORMAL HOURS OF WORK PER DAY.
The total number of working hours shall not exceed eight (8) hours
daily. This eight (8) hour period is called the normal hours o.fwork. Any work in
excess of eight (8) hours is considered overtime work.
2. REDUCTION OF 8-HOUR WORKING DAY BY EMPLOYER.
The employer, in the lawful exercise of its prerogative, is not prohibited
from reducing the eight-hour normal working time per day provided that no
corresponding reduction is made on the employee's wage or salary equivalent to
an eight-hour work day.
In instances where the number of hours required by the nature of work
is less than eight hours, such number of hours should be regarded as the
employee's full working day.
3. BROKEN HOURS.
The normal eight (8) working hours mandated by law do not always
mean continuous and uninterrupted eight (8) hours of work. As may be required
by peculiar circumstances of employment, it may mean broken hours of say,
four hours in the morning and four hours in the evening or a variation thereof:
I
provided that the total of eight (8) hours is accomplished within one "work day"
as this term is understood in law. Hence, even if the 4-hour work is done in the
evening as in the example above, it should not be considered overtime work
since the eight-hour period has not yet been exceeded.
f
I
~ 1
1
2
SecOOn 4, Rule I, Book Ill, Rules to Implement the Labor Code.
lklkln GalbklelaborUnionv. Unioo cabide Phiippines, Inc., 215 SCRI\554{1992).
[)Jrabil Recapping Plant~ v. NLRC, G.R No. L-76746, Ju~ 27, 1987, 152 SCRA 328.
! 2
L
3
CHAPTER l!l 107
lABOR STANDARDS
4. STAGGERED WORKING TIME.
Staggered working time is a valid scheme which may be resorted to by
employers. As a matter of precedence, Memorandum Circular No. 81 was issued
by the Office of the President on December 14, 2004 which implemented the
branches of government and the private sector in Metro Manila during the
Christmas Season from December 15, 2004 to January 6, 2005. According to
this issuance, the "Staggered Working Time" is meant to improve the delivery of
goods and services.
5. WORK IN DIFFERENT SHIFTS.
In establishments where work is in different shifts, work done by the
employee beyond his eight-hour shift is considered overtime work which should
be compensated accordingly. For example, if there are three (3) eight-hour
shifts in a "work day, " say, the first shift is from 6:00 a.m. to 2:00 p.m.; second
shift from 2:00p.m. to 10:00 p.m.; and the third shift from 10:00 p.m. to 6:00
a.m. of the followbg day, the employee whose regular eight-hour work is in the
first shift (6:00 a.m. to 2:00p.m.), once required to work in the second or third
shift, should be given additional compensation for such work done beyond hi8
regular working hours which legally is .considered overtime work.
6. REDUCTION OF WORKDAYS ON ACCOUNT OF LOSSES.
Workdays may be reduced in situations where the reduction in the
number of regular working days is resorted to by the employer to prevent
serious losses due to causes beyond his control, such as when there is a
substantial slump in the demand for his goods or services or when there is lack
ofraw materials.'
7. FLEXIBLE WORK SCHEDULE UNDER R.A. NO. 8972.
Under R.A. No. 8972, otherwise known as "The Solo Parents' Welfare
Act of2000," solo parents are allowed to work on a flexible schedule, thus:
"Sec. 6. Flexible Work Schedule. - The employer shall
provide for a flexible working schedule for solo parents: Provided,
That the same shall not affect individual and company productivity:
Provided, further, That any employer may request exemption from
the above requirements from the DOLE on certain m¢torious
grounds."2
Explanatory Bulletin on the Elfect of Reduction of WOO<days on WageWkig Allowances issued by the DOLE on Ju~ 23,
1985.
Section 6, RA No. 8972.
108 BAR REviEWER ON lABOR lAW
The phrase "flexible work schedule" is defined in the same law as the
right granted to a solo parent employee to vary his/her arrival and departure time
1
I Other than the CWW, the following are flexible work arrangements
without affecting the core work hours as defined by the employer.
i.
COMPRESSED WORK WEEK
1. DEFINITION UNDER DEPARTMENT ADVISORY NO. 2, SERIES OF
2009.
The Labor Code provides that the normal work hours per day shall be
eight (8) hours. Work may be performed beyond eight hours a day provided the
employee is paid for the overtime work.
On the other hand, the normal number of workdays per week shall be
six (6) days, or a total offorty-eight (48) hours based on the normal workday of
eight (8) hours. This is without prejudice to fmns whose normal workweek is
five (5) days, or a total of forty (40) hours based on the normal workday of eight
(8) hours. 2
''Compressed Workweek" or "CWW" refers to a situation where the
normal workweek is reduced to less than six (6) days but the total number of
work-hours of 48 hours per week remabs. The normal workday is increased to
more than eight (8) hours but not to exceed twelve (12) hours, without
corresponding overtime premium.3 This concept can be adjusted accordingly in
cases where the normal woikweek of the firm is five (5) days. 4
Z. CWW, A KIND OF FLEXIDLE WORK ARRANGEMENT.
CWW is a kind of flexible work arrangement which is considered as
better alternative to the outright termination of the services of the employees or
the total closure of the establishment. Anchored on voluntary basis and
conditions. mutually acceptable to both the employer and the employees, it is
recognized as beneficial in terms of reduction of business costs and helps in
saving jobs while maintaining competitiveness and productivity in industries.5
"Flexible work arrangements" refer to alternative arrangements or
schedules other than the traditional or standard work hours, workdays and
workweek. The effectivity and implementation of any of the flexible work
arrangements should be temporary in nature. 6
1 See Secliln 3(e] Ulefeof.
2 llepar1men!Mviso!y No.2, Seliesof2004, issued by the DOLE Secretary on [);cember2, 2004 i11plementing compressed
w:ll1\week (ONW) schemes.
3 DepartmeotAdvisoly No.2, Sefiesof2009, issued on January 29, 2009by DOLE Secrelaiy Malianito D. Roque enunciating
lhe Guideliles on the Adqltion of~ WO!K Arrmgemerns.
4 Depa1mentMviso!y No. 2, Selies of 2004, supra
s 0epar1rnent AdvisOiy No. 2, Selies d 2009, supra.
6 \d.
L
CHAPTER Ill 109
lABOR STANDARDS
3. OTHER FORMS OF FLEXIBLE WORK ARRANGEMENTS.
which may be considered, among others:
1. "Reduction of Workdays" refers to one where the normal workdays
per week are reduced but should not last for more than six (6)
months.
2. "Rotation of Workers" refers to one where the employees are
rotated or alternately provided work within the workweek.
3. "Forced Leave" refers to one where the employees are required to
go on leave for several days or weeks utilizing their leave credits, if
there are any.
4. "Broken-time schedule" refers to one where the work schedule is
not continuous but the work-hours within the day or week remain.
5. "Flexi-ho/idays schedule" refers to one where the employees agree
to avail of the holidays at some other days provided there is no
diminution of existing benefits as a ;esult of such arrangement. 1
Under these flexible work arrangements, the employers and the
employees are encouraged to explore alternative schemes under any agreement
and company policy or practice in order to cushion and mitigate the effect of the
loss of income of the employees.2
4. CONDITIONS.
DOLE shall recognize GWW schemes adopted in accordance with the
following:
1. The CWW scheme is undertaken as a result of an express and
voluntary agreement of majority of the covered employees or their duly
authorized representatives. This agreement may be expressed through
collective bargaining or other legitimate workplace mechanisms of participation
such as labor-management councils, employee assemblies or referenda.
2. In firms using substances, chemicals and processes or operating
under conditions where there are airborne contaminants, human carcinogens or
noise prolonged exposure to which may pose hazards to the employees' health
and safety, there must be a certification from an accredited health and safety
organization or practitioner or from the firm's safety committee that work
beyond eight (8) hours is within the threshold limits or tolerable levels of
exposure, as set in the Occupational Safety and Health Standards (OSHS).
1 kl.
2 kl.
 BAR REVIEWER ON lABOR lAW
110
3. The employer shall notify the DOLE, through its Regional Office
having jurisdiction over the workplace, of the adoption of the CWW scheme.
1 compressed workweek in the company.
The notice should be made in DOLE CWW Report Form.
S.EFFECTS.
A CWW scheme which complies with the foregoing conditions shall
have the following effects:
1. Unless there is a more favorable practice existing in the firm, work
beyond eight (8) hours will not be compensable by overtime premium
provided the total number of hours worked per day shall not exceed twelve
(12) hours. In any case, any work performed beyond twelve (12) hours a day
or forty-eight (48) hours a week shall be subject to overtime pay.
2. Consistent with Article 852 of the Labor Code, employees under a
CWW scheme are entitled to meal periods of not less than sixty (60) minutes.
Nothing, however, shall impair the right of employees to rest days as well as to
holiday pay, rest day pay or leaves in accordance with law or applicable CBA or
company practice.
3. Adoption of the CWW scheme shall in no case result in diminution
of existing benefits. Reversion to the normal eight-hour workday shall not
constitute a diminution of benefits. The reversion shall be considered a
legitimate exercise uf management prerogative provided that the empioyer shall
give the employees prior notice of such reversion within a reasonable period of
3 In declaring the compressed workweek arrangement in the 2007 case of
time.
A case in point is Bisig Manggagawa sa Tryco v. NLRC, where
private respondent Tryco and the petitioners signed separate Memorand[a) of
Agreement (MOA), providing for a compressed workweek schedule to be
implementedin the company effective May 20, 1996. The MOA was entered
into pursuant to DOLE Department Order (D.O.) No. 21, Series of 1990
enunciating the Guidelines on the Implementation of Compressed Workweek. As
provided in the MOA, 8:00a.m. to 6:12p.m., from Monday to Friday, shall be
considered as the regular working hours, and no overtime pay shall be due and
payable to the employee for work rendered during those hours. The MOA
specifically stated that the employee waives the right to claim overtime pay for
work rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday
considering that the compressed workweek schedule is adopted in lieu of the
regular workweek schedule which also consists of forty-six (46) hours.
However, should an employee be permitted or required to work beyond 6:12
p.m., such employee shall be entitled to overtime pay.
1 Depar1ment MiW.y No. 2, Series c( 2004, supta
z ~provides: 'Mk:le 85. Mlal Perods.- SUbject to such regula6ons as !he Secretary d Labor may presaibe, ~shall be ll1e
duty cf fNf!ft erJ1lbyer to gP/e his empklyees not less 11m st<ly (60) minutes time<J!f foc their regular meals.'
3 Depar1men1Adviso!y No.2, Series of2004, SUpta
4 G.R. No. 151309, Ocl15, 2008.
CHAmRIII 111
lABOR STANDARDS
Tryco informed the Bureau of Working Conditions (BWC) of the
Department of Labor and Employment of the implementation of. the said
In upholding the validity of the compressed workweek, it was noted
that Department Order No. 21 sanctions the waiver of overtime pay in
consideration of the benefits that the employees will derive from the adoption of
a compressed workweek scheme, thus:
"The compressed workweek scheme was originally conceived for
establishments wishing to save on energy costs, promote greater work
efficiency and lower the rate of employee absenteeism, among others. Workers
favor the scheme considering that it would mean savings on the increasing cost
of transportation fares for at least one ( 1) day a week; savings on meal and
snack expenses; longer weekends, or an additional 52 off-days a year, that can
be devoted to rest, leisure, family responsibilities, studies and other perscnal
matters, and that it will spare them for at least another day in a week from
certain inconveniences that are the normal incidents of employment, such as
commuting to and from the workplace, travel time spent, exposure to dust and
motor vehicle fumes, dressing up for work, etc. Thus, under t'Jis scheme, the
generCI1iy observed workweek of six (6) days is shortened to five (5) days but
prolonging the working hours from Monday to Friday without the employer
being obliged for pay overtime premium compensation for work performed in
excess of eight (8) hours on weekdays, in exchange for the benefits above-cited
that will accrue to the employees."
4 Linton Commercial Co., Inc. v. Hellera,1 as unjustified and illegal and in
holding that petitioners are guilty of illegal reduction of work hours, the
Supreme Court found specious the petitioners attempt to justify their action by
alleging that the company was suffering from financial losses owing to the
Asian currency crisis. Petitioners' claim of financial losses was not supported by
evidence. A close examination of petitioners' fmancial reports for ·1997-1998
shows that while the company suffered a loss of P3,645,422.00 in 1997, it
retained a considerable amount of earnings and operating income. Clearly then,
while Linton suffered from losses for that year, there remained enough earnings
to·· sufficiently sustain its operations. In business, sustained operations in the
black is the ideal but being in the red is a cruel reality. However, a year of
financial losses would not warrant the immolation of the welfare of the
employees which in this case was done through a reduced workweek that
I resulted in an unsettling diminution of the periodic pay for a protracted period.
I Permitting reduction of work and pay at the slightest indication of losses would
be contrary to the State's policy to afford protection to labor and provide full
employment. All taken into account, the compressed workweek arrangement
1
G.R. No.163147, Ocl10, 'IIXJ7.
""--·~~
112 BAR REVIEWER ON lABOR lAW
was unjustified and illegal. Thus, petitioners committed illegal reduction of
work hours."
ii.
POWER INTERRuPTIONS/BROWNOUTS
The following are the effects of work interruption due to brownouts: 1
1. Brown-outs of short duration but not exceeding twenty (20) minutes
shall be treated as worked or compensable hours whether used
productively by the employees or not.
2. Brown-outs running for more than twenty (20) minutes may not be
treated as hours worked provided any of the following conditions
are present:
a. The employees can leave their workplace or go elsewhere
whether within or without the work premises; or
b. The employees can use the time effectively for their own
interest.
3. In each case, the employer may extend the working hours of his
employees outzide the regular schedules to compensate for the loss
of productive man-hours without being liable for overtime pay.
4. Industrial enterprises with one or two workshifts may adopt any of
the workshifts prescribed for enterprises with three (3) workshifts to
prevent serious loss or damage to materials, machineries or
equipment that may result in case of power interruptions. 2
5. The days when work was not required and no work could be done
because of shutdown due to electrical power interruptions, lack of
raw materials and repair of machines, are not deemed hours
worked. 3
c.
MEAL BREAK
1. GENERAL RULE ON MEAL PERIOD.
As a general rule, every employer is required to give his employees,
regardless of sex, not less thim one (1) hour (or 60 minutes) time-off for regular
meals. 4
Being time-off, it is not compensable hours worked. In this case, the
employee is free to do anything he wants, except to work. If he is required,
however, to work while eating, he should be compensated therefor.
1 PrAicy lnsb\JCOOns No. 36 dated Way 22, 1978 was issued byfle Undernecrelary of um and Empklyrnentlodarily lhe
effects d. power intenupOOns oc bro\m-ou!s on producti.le nmhouls.
2 PrA'K.)' lnslruclions No. 36, May 22, 1978.
3 DJrabiltReccwilg PlantCompanyv. NLRC,G.R No. L-76746,Ju~27, 1987, 152SCRA328.
4 Article85, l.abocCode; Sectklo 7, Rule I, Book Ill, Rules kl~ lhe IAilorC«<e.
I CHAI'TER Ill
I lABOR STANDARDS 113
! 2. SHORTENING OF MEAL TIME TO NOT LESS THAN 20 MINUTES,
WHEN COMPENSABLE.
In the following cases, a meal period of not less than twenty (20)
minutes may be given by the employer provided that such shorter meal period is
credited as compensable hours worked of the employee:
a. Where the work is non-manual work in nature or does not involve
strenuous physical exertion;
b. Where the establishment regularly operates for not less than
sixteen (16) hours a day;
c. In cases of actual or impending emergencies or when there
is urgent work to be performed on machineries, equipment or
installations to avoid serious losses which the employer would
otherwise suffer; and
d. Where 1the work is necessary to prevent serious loss of perishable
goods.
3. SHORTENING OF ME.AL TIME TO NOT LESS THAN 20 MINUTES,
WHEN NOT COMPENSABLE.
The law allows a situation where the employees themselves request for
the shortening of meal period to not less than twenty (20) minutes (say, thirty
minutes, or from 12:00 to 12:30 p.m. instead of 12:00 to 1:00 p.m.) for the
l
I
purpose of allowing them to leave work earlier than the lapse of the eight (8)
hours required by law (say, 4:30p.m. instead of 5:00 p.m.). This shortened
period, however, shall not be considered compensable working time provided
~ the following conditions are complied with:
~
a. The employees voluntarily agree in writing to a shortened meal
period of thirty (30) minutes and are willing to waive the overtime
pay for such shortened meal period;
b. There should be no diminution in the benefits of the employees
which they receive prior to the effectivity of the shortened meal
I
period;
c. The work of the employees does not involve strenuous physical
exertion and they are provided with adequate coffee breaks in the
morning and afternoon;
f d. The value of the benefits derived by the employees from the
proposed work arrangement is equal to or commensurate with the
compensation due them for the shortened meal period as well as the
1
L
Section 7, Rule I, Book Ill, lbKl.
114 BAR REviEWER ON lABOR lAW
overtime pay for 30 minutes as determined by the employees
concerned;
e. The overtime pay of the employees will become due and
demandable if ever they are permitted or made to work beyond 4:30
p.m.; and
f. The effectivity of the proposed working time arrangement shall be
for a temporary duration as determined by the DOLE Secretary.1
4. SHORTENING OF MEAL TIME TO LESS THAN 20 MINUTES,
EFFECT.
The law does not allow that meal time be shortened to less than twenty
(20) minutes. If so reduced, the same shall no longer be considered as meal time
but merely as rest period or coffee break and, therefore, becomes compensable
working time. 2
5. CHANGL~G FROM 30-MINUTE .PAID "ON CALL" LUNCH BREAK
TO ONE (1) HOUR MEAL TIME WITHOUT PAY, EFFECT.
The case of Sime Darby Pilipinas, Inc. v. NLRC,3 is illustrative of
this point. Prior to the pn:sent controversy, all company factory workers in
Mariki..1a including members of private respondent union worked from 7:45a.m.
to 3:45p.m. with a 30-minute paid "on cal/"lunch break. Petitioner, by way of
a memorandum, changed the meal time schedule from 30 minutes to one (1)
hour without pay. Since private respondent union felt affected adversely by the
change in the work schedule and discontinuance of the 30-minute paid "on call"
lunch break, it filed on behalf of its members a complaint with the Labor Arbiter
for unfair labor practice, discrimination and evasion ofliability. In declaring the
change in. the work schedule as valid, the Supreme Court held:
"(The petitioner) rationalizes that while the old work schedule
included a 30-minute paid lunch break, the employees could be called upon to do
jobs during that period as they were 'on call. ' Even if denominated as lunch
break, this period could very well be considered as working time because the
factory employees were required to work if necessary and were paid accordingly
for working. With the new work schedule, the employees are now given a one-
hour lunch break without any interruption from their employer. For a full one-
hour undisturbed lunch break, the employees can freely and effectively use this
hour not only for eating but also for their rest and comfort which are conducive
to more efficiency and better performance in their work. Since the employees
are no longer required to work during this one-hour lunch break, there is no
more need for them to be compensated for this period. We agree with the Labor
Arbiter that the new work schedule fully complies with the daily work period of
Letler-Opi'lion dated Nov. 27,1989ofSecretaty Frankfn DrbltoKodakPhilippi1es.
ld.
3 GR No. 119205, April15,1998, 289 SCRA 86.
CHAI'TER Ill 115
lABOR STANDARDS
eight (8) hours without violating the Labor Code. Besides, the new schedule
applies to all employees in the factory similarly situated whether they are union
members or not."
6. MEAL TIME INVOLVING SEVERAL SHIFTS.
In a company where work is continuous for several shifts, the mealtime
breaks should be counted as working time for purposes of overtime
compensation. Consequently, the workers who are required to work in two (2)
full successive shifts should be paid for sixteen (16) hours and not fourteen (14),
the two hours for rest or mealtime breaks being included as compensable
working time. The idle time that an employee may spend for resting wherein he
may leave the work area should not be counted as working time only when the
work is not continuous. 1
d.
WAITING TIME
1. WHEN WA!T!NG TIME COMPENSABLE.
Waiting time spent by an employee shall be considered as working time
if waiting is an integral part of his work or the empioyee is required or engaged
by the employer to wait. 2
In Arica v. NLRC/ it was ruled that the 30-minute assembly time
practiced by the employees of the company cannot be considered "waiting
time" and should not therefore be compensable.
Although it is clear that employers must compensate employees for
time actually spent working, questions arise as to whether the minimum wage
and overtime provisions also apply to time spent waiting to perform productive
work. Under the regulations, whether waiting time is time worked depends on
the particular circumstances. ·
Time spent waiting for work is compensable if it is spent "primarily for
the benefit of the employer and [its] business." Conversely, if the time is spent
primarily for the benefit of the employee, the time is not compensable. In
determining whether waiting. time constitutes hours worked, the amount of
control the employer has over the employee during the waiting time, and
whether the employee can effectively use that time for his own purposes is
material.
2.0NDUTY.
Waiting time while on duty is included in compensable time, especially
when it is unpredictable, or is of such short duration that the employees cannot
NalklnaHJeveqJinent Coolpanyv. Court of lndusbial Reialioos, G.R No. L-15422, Nov. 30, 1962
Section 5[a), Rule I, Book Ill, Ibid.
3
G.R No. 78210, FebruaJY 28,1989,170 SCRA n6.
116 BAR IUVIEWER ON lABOR lAW
use the time effectively for their own purposes. In those instances, the
employees are to be compensated whether their work is on or off the employer's
premises, even if the employees spend the time engaging in such amusements as
playing cards, watching television or reading. Examples in American
jurisprudence where employees were found to be engaged in compensable
waiting time include:
• Assembly line workers who experienced idle time of 45 minutes or
less due to delays in delivery and mechanical failures;
• A well pumper who resided on the employer's premises and who
was required to be on duty at least eight hours per day, seven days
per week to pump wells and repair machinery when needed;
• Restaurant employees who were required by their employer to
report to work at a certain time even though they could not punch in
U..'ltil enough customers were present to make work available;
• Truck washers who were idle while waiting for the arrival of the
next truck;
• Truck drivers carrying the mail who had periodic layovers lasting
two hours or less due to loading or unloading problems;
• Oil well casing crews who had to wait for casings after they set up
their equipment;
• Truck drivers and helpers who were required by their employer to
wait on premises for assignments; and
• Employees who experienced occasional idle time caused by
machinery breakdowns.
3.0FFDUTY
Based on U.S. jurisprudence, periods during which an employee is
completely relieved from duty and which are long enough to enable him to use
the time effectively for his own purposes are not hours worked. Whether the
time off is truly sufficient to enable employees to effectively use the time for
their own purposes is a factual issue dependent upon the circumstances.
Circumstances considered by the courts include the duration of the time
off and any other facts which may place restrictions on the employees.
Examples of cases where courts have found that employers are justified in
denying compensation for idle time include:
• A telephone dispatcher who only had to answer a small number of
telephone calls for non-emergency ambulance care each night and
who was allowed to pursue her own personal, social and business
activities during the evening hours;
• Employees who were required to live on the employer's premises
during their off-shift hours, but who were free during their off duty
CHAPTER Ill 117
lABOR STANDARDS
time to sleep, eat, watch television, exercise, play ping pong or cards,
read and engage in other personal amusements; and
• Truck drivers responsible for picking up and delivering the mail who
were free to attend to personal matters and occupy their time as they
desired during the waiting time between scheduled runs.
4. IDLE TIME.
A close variance of "waiting time" is "idle time" during which an
otherwise off-duty employee remains available to be called to work may or may
not be compensable, depending upon the situation. As a general rule, the issue
of compensability depends on whether the time is spent primarily for the
employer's benefit as opposed to the employee's. The answer usually turns
upon the extent to which employee is able to and does use the time effectively
for personal purposes.
An evaluation of all the relevant facts become necessary to determine
r;ompensability. The following, among others, should be considered:
a. The employer requires the employte to remain on the employer's
premises;
b. The employer requires the employee to wait at home for calls or
messages or confines the employee to a highly-restricted
geographical area;
c. The employee receives numerous or frequent work assignments
during the on-call period;
d. The employee must respond within a short timeframe under the
circumstances (especially if the employee must travel somewhere to
do the work);
e. Requires the employee to be on-call frequently, never relieves the
employee from on-call status, does not permit the employee to
exchange calls or call periods with another worker, or does not
I allow the employee to turn down at least some calls; and
f. There is an agreement or understanding covering the arrangement.
Some combination of the foregoing factors is present when idle on-call
time is found to be compensable work.
5. COMMUTING TIME AND TRAVEL TIME.
a. Travel from home to work.
An employee who travels from home before his regular workday and
returns to his home at the end of the workday is engaged in ordinary home-to-
work travel which is a normal incident of employment and therefore not
considered as hours worked. This is true whether he works at a fixed location or
at different jobsites.
But while normal travel from home to work is not working time, if an
employee receives an emergency call outside of his regular working hours and is
118 BAR REviEWER ON lABOR lAW
required to travel to his regular place of business or some other work site, all of
the time spent in such travel is considered working time.
·b. Travel that is all in the day's work.
Time spent by an employee in travel as part of his principal activity,
such as travel from jobsite;to jobsite during the workday, must be counted as
hours worked. Where an employee is required to report at a meeting place to
receive instructions or to perform other work there, or to pick up and carry tools,
the travel from the designated place to the workplace is part of the day's work
and must be counted as hours worked regardless of contract, custom or practice.
If an employee normally finishes his work on the premises at 5:00p.m. and is
sent to another job which he fmished at 8:00p.m. and is required to return to his
employer's premises arriving at 9:00 p.m., all of the time is working time.
However, if the employee goes home instead of returning to his employer's
premises, the travel after 8:00p.m. is work-to-home (home-to-work) travel and
is not hours worked.
c. Travel away from home.
Travel that keeps the employee away from home overnight is travel
away from home. Travel away from home is cleariy working time when it cuts
across the employee's workday. The employee is simply substituting travel for
other duties. The time is not only hours worked on regular working days during
normal working hours but also daring the corresponding hours on non-working
days. Thus, if an employee regularly works from 9:00 a.in. to 5:00 p.m. from
Monday through Friday, the travel time during these hours is working time.
Regular meal period is not counted. As an enforcement policy, the Department
of Labor and Employment does not consider as working time the time spent in
travel away from home outside of regular working hours as a passenger on an
airplane, train, boat, bus or automobile.
Any work which an employee is required to perform while travelling
must be counted as hours worked. An employee who drives a truck, bus,
automobile, boat or airplane or an employee who is required to ride therein as an
assistant or helper, is working while riding, except during bona-fide meal
periods or when he is permitted to sleep in adequate facilities furnished by the
employer.
e.
OVERTIME
1. SOME PRINCPLES ON OVERTIME WORK.
1) Work rendered after normal eight (8) hours of work is called
"overtime work."
CHAPTER Ill
119
lABOR STANDARDS
2) In computing overtime work, "regular wage;' or "basic salary"
means "cash" wage only without deduction for facilities provided
by the employer.
3) "Premium pay" means the additional compensation required by law
for work performed within eight (8) hours on non-working days,
such as regular holidays, special holidays and rest days.
4) "Overtime pay" means the additional compensation for work
performed beyond eight (8) hours.
5) Illustrations on how overtime is computed:
a) 'For overtime work performed on an ordinary day, the
overtime pay is plus 25% ofthe basic hourly rate.
b) For overtime work performed on a rest day or on a
special day, the overtime pay is plus 30% of the basic
hourly rate which includes 30% additional compensation as
provided in Article 93 [aJ o[the Labor Code.
c) For overtime work performed on a rest day which falls
on a speci!l.l d~y, the overtime pay is plus 30% o(the basic
I, hourly rate which includes 50% additional compensation as
provided in Article 93 [cl o[the Labor Code.
d) For overtime work performed on a regular holiday, the
overtime pay is plus 30% of the basic hourly rate which
I includes 100% additional compensation as provided in
I
I Article 94 [bl o[the Labor Code.
I
e) For overtime work performed on a rest day which falls
on a regular holiday, the overtime pay is plus 30% o[the
basic hourly rate which includes 160% additional
compensation.
2. PREMIUM PAY VS. OVERTIME PAY.
"Premium pay" refers to the additional compensation required by law
for work performed within eight (8) hours on non-working days, such as rest
days and regular and special holidays. 1
"Overtime pay" refers to the additional compensation for work
performed beyond eight (8) hours a day. Every employee who is entitled to
premium pay is likewise entitled to the benefit of overtime pay. 2
1
No. Ill, DOLE Handbook on Wo!l<ers Statutory Monetary Benefits.
2
No. IV, Ibid.

BAR REVIEWER ON lABOR lAW
120
3. BUILT-IN OVERTIME PAY.
In case the employment contract stipulates that the compensation
includes built-in overtime pay and the same is duly approved by the Director of
the Bureau of Employment Services (now Bureau of Local Employment), the
non-payment by the employer of any overtime pay for overtime work is justified
and valid.'
In PAL Employees Savings and Loan Association, Inc. !PESALA]
v. NLRC,l where the period of normal working hours per day was increased to
twelve (12) hours, it was held that the employer remains liable for whatever
deficiency in the amount for overtime work in excess of the frrst eight (8) hours,
after recomputation shows such deficiency.
4. VALIDITY OF CBA PROVISION ON OVERTIME WORK.
Generally, the premium pay for work performed on the employee's rest
days or regular and special holidays is included as part of the regular rate of the
employee in the computation of overtime pay for any overtime work rendered
on said days, especially if the employer pays only the minimum overtime rates
prescribed by law. The employees and employer, however, may stipulate in their
CBA the payment of overtime rates higher than those provided by law. Such
agreement may be considered valid only ifthe stipulated overtime pay 3
rates will
yield to the employees not less than the minimum prescribed by law.
5. EMERGENCY OVERTIME WORK.
a. General rule.
I
The general rule remains that no employee may be compelled to render
overtime work against his will.
b. Exceptions when employee may be compelled to render
overtime work:
1. When the country is at war or when any other national or local
emergency has been declared by the National Assembly or the
I public order, public policy, morals or good customs or prejudicial to a third
Chief Executive;
2. When overtime work is necessary to prevent loss of life or
property or in case of imminent danger to public safety due to
actual or impending emergency in the locality caused by serious
accident, fire, floods, typhoons, earthquake, epidemic or other
disasters or calamities;
1 Erf:!ileeri'tg~~ Inc. v. Mnisterofl.abor,G.R. No.L-64967,Sept23,1985
2 G.R. No. 105963, August 22, 1996.
3 No. rv [DJ, DOLE Handbocl< on WC!kers SlabJ1Dty M:lnetar{ Benefit.
(HAI'TER Ill 121
lABOR STANDARDS
3. When there is urgent work to· be performed on machines,
installations or equipment, or in order to avoid serious loss or
damage to the employer or some other causes of similar nature;
4. When the work is necessary to prevent loss or damage to
perishable goods;
5. When the completion or continuation of work started before the g1h
hour is necessary to prevent serious obstruction or prejudice to the
business or operations of the employer; and
6. When overtime work is necessary to avail of favorable weather or
environmental conditions where performance or quality of work is
dependent thereon.
c. May an employee validly refuse to render overtime work under
any of the afore-said circumstances?
No, an employee cannot validly refuse to render overtime work if any
of the afore-mentioned circumstances is present. When an employee refuses to
render emergency overtime work under any of the foregoing conditions, he may
be dismissed on the ground of insubordination or willful disobedience of the
lawful order of the employer.
6. UNDERTIME NOT OFFSET BY OVERTIME.
The following rules shall apply:
1. Undertime work on any particular day shall not be offset by
overtime on any other day.
2. Permission given to the employee to go on leave on some other day
of the week shall not exempt the employer from paying the
additional compensation required by law such as overtime pay or
night shift differential pay.
7. WAIVEROFOVERTIMEPAY.
The right to claim overtime pay is not subject to a waiver. Such right is
governed by law and not merely by the agreement of the parties.'
While rights may be waived, the same must not be contrary to law,
person with a right recognized by law.Z
But if the waiver is done in exchange for and in consideration of certain
valuable privileges, among them that of being given tips when doing overtime
1 Mercader v. Mania POOCUJ, G.R. No. L·8373, Sept 28, 1956; Cruz v. Yee Sing, G.R. No. L-12046, Oct 1959; Manila
Terrnb1a1Co.,lnc. v. CR, G.R. No. L-9265, Apfif 29, 1957,480. G. 7, p. 2725,91 PhD. 625.
2 Article 6, CMI Cede;~ Sugar Develop!rent Co., Inc. v. Court of Industrial Relations, G.R. No. L-39387, June 29,
1982.
122 BAR REviEWER ON lABOR lAW
work, there being no proof that the value of said privileges did not compensate
1
for such work, such waiver may be considered valid.
f.
NIGHT SHIFT DIFFERENTIAL
1. HOW RECKONED.
Night shift differential is equivalent to 10% of employee's regular wage
for each hour of work performed between 10:00 p.m. and 6:00 a.m. of the
following day.
2. NIGHT SHIFT DIFFERENTIAL PAY VS. OVERTIME PAY.
When the work of an employee falls at night time, the receipt of
overtime pay shall not preclude the right to receive night differential pay. The
reason is the payment of the night differential pay is for the work done during
the night; while the payment of the overtime pay is for work in excess of the
regular eight (8) working hours.
3. COMPUTATION OF NIGHT SHIFT DIFFERENTIAL PAY.
1) Where night shift (10 p.m. to 6 a.m.) work is regular work.
a. On an ordinary dav: Plus 10% of the basic hourly rate or a
total of 110% of the basic hourly rate.
b. On a rest day, special day or regular holiday: Plus 10% of
the regular hourly rate on a rest day, special day or regular
holiday or a total of 110% of the regular hourly rate.
2) Where night shift (10 p.m. to 6 a.m.) work is overtime work.
a. On an ordinary day: Plus 10% of the overtime hourly rate on
an ordinary day or a total of 110% of the overtime hourly rate
on an ordinary day.
b. On a rest day or special day or regular holiday: Plus 10%
of the overtime hourly rate on a rest day or special day or
regular holiday.
3) For overtime work in the night shift. Since overtime work is not
usually eight (8) hours, the compensation for overtime night shift
work is also computed on the basis of the hourly rate.
a. On an ordinary day. Plus 10% of 125% of basic hourly rate
or a total of 110% of 125% ofbasic hourly rate.
1 Merak:o WO!kers Unbn v. Mania EledOC Co., G.R. No. L-11876, tMj 29, 1959.
CHAPTER III 123
lABOR STANDARDS
b. On a rest day or special day or regular holiday. Plus 10% of
130% of regular hourly rate on said days or a total of 110% of
130% of the applicable regular hourly rate.
g.
REST PERIODS
1.
WEEKLY REST DAY
1. DURATION.
It shall be the duty of every employer, whether operating for profit or
not, to provide each of his employees a rest period of not less than twenty-four
(24) consecutive hours after every six (6) consecutive normal work days.'
2. PREROGATIVE OF EMPLOYER TO SCHEDULE; EXCEPTION-
RELIGIOUS GROUND.
The employer shall determine and schedule the weekly rest day of his
employees subject to CBA and to such rules and regulations as the DOLE
Secretary may provide. Howev::r, the employer shall respect the preference of
employees as to their weekly rest day when such preference is based on
. . grounds..2
reItg10us
In other words, the employer's right and prerogative is subject to the
preference in the choice by the employee of his rest day based on religious
grounds. Article 91, in fact, makes the employer duty-bound to respect such
preference of the employee if based on religious grounds.
Where, however, the choice of the employees as to their rest day based
on religious gronnds will inevitably result in serious prejudice or obstruction to
the operations of the undertaking and the employer cannot normally be expected
to resort to other remedial measures, the employer may so schedule the weekly
rest day of their choice for at least two (2) days in a month. 3
3. SUNDAY NOT THE REST DAY DESIGNATED BYLAW.
With the repeal of the Blue Sund«y Law4 by the Labor Code,5 Snnday is
no longer the rest day designated by law. Consequent to such repeal, the rule
now is that all establishments and enterprises may operate or open for business
1 Article 91 (a), Labor Code.
2 Article 91(b), ld.
3 Section 4, Rule Ill, Bcxi Ill, Rukls 1o lf1'4llemen!the Labor Code.
4
RA No. 946 (June 20, 1953], olherMse kn<MI1 as toe '!fllue &mday Law; prc7Mes that no COIMle!dal, ildustrial or
agliculb.nal enle!plise or establishment, id.Jdirg stores and shops of 8trf kind, shall be ~ oo arrJ Sunday, Christmas
Day, New Veal's Day, HolyThtnsday, <VldGood FOOa'{, from 12:00 midnghl1o 12:00 11Dlght
s Article 317 [302], Labor Code; Section 1[q], Rule Ill, Bcxi VII, Rukls 1o Implement the Labor Code.
124 BAR RI:VIEWER ON lABOR lAW
I CHAPTER Ill
lABOR STANDARDS
125

on Sundays and holidays provided that the employees are given the weekly rest
day and the resultant benefits as provided in the law and its implementing rules. 1
4. SOME PRINCIPLES ON WEEKLY REST DAY.
I e) Where the nature of the work is such that the employees have to
• Where the weekly rest is giveri to all employees simultaneously, the
employer should make known such rest period by means of a written notice
posted conspicuously in the workplace at least one (1) week before .it
becomes effective?
• Where the rest period is not granted to all employees simultaneously and
collectively, the employer shall make known to the employees their
respective schedules of weekly rest day through written notices posted
conspicuously in the workplace at least one (I) week he fore they become
effective.3
• An express waiver of compensation for work on rest days and holidays
provided in an employment contract which fixes annual compensation of
the employees is not valid and does not operate to bar claims for extra
compensation therefor. 4
• Rest day cannot be offset by regular workdays. 5
2.
EMERGENCY REST DAY WOILT(
1. WHEN EMPLOYER MAY REQUIRE WORK ON A REST
DAY.
The employer may require any of its employees to work on their
scheduled rest day for the duration of the following emergency and exceptional
conditions:
a) In case of actual or impending emergencies caused by serious
accident, fire, flood, typhoon, earthquake, epidemic or other disaster
or calamity, to prevent loss of life and property, or in case of force
majeure or imminent danger to public safety;
b) In case of urgent work to be performed on machineries, equipment,
or installations, to avoid serious loss which the employer would
otherwise suffer;
c) In the event of abnormal pressure of work due to special
circumstances, where the employer cannot ordinarily be expected to
resort to other measures;
d) To prevent serious loss of perishable goods;
I Section 2, Rule 1\1, Book 1\1, ibid.
2 Section 5(a], Rule Ill, Book Ill, Ibid.
3 Section 5[b], Rule Ill, Book Ill, Ibid.
4
k, held in Mercury Drug Co., Inc. v. Dayao, G.R No.l-30452, Sept 30, 1982.
s Lagatic v. NLRC. GR No.121004, Jan. 28, 1998.
work continuously for seven (7) days in a week or more, as in the
case of the crew members of a vessel to complete a voyage and in
other similar cases; and
f) When the work is necessary to avail of favorable weather or
environmental conditions where performance or quality of work is
dependent thereon. 1
2. EXCLUSIVE NATURE OF THE ENUMERATION.
No employee sh~ll be required against his will to work on his
scheduled rest day except under the circumstances provided therein where work
on such day may be compelled. 2
However, in case work on rest day i~ required and not one of the said
circumstances is present, the employee may work during such rest day but only
on voluntary basis. And once an employee volunteers to work on his rest day,
he should express such willingness and desire to work in writing. Accordingly,
he should be paid the additional compensation ior working on his rest day under
the law. 3
h.
HOLIDAY PAY, 13mMONTHPAY
1.
HOLIDAY PAY
1. COVERAGE; EXCLUSIONS.
Generally, all employees are entitled to and covered by the law on
holiday pay, 4 except:
a) Those of the government and any of the political subdivisions,
including government-owned and controlled corporations;
b) Those of retail and service establishments regularly employing less
than ten (10) workers;
c) Domestic workers or Kasambahays;5
d) Persons in the personal service of another;
e) Managerial employees as defined in Book III of the Labor Code;
f) Field personnel and other employees whose time and performance
is unsupervised by the employer;
1 Section 6, Rule Ill, Book Ill, Rules to lmplem€ntthe Labor Code; Alticle92, l.abo'Code.
2 ld.
3 k!.
Alticle 94' l.alxr Code.
Formerly called domestic helper or househelper. See R.A. No. 10361, otherwise known as the ~Domeslic Worl<ers
Acf [January 18, 2013].
126 BAR REviEWER ON lABOR lAW CHAPTER l!l · 127
lABOR STANDARDS

g) Those who are engaged on task or contract basis or purely 9492. 1 For the movable holidays, the President is required to issue, at least six
commission basis; (6) months prior to a movable holiday, a Proclamation fiXing the specific date of
h) Those who are paid a fixed amount for performing work that holiday.
irrespective of the time consumed in the performance thereof; For year 2017, Proclamation No. 50 was issued on August 16, 2016 by
i) Other officers and members of the managerial staff; the President declaring the following regular holidays and special (non-working)
j) Members of the family of the employer who are dependent on him days:
for support. 1
2. HOLIDAY PAY, MEANING AND PURPOSE. A. Regular Holidays
Holiday pay is a legislated benefit enacted as part of the Constitutional • New Year's Day -January 1, 2017 (Sunday)
imperative that the State shall afford protection to labor. 2 Its purpose is not • Araw ng Kagitingan - April9, 2017 (Sunday)
merely to prevent diminution ofthe monthly income of the workers on account • Maundy Thursday - April13, 2017 (Thursday)
of work interruptions. In other words, although the worker is forced to i.ake a • Good Friday - April14, 2017 (Friday)
rest, he earns what he should earn, that is, his holiday pay.3 It is also intended to • LaborDay -May 1, 2017 (Monday)
enable the worker to participate in the national celebrations held during the days • Independence Day -June 12, 2017 (Monday)
identified as being imbued with great historical and cultural significance. • Eid'l Fitr - to be announced
Independence Day (June 12), Araw ng Kagitingan (April 9), National • National Heroes Day -August 28, 2017 (Monday)
Heroes Day (last Sunday of August), Bonifacio Day (November 30) and Rizal • Eidul Adha - to be announced
Day (December 30) were declared national holidays to afford Filipinos with a • Bonifacio Day -November 30, 2017 (Thursday)
recurring opportunity to commemorate the heroism of the Filipino people, • Christmas Day - December 25, 20 17 (Monday)
promote national identity, and deepen the spirit of patriotism. Labor Day (May • Rizal Day -December 30, 2017 (Saturday)
1) is a day traditionally reserved to celebrate the contributions of the working
class to the development of the nation; while the religious holidays designated in B. Special (Non-Working) Days
Executive Order No. 203 [lately under R.A. No. 9177 (November 13, 2002) and
R.A. No. 9492 (July 25, 2007) on Eidul Fitr; and R.A. No. 99849 (December • Additional special
11, 2009) on Eidul Adha] allow the worker to celebrate his faith with his family. 4 non-working day -January 2, 2017 (Monday)
Article 94 of the Labor Code, as well as the subsequent amendments • Chinese New Year -January 28,2017 (Saturday)
thereto, afford a worker the enjoyment of twelve (12) paid regular holidays. • EDSA Revolution
The provision on holiday pay is mandatory, regardless of whether an • Anniversary -February 25, 2017 (Saturday)
employee is paid on a monthly or daily basis. 5 • Black Saturday -April 15, 2017 (Saturday)
3. LIST OF REGULAR HOLIDAYS. • Ninoy Aquino Day - August 21, 2017 (Monday)
• Additional special
A fixed list of dates of holidays presents a challenge because some of non-working day - October 31, 2017 (Tuesday)
the regular holidays and nationwide special holidays are movable, per R.A. No. -November 1, 2017 (Wednesday)
• All Saints Day
• Last Day of the Year -December 31, 2017 (Swiday)

1 M:;ie 82, Labor Co:le; See also Section 1, RukliV, Book Ill, Rules kl inlJiement l!le Labor Code; No. II (A], OOLE
The proclamations declaring national holidays for the observance of
Hanttlook on Worke!S Sla1uloly Mlnetay Benefifs. Eidul Fitr and Eidul Adha will be issued after the approximate dates of the
2 Section 3, M XIII, 1987 Constitution.
3 Jose Rizal College v. NLRC Clld NATOW, G.R No. 65482, Dec. 1, 1987.
4 Asm TllllS11"issoo Co!pcJatkJn v. CA, G.R No. 1«664, Mcvch 15,2004.
5
lnsulcr~kd Asiaandl'inericaEftl>loyees' Unoo{IBMEU)v. ~. G.R. No.L-52415, Ocl23,1984,132 SCRA663;
1 Approvied on July 25, 2007, entitled 'M Act Rationalizirg the Celeblalion of National Holidays Amendi1g lor the Pul)l05e
0\artered Bank ~ees Association v. Ople, G.R No. L-44717, Aug. 28, 1985, 138 SCRA 273; Man1radetfM\IC Section 26, Chapter 7. Book Iof Exeartive Order No. 292, as Mlended, OtherMse l<nct.m as Ble Adrni16b'ative Code of
DMsloo ~loyees ood Workers Unoo v. BacungM, G;R No. L-48437, Sept 30, 1986, 144 SCRA 510. 1987.'

•...
,...,....__,

BAR REvi£W!'R ON LABOR LAW
128
Islamic holidays have been determined in accordance with the Islamic calendar
(Hijra) or the lunar calendar, or upon Islamic astronomical calculations,
whichever is possible or convenient. To this end, the National Commission on
Muslim Filipinos (NCMF) shall inforni. the Office ofthe President on the actual
1 • If the employee Worked in excess of eight hours (overtime work),
dates on which these holidays shall respectively fall.
For 2017, President Rodrigo Duterte declared June 26, 2017 as a
regular holiday nationwide in observance of the Eid'l Fitr or end of Ramadan.
The declaration was cited in his Proclamation 235 which he signed on June 16,
2017.
4. TOTAL OF 12 REGULAR HOLIDAYS.
It is important to note that the total number of regular holidays is
twelve (12) days per year. This is important for purposes {lf reckoning certain
divisors and computation of employee benefits.
S.PREMWMPAY.
"Premiam pay" refers to the additional compensation required by law
to be paid for work performed within the regular eight (8) hours on non-working
2
days, such as rest days, regular and special holidays.
This term should not be confused with "overtime pay" which refers to
the additional compensation for work performed beyond or in excess of the
regular eight (8) hours of daily work.
Premium pay and overtime J}ilY are not mutually exclusive. Every
employee who is entitled to premium pay is likewise entitled to the benefit of
3
overtime pay if overtime work is actually rendered.
6. COMPUTATION OFPREMIUMPAYFORHOLIDAYS.
4
Labor Advisory No. 06, Series of 2013, on the Payment of Wages for
the Regular Holidays, Special (Non-working) Days, and Special Holiday (For all
Schools) for the Year 20 14, specifically promulgated the following rules that
shall apply:
1. REGULAR HOLIDAYS
• If the emplovee did not work, he/she shall be paid 100 percent of
his/her salary for that day. Computation: (Daily rate + Cost of
Living Allowance) x 100%. The COLA is included in the
computation of holiday pay.
1 See Section 2, f'roclanation No. 50 Ssued on August 16, 2016
2 No.lll, DOlE HMdbook on W0111e;s Statukxy M:lneti:My Benefits.
3 No.IV,W.
~ Issued on October 1, 2013 by Acting Secretay Dania P. Cruz.
CHAPi'ER Ill 129
LABOR STANDARDS
• ![the employee worked, he/she shall be paid 200 percent of his/her
regular salary for that day for the first eight hours. Computation:
(Daily rate + COLA) x 200%. The COLA is also included in
computation of holiday pay.
he/she shall be paid an additional30 percent of his/her hourly rate
on said day. Computation: Hourly rate of the basic daily wage x
200% x 130% x number of hours worked.
• !{the employee worked during a regular holiday that also falls on
his/her rest dav, he/she shall be paid an additional 30 percent of
his/her daily rate of 200 percent. Computation: (Daily rate +
COLA) x 200%) + (30% [Daily rate x 200%)].
• If the employee worked in excess of eight hours (overtime work)
during a regular holiday that also (ails on his/her rest dav, he/she
shall be paid an additional30 percent of his/her hourly rate on said
day. Computation: (Hourly rate of the basic daily wage x 200% x
130% x 130% x number of hours worked);
Simplified Computatio!':
a. If "TfofK is rendered on an employee's regular wcrkday-
• If unworked - l 00%
• If worked - 1st 8 hours - 200%
• Work in excess of 8 hours -plus 30% of hourly rate on said day
b. If it is an employee rest day-
• If unworked- 100%
• If worked- first 8 hours - plus 30% of 2\JO%
• Work in excess of 8 hours- plus 30% of hourly rate on said day
2. SPECIAL (NON-WORKING) DAYS
• ![the emplovee did not work. the "no work, no pay'' principle shall
apply, unless there is a favorable company policy, practice, or
CBA granting payment on a special day.
• I[ the employee worked. he/she shall be paid an additional 30
percent of his/her daily rate on the first eight hours of woJ:k..
Computation: [(Daily rate x 130%) +COLA).
• If the employee worked in excess of eight hours (overtime work), ·
he/she shall be paid an additional 30 percent of his/her hourly rate
on said day. Computation: (Hourly rate of the basic daily wage x
130% x 130% x number of hours worked).
130 BAR REVIEWER ON iABOR lAW
CHAPTER Ill 131
lABOR STANDARDS
• If the employee worked during a special day that also falls on 4) When day preceding regular holiday is a non-working day or
his/her rest day, he/she shall be paid an additional fifty percent of scheduled rest day - should not be deemed to be on leave of
his/her daily rate on the first eight hours of work. Computation: absence on that day, in which case, employees are entitled to the
((Daily rate x 150%) +COLA]. regular holiday pay if they worked on the day immediately
• If the employee worked in excess of eight hours (overtime work) preceding the non-working day or rest day.'
during a special dav that also falls on his/her rest day, he/she shall 8. RIGHT TO HOLIDAY PAY IN CASE OF TEMPORARY CESSATION
be paid an additional30 percent of his/her hourly rate on said day. OF WORK.
Computation: (Hourly rate of the basic daily wage x 150% x 130%
x number of hours worked). a. Temporary or periodic shutdown or cessation of work not due
to business reverses.
Simplified Computation: In cases of temporary or periodic shutdown and temporary cessation of
a. If unworked- work of an establishment, as when a yearly inventory or when the repair or
cleaning of machineries and equipment is undertaken, the regular holidays
• No pay, except if there is a company policy, practice, or collective falling within the period should be compensated in accordance with the
bargaining agreement (CBA) which grants payment of wages on Implementing Rules. 2
special days even ifunworked. b. Temporary cessation of operation due to business lo~ or
b. if worked - r~verses.

• First 8 hours- plus 30% oft.1e daily rate of 100% The regular holidays during the temporary cessation of operation of an
enterprise due to business losses or financial reverses as authorizt:d by the
• Work in excess of8 hours- plus 30% of hourly rate on said day
DOLE Secretary may not be paid by the employer. 3
c. If falling on th;! employee's rest day and if worked - 1-A.
• First 8 hours- plus 50% of the daily rate of 100% HOLIDAY PAY/PREMIUM PAY OF
• Work in excess of 8 hours - plus 30% of hourly rate on said day TEACHERS, PIECE WORI(ERS, TAKAY:
SEASONAL WORKERS, SEAFARERS
7. RIGHT TO HOLIDAY PAY IN CASE OF ABSENCES.
1. RIGHT TO HOLIDAY PAY OF TEACHERS.
1) ·Employees on leave of absence with pay- entitled to holiday pay
when they are on leave of absence with pay. 1 ·
a. Private school teachers, in general.
2) Employees on leave of absence without pay on the day Private school teachers, including faculty members of colleges and
immediately preceding the regular holiday - may not be paid the universities, may not be paid for the regular holidays during semestral vacations.
required holiday pay if they have not worked on such regular They shall, however, be paid for the regular holidays during Christmas
holiday. 2 vacation. 4
3) Employees on leave while on SSS or employee's compensation b. Holiday pay of hourly-paid teachers.
beneflls - Employers should grant the same percentage of the A school is exempted from paying hourly-paid faculty members their
holiday pay as the benefit granted by competent authority in the pay for regular holidays, whether the same be during the regular semesters of
form of employee's compensation or social security payment, the school year or during semestral, Christmas, or Holy Week vacations.
whichever is higher, if they are not reporting for work while on However, it is liable to pay the faculty members their regular hourly rate on days
such benefits? declared as special holidays or if, for some reason, classes are called off or

1 Section 6(c}, Rule IV, Book Ill, Ibid.; No. II [EJ, Ibid.
1 SecOOn 6 (a}, Rule IV, Book Ill, Rules '> 1fr91ement the \.abor Code; No. II {E}, OOLE Handbook on Workers Stali.Jtoly 2 Section 7(a}, Rule IV, Bed Ill, lbi:l.; No.I! [F], llid.; See also Rule IV [Holidays With Pay], Bed Ill of lhe Rules to Implement
M:lnetaly Benefits. lhe l.aboc Code.
2 SecOOn 6(a}, Rule IV, Book Ill, Ibid.; No. II [EJ.Ibid. 3 Section 7[b], Rule IV, Book Ill, W.
3 Section 6[b), Rule IV, Book Ill, lbkl.; No. II {E}, Ibid.

L
~ SecOOn 8[a}, Rule IV, Book Ill, Ibid.; No. II G}, Ibid.

•
132 BAR REVIEWER ON lABOR lAW
CHAPTER Ill 133
lABOR STANDARDS
shortened for the hours they are supposed to have taught, whether extensions of plantations where the work is performed in bulk or in volumes,
class days be ordered or not; and in case of extensions, said faculty members hence, difficult to quantify. 1
shall likewise be paid their hourly rates should they teach during said
•
extensions.·
1
3. RIGHT TO HOLIDAY PAY OF SEASONAL WORKERS.
2. RIGHT TO HOLIDAY PAY OF PIECE-WORKERS, TAKAY AND Seasonal workers are entitled to holiday pay while working during the
OTHERS PAID BY RESULTS. season. They may not be paid the required regular holiday pay during off-season
where they are not at work. 2
a. Holiday pay of piece workers, takay or employees paid by
results. 4. RIGHT TO HOLIDAY PAY OF SEAFARERS.
Where a covered employee is paid by results or output such as payment Any hours of work or duty including hours of watchkeeping performed
on piece-work, his holiday pay should not be less than his average daily by the seafarer on designated rest days and holidays shall be paid rest day or
earnings for the last seven (7) actual working days preceding the regular holiday pay. 3
holiday. In no case, however, should the holiday pay be less than the applicable The following shall be considered as holidays at sea and in port:
• • 2
statutory mmmmm wage rate.
b. Workers paid by results classified into supervised and New Year's Day January 1
unsupervised. tviaundy Thursday Movable date
Good Friday Movable date
The principal test tO determine entitlement to holiday pay is whether Araw ng Kagitingan
the employees' time and performance of the work are "supervised" or (Bataan & Corregidor Day) - April9
"unsupervised" by their employer. If supeiVised, the employee is entitled to Labor Day Mayl
holiday pay. IfunsupeiVised, he is not? Independence Day June 12
The distinctions between supervised and unsupervised workers paid by National Heroes Day Last Sunday of August
results are as follows: All Saints Day November I
Bonifacio Day November30
(1) Those whose time and performance are supervised by the Christmas Day December25
employer. Here, there is an element of control and supervision RizalDay December 304
over the manner as to how the work is to be performed.· A piece-
rate worker belongs to this category especially if he performs his It must be noted that the foregoing listing and enumeration of the
work in the company premises; and holidays are different from that prescribed for local workers. (See above listing
thereof).
(2) Those whose time and performance are unsupervised. Here, the
employer's control is over the result of the work. Workers on 5. SOME IMPORTANT PRINCIPLES ON HOLIDAYS.
pakyao and takay basis belong to this group. Both classes of • Non-Muslims are entitled to Muslim holiday pay during Muslim
workers are paid per unit accomplished. Piece~te payment is holidays5 considering that all private corporations, offices, agencies, and
generally practiced in garment factories where work is done in the entities or establishments operating within the designated Muslim provinces
company premises, while payment on pakyao and takay basis is and cities are required to observe Muslim holidays, hence, both Muslims
commonly observed in the agricultural industry, such as in sugar

1 larrbov. NLRC, GR fob.111042, 0c100er26, 1999,317 SCRA420.

2 SecOOn 8 (c], Rlre PI, Boct Ill, Rilles Ill in1Jiement lhe labor Code; No. II G], DOLE HMdiJod( on WOI1<ecs Statutoly
1 Jose Rizal College v. NLRC, GR No. 65482, December 1, 1987. t.'ooelay lleneft;,

..
2 Section 8 [b], Rule IV, Book Ill, Rules to lfr4llement l1e t.m COOe; No. II G], OOI.E HinJxd oo Wtrtem StaWy 3 SecOOn 11 (Overline ood Ho&tays), Merrxxandum Citular fob. 10, Series d 2010, OctOOer 26, 2010 [Amended Sla1d.W
Mxletaly Beoefi1s. Terms and Conditions Govenilg the Ovefseas ~ d Filipino Seafarers OtHloMI Ocean-Goi'q Sh~].
J lm' Coogress d the ~Hippiles v. NLRC, G.R. No. 123938, May 21, 1998, 290 SCRA 509; Tan v.la;jrama, GR fob. 4 ld.

L
151228, August 15, 2002. 5 San MiJuel Cotporalion v. The Hon. CA, G.R No. 146n5, Jan. 30, 2002.

~
 BAR REVIEWER ON lABOR lAW
134 CHAPTERlll 135
lABOR STANDARDS
and Christians working within the Muslim areas may not report for work on
the days designated by law as Muslim holidays.
1 2.
• The day designated by law for holding a general election is deemed a 13THMONTHPAY2
2
regular holiday.
• In case of two (2) regular holidays falling on the same day, the worker 1. COVERAGE.
should be compensated as follows: All employers are required to pay all their rank-and-file employees, a
o If unworked - 200% for the two regular holidays; 13th month pay not later than December 24 of every year.
o If worked- 200% for the two regular holidays~ premium of 100% Only rank-and-file employees, regardless of their designation or
3
for work on that day. employment s1atus and irrespective of the method by which their wages are
• "Monthly-paid" employees are not excluded from the coverage of holiday paid, are entitled to the 13th month pay benefit.3 Managerial employees are not
pay. 4 (Note: A "monthly-paid employee" refers to one who is paid his entitled to 13th month pay. 4
wage or salary for every day of the month, including rest days, Sundays,
2. EXCLUSIONS/EXEMPTIONS FROM COVERAGE.
regular or special days, although he does not regularly work on these days.
A "daily-paid employee" refers to one who is paid his wage or salary only The following employers are not covered by the 13th month pay law: 5
on the days he actually worked, except in cases of regular holidays whereir. l) The government and any of its political subdivisions, including
he is paid his wage or salary even if he does not work during those days, government-owned and controlled corporations, except those
provided that he is present or on leave of absence with pay or. the working corporations operating essentially as private subsidiaries of the
day immediately preceding the regular holidays. As distinguished from government. 6
monthly-paid employees who are assured of being paid tor every day of the 2) Employers already paying their employees 13th month pay or more
month, the provision of the Labor Code on holiday pay is principally in a calendar year or its equivalent at the time of the issuance of the
intended to benefit daily-paid employees who are normally bowtd by the Revised Guidelines. 7
principle of "no work, no pay. " Before the advent of the Labor Code, they
3) Employers of those who are paid on purely commission, boundary,
are not paid for unworked regular holidays).
or task basis, and those who are paid a flxed amount for
• Regular or special holidal pay benefit cannot be withdrawn after being
performing a specific work, irrespective of the time conswned in
practiced for quite a time as when it has been practiced continuously for
' 6 the performance thereof, except where the workers are paid on
eight (8) months. piece-rate basis, in which case, the employer shall be covered by
• Offsetting of holiday work with work on regular days is not allowed.'
the Revised Guidelines insofar as such workers are concerned.
Workers paid on piece-rate basis shall refer to those who are
paid a standard amount for every piece or unit of work produced
' The 1999 Hadlodl oo WJm' SllmJllxy ~. appriMld by 11en DOLE Sooelily Bie1weni:1o t. Laguesma oo
that is more or less regularly replicated without regard to the time
llecenter 14, 1999.
2 Article 94{c), labor Code; See Associated labor UnionS (AL.U)-TUCP v. Lefrondo.M:Inl!jo, G.R No. 111988, Oct 14, spent in producing the same. 8
1994, 237 seRA 621 v.t1ich i"r.dles l1e elecOOn d SaroolftoJ Kal!EM (SK). The lem1 "genenll eloctions' meMS, illle
od!Xldfle Sa1ggldrg ~ (SK) eledions, lhe -eledb1s b" l11l!rOOeiS dlleSK,.as disquished fum lie
special eledb1s b" such oflicers.MlreoYer,lhe factllaloo~llose beMeen 15ald21 tldt p!tillhe electic:n ilrmerrbefs
d the SK does rd mr:l\e such eleclkx1 ~ less a reglD' kX3 eledloo. Coosequentf, I was -held flat v.tletler illle
ali"IIIMd toe CBAalle t.m'Ctde. Decerber 4, 1992 wasaholda,tb"v.tth horiday P1Jf sh!U:Ibepaid by resp!X1dl!ll ' lagatic v. NLRC, G.R No. 121004, .lat. 28,1998.
2 PD. No. 851 J)ecerrbel' 16, 1975; Memorandum Order No. 28 ~ 13, 1986; ReWled Gtroernes on 1he
~-
3 See "Explana\Oiy Bli\letin on Wolke!S' Entitlement to Holiday Pay on 9 Ap!l1993, • ng Kagitingan and Good ~ d lie 13111 lv'ooth Pay l.aN [No'lentler 16, 1987'
Fooay' issued on March 11, 1993 by DOLE Underseelelaly Cresendano B. Trajano; Labor NJ.vioory issued on 3 Ibid.; SeciJn 1, l.'anoov1dum Order No. 28.
March 22, 2004 b'f DOLE Secretary Pabicia A. Santo Tomas; Asioo Transmission Caporation v. CA, G.R. No. HousedScraleev.Rey,GR No. 149013,Aug. 31,2006.
144664, March 15, 2004. P.O. No. 851, as amended.
~ San Mguet Corp. v. Del Rosano, G.R. Nos. 168194 &168603, Dec. 13, 2005; Oda~o v. NLRC, G.R. No. 147420, 6 No. 2 {a], Revised Guideines on lhe Implementation a the 13~ Mlnlh Pay l.all, fonnel1y Section 3 lbL Rules and

June 10, 2004; Insular Bank of Asia and America ~Joyees Union tiBMEUJ v. lnciong, G.R. No. L-52415, Oct. Regutam ~P.O. No. 851; AlfiOOCe ofGovemmentWO!kersv. t.tmdlaborand Empkl)1nenl, G.R No. L-
23, 1984, 132 SCRA 663; The Chartered Bank Employees Associatioo v. Ople, G.R No. L44717, Aug. 28, 1985. 60403, Aug. 3, 1983.
5 FEU Employees Labor Union v. Far Eastern University, G.R Nos. 69224-5, Dec. 18,1987,156 SCRA629, 677. 1 Section 2, PD. No. 851; No.2 [b], Revised Gtideines oo the hr~J~ementatialdthe 13~ Woo1h Pay laN, bmeft/ Section 3

L
s ld.; See also Oceanic Pharmacal Employees Union [FFW] v.lnciong, G.R. ~: L-50568, Nov. 7, 1979. [c), Rules !lld Regulations Implementing PD. No. 851.
a No.2 !dJ, lbid.,loonel1y Section 3[e], Rules em Regulations lmplementi1g P.O. No. 851.

~

136 BAR REvlEWERON lABOR lAW
2.1. DOMESTIC WORKERS OR KASAMBAHAYS, NOW COVERED.
Previously, not covered by the 13th month pay law are employers of
household helpers and persons in the personal service of another in relation to
such workers. However, R.A. No. 10361 is now explicit in its commandment
that a domestic worker or Kasambahay is entitled to 13th month pay as provided
forbylaw. 2
3. NATURE OF 13m MONTH PAY.
13th month pay is in the nature of additional income granted to
employees who are not receiving the same.3 P.D. No. 851 is undoubtedly a labor
standards law whose purpose is to increase the real wages of the workers. 4 It is
based on wage but not part ofwage. 5
4. MINIMUM AMOUNT OF 13m MONTH PAY.
The minimum 13th month pay required by law should not be less than
one-twelfth (1/12) of the total basic salary earned by an employee within a
calendar year. 6
5. MINIMUM PERIOD OF SERVICE REQUIRED.
To be entitled to the 13lh month pay benefit, it is imposed as a
minimum service requirement that the employee should have worked for at
least one (1) month during a calendar year. 7
6. COMMISSION VIS-A-VIS 13TH MONTH PAY.
In order to be considered part of 13th month pay, the commission
should be part of the basic salary of the employee.
However, whether or not a commission forms part of the basic salary
depends upon the circumstances or conditions for its payment which indubitably
are factual in nature for they will require a re-examination and calibration of the
evidence on record. 8
If the commission paid in addition to the basic salary is in the nature of
a productivity bonus or profit-sharing benefit which is dependent on and
1 No. 2 [c1 Revised Gilerrles 00 81e ~ ct the 13fl Mlnlh Pay l.a'l, b:mel1y Secloo 3 [d), PJAes en:!
ReglEtioos ~P.O. No.85-1.
2 Section 25, Article IV, RA No. 10361, otherwise known as the MDomestic WO!kers Acf [January 18, 2013~
3 ~ v. NLRC, G.R No. 158693, Nov. 17,2004.
4 A1iance <i GoYemment Workels v. t.tlis!er of Lalor, G.R No. L-60403, Al.g. 3, 1983; Nationa Federatioo <i Sug<rWakels
v. Ovejela, G.R No. 59743, May 31, 1982; Martqlper ~ Ccxpoortioo v. Ope, G.R No. 51254, June 11, 1981, 105
SCRA75.
5 CeotaiAzllceade Tmv. Centra!Azucarera deTm laborUnio!J.NLU, G.R No. 188949, July 26,2010.
6 SecOOn 2[a], Rules en:! RegulaOOils ~P.O. No. 851.
7 No. 1, Revised Guileines on the Implementation of the 13fl fv'ooth Pay law; No. X[A], DOLE~ on WaKe!S
StabJtcy MJlelary Benelit.
s Reyesv. NL.RC, G.R No.160233, Al.g. 8, 2007.
CHAPTER Ill
lABOR STANDARDS
137
!
! .
I
generally tied to the productivity or capacity for revenue production of a
company, it should not be considered as part ofbasic salary. 1
t
I
! But if the commission paid in addition to the basic salary has a clear
direct or necessary relation to the amount of work actually done by the
employee, it should be considered as part of basic salary. 2
If the employee is paid on commission basis only, he is excluded from
receiving the 13th month pay benefit. 3
7. CBA VIS-A-VIS 13m MONTH PAY.
For purposes of computing the 13th month pay, "basic salary" includes
all remunerations or earnings paid by the employer for services rendered but
does not include allowances and monetary benefits which are not considered or
integrated as part of the regular or basic salary, such as the cash equivalent of
unused vacation and sick leave credits, maternity leave, overtime, premium,
night differential and holiday pay, premiums for work done on rest days and
special holidays and cost-of-living aHowances. However, these salary-related
benefits should be included as part of the basic salary in the computation of the
l3rn month pay if by individual or collective bargaining agreement, company
practice or policy, the same are treated as part of the basic saiarj of the
employees. 4
8. SOME PRINCIPLES ON 13TH MONTH PAY.
l. "Basic salary" or "basic wage" contemplates work within the normal eight
(8) working hours in a day. This means that the basic salary of an
employee for purposes of computing the 13th month pay should include all
remunerations or earnings paid by the employer for services rendered
during nonnal working hours. 5
2. For purposes of computing the 13th month pay, "basic salary" should be
interpreted to mean not the amount actually received by an employee, but
1/12 of their standard monthly wage multiplied by their length of service
within a given calendar year. 6
3. Extras, casuals and seasonal employees are entitled to 131h month pay.7
1
Philippine Dupli:ators, klc. v. NLRC, G.R No. 110068, Feb. 15, 1995; Boie-Tateda Cllemi<3s, Inc. v. Oela Serna, GR No.
92174]Md Phftippine Fuji XeroxCapoodionv. Trajano, G.R. No.102552, M:rth 24,1994.
2 ld.
3
King of K'BJ5 Troosport, Inc. v. Mml:, GR. No. 166208, June 29, 2007.
• No. 4 [a], Revised GOOel'lllE!S on l1e inllfemenlation of the 1Jfllloolh Pay taw, lixme!lt Section 2 PIJ of the RUes ald
Regulations lrqllemenlilg P.O. No. 851; No. X(C], DOLE Haldbook on Wo:kers Sta1utory M:x1elay !lerlelis.
5
See No.1, OOLE ~lanatoiY Bullelinoo the lndlsiono!Teache!s' OieOOad Pay il the 13fl Mln1h PayDeemilatioo (Dec.
03,1993.
6
Hooda Phis., Inc. v. SarnahM ng Malay~ Manggagawa sa HoOOa, GR No. 145561, June 15, 2005; San Mguel
Corporation (Cagayan Coc&Cola PlanQ v. b:lcklng, G.R No. L49n4, Feb. 24, 1981, 103 SCRA 139.
7
BWC Opinkln dated Dec. 19, 1987, Bagong Pilipino WOOd's Fashion Wake!S Union, WOOd's Fashion, Inc.

138 BAR REviEWER ON lABOR lAW
.. i.
1
SERVICE CHARGE
1. ESTABLISHMENTS COVERED.
The rules on service charge apply only to establishments collecting
service charges, such as hotels, restaurants, lodging houses, night clubs, cocktail
lounges, massage clinics, bars, casinos and gambling houses, and similar
enterprises, including those entities operating primarily as private subsidiaries of
the government. 2
2. EMPLOYEES COVERED.
The same rules on service charges apply to all employees of covered
employers, regardless of their positions, designations or employment status, and
irrespective of the method by which their wages are paid except those receiving
more than n,ooo.oo a month. 3
3. EXCLUSION.
Specifically excluded from coverage are employees who are receiving
wages of more than P2,000.0C a month. 4 However, it must be pointed out that
the P2,000.00 ceiling is no longer realistic considering the applicable minimum
wages prevailing in the country. Hence, it must be disregarded. 5
4. DISTRIBUTION.
a. Percentage of sharing.
All service charges collected by covered employers are required to be
distributed at the following rates:
I) 85% to be distributed equally among the covered employees; and
2) 15% to .management to answer for losses and breakages and
distribution to employees receiving more than P2,000.00 a month, at
the discretion of the management. 6
b. Frequency of distribution.
The share of the employees referred to above should be distributed
and paid to them not less often than once every two (2) weeks or twice a month
at intervals not exceeding sixteen (16) days. 7
• Article 96, Labor Code.
2 ld.; Section 1, Rule VI [Service Charges], BoollllloflheRules lo lmpieme!lttel.abaCode.
3 Section 2, Rule VI, Book ill, Rules to Implement lhe labor Code.
4 ld.
No. VII [AI, DOLE Handblxt on Workas Slalutccy M:lnelaJy Benefils.
Section 3, Rule VI, Book ill, Ibid.; No. VII [A], lbk!.
Sedion4, Rule VI, Book ill, Ibid.; No. VII [B), Ibid.
I
CHAPTER Ill 139
lABOR STANDARDS
5. INTEGRATION.
! In case the service charge is abolished, the share of covered employees
should be considered integrated in their wages, in accordance with Article 96 of
I
I
!i
the Labor Code. The basis of the amount to be integrated is the average monthly
share of each employee for the past twelve (12) months immediately preceding
the abolition or withdrawal of such charges. 1
6. SOME PRINCIPLES ON SERVICE CHARGE.
I • Tips and services charges are two different things. Tips are given by
customers voluntarily to waiters and other people who serve them out of
recognition of satisfactory or excellent service. There is no compulsion to
give tips under the law. The same may not be said of service charges which
are considered integral part of the cost of the food, goods or services
ordered by the customers. As a general rule, tips do not form part of the
service charges which should be distributed in accordance with the sharing
ratio prescribed under Article 96 of the Labor Code. However, where a
restaurant or similar establish...'D.ent does not collect service charges but has a
practice or policy of monitoring and pooling tips given voluntarily by its
customers to its employees, the pooled tips should be monitored, accounted
for and distributed in the same manner as the service charges? Hence, the
85% : 15% sharing ratio should be observed.
• Service charges are not in the nature of profit share and, therefore,
cannot be deducted from wage. 3
B.
WAGES
1.
WAGE VERSUS SALARY
1. BASIC DISTINCTION.
The term "wage" is used to characterize the compensation paid for
manual skilled or unskilled labor. "Salary," on the other hand, is used to
describe the compensation for higher or superior level of employment.4
i
' Section 5, Rule VI, Book Ill, bid.; No. VII [B), Ibid.
No. Vlllq, 001.£ 1-mdbook on WorkeiS Slal!.rto!y !looefaly Benefils.
3 Mayan 1W &Reslaunrtv. Adala, GR No. 157634, Mtj 16, 2005.
4 100 terms 'wage' (e\yiTK)bJk:al~ from lhe WWie ElY;Jiish IIIJill 'waJen), 's;J.arf (from !he R001a1\\Ud ·sar and Latin
v.ord 'saimni are synonymous i1 meaning and usage. They al refer to Ole same lhir¥J, i.e., a canpensalion pakl on
account ct work or sef'lices re11dered.
'i'
L
140 BAR REviEWER ON lABOR lAW
2. DISTINCTION IN TERMS OF EXECUTION, ATTACHMENT OR
GARNISHMENT.
In cases of execution, attachment or garnishment of the
compensation of an employee received from work issued by the court to satisfY
a judicially-determined obligation, a distinction should be made whether such
compensation is considered "wage" or "salary. " Under Article 1708 of the
Civil Code, if considered a "wage," the employee's compensation shall not be
subject to execution or attachment or garnishment, except for debts incurred for
food, shelter, clothing and medical attendance. If deemed a "salary," such
compensation is not exempt from execution or attachment or garnishment.
Thus, the salary, commission and other remuneration received by a managerial
employee (as distinguished from an ordinary worker or laborer) cannot be
considered wages. Salary is understood to relate to a position or office, or the
compensation given for official or other service; while wage is the compensation
for labor.'
2.
PAYMENT OF WAGES
1. BASIC WAGE.
The term "basic wage" means all the remuneration or earnings paid by
an employer to a worker for services rendered on normal working days and
hours but does not include cost-of-living allowances, profit-sharing payments,
premium payments. 13th month pay or other monetary benefits which are not
considered as part of or integrated into the regular salary of the workers. 2
Further, as held in Honda Phils., Inc. v. Samahan ng Malayang
Manggagawa sa Honda/ the following should be excluded from the
computation of "basic salary," to wit: payments for sick, vacation and
maternity leaves, night differentials, regular holiday pay and premiums for
work done on rest days and special holidays.4
2. ATTRIBUTES OF WAGE.
"Wage" paid to any employee has the following attnbutes:
1. It is the remuneration or earnings, however designated, for work done
or to be done or for services rendered or to be rendered;
Gaa v. CA, ilfra; See also ~itable BarUg Colp. v. Sadac, 1J.R No.164n2,June 8, 2006.
IIEm [n1 Defllitkln ofTenns, Rilles lmplementi1g Republic Act No. 6727.
GR No.145561,June 15,2005,460SCRA 187.
See also Soo t.i;)uel Co!poralioo Gagaym Coca-Cola Plant v.inciooJ, G.R No. L-49774, Feb. 24, 1981, 103 SCRA 139.
CHAPTER III 141
lABOR STANDARDS
2. It is capable of being expressed in tenus of money, whether fixed or
ascertained on a time, task, piece or commission basis, or other
method of calculating the same;
3. It is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done or for
services rendered or to be rendered; and .
4. It includes the fair and reasonable value, as determined by the DOLE
Secretary, of board, lodging, or other facilities customarily furnished
by the employer to the employee. "Fair and reasonable value" shall
not include any profit to the employer or to any person affiliated with
the employer.'
3. MINIMUM WAGE.
The minimum wage rates prescribed by law shall be the basic casb
wages without deduction therefrom of whatever benefits, supplements or
allowances which the employees enjoy free of charge aside from the basic pay. 2
4. STATUTORY MINIMUM WAGE.
[ The term "statutory minimum wage" refers simply to the lowest basic
wage rate fa:ed by law that an employer can pay his workers.J
i
I 5. REGIONAL MINIMUM WAGE RATES.
l The term "regional minimum wage rates" refers to the lowest basic
I wage rates that an employer can pay his workers, as fixed by the Regional
Tripartite Wages and Productivity Boards (RTWPBs), and which shall not
4
be lower than the applicable statutory minimum wage rates.
The minimum wage rates for agricultural and non-agricultural
employees and workers in each and every region of the country shall be those
prescribed by the "RTWPBs". 5 These wage rates may include wages by
industry, province or locality as may be deemed necessary by the RTWPBs.
6
6. WAGE RATES.
The term "wage rates" includes cost-of-living allowances as fixed by
the RTWPB, but excludes other wage-related benefits such as overtime pay,
, Based on the defrlition of 'wiJ;le' it Altide 97 [1), labor Code.
2 Section 1, 1M! VIl-A, Boci I~ Rules kl ~tile l.lilorCcde, as ameOOed by Mem:xandumCiaJiar No.3, Nov.4,
1992
3 ~ [o], Definition ofTenns, RUes ~ng RA No.6727; Section 4 ~.Rule I, N'M'C Guidelines No. 01, Series of
2007, June 19, 2007 (Arnel1ded RUes of Procedure on tMitun Wage FIXing.
4 Section 4 [k1 Rule I, N'IWC Guideliles No. 01, Series d 'lf!J7, June 19, 2007 [.Arne!1ded Rules of Procedure on Mnill1JI11
Wage FIXilg.
5 See Article 99 (Regional Minimum Wages),.as amended by Section 3, RA. No. 6727, June9, 1989.
6 Micle99, Labor Code; Section 1, Chapter Ill, Rules lf1'4llementing RA. No. 6727.
L.
 I CHArTER Ill
I
142 liAR REVIEwER ON lABOR lAW
bonuses. night shift differential pay, holiday pay, premium pay, 13 111 month pay,
premium pay, leave benefits, among others. 1
7. RATIONALE.
The principal reason why a legislated wage increase is considered valid
~I
! not a new method of increasing the minimum wage.
is that it prevents the exploitation of defenseless workers who are situated.in an
unequal position vis-a-vis their employers in terms of bargaining power. By
setting the minimum below which the law considers illegal, the workers are
assured of decent living subsistence without need for them to bargain for the
same.
The employer cannot hope to validate his non-compliance with the
legislated minimum wage by contending that he has liquidity problem or is
suffering from financial reverses or business losses. Whatever problem he may
have in the operation of his business cannot certainly affect his obligation to pay
the minimum wage rate fixed by law.
Thus, in Mayon Hotel & Restaurant v. Adana/ the Supreme Court
ruled that petitioner's repeated invocation of serious business losses is not a
defense to payment of labor sLJtdard benefits. The employer cannot exempt
himself from liability to pay minimum wages because of poor fmancial
condition of the C(lmpany. The payment of minimum wages is not dependent on
the employer's ability to pay. 3
It must be noted that acceptance by the employee of wage below tbe
minimum set by law does not preclude bim from suing for tbe deficiency.
The principle of estoppel or laches does not apply in this situation.
8. INTEGRATION OF COLA AND OTHER MONETARY BENEFITS
INTO THE BASIC PAY.
a. Meaning of cost-of-living allowance (COLA).
Clearly, COLA is not in the nature of an allowance intended to
reimburse expenses incurred by employees in the performance of their official
functions. It is not payment in consideration of the fulfillment of official duty. 4
As defmed, "cost of living" refers to "the level of prices relating to a range of
everyday items"5 or "the cost of purchasing the goods and services which are
1 Sedb12 G], DepOOrnent O!der No.10, Seres of 1998 [May 04, 1998.
2 GRNo.157634,May16,2005.
L.
3 See also Vda.de Rachov. M.inqlaiyofl\ag<rl, G.R No.L-23542, Jan. 2,1968,22 SCRA 1.
4 Qmerrezv.DBM, G.R No.153266,March 18,2010,616SCRA 1, 18.
s ld. at 19, cili1g Tt,e New Oxford AmeOCallli:tionay, Oxford UlMllsity Press, 2005 Editioo.
143
lABOR STANDARDS
included in an accepted standard level of consumption." 1 Based on this premise,
COLA is a benefit intended to cover increases in the cost ofliving. 2 ·
b. Validity of integration.
The integration of monetary benefits into the basic pay of workers is
By way of latest illustration, under Section 1 of Wage Order No. NCR-
20 which was issued on May 17, 2016, the COLA ofP15.00 per day under the
previous Wage Order No. NCR-19 was ordered integrated into the basic pay of
P466.00 upon its effectivity thereby making P481.00 as the new basic wage.
Further, a new COLA of P10.00 per day was added resulting in the new
minimum wage rate ofP491.00.
9. "NO WORK, NO PAY" PRINCIPLE.
It must be emphasized that the age-old rule governing the relation
between labor and capital, or management and employee of "no work, no pay"
or "fair day's wage for fair day's labor" remains to be adhered to in our
jurisdiction as the basic factor in determining the wages of employees. If the
worker does not work, he is generally not entitled to any wage or pay. The
exception is when it was the employer who unduly prevented him from working
despite his ableness, willingness and readiness to work; or in cases where he is
iUegally locke.d out or illegally suspended or illegally dismissed, or otherwise
illegally prevented from working, in which event, he should be entitled to his
wage. 3
3.
FACILITIES VERSUS SUPPLEMENTS
l. FACILITiES, DEFINED.
The term "facilities" includes articles or services for the benefit i>f the
employee or his family but does not include tools of the trade or articles or
services primarily for the benefit of the employer or necessary to the conduct of
the employer's business. 4 They are items of expense necessary for the laborer's
and his family's existence and subsistence which form part of the wage and
1 ld., cmg Websb's Tti'd New kllelna1D1ai!X1ionay, MerticmWebs8hc., 1993 Edibt
2 MlyniadWater~Assodationv.l.4ayrHIWalerSeMces, klc.,-G.R. No.198935, Nov.27, 2013.
3 Aldan 13ed!tCoope!;ANev. Nt.RC, G.R No.121439,J<r1. 25, 2000; PlliippileAi111esv.NLRC, GF. No. 55159, June 22,
1989; C*x Relilely ~ AssociaOOn v. Bdlcrlles, G.R No. 123782, Sept 16, 1997, 279 SCRA 218; Ourabilt
~ Plirt~ v. NLRC, G.R No. L-76746, Jt1t 27, 1987, 152 SCRA 328; SSS v. SSS s...,eMsors lrol,
GR No. L-31832, Oct. 23,1982.
4 SecOOn 2, Rli! IJII.A, Book Ill, Rules tl ~lle Lalor Code, as emended by M!romim Citulir No.3, NoJ. 4,
1992.

144 BAR REVIEWER ON lABOR lAW
when furnished by the employer, are deductible therefrom; since if they are not
so furnished, the laborer would spend and pay for them just the same. 1
2. SUPPLEMENTS, DEFINED.
The term "supplements" means extra remuneration or special
privileges or benefits given to or received by the laborers over and above their
ordinary earnings or wages. 2
3. FACILITIES VS. SUPPLEMENTS.
The benefit or privilege given to the employee which constitutes an
extra remuneration over and above his basic or ordinary earning or wage is
supplement; and when said benefit or privilege is made part of the laborer's
basic wage, it is a facility. The criterion is not so much with the kind of the
benefit or item (food, lodging, bonus or sick leave) given but its purpose. Thus,
free meals supplied by the ship operator to crew members, out of necessity,
cannot be considered as facilities but supplements which could not be rtduced
having been given not as part of wages but as a necessary matter in the
maintenance of the health and efficiency of the crew during the voyage. 3
4. SOME PRINCIPLES ON FACILITIES AND SUPPLEMENTS.
• Facilities are deductible from wage but not supplements. 4
. • Legal requirements must be complied with before facilities may be
deducted from wages. The employer simply cannot deduct the value from
the employee's wages without satisfying the following:
(1) Proof that such facilities are customarily furnished by the trade;
(2) The provision of deductible facilities is voluntarily accepted in writing
by the employee; and
(3) The facilities are charged at fair and reasonable value. 5
• An employer may provide subsidized meals and snacks to his employees
provided that the subsidy shall not be less than thirty percent (30%) of the
fair and reasonable value of such facilities. In such a case, the employer
may deduct from the wages of the employees not more than seventy percent
(70%) of the value of the meals and snacks enjoyed by the employees,
1 State MCKine Coqlelalioo illd Rojalline, n:. v. Cebu Sea'nen's Associatkln, Inc., G.R No. L·12444, Feb. 28, 1963; A1Dk
BiJ Wedge lvililg Co., Inc. v. Alii BiJ Wedge MJ1ual BeneftAssocmln, G.R No. L-5276, Marth 3, 1953,97 Phi. 294.
2 Stale Mline Cooperation and Royal Lile, Inc. v. Cebu Seamen's Association, Inc., supra; Amk eg Wedge Moing Co., he.
v. NDk Bg Wedge Mltual BenefitAssociatioo, G.R No. L-5276, Mirth 3, 1953, 97 f'llH. 294
l State Mline CoJporaOOn and Royal line, Inc. v. Cebu Smell's AssociaOOn, klc., supra; Mayon Hotel &Restaurant v.
Adooa, GR No. 157634, May 16, 2005; Mima v. NLRC, G.R No. 118506, Apn1 18, 1997, 271 SCRA 670.
State Mali1e Coqxra!ion illd Royal Lile, Inc. v. Cebu Seamen's Association, Inc., supra.
L
4
5 Mabeza v. NLRC, supra.
f
·--
CHAPTER Ill
lABOR STANDARDS
45
provided that such deduction is with · the written authorization of the
employees concerned. 1
• The free board and lodging petitioner SIP furnished its employees cannot
operate as a set-off for the underpayment of their wages. 2
4.
NON-DIMINUTION OF BENEFITS
1. APPLICABILITY OF ARTICLE 100 OF THE LABOR CODE.
a. Applicability even to benefits granted after the
promulgation/effectivity of the Labor Code.
Albeit Article 100 is clear that the principle of non-elimination and
non-diminution of benefits apply only to the benefits being enjoyed "at the time
of the promulgation" of the Labor Code, the Supreme Court has consistently
cited Article 100 as being applicable even to benefits granted after said
. promulgation. It has, in fac~ been treated as the legal anchor for the declaration
of the invalidity of so many acts of employers deemed to have eliminated 01
diminished the benefits of employees.
b. Proper basis is not Article 100.
The language of Article 100 is clear as to its applicability. Therefore,
subsequent to the date of promulgation of the Labor Code, the non-elimination
and non-diminution principle enunciated therein can no longer be invoked as the
same was explicitly and clearly made applicable only to "supplements or other
employee benefits being enjoyed at the time of promulgation" of the Labor
Code.3
This view that Article 100 is not the proper basis for the invocation of
the non-diminution and non-elimination of benefits principle was underscored in
the separate concurring opinion of Mr. Justice Arturo D. Brion4 in the case of
Arco Metal Products, Inc. v. Samahang ng mga Manggagawa sa Arco
Metal-NAFLU {SAMARM-NAFLU),5 where he clarified that the basis for the
prohibition against diminution of established benefits is not really Article 100 of
the Labor Code as the respondents claimed and as the cases cited in the
ponencia mentioned. He emphasized therein that Article lOO·refers solely to the
1 Sedioo 1, RIJe VIl-A, Book Ill, Rilles b ~the Labor Code, as emended by Memorandum Cialla' No.3, Nov. 4,
1992.
2 See Article 124, t.aJortode.
Apex Mni'lg Company, Inc. v. NLRC, G.R No. 86200, Feb. 25, 1992,206 SCRA497; See also Octavia v. Philippine
Long DislaJce Telephone Company, G.R No.175492, Feb. 27, 2013; Insular Hotel Employees Union-NFL v.
Wateffront Insular Hotel Davao, G.R Nos. 174040-i1, Sept 22, 2010.
4 Fonner Secretay cllhe OepMment oll.aba md Employment pOOr lo his~ kllhe High Court.
GR No. 170734, Mly 14, 2008.
146 BAR REVIEWER ON lABOR lAW
non-diminution of benefits enjoyed at the time of the promulgation of the Labor
Code.
Indeed, the view is advanc.ed that even without Article I00, the
protection-to-labor clause 1 in the Constitution and the grounds of justice and
equity will not allow such diminution and/or elimination of employee benefits.
Based on the ponencia and concurring opinion afore-cited in the Arco
Metal case, it may be safely concluded that the proper legal bases for the
invocation of the principle that any benefit or supplement being enjoyed by.
employees cannot be reduced, discontinued or eliminated by the employer are
the following:
(1) Express terms of an employment agreement;
(2) Company practice which refers to the implied terms of an
employment agreement which the employer has freely, voluntarily
and consistently extended to its employees and thus cannot be
withdrawn except by mutw=1l consent or agreement of the
contracting parties;
(3) The Constitution (Section 18 of Article II and Section 3 of Articie
XIII thereof); and
(4) Article 4 of the Labor Code.
Indeed, the express terms of an employment agreement which are not
contrary to law, public policy or public order are the touchstone of the
employment relationship. Said terms constitute the law between the employer
and the employee which cannot be breached. The implied terms thereof, once
granted by the employer, may ripen into a company practice or even into a
policy which generally can no longer be withdrawn unilaterally by the employer
except when the affected employee agrees to such withdrawal.
And the protection-to-labor mandate enunciated in Section 18 of
Article II and Section 3 of Article XIII of the Constitution as well as the rule on
the proper interpretation and construction of the provisions of the Labor Code
and its implementing rules enshrined in Article 4 thereof are the main bedrock
and shield against any attempt at reducing, diminishing or eliminating benefits
that employers have granted and which the employees have been enjoying.
c. Latest pronouncement on the application of the non-diminution
rule in Article 100.
The 2014 case of Wesleyan University-Philippines v. Wesleyan
Universitv-Philippines FacultY and Staff Association/ succinctly pointed out
1 Refen11g Ill Section 18, M:le II a'ld Section 3, Article XII~ 1987 Cooslitution.
2 G.R No. 181806, Martfl12, 2014.
CHAPTER Ill
147
lABOR STANDARDS
that the Non-Diminution Rule found in Article 100 of the Labor Code
explicitly prohibits employers from eliminating or reducing the benefits received
by their employees. This rule, however, applies only if the benefit is based on
any of the following:
(I) An express policy;
(2) A written contract; or
(3) A company practice. 1
2. ELIMINATION OR DIMINUTION OF BENEFITS MAY
CONSTITUTE DEMOTION OR CONSTRUCTIVE DISMISSAL.
a. When it constitutes demotion.
The illegal and unjustified elin1ination or diminution of certain benefits
may result in illegal demotion if it results in the lowering in position or rank or
reduction in salary of the employee.Z
b. When it constitutes constructive dismissal.
Elimination or diminution of ce1taL'l benefits may result in the
constructive dismissal of an employee when it amounts to an involuntary
resignation resorted to because continued employment is rendered impossible,
unreasonable or unlL~ely; when t1ere is a demotion in rank and/or a diminution
in pay; or when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to ihe employee that it could foreclose any choice by him
except to forego his continued employment. 3
3. COMPANY PRACTICE.
a. No hard and fast rule to establish company practice.
Company practice is a custom or habit shown by an employer's
repeated, habitual customary or succession of acts of similar kind by reason of
which, it gains the status of a company policy that can no longer be disturbed or
withdrawn.
b. The grant of benefit should not be by reason of legal or
contractual obligation but by reason of liberality.
To ripen into a company practice that is demandable as a matter of
right, the giving of the benefit should not be by reason of a strict legal or
1 Citing Cenlral Azuc<rera De Tal1acv. Cenlral Amcare!a De Tarlac lalxri.Jrm.NLU, G.R No.188949, Ju~ 26,2010, 625
SCRA 622, sm31.
2 PhUippi1e Wreless, Inc. [F'ockeftlelfl v. NLRC, G.R. No. 112963, Ju¥ 20, 1999; Blillmles v. GuMra, G.R No. L-22586,
Feb.27, 1969,27 SCRA 138;Femandov. Sio. Tomas,G.R No.112309,.lutj28, 1994,234SCRA546.
3 Unmn Safely~. Inc. v. Bascrte, G.R No. 154689, lb. 25, 2004; See also ~Mide Sales Wiiehouse CUJ v. NLRC,
G.R. No. 154503, Feb. 29, 2008; Chiang Kai Shek College v. Hon. CA, G.R No. 152988, Aug. 24,2004.
148 BAR REVIEWER ON LABOR LAW
contractual obligation but by reason of an act of liberality on the part of the
• 1
emptoyer.
c. Criteria that may be used to determine existence of company
practice.
There is no hard and fast rule which may be used and applied in
determining whether a certain act of the employer may be considered as having
ripened into a practice which, having been elevated to such status, may thus be
accorded the same enforceability and binding effect equivalent to a demandable
policy or agreement.
According to the case of National Sugar Refineries Corporation v.
NLRC/ the test or rationale of this rule on long practice requires an
indubitable showing that the employer agreed to continue giving the benefits
knawing fully well that said employees are not covered by the law requiring
the payment thereof.
The following criteria may, however, be used to determine whether an
act has ripened into a company practice:
(1) The act of the employer has been done for a considerable period of
time;
(2) The act should be done consistently and intentionally; and
(3) The act should not be a product of erroneous interpretation or
construction of a doubtful or difficult question of law or provision
in the CBA.
1. THE ACT OF THE; EMPLOYER HAS BEEN DONE FOR A
CONS,IDE'RABLE PERIOD OF TIME.
If done only once as in the case of Philippine Appliance Corporation
@ilacor) v. ~~where the CBA signing bonus was granted only once during
fue 1997 CBA negotiation, the same cannot be considered as having ripened into
a company practice. Similarly, in the 2011 case of Supreme Steel Corporation
v. Narkakaisang Man22agawa ng Supreme Independent Union <NMS.UID-
APL),4 it was held that the impiementation of the COLA under Wag~ Order No.
RBili-1 0 on an across-the-board basis, which only lasted for less than a year,
cannot be considered as having been practiced "over a long period of time."
While it is true that jurisprudence has not laid down any rule requiring a specific
minimum number of years in order for a practice to be considered as a voluntary
act of the employer, under existing jurisprudence on this matter, an act carried
1 Pag-Asa Steel Wol1ts, Inc. v. CA, G.R No. 166647, Malth 31,2006.
2 G.R.t«<.101761,Ma!t:h24, 1993,220SCRA452.
3 GRNo.149434,June3,2004.
4 G.R. No.185556, Man:h 28,2011.
CHAPTER III 149
LABOR STANDARDS
out within less than a year would certainly not qualify as such. Hence, the
withdrawal of the COLA Wage Order No. RBIII-10 from the salaries of non-
minimum wage earners did not amount to a "diminution of benefits" under the
law.
In the following cases, the act of the employer was declared company
practice because of the considerable period of time it has been practiced:
(a) Davao Fruits Corporation v. Associated Labor Unions.'- The
act of the company of freely and continuously including in the
computation of the 13th month pay, items that were expressly
excluded by law has lasted for six (6) years, hence, was considered
indicative of company practice.
(b) Sevilla Trading Compa!!y v. A. V. A. Semana/ - The act of
including non-basic benefits such as paid leaves for unused sick
leave and vacation leave in the computation of the employees' 13th
month pay for at leasi two (2) years was c~_msidered a company
practice.
(c) The 2010 case of Central Azucarera de Tarlac v. Central
3
Azucarera de Tarlac Labor Union-NLU, also ruled as company
practice the act of petitioner of granting for thi.rty (30) years, its
workers the mandatory l31h month pay computed in accordance
with the following formula: Total Basic Annual Salary divided
by twelve (12) and Including in the computation of the Total
Basic Annual Salary the foliowing: basic monthly salary; frrst
eight (8) holll'S overtime pay on Sunday and legaVspecial holiday;
night premium pay; and vacation and sick leaves for each year.
4
(d) Manila Electric Company v. Secretary of Labor, where the act
of the employer in granting, in addition to the regular 13th month
bonus, an additional Christmas bonus at the tail-end of the year
since 1988 was considered company practice. The conside :rable
length of time MERALCO has been giving these special grru 1ts to
its employees indicates a unilateral and voluntary act on its p art to
continue giving said benefits knowing that such act wa1 ; not
required by law. · 5
(e) Davao Integrated Port Stevedoring Services v. Abargue. 7;: -
The employer, for three (3) years and nine (9) months, appr( 1ved
1 G.R. No. 85073, Aug. 24, 1993, 225 SCRA 562.
2 G.R. No. 152456, Ap!i128, 2004, 438 SCRA 239.
3 G.R. ttl. 188949, July 26, 2010.
4 G.R. No. 127598, Jan. 27, 1999.
s G.R.t«1.102132, Math 19,1993,220 SCRA 197.
150 BAR REVIEWER ON lABOR lAW
the commutation to cash of the unenjoyed portion of the sick leave
with pay benefit of its intermittent workers. It was held that this act
of the employer has already ripened into a company practice which
can no longer be withdrawn.
(f) Tiangco v. Leogardo, Jr .. 1 where the employer carried on the
practice of giving a fixed monthly emergency allowance from
November 1976 to February 1980, or for a period of three (3) years
and four (4) months. It was ruled that this has already ripened into
a company practice which cannot be peremptorily and unilaterally
withdrawn by the employer.
(g) Metropolitan Bank and Trust Company v. NLRC/ where the
act of Metrobank, for over a decade, of consistently, deliberately
and voluntarily granting improved benefits to its officers, after the
signing of each CBA with its rank and file employees, retroactive
to January l st of the same year as tile grant of improved benefits
and without the condition that the officers should remain
employees as of a certain date is a company practice. This
undeniably indicates a unilateral and voluntary act on Metrobarik's
part, to give said benefits to its officers, knowing that such act was
not required by iaw or the company retirement plan. It must be
noted that coinpany practice or policy may still be invoked
even if the claimant employees have already retired and
received their retirement benefits. Thus, the argument of
Metrobarik that it ceased to have any obligation to grant improved
retirement benefits to employees who are no longer its employees
·at the time of the grant was debunked by the High Court.
2. THE ACT SHOULD BE DONE CONSISTENTLY AND
INTENTIONALLY.
The intention to make a certain act a company practice may be
logically inferred from the peculiar circumstances obtaining in each case.
The following cases may be cited to illustrate this principle:
(a) Tiangco v. Leogardo, Jr./ where the employer has consistently
been granting fixed monthly emergency allowance to the
employees from November, 1976 but discontinued this practice
effective February, 1980 insofar as non-working days are
concerned based on the principle of "no work, no pay. " The
Supreme Court ruled that the discontinuance of said benefit
1 G.R. No. L-51636, May 16, 1983,122 SCRA267; 'lf.J7 Phil. 2235.
2
3
G.R. no.152928, June 1S, 2009.
GR No. L-57636, We/ 16, 1983, 122 SCRA 267; 'lfJ7 Phil2235.
CHAPTERlll 151
lABOR STANDARDS
contravened Article 100 of the Labor Code which prohibits the
diminution of existing benefits.
(b) Republic Planters Bank, [now known as PNB-Republic Bank)
v. NLRC,i where the Supreme Court ruled, thus: "A punctilious
perusal of the records leads us to the same conclusion, i.e., that
PNB-RB has adopted the policy of granting gratuity benefits to its
retiring officers based on the salary rate of the next higher rank. It
continued to adopt this practice even after the expiration of the
1971-1973 CBA. The grant was consistent and deliberate although
petitioner knew fully well that it was not required to give the
benefits after the expiration of the 1971-1973 CBA. Under these
circumstances, the granting of the gratuity pay on the basis of the
salary rate of the rank next higher may be deemed to have ripened
into a company practice or policy which can no longer be
peremptorily withdrawn.
(c) ~tandard Chartered Bank v. Standard Chartered Bank
Employees Union (SCBEID/ where petitioner asserts that its
employees are not entitled to "outpatient medicine
reimbursements" distinct and separate from the "medicine
allowances" granted in the CBA. It alleges that outpatient
medicine reimbursement was not expressly provided for in the
Philamlife insurance policy and that this was precisely the reason
petitioner's employees were provided with a medicine allowance
under the CBA. The Supreme Court, however, adopted the finding
of the DOLE and the CA that the "outpatient benefit [had] been a
regular feature of the (petitioner's] medical coverage and as a
regular feature, cannot be withdrawn unilaterally." The insurance
policy issued by Philamlife allowed outpatient benefits as claims
against maximum disablement, notwithstanding the lack of an
express provision regarding outpatient benefits. Moreover, it was
found that petitioner acknowledged, without disapproval or
objection, employees' requests for reimbursement of outpatient
medical expenses under the old insurance plan.
3. THE ACT SHOULD NOT BE A PRODUCT OF ERRONEOUS
INTERPRETATION OR CONSTRUCTION OFA DOUBTFUL
OR DIFFICULT QUESTION OF LAW OR PROVISION IN THE
I
I CBA.
The general rule is that if it is a past error that is being corrected, no
vested right may be said to have arisen therefrom nor any diminution of benefit
I 1 G.RM:;. ii7460,Jan.6, 1997.
L.
1 G.R. No. 165550, 0c1. 8, 2008.
152 BAR REviEWER ON lABOR lAW CHAI'TERill 153
lABOR STANDARDS

may have resulted by virtue ofthe correction thereof.' The error, however, must case, respondent Bank has previously implemented Wage Orders
be corrected immediately after its discovery; 2 otherwise, the rule on non- Nos. NCR-01 and NCR-02 nationwide although they are
diminution of benefits would still apply.3 supposedly applicable to the National Capital Region only. With
The following cases would illuminate this principle: the issuance of Wage Order No. RB 05-03 (appiicable for Region
V) and Wage Order No. RB VII-03 (applicable for Region VII),
(a) Globe Mackay Cable and Radio Corporation v. NLRC,4 where respondent Bank started to regionalize the implementation of the
the Supreme Court ruled on the proper computation of the cost~of­ wage increases. In holding that this argument of petitioner is not
living allowance (COLA) for monthly-paid employees. Petitioner persuasive, the Supreme Court ruled that although the Bank
corporation, pursuant to Wage Order No. 6 (effective October 30, implemented Wage Orders Nos. NCR-01 and NCR-02 nationwide
1984), increased the COLA of its monthly-paid employees by instead of regionally even after the effectivity of R.A. No. 6727,
multiplying the P-3.00 daily COLA by 22 days which is the number the Bank at the time was still uncertain about how to follow the
of working days in the company. The union disagreed with the new law. In any event, that single instance cannot be constitutive
computation, claiming that the daily COLA rate of P-3.00 should be of "management practice. "
multiplied by 30 days which has been the practice of the company
for several years. The Supreme Court, however, upheld the But if the error does not proceed from the interpretation or construction
contention of the petitioner corporation. It hekl that the grant by of a law or a provision in the CBA, the same may ripen into a company practice.
the employer of benefits through an erroneous application of the The following cases may be cited in accordance with this tenet:
law due to absence of clear administrative guidelines is not
(a) Hinatuan Mining Corporation and/or the Manager v. NLRC,'
considered a voluntary act which cannot be unilaterally
where the act of the employer in granting separation pay to
discontinued.
resigning employees, despite the fact that the Labor Code does not
(b) TSPIC Corp. v. TSPIC Employees Union JFFWJ/ where the
grant it, was considered a:1 established empioyer practice.
Supreme Court reiterated the rule enunciated in Globe-Mackay,
(b) Arco Metal Products, Inc. v. Samahang ng mga Manggagawa
that an erroneously granted benefit may be withdrawn without
sa Arco Metai-NAFLU (SAMARM-NAFLU),2 where petitioner,
violating the prohibition against non-diminution of benefits. No
despite the provision of the law and the CBA that 13th month pay,
vested right accrued to individual respondents when TSPIC
vacation leave and sick leave conversion to cash should be
corrected its error by crediting the salary increase for the year 200 1
computed in amounts proportional to the service the employees
against the salary increase granted under Wage Order No. 8, all in
have actually rendered within a year, had not pro-rated the
accordance with the CBA. Hence, any amount given to the
payment of the same benefits to seven (7) employees who had not
employees in excess of what they were entitled to, as computed
served for the full 12 months in 1992, 1993, 1994, 1996, 1999,
above, may be legally deducted by TSPIC from the employees'
· salaries. 2003, and 2004. Petitioner claims that its full payment of benefits
regardless of the length of service to the company does not
(c) Prnbankers Association v. Prudential Bank and Trust
constitute voluntary employer practice. It points out that the
Companv.6 where petitioner union C!Sserts that respondent Bank
payments had been erroneously made and they occurred in isolated
has already adopted a uniform wage policy which has attained the
cases in the years 1992, 1993, 1994, 1999, 2002 and 2003.
status of an established management practice; thus, it is estopped
According to petitioner, it was only in 2003. that the accounting
from implementing a wage order for a specific region only. In this
department discovered the error "when there were already three (3)
employees involved with prolonged absences and the error was
1 GIOOe Mad<lr{Cable v. NtRC,Ilfra. corrected by implementing the pro-rata payment of benefits
2 Central Azucaera De Tarlac v. Centra!Azucaera De TaM:: labor UniiJo.NLU, GR. No. 188949, Ju~ 26,2010,625 SCRA pursuant to law and their existing CBA." It adds that the seven
622,63M31.
3 Wf!i}eyoo Univtl1Sity-Ph~ippines v. WfS(qBII Unr.telsity-Philippines Faruty il1d Stlff Association, G.R. No. 181806, March earlier cases of full payment of benefits went unnoticed
12,2014.
4 G.R. No. 74156,June29, 1988, 163SCRA71.
s G.R. No. 163419, Feb. 13,2008. G.R.No.117394,Feb.21, 1997.

L.
1
6 GRNo.131247,J<l1.25, 1999,302SCRA74. 2 G.R. No. 170734, May 14, 2008.
154 BAR REviEWER ON lABOR lAW
considering the proportion of one employee concerned (per year)
vis avis the 170 employees of the company. Petitioner describes
the situation as a "clear oversight" which should not be taken
against it. To further bolster its case, petitioner argues that for a
grant of a benefit to be considered a practice, it should have been
practiced over a long period of time and must be shown to be
consistent, deliberate and intentional, which is not what happened
in this case. In disagreeing to this contention, the Supreme Court
pronounced:
"In the years 1992, 1993, 1994, 1999, 2002 and 2003,
petitioner had adopted a policy of freely, voluntarily and
consistently granting full benefits to its employees regardless of
the length of service rendered. True, there were only a total of
seven employees who benefited from such a practice, but it was
an established practice nonetheless. Jurisprudence has not laid
down any rule specifying a minimum number of years within
which a company practice must be exercised in order to
constitute voluntary company practice. Thus, it can be six (6)
years, three (3) years, or even as short as two (2) years. Petitioner
cannot shirk away from tls responsibility by merely claiming that
it was a mistake or an error, supported only by an affidavit of its
1
manufacturing group head."
d. Some principles on the non-diminution principle.
• As a final word, the Supreme Court, on the issue of what should be
included in the computation of the 13th month pay, declared that no
more error can be asserted at this late hour in the reckoning of the
"basic salary" as basis for the computation of the 13th month pay
because from the inception ofP.D. No. 851 on December 16, 1975,
clear-cut administrative guidelines have been issued to insure
uniformity in the interpretation, application, and enforcement of
the provisions of P.D. No. 851 and its implementing rules and
regulations. Thus, an employer cannot successfully assert that it
has committed an honest error in including such salary-related
benefits as the cash equivalent of unused vacation and sick leave
credits, overtime, premium, night-differential and holiday £ay, and
cost-of-living allowances in the computation of the 13 month
pay.2
• No company practice could ripen in situations where certain
benefits are granted only under certain specified circumstances
such as in case of payment of per diem, relocation allowance,
1 See also Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa Honda, BR No. 145Sil1,Jllle 15,2005.
2 Central Awcarera de Tarlac v. Central Azucarera de Tarlac Labor Union-NLU, G.R No. 188949, .htf 26, 2010.
L Article 1708, Civil Code.
CHAPTER Ill
lABOR STANDARDS
1.55
dislocation pay, gasoline allowance, or similar supplements.
Consequently, even if the employee has been enjoying certain
benefits for quite a long period of time, if the circumstances have
changed which no longer justify the continuation of the grant of
said benefits, the removal thereof does not certainly constitute a
violation of the non-diminution of benefits principle. Thus, the
grant of relocation allowance, dislocation pay, gasoline allowance
or per diem intended for board and lodging once an employee is
assigned away from his home base, may be discontinued if the
employee is no longer assigned to posts requiring the grant
thereof. 1
5.
PROHIBITIONS REGARDING WAGES
1. PERTINENT LABOR CODE'S PROVISIONS.
The LRbor Code devotes an entire Chapte~ on the prohibitions regardi'lg
wages, spanning Articles 112 to 119 thereof. Below is a discussion on all these
prohibitions
2. NON-INTERFERENCE BY EMPLOYER IN THE DISPOSAL BY
EMPLOYEES OF THEIR WAGES.
Article 112 of the Labor Code is clear-cut in its interdiction that no
employer is allowed to limit or otherwise interfere with the freedom of any
employee to dispose of his wages and no employer shall in any manner oblige any of
his employees to patronize any store or avail of the services offered by any person.3
3. WAGES NOT SUBJECT TO EXECUTION OR A'ITACHMENT;
EXCEPTION.
The general rule is that laborer's wages are not subject to execution or
attachment The exception is when such execution or attachment is made for debts
incurred for food, shelter, clothing and medical attendance.4
4. DEDUCTIONS FROM WAGES.
The general rule is that an employer, by himself or through his
representative, is prohibited from making any deductions from the wages of
1
Lexal L.abcxalrxies, Inc. v. Court of lndusiial Relations, G.R No. L-24632, Od. 26, 1988; Asis v. Moister of t.roor, G.R Nos.
58094-95, March 15,1989.
2 See Chapter IV (Prohibitions Regarding Wages), Title II (Wages), Book Ill (Conditions of Employment), Labor
Code.
See aso Section 12, Rule VIII, Bool<.lll, Rules to lll"lllementlhe Labor Code.
 BAR REVIEWER ON lABOR lAW
156 CHAPTER Ill 157
lABOR STANDARDS
his employees. The employer is not allowed to make unnecessary deductions
1 7) Withholding tax mandated under the National Internal Revenue
without the knowledge or authorization of the employees. Code (NIRC);
4.1. PERMISSffiLE DEDUCTIONS FROM WAGES UNDER THE 8) Withholding of wages because of the employee's debt to the
LABOR CODE AND OTHER LAWS. employer which is already due/
9) Deductions made pursuant to a court judgment against the worker
a. Deductions allowed under Article 113. under circumstances where the wages may be the subject of
Article 113 of the Labor Code allows only three (3) kinds of attachment or execution but only for debts incurred for food,
deductions, namely: clothing, shelter and medical attendance; 2
10) When deductions from wages are ordered by the court;
(a) In cases where the worker is insured with his consent by the II) Salary deductions of a member of a cooperative.3
employer, and the deduction is to recompense the employer for the
amount paid by him as premium on the insurance; 5. PROHIBITION AGAINST DEPOSIT REQUIREMENT.
(b) For union dues, in cases where the right ofthe worker or his union
Article 114 of the Labor Code enunciates the rule prohibiting the
to check-off has been recognized by the employer or authorized in
imposition by the ew\)loyer of the requirement that workers should make a deposit
writing by the individual worker concerned; and
from which deductions shall be made for the reimbursement of ioss of tools,
(c) In cases where the employer is authorized by law or regulations
materials or equipment supplied by him, or any &mages thereto.
issued by the DOLE Secretary.
In Five J Taxi v. NLRC,4 the Supreme Court considered violative of
b. Deductions allowed under other provisions cf the Labor Code
Article I14 of the Labor Code the ,15.00 daily deposit required by the employer
and other laws. from taxi drivers for the purp0se of defraying shortage in "boundary," since there is
Deductions from the wages of employees may be made by the no showing that the Secretary of Labor and Employment has recognized the same as
employer in any of the following cases: a "practice" in the taxi industry. Article II4 provides the rule on deposits for loss or
damage to tools, materials or equipment supplied by the employer. It does not
1) Deductions for loss or damage under Article 114 of the Labor
permit deposits to defray any deficiency which the taxi driver may incur in the
Code; remittance of his "bozmdary." Such illegally collected deposits should be refunded
2) Deductions made for agency fees from non-union members who
accept the benefits under the CBA negotiated by the bargaining to the drivers.
union. This fonn of deduction does not require the written Likewise, in another case, Dentech Manufacturing Corporation v.
2
authorization of the non-bargaining union member concerned; NLRC,S it was ruled that the employer is not allowed to require his employees to
3
3) Union service fees; file a cash bond or to make deposits for loss or damage to tools or equipment
4) When the deductions are with the written authorization of the
employee for payment to a third per~on and the employer agrees 5.1. PERMISSffiLE DEDUCTIONS FOR WSS OR DAMAGES.
to do so, provided that the latter does not receive any pecuniary Where the employer is engaged in a trade, occupation or business where
4
benefit, directly or indirectly, from the transaction; the practice of making deductions or requiring deposits is recognized, to answer for
5) Deductions for value of meal and other facilities;~ the reimbursement of loss of or damage to tools, materials or equipment supplied by
6) Deductions for premiums for SSS, PhilHealth, employees' the employer to the employee, the employer may make wage deductions or require
6
compensation and Pag-ffiiG; the employees to make deposits from which deductions shall be made.

1 Gavadoresv. Trajooo, G.R No. L-70067, Sept 15,1986,144 SCRA 138.

2 Article 259{e) {248(e)), L!ilor Code.
1 Article 1700, Cili Code.
3 ~..t:l Cormuri:atiooSoflhe Phils., Inc. v. Secretary of labor and Employment, G.R No. 77959, Jan. 9, 1989, 169 SCRA 2 Article 1708, lbkl.
3 Article 59, RA No. 6938, The CcqJeiatNe Code of the Philippines.
38.
4 Sectioo 13, Rule Vlll, Sock Ill, Rules ID Implement 1he L!ilor Code. GR. No. 111474, Aug. 22, 1994, 235 SCRA 556.
5 G.R. No.81477,Aplil19, 1989, 172SCRA588.

L.
5 Section 7' Role Vl, Book Ill, ll«l. Article 114, latxx'Code; Section 14, Role VIII, Book Ill, Roles ro Implement !he latxx'Code.

158 BAR REviEWER ON lABOR lAW
In Niiia Jewelry Manufacturing of Metal Arts, Inc. v. Montecillo/ the
Court ruled that:
"[I]he petitioners should first establish that the making of deductions
from the salaries is authorized by law, or regulations issued by the
Secretary of Labor. Further, the posting of cash bonds should be proven
as a recognized practice in the jewelry manufacturing business, or
alternatively, the petitioners should seek for the determination by the
Secretary of Labor through the issuance of appropriate rules and
regulations that the policy the former seeks to implement is necessary or
desirable in the conduct of business. The petitioners failed in this
respect It bears stressing that without proofs that requiring deposits and
effecting deductions are recognized practices, or without securing the
Secretary of Labor's determination of the necessity or desirability of the
same, the imposition of new policies relative to deductions and deposits
can be made subject to abuse by the employers. Tllis is not what the law
intends."
6. PROHlBITION ON \\1TIDIOLDING OF WAGES.
Article 116 of the Labor Code categorically prohibits and considers it
unlawful for any person, whether employer or not, directly or indirectly, to witW10Id
any amount from t.'le wages of a worker.
Under Article 1706 of the Civil Code, withhoiding of the wages, except for
a debt due, is not allowed to be made by tlJ.e employer.
Moreover, under Article 1709 of the same Code, the employer is not
allowed to seize or retain any tool or other articles belonging to the laborer.
The above-cited provisions are clear and need no further elucidation.
Indeed, as held in Special Steel Products, Inc. v. Villareab2 an employer has no
legal authority to withhold the employee's 13ih month pay and other benefits. What
an employee has worked for, his employer must pay. Thus, an employer cannot
simply refuse to pay the wages or benefits of its employee because he has either
defaulted in paying a loan guaranteed by his employer; or violated their
memorandum of agreement; or failed to render an accounting of his employer's
property.
1 G.R No. 188169, Nov. 28; 2011, 661 SCRA 416. On M}JSt 13, 2004, Nitia Jeweiiy ~a pcky fa' goldsmiths
requii'g llem '>post cash balds or deposits in vai)'i'g aoount; but il no case exceecft'Q 15% of l1e lattel's salaries per
week. The deposits were ilteoded 1D lllSWef fi:lr C1rJ klss or da'n<rJe v.ill::h Niia Jewelly may sustain by reason of lhe
gctisrrilhs' faultorOOJii;Jence in lm:l~ 1he!JI*! enUus8:l '>toem. Thedeposils shal be relilmed upoo ~of tile
goklsmiths' l'tlll1l. and after an accwnting of the gold recef.red. Nina Jewelry alleged that Ole goldsmiths were gMlll tile
option not 1o post deposit;, but to sgn authorizatioos ~ lhe former to deduct from U1e latte(s salaries amounts not
exceeding 15% of !heir take home pay shoold tt be found lhat they lostUle gold enlrusled 1D !hem. The respondents claimed
olhefY,;se insislilg lhat Nifla Jewelfy left U1e goldsnilhs l'rit1 no opm bulk> pos1 tile deposits. The respoo:tents alleged that
they were constudively dismissed by N'liia Jeweky as lheir cootinued emp\oymenls were made dependent oo 1t.ei'
readiness 1D pJSt 1he required deposils.
2 G.RNo.143304,Ju~8,2004.
CHAPTER Ill
lABOR STANDARDS
159
In SHS Perforated Materials, Inc. v. Diaz/ petitioners contended that
withholding respondent employee's last salary covering the period from November
lI 16 to November 30, 2005, was justified because respondent was absent and did not
show up for work during that period. He also failed to account for his whereabouts
and work accomplishments during said period. Petitioners further argued that when
there is an issue as to whether an employee has, mfact, worked and is entitled to his
salary, it is within management prerogative to temporarily withhold an employee's
salary/wages pending determination of whether or not such employee did indeed
work. In disagreeing to this postulation of petitioners, the High Court stated that
although management prerogative refers to ''the right to regulate all aspects of
employmen~" it cannot be understood to include the right to temporarily withhold
salary/wages without the consent of the employee. To sanction such an interpretation
would be contrary to Article 116 of the Labor Code. Any withholding of an
employee's wages by an employer may only be allowed in the fonn of wage
deductions under the circumstances provided in Article 113 of the same Code. As
correctly pointed out by the Labor Arbiter, "absent a showing that the witlili.o!di.IJ.g of
complainant's wages falls under the exceptions provided in Article 1i3, the
withholding thereof is thus unlawful." Although it cannot be determined with
certainty whether respondent worked for the entire period from November 16 to
November 30, 2005, the consistent rule is that if doubt exists between the evidence
presented by the employer and that by the employee, the scales of justice must be
tilted in favor of tiie latter in line with the policy mandated by Articles 2 and 3 of the
Labor Code to afford protection to labor and construe doubts in favor of labor. For
petitioners' failure to satisfy their burden of proof, respondent is presumed to have
worked during the period in question and is, accordingly, entitled to his salary.
Therefore, the withholding of respondent's salary by petitioners is contrary to Article
116 of the Labor Code and, thus, unlawful.
6.1. WITilliOLDING OF WAGES MAY AMOUNT TO CONSTRUCTIVE
DISMISSAL
In the same case of SHS Perforated Materials, the unlawful withholding
of the last salary of respondent was declared to constitute constructive dismissal
since for this reason, he was forced to resign as it has made it impossible,
unreasonable or unlikely for him to continue working for petitioners. It is of no
moment that he served his resignation letter on November 30, 2005, the last day of
the payroll period and a non-working holiday, since his salary was already due him
on November 29, 2005, being the last working day of said period. In fac~ he was
then infonned that the wages of all the other SHS employees were already released,
and only his was being withheld. What is significant is that the respondent prepared
I and served his resignation letter right after he waS infonned that his salary was being
withheld. It would be absurd to require respondent to tolerate the unlawful
I
L
1 G.R No. 185814, Oct 13, 2010.
160 BAR REVIEWER ON lABOR LAW
withholding of his salary for a longer period before his employment can be
considered as so impossible, unreasonable or unlikely as to constitute constructive
dismissal. Even granting that the withholding of respondent's salary on November
30, 2005, would not constitute an unlawful act, the continued refusal to release his·.
salary after the payroll period was clearly unlawful. The petitioners' claim that they
prepared the check ready for pick-up cannot undo the unlawful withholding. It is
worthy to note that in his resignation letter, respondent cited petitioners' "illegal and
unfair labor practice" as his cause for resignation. As correctly noted by the CA,
respondent lost no time in submitting his resignation letter and eventually filing a
I "Accountability," in its ordinary sense, means obligation or debt. 1 The
complaint for illegal dismissal just a few days after his salary was withheld. These
circumstances are inconsistent with voluntary resignation and bolster the finding of
constructive dismissaL
6.2. VALIDITY OF WITHHOLDING OF RELEASE OF LAST PAYMENTS
TOEMPLOYEESFORF~URETOCOMPLY~THCLEARANCE
REQUIREMENTS.
Although as a general rule, employers are prohibited from withholding
wages1 from employees, they usually withhold the release of the last salary and
benefits of terminared or resigning employees prior to or pending their compliance
with certain clearance procedures. This appears to be a standard procedure among
employers, whether public or private. 2 Cleardllce procedures are instituted to ensure
that the properties, real or persona~ belonging to the employer but are in the
possession of the separated employee, are returned to the employer before Li.e
employee's departure. 3
The law supports the employers' institution of clearance procedures before
the release of wages. 4 As an exception to the general rule that wages may not be
withheld5 and benefits may not be diminished, 6 the Labor COOe provides in its
Article 113 [Wage Deduction] that "[n]o employer, in his own behalf or in behalf of
any person, shall make any deduction from the wages of his employees, except """
(3) In cases where the employer is authorized by law or regulations issued by
the Secretary of Labor and Employment."
The Civil Code7 provides that the employer is authorized to withhold
wages for debts due. "Debt" in this case refers to any obligation due from the
employee to the employer. It includes any accountability that the employee may
t Re!ening Ill Article 116 ollhe Labor Code, riled ''Mhholding of wages and ~ prOOilited.'
2 em
M1an v. NLRC Solid Mils, Inc., G.R No. 202961, Feb. 04, 2015.
3 kl.
4 ld.
s SeeAiticle 116 of the Labor Code, entitled 'VItidilg of wages and kkkbad<s prohbib!d."
s Re!enTlg Ill Artide 100 of the Wlor Code l'tth pi(Nides: 'Art 100. Prollilitioo- eimination or -diminution of benefits.
Nolhiflg in tilis BooK sh<dl be construed Ill eliTin<*l or in any WCfi diminish supploolenls, or other ~ ben~ being
enjoyed at the tine of promugation of this Code..
1 Atticle 1700. ~hol:lilg of the wages, ~In' adebt due, shallnotberra:leby lhEHliJ1lklyer.
CHAPTER Ill 161
lABOR STANDARDS
have to the employer. Thus, there is no reason to limit its scope to uniforms and
equipment
ordinary meaning of the term "accountability" does not limit the definition of
accountability to those incurred in the worksite. 2 As long as the debt or obligation
was incurred by virtue of the employer-employee relationship, generally, it shall be
included in the employee's accountabilities that are subject to clearance procedures. 3
There is no reason to limit its scope to uniforms and equipment Thus, the term
"accountability" was construed in the 2015 case of Milan v. NLRC and Solid
Mills, Inc.,4 as including petitioners' possession of their constructed houses within
tlJ.e SMI Village, a property of private respondent Solid Mills where petitioners and
their families were allowed to occupy during their employment. When Solid Mills
closed its operations resulting in the termination of petitioners, they were bound to
vaCilte and tum-over their possession over their houses to Solid Mills. Consequently,
their refusal to do so justified the withholding by Solid Mills of their separation pay
artd termination benefits. 5
63. KICKBACKS.
The second instance prohibited by Article 116 of the Labor Code is the so-
called "kickback" which consists in the act of any person, whether employer or not,
directly or indirectly, to induce a worker to give up any part of his wages by force,
stealth, intimidation, threat or by any other means whatsoever, without the worker's
consent
7. PROIUBITION AGAINST DEDUCTION TO ENSURE EMPWYMENT.
Article 117 of the Labor Code prolnbits and considers it unlawful for any
person, whether the employer himself or his representative or an intermediary, to
require that a deduction be made or to actually make any deduction from the wages
of any employee or worker, for the benefit of such employer or his representative or
an intermediary, as consideration of a promise of employment or, when already
employed, for the continuation of such employment or retention therein.
8. RETALIATORY ACTIONS BY EMPWYER.
Article 118 of the Labor Code prohibits and declares it unlawful for the
employer:
a) to refuse to pay the wages and benefits of an employee; or
b) to reduce his wages and benefits; or
t t.1iri v. NLRC and Sdid Mils, klc., supra.
2 ld.
3 ld.
4 G.R No. 202961, Feb. 04, 2015.
s Consislilg of vacation .m sick leave benefils and 13~ lfOO!h pay.

162 BAR REviEWER ON lABOR lAW
c) to discharge him from employment; or
d) to discriminate against him in any manner;
on account and by reason of said employee's:
I) act of filing any complaint or institution of any proceeding under Title
11 [Wages], Book ill of the Labor Code; or
2) act of testifying in said proceedings or when he is about to testify
therein.
8.1. WHEN THE RETALIATORY ACT IS CONSIDERED UNFAIR LABOR
PRACTICE.
The commission of the retaliatory act of discharging or in any manner
discriminating against any employee who has filed any complaint or instituted any
proceeding or has testified or is about to testify in such proceeding described in
Article 118 may be considered an unfair labor practice under Article 259(f) [248(f)]
of the Labor Code. As provided therein, it is an act of unfair labor practice for an
~mployer to dismiss, discharge or otherwise prejudice or discriminate against an
employee for having giveu or being about to give testimony under the Labor Code.
It must be noted that it is only this type of unfair labor practice mentioned
in Article 259 [248] (Unfair Labor Practices of Employers) which may or may not
be related to or connected with the exercise by the employee of his right to self-
organization or collective bargaining. The employee giving testimony or about to
give one, may or may not be a member of a union.'
To cite an example, in the case of Philippine American Cigar and
Cigarette Factoty Workers Independent Union v. Philippine American Cigar
and Cigarette Manufacturing Co} the employer dismissed the brother of an
employee who filed a case against the company. The Supreme Comt ruled that such
act of the employer constitutes an unfair labor practice. Although Section 4(a) 5 of
RA. No. 875 (now Article 259(f) [248(f)] of the Labor Code) would seem to refer
only to the one who filed charges against the company as constituting unfair labor
practice, the legislative intent is to assure absolute freedom of the employees to
establish labor organizations and unions, as well as to proffer charges for violation of
labor laws. If the dismissal of an employee due to the filing by him of charges
would be and is an undue restraint upon said freedom, the dismissal of his brother
owing to the non-withdrawal of the charges of the former, would be and constitute as
much, in fact a greater and more effective, restraint upon the same freedom. What is
prolnbited to be done directly shall not be allowed to be accomplished indirectly.
1 Phi'oon ~loyees Unkin v. Phil~ Global Conm.mications, G.R No. 144315, Ju~ 17, 2006; See also Bisig
Manggagawasa TfYOOV. NLRC, G.R No.151309, Ocl15, 2008.
2 G.R No. L-18364,Feb. 28, 1963.
~
CHAPTER Ill 163
lABOR STANDARDS
d· In another case, Itogon-Suyoc Mines, Inc. v. Baldo/ the High Court
I 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. 2
9. FALSE STATEMENT, REPORT OR RECORD.
Article 119 of the Labor Code prohibits and considers it unlawful for any
person, whether employer or not, to make any false statement, report or record
required to be filed or kept in accordance with and pursuant to the provisions of the
Labor Code, knowing such stltement, report or record to be false in any material
respect.3
Examples of such statement, report or record required to be filed or kept
under the Labor Code are payrolls, time records, employment records and
production records, among others.
6.
WAGE ORDER, WAGE DISTORTION
6.1.
WAGE ORDER
1. WAGE ORDER, DEFINED.
The term "Wage Order" refers to the order promulgated by the
RTWPB pursuant to its wage fixing authority. 4
2. PRESCRIBED INCREASES OR ADJUSTMENTS, DEFINED.
"Prescribed increases or adjustments" refer to the amount of
increases or adjustments in the wage rate of workers fixed by the RTWPB
(hereafter may be referred to as "Regional Board") which the employer is mandated
5
to pay upon effectivity of a Wage Order.
3. WHEN PROPER TO ISSUE WAGE ORDER.
Whenever conditions in the region so warrant, the Regional Board shall
investigate and study all pertinent facts and based on the prescribed standards
and criteria, shall proceed to determine whether a Wage Order should be issued.
1 G.R. No. L-17739, Dec. 24, 1004.
2 See also National FastenerQxpoollion v. CIR, 1SCRA 17: Henares &Sonsv. Nalionall..cilor Union, 3SCRA 765.
3 SOOion 13, Rule X. Book Ill, PJJestl Implement 1he Latxr Code.
4 Section 4 [n], Rule I, NV'I'PC COOefines No. 01, Series of 2007, June 19, 2007 [/ln'e1ded RUes of Procedure on Minimum
Wage Fixing]; SOOion 2[hJ, llepa1mefit Order No. 10, Series of 1998 {Mff)' 04, 1998].
.t- s SOOion 2 m. Department Order No. 10, Series ot 1998 [lky 04, 1998.
f'Ft'"··
 CHAPTER Ill 165
164 BAR REVIEWER ON lABOR lAW lABOR STANDARDS

Any such Wage Order shall take effect after fifteen (15) days from its complete
publication in at least one (l) newspaper of general circulation in the region. 1
4. PUBLIC HEARINGS/CONSULTATIONS.
In the performance of its wage-determinmg functions, the Regional
Board shall conduct public hearings/consultations, giving notices to employees'
and employers' groups, provincial, city and municipal officials and other
interested parties. 2
5. APPEAL BY AGGRIEVED PARTY.
Any party aggrieved by the Wage Order issued by the Regional Board
may appeal such order to the National Wages and Productivity Commission
(hereafter "NWPC" or "Commission") within ten (10) calendar days from the
publication of such order. It shall be mandatory for the Commission to decide
such appeal within sixty (60) calendar days from the filing thereof.
The filing of the appeal does not stay the order unless the person
appealing such order shall file with the Cr,mmission an undertaking with a
surety or sureties satisfactory to the Commission for the payment to the
employees affected by the order of the corresponding increase, in the event such
order is affirmed?
6. STANDARDS/CRITERIA FOR MINIMUM WAGE FIXING.
a. Relevant factors to consider in fixing minimum wage.
The minimum wage rates to be established by the Regional Board shall
be as nearly adequate as is economically feasible to maintain the minimum
standards of living necessary for the health, efficiency and general well-being of
the workers within the framework of national economic and social development
goals. In the determination of regional minimum wages, the Regional Board
shall, among other relevant factors, consider the following:
(1) Needs of workers and their families
1) Demand for living wages;
2) Wage adjustment vis-a-vis the consumer price index;
3) Cost of living and changes therein;
4) Needs of workers and their families;
5) Improvements in standards of living.
(2) Capacity to pay
2) Productivity.
(3) Comparable wages and incomes
1) Prevailing wage levels.
(4) Requirements of economic and social development
1) Need to induce industries to invest in the countryside;
2) Effects on employment generation and family income;
3) Equitable distribution of income and wealth along the
1
imperatives of economic and social development.
b. Standard prevailing minimum wages in every region.
The wages shall be the standard prevailing minimum wages in every
region. These wages shall include wages varying with industries, provinces or
localities if in the judgment of the Regional Board, conditions make such local
2
differentiation proper and necessary to effectuate the purpose of the law.
7; METHODS OF FIXING THE ML~IMUM WAGE RATES.
a. Two (2) methods according to jurisprudence.
The Supreme Court has identified two (2) methods of fJXing the
minimum wage, namely:
1. "Floor-Wage" method which involves the ftxing of a determinate
amount to be added to the prevailing statutory minimum wage rates.
This was applied in earlier wage orders; and
2. "Salary-Cap" or "Salary-Ceiling" method where the wage
adjustment is to be applied to employees receiving a certain
denominated salary ceiling. In other W{)rds, workers already being
paid more than the existing minimum wage (up to a certain amount
3
stated in the Wage Order) are also to be given a wage increase.
4
The "Salary-Cap" or "Salary-Ceiling" method is the preferred mode.
b. Distinction between the 2 methods.
The distinction between the two (2) methods is best shown by way of
an illustration. Under the "Floor Wage Method," it would be sufficient if the
1 Section 2, Rule II, toNv'PC GWelnes No. 01, Series ci 'lftJ7, June 19, 'NJ7 (Amended rues ci Procedure en Mnirun
~ FIXing]; ArOCie 124, I..OOor Code .

1) Fair return on capital invested and capacity to pay of

.. 2
3
ld.
EJr4>klYe!s Coo!edera1ioo rJ 111e Phiippines v. Nalil1al W;JJes and ProdudMiy Coolnissm, G.R. No. 96169, Sept 24,
employers; 1991, 201 SCRA 759' See also No!kis Free and lndependeot Wori<ers Union v. NOOds T~ ~y. loc., GR No.

.
157098, June 30, 2005.
4 The secood method moe was used il Repubic Ads Noo. 6640 end 6727 and 11 Presidential Decrees Nos. 525, 1123,
1 Artide 123, I..OOor Code. 1614, 1634, 1678,1713 MCIW;JJe Orde!s Nos. 1, 2, 3, 5and 6. This meii'Kld Is prefen'ed as imnimizes disputes ilvolving
2 ld. wcge distortion. (ld.).

L
3 kl.

~
.
166 llAR REVIEWER ON lABOR lAW
CHArTER Ill 167
lABOR STANDARDS
Wage Order simply set Pl5.00 as the amount to be added to the prevailing
the Regional Board shall proceed to exercise its wage fixing
statutory minimum wage rates; while in the "Salary-Ceiling Method, " it would
function even before the expiration of the said period. 1
be sufficient if the Wage Order states a specific salary, such as P250.00, and
only those earning below it shall be entitled to the wage increase.
• Effectivity of Wage Order; requirement ofpublication. - A Wage
Order shall be published only after its review by the Commission
c. Current policy discourages across-the-board increase. and shall take effect fifteen (15) days after its publication in at
When neither of the 2 methods is used and instead what was granted least one (1) newspaper of general circulation in the region. 2
was an across-the-board (ATB) wage increase, the Regional Board is deemed
b. On public bearings/consultations.
to have exceeded its authority (ultra vires) by extending the coverage of the
Wage Order to wage earners receiving more than the prevailing minimum wage • Hearings may be conducted by the Regional Board en bane or by a
rate without a denominated salary ceiling. 1 duly authorized committee thereof wherein each sector shall be
While ATB wage increases have been granted in the past, current represented. 3
policy discourages the Regional Boards from granting ATB adjustments as they • No preliminary or permanent injunction or temporary restraining
create more distortions in the labor market which in turn affect adversely the order may be issued by any court, tribunal or any other entity
income and standard of living of workers and their families. Specifically ATB against any proceeding before the Commission or Regional
wage increases ( 1) have greater impact on inflation; (2) are disincentives to trade Board.4
c Failure to conduct public hearings/consultations and to publish a
unionism; and (3) are not consistent with the minimum wage fe<:ing mandate of
the Regional Boards.1 wage order renders it iuvalid.5

8. SOME PRINCIPLES ON WAGE FIXING. c. On applicability of wage order.

a. On issuan~e of wage order. • Wage increases mandated by wage orders apply only to covered
employ0es specified therein. 6
• Contents of Wage Order. - A Wage Order shall specify the region,
• If none of the employees are receiving salaries below the
province, or industry to which the minimum wage rates prescribed
prescribed minimum wage, an employer is not obliged to grant the
thereunder shall apply and provide exemptions, if any, subject to
wage increase to any ofthem.7
guidelines issued by the Commission. 3
• Frequency of Wage Order. - Any Wage Order issued by the 6.2.
Regional Board may not be disturbed for a period of twelve (12) WAGE DISTORTION
months from its effectivity, and no petition for wage increase shall
be entertained within the said period except when there are 1. WAGE DISTORTION, AS DEFINED IN THE LAW AND
supervening conditions, such as extraordinary increase in prices of IMPLEMENTING RULES.
petroleum products and basic goods/services, which demand a
"Wage distortion'.s contemplates a situation where an increase in
review of the minimum wage rates as determined by the Regional
prescribed wage rates results in either of the following:
Board and confinned by the Commission (NWPC), 4 in which case,

1 Section 3, Rule IV, NWPCGuidelines No. 01, Series of 2007, .kine 19,2007 (Amended Rules of Proced1.1e oo Mnirum
WageFIXi'IJJ.
2 AI1ic1e 123,l.abor Code; Section 4, 01aplef Ill, Rules lmplemenlilg RA. No. 6727; Section 5, Rule IV, tM'PC Guidlelines
No. 01, Seres ci 2007, June 19, 2007 [Aioonded RUes ci Procedure oo Mnirum WiJJe FIXilgl.
1 Metropolitan BanK and Trusi Co., inc. "· National \Nsges and Productivity Commissioo, G.R. No. 144322, Feb. 6, 3 Section 2, Rule Ill, tM'PC Guidelines No. 01, Seres of 2007, June 19, 2007 [.Amended Rules of Procedure oo Mnimum
2007; NilS¢ Integrated Arras1re lfld Stevedoring SeNices, Inc. (NIASSI) v. Nasip~ EmpkYfees Lm Unoo (NB.O}ALU. W<rJeFIXing].
TUCP, G.R. No.162411,June27,2008. 4 Section 7, Rule Ill, Ibid.
2 See htlp11YMw.rw.pc.dole.gaJ.pMaq.hbnl s Cagayan Sugar Millillg Company v. Secretart of Labor and Employment GR No. 128399 Jan.15, 1998.
3 Sedioo 2, Rule IV, WIIPC Gukleliles No. 01, Series of 'lf1J7, J1.11e 19, 2007 (Amended Rules ci Pro:edure oo Mnirum 6 Capitol Wireless, Inc. v. Bate, G.R No.104682, Ju~ 14, 1995.
W"~FIXf!Qj. 7 Pag-Asa Steel Woli<s, Inc. v. CA, GRNo.166647, M3rth31,2006.
4 Re!en'd1g tllle National Wages lfld ProdudMy Coom'issill (tM'PC). 6 Mabezav.NLRC,G.RNo.118506,Apli18, 1997,271 SCRA670.

L

168 BAR REVIEWER ON lABOR lAW
1. Elimination of the quantitative differences in the rates of wages or
salaries; or
2. Severe contraction of intentional quantitative differences in wage or
salary rates between and among · employee groups in all
establishment as to effectively obliterate the distinctions embodied
in such wage structure based on the following criteria:
a) Skills;
b) Length of service; or
1
c) Other logical bases of differentiation.
Wage distortion presupposes a classification of positions and ranking of
these positions at various levels. One visualizes a hierarchy of positions with
corresponding ranks basically in tenns of wages and other emoluments. Where
a significant change occurs at the lowest level of positions in terms of basic
wage without a corresponding change in the other level in the hierarchy of
positions, negating as a 1esult ther~::of the distinction between one level of
position from the next higher level, and resulting in a parity between the lowest
level and the next higher level or rank, between new entrants and old hires, there
exists a wage distortion. xxx. The concept of wage distortion assumes an
existing grouping or classification of employees which establishes distinctions
among such employees on some relevant or legitimate basis. This classification
is reflected in a differing wage rate for each of the existing classes of
employees. 2
2. FOUR (4) ELEMENTS OF WAGE DISTORTION.
The four (4) elements of wage distortion are as follows:
(1) An existing hierarchy of positions with corresponding salary rates;
(2) A significant change in the salary rate of a lower pay class without
· a concomitant increase in the salary rate of a higher one;
(3) The elimination of the distinction between the two levels; and
3
(4) The existence of the distortion in the same region ofthe country.
Normally, a company has a wage structure or method of determining
the wages of its employees. In a problem dealing with "wage distortion, " the
t Arti:le 124,labor Code; Item fp), Definition d TellllS, Rides knplemenling Repubic /lD. No. 6727; Sedioo 4lm), Rule I,
N'M'C GuK!elines No. 01, Series of ?J1J7, June 19, 2007 ~ Rules of Procedure oo Mnitrum Wtw;~e Ftxmg]; See
also Se<fun 1~, Rt.lle II, N~ Revised Procedural Guideliles in the ConductctVoluntaty Atbitratioo Proceedngs JOel 15,
2004].
Na1iona1 Fedemli:ln of Labor v. NLRC, G.R No. 103586, Ju~ 21, 1994, 234 SCRA 311; See also M!lrcp:litan Bank and
Trust Coolpaly Employees lJnion.ALU-TUCP v. NLRC, G.R No. 102636, Sepl. 10, 1993, 226 SCRA 268; Calma v.
NLRC, G.R No. 89007,1/oo::h 11,1991, 195 SCRA92;Associaled LaborUniJns.TUCPv. Nl.RC, G.R No.109328,Aug.
16,1994, 235 SCRA 395.
3 Prubri.e!SAssociaOOnV. Prudential Bank and TrustCoo1Jany, G.R. No.131247, Jan. 25,1999,302 SCRA 74.
CHAPTER III 169
lABOR STANDARDS
basic assumption is that there exists a grouping or classification of employees
that establishes distinctions among them on some relevant or legitimate bases. 1
Involved in the classification of employees are various factors such as
the degrees of responsibility, the skiDs and knowledge required, the
complexity of the job, or other logical basis of differentiation. The differing
wage rate for each of the existing classes of employees reflects this
classification.
3. "ELIMINATION" AND "SEVERE CONTRACTION;" DISTINCTION.
In order to justify adjustment in wage rates, it is not required that there
should be a complete elimination of quantitative wage differences. The
existence of "severe contraction" of such quantitative wage differences is
sufficient.
The law mentions "intentional quantitative differences" in wage or
salary rates between and among employee-groups in an establishment. By the
term "intentional" means that the quantitative differences had been arrived at
through the collective bargaining process and concluded by the parties. The
intention of the parties on the issue of whether or not the benefits under the CBA
should be equated with those granted by law must prevail and should be given
full effect.
4. SEVERE CONTRACTION; MEASURE THEREOF.
In Metropolitan Bank and Trust Company Employees Union-ALU-
TUCP v. NLRC,Z the Supreme Court said that the contraction between
personnel grouping at about eighty-three percent (83%) certainly cannot be
considered less than severe. Consequently, there is no doubt that there is an
evident severe contraction which resulted in wage distortion.
5. CASES WHERE NOW AGE DISTORTION OCCURS.
In Prubankers Association v. Prudential Bank and Trust
Company/ it was declared that wage distortion presupposes an increase in the
compensation of the lower ranks in an office hierarchy without a corresponding
raise for higher-tiered employees in the same region of the country, resulting in
the elimination or the severe diminution of the distinction between the two
groups. Such distortion does not arise when a wage order gives employees in
one branch of a bank higher compensation than that given to their counterparts
in other regions occupying the same pay scale, who are not covered by said
f
r
~
~
1 Nalional F.edemOOn of L.allorv. NLRC, G.R No. 103586, Ju~ 21, 1994, 234 SCRA 311.
2 G.R No.102636, Sepl10, 1993.
G.RNo.131247,Jm.25,1999,302SCRA74.
L.
l
170 BAR REVIEWER ON lABOR lAW
wage order. In short, the implementation of wage orders in one region but not in
others does not in itself necessarily result in wage distortion.
A disparity in wages between employees holding similar positions
but in different regions does not constitute wage distortion as contemplated
by law. It is the hierarchy of positions and the disparit'; of their corresponding
wages and other emoluments that are sought to be preserved by the concept of
wage distortion. Put differently, a wage distortion arises when a wage order
engenders wage parity between employees in different rungs of the
organizational ladder of the same establishment. It bears emphasis that wage
distortion involves a parity in the salary rates of different pay classes which, as a
result, eliminates the distinction between the different ranks in the same region.
The difference in wages between employees in the same pay scale in
different regions is not the mischief sought to be banished by the law. In fact,
R.A. No. 6727 recognizes "existing regional disparities in the cost of living"
in its Section 2. 1
6. RECTIFICATION OF WAGE DISTORTION.
a. Formula for resolving wage distortion.
In the same case ofMdropolitan Bank/ the Supreme Court has given
its imprimatur to the following formula for the correction of wage distortion in
the pay scale structures:
Minimum Wage =%x Prescribed Increase =Distortion Adjustment
Actual Salary
The above formula was held to be just and equitable.
b. Wage distortion; bow rectified.
l. In organized establishments. - Where the application of any prescribed
wage increase by virtue of a Wage Order issued by the RTWPB results in distortions
of the wage structure within an establishment, the employer and the union should
negotiate to correct the distortions. Any dispute arising from wage distortions should
be resolved through the grievance procedure under their CBA and, if it remains
unresolved, through voluntaty arbitration. Unless otherwise agreed by the parties in
writing, such dispute should be decided by the Voluntaiy Arbitrator or panel of
Voluntaty Arbitrators within ten (10) days from the time said dispute was referred to
voluntuy arbitration.3
1
2
ld.
GRNo.102636,Sept 10,1993.
3 Para:Jraph 1, SecOOn 1, Rule VII, NWPC Guide&les tb. 01, Seres of 2007, Jooe 19, 'JJYJ7 (Amended Rules of Procedure
on Mnrnum Woo,e F;xi;g}; Article 124, 1..ctJor Code; SecOOn 7, Chapter II, Rules mplementing R.A. No. 6727.
CHAPTER Ill
171
lABOR STANDARDS
2. In JmQ!ganized establishments. - In cases where there are no collective
agreements or recognized labor unions, the employers and workers should endeavor
to correct such distortions. Any dispute arising therefrom should be settled through
the National Conciliation and Mediation Board (NCl\.1B) and, if it remains
unresolved after ten (10) days of conciliation, should be referred to any of the Labor
Arbiters of the appropriate branch of the NLRC. It shall be mandatory for the l'-!'LRC
to conduct continuous hearings and decide the dispute within twenty (20) days from
the time said dispute is submitted for compulsory arbitration. 1
3. Fffect ofpendency of a wage distortion dispute. - The pendency of a
dispute arising from wage distortion shall not, in any way, delay the applicability of
any increase in prescribed wage rates pursuant to the provisions of the Wage Order. 1
c. Prohibition on the staging of a strike or lockout involving the
issue of wage distortion.
3
Any issue involving wage distortion is not a valid ground for a strike or
lockout. Wage distortions should be c0rrected through voluntary negotiation or
arbitration instead of strikes, lockouts or other concerted activities. Unilateral or
negotiated wage increases granted by employers for the purpose of correcting
such wage distortions .are in keeping with the public policy of encouraging
employers to grant wages higher than legislated wage rates. 4
To compel employers simply to add upon legislated increases in
salaries or allowances without regard to what is already being paid would be to
penalize employers who grant their workers more than the statutorily-prescribed
minimum rates of increases. Clearly, this would be counter-productive so far as
securing the interests of labor is concerned. 5
d. Wage distortion disputes made subject of a notice of strike or
lockout.
Wage distortion is not a proper ground to be invoked in support of a
strike or lockout. Disputes arising from wage distortion resulting from wage
orders issued by the RTWPBs which are alleged in the notice of strike or notice
of lockout should be referred to the Labor Arbiter if not settled within ten
(10) calendar days of conciliation by the NCMB. 6
~·
1
~ 2, SecOOn 1, Rule VII, lbkl.; A10C1e 124, IJid.; Section 7, ChapEr II~ llid.
2 P~ 2, Sedioo 1, Rule VII, Ibid.; AIOCie 124, Ibid.; Section 7, ~-IH, .liid.
l 3
Seciioo 16, ChapEr I, Rules Implementing RA No. 6727; llaw at Bukb:I!YJ Malggagawa v. NLRC, G.R. No. 91980, June
I 5
'l/, 1991.
~ Associated Labor Unions-TUCP v. NLRC, G.R No. 109328, AuJ. i6, 1994, 235 SCRA 395.
Apex Ml1ilJ Co., klc. v. NIRC,{).R No..86200, Feb. 25, 1992,206 SCRA497, 501; M!lropolitan Bank and Trust Company
L
~ LmrALU.lUCP v. NLRC, G.R No. 102636, Sept 10, 1993.
6
Section 6{cj, Rull V, NCMB Manual of Procedures for Coociali:ln i!1d PreverltM! Me!iation Cases.
172 BAR REVIEWER ON lABOR lAW
e. Wage distortion can only be corrected if prescribed by law or
wage order, not ifvoluntarily increased by the employer.
The employer cannot legally be obligated to correct "wage distortion"
if the increase in the wages and salaries of the newly-hired employees was not
due to a prescribed law or wage order.
The wordings of Article 124 are clear. If it was the intention of the
legislators to cover all kinds of wage adjustments, then the language of the law
should have been broad, not restrictive, as it is currently phrased.
If the compulsory mandate under Article 124 to correct "wage
distortion" is applied to voluntary and unilateral increases effected by the
employer in fixing hiring rates which are inherently a business judgment or
prerogative, then the hands of the employer would be completely tied even in
cases where an increase in wages of a particular group is justified due to a re-
evaluation of the high productivity of a particular group, or the need to increase
the competitiveness of the employer's hiring rate. An employer would be
dist:ouraged from adjusting the salarj rates of a particular group of employees
for fear that it would result to a demand by all employees for a similar increase,
especially if the fmancial conditions of the business cannot address an across-
the-board iucrease.
In the case of Bankard Employees Union-Workers Alliance Trade
Unions, v. NLRC./ the petitioner cited Metro Transit Organization, Inc. v.
NLRC/ to support its claim that the obligation to rectify wage distortion is not
confmed to wage distortion resulting from government decreed law or wage
order. Reliance on Metro Transit is, however, misplaced as the obligation
therein to rectify the wage distortion was not by virtue of Article 124 of the
Labor Code but on account of a then existing "company practice" that
whenever. rank-and-fiie employees were paid a statutorily mandated salary
increase, supervisory employees were, as a matter of practice, also paid the same
amount plus an added premium.
The mere factual existence of wage distortion does not, however, ipso
facto result to an obligation to rectify it, absent a law or other source of
obligation which requires its rectification.
f. Requirement to restore substantial differentiation among classes
of employees.
It must be noted that in correcting wage distortion, the law does not
require that the difference which had previously existed between and among the
1 GR No.140689,Feb.17, 2004.
2 G.R.No.116008,.Mf11, 1995,245SCRA767.
CHAPTER !II
lABOR STANDARDS 173
employees of different classes be restored in exactly the same amount. What is
required is substantial difference in such wage rates. 1
c.
LEAVES
1.
SERVICE INCENTIVE LEAVE2
1. RIGHT TO SERVICE INCENTIVE LEAVE.
Every covered employee who has rendered at least one (1) year of
service is entitled to a yearly service incentive 1eave of five (5) days with pay. 3
The term "at least one year of service" should mean service within
twelve (12) months, whether continuous or broken, reckoned from the date the
employee started working, including authorized absences and paid regular
hoiidays, unless the number of working days in the establishment as a matter of
practice or policy, or that provided in the employment contract, is less than
twelve (12) months, in which case, said period should be considered as one (1)
year for t.1.e purpose of detenninir.g entitlement to the service incentive leave
benefit. 4
2. EXCLUSIONS FROM COVERAGE.
All employees are covered by the rule on service incentive leave
except:
a) Those of the government and any of its political subdivisions,
including government-owned and controlled corporations;
b) Domestic workers or kasambahays; 5
c) Persons in the personal service of another;
d) Managerial employees as defined in Book III of the Labor Code;
e) Field personnel and other employees whose performance is
unsupervised by the employer;
f) Those who are engaged on task or contract basis, purely
commission basis, or those who are paid in a fixed amount for
1
NafiJM FedeaOOn oll.abcn. N.RC, G.R No. 103586, JIAy 21, 1994, 234 SCRA 31 Uletro Transi!Organizati:ln, Inc. v.
NlRC, G.R No. 116008, July 11, 1995,245 SCRA 767.
2
& Miele 95 [at labor Code.
~ kl.; Sef.1ion 2, Rl.lle V, :Book IH, ~les to ~~ 1he Laba Code.
~; Section 3, Rule V, Book Ill, Rules klifll>lement lhe labor~; No. VI [BJ, OOlE lmdbook oo Workers Sta!u!oty
~
M:xtetary Benefits; lntegraled Ccnim CM1d Plui!OO;J WOO:s, klc. v. NI.RC, G.R No. 152427, Aug. 9, 2005.
L
Formerly called domestic helper or househelper. See R.A. No. 10361, olherllise known as 1he ~Domestic Walkers
5
A~ [January 18, 2013].

BAR REVIEWER ON lABOR lAW
174
perfonning work irrespective of the time consumed in the
performance thereof;
g) Those who are already enjoying the benefit provided in the law;
h) Those enjoying vacation leave with pay of at least five (5) days;
i) Those employed in establishments regularly employing less than ten
(10) employees;
j) Other officers and members ofthe managerial staff; and
k) Members of the family of the employer who are dependent on him
for support. 1
3. COMMUTABLE NATURE OF BENEFIT.
The service incentive leave is commutable to its money equivalent if
not used or exhausted at the end of the year. 2 The phrase "leave with pay"
means that the employee is entitled to his full compensation during his leave of
absence from work. 3 In computing the service incentive leave benefit, the basis
is the salary rate at the date of ::omrnutation. The availrnent and commutation of
4
the service incentive leave benefit may be on a pro-rata basis.
4. ILLUSTRATIVE COMPUTATION.
To illustrate the computation of the service incentive leave (SiL) cash
commutation, an employee who is hired on January 1, 2017 and resigned on
March 1, 2018, assuming he has not used or commuted any of his accrued SIL,
is entitled upon his resignation to the commutation of his accrued SIL as
follows:
SIL earned as of Dec~mber 31, 2017 Five (5) days
Proport!:mate SIL for Jan. and Feb.
2iH8 (2/12 x 5 days) 0.833day
Total accrued SIL as of March 1, 2018 - 5.833 days5
2.
MATERNITY LEAVE6
1. COVERAGE.
"Maternity leave" is the period of time which may be availed of by a
woman employee, married or unmarried, to undergo and recuperate from
1 Aitide 82, UibOr Code; SediOO 1, Rule V, Book Ill, Rules to lnvlement the Labor Code; No. VI (A), DOLE Hcmbook on
WOO<els Slatu1oty t.metal)' Benefils.
2 SediOO 5, Rule V, Book Ill, lbi:l.; No. Vl[q lbkl.
1 Esoosum v. San tJjgueiBrewely, loc., G.R No. L-16696; Joo. 31,1962.
4 No. VI[CJ, DOLE Handbook oo Wo!kern St!tu1ort tJooela!y Benefits.
s See No. VI (A], DOLE Handbook oo Wmas Statuby MJnetary 8enefjs based on the opi1ion of DOLE Legal
SeMce.
s MK:Ie131[133J,~Cv:!e; Section 14-A, Social Seculilylaw[RA.No.8282].
CHAPTER Ill 175
lABOR STANDARDS
I
childbirth, miscarriage or complete abortion during which she is pennitted to
retain her rights and benefits flowing from her employment.
Section 14-A1 of the Social Security Law now provides as follows:
I ;'Sec. 14-A. Maternity Leave Benefit. - A female member who has
paid at least three (3) monthly contributions in the twelve-month period
immediately preceding the semester of her childbirth or miscarriage shall
be paid a daily maternity benefit equivalent to one hundred percent
( l 00%) of her average daily salary credit for sixty (60) days or seventy-
eight (78) days in case of caesarian delivery, subject to the following
conditions:
"(a) That the employee shall have notified her employer of her
pregnancy and the probable date of her childbirth, which notice shall
be transmitted to the SSS in accordance with the rules and
regulations it may provide;
"(b) The full payment shall be advanced by the employer within thirty
(30) days from the filing of the maternity leave application;
"(c) That payment of daily maternity benefits shall be a bar to the
recovery of sickness benefits provided by this Act for the same
period for which daily maternity benefits have been received;
"(d) That the maternity benefits provided under this section shall be paid
only for the first four (4) deliveries or miscarriages;
"(e) T4at the SSS shall immediately reimburse the employer of one
hundred percent (100%) of the amount of maternity benefits
advanced to the employee by the employer upon receipt of
satisfactory proof of such payment and legality thereof; and
"(f) That if an employee member should give birth or suffer miscarriage
without the required contributions having been remitted for her by
her employer to the SSS, or without the latter having been
previously notified by the employer of the time of the pregnancy,
the employer shall pay to the SSS damages equivalent to the
benefits which said employee member would otherwise have. been
entitled to."
2. CONDITIONS TO ENTITLEMENT.
The following are the qualifications for entitlement to maternity
benefits:
1. The female member should be employed at the time of delivery,
miscarriage or abortion. ·
2. She must have given the required notification to the SSS thru her
employer.
I
L
1 /Is amended by RA No. 7322 as well as lheSocial SecOOty ActcA 1997 [RA No. 8282].
176 BAR REVIEWER ON LABOR LAW
3. Her employer must have paid at least three (3) months of maternity
contributions within the 12-month period immediately before the
semester of contingency. 1
3. AVAILMENT.
a. Pregnant women, whether married or unmarried, are entitled to
maternity leave benefits.
Entitlement to maternity leave benefits is not dependent on the civil
status of the pregnant woman. Every pregnant woman in the private sector,
whether married or unmarried, is entitled to the maternity leave benefits. 1
b. Maternity benefits, not part of 13th month pay {:omputation.
Maternity benefits, like other benefits granted by the SSS, are granted
to employees in lieu of wages and, therefore, may not be included in computing
the employee's 13th month pay for the calendaryear.3
c. Computation of maternity benefits.
The maternity benefits shall be computed as follows:
1) Exclude the semester of contingency (delivery, miscarriage or
abortion). A semester refers to two consecutive quarters ending in
the quarter of contingency. A quarter refers to three (3) consecutive
months ending in March, June, September or December.
2) Count twelve (12) months backwards starting from the month
immediately before the semester of contingency.
3) Identify the six (6) highest monthly salary credits within the 12-
month period. "Monthly salary credit" means the compensation
base for contributions and benefits related to the total earnings for
the month. 4
4} Add the six (6) highest monthly salary credits to get the total
monthly salary credit
5} Divide the total monthly salary credit by 180 days to get the average
daily salary credit This is equal to the daily maternity allowance.
1 No. XI, DOlf Hcl1dbook oo WOIKers Staluloly M:lnelasy Benefits.
2 kt.
ld.
L
3
4 The lalle of such m:JI'llhiy sala!Y cre<f~ is omitted.
.
CHAPTERlll 177
LABOR STANDARDS
6) Multiply the daily maternity allowance by sixty (60) days 1 (or 78
days) to get the total maternity allowance.
d. Entitlement to maternity benefit forecloses entitlement to
sickness benefit
A female member of the SSS who has availed of maternity benefit
cannot claim for sickness benefit for a period of sixty (60) days (or 78 days)
within which she was already paid the maternity benefit. As a rule, no member
can be entitled to two (2) benefits for the same period.
e. Notification to SSS in case of pregnancy.
It is a requirement to notify the SSS. As soon as a female member
becomes pregnant, she must inunediately inform her employer of such
pregnancy by accomplishing the Maternity Notification Form. The employer
must, in tum, notify the SSS thru the submission of said form.
f. Payment of maternity benefit; how made.
The benefit is advanced by the employer to the qualified employee in
full or in two (2) equal installments. The first installment will be paid upon
receipt of the maternity leave application. The second will be paid not later than
thirty (30) days after payment of the first installment. Upon receipt of
satisfactory proof of such payment, the SSS will pay back the employer the
amount of maternity benefit it legally advanced to the employee.
3.
PATERNITY LEAVE
3
1. COVERAGE.
"Patemity leave" covers a married male employee allowing him not to
report for work for seven (7) calendar days but continues to earn the
compensation therefor, on the condition that his spouse bas delivered a child or
suffered miscarriage for purposes of enabling him to effectively lend support to
4
his wife in her period of recovery and/or in the nursing ofthenewly-bom child.
"Delivery" includes childbirth or any miscarriage.5
"Spouse" refers to the lawful wife. For this purpose, "lawful wife"
refers to a woman who is legally married to the male employee concerned.
6
"Cohabiting" refers to the obligation of the husband and wife to live
1
together.
1 For normal deliveiY.
2 For caesalian section.
3 RA No. 8187, 'The Patemty Leave Act of 1991:>" ~une 11, 1996.
4 Section 3, RA No.8187;Sedion 1[a], Revised Implementing Rules and RegwamofRA No.8187 [M:ltdl13, 1997].
5 Section 2, Ibid.; Secbl1 [c], Ibid.
6
Section 1ldl. Ibid.
178 BAR REviEWER ON lABOR lAW
2. CONDffiONS TO ENTITLEMENT.
Every married employee in the private and public sectors is entitled to a
paternity leave of seven (7) calendar days with full pay for the first four (4)
deliveries of the legitimate spouse with whom he is cohabiting. The male
employee applying for paternity leave should riotify his employer of the
pregnancy of his legitimate spouse and the expected date of such delivery?
Paternity leave benefits are granted to the qualified employee after the
delivery by his wife, without prejudice to an employer allowing an employee to
avail of the benefit before or during the delivery, provided that the total number
of days should not exceed seven (7) calendar days for each delivery. In the
event that the paternity leave benefit is not availed of, said leave shall not be
convertible to cash. 3
3. AVAILMENT.
The employee is entitled to his full pay, consisting of basic salary, for
the seven (7) calendar days during which he is allowed not to report for work
provided that his pay shall not be less than the mandated minimwn wage. 4
4.
PARENTAL LEAVE FOR SOLO PARENTS5
1. COVERAGE.
"Parental/eave" is the leave benefit granted to a male or female solo
parent to enable him/her to perform parental duties and responsibilities where
physical presence is required.
The parental leave shall not be more than seven (7) working days
every year to a solo parent who has rendered service of at least one (1) year, to
enable him/her to perform parental duties and responsibilities where his/her
physical presence is required. This leave shall be non-cumulative. 6
It bears noting that this leave privilege is an additional leave benefit
which is separate and distinct from any other leave benefits provided under
existing laws or agreements. 7
The term "solo parent" refers to any individual who falls under any of
the following categories:
2
3
SecOOn 1(e), Ilk!.
SecOOn 2, RA No. 8187.
Sectioos 5emS, -ReWed Implementing Rules and Regulations of RA No. 6167 [March 13, 1997].
4 Sedioo~. Ibid.
5
6
RA. No. 8972, 'The Solo Parents' Welfare Act of 2000' (November 7, 2000).
Section 18, Article V, Implementing Rules of R.A. No. 8972.
7 Section 6, RA. No. 8972.
CHAPTER Ill 179
lABOR STANDARDS
( 1) A woman who gives birth as a result of rape and other crimes
against chastity even without a fmal conviction of the offender:
Provided, That the mother keeps and raises the child;
(2) Parent left solo or alone with the responsibility of parenthood due
to death of spouse;
(3) Parent left solo or alone with the responsibility of parenthood
while the spouse is detained or is serving sentence for a criminal
conviction for at least one (1) year;
(4) Parent left solo or alone with the responsibility of parenthood due
to physical and/or mental incapacity of spouse as certified by a
public medical practitioner;
(5) Parent left solo or alone with the responsibility of parenthood due
to legal separation or de facto separation from spouse for at least
one (1) year, as long as he/she is entrusted with the custody of the
children;
(6) Parent left solo or alone with the responsibility of parenthood due
to declaration of nullity or annulment of marriage as decreed by a
wurt or by a church as long as he/she is entrusted with the custody
of the children;
(7) Parent left solo or alone witt, the responsibility of parenthood due
to abandonment of spouse for at least one (1) year;
(8) Unmarried mother/faiher who has preferred to keep and rear
her/his child/children instead of having others care for them or give
them up to a welfare institution;
(9) Any other person who solely provides parental care and support to
a child or children;
(10) Any family member who assumes the responsibility of head of
family as a result of the death, abandonment, disappearance or
prolonged absence of the parents or solo parent.
A change in the status or circumstance of the parent claiming benefits
under this Act, such that he/she is no longer left alone with the responsibility of
1
parenthood, shall terminate his/her eligibility for these benefits.
"Children" refer to those living with and dependent upon the solo
II parent for support who are unmarried, unemployed and not more than eighteen
(18) years of age, or even over eighteen (18) years but are incapable of self-
support because of mental and/or physical defect/disability.
1
I; : Section ~G[b], Article Ill Ibid
3[b]' Ibid·:· Secti
Section 3[a]lbid
' ., 6[e), Article m: Ibid:
L ~0·
180 liAR REVIEWER ON lABOR lAW
"Parental responsibility" with respect to their minor children shall
refer to the rights and duties of the parents as defined in Article 220 of
Executive Order No. 209, as amended, otherwise known as the "Family Code of
the Philippines" and hereunder enumerated as follows:
(1) To keep them in their company, to support, educate and instruct
them by right precept and good example and to provide for their
upbringing in keeping with their means;
(2) To give them love and affection, advice and counsel,
companionship and understanding;
(3) To provide them with moral and spiritual guidance, inculcate in
them honesty, integrity, self-discipline, self-reliance, industry and
thrift, stimulate their interest in civic affairs, and inspire in them
compliance with the duties of citizenship;
(4) To furnish them with good and wholesome educational materials,
supervise their activities, recreation and association with others,
protect them from bad company, and prevent them from acquiring
habits detrimental to their healih, studies and morals;
(5) To represent them in all matters affecting their interest;
(6) To demand from them respect and obedience;
(7) To Impose discipline on them as may be required under the
circumstances; and
(8) To perform such other duties as are imposed by law and upon
parents and guardians. 1
2. CONDITIONS TO ENTITLEMENT.
A solo parent shall be entitled to parental leave provided that:
(a) He/She has rendered at least one (1) year of service whether
. 1:ontinuous or broken at the time of the affectivity of the Act;
(b) He/She has notified his/her employer of the availment thereof
within a reasonable period of time; and
(c) He/She has presented a Solo Parent IdentifiCation Card to his/her
employer. 1
3. AVAILMENT.
a. Non-conversion of parental leave.
In the event that the parental leave is not availed of, said leave shall not
be convertible to cash unless specifJ.Cally agreed upon previously. However, if
1 Section 3[c], Ibid.; Section 6[fJ, Article Ill, Ibid.
2 Section 19, Article V, Implementing Rules of R.A. No. 8972.
~
1"~"''"-- .
CHAPTER Ill 181
lABOR STANDARDS
said leave were denied an employee as a result of non-compliance with the
provisions of the Implementing Rules by an employer, the aforementioned leave
may be used a basis for the computation of damages. 1
b. Crediting of existing leave.
If there is an existing or similar benefit under a company policy, or a
CBA or collective negotiation agreement, the same shall be credited as such. If
the same is greater than the seven (7) days provided for in the Act, the greater
benefit shall prevail. Emergency or contingency leave provided under a
company policy or a collective bargaining agreement shall not be credited as
compliance with the parental leave provided for under the Act and its
Implementing Rules. 2
c. Benefits.
Any solo parent whose income in the place of domicile falls below the
poverty threshold as set by the National Economic and Development Authority
(NDDA) and subject to the assessment of the DSWD worker in the area shall be
eligible for assista.'lce: Provided, however, That any solo parent whose income is
above the poverty threshold shall enjoy the benefits mentioned in Sections 6, 7
and 8 ofR.A. No. 8972, to wit:
5.
SPECIAL LEAVES FOR WOMEN WORKERS
(MAGNA CARTA FOR WOMEN)3
1. GYNECOLOGICAL SURGERY LEAVE.
4
A special leave benefit for women was granted under R.A. No. 9710.
Thus, any female employee in the public and private sector regardless of age and
civil status shall be entitled to a special leave of two (2) months with full pay
based on her gross monthly compensation subject to existing laws, rules and
regulations due to surgery caused by gynecological disorders under the
following terms and conditions:
I) She has rendered at least six (6) months continuous aggregate
employment service for the last twelve (12) months prior to surgery;
2) In the event that an extended leave is necessary, the female
employee may use her earned leave credits; and
1 Section 20, Ar1icle V, Ibid.
2
Section 21, Article V, Ibid.
3 The proper description of this law, RA. No. 9710, otheiWise known as 'The Magna carta of Women" [August 14,
2009], is Magna Carta of Women (not Magna Carta for Women) since this is what is embodied in the law.
4
See Section 18, RA. No. 9710.
i.
182 BAR REVIEWER ON lABOR lAW
3} This special leave shall be non-cumulative and non-convertible to
cash. 1
2. GYNOLOGICAL DISORDERS, MEANING.
"Gynecological disorders" refer to disorders that would require
surgical procedures such as, but not limited to, dilatation and curettage and those
involving female reproductive organs such as the vagina, cervix, uterus,
fallopian tubes, ovaries, breast, adnexa and pelvic floor, as certified by a
competent physician. Gynecological surgeries shall also include hysterectomy,
ovariectomy, andmastectomy. 2
3. SEPARATE AND DISTINCT FROM MATERNITY LEAVE.
This leave should be distinguished from maternity leave benefit, a
separate and distinct benefit, which may be availed of in case of childbirth,
miscarriage or complete abortion.
A woman, therefore, may avail of this special leave benefit in case she
undergoes surgery caused by gynecological disorder and at the same time
maternity benefit as these two leaves are not mutually exclusive.
D.
SPECIAL GROUPS OF EMPLOYEES
l.
WOMEN
a.
DISCRIMINATION
1. ACTS OF DISCRIMINATION UNDER THE LABOR CODE.
Article 133 [135] of the Labor Code considers as unlawful the act of an
employer to discriminate against any woman employee with respect to terms
and conditions of employment solely on account of her sex.
More specifically, it enumerates the following acts of discrimination:
(a) Payment of a lesser compensation, including wage, salary or other
form of remuneration and fringe benefits, to a female employee as
against a male employee, for work of equal value; and
1 Section 21, Rule r.J, krcllementinQ Rules andRegul<b:insofRA No. 9710.
2 Section 7(m), Rule II, Ibid.
t~-'--~.
CHAI'TIR Ill 183
lABOR STANDARDS
(b) Favoring a male employee over a female employee with respect to
promotion, training opportunities, study and scholarship grants
solely on account of their sexes.
2. ACTS OF DISCRIMINATION UNDER THE MAGNA CARTA OF
WOMEN.
RA. No. 9710/ otherwise known as "The Magna Carta of Women," is
a comprehensive women's human rights law that seeks to eliminate
discrimination against women by recognizing, protecting, fulfilling and
promoting the rights of Filipino women, especially those in marginalized sector.
Based on the definition of the term "Discrimination Against Women"
in R.A. No. 9710,1 the following are considered discriminatory acts:
1. Any gender-based distinction, exclusion, or restriction which has
the effect or purpose of impairing or nullifying the recognition,
enjoyment, or exercise by women, irrespective of their marital
status, on a basis of equality of men and women, of hwnan rights
and fundamental freedoms in the political, economic, socia~
cultural, civil or any other field;
2. Any act or omission, including by law, policy, administrative
measure, or practice, that directly or indirectly excludes or restricts
women in the recognition and promotion of their rights and their
access to and enjoyment of opportunities, benefits or privileges;
3. A measure or practice of general application that fails to provide for
mechanisms to offset or address sex or gender-based disadvantages
or limitations of women, as a result of which women are denied or
restricted in the recognition and protection of their rights and in
their access to and enjoyment of opportunities, benefits, or
privileges; or women, more than men, are shown to have suffered
the greater adverse effects of those measures or practices; and
4. Discrimination compounded by or intersecting with other grounds,
status, or condition, such as ethnicity, age, poverty or religion.3
Additionally, women are guaranteed their right to decent work. The
State shall progressively realize and ensure decent work standards for women
1 RA. No. 9710, approved 00 hlgusl14, 2009.
2 SedXx1 4(b), Chapter II, R.A. No. 9710, approved oo August 14, 2009; See a1oo Section 7(c), rue II, ~ Rules
Md Regulltions d R.A. No. 9710.
3 ld.
4
184 BAR REVIEWER ON lABOR lAW
that involve the creation of jobs of acceptable quality in conditions of freedom,
equity, security and human dignity. 1
b.
STIPULATION AGAINST MARRIAGE
l.INVALIDITY OF STIPULATION AGAINST MARRIAGE.
Article 134 [136] of the Labor Code considers as an unlawful act of the
employer to require as a condition for or continuation of employment that a
woman employee shall not get married or to stipulate expressly or tacitly that
upon getting married, a woman employee shall be deemed resigned or separated.
It is likewise an unlawful act of the employer, to actually dismiss,
discharge, discriminate or otherwise prejudice a woman employee merely by
reason of her marriage. 2
2. RELEVANT JURISPRUDENCE.
The following cases are relevant:
I) Zialcita v. Philippine Airlines, Inc.3 - In this case decided by the
Office of the President, the provision in a contract between an airline company
and a flight attendant which states that "flight attendant-applicants must be
single and that they shall be automatically separated from employment in the
event they subsequently get married" was declared as a null and void provision;
hence, cannot be enforced for being contrary to Article 134 [136] of the Labor
Code and the protection-to-labor clause in the Constitution.
2) Philippine Telegraph and Telephone Company v. NLRC.4 - It
was declared here that the company policy of not accepting or considering as
disqualified from work any woman worker who contracts marriage runs afoul of
the test of, and the right against, discrimination afforded all women workers by
our labor laws and by no less than the Constitution.5
6
3) Star Paper Corp. v. SimboL Cornia and Estrella. - The following
policies were struck down as invalid for violating the standard of reasonableness
which is being followed in our jurisdiction, otherwise called the "Reasonable
Business Necessity Rule":
Sec&x125, ~leV,~ ~les and RegulaOOns dRA No. 9710.
See also Sec&x113[e}, Rule XII, Booi( Ill, Rulesb ~Ule I..OOa'Code; Guabeltov. Marinduque Mnilg kdJs1rial
Corporatioo, CA-G.R No. 52753-R, June 28,1978.
Case No. R04-:l-393-76, Feb. 20, 1977.
G.R. No. 118978, May 23, 1997, 272 SCRA 596,605.
s SeealsoGuallertov. Marilduque Mni1l &lndusiJial Capamtion, supra;Zialcia, v. PhifippineAi~ines. supm;45AAm. Jur.
2d, Job Oisainination, Sec. 506, p. 486.
s G.R No. 164774, f>ll!i 12,2006.
CHArTER Ill HSS
lABOR STANDARDS
"1. New applicants will not be allowed to be hired if in case he/she
has [a] relative, up to [the] 3'd degree of relationship, already
employed by the company.
"2.1n case of two of our employees (both singles [sic], one male and
another female) developed a fiiendly relationship during the course
of their employment and then decided to get married, one of them
should resign to preserve the po!icy stated above."
4) Duncan Association of Detailman-PTGWO v. Glaxo Welcome
Philippines, Inc.1 In this case, the prohibition against marriage embodied in the
following stipulation in the employment contract was held as valid:
"10. You agree to disclose to management any existing or future
relationship you may have, either by consanguinity or affinity with co-
employees or employees of competing drug companies. Should it pose
a possible conflict of interest in management discretion, you agree to
resign voluntarily from the Company as a matter of Company policy."
The Supreme Court ruled that the dismissal based on this stipulation in
the employment contract is a valid exercise of management prerogative. The
prohibition against personal or marital relationships with employees of
competitor companies upon its employees was held reasonable under the
circumstances because relationships of that nature might compromise the
interests of the company. In laying down the assailed company policy, the
employer only aims to protect its interests against the possibility that a
competitor company will gain access to its secrets and procedures.
c.
PROIITBITED ACTS
l. PROillBITED ACTS UNDER ARTICLE 135 [137] AND ITS
IMPLEMENTING RULES.
Article 135 [1371 of the Labor Code and its implementing rule consider
unlawful the followings acts of the employer:
1) To discharge any woman employed by him for the purpose of
preventing such woman from enjoying maternity leave, facilities
and other benefits provided under the Labor Code;
! 2) To discharge such woman on account of her pregnancy, or while on
I leave or in confinement due to her pregnancy;
l 3) To discharge or refuse the admission of such woman upon returning
to her work for fear that she may again be pregnant;
1 G.R No. 162994, Sepl17, 2004.
~"'--•..
186 BAR REviEWER ON lABOR U\W CHArTER Ill 187
U\BOR STANDARDS

4) To discharge any woman or any other employee for having filed a
complaint or having testified or being about to testify under the
Labor Code; or
5) To require as a condition for or continuation of employment that a
woman employee shall not get married or to stipulate expressly or
tacitly that upon getting married, a woman employee shall be
deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by
reason of marriage. 1
2. DENIAL OF BENEFITS.
The following are the prohibited acts under Article 135 [137] of the
Labor Code: 2
3 prohibits an employer to discharge an employee on account of tile latter's
1) To deny any woman employee the following benefits, namely:
a) Facilities for women; 4
b) Maternity leave benefits; 5 and
c) Family planning services and incentives for family planning.6
2) To discharge any woman employee for the purpose of preventing
3) To discharge her while she is in confinement due to her pregnancy;
or
4) To discharge her upon returning to her work for fear tilat she may
again be pregnant; or
5) To refuse her admission upon returning to her work for fear tilat she
may again be pregnant. 1
Del Monte Philippines, Inc. v. Velasco.2 - The series of absences of
tile respondent due to pregnancy and its related ailments, such as urinary tract
infection, were found not to be a valid ground to dismiss her from employment.
The Supreme Court agreed with the Court of Appeals in concluding that
respondent's sickness was pregnancy-related and, therefore, the petitioner
cannot terminate respondent's services because in doing so, petitioner will, in
effect, be violating the Labor Code which, under Article 135 [137] thereof,
pregnancy. The Court was convinced that tile petitioner terminated the services
of respondent on account of her pregnancy which justified her absences and,
thus, committed a prohibited act rendering the dismissal illegal.
II Lakpuc Drug, Inc. v. Belga.3 - Respondent was dismissed for
allegedly deliberately concealing her pregnancy and for incurring absences
I.

her from enjoying any of the benefits provided under the Labor without official leave for 16 days at which time she delivered her baby.
Code. 7 Petitioner argues that such non-disclosure is tantamount to dishonesty. In

Under No. 1 above, mere denial of the afore-described benefits would
already constitute a violation of Article 135 [137]. Under No. 2 above, it is
required that there must not only be denial but actual discharge or dismissal of
the woman employee meant to prevent her from enjoying any of the benefits
under the Labor Code and not only of the benefits under Chapter I, Title III of
Book III of the Labor Code.
3. DISCHARGING A WOMAN DUE TO PREGNANCY.
.
t fmding the penalty of dismissal too harsh and illegal, the Supreme Court ruled
that the alleged misconduct of Belga barely falls within the situation
I contemplated by law. Her absence for 16 days was justified considering that she
had just delivered a child, which can hardly be considered a forbidden act, a
I
]
dereliction of duty; much less does it imply wrongful intent on the part of
Belga. Petitioner harps on the alleged concealment by Belga of her
pregnancy. This argument, however, begs the question as to bow one can
conceal a full-term pregnancy. The Court agreed with respondent's position that

Article 135 [137t contemplates the following prohibited acts in

connection with the pregnancy of a woman employee:
I) To discharge her on account of her pregnancy; or
l
~
it can hardly escape notice how she grows bigger each day. While there may be
instances where the pregnancy may be inconspicuous, it has not been
sufficiently proven by petitioner that Belga's case is such.
~ 4. DISCHARGING A WOMAN EMPLOYEE FOR HAVING FILED A
2) To discharge her while she is on leave due to her pregnancy; or CASE OR FOR TESTIFYING IN A CASE
An additional prohibited act4 is the act of discharging any woman or
1 Sectioo 13, Rule XII, BooK lllllereof. any other employee for having filed a complaint or having testified or being
2 See paragraph [al (1) !hereof. about to testify under the Labor Code.

~
3 As prll'lided in Chapter I(Employment of Women), rttle Ill (Wo~ing Cond'rtions for Special Groups of Employees)
of Book Ill of the Labor Code.
4 Under Article 130 [132], Ibid.
s Under Article 131 [133], Ibid. 1
See also Section 13, Rule XJI,Boolt Ill, Rules D lrc~lementlhe.l.aborCode.
s Under Article 132 [134j, Ibid. 2 GR No. 153477, foMrch 6, 2007.
3
7 See~ Section 13, Rule XII, Book Ill, Rules to lfllllementlhe Labor Code. GR. No. 166379, Oct. 20, 2005.
4
s See paragraph (aj (2) and (3) thereof. See Section 13, Rule XII, Book Ill of the Rules to Implement the Labor Code.

L
188 BAR REVIEWER ON lABOR lAW
i CHAPTER Ill
lABOR STANDARDS
189

l
another, regardless of whether the demand, request or requirement for
Of relevance to this prohibited act are the parallel provisions in Articles
submission is accepted by the object of said act. 1
118 and 259(f) [248(f)] of the Labor Code. Under Article 118, itis considered
unlawful for an employer to discharge or in any manner discriminate against any Further, any person who directs or induces another to commit any act
employee who has filed any complaint or instituted any proceeding under Title of sexual harassment as defined in the law, or who cooperates in the commission
II (Wages) of Book ill or has testified or is about to testify in such proceedings.
Under Article 259(f) [248(f)], it is considered an unfair labor practice (ULP) to
I thereof by another without which it would not have been committed, shall also
be held liable under the law. 2
dismiss, discharge or otherwise prejudice or discriminate against an employee
4. SEXUAL HARASSMENT IN A WORK-RELATED OR
for having given or being about to give testimony under the Labor Code. This is
EMPLOYMENT ENVIRONMENT.
the only ULP act of the employer which need not be related to the exercise 1
by
the employee of his right to self-organization and collective bargaining. In a work-related or employment environment, sexual harassment is
committed when:
d.
SEXUAL HARASSMENT 1. The sexual favor is made a: condition in the hiring or in the
2 employment, re-employment or continued employment of said
{A.T'ITI-SEXUAL HARASSMENT ACD individual or in granting said individual favorable compensation,
1. THREE (3) SITUATIONS ONLY. terms, conditions, promotions, or privileges; or the refusal to grant
the sexual favor results in limiting, segregating or classifying the
R.A. No. 7877 declares sexual harassment unlawful only in three (3)
employee which Li! any way would discriminate, deprive or
situations, namely: diminish employment opportunities or otherwise adversely affect
(1) employment; said employee;
(2) education; and 2. The above acts would impair the employee's rights or privileges
(3) training environment under existing labor laws; or
3. The above acts would result in an intimidating, hostile, or offensive
Notably, sexual harassment is not the sole domain of women as men environment for the employee. 3
may also be subjected to the same despicable act. Said law does not limit the
victim of sexual harassment to women. Libres v. NLRC. 4 - The act of the manager in touching a female
subordinate's hand and shoulder, caressing her nape and telling other people that
2. SPECIFIC ACTS PENALIZED. the subordinate was the one who hugged and kissed him or that she responded to
The law punishes sexual harassment if the same is: his sexual advances, was considered an act of sexual harassment for which he
was penalized by the company with a 30-day suspension whose validity the
1. . work-related; or Supreme Court affirmed. 5
2. education-related; or
3. training-related.
3 Domingo v. Rayala.6 - This involves a sexual harassment suit filed
against Rogelio I. Rayala, the former Chairman of the National Labor Relations
3. PERSONS WHO MAY BE LIABLE FOR SEXUAL HARASSMENT. Commission (NLRC) by a subordinate, Ma. Lourdes T. Domingo, then
Work, education or training-related sexual harassment is committed by Stenographic Reporter lll. Rayala contends that the acts ascribed to him do not
any employer, employee, manager, supervisor, agent of the employer, teacher, constitute sexual harassment because Domingo did not allege in her complaint
instructor, professor, coach, trainor, or any other person who, having authority, that there was a demand, request, or requirement of a sexual· favor as a condition
influence or moral ascendancy over another in a work or training or education
environment, demands, requests or otherwise requires any sexual favor from 1 ld.
2 ld.
3 Section 3[a1 RA tfJ. 7877.
1 P1i::om Employees Unkln v. flhiWne Globrl CorrrrunK:a!Xx1, GR No. 144315, July 17, 2000; See alsO Bisig 4 G.R No. 123737, May 28, 1999.
~gagawasaTl'f!Xlv.NLRC,GRNo.151309,0cl15,2008. 5 1/illarcmav. NLRCilld Gok1en Donuts, Inc., G.R No.100341, Sept 2,1994.
2 Relevant law: RA. No. 7877, Feb. 14, 1995. s G.R No. 155831,Feb.18, 2008.
3 Section 3, R.A. No.7877.
;._
······'·.:.._...._._

BAR REVIEWER ON lABOR lAW
190
for her continued employment or for her promotion to a higher position. In
disagreeing to this postulation and in holding Rayala liable for sexual
harassment, the High Court ruled:
"xxx
"Yet, even if we were to test Rayala' s acts strictly by the standards
set in Section 3, RA 7877, he would still be administratively liable. It is
true that this provision calls for a 'demand, request or requirement of a
sexual favor.' But it is not necessary that the demand, request or
requirement of a sexual favor be articulated in a categorical oral or written
statement It may be discerned, with equal certitude, from the acts of the
offender. Holding and squeezing Domingo's shoulders, running his
fingers across her neck and tickling her ear, having inappropriate
conversations with her, giving her money allegedly for school expenses
with a promise of future privileges, and making statements with
unmistakable sexual overtones - all these acts of Rayala resound with
deafening clarity the unspokeli request for a sexual favor.
"Likewise, contrary to Rayala's claim, it is not essential that the
demand, request or requirement be made as a condition for continued
employment or for promotion to a higher position. It is enough that the
respondent's acts result in creating an intimidating, hostile or offensive
environment for the employee. That the acts of Rayala generated a.'\
intimidating and hostile environment for Domingo is clearly shown by the
common factual finding of the Investigating Committee, the OP and the
CA that Domingo reported the matter to an officemate and, after the last
incident, filed for a leave of absence and requested transfer to another
unit"
5. SEXUAL HARASSMENT IN AN EDUCATION OR TRAINING
ENVIRONMENT.
In an education or training environment, sexual harassment is
committed:
1. against one who is under the care, custody or supervision of the
offender;
2. against one whose education, training, apprenticeship or tutorship
is entrusted to the offender;
3. when the sexual favor is made a condition to the giving of a
passing grade, or the granting of honors and scholarships, or the
payment of a stipend, allowance or other benefits, privileges, or
considerations; or
4. when the sexual advances result in an intimidating, hostile or
offensive environment for the student, trainee or apprentice.'
1 Sectioo 3[b1 RA No. 7877.
CHAPTER lll 191
lABOR STANDARDS
6. DUTY OF THE EMPLOYER OR HEAD OF OFFICE.
It is the duty of the employer or the head of the work-related,
educational or training environment or institution, to prevent or deter the
commission of acts of sexual harassment and to provide the procedures for the
resolution or prosecution of acts of sexual harassment.
Towards this end, the employer or head of office is required to:
1. promulgate appropriate rules and regulations, in consultation with
and jointly approved by the employees or students or trainees,
through their duly designated representatives, prescribing the
procedure for the investigation of sexual harassment cases and the
administrative sanctions therefor. The said rules and regulations
issued shall include, among others, guidelines on proper decorum in
the workplace and educational or training institutions.
2. create a committee on decorum and investigation of cases on sexual
harassment. The committee shall conduct meetings, as the case may
be, with officers and employees, teachers, instructors, professors,
coaches, trainers and students or trainees to increase understanding
and prevent incidents of sexual harassment. It shall also conduct the
investigation of alleged cases constituting sexual harassment.
In the case of work-related environment, the committee is composed of
at least one (1) representative each from the management, the union, if any, the
employees from the supervisory rank and from the rank-and-file empioyees.
In the case of educational or training institution, the committee is
composed of at least one ( l) representative from the administration, the trainors,
teachers, instructors, professors, or coaches and students or trainees, as the case
maybe.'
7. SOME PRINCIPLES ON SEXUAL HARASSMENT.
l) The employer or head of office or the educational or training
institution are solidarily liable for damages arising from the acts of
sexual harassment committed in an -employment, education or
training environment, if such employer or head of office or
educational or training institution is informed of such acts by the
offended party and no immediate action is taken thereon?
1 Section4, lbki.
2 Section 5, Ibid.
 liAR REVIEWER ON lABOR lAW
192
2) The victim of sexual harassment is not precluded from instituting a
separate and independent action for damages and other affirmative
reliefs. 1
3) Any action arising from sexual harassment prescribes in three (3)
years. 2
4) Any person who violates the provisions of R.A. No. 7877 shall,
upon conviction, be penalized by imprisonment of not less than one
(1) month nor more than six (6) months, or a fine of not less than
ten thousand pesos (P10,000.00) nor more than twenty thousand
pesos (P20,000.00}, or both such fine and imprisonment at the
3 The following hours of work shall be observed for any child allowed
discretion of the court.
Dr. Rico S. Jacutin v. People.4 - This case illustrates the proper
penalty imposable on the violator. Here, the Supreme Court affirmed the
Sandiganbayan's decision finding Dr. Rico Jacutiny Salcedo guilty of the crime
of sexual harassment defmed and punished under R.A. No. 7877, particularly
· Sections 3 and 7 thereof, and penalizing him with imprisonment of six (6}
months and to pay a fine of Twenty Thousand (P20,000.00) Pesos, with
subsidiar; imprisonment in case of insolvency. Additionally, he was ordered to
indemnify the offended party, Juliet Yee, in the amount of P30,000.00 and
f'20,000.00 by way of moral damages and exemplary damages, respectively.
2.
MINORS5
1. "CHILD" AND "WORKING CHILD." MEANING.
For legal purposes, the term "child" refers to any person less than
eighteen (18) years of age.
A "working child" refers to any child engaged as follows:
i. when the child is below eighteen (18) years of age, in work or
economic activity that is not "child labor;" and
ii. when the child below fifteen (15) years of age:
(a) in work where he/she is directly under the responsibility of
his/her parents or legal guardian and where only members of the
child's family are employed; or
1 Sedion 6, Ibid.
2 Sedion 7' Ibid.
3 Sedion 7, Ibid.
4 GR No. 140604, M:Ych 6, 2002.
s Relevant~: Labor Code, RA No. 7678 and RA No. 9231.
CHAPTER Ill 193
lABOR STANDARDS
(b) in "public entertainment or information" which refers to
artistic, literary, and cultural performances for television show,
radio program, cinema or film, theater, commercial
advertisement, public relations activities or campaigns, print
materials, internet, and other media.
2. REGULATION OF WORKING HOURS OF A CIDLD.
The tenn "hours ofwork" includes (1) all time during which a child is
required to be at a prescribed workplace, and (2) all time during which a child is
suffered or permitted to work. Rest periods of short duration during working
hours shall be counted as hours worked. 1
to work under R.A. No. 9231 and its Implementing Rules:
(a) For a child below flfieen (15) years of age, the hours of work shall
not be more than twenty (20) hours per week, provided that the
work shall not be more than four (4) hours at any given day;
(b) For a child fifteen (15) yt:ars of age but below eighteen (18), the
hours of work shaH not be more than eight (8) hours a day, and in
no case beyond forty (40) hours a week; and
(c) No child below fifteen (15) years of age shall be allowed to work
between eight (8) o'clock i.1. the evening and six (6) o'clock in the
morning of the following day and no child fifteen ( 15) years of age
but below eighteen (18) shall be allowed to work between ten (10)
o'clock in the evening and six (6) o'clock in the morning of the
following day. 2
3. EMPLOYMENT OF CHILD IN PUBLIC ENTERTAINMENT.
Sleeping time as well as travel time of a child engaged in public
entertairunent or infonnation from his residence to his workplace shall not be
included as hours worked without prejudice to the application of existing rules
on employees' compensation.3
4. PROillBITION OF EMPLOYING MINORS IN CERTAIN
UNDERTAKINGS AND ADVERTISEMENTS.
No child below eighteen (18) years of age is allowed to be employed as
a model in any advertisement directly or indirectly promoting alcoholic
Section 3, Chapter 1, !lepal1ment Order No. 65-04.
Section 15, ~ 5, W.; Section 12-A, RA No. 7610, as added by Sedion 3, RA No. 9231.
3 ld.
 BAR REviEWER ON lABOR lAW
194
beverages, intoxicating drinks, tobacco and its by-products, gambling or any
form of violence or pornography.
1
5. PROillBITION ON THE EMPLOYMENT OF CHILDREN BELOW 15
YEARS OF AGE; EXCEPTIONS AND CONDITIONS.
1. General rule. The general rule is that no child below fifteen (15)
years of age shall be employed, permitted or suffered to work in any
2
public or private establishment.
2. Exceptions. The following shall be the only exceptions to the
prohibition on the employment of a child below fifteen (15) year of
age:
(a) When the child works under the sole responsibility of his/her
parents or guardian, provided that only members of the child's
family are employed.
(b) When the child's employment or participation in public
entertainment or information is essential, regardless of the
3 provisions are presented herein following the presentation in the law itself.
extent of the child's role.
3. Cohditions to the prohibition. Such employment shall be strictly
under the following conditions:
a) The total number of hours worked shall be in accordance with
Section 15 [Hours of Work of a Working Child] of the Rules
[supra];
b) The employment does not endanger the child's life, safety,
health and morals, nor impair the child's normal development;
c) The child is provided with at least the mandatory elementary or
secondary education; and
4 {e) Laundry person; or
d)· The employer secures a work permit for the child
"Normal development of the child" refers to the physical,
emotional, mental, and spiritual growth of a child within a safe
and nurturing environment where he/she is given adequate
nourishment, care and protection and the opportunity to perform
5 ~)of PD. No. 442, as anended illd rwrbered by RA No. 10151 are hereby expresstj repealed. AD M,
tasks appropriate at each stage of development.
1 Sedion 6, Chapter 2, Department Order No. 65-04; Sedion 14, Miele VIII, RA No. 7610, as amended by Section 5, RA
No.9231.
2 Sedioo4.~2,1bid.
3 Sedion7.~3,1bid.
• ld.; In accordancewilh Sedioos 8 to 12 of the Rules.
s Section 3, Chapter 1, Ibid.
CHAPTERlll 195
lABOR STANDARDS
3.
KASAMBAHAY 1
1. EXPRESS REPEAL OF ENTIRE CHAPTER ID, TITLE ID, BOOK III
OF THE LABOR CODE.
This Chapter on Househelpers originally covers Articles 139 [141] to
150 [152]. The entire Chapter III, however, has been expressly repealed by RA.
No. 10361, otherwise known as "Domestic Workers Act" or "Batas
Kasambahay" approved by President Benigno S. Aquino ill on January 18,
2013. 2
Further, note must be made that R.A. No. 10361, despite its expressed
intent of repealing the said provisions, did not follow the numbering pattern of
the Labor Code, as renumbered lately pursuant to Section 5 ofR.A. No. 10151
[June 21, 2011]. It, in fact, has its own designation of its provisions which it
denominated as "sections." This notwithstanding the fact that it merely
rehashed or revived some principles already embodied in the repealed provisions
of the Labor Code. For purposes of discussion, therefore, its substantive
2. COVERAGE.
R.A. No. 10361 applies to all domestic workers employed and
working within the country. 3 It shall cover all parties to an employment contract
for the services of the following Kasambahay, whether on a live-in or live-out
arrangement, such as, but not limited to:
(a) General househelp;
(b) Yaya;
(c) Cook;
(d) Gardener;
1 RelevaltliM: RA No. 10361.
2 Ais ptM!ed il its Section 44, flus: 'SEC. 44. Repealrg Claise.- AI aOCfes or pllNisions ct ~ Ul ~of
deaees, execuwe ordefs, issuanCeS, lUes !l1d regulations or piJ!s flerect R:onsistent wilh 1he p!O\'OOis ct 115 Pd. are
hereby repealed or mcxfllied CKXXll'diriJt;'.'
~. 1he folkM'iYJ eleven (11) prOYis«lns entraced il said Chapter appli:able to al ~. Ytt1e1her
efl1lloyed oo ful or part-line basis, are already expressty repealed: Article 139 [141] (Coverage); Article 140 (142] (Con1ract
of OcxnesOC SefVice); Article 141 (143] (Mnilrum Wage~ Miele 142 (144] (Mnimum Cash Wa;Je); Article 143 ~45]
(A$ijrmert kl Noo-Hoosehold Wort); Article 144 [146] (Oppaimi!y for Education); Article 145 [147] (Treatment of
~); Article 146 [148] (Board, lodgir¥;1, !rid ~ical Allendance); Article 147 [149] (lndelmi!y for Unjust
Tennilation of Services); Article 148{150] (SefVice ofTenmation Noli::e); Article 149 [151] (EnwJoymentCettification) and
Article 150 1152] (Errjlloyment Record).
3
Sedion 3, Article t, RA. No. 10361.
 CHAPTER III 197
BAR REVIEWER QN lABOR lAW lABOR STANDARDS
196
(d) "Employer" refers to any person who engages and controls the
(f) Any person who regularly p.erfonns domestic work in one services of a Kasambahay and is party to the employment contract. 2
household on an occupational basis!
(e) "Live-out arrangement" refers to an arrangement whereby the
3. EXCLUSIONS. Kasambahay works within the employer's household but does not reside
The following are not covered: therein. 3

(a) Service providers; (f) "Service provider" refers to any person or entity that carries an
(b) Family drivers; independent business and undertakes to perform job, work or service on his/her
2
(c) Children under foster family arrangement; and own for a household, according to his/her own manner and method, and free
(d) Any other person who performs work occasionally or sporadically from the control and direction of the employer in all matters in connection with
and not on an occupational basis.
3 the performance of the work except as to the results thereof. 4

4. DEFINITIONS. 5. HIRING OF KASAMBAHA Y.

Some important terms are defined below:
(a) "Domestic worker" or "kasambahay" refers to any person
engaged in domestic work within an employment relationship, whether on a
live-in or live-out amthge10ent, such as, but not limited to, general househelp,
"yaya", cook, gardener, or laundry person, but shall exclude service providers,
family drivers, children who are under foster family arrangement, or any person
who· performs domestic work only occasionally or sporadically and not on an
4
occupational basis.
This term shall not include children who are under foster family
arrangement which refers to children who are living with a family or household
of relative/s and are provided access to education and given an allowance
incidental to education, I.e., "baon", transportation, school projects, and school
activities; provided, that the foster family and foster care arrangements are in
compliance with the procedures and requirements as prescribed by R.A. No.
10165 or the "Foster Care Act of2012.',s
BecaUse of these new terminologies prescribed in the law, the use of
the term "househelper'' may no longer be legally correct.
(b) "Domestic work" refers to work performed in or for a household
6 covering the cost of transportation, meals, communication expense, and other
or households.
(c) "Household" refers to the immediate members of the family or the
occupants of the house who are directly and regularly provided services by the
1
Kasambahay.
1 Section 2, Rule l,lrrjllementilg Rules em RegulaOOns of RA No. 10361.
2 Section 3(a), Rule 1. ~ling Rules em Regula1ms ofRA. No. 10361.
3 Section 4(d), Artkle 1. RA No. 10361; Section 3(e), Rule l,lnlllementing Rules and Regulatioos of RA. No. 10361.
4 Section 2, Rule I, Ibid.
s Section 4 (dj, Artkle I, RA No. 10361; Section 3(a), Rule !,Implementing Rules and Regulatioos of RA. No. 10361.
& SecOOn 4[c), Artkle I, Ibid.; Sec00n 3{d), Rule 1, Rlid.
a. Mode of Hiring. - A Kasambahay can be hired by the employer
directly or indirectly through a licensed PEA. 5 A "Private Employment
Agency (PEA)" refers to any individual, partnership, corporation or entity
licensed by the Department of labor and Employment (DOLE) to engage in the
recruitment and placement ofKasambahay for local employment. 6
b. Cost of Hiring. - The employer shall shoulder the cost of hiring of a
Kasambahay, whether he/she is hired through a licensed PEA.;
In no case shall the recruitment or finder's fees be charged against the
Kasambahay. 8 "Recruitment and finder's fees" refers to charges or any
amount collected by the licensed PEA from the Kasambahay for his/her
recruitment and placement.9
c. Deployment Expenses. - The employer, whether the Kasambahay is
hired directly or through a PEA, shall pay the expenses directly used for his/her
transfer from place of origin to the place of work. The employer may recover
deployment costs from the Kasambahay whenever he/she leaves without
10
justifiable reason within six (6) months from employment.
"Deployment expenses" refers to expenses that are directly used for
the transfer of the Kasambahay from place of origin to the place of work
1 Sediln 4PJ, Mk:1e I, Ibid.; Section 3(g). RIJe 1, Ibid.
2 Sedion4{ei,Mk:le I, Ibid.; Section3(Q, Rule 1,1bid.
3 Section 3(h), Rule I, Ibid.
4 SecOOn 3(1), Rule I. Ibid.
5 Section 1, Rule ll,lbid.
6 Sedkx13(i), Rule I, Ibid.
Section 2, Rute H, Ibid.
ld.
9 Section 3(j), Rule I, Ibid.
10 Section 3, Rule II, Ibid.
 BAR REVIEWER ON lABOR lAW CHAPTER Ill
198 199
lABOR STANDARDS

incidental expenses. Advances or loans by the Kasambahay are not included in (a) Duties and responsibilities of the Kasambahay, including the
1
the defmition of deployment expenses. responsibility to render satisfactory service at all times;
(b) Period of employment;
6. PRE-EMPLOYMENT REQUIRE,M:ENT. (c) Compensation;
Prior to the execution of the employment contract, the employer may (d) Authorized deductions;
require the following from the Kasambahay: (e) Hours ofwork and proportionate additional payment;
(t) Rest days and allowable leaves;
(a) Medical certificate or a health certificate issued by a local
(g) Board, lodging and medical attention;
government health officer; (h) Agreements on deployment expenses, if any;
(b) Barangay and police clearance; (i) Loan agreement, if any;
(c) National Bureau of Investigation (NBI) clearance; and
G) Termination of employment; and
(d) Duly authenticated birth certificate or, if not available, any other
(k) Any other lawful condition agreed upon by both parties. If the
document showing the age of the Kasambahay such as voter's
Kasambahay is below 18 years old, the employment contract shall
identification card, baptismal record or passport.
be signed by his/her parent or lawful guardian on his/her behalf. 1
The foregoing shall be the standard requirements when the employment Upon the request of either part'j, the Punong Barangay or his/her
of the Kasambahay is facilitated through a PEA. designated officer shall read and explain the contents of the contract to both
The cost of the foregoing shall be borne by the prospective employer or parties and shali serve as its witness. 2
3
agency,1 as the case may be. c. Standard employment contract. - The employment contract shall
7. WRITTEN EMPLOYMENT CONTRACT. conform to the DOLE Standard Employment Contract (Kontrata sa Paglilingkod
sa Tahanan) or Form BK-1.3
a. The employment contract must be in writing and should contain
the conditions set by law. d. Distribution of copies of employment contract. - The employer
shall have the obligation to furnish a copy of the employment contract to the
To make the relationship between the employer and the kasambahay
Kasambahay and to. the Office of the Plmong Barangay in the barangay where
more formal, R.A. No. 10361 4 requires that a written contract of employment be
the employer resides.4
executed between them. This is a very significant improvement since not even
the Labor Code requires the execution of a written instrument in order to create e. Renewal of Contract. - Should the parties mutually agree to
or establish an employer-employee relationship. It is a well-established rule that continue their employment relationship upon expiration of the contract, they
such relationship need not be documented by a written contract. Once the shall execute a new contract to be registered with the concerned barangay.
elements of the employer-employee relationship are determined and established, However, if the parties fail to execute a new contract, the terms and conditions
it is immaterial whether such relationship was created verbally or in writing. of the original contract and other improvements granted during the effectivity of
said contract are deemed renewed. 5
b. Contents of the employment contract.
f. Domestic workers cannot acquire regularity of employment
Before the commencement of the service, a written employment
under R.A. No. 10361. ·
contract between the Kasambahay and the employer shall be accomplished in
three (3) copies. The contract shall be in a language or dialect understood by Despite the repeal of the entire chapter of the Labor Code on
both the Kasambahay and the employer, and shall include the following: Househelpers by R.A. No. 10361, all the indicia of regularity of employment
I
! 1 Section 11, Article Ill, Ibid.; Section 5, Rule II, Ibid.
Section 3(c), Rule I, lbli. 2 ld.
1
2 Refelling IDa p!Nale ~a;Jency(PEA). I 3 Section 6, Rule II, Ibid.

L.
l Section 12, A11k:1e Ill, RA No. 10361; Sectioo 4, Rule II, lmplementilJ Rules and RegulalionS of RA No. 10361. 4
Section 7, Rule II, Ibid.
5 Section 8, Rule II, lbKi.
4 Section 11' Al1k:le lllllid.
200 BAR REVIEWER ON lABOR lAW
remain absent in the employment of domestic helpers. The following factors
clearly show that domestic helpers can never become regular employees:
1) By express provision of the law, the employment contracts of
Kasambahays are for fixed or definite term. 1 They do not fix the
period of employment nor put a cap on their duration, unlike in
Article 140 [142] of the Labor Code. 2
2) The law does not recognize any probationary employment of
Kasambahays;3
3) The Kasambahays are not included in the concept of regular
employment under Article 295 [280] (Regular and Casual
Employment) of the Labor Code; 4
4) The Kasambahays are not entitied to the reliefs provided under
Article 294 [279] of the Labor Code such as "reinstatement without
loss of seniority rights and other privileges and to his/her full
backwages, inclusive of allowances, and to his/her other benefits or
their monetary equivalent computed from the time his/her
compensation was withheld from him/her up to the time of his/her
actual reinstatetnent"; 5
1 Seclkx1111b],Mk:le Ill, RA No. 10361, il relaOOn 1o Seclkx132, MldeV <iRA No. 10361. Seclkx111[b]d Arti::le Ill
lhereof deat{ states that 1l1e ~ mact by and between the doolestic IWiker and 1l1e ~ slloli! ilckJde a
'period d ~· ~ tlis pltNision v.iH1 SeciXx1 32 d Mlde vthered l'lllUkl result illle ~
coockJsioo lhat Sld1 ElfllloYment coo9:t is tJr a "Bm', Vrus: 'SEC. 32. Temilation d SeM::e.- Neilher l1e domestic
IWiker nor l1e en1Jioyer may Eminate !1e mact before l1e expiakx1 ci l1e tEnn except tJr g!Mds pnMded for il
Sections 33 and 34 rJ. U1is />D.. J:J:t This cbsetvalion is further sb'eogl1ened by 1l1e openilg paagraphs d sad Sections 33
and 34, his: 'SEC. 33. Te;rnilation nitiated by 1l1e Oomeslk \'o\ner. - The domestic IWiker may ilrmilale fie
~~ aiBlrf tine babe lle expiaOOn rJ.111e <XX11rcnb: Blrf rJ.1he ~causes: u:t Clld 'SEC. 34.
Te111'i1aion nlaled by 111e ~--!vi ~may temila!e lle services ci fie domestic IWiker at Blrf ine before
l1e expiation d l1e oonllatt, b' Blrf d1he bbWvJ causes~
2 NotaJiy, RA ltl. 10361 ro bYJer I1B1dales that a det'riE nurrber d yeas be ~ illle aiJm mact rJ.
~ d dareslk: IWikers. lkxler 11e OfiJm rendefiVJ <t Altfe 142 cllle t.axr Code, 1is p«Niled flat ~
aiJm cxnracta domestic seM:e s11a1 net ~a&b' nne 1m t.w (2) yeas but 1may be renewed 111m peRxls as may
be ClJfeed ~by thepllties.'This perkxl-inilaiD1 has alreOOy been deleled illle new llfN.
3 Neller RA ltl. 10361 nor 11e 1..a1xr Code enixJdies Blrf pro~xm~y Eff!lloyment ~ 1o OOmesti: mers.
Al1ough i1 cases of OYerseas Fif4Ji1o V«Hkees vhl are deployed as doolestic Y«llkers cboad, l1e •
prOOali:JMy perb:l of~~ is reoognized, but 1l1e SCire is att b' lle pUipose rJ delermini1g M1elher lle danes1i::
W0111er has qurjied ulle fixed.l!m1 ~~ ~ by lle pa&!s as held i1 ~ SeMces and
Resou«:es, klc. v. lvlita Rodtlluez. GR ltl. 152616, Mll:h 31, 2006.
4 This is 00\bJs fltrn 1l1e t.lct lhat ll1efe is 00 pltNision cA law v.llk:h makes reference 1o lhe appli3lllly d said p!llYiskJn 1o
h! eflllkJymentof domesticwo!kers. On111e oonfiary, l1e ~rJV«lll<ers b' en ildelilite perb:l is ootifuNed and
they do not becon1e reg!B' ~ by reason of the nature of therm Series of re-hin;l or renewal clthe oontact of
ef11lloYmenl of adomestic WO!ker does not llev.ise lipen il1o regula'~
5 The refief oen legaly d'ISITissed d<xnesti: IWiker is found i1 Seclkx132, Mlde vof RA. No. 10361 m speaks of 11e
penalty v.l1en the errq>loyer 'unjustly d'JSmisses' 1l1e domestic W0111er. Thus, '(i)f the domestic waller is ~ dismissed,
the domestic'Mlltershal be paid the~ already earned P'Js the equivalentofflfleen (15) days WOI1I by wat of
ildermity~
CHAPITR Ill 201
lABOR STANDARDS
5) The Kasambahays' enjoyment ofsecurity of tenure holds true only
during the effectivity of their fixed~term employment; 1
6) The employment of Kasambahays ceases upon the expiration of the
fixed term thereor;z
7) The contract of employment of Kasambahays is terminable by mere
notice, a clear indication that the employment is not regular in
nature; 3
8) The Kasarnbahay is given the right to pre-terminate the
employment contract. 4
8. RIGHTS AND PRNILEGES OF KASAMBAHAY.
The rights and privileges5 of the Kasambahay are as follows:
(a) Minimum wage;
(b) Other mandatory benefits, such as the daily and weekly rest
periods, service incentive leave, and 13111 month pay;
(c) Freedom from employers' interference in the disposal of wages;
(d) Coverage under the SSS, Phi!Health and Pag-IBIG laws;
(e) Standard of treatment;
(f) Board, lodging and medical attendance;
(g) Right to privacy;
(h) Access to outside communication;
(i) Access to education and training;
This is dear fltJn 1l1e ~ pnM;iln of Section 32 d Ar1i:le Vof RA No. 10361lili'g lle e«ectivity of l1ei' oonlract
1
Clld before 1l1e expiation d ils leml, nether the domestic W0111er nor the eJ11lklyer may Enritale l except on 111e grounds
ll1lliOOled il111e law itsef.
2 This Is dear toot Seclkx132, his: 'SEC. 32. Temilatioo of SeMce. - Nei!1er the domestic IWiker nor 1l1e eR1Jioyer may
lennilate lhe contract before !1e expiation cA the loon exa!pl b' grounds prtl'lided b' i1 Sections 33 end 34 cl Ills />D..'
Section 33 teals of the iJst caJSeS i1 cases cllennilaOOn kilialed by 1he Domesti: Woker end Section 34 speaks d lle
jJStcauses m le!milaOOn isillia!ed by111e ~.
3 il case lle ~ conba:t b' domes&: services does net ptrNide b' a specific cr deli1iive 1erm, 2nd paagrap11 rJ.
Seclkx132, Mkte VrJ RA NO. 10361 Slates, his: 'SEC. 32. Temi'lalion d SeM::e.- XXX 111e cUation rJ.Ihe domes&:
seM:e Is not delem'iled eihr i1 ~ cr by l1e nahJe cllhe seM:e, 1he eJl1lkrtlr 1r fie domestic Y«llker may gr.oe
nOOce 1o end 1he VtiXki1g ~ fNe (5) days before lle i1lerded temi1alion rJ 1he SENi:e.' ft is hJs ~ dea' toot
lis proviskln, Wlk:h Is a~ l81ash of lle ~ hi:le 150 rJ 1he Labor Code, llatro IJreSll11ltion d reglDily d
f!ll1lklYment rmt m flon1 11e faiJre cl the ~ Clld the domestic W0111er 1o ~ on a detiie lenn.
rJ such Consequentlt, the erJ'I)bymeot ~ is temirlOOie by fie sir1J1e exped'lel'la! cllle Sf!lloyer or 1he domestic Y«llker
'gr.{llg) notK:e llend 111ew:MJ rel:ltillship five (5) days bebe fie il\stded llillnilalion cllleseivice.'
4
This is !I10ther ildication that lle eiJ1lbyment ~ between a domestic IWiker Clld lish1er en1Jbfer is not regular n
nahJre is 1he grant cllle Jij1t ll eilher of lhem to pre-lemlilale 1hei' oontract of Efl'llblment un:ler the 3id paragtaph of
Section 32, Miele Vcl RA No. 10361, lhus: 'SEC. 32. Termilation cl SeM::e.- XXX 'The domestic Y«llker end lhe
en1Jioyer may I1XJb:Ja'ly 3Jtee upon w.itleo notice D pre-lenni1a1e the oontract of ~ Ill end lhe employment
relationsl!ip." It beals noth1g llat 81ere is no similar provision illhe entire Lm' Cede v.llk:h grcJ\Is the sane light of pre-
lennilation tl 1l1e erlll~Jyer Clld the domestic woiXer ~). Under exisli1g law Ol1d jlrisprudence, never is K
p!tl'lkled IX' abNed il Blrf ~ b: 1l1e ~ ood ~ fD pre-ferrrme lheb' regula' relaOOnship by siT1llf ilki1g en
a;~reement of pre-tennination. In fact, such a;~reement on pre{emlilation has been slruck doYm as a nul stipulation il cr1
emplcyment contract illhe case of Price v.lnncxlata Phils., lr.cJ1nnodata Corp., G.R No. 178505, Sept 30, 2008.
5
Per Section 1, Rule IV, lmplemenli'g Rules and Regula1ions<tRA. No. 10361.
L~
-
202 BAR REviEWER ON lABOR lAW CHAPTER III 203.
lABOR STANDARDS

G) Right to form, join, or assist labor organization; • Payment of wages:

(k) Right to be provided a copy of the employment contract; 1. To whom paid. - It should be made on time directly to the
(I) Right to certificate of employment; Kasambahay to whom they are due in cash at least once a
(m) Right to terminate the employment; and month. 1
(n) Right to exercise their own religious beliefs and cultural practices. 1 2. Deductions, prohibition; when allowed. - The employer,
The foregoing rights and privileges are discussed below. unless allowed by the Kasambahay through a written consent,
shall make no deductions from the wages other than that
9. MINIMUM WAGE. which is mandated by Ia~ such as for SSS, PhiiHealtb or
a. Amount of minimum wages. Pag-ffiiG contributions. 3
The new minimum wage rates prescribed in R.A. No. 10361 2 are as Deduction for loss or damage shall only be made under the
following conditions:
follows:
"SEC 24. Minimum Wage. - The minimum wage of domestic (a) The Kasambahay is· clearly shown to be responsible for
workers shall not be less than the following: the loss or damage;
(a) Two thousand five hundred pesos (1"2,500.00) a month for (b) The Kasambahay is given reasonable opportunity to show
those empioyed in the National Capital Region (NCR); cause why deduction should not be made;
(b) Two thousand pesos (1"2,000.00) a month for thl)se employed in (c) The total amount of such deductions is fair and reasonable
chartered cities and first class municipalities; and and shall not exceed the actual loss or damage; and
(c) One thousand five hundred pesos (1"1,500.00) a month for those
employed in other municipalities. (d) The deduction from the wages of the Kasambahay does
not exceed 20% of his/her wages in a month.
"After one (1) year from the effectivity of this Act, and periodically
thereafter, the Regional Tripartite and Productivity Wage Boards The DOLE shall extend free assistance in the
(RTPWBs) shall review, and if proper, determine and adjust the minimum determination of fair and reasonable wage deductions. 4
wage rates of domestic workers.',J 3. Mode of payment - It should be paid in cash and not by
b. Some important principles on wage. means of promissory notes, vouchers, coupons, tokens, tickets,
chits, or any object other than the cash wage as provided for
• Frequency of payment of wages. - The wages . of the under this Act. 5
Kasambahay shall be paid at least once a month. 4 This is so
4. Pay slip. - The employer shall at all times provide the
because the minimum wage rates are on a monthly basis.5
Kasambahay with a copy of the pay slip containing the
• The equivalent minimum daily wage rate of the Kasambahay
amount paid in cash every pay day, and indicating all
shall be determined by dividing the applicable minimum monthly
rate by thirty (30} days. 6
deductions made, if any. The copies of the pay sw shall be
kept by the employer for a period of three (3) years.
• The amount of the minimum wage depends on the geographical
area where the Kasambahay works. 7 5. Prohibition on interference in the disposal of wages. - It
shall be unlawful for the employer to interfere with the
freedom of the Kasambahay in the disposition of his/her
1 ld.
2 See Sectioo 24, Artide IV 111eleof.
wages, such as:
3 SeealsoSectial2, Rule IV, kf4llemenlilg Rules and RegulamsofRA No. ffi361.
4 Sec1Xx14, R1.re IV, ~ Rules and Regulations of RA No. 10361.
5 1\s distinglished from the legatj mardak!d ilcreases il the rnininum wages (such as those II1CI1dated by RA No. 6640,
SecOOn 25, Artide W, Ibid.
RA No. 67'lf and Wage Orders passed by the RTVm) whidl ere on a daily-lll1e basis, 1he nininum wage rae;
presabed il RA No. 10361 are on amonlhly basis.
I 3
ld.
SecOOn 30, Article IV, Ibid.
s Sec1Xxl6, Rule XJU, Book Ill, Rules illrrcllement lhe l..aboc Code.
7 Sec1Xxl24, Artide IV, RA No.10361.
I
l
4
5
Section6, Rule V, Implementing Rules and RegulaOOilsofRA No. 10361.
Section 30, AI1ic1e IV, Ibid.; SecOOn 3, Rule W, Ibid.

L
6 Section 26, Artide W, RA No.10361; Section 2, Rule V, Ibid.

~
.
204 BAR REVIEWER ON lABOR lAW
CHArTER Ill 205
lABOR STANDARDS
(a) Forcing, compelling, or obliging the Kasambahay to
purchase merchandise, commodities or other properties d. l31h month pay. - The Kasambahay who has rendered at least one ·
from the employer or from any other person; or (1) month of service is entitled to a 13th month pay which shall not be less than
(b) Making use of any store or services of such employer or one-twelfth (l/12) of his/her total basic salary earned in a calendar year. The
any other person. 1 · 131h month pay shall be paid not later than December 24 of every year or upon
6. Prohibition against withholding of wages. - It shall be separation from employment. 1
unlawful for an employer, directly or indirectly, to withhold e. Daily rest period. - The Kasambahay shall be entitled to an
the wages of the Kasambahay. If the Kasambahay leaves aggregate rest period of eight (8) hours per day. 2
without any justifiable reason, any unpaid salary for a period
not exceeding fifteen (15) days shall be forfeited. Likewise, f. Weekly rest period. -The Kasambahay shall be entitled to at least
the employer shall not induce the Kasambahay to give up any twenty-four (24) consecutive hours of rest in a week. The employer and the
part of the wages by force, stealth, intimidation, threat or by Kasambahay shall agree in writing on the schedule of the weekly rest day but
any other means whatsoever. 2 the preference of the Kasambahay, when based on religious grounds, shall be
· respected. 3 Nothing in this provision shall deprive the Kasambahay and the
10. TERMS AND CONDITIONS OF EMPLOYMENT. employer from agreeing to the following:
The following is a rundown of the basic terms and conditions that
(1) Offsetting a day of absence with a particuiar rest day;
should be observed in the employment of a Kasambahay:
(2) Waiving a particular rest day in return for an equivalent daily rate
a. Employable age. - Children whose age is below 15 years are of pay;
absolutely pronibited to work as Kasambahay. 3 (3) Accumulating rest days not exceeding five (5) days; or
(4) Other similar arrangements. 4
b. Normal daily hours of work.- Because R.A. No. 10361 does not
contain any provision on the number of normal hours of work that a g. Service incentive leave. - A Kasambahay who has rendered at least
Kasambahay should render in a day but merely prescribes said daily rest period one (1) year of service shall be entitled to ail annual service incentive leave of at
of eight (8) hours per day, it may be concluded that the Kasambahay should least five (5) days with pay. Any unused portion of said annual leave shall not be
work for at least a total of sixteen (16) hours per day as nonnal hours of work. cumulative or carried over to the succeeding years. Unused leaves shall not be
However, it must. be noted that the Labor Code does not contain any provision convertible to cash.5
on the normal hours of work of househelpers. Article 1695 of the Civil Code,
however, specifically provides that househelpers shall not be required to work h. Social security benefits. - A Kasambahay who has rendered at least
for more than ten (10) hours a day. Since R.A. No. 10361, a special law, is the one (l) month of service shall be covered by the Social Security System (SSS),
most recent piece of legislation, it should prevail over the general provision of Employees Compensation Commission (ECC), Philippine Health Insurance
the Civil Code. Corporation (PhilHealth), and Home Development Mutual Fund or Pag-illiG,
and shall be entitled to all the benefits in accordance with their respective
c. Normal daill hours of work for working child-kasambahay is policies, laws, rules and regulations. 6
eight (8) hours per day.

I Sectill127' Article l\1, lb«l.; Sectioo 5, Rule V, bid.
2 Sectioo 28, Article IV, Ibid.; Sectioo 4, Rule V, Ibid.
3 Sectill116, Ar1ic1e Ill of RA No.10361 states iway clear ems, Vws: 'SEC. 16. ~~of Domestic WOI'r:ers.-
l shal be unlawful b ~ fl't/ person below fifteen (15) yeas of age as adomes1k: '1«111rer. ~of~
dilren, as defined lAlder Vlis f.d.. shall be subject kl tile JrCNiskJns of Seclioo 10(A), ~h 2 of Section 12-A.
pM~Qraph 4of Section 12-D, and Section 13 of RA. No. 7610, as amended, olhe!V.1se kooM1 as the 'Special Protedioo of
efl1ll<1iment ofl'olll1<i1Q chklren is Slj)jed 1o the pro'lisiln of paragraph 2d Section 12-A d RA No. 7610, as lllli!Rded.
This pro.oision states flat '[a] chikl fifteen (15) yeas of age but bekM eghteen (18) shall oot be alc1Mld lo 'Mllt lor I1JJre
1han eght (8) tms adaf, ood il no case beyood ftx1y (40) hCXJs aweek;'
1
SecOOn 25, Alticte IV, RA No. 10361; Section 8, Rule l\1, ~Rules illd Regulations of RA No. 10561. Note
roost be made flat previoustf, flll1lk:f;ers of hoosehokt ~ ood persons illhe peiSOOal sevice of MOiher il relation to
such w:xKers c>re oot OOiigated lo pay 13" ITKJ1th pay t lhese kf1ds of efTClloyees. (No. 2[c], Revised Guidef11es on 1he
Implementation of the 13111 monlh Pay LirN, bmettj Section 3 [d], Rules illd Regulatbns Implementing P.O. No. 851).

. :
Chi:lren Against Chikl Abuse, ExpkJitation and asaini1aOOn M.' 2
Sedion20,Mkle IV, RA No. 10361; Section 5, Rule IV, lmplementilg Rules and RegulationsofRA. No.10561.
4 Silce as ea1ier discussed, RA No. 7610, as amended by RA No. 9231, applies 1o a 'chiid' v.tlk:h l.eml, il legal 3
Section 21,Aiticte IV, Ibid.; SectionS, Rule IV, Ibid.
contemplalioo, refers lo fl't/ person ¥tOO is under eghleen (18) yeas of age,~ I\IXKers v.1iooe age is under e'ghteen 4 ld.;ld.
(18) yeaiS are Sl.dJject to 1he hol.lfs of'Mllt of a 'v.lxking chid.' SecOOn 16, Ar1kle Ill of RA No. 10361 states lhat the ~29.~1V.ftl!:l.;~7,Rule1V,Il~.

L
Section 30, Miele rv, Ibid.; Section 9, Rule IV, llid .
.

4
.
206 BAR REVIEWER ON lABOR lAW
Benefits under the SSS include sickness, maternity, disability,
retirement, death and funeral. A unified benefit package under PhilHealth
includes Inpatient Hospital Care and Outpatient Care. 1
Mandatory premium payments or contributions shall be shouldered by
the employer. However, if the Kasambahay is receivi.-lg a monthly wage rate of
Five Thousand Pesos (P5,000.00) and above, the Kasambahay shall pay the
proportionate share in the premium payments or contributions, as provided by
law. 2
In the event the Kasambahay avails of certain loan privileges from Pag-
ffiiG Fund which require the payment of additional or upgraded contributions,
the said additional or upgraded contributions shall be shouldered solely by the
Kasambahay. 3
The SSS, Pag-IBIG and PhilHealth shall develop a unified system of
registration and enrollment within six (6) months from the promulgation of this
IRR. 4
Obligation af employer to register and enroll with SSS, PhiiHealth,
and Pag-IDIG. - As employer of the Kasambahay, he/she shall register
himself/herself with, and enroll the latter as his/her employee to the SSS,
PhilHealth, and Pag-IBIG.5
a. Loan assistance.- An employer may agree to extend loan assistance
to the Kasambahay in an amount not exceeding his/her six (6) months' salary.
This provision shall not apply to working children. 6
b. Deduction for loans. - By written agreemen~ the employer may
deduct the loans from the wages of the Kasambahay, which amount shall not
exceed 20% of his/her wages every month. 7
c. Deposits for loss or damage. - It shall be unlawful for the employer
or any other person to require a Kasambahay to make deposits from which
deductions shall be made for the reimbursement of loss or damage to tools,
materials, furniture and equipment in the household 8
11. OTHER TERMS AND CONDITIONS OF EMPLOYMENT.
In addition to the foregoing, the following terms and conditions are
mandated under R.A. No. 10361:
1 ld.;ld.
2
ld.; ld.
3 ld.;ld.
4 ld.;ld.
s SecOOn 3, Rille V, llro.
s Section 10, Rille IV, llid.
7 Section 11, Rille IV, Ibid.
s Sedioo 14,Article Ill, RA No.10361; Section 7, RllleV, Ibid.
CHAHERIII 207
lABOR STANDARDS
a. Standard of treatment. - The Kasambahay shall be treated with
respect by the employer or any member of the household. He/she shall not be
subjected to any kind of abuse, including repeated verbal or psychologica~ nor
l be inflicted with any form of physical violence or harassment or any act tending
to degrade his/her dignity, as defmed under the Revised Penal Code, Violence
Against Women and their Children Law (R.A. No. 9262), Special Protection of
Children Against Child Abuse, Exploitation and Discrimination Act (R.A. No.
7610) as amended by R.A. No. 9231, Anti-Trafficking in Persons Act of 2003
(R.A. No. 9208), and other applicable laws. 1
b. Board, lodging and medical attendance. - The employer shall
provide for the basic necessities of the Kasambahay, to include the following:
(l) At least three (3) adequate meals a day, taking into consideration
the Kasambahay's religious beliefs and cultural practices;
(2) Humane sleeping condition that respects the person's privacy for
live-in arrangement; and
(3) Appropriate rest and medical assistance in the form of first-aid
medicines, in case of illnesses and injuries sustained during service
without loss of benefits.
For the Kasambahay under live-out arrangement, he/she shall be
provided space for rest and access to sanitary facilitj. At no instauce shall the
employer withdraw or hold in abeyance the provision of these basic necessities
as punishment to, or disciplinary action against, the Kasambahay. 2
c. Guarantee of privacy. - The employer shall, at all times, respect the
right of the Kasambahay to privacy, which shall extend to all forms of
communication and personal effects. 3
d. Access to outside communication. - During free time, the
Kasambahay shall be granted access to outside communication. In case of
emergency, access to communication shall be granted even during working time.
Should the Kasambahay use the employer's telephone or other communication
facilities, the costs shall be borne by the Kasambahay, unless waived by the
employer. 4
e. Prohibition against privileged information. - All communication
and information pertaining to the employer or members of the household shall
be treated as privileged and confidential, and shall not be publicly disclosed by
the Kasambahay during and after employment. Such privileged information
1
Sedioo 5, Article II, Ibid.; SecOOn 12, Rule W, llid.
2 SecOOn 6, Article II, lb«<.; Section 13, Rule IV, Ibid.
L.
3 Sec00n 7, Article 11, Ilk!.; Section 14, Rule IV, llid.
4
Sedioo 8, Article II, Ibid.; Section 15, Rule W, bid.
208 BAR REVIEWER ON lABOR lAW
shall be inadmissible in evidence, except when the suit involves the employer or
any member of the household in a crime against persons, property, personal
liberty and security and chastity .1
f. Opportunities for education and training. - The Kasambahay shall
be afforded the opportunity to finish basic education, which shall consist of
elementary and secondary education. He/she may be allowed access to
alternative learning systems and, as far as practicable, higher education or
technical vocational education and training.
The employer shall adjust the work schedule of the Kasambahay to
allow his/her access to education or training without hampering the services
required by the employer. Access to education may include fmancial assistance
at the option of the employer.
The Department of Education (DepEd) shall ensure continued access of
the Kasambahay to alternative learning system education. 2
g. Membershin in labor organization. - The Kasambahay shall have
the right to join a labor organization of his/her ovm choosing for purposes of
mutual aid and collective negotiation. The Kasambahay shall be afforded
opportunity to attend organization meetings during free tirne. 3
li. Health and safety. - The employer shall safeguard t1e safety and
health of the Kasambahay in accordance with the standards which the DOLE
shall develop through the Bureau of Working Conditions (BWC) and the
Occupational Safety and Health Center (OSHC) within six (6) months from the
promulgation of this IRR. The said standards shall take into account the peculiar
nature of domestic work. 4
i. Prohibition on debt bondage. - It shall be unlawful for the employer
or any person acting on his/her behalf to place the Kasambahay under debt
bondage.5 "Debt bondage" refers to the rendering of service by the
Kasambahay as security or payment for a debt where the length and nature of
service is not clearly defined or when the value of the service is not reasonably
applied in the payment-of the debt.6
j. Assignment to non-household work. - The employer shall not
assign the Kasambahay to work, whether in full or part-time, in a commercial,
1 Section 8, Rule V, Ibid.
2 Section 9, Artk:le H, Ibid.; Section 16, Rule rJ, Ibid.
3 Section 17, Rule rJ, Ibid.
4 Section 19, Artide rJ, RA No.10361; Section 12, Rule V, ftlid.
5
6
Section 15, Article Ill, Ibid.; Section 9, Rule V, Ibid.
Section 4(a), Mi:le I, Ibid.; Section 3(b), Rule I, Ibid.; See also Section 3, RA No. 9208.
CHAPTER Ill 209.
lABOR STANDARDS
industrial or agricultural enterprise at a wage rate lower than that provided for
agricultural or non-agricultural workers. 1
The following cases decided prior to R.A. No. 10361, are still relevant
to this proscription in the law:
(l) Apex Mining Company, Inc. v. NLRC.2 - In this case, the High
Court held that a househelper in the staffhouses of an industrial company is
considered a regular employee thereof. The mere fact that the househelper is
working within the premises of the business of the employer and in relation to or
in connection with its business, as in its stafthouses for its guest or even for its
officers and employees, warrants the conclusion that such househelper is and
should be considered as a regular employee of the employer and not as a mere
family househelper or as contemplated in the law. 3
(2) Remington Industrial Sales Corp~ v. Castaneda.4 - The same
ruling as in Apex was made in this case. Respondent worked at the company
premises and her duty was to cook and prepare its employees' lunch and
merienda. Clearly, the situs as well as the nature of respondent's work as a cook,
who caters not only to the needs of Mr. Tan (Managing Director of petitioner)
and his family but also to that of the petitioner's employees, made her fall
squarely within the definition of a regular employee under the doctrine
enunciated in the Apex Mining case. That she works within company premises
<md that she does not cater exclusively to the personal comfort of Mr. Tan and
his family, is reflective of the existence of the petitioner's right of control over
her functions, which is the primary indicator of the existence of an employer-
employee relationship.
(3) Barcenas v. NLRC.5 - In this case, private respondent contends
that petitioner was not an employee but a servant at the Manila Buddhist
Temple. The Supreme Court, however, disagreed. It held that petitioner was a
regular employee thereof considering that the work that she performed in the
temple could not be categorized as mere domestic work. Petitioner, being
proficient in the Chinese language, attended to the visitors, mostly Chinese; who
came to pray or seek advice before Buddha for personal or business problems;
arranged meetings between these visitors and the Head Monk and supervised the
preparation of the food for the temple visitors; acted as tourist guide of foreign
visitors; acted as liaison with some government offices; and made the payment
for the temple's Meralco, MWSS and PLDT bills. Indeed, these tasks may not be
i 1 Section 22,Article rJ, Ibid.; Seclion 10, Rule V, Ibid.
1 2 GR No.94951,Aplil22, 1991, 196SCRA251,254-255.
3 kl.
I ~
5
G.R Nos. 169295-96, Nov. 20,2006.
G.R. No. 87210, July 16, 1990.
L.
210 BAR REviEWER ON lABOR lAW CHAPTER Ill 211
lABOR STANDARDS

deemed activities of a household helper. They were essential and important to (l) Work for more than eight (8) hours a day and beyond forty (40)
the operation and religious functions of the temple. \ hours a week;
k. Extent of duty outside the household. - The Kasambahay and the (2) Work between ten o'clock in the evening and six o'clock in the
employer may mutually agree for the Kasambahay to temporarily perform a task t morning of the following day; and
for the benefit of another household under the following conditions: (3) Work which is hazardous or likely to be harmful to the health,
safety or morals of children, as defined under existing laws and
(a) There is an agreement between the Kasambahay and the employer
regulations. 1
for the purpose, particularly on the tasks to be performed;
(b) The Kasambahay is entitled to additional payment of not less than 13. TERMINATION OF KASAMBAHAY.
the applicable minimum wage rate: a. Pre-termination of employment - The following rules shall be
(c) The original employer shall be responsible for any liability observed:
incurred by the Kasambahay on account of such arrangement; and (1) ln case the duration of employment is specified in the contract, the
(d) The original employer is not charging any amount from the other Kasambahay and the employer may mutually agree upon notice to
household for the arrangement. terminate the contract of employment before the expiration of its
term.Z
The temporary pe1formance of work shall not exceed thirty (30) days
per assignment. The ot1er household where the Kasambahay is temporarily (2) In case the duration is not determined by stipulation or by nature of
assigned is solidarily liable with the original employer for any non-payment of service, the employer or the Kasambahay may give notice to end
wages during such temporary assignment. the employment relationship five (5) days before the intended
termination of employment..;
It shall be unlawful for the original employer to charge any a.rnount
from the said household where the service of the Kasambahay was temporarily b. Termination of employment initiated by the Kasambahay. - The
performed. 1 Ka~ambahay may terminate the employment relationship at any time before the
expiration of the contract for any of the following causes:
12. STANDARDS FOR EMPLOYMENT OF WORKING CIDLDREN.
(1) Verbal or emotional abuse of the Kasambahay by the employer or
a. Working children. - This term refers to Kasambahays who are
any member of the household;
fifteen (15) years old and above but below eighteen (18) years old. 2
(2) Inhuman treatment including physical abuse of the Kasambahay by
b. General prohibition. - It shall be unlawful to employ any person the employer or any member of the household;
3
below fifteen (15) years of age as Kasambahay.
(3) Commission of a crime or offense against the Kasambahay by the
c. Benefits of working children. - Working children shall be entitled employer or any member of the household;
to minimum wage, and all benefits provided under R.A. No. 10361, the Batas (4) Violation by the employer of the terms and -conditions of the
Kasambahay, which include access to education and training. 4 employment contract and other standards set forth in the law;
d. Employment of working children. - Pursuant to R.A. No. 9231,5
working children shall not be subjected to the following:
1 SecOOn 2, Rule VI, ~IPJ Rules and Re;!Ualions of RA tfl. 10361. Ad<litioMli. ~is prcMded thEreil as foloy,s:
'SECTION 4. Progrcrns ti:J l1e Binilation of Wooil Foons of Clill.abor il ~ Wak. • The DOLE, through lhe
1 SecOOn 23, Al1ide W, llid.; Section 11, Rule V, llit. National ft.nti.Chik:l Labor Coomit!ee (NCLC) and il rollaborabl v.illlhe NCLC meniler-agendes, shall <Xllbe ID
2 Section 3(k), Rule I, lnl)lementirg Rules and ReglJationsofRA No. 10361.
Sedion 1, Rule VI, lbi:i.
I inplement prtXJrams to ~. resrue, lH1d rehabiJita!e 'Ml!kil;J dlildren belaN fifteen {15) yeas of ~e. The NCLC shaH
enst1e that~ cl1ildren and !heir flmiies are prtNi:ied with occess ID education, occess to p!llducWe resoorces, and

(
Section 16, Al1ide Ill, RA. No. 10361; Sedion 3, IUl VI, lbi:l. 1hal measures are il place ID ensure COIJlllicnce wi1h lhe staldcrds b' ~loyment of chilren il domestic v.uri< as
s Entitled 'An Ad. Providing ti:J 1he Eliminalioo of lhe Woo;t Foons of Child l..alxx' lH1d Affold"lllQ Slronger ProEction for 1he !l presaiJed in !his Rule.'
WOO<i1g Chikl, .Amendi1g for !his PurposeReplilt Ad. No. 7610, As Amended, Olherv.te kflooMl as the 'Special Pro1ection 2 Section 32, Article V, RA No. 10361; Sedion 1, Rule VII, inlJiementilg Rules and Regulations of RA. No. 10361.
of Children Against Child Abuse, Explailatioo and lmililaliln Act' i 3 ld.;ld.

L . 4
212 BAR REviEWER ON lABOR lAW
(5) Any disease prejudicial to the health of the Kasambahay, the
employer, or members of the household; and
1
(6) Other causes analogous to the foregoing.
If the Kasambahay leaves without cause, any unpaid salary due, not
exceeding the equivalent of fifteen (15) days work, shall be forfeited. In
addition, the employer may recover from the Kasambahay deployment
expenses, if any, if the services have been terminated within six (6) months from
employment.2
c. Termination of employment initiated by the employer. - An
employer may terminate the employment of the Kasambahay at any time before
the expiration of the contract for any of the following causes:
(1) Misconduct or willful disobedience by the Kasambahay of the
lawful order of the employer in connection with the former's work;
(2) Gross or habitual neglect or inefficiency by the Kasambahay in the
performance of duties;
(3) Fraud or willful breach of the trust reposed by the employer on the
Kasambahay;
(4) Commission of a crime or offense by the Kasambahay against the
person of the employer or any immediate member of the
employer's family;
(5) Violation by the Kasambahay of the terms and conditions of the
employment contract and other smndards set forth under the law;
(6) Any disease prejudicial to the health of the Kasambahay, the
employer, or members of the household; and
(7) Other causes analogous to the foregoing. 3
If the employer dismissed the Kasambahay for reasons other than the
above, he/she shall pay the Kasambahay the earned compensation plus
indemnity in the amount equivalent to fifteen (15) days work. 4
d. Invalid ground for termination. - Pregnancy and marri~e of the
Kasambahay are not valid grounds for tennination of employment. 5
e. Employment Certification. - Upon the termination of employment,
the employer shall issue the Kasambahay, within five (5) days from request, a
, Section 33, Article V, Ibid.; Section 2, RUe VII, Ibid.
Section 32, Article V, lli:l.; Section 2, Rule VII, Ibid.
Section 34, Article V, Ibid.; Sedioo 3, Rule VII, Ibid.
4 Section 32, Artk:1e V, Ibid.; Sedioo 3, Rule VII, Ibid.
s Section 4, Rule VII, Ibid.
II
L~
CHAPTER Ill 213
lABOR STANDARDS
certificate of employment indicating the nature, duration of the service and work
description. 1
4.
HOMEWORKERS2
1. DEFINITIONS.
a. "Industrial homeworker" refers to a worker who is engaged in
industrial homework. 3
b. "Industrial homework" refers to a system of production under
which work for an employer or contractor is carried out by a homeworker at
his/her home. Materials may or may not be furnished by the employer or
contractor. It differs from regular factory production principally in that, it is a
decentralized form of production where there is ordinarily very little supervision
Oi regulation of methods of work.
4
c. "Home" means any nook, house, apartment or other premises used
regularly, in whole or in part, ru; a dwelling place, except those situated within
the premises or compound of an employer, contractor/subcontractor and the
work performed therein is ander the active or personal supervision by or for the
latter. 5
d. "Field persmnel" refers to a non-agricultural employee who
regularly perfomis his duties away from the principal place of business or
branch office of the employer and whose actual hours of work in the field cannot
be determined with reasonable certainty. 6
e. "Employer" refers to any natural or artificial person who, for his
own account or benefit, or on behalf of any person residing outside the
Philippines, directly or indirectly, or through any employee, agent, contractor,
subcontractor or any other person: (l) delivers or causes to be delivered any
goods, articles or materials to be processed or fabricated in or about a home and
thereafter to be returned or to be disposed of or distributed in accordance with
his direction; or (2) sells any goods, articles Qr materials for the purpose of
having such goods or articles pmcessed in or about a home and then repurchases
them himself or through another after such processing.
1 Sedioo 35, Article V, Ibid.; SecOOn 5, Rule VII, Ibid.
2 ReleVcl1t ProYi:six15: Ar1kles 151 [1531 t>153 [155J, l.alloc Code; Depas1ment Older No. 5, fSxuay 4, 19921 en~
the regulaOOns governing the ef1llloyment of horrlewolte!S. This Oeparinent Order is OON1anrm as Rule YN, Book Ill of
the Rules to Ilf4llement the LaxrCode.
3 SecOOn 2, Oepartnent Older No. 5[Rule YN, Book Ill, Rules !D ~Iemen! the labor COOe["
~
5
6
kl.
kl.
Article82, Labor Code
"
214 BAR REvltWER ON lABOR lAW
f. "Contractor" or "subcontractor" refers to any person who, for the
account or benefit of an employer, delivers or causes to be delivered to a
homeworker, goods or articles to be processed in or about his home and
thereafter to be returned, disposed of. or distributed in accordance with the
direction ofthe employer. 1
g. "Processing" refers to manufacturing, fabricating, fmishing,
repairing, altering, packing, wrapping or handling in any way connected with the
production or preparation of an article or material. 2
2. DUTIES OF EMPLOYER, CONTRACTOR OR SUBCONTRACTOR.
Whenever an employer contracts with another for the performance of
the employer's work, it shall be the duty of such employer to provide in such
contract that the employees or homeworkers of the contractor and the latter's
subcontractor shall be paid in accordance with the provisions of the Rules to
Implement the Labor Code? In the event that such contractor or subcontractor
fails to pay the wages or earnings of his employees or homeworkers as specified
in said Rules, such employer shali be jointly and severaily liable with the
contractor or subcontractor to the workers of the latter, to the extent that such
work is performed under such contrac~ in the same manner as if the employees
or homeworkers were directly er,gaged by the employer. The employer,
contractor or subcontractor shall assist the homeworkers in the maintenance of
basic safe and healthful working conditions at the homeworkers' place ofwork. 4
3. PAYMENT FOR HOMEWORK.
Immediately upon receipt of the fmished ·goods or articles, the
employer is required to pay the homeworker or the contractor or subcontractor,
as the case may be, for the work performed less the corresponding
homeworker's share of SSS, PhilHealth and ECC premium contributions which
should be remitted by the contractor or subcontractor or employer to the SSS
with the employer's share. However, where payment is made to a contractor or
subcontractor, the homeworker should likewise be paid immediately after the
goods or articles have been collected from the workers. 5
4. PROHIDITIONS ON CERTAIN KINDS OF HOMEWORK.
No homework shall be performed on the following:
l) Explosives, fireworks and articles oflike character;
2) Drugs and poisons; and
' Section 2, Depal1ment Order No.5 (Rule XN, Booillll, RJJ\es to~ lhe Labor Code).
2 ld.
3 See Rllle XIV thereof.
I Sedioo 11, DepaVnent<JderNo. 5[Rule XIV, Booil\11, RJJ\esto lr(Jiementlhe Labor Code.
5 Sectioo 6, Ibid.
CHAPTER Ill
215
lABOR STANDARDS
3) Other articles, the processing of which requires exposure to toxic
substances. 1
5. CONDITIONS FOR DEDUCTION FROM HOMEWORKER'S
EARNINGS.
a. Deductions for lost, destroyed, soiled or damaged materials.
No employer, contractor or subcontractor shall make any deduction
from the homeworker's earnings for the value of materials which have been lost,
destroyed, soiled or otherwise damaged unless the following conditions are met:
a) The homeworker concerned is clearly shown to be responsible for
the loss or damage;
b) The homeworker is given reasonable opportunity to show cause
why deduction should not be made;
c) The amount of such deduction is fair and reasonable and shall not
exceed the actual loss or damage; and
d) The deduction is made at such ratt: that the amount deducted does
not exceed twenty percent (20%) of the homeworker's earnings in a
week. 2
5.
NIGHT WORKERS
1. SIGNIFICANCE OF THE LAW.
3
R.A. No. I0151 has repealed Article 130 [Nightwork Prohibition] and
Article 131 [Exceptions] of the Labor Code and accordingly renumbered the
same articles. Additionally, it has inserted a new Chapter V to Title III of Book
III of the Labor Code entitled "Employment of Night Workers" which addresses
the issue on nightwork of all employees, including women workers. Chapter V
covers newly renumbered Articles 152 [154] up to 167 [161] of the Labor Code.
2. COVERAGE OF THE LAW.
The law on nightwork applies not only to women but to all persons,
who shall be employed or permitted or suffered to work at night, except those
employed in agriculture, stock raising, fishing, maritime transport and inlimd
navigation, during a period of not less than seven (7) consecutive hours,
including the interval from midnight to five o'clock in the morning, to be
1 SecOOn 13, llro.
2
Relevartf'roo.isms: (1) Apprenlices-<XIVe!'OO by Alfu 571o 72, t.m-Cilde; (2) Learners -WJe!OO by Al1ides 73 to
·T7, Labor Co:le; (3) RA No. 7700 (Tedlnical Edu«llion and Sklls ~Ad cA 1994) and Ms 1rnp1enm1i1g R1J1es
and Regulali:xls.
3
Entitled "lvl Ad~ the ~of N~htWOI1<ers, ll1ereby RepeaiVJ Mk:les 130 and 131 rAPD. No. 442, As
Amended,~ KnoYm as lhe Labor Code of lhe Ph!ippines' was appiMd oo June 21, 2011.
 CHAPTER Ill
216 BAR REvtEWER ON lABOR lAW lABOR STANDARDS
217

detennined by the DOLE Secretary, after consulting the workers' and workers providing for an equivalent or superior benefit;
or
representatives/labor organizations and employers. 1
ii. Where the start or end of the night work does not fall within
3. NIGHT WORKER, MEANING.. 12 midnight to 5 o'clock in the morning; or
"Night worker" means any employed person whose work covers the iii. Where the workplace is located in an area that is accessible
period from 10 o'clock in the evening to 6 o'clock the following morning twenty-four (24) hours to public transportation;
provided that the worker performs no less than seven (7) consecutive hours of iv. Where the number of employees does not exceed a specified
work. 2 number as may be provided for by the DOLE Secretary in
4. HEALTH ASSESSMENT. subsequent issuances. 1
At their request, workers shall have the right to undergo a health 6. TRANSFER DUE TO UNFITNESS OF WORK FOR HEALTH
assessment without charge and to receive advice on how to reduce or avoid REASONS.
health problems associated with their work: Night workers who are cei"tified by competent physician, as unfit to
(a) Before taking up an assignment as a night worker; render night work, due to health reasons, shall be transferred to a job for
(b) At regular intervals during such an assignment; or which they are fit to work whenever practicable. The transfer of the employee
(c) If they experience health problems during such an assignment. must be to a similar or equivalent position and in good faith.
With the exception of a finding of unfitness for night work, the findings If such transfer is not practicable or the workers are una ole to render
of such assessments snail be confidential and shall not be used to their night work for a continuous period of not less than six (6) months upon the
detriment, subject, however, to applicable company policies. 3 certification of a competent public health authority, these workers shall be
granted the same company benefits as other workers who are unable to work due
5. MANDATORY FACILITIES. to illness.
Mandatory facilities shall be made availabie for workers perfonning
A night worker certified as temporarily unfit for night work for a
night work which include the following:
period of less than six (6) months shall be given the same protection against
(a) Suitable first-aid and emergency facilities as provided for under dismissal or notice of dismissal as other workers who are prevented from
Rule 1960 (Occupational Health Services) of the Occupational working for health reasons. 2
Safety and Health Standards (OSHS); 7. WOMEN NIGHT WORKERS, ALTERNATIVE MEASURES TO
(b) Lactation station in required companies pursuant to R.A. No. NIGHT WORK FOR PREGNANT AND NURSING EMPWYEES.
10028 (The Expanded Breastfeeding Promotion Act of2009);
Employers shall ensure that measures shall be undertaken to provide an
(c) Separate toilet facilities for men and women; alternative to night work for pregnant and nursing employees who would
(d) Facility for eating with potable drinking water; and otherwise be called upon to perform such work. Such measures may include the
(e) Facilities for transportation and/or properly ventilated transfer to day work, where it is possible, as well as the provision of social
temporary sleeping or resting quarters, separate for male and security benefits or an extension of maternity leave.
female workers, shall be provided except where any of the (a) Transfer to day work.- As far as practicable, pregnant or nursing
following circumstances is present: employees shall be assigned to day work, before and after childbirth for a period
i. Where there is an existing company guideline, practice or of at least sixteen (16) weeks which shall be divided between the time before
policy, CBA or any similar agreement between management and after childbirth.
i Medical certificate issued by competent physician (i.e., Obstetrician/
1 Micle152[154], UlborCode, asamendedbySedion4, RA No.10151.
2 See Sectioo 2, Depar1meot Order No. 119-12, Series of 2012 (Rules ifr4Jiementilg RA. No. 10151). tt Ilea's no1ing lhat the I Gynecologist, Pediatrician, etc.) is necessary for the grant of:
definition of "niJht ael" lllder the law is as follows: 'Ni,Jht worltel" meaJS 8lrf eiJ1lloyed pernon w!lose a requres
performcn:e of a substlrltial nllfber of hours of niJflt WOik v.tlich exceeds aspecified fml This liM shall be fixed by the
SEcre!ay of Ulbor after oonsullirg 8le wcckers' represenlaWesi1abor01ganiza1icl!\s and en¢'fers.' (Article 152[154], l..aiJcr
Code, as amended by Sectkw14, RANo.10151).
I 1
Sedbn4, ki.Micle156, ld.

L
a Sectkw13, Oepa1meot Order No. 119-12, Series ol2012 (Rules ln1Jiemeolirq RA No. 10151); Article 153 (155], t.a1xr 2 Sectbn5, ki.Mi:ie157,1d.
COOe, as amended bySection4, RA No.10151.

4
.
218 BAR REVIEWER ON lABOR lAW CHAPTER Ill
219
lABOR STANDARDS

i. additional periods of assignment to day work during pregnancy or existing laws, such as service incentive leave, rest day, night differential pay,
1
after childbirth other than the period mentioned in the foregoing l3 h month pay, and other benefits as provided for by law, company policy or
paragraph, provided that the length of additional period should not CBA. 1
be more than four (4) weeks or for a longer period as may be agreeg 11. SOCIAL SERVICES.
upon by the employer and the worker; ·
ii. extension of maternity leave; and Appropriate social services shall be provided for night workers and,
where necessary, for workers perfonning night work. 2
iii. clearance to render night work.
12. NIGHT WORK SCHEDULES.
(b) Provision of social security benefits. - Social security benefits,
such as paid maternity leave shall be provided to women workers in accordance The employer shall at its own initiative, consult the recognized
with the provisions of R.A. No. 8282 (Social Security Act of 1997) and other workers' representatives or union in the establishment on the details of the night
existing company policy or CBA. work schedules and the forms of organization of night work that are best
adapted to the establishment and its personnel, as well as on the occupational
(c) Extension of maternity leave.- Where transfer to day work is not health measures and social services which are required.
possible, a woman employee may be allowed to extend, as recommended by a
competent physician, her maternity leave without pay or using earned leave ln establishments employing night workers, consultation shall take
credits ofthe worker, ifany. 1 place regularly and appropriate changes of work schedule shall be agreed upon
before it is implemented. 3
8. NON-DIMINUTION OF MATERNITY LEAVE BENEFITS UNDER
EXISTING LAWS.
The law and its rules shall not be construed to authorize diminution or ----oOo-----
reduction of the protection and benefits connected with maternity leave under
existing law. 2
9. PROTECTION AGAINST DISMISSAL AND LOSS OF BENEFITS
ATTACHED TO EMPLOYMENT STATUS, SENIORITY AND
ACCESS TO PROMOTION.
Where no alternative work can be provided to a woman employee who
is not in a position to render night work, she shall be allowed to go on leave or
on extended maternity leave, using her earned leave credits.
A woman employee shall not be dismissed for reasons of pregnancy,
childbirth ·and childcare responsibilities. She shall not lose the benefits
regarding her employment status, seniority, and access to promotion which may
attach to her regular night work position.3
10. COMPENSATION.
The compensation for night workers in the fonn of working time, pay
or similar benefits shall recognjze the exceptional nature of night work. 4
Consequently, such compensation shall include, but not be limited to,
working time, pay and benefits under the Labor Code, as amended and under

\ Section 6, ld. Miele 158, ld.

2 Section7,1d.Mide158,1d.
II \ SediJn 9, ld.
2
~160,1d.
3 Section 8, ld. Article 158, ld.

L
4 Artide 159, ld. 3 Sectioo 10, ld. Article 161, ld.
220 CHAPTER IV 221
POST EMPlOYMENT

CHAPTER FOUR 2) Payment of wages or salaries;

3) Exercise of the power of dismissal; ot
POST-EMPLOYMENT 4) Exercise of the power to control the employee's conduct. 1
These tests, however, arenot fool-proof as they admit of exceptions.
TOPICS PER SYLLABUS
2. CONTROL TEST, THE CONTROLLING TEST.
IV. No. 4 above, or the so-called "control test", is the controlling test. It
POST EMPLOYMENT addresses the issue of whether the employer controls or has reserved the right
to control the employee not only as to the result of the work to be done but also
A. Employer-Employee Relationship as to the means and methods by which the same is to be accomplished. 2
1. Tests to determine employer-employee relationship
2. Kinds of employment 3. THE FRANCISCO DOCTRINE: 2-TIERED TEST OF EMPLOYMENT
3. Subcontracting versus Labor-Only Contracting RELATIONSHIP.
a. Elements While the control test may be the most important index to detennine the
b. Trilateral relationship existence of the employer-employee relationship, however, in certain cases, the
c. Solidary liability control test is net sufficient to give a complete picture of the relationship between the
B. Termination of Employment parties, owing to the complexity of such a relationship where several positions have
1. Termination by Employee been held by the worker. There are instances when, aside £:om the employer's
a. Resignation versus Constructive dismissal power to control the employee with respect to the means and methods by which the
2. Termination by Employer work is to be accomplished, economic realities of the employment relations help
l!. Just Causes
provide a comprehensive analysis of the true classification of the individua~ whet..'Ier
b. Authorized Causes as employee, independent contractor, corporate officer or some other capacity.
c. Due Process
l. Twin-notice requirement Recent jurisprudence adds another test, applied in conjunction with the
2. Hearing; Ample opportunity to be heard control test, in determining the existence of ~loyment relations. 3 This is the two-
.!!: Reliefs for lllel;!al Dismissal1 tiered test enunciated in Francisco v. NLRC, which involves an inquiry into the
2 following:
!h Preventive Suspension
C. Retirement (1) The putative employer's power to control the employee with respect to
the means and methods by which the work is to be accomplished
A. [control test}; and
EMPLOYER-EMPLOYEE RELATIONSHIP (2) The underlying economic realities of the activity or relationship
[economic reality testj.5
l.
TESTS TO DETERMINE Employment relationship under the control test is detennined by asking
EMPLOYER-EMPLOYEE RELATIONSHIP whether "the person for whom the services are performed resenres the right to
control not only the end [to be] achieved but also the manner and means [to be
l. FOUR-FOLD TEST.
1) Selection and engagement of the employee; 1 ~Gklbal Comrrunications, klc. v. Oe Vera, G.R No. 157214, .krle 7, 2005.
2 Galego v. Bayer Philippines, Inc., G.R No. 179807, J~ 31, 2009, 594 SCRA 736.
3 See the dissentirYJ opinko of tvt. Justk:e Arhlro BOOn in the 2013 case of Re: Request of (Ret) Chief Justice Artemio V.
1 This topic is designated as No. 3under the general topic of "Due Process.' It is tile view of tile author that this topic P~rim for Re-r.crnpulalio of his Creditable SeiVk:e for the PulpOse d ~ his Retirement Benefits, A.M.
has no direct relation to due process and, therefore, must be treated as aseparate and distinct topic. No.W-9-15-SC, Feb.l2, 2013v.lleretllis 2·1iered1estisexlensWidiscussed.
2 This topic is designated as No. 4 under tile general topic of "Due Process.' For the same reason as above, this 4 G.R. No. 170087, Aug. 31, 2006.
topic should be presented as aseparate and dislinct topic. 5 ld.
222 BAR REVIEW~R ON lABOR lAW CHAI'TERIV 223
POST EMPLOYMENT

used in reaching such] end"1 the broader economic reality test calls for the
detennination of the nature of the relationship based on the circumstances of the
whole economic activity. 2 Under this 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. 3 In the United States, the touchstone
of economic reality in analyzing possible employment relationships for purposes of
the Federal Labor Standards Act is dependency. 4 By analogy, the benchmark of
economic reality in analyzing possible employment relationships for purposes of the
Labor Code ought to be the economic dependence of the worker on his employer.
This two-tiered test provides a framework of analysis which would take
into consideration the totality of circumstances surrounding the true nature of the
relationship between the parties. This is especially appropriate in a case where there
is no written agreement or tenns of reference to base the relationship on and there
exists l complexity in the relationship based on the various positions and
responsibilities given to the worker over the period of the latter's employment.
Applying this tWo-tiered test, the Court ruled that petitioner Angelina
Francisco in this case of Francisco, was an employee of private respondent Kasei
Corporation, where she simultaneously held several positions because she was under
the direct control and supervision of Seiji Kamura, the corporation's Technical
Consuitant. She reported for work regularly and served in various capacities as
Accountant, Liaison Officer, Technical Consultant, Acting Manager and Corporate
Secretary, with substantially the same job functions, that is, rendering accounting
and tax services to the company and perfonning functions necessacy and desirable
for the proper operation of the corporation, such as securing business pennits and
other licenses over an indefinite period of engagement. Under the broader
economic reality test, the petitioner can likewise be said to be an employee of
respondent corporation because she had served the company for six years before her
dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13"'
month pay, bonuses and allowances, as well as deductions and Social Security
contnbutions from August 1, 1999 to December 18, 2000. When petitioner was
designated General Manager, respondent corporation made a report to the SSS.
Petitioner's membership in the SSS as manifested by a copy of the SSS specimen
signature card which was signed by the President of Kasei Corporation and the
inclusion of her name in the on-line inqniry system of the SSS evinces the existence
of an employer-employee relationship between petitioner and respondent
corporation.
Based on the foregoing, it is clear that the two-tiered test gives a complete
picture of the relationship between the parties. Aside from the employer's power to
control the employee, an inqui.'Y into the economic realities of the relationship helps
provide a comprehensive analysis of the true classification of the individuaL whether
as employee, independent contractor, corporate officer or some other capacity.
Following the broader economic reality test, the Supreme Court found
petitioner in Orozco, 1 who is a columnist in the Philippine Daily Inquirer (PDI), not
an employee of PDI but an independent contractor. 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 a.'l independent contractor, engaged to do independent work.
4. SOME PRINCIPLES ON EMPLOYER-EMPLOYEE RELATIONSHIP.
a) There is nv uniform test prescribed by law or jurisprudence to
determine the existence of employer-employee relationship. 2
b) The existence of the employer-employee relationship is essential in
that it comprises as the jurisdictional basis for recovery under the
law. Only cases arising from said relationship are cognizable by the
labor courts.3
c) The relationship of employer and employee is contractual in nature.
It may be an oral or written contract. A written contract is not
necessary for the creation and validity of the relationship. 4
d) Stipulation in a contract is not controlling in determining existence
of the relationship. The employment status of a person is defined
and prescribed by law and not by what the parties say it should be.5
e) The mode of paying the salary or compensation of a worker does
not preclude existence of employer-employee relationship. Thus,
payment by commission6 or on a piece-rate basis7 or.on a "no work,

1 ld.
2. These citlrnstlllces ;re as foi!<wls: (1) The extent kl v.!lidllhe seMce5 perfonned are 111 iniEgral pat It lhe erJ1lloyel's
business; (2) The extent ct the wnef's i1Vestmenl in equ~ !lld fadlities; (3) The nature and degree of cootrol
exeftised by lhe eiJ1ll<7fer; (4) The V«rtef's qlpOrtunily for proiU !lld klss; (5) The amount ct initiative, skil, jJdgmenl or
faesght required b" lhe success ct l1e claired i1dependenl enterprise; (6) The pe1lTI!IlElllcy and duration of the
~ between lhe wner and lhe ~ Cl1d (1) The degree rJ. dependency of the mer upoo 11e employer for
his cootiooed employment illhat line of busiless. (Per Fr!lldsco v. NLRC, Ibid.).
3 ~ v. Pulse Drug~. s21 F.2d 261 (5th cr. 1987).
1
Orozcov. The Fifth DMsioooflheHonorcble Courtof~,GR No.155207,Aug.13,2008.
2 Caurdane!aan Pece WOO:ers Union v.laguesma, G.R No.113542. Feb. 24, 1998,286 SCRA401, 426.
3
MaOO;!al Shipping Co. v. Me!OO, G.R Nos.l-17362& L-17367-69, Feb.28, 1963,7 SCRA330.
4 Corillania.Maritima v. EmestaCiilagrdVda. De Hio, G.RNo.l·10675,Ap!t29, 1960,107 Pti.873.
5 Chavezv.NLRC,G.RNo.146530,Jan.17,2005.
s Lazarov. Social SerurityCoovnissOO, G.R No.138254,July 30,2004.

L
7
4 Weiselv. ~JointVenb.Jre, lnc.,602F2d.1185(51hCir.1979~ lHnbov. NLRC, G.R No.111042,0ct 26,1999,317 SCRA420.
224 BAR REVIEWER ON lABOR lAW
1
no pay" basis does not affect existence of employment
relationship.
f) Retainer fee arrangement does not give rise to employment
relationship. 2
2.
RINDSOFEMWLOYMENT
1. FIVE (5) GENERAL CLASSIFICATIONS OF EMPLOYMENT.
There are five (5) classifications of employment. 3 Article 295 [280]
provides for four (4) kinds of employees, 4 to wit:
(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 fo1 a specific project or undertaking, the compietiou 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 t.'J.e employment is for
the duration of the season; and
(d) Casual employees referring to those who are not regular, project,
or seasonal employees.5
A fifth one, [IXed-term employees, must be added to the above
enumeration.' This, however, is not provided in the Labor Code but recognized
only in jurisprudence. 7
2. CLASSIFICATION OF EMPLOYMENT AS TO NATURE OF WORK.
According to GMA Network, Inc. v. Pabriga,1 pursuant to Article 295
[280],: another classification may be formed in accordance with the nature of
employment, to wit:
1 CRC1¢'1JIJ.raiTra<ilgv.M.RC,G.RNo. 1n664,0ec.23,2009.
2 PfiWile~CamulicaXxls, klc. v. DeVera,GR No.157214,.ltlle7,2005.
3 GIAANe\wo!k, nc.
v. ~a,G.RNo.176419,Nov.27,2013.
~ As expressly reoogni..>ed by the lfr,jh Coort in Leyte GOOhennal Power f'ro.lressiJe Employees UnmALLJ.TUCP v.
~ NatiooaiOil Corqlaly-EneigyDevelopmentCapaab!,GR No.170351, Mtrch 30,2011.
s See 1B> Benares v. Pilldlo, G.R No. 151827, Apli 29, 2005; ~lla v. NLRC, GR 117043, Jan. 14, 1998, 284 SCRA 105,
127; f7rlwine Federation o!Cred"~ klc. v. NLRC, G.R. No. No. 121071, Dec. 11, 1998,300 SCRA n, n;
PelpebJal He~
Credit Cooperative, Inc. v. Fab!Hada, G.RNo. 121948, Oct 8, 2001.
6
GM4. Ne1mik, Inc. v. Pabl'ga, G.R No. 176419, Nov. 27, 2013; L~ Geotilennal Power Pro;jressNe ~Unit&
Al.LJ.nJCPv. Phirippine ~.&Gu~-Enelgy DevelopmentC<xporation, llil., citing Mia WOOd Recruitment, Inc.
v. NLRC, G.R No. 113363,Aug. 24,1999,371 Phil. 745,755-756.
7 Bia1l School, Inc. v. Zlmlra and Alegre, supra; GMA. Network, Inc. v. ~a, supra; Lt"fle Geolhermal f'ctM!r Progressr<e
~ Unioo-Al.LJ.TUCP v. PhiJWile National Oi ~-Energy Development Corpoca!ion, supm.
(HAI'TERIV 225
POST EMPLOYMENT
(1) Employees performing activities which are usually necessary or
desirable in the employer's usual business or trade can either be
regular, project or seasonal employees; while
(2) Those performing activities not usually necessary or desirable in
the employer's usual business or trade are, as a general rule, casual
employees.
The reason for this distinction may not be readily comprehensible to
those who have not carefully studied these provisions; only employers who
constantly need the specified tasks to be performed can be justifiably charged to
uphold the constitutionally protected security of tenure of the corresponding
workers. The consequence of the distinction is found in Article 294 [279] of the
Labor Code? With respect to the activities of project employees, they may or
may not be usually necessary or desirable in the usual business or trade of the
employer, as discussed by the Court in some cases. 4
a.
PROBATIONARY EMPLOYMENT5
l. NATURE OF PROBATIONARY EMPLOYMENT.
A probationary employee is one who, for a given period of time, is on
observation, evaluation and trial by an employer during which the employer
determines whether or not he is qualified for permanent employment. During the
probationary period, the employer is given the opportunity to observe the skill,
competence, attitude and fitness of the probationary employee while the latter
1 G.R No.176419,Nov.27,2013.
2 Mk:te 295 (280]. Regula" i'K1d Gasual ~ - The prcl'visklns ct 'Millen ;~Jreement ID the cootrary notwi1t1stlrldi
i'K1d ftiJadless ct lhe oral ;~Jreement ct the paties, an erllJI:¥nent shal be deemed tl be regtk v.t.ere lhe enl*lYee has
been ~ tl pe!ixm Dlilies Yd1k:h 11e USlJatf nece5Sif)' or desBlle i1 the usual busi1ess <r tade ct lhe ~.
ex~ v.t.ere the~ has been fixed lor aspeci: JXtject« ll1deltakirJ lhe IXlflllleOOn a-leimilation ct>Mlich has
been delenri1ed a 11e 1ine o1 lhe ergaJerrent ct lhe ~a- v.t1ere 11e Y«lfk or service 1D be perbmed is
seasonal i1 nalure cnllhe ef1llbimen! is lor lhe dt.r.Drl cllhe ~
An ~shalbe deemed to be cam Wi is ootrowred by 11e precedi"g ~: Proided, That"''~
v.t1o has rendered a11m one )'19" of service, v.41ether such service is coobJous a- broken, shal be oonsideled areguao
~ v.i1h respect mlhe a:My nv.nm he is errc*lYed iWl tis ef11lk¥nenl shal coo1ilue Wlli! such d.i!y exist.
lfs rerurrbered pu-suant 1D Se:tial5, RA. No. 10151, June 21, 2011 Md OOlE DepMmentAdvi&wy No. 01, Selies of
2015 (Reoorrbe!iv;Jclthe LmCodecllhe f'hiWiles, as Anlended}, issued on JWt 21, 2015).
3 GMA Nelwt:xk, Inc. v. ~. G.R. No. 176419, Nov. 27, 2013. Artk:le 294 [2791 ci lhe Labor Code proWles: 'Seality ol
tenure. -In cases d regli!r employment, lhe ~ shal not lelmilale the seM:es ci an employee except ftr a;JSt
caJSe <r v.toen liJ1taized by lhis Tille. An empklyee v.tlo is llf1usiiY disrilissOO from WOik shaB be 81titled t rei1slatement
v.;tw~loss ci senixi!y riJh1s llld ~ p!Mieges and tl his full backwages, i1cilsWe ci alklwalces, and ID tis other
beOefils or lheir rrooe1irf equN-colent canputed from the line his ~ was v.ilhheld !rem hm up 1o the line of hB
a:~ua~~·
~ .Sudl as Al.LJ.TUCP v. tf.RC, G.R. No. 109902, A!J1. 2, 1994, 234 SCRA 678, 684-686 and receotti reiferall!d i1 Leyte
Geothermal Potier~ ~ Union-Al.LJ.TUCP v. Phili'Pile NaliJnal Oi ~-Energy~
Corporation, G.R No. 170351, Marth 30, 2011.
5 RelevantPro'lision:Aitide 296 (281], Labor Code.
226 BAR REviEWER ON lABOR lAW
CHAPTER IV 227
POST EMPLOYMENT
seeks to prove to the employer that he has the qualifications to meet the
probationary employment, the parties intend to make their relationship regular
reasonable standards for permanent employment.'
after the lapse of the period. In fLXed-term employment, no such intention exists
2. PROBATIONARY PERIOD. and the relationship automatically terminates at the expiration of the period. A
As a general rule, it should not exceed six (6) months from the date the probationary period cannot be stipulated within the fixed period of
employee started working. 2 One becomes a regular employee upon completion employment. 1
ofhis six-month period ofprobation.3 6. SOME PRINCIPLES ON PROBATIONARY EMPLOYMENT.
3. EXCEPTIONS. • The probationary period may be extended but only upon the mutual
The 6-month period provided in Article 296 [281] admits of certain agreement by the employer and the probationary employee. 2
exceptions such as: • An employee who is allowed to work after a probationary period is
1) When the employer and the employee agree on a shorter or longer considered a regular employee.3
period; • Employment is deemed regular if the employment contract has no
4
2) When the nature of work to be performed by the employee requires stipulation on probationary period.
a longer period; • Employee is deemed regular absent any contract to prove probationary
5
3) When a longer period is required and established by company employment.
policy. • Repetitive rehiring of a probationary employee means he has become a
If not one of the exceptional circumstances above is proven, the regular employee. 6
employee whose employment exceeds six (6) months is undoubtedly a regular • Regular workers of previous owner of business may be hired as
employee. 4 probationary employees of new cwner.
1

Buiser v. Hon. Leogardo.5 - The probationary period of 18 months • Probationary employment cannot be ad infinftum.8
was considered valid in the light of the nature of employment of the 7. TERMINATION OF PROBATIONARY EMPLOYMENT.
probationary employees. The company here is engaged in the publication of a. Security of tenure of probationary employees.
advertisements in PLDT's Yellow Pages Telephone Directories. Solicited ads Within the limited 6-month probationary period, probationary
are published a year after the sale has been made and only then can the company employees are entitled to security of tenure notwithstanding their limited tenure
be able to evalu!!te the efficiency, conduct and selling ability of the sales and non-permanent status. 9 Hence, during their probationary employment, they
representatives, the evaluation being based on the published ads. cannot be dismissed except for just or authorized cause or when he fails to
4. PROBATIONARY PERIOD~ HOW RECKONED AND COMPUTED. qualify as a regular employee. 10
b. Grounds to terminate probationary employment
The 6~month probationary period should be reckoned "from the date of
Under Article 296 f281], a probationary employee may be terminated
appointment up to the same calendar date of the rf" month following. n6
only on three (3) grounds, to wit:
5. PROBATIONARY EMPLOYMENT VS. FIXED-TERM
EMPLOYMENT. 1 llililluevav. N..RC, G. R No. 127448, Sept 10, 1998,356 PIU38; Servklad v. tlRC, G.R No. 128682, Mrth 18, 1999,
The intention of the parties (employer and employee) is material. Both 305 SCRA49,55; 364Phi. 518; blodaaPh~piles, ~ v. Quejada-l.opez, G.R. No. 162839, Oct.12, 200i.
involve fixed period in terms of duration of employment. However, in 2 Mariwasa Manufacturing, Inc. v. Leogardo, G.R No. 74246, Jan. 26, 1989; Dusi 1-W tidal v. Ga!bonbl, G.R. No.
161654, tlay 5, mi.
3 ArtDe 296 [281L L.m Code;~ National Balk v. Caba\scg, G.R No. 157010, June 21, 2005; Setvklad v. NLRC,
1 DelaCruz, Jr. v. NLRC, G.R. No.145417, Dec. 11,2003. G.R. No. 128682, Mirdl18, 1999.
2 MX:Ie 296 [281], Lm Code.
4 ATCI Oversem Ccrpaalion v. CA, G.R No. 143949, Aug. 9, 2001; A. MOre1a &Co., tic. v. NLRC, G.R No. 7-1004, Al.g.
3 V(1f€1Jr Visage SWdio, Inc. v. CA, G.R. No. 144939, Mrd118, 2005; t>; PJime Sec:.ni!y Seriices, Inc. v. NLRC, G.R No. 10,1989.
107320,Jat19, 2000. 5 Sal fl9iel Corp. v. Del Rosario, G.R Nos.168194and 168603, Dec. 13,2005.
6 Octaviano, v. NLRC, G.R. No. 88636, Oct. 3, 1991.
' Sall.i]uel Corp. v. Del RosaOO, G.R Nos. 168194 &168603, Dec.13, 2005.
7 Espinav.lbl. CA, G.R. No.164582, March 28,2007.
s G.R.No.L-63316,July31, 1984.
6 Cebu Royal Plant(SMCJ v. Deputy Minister of Labor, G.R. No. L-58639, Aug. 12, 1987, 153 SCRA 38; Cals Poullly
8 Voyeur VISage Studio, Inc. v. CA, G.R. No. 144939, March 18,2005.
SUpplf Coqxxation v. Roal, G.R No. 150660, Jlltf 30, 2002. 9 Ptippile Dai1f lrqlier, Inc. v. Magtibay, Jr., G.R Nc. 164532, July 24, 2007.
10 lacuesta v. Ateneode Mria Unr.oersily, G.R No. 152m, Dec. 9, 2005,477 SCRA217, 225.

...
~
228 BAR REVIEWER ON lABOR lAW
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.'
c. Some principles on termination of employment of probationary
employees.
1. Procedural due process is required only in the case of the first and
second grounds (dismissal due to just or authorized cause). The
third ground (failure to qualify as a regular employee) does not
require notice and hearing. Due process of law for the third grQund
consists of making the reasonable standards expected of the
employee during his probationary employment known to him at the
time of his engagement.2
2. Tennination to be valid must be done prior to lapse of probationary
. d3
peno_.
3. 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. 4
4. Peremptory and arbitrary tennination of probationary employees is
not allowed. 5
5. No obligation to pay unexpired portion in case of valid termination
prior to lapse of probationary period.6
6. Agabon doctrine 7 applies if dismissal of probationary employee for
a just cause is without due process. Thus, the termination is
considered legal but the employee will be awarded an indemnity in
the form of nominal damages ofP30,000.00.8
1 Sedions 2Jl) oodotcJ, Rule I, Book VI, Rules b irr4Jiemeltlhe.Laba"Qxle, as anerded by Artk:le V, lleparbnentOrder
No. 10, Series ct 1997; See aSI Calla'/ Pacii: f.i.vejs, Iii. v. f.lail, G.R No. 148931, Sepl12, 2006; A111ema
Wemc6Jnal Mr1paNer SeMces, tic. v. Vilanos, G.R No. 151303, Apri 15, 2005; Nlerdeen CaJt, tic. v. hjuslil, .t., G.R
No. 149371, Apd 13, 2005.
2 AfWi1e Daiy lnquier, h:. v. Mlgtbay, .t., G.R No.164532, Jlij 24, 2007; ScrneerOierseas Plcmneot~. Inc. v.
N-RC, G.R No. 132564, Oct 20, 1999; Woodridge ScOOol [OON kna.\11 as WoodOO,je College, Inc. v. Benito, G.R No.
160240, Oct 29, 2008.
3 PascrOOa v. NLRC, G.R No. 168421, Jllle 8, 2007; See aso Mria Elecllt Con1Jany v. NLRC, G.R No. 83751, Sepl29,
1989, 178 SCRA.198, 203.
• Sill t.'i;juel Corp. v. Del Rosario, G.R Nos. 168194 ood 168603, Dec. 13, 2005;~u Royal Plant (San Miguel
Corporation] v. Han. Deputy Minister of Labor, G.R. No. L-58639, Aug. 12, 1986.
s Cebu Maline Beach Resort v. NLRC, G.R. No. 143252, Oct. 23, 2003.
6 International GaMIC Mgmtion Con1T1ission v. NLRC, GR No. 72222, Jal. 30, 1989.
7 ~aboo v. NLRC, G.R. No.158693, Nc7J.17, 2004.
a l>be!deen Coort, Inc. v.~ustin,Jr., G.R. No. 149371,Aprit 13,2005.
CHAPTER IV 229
POST EMPLOYMENT
7. Jaka doctrine' applies if dismissal of probationary employee for an
authorized cause is without due process. The amount of indemnity
is higher: P50,000.00.
b.
REGULAR EMPLOYMENT2
l. TWO (2) KINDS OF REGULAR EMPLOYEES.
The regular employees under Article 295 [280] consist of the
following:
(1) Those engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer; and
(2) Those who have rendered at least one (1) year of service, whether
such service is continuous or broken, with respect to the activity in
which they are employed.3
2. THREE (3) WAYS OF ATTAINING REGULA...~ EMPLOYMENT.
Under the Labor Code, regular employment may be attained in either of
three (3) ways, n~ely:
I) 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. 4
2) By period of service. - The employment is reckoned as regular
when the employee has rendered at least one (l) 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.
1 Jaka Foodl'locessi'll Corporationv. Pacxt, G.R 151378, March 28,2005.
2 Relevant Provision: Article 295 [280), labor Code.
3 Sill Mgue1 ~ v. Te<Xlosk:, G.R No. 163033, Oct 2, 2009; Gana v. P~ F'tclltaOOn, Inc., G.R No. 160905,
July 4, 2008. 557 SCRA. 124, 133; Pili¢ Sent:onduc!Ixs [Phis.), h:. v. Fadriquela, G.R No. 141717, ~114, 2004;
t
I Pelpetua ~ Qedit Cooperative, Inc. v. FOOurada, G.R No. 121948, Oct 8, 2001.
i 4 .ArtDe 295 (280), LBbor Code; Paguiov. NLRC, GR No. 147816, May 9, 2003, 403 SCRA 190; VlellleS v. NLRC, G.R No.
' 108405, Apri 4, 2003, 400 SCRA 557.
L.
Article 295 [280]. Labor Code; Conti v. NLRC, G.R No. 119253, Aplil10, 1997, 271 SCRA 114; Pt-dlippi1e Fruit &Vegetille
Industries, loc. v. NLRC, G.R No.122122,July 20,1999.
230 BAR. REVlEWER. ON lABOR lAW
3) By probationary employment. - The employment is considered
regular when the employee is allowed to work after a probationary
period.'
3. SOME PRINCIPLES ON REGULAR EMPLOYMENT.
a. Law presumes regularity of employment. The presumption
having been made by the law itself, it follows that an employee is
deemed regular by operation of law the moment the fact is
established that the nature of his work is directly related to the
2
principal business of the employer.
b. The phrase "to perform activities which are usually necessary or
desirable in the usual business or trade of the employer"
includes performance of peripheral jobs indirectly related to the
principal business of employer.3
c. No declaration or appointment paper necessary to make one a
regular employee. 4
d. Fixed-period employment is the exception to the rule that an
employee becomes regular by reason of nature of work or period of
employment5 because in fixed-period employment, these factors are
not decisive indicators of regularity of employment. The decisive
determinant is the day certain agreed upon by the parties for the
commencement and termination of their employment relationship, a
day certain being understood to be "that which must necessarily
come, although it may not be known when. ,,o
e. Written or oral agreement is inunaterial to determine regularity of
employment. The phrase "the provisions ofwritten agreement to the
contrary notwithstanding and regardless of the oral agreement of
the parties" in Article 295 [280] simply means that irrespective of
any written or oral agreement stating that the employment is not
regular, once the fact is established that the employee has been
engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, his
employment is regular by reason of its nature. 7
1 Mk:le 296 [2811. Labor Code.
2 SeM:lad v. NLRC, modata Phippines, lnc.llnnodata Caporation, TOOd Soklmon,GR No.128682, MaJth 18, 1999,305
SCRA49, 55; 364 Phil. 518;Ph~Semi:oodud!Xs [PitisJ klc. v. FOOriquela, GR No.141717, Apnl14, 2004.
3 Rooaesv. tlRCCild PimicoFoodsCOiporation, G.R No.122327, Allg.19, 1998.
~ Philips Se!ricondudors [f'tli5.], Inc. v. Fad~. G.R No.141717, April14, 2004; De lem v. Nl.RC, G.R. No. 70705,Aug.
21,1989,176 SCRA 615.
5 Brellt School, Inc. v. Zamofa, GR. No. 48494, Feb. 5, 1990.
6 P<r11ranco Nor111 Express, Inc. v. NLRC, GR No. 106654, Dec. 16, 1994; Breot Sd100, klc. v. lanora, G.R No. 48494,
l
( Article 295 [280], labor Code; Section 5~]. ~le I, Book VI, Rukls to iiT1>Iement lhe l.abor Code, as !r11ellded by Article IV,
Feb. 5, 1990.
7 Association ct Trade Unions [ATU] v. Abela, G.R No. 100518, Jan. 24, 2000; S1rllvfguel Corporation v. NLRC, G.R
L
125600, Oct 7, 1998.
l '
.
CHAPTER. IV 231
POST EMPLOYMENT
f. However, there is a need to execute a written employment contract
if the intention is to stipulate on such other kinds of employment
such as probationary, project, seasonal, casual or fixed-term, as the
case may be, because the absence thereof will make the relationship
that of regular employment. It is only by proving the terms and
conditions of the contract that the general presumption that the
relationship is regular in nature would be effectively dispelled.
Jurisprudence abounds where the non-presentation of the written
contract was held as evidence that the status of employment is not
what it purports to be, that is, probationary, project, seasonal, casual
or fixed-term but regular employment.
g. The doctrine of adhesion' applies to employment contracts.2 It must
be emphasized, however, that the rule on the interpretation or
construction of contracts of adhesion does not apply when the
stipulations contained in a contract are not obscure or ambiguous. 3
Besides, a contract of adhesion is not prohibited per se. 4
h. The act of hiring and n:-hiring the employees over a period of time
without considering them as regular empioyees evidences bad faith
on the part of the employer. 5
i. Manner and method of payment of wage or salary is immaterial to
the issue of whether the employee is regular or not. 6
c.
PROJECT EMPLOYMENT7
l.CONCEPT.
Project employees are those hired:
l) for a specific project or undertaking; and
2) the completion or termination of such project has been
detennined at the time of their engagement.8
1 Al1k:le 1377 ct lhe CMI Code p!tl'<ties: 'The i1terprela!ioo ci obscure wads oc stipula1kx1s i1 a contlct shall nd favor 1he
patyv.t.o~lhedlsrurity.'(SeeSeM!adv.NLRC,G.R No.128682,Mrt:h 18, 1999). .
2 Rowell kldustial Cap. v. Hort CA, G.R No.167714, MaJth 7, 2007; Vilanuevav. NLRC, G.R No. 127448, Sept. 10, 1998.
leYerizav. Woonediate Appellale Coort, G.R No.L-66614, Jcn 25, 1988, 157 SCRA 283.
Rizal Conloofdal Banki1g Corporation v. CA. G.R No. 133107,25 Math 1999.
5 ~v.NLRC,G.RNo.111651,March15, 1996.
6 Cdurrbus PllqlpBles8us Corpaalion v. NLRC, G.R. Nos. 114858-59, Sept 7, 2001; Lambov. NLRC, G.R No. 111042,
Oct 26, 1999; Vli.Jga v. NLRC, G.R No. 75038, Aug. 23, 1993, 225 SCRA 537.
RelevMt PrtMsioo: Miele 295 [280], l..aboc Code.
Depatment Order No. 10, Sefies ci 1997; ~ v. Suarez, G.R. No. 151227, July 14, 2008, 558 SCRA 135, 142; D. M.
Consunj.lnc. v. NLRC, G.R No. 116572, Dec. 18, 2000; Association ci Trale Unions [AlU] v. Abella, G.R. No. 100518,
Jan. 24, 2000.
232 BAR REVIEWER ON lABOR lAW
2. TWO (2) CATEGORIES OF PROJECT EMPLOYEES.
In order to safeguard the rights of workers against the arbitrary use of
the word "project" to prevent employees from attaining the status of regular
employees, employers claiming that their workers are project employees should
not only prove that the duration and scope of the employment was specified at
the time they were engaged, but also that there was indeed a "project."1 . own accounting department to which respondent was assigned. This was one of the
The two (2) categories of project employees on the basis of "project"
for which they have been engaged to perform are as follows:
(1) A particular job or undertaking that is within the regular or usual
business of the employer company, but which is distinct and
separate, and identifiable as such, from the other undertakings
of the company; or
(2) A particular job or undertaking that is not withi:t the regular
business of the corporation.2
In the realm of business and industry, we noie that 'project'
could refer to one or the other of at least two (2) dist!nguishable tvpes
of activities. Firstly, a project could refer to a particular job or
undertaking that is wiJhin the regular or usual business of the
employer company, but which is distinct and separate, and
ider.tifiable as such, from the other undertakings of the company.
Such job or undertaking begins and ends . at determined or
determinable times. The typical example of this first type of project is
a particular construction job or project of a construction company. A
construction company ordinarily carries out two or more [distinct]
identifiable construction projects: e.g., a twenty-five-storey hotel in
Makati; a residential condominium building in Baguio City; and a
domestic air terminal in Iloilo City. Employees who are hired for the
carrying out of one of these separate projects, the scope and duration
of which has been determined and made known to the employees at
the time of employment, are properly treated as 'project employees,'
and their services may be lawfully terminated at completion of the
project.
The term 'project' could also refer to, secondly, a particular job
or undertaking that is !:!Q1 within the regular business of the
corporation. Such a job or undertaking must also be identifiably
separate and distinct from the ordinary or regular business operations
GM\Nellllllk, kic. v.~. G.RNo.176419,Nov.27,2013.
aso
Al.lJ.TUCP v. NLRC, G.R. No. 109902, 1\!JJ. 2, 1994, 234 SCRA 678, 684-686. See GMA. ~. D:. v. PIMJa,
supm; l.efe Geollen'lla Power PI!JJressi.'e ~ Uniln-AI.lJ.1UCP v. Phftppine National Oi ~ - Enelgy
~capaation. G.R. No.170351, Manil31l, 2011.
CHAPTER IV 233
POST EMPlOYMENT
of the employer. The job or undertaking also begins and ends at
determined or determinable times. 1
In PLDT v. Ylagan/ the Court held that accounting duties were not
shown as distinct, separate and identifiable from the usual undertakings of therein
petitioner PLDT. Although essentially a telephone company, PLDT maintains its
reasons why the Court held that respondent in said case was not a project employee.
On the other hand, in San Miguel Corporation v. NLRC/ respondent
was hired to repair furnaces, which are needed by San Miguel Corporation to
mall.ufacture glass, an integral component of its packaging and manufacturing
business. The Court, finding that respondent is a project employee, explained that
San Miguel Corporation is not engaged in the business of repairing furnaces.
Although the activity was necessary to enable petitioner to continue manufacturing
glass, the necessity for such repairs arose only when a particular furnace reached the
end of its life or operating cycle. Respondent therein was therefore validly
!.:onsidered a project employee. 4
In GMA Network, !nc. v. Pabri2a,S respondents were hired and assigned
by petitioner to the following tasks (l) Manning of Technical Operations Center;6
(2) Acting as Tra.'lSmitter/VTR men; 7 (3) Acting as Maintenance staff;8 and (4)
Acting as Cameramen. These jobs and undertakings, according to the Supreme
Court, are clearly within the regular or usual business of the employer company and
are not identifiably distinct or separate from the other undertakings of the company.
There is no denying that the manning of the operations center to air commercials,
acting as transmitter/VTR men, maintaining the equipment, and acting as
cameramen are not undertakings separate or distinct from the business of a
broadcasting company. Petitioner's allegation that respondents were merely
substitutes or what they call pinch-hitters (which means that they were employed to
take the place of regular employees of petitioner who were absent or on leave) does
not change the fact that their jobs cannot be ronsidered projects within the purview
of the law. Every industry, even public offices, has to deal with securing substitutes
1 ~supplied. AI.U.TUCP, ~·See aso ~ v. Nl.RC. G.R No. 100333, Mcrth 13, 1997; Cosmos Botlli1g
Coqxxation v. NlRC, G.R No. 106600, Wath 29, 1996; Vila v. NI.RC, G.R. No: 117043, Jan. 14, 1998, 284 SCRA 105;
348 Phil116, 143; A8SCBN lioadcaslirY;J Corp. v. Nazareno, GR No. 164156, Sept 26,2006.
2 G.R No. 155045, NaY. 24, 2006, 508 SCRA 31; 537 Phi. 840.
3 357 Phi 954 {1998).
~ GW.Net.lm, Inc. v. Pab!J;!a, G.R No.176419, Nov. 'l7, 2013.
G.R No. 176419, Nov. 27,2013.
Pe!fonni'g the~ fullCOOns: {a) Re5pO!lSi!Jefor1he airing ofklcaiCiliTfTieltia!s;and (b)~ of national
~(satellle).
7
Perfooniig the folkMilg fullCOOns: {a) Prepare tapes for local ai~; (b) Ac\Jal airing of corrrnertials; (c) 1\Jggilg of slaOOn
l 8
prorro; (d)l.o'Jgilg oflranSrlitterreadilg; and (e) In case o!Jl(MI!ffaikJre, stlKtupgeneratorsettlrest.me~.
P~ the followiig functions: {a) Oleckilg mequ~ (b) Wcrmilg up of generator; {c) Fifing of oi, fuel, and water
L
il radiafor.
234 BAR REviEWER. ON lABOR lAW
for employees who are absent or on leave. Such tasks, whether performed by the
usual employee or by a substitute, cannot be considered separate and distinct from
the other undertakings of the company. 1
While it is management's prerogative to device a method to deal with this
issue, such prerogative is not absolute and is limited to systems wherein employees
are not ingeniously and methodically deprived of their constitutionally protected
right to security of tenure. We are not convinced that a big corporation such as
petitioner cannot device a system wherein a sufficient number of technicians can be
hired with a regular status who can take over when their colleagues ;;rre absent or on
leave, especially when it appears from the records that petitioner hires so-called
pinch-hitters regularly every month. 2
3. LITMUS TEST OF PROJECT EMPLOYMENT.
The litmus test of project employment, as distinguished from regular
employment, is whether or not the project empioyees were assigned to carry out
a specific project or undertaking, the duration and scope of which were specitied
3
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
4
or determinable times and be informed thereof at the time of hiring.
4. PROJECT EMPLOYMENT VS. REGULAR EMPLOYMENT.
1. The services of project employees are coterminous with the project
or any phase thereof and may be terminated upon the end or completion of the
project or phase thereof for which they were hired. Regular employees, in
contrast, enjoy security of tenure and are legally entitled to remain in the service
of their employer and to hold on to their work or position until their services are
tenninated by any of the modes of termination of service recognized under the
Labor Code.5
2. Due process likewise varies. In case of project employment, if the
tennination is brought about by the completion of the project or any phase
.thereof: due process is complied with even if no prior notice of termination is
served. For termination of regular employment, the due process required would
1 GMA Ne1wo1k, klc. v. ~ G.R No.176419, Nov. 27,2013.
2 ld.
3 Ar1i:1e 295 [28011..aboc Cede; Leyte Geol1ermal Ptwler ~ ~ lJnioo.ALU-lUCP v. ~National{)~
~-EnelgyDevelopmen!Caporalkln, supa; Dao.ital v. LM.CoollsErgileerilg Corp., G.Ritl.176748, Sept. 1,
2010; Equipment T«hni::al SeM:es v. CA, G.R No. 157680, Oct. 8, 2008; Haljil Heavy Industries~ Conslrudion Co.,
lil. v.lba'iez, G.R 1'«!. 170181,Jl.lle26,2008, 555 SCRA537, 553;.
~ Galla v. ~ Plallalion, kloo'p<Jated, G.R No. 160905, .JtKt 4, 2008, 557 SCRA 124, 134; Caseres v. Unwer.;al
Robina SUga' Mlilg Corp. [URSUI£0L G.R l'«l. 159343, Sept 28, 2007; ~ MaintenallCe SeM:es, b1c. v.
Chanlengro, G.R No. 156146, June 21, 2007.
s Mllenninll Erec1Ixs Co!polalion v. Magaftanes, G.R No. 184362, Nov. 15, 2010; Equ~ Tedlnic<i Se1vioos v. Court of
~. G.R No.157680, Oct. 08,2008,568 SCRA 122, 130.
CHAPTER IV 235
POST EMPlOYMENT
necessarily depend on the ground cited. If the termination is for just cause, due
process applicable to Article 297 [282] terminations applies. If due to authorized
cause, due process applicable to Articles 298 [283] and 299 [284] terminations
should be followed.
5. INDICATORS OF PROJECT EMPLOYMENT.
a. 6 indicators of project employment.
Either one or more of the following circumstances, among others, may
be considered as indicator/s that an employee is a project employee:
1. The duration of the specific/identified undertaking for which the
worker is engaged is reasonably determinable.
2. Such duration, as well as the specific work/service to be performed,
are defmed 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. The terminaiion of his employment in the particular
project/undertaking is reported to the Regional Office of the
Department of L:tbor and Employment having jurisdiction over the
workplace, within thirty (30) days following the date of his
separation from work, using the prescribed form on employees'
terminations or dismissals or suspensions.
6. An undertaking in the employment contract by the employer to pay
completion bonus to the project employee as practiced by most
construction companies. 1
b. Some principles on project employment.
1. Project employees should be informed of their status as such at
inception of the employment relationship. 2
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.3
3. A ~itten project employment contract is an indispensable
requrrement.
1 Section 22., ~<ltderNo. 19, Selies of ~993.
2 .6Jlesco Construdloo lYld Oevelopmel1t{;ap. v:Raniez, {l.R 1'«!. 141168, Apri110, 2006.
3 ld.
236 6AR REviEWER ON lABOR lAW
4. Failure to present contract of project employment means that
employees are regular. 2
5. Regular employment is inconsistent with project employment. In
other words, a regular employee cannot be at the same time a
project employee.3
6. Intervals in employment contracts indicate project employment. 4
7. Continuous, as opposed to intermittent, rehiring shows that
employee is regular.
8. "Project-to-project" basis of employment is valid. 6
9. Length of service is not a controlling determinant of employment
tenure. 7
10. Project employment should not be confused with fixed-term
employment to justify continuous rehiring of so-called project
employees. 8 ·
c. "Work pool" principle.
As a general rule, employers may or may not form a "work pool. " A
"work pool" refers to a group of workers from which an employer like a
construction company draws the workers it deploys or assigns to its various
projects or any phase/s thereof. Members of~ "work pool" may consist of:
1. Non-project employees or employees for an indefinite period. If
they are employed in a particular project, the completion of the
project or of any phase thereof will not mean severance of
employer-employee relationship.
2. Project employees. These workers in the work pool who are
employed in a particular project or in any phase thereof are
considered as such if they are free to leave anytime and offer their
services to other employers.'
Mere membership in a "work pool" does not result in the workers'
becoming regular employees by reason of that fact alone. 10 However, under
established jurisprudence, a project employee who is a member of a "work
1 Abesco ConslructiJn 11\d Oe'JelopmertCoql. v. Raniez, G.R No. 141168, April tO, 2006; Section 22, Depa1ment Oilier
No. 19, Series a1993, Guileiles Govemilg 11e ~loymenta Workels nile Coosbuctioo h'ldusby.
2 HajJ Heavy hluslries 11\d Cooslrudioo Co, Lid. v.llaiez, GR. No. 170181, June 26, 2008.
3 M¥p1as v. N-RC, G.R No.100333, Mlrd113,1997, 269 SCRA453, 468.
4 Palomares v. NLRC, G.R No. 120064, Aug.15, 1997.
s PIDTv. ~. G.R. No.155645, Nov. 24,2006.
6 Salinas v. NLRC, G.R No. 114671, Nov. 24, 1999.
7 F~ v. Sal !Ji;juel Capocatioo, G.R No. 150658, Feb. 9, 2007.
B Mlillem 11\d Fbres v. Manilas ln<iJstria Corp., G.R No. 20t:t$, Feb. 26, 2014.
9
Under Policy lnslructions No. 20; Rayccr Ai'COnb'ol Systems, Inc. v. NLRC, G. R No. 114290, ~ 9, 1996,261 SCRA
589.
1o AbescoCoos!ruction!lld~Corp. v. Ramirez, G.RNo. 141168,April10, 2006.
Jf
CHAPTER IV :!37
POST EMPLOYMENT
I pool," may attain regular status as a project employee. This kind of employee
is known as "regular project employee. "
\ 6. TERMINATION OF PROJECT EMPLOYMENT.
1) Project employees enjoy security of tenure only during the term of
their project employment. 1
2) If the project or the phase thereof on which the project employee is
working has not yet been completed and his services are terminated
without just or authorized cause and there is no showing that his
services are unsatisfactory, such termination is considered illegal,
hence, the project employee is entitled to reinstatement to his former
position or substantially equivalent position. If the reinstatement is
no longer possible, the employee is entitled to his salaries for the
unexpired portion of the agreement. 2
3) Project employees are not, by law, entitled to separation pay if their
services are termiMted as a result of the completion of the project or
any phase thereof in which they are employed. The reason is that
their services are deemed coterminous with the project or phase
thereof. 3
4) 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 catain"
which they and their empioyer 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. 4
5) Advance notice of termination of project employment is not
required.5
6) Report to DOLE on termination of project employees is required. 6
Report should be made after every completion of project or phase
thereof. 7
1 Tomas lao Construdion, v. NLRC, G.R No.116781, Sept 5,1997.
z fqJinas Pl&f<iri:a!W MOOg Syslems [RsyslemsLinc. v. Puente, G.R No. 153832. Mardl18, 2005.
3 Section 32., Depment Older No. 19. Series ct 1993, GuCeli1es GovemilQ 1he ~ a wcaers i1 lhe
Coos!r\dioo kWslry ~supersedes Policy k1slrucOOns No. 20 of 1977; Saberda v. SUarez, G.R No. 151227, July 14,
2008; Salazarv. NLRC, G.R No. 109210, ~ 17, 1996, 256 SCRA 273.
4 See Dacui1alv. L.M Camus Eng~ C<xp., G.R No.176748, Sept 1, 2010.
5 Ci:loo ¥. C. E. Coos1ru:tioo Corporation, {l.R No. 156748, Sept 8, 2004.
6 Depal1ment Older No. 19, [Ap1i 1, 19931 Cioco v. C. E. Ctl1sN:Iion Cocporalioo, supra; See also PIDT v. Ylagan, G.R.
No.155645, Nov. 24, 2006; Phesco,lnc. v. NLRC, G.R Nos.1044#49, Dec. 27, 1994.
7 Oacuilal v. LMCMl!S Engilee!ilgiJO!p., GR No. 176748, Sept 1, 2010; Equ¢ient Tedmical SeM:es v. CA, GR No.
157680, Oct 8, 2008; Goma v. Pan"cllona f'm1alion,lnc., G.R No. 160905, Julf 4, 2008; Belle Corp. v. Macasusi, G.R. No.
168116,1\p!i 22,2008.
238 BAR REviEWER ON lABOR lAW CHAPTER IV 239
POST EMPlOYMENT

7) Payment of completion bonus is an indicator of project e.

employment.' CASUAL EMPLOYMENT1
8) Burden of proof in termination of project employment rests on the
employer.2

SEASONAL EMPLOYMENT
d.
3
I
i
1. MEANING OF CASUAL EMPLOYMENT.
There is casual employment where an employee is engaged to perform
a job, work or service which is merely incidental to the business of the
employer, and such job, work or service is for a definite period made known to
1. CONCEPT.
the employee at the time of engagement. 2
A "seasonal employee" is one whose work or service to be performed
2. SOME PRINCIPLES ON CASUAL EMPLOYMENT.
is seasonal in nature and the employment is for the duration of the season. 4
• Casual employee becomes regular after one year of service by operation of
2. REGULAR SEASONAL EMPLOYMENT.
law?
Seasonal employees may attain regularity in their employment as such. • No regular appointment papers necessary for casual employees to become
Once they attained such regularity, they are properly to be called "regular 4
regular.
seasonal employees. "
• The one (1) year period should be reckoned from the hiring date. 5
Regular seasonal workers are called to work from time to time, 6
• Repeated rehiring of a casual employee makes him a regular employee.
mostly during certain season. The nature of their relationship with the emplay~r
• The wages and benefits of a casual employee whose status is converted Into
is such that during off-season, they are temporarily laid off but they are re- 7
regular employment should not be diminished.
employed during the season or when their services may be needed. They are not,
strictly speaking, separated from the service but are merely considered as on f.
leave of absence without pay until they are re-employed. Their employment FIXED-TERM El.VIPLOYMENT8
relationship is never severed but only suspended. As such, they can be
considered as being in the regular employment of the employer.5 1. REQUISITES FOR VALIDITY OF FIXED-TERM CONTRACTS OF
EMPLOYMENT.
3. REQUISITES FOR REGULAR SEASONAL EMPLOYMENT.
The requisites in order that a seasonal employee may be deemed to The two (2) requisites or criteria for the validity of a fixed-term
have attained regularity of employment are as follows: contract of employment are as follows:
l) The seasonal employee should perform work or services that are l. The fixed period ofemployment was knowingly and voluntarily
seasonal in nature; and agreed upon by the parties, without any force, duress or improper
2) They must have also been employed for more than one (l) season. pressure being brought to bear upon the employee and absent any
other circumstances vitiating his consent; or
Both requisites should concur in order that the employee may be
classified as regular seasonal employee. If the seasonal worker is engaged
only for the· duration of nne {1) season, then, he does not attain regularity of 1 Relevant Provisioo: Article 295 (2801. Labor Code.
employment as a seasonal worker. 6
2 Article 295 [280J.labor Code; Section 5!bJ, Rule llloii VI, ~ 1D kr(llement lle Lalor Code, as cvnended by Ar1k:le IV,
Depmen!OrderNo.10,Seriesd1997;Cootiv.NLRC, G.R No.119253,Apri10, 1997,271 SCRA 114.
3 Section 5 Jl], Rue I, Book VI, Rules 1D ~ lhe l.alxJ Code, as 811el'ded by Article IV, Oepa1ment O!tfer No. 10,
Series of 1997; ~. v. NLRC, G.R. No. 9J653, NcN. 12, 1990.
1 Section 3.4. of Department Order No. 19, Series of 1993; Hajl!S.y b1dustries ll1d CoostnJdioo Co, Lid. v. ba'iez, ~ Ki1ilertf b1depeodent labor lJnklo u SoiKlriy, ~ !l1d Na!WismOig<rlized tm AssociaOOn nL.ile Industries
GR No. 170181. .ltme 26, 2008. . ll1d h;jricultl.re v. O!bl, G.R Nos. 77629 !l1d 78791, May 9, 1990, 185 SCRA 190; See also Kay Products, nc. v. CA,
2 Southern Co1aba1o Develojxnent!lld Construction, Inc. v. NLRC, G.R No. 121582, Oct 16, 1997, 280 SCRA 853. G.R. No. 102472, !Jtf 28, 2005; Cebu Engi:Jeem;J Md Oewlopment~. Inc. v. NLRC, G.R. No. 118695, Apnl22,
3
4
Relevcrlt PIMion: Article 295 [280], La:lorCode.
Article 2951280], t.m Code; Section 5, Rule I, Book VI of lhe Rules 1D kr(llement the Labor Code.
i 5
1998.
Kimbef1y-Ciarll [Phils.L Inc. v. Secretary of labor, G.R No. 156668, NcN. 23, 2007.
5 Abasobv. NLRC, G.R No. 118475, Nov. 29, 2000; Bacolod-MJrtia Mlfrg Co, Inc. v. NlRC, GR. No. 84272, Nov. 21, Tan v. la;jrana, G.R. No. 151228, Aug. 15, 2002; Romares v. NLRC, G.R No. 122327, Aug.19, 1998.
1991, 204 SCRA 155, 158; VJSaYOO Si!Yedore Tr<riSp<lrtaOOn ~v. CIR, No. L-21696,Feb. 25, 1967. PlliiWi:le ArreOCa1 Mm;jement Association, v. CIR, G.R No. L-37206, Apnl15, 1988.
6
Hacienda Fatima v. National Federation of Sugarcane WorkeiS- Food and General Trade, G.R. No. 149440, Jan.
8 Relevantfll'ovi;Q]: No Labor Code provision on fixed-lE!m employment (Brent School, Inc. v.lamora arid Alegre, G.R No.

L l .
28,2003. 48494, Feb. 5, 1990).

.
 CHAPTER IV 241
BAR REviEWER ON lABOR lAW POST EMrLOYMENT
240
• Liability for illegal dismissal of fixed-term employee is only for salary for
2. It satisfactorily appears that the employer and employee dealt with unexpired portion. 2
each other on more or less equal terms with no moral dominance
1 3. FIXED-TERM EMPLOYMENT OF OFWs.
whatever being exercised by the former on the latter.
If the foregoing criteria are not present, the ftxed-term contract of • OFWs can never acquire regular employment.3
employment should be struck down for being illegal.
2
• Employment contracts ofOFWs for indefmite period are not valid. 4
• OFWs do not become regular employees by reason of nature ofwork. 5
2. SOME PRINCIPLES ON FIXED-TERM EMPLOYMENT.
• Series ofrehiring ofOFWs cannot ripen into regular employment.6
• Fixed-term employment is valid even if duties are usually necessary or • CBA cannot override the terms and conditions prescribed by the POEA
desirable in the employer's usual business or trade? under the Standard Employment Contract {SEC) for OFWs. 7
• Notice of termination not necessary in fix~d-term employment.
4 8
• Probationary employment ofOFWs is a misnomer.
• Employee is deemed regular if contract failed to state the specific fixed • The employment of OFWs for a fixed period is not discriminatory.'
5
period of employment. • The contracts ofOFWs cease upon expiration thereof. 10
• Charges for misconduct or other wrongful acts or omissions are relevant • Hiring of seafarer for overseas employment but assigning him to local
only in termination prior tc expiration of the term. They are not relevant if
6
vessel does not affect his status as an OFW. 11
termination is due to expiration offtxed period. ~ Seafarer hired for overseas deployment but later assigned to domestic
• Employees allowed to work beyond ftxed term become regu~ar cmployees.
7

8
operations after the expiration of his overseas contract ceases to be an
• Rendering work beyond one (1) year would result to regular employment. OFW. 12
• Successive renewals of fixed-period contracts will result to regular 3.
9
employment. SUBCONTRACTING VERSUS
• Hiring of employees on a uniformly fixed 5-month basis and replacing them
LABOR-ONLY CONTRACTING
upon the expiration of their contracts with other wqrkers with the same
10
employment status circumvents their right to security oftenure. (NOTE: To provide for a more comprehensive discussion,
• Employment on a "day-to-day basis for a temporary period" will result to the topics in this section are re-arrangl!d accordingly).
11
regular employment. 1. JUDICIAL RECOGNITION OF VALIDITY OF OUTSOURCING.
• Termination prior to lapse of fixed-term contract should be for a just or
authorized cause.
1 The validity of outsourcing has been judicially recognized by the
Supreme Court. It has already taken judicial notice of the general practice
adopted in several government and private institutions and industries, of hiring
1 Plilippi1e Natiala Oil~ ~capoo611v. NI.RC, G.R No. 97747, t.tltt131, 1993; Seeaso independent contractors to perform special services. These services range from
~ ~ [Phis.1 nc. v. F!Diquela, G.R No.141717, Apri 14, 2004; ~ v. MY. Soo Broil;, klc., G.R
No.148102,.kif 11,2006; Medellllav. Phii'IJil(ieVeB111SBlri. G.R No.127673,Mrch 13,2000.
2 Pure Foods Colporalion v. NLRC, G.R. No.122563, Dec. 12, 1997,283 SCRA 133.
1 Medenilav. Phii!Jpi1e Ve1ErMs Bri, ilfra;<leage Anderson v. NLRC, G.R No. 111212,Jan. 22, 1996,252 SCRA 116;
322 Phi. 122, 137.
3 ~v. CA, G.R No.155505, Feb.15, 2007.
4 PcrQiinM v. Genem1 Mil'o;J Colpaation, supra; Bm:alorv. NI:RC, G.R. No.101013, Feb. 2, 1993,218 SCRA 366; New 2 New Stme Melal Conslruclion v. Pia, G.R No. 171131, Julf 10, 2007.
3 See second 2002 Resolution i1 M11ares v. NLRC, G.R No. 110524, July 29,3102, 385 SCRA 306.
Sunrise Met!! CoosnJcb1 v. Pia, G.R No. 171131, July 10, 2007. 4 Pentagon lntemalional Shipping,lnc. v. Adelantar, G.R No.157373, Joly 27,2004.
5 Poseidoo FJShi"g v. NlRC, G.R No. 168052, Feb. 20, 2006. 5 Gu-Mirov. Adorable, G. R. No. 160952, Aug. 20,2004.
s MIA Ca11Ju~erCollege,Pcrlllaque, v. Auslrla, G.R No.1&1078,tb.23,2007. 6 ld.
7 V~e~~~es v. NLRC, G.R No. 108405, April4, 2003. 7 De La Cruz v. Maersk F~ Crewi1g,lnc., G.R No. 172038,1\!Jii 14, 2008.
8 Megascope General Services v. NLRC, G.R. No. 109224, June 19, 1997, 274 SCRA 147, 156; PQusoo del Nate
8 Mllares v. NLRC, G.R No. 110524, July 29,2002,385 SCRA 306; See amtiel.a Cruz v. Maersk Fl'ip~ Crewilg, inc.,
Eledric ~.Inc. v. Ca':J;vnpcrlQ Md G!rzoo, GR No. 167627, Ocl10, 2008.
9 PhRips Semiconductors [Phils.l,lnc. v. Fadliquela, G.R. No.141717, April14, 2004.
G.R No.172038, Apri114, 2008. .
9 Ravagov. Esso Eastern Marine, ltd., G.R. No.158324, Mall:h 14,2005.
10 Pure Foods Corporation v. NLRC, G.R No. 122653, Dec. 12, 1997, 283 SCRA 133; Universal ROOina Cap. v.
1o Ravago v. Esso.Emn Maile, Ud., supra; MUares v. NLRC, SUJllll.
~. G.R. No. 164736, Ocl14, 2005. 11 OSM Shippirij PhRiJpiles, Ire. v. NLRC, G.R No. 138193, March 5, 2003.
11 ~ 8otllers Pills., ~rc. v. De 1a eruz. G.R. No. 1849n. Dec. 1. 2009; P~rg v. CocaQIIa Phiippines, Inc., GR
12 Delos SMIDsv. Jebsen Mamine, Inc., G.R. No.154185, Nov. 22,2005.
No. 157966, Jan. 31, 2008; Magsafn &CocaQIIa BdiJers Phis., Inc. v. National OtganWt tt Woll<ing Wen (N.O.W.M.).
G.R. No. 148492, Mrf9,2003.
242 BAR RE\IltwER ON lABOR lAW
janitorial, security and even technical or other specific services. While these
services may be considered directly related to the principal business· of the
employer, they are not necessary in the conduct of the principal business of the
employer. 1 · 106 to 109 of the Labor Code, as Amended "1 Indeed, the DOLE Secretary is
2. LABOR CODE PROVISIONS ON JOB-CONTRACTING OR
CONTRACTUALIZATION.
There are only four (4) provisions in the Labor Code which directly
enunciate the rules on contractualization, to wit:
1. Article 106 - Contractor or Subcontractor;2
2. Article 107- Indirect Employer; 3
3. Article 108- Posting ofBond;4 and
4. Article 109- Solidary Liability.5
These articles and relevant DOLE issuances will be discussed below.
3. DEPARTMENTORDERNO.li4, SERIES OF 2017- THE
PREVAILING IMPLEMENTING RULES.
Despite the fact that there has been no amendments to the afore-
mentioned articles in the Labor Code, quite a number of Implementing Rules
1 lifHrlaS Syn1helic Filer Colpaalioo lfiLSYN] v. NI.RC, G.R No. 113347, Jooe 14, 19&6; Neri v. NLRC, GR Noo. 9700&-
09, Jlij 23, 1993, 224 SCRA 7171; Rhooe Poolenc -~ Phiippiles, Ire. v. N..RC, G.R Noo. 102633-35, Jcn
19, 1993; Ki1teftt Independent l.aba' 1.001 b' Sdmily, Activism C!1d ~ t.m Associalixl il Li1e
klOOsbEs Md Pl;lricui\Jre [KJLUSAN-OI.ALIA) v. Db!. G.R No. 77629, May 9, 1900, 185 SCRA 190, 205.
2 Mi:le 100. CooradDr a SlbcoolraclDr. - W1eneYef 111 ~ entss iltl a cOOIIa:t r.i!h a1G'I1er JlEm1 for f1e
pe!foonallCe ol1he foonits work. the en1)loyees cl1he cool!ackr Md cl1he Ws subc:tmcb', I <Iff, shall be pad il
axx:xda1ce IWI1 the provisioos d this Code. . Based on the foregoing, the party which contracts with the principal is
n1he event lhat 1he c:®acb' cr ~ fais t pay the wages d his EfTilllYees il accordooce l\il !his Code, the
~shal be pi1tt; Md ~ iable lrih lisma:tx' aSilbo:Jnirocb'tsuch ~to the eMent cllle ~
perfmned tllds'llecoollacl, illlescrne mmrMdextentllathe is liable t~~~by hin.
The Secrelily d l.tbJ 11111 ~ II!Clf, by~ reg1Etions,18S8:1 cr proljllt lite~ lllcmor t
pcW!Ct 11e ~ d ~ estallisha!IRier llis Code. n so ~ a restalg, he may nae ~
clsfi1clbls beMeen lcmor-ooly Clll'ilr.l:fhJ Md pi ~ as wei as llfealliabiS d1il flese l)1les II amc&1g
!I'd delemi1e v.tlo II1100J the pMies tMMd shal be cmsi!ered f1e ~ b' jilrposesd tlis Code, to pevenl iff'/
WJiation a ci'aln'wntioo d 1l1f pnMsi:ln !IIIlis Code.
There is 'IIIler-or#( C001radiY,J where lite peoo1 ~ Yme!S to 111 el1'4iJ'ier does rd 11M~~ cr
ilvesfment illle bm d Dis, ~ nmileries, ~ prenises, ilf1lX'9 oilers. 11111 the defS reau1Ed Md
p1cm1 by such persoo ;re pecfiJmilg a:tivities r.ft1t ~~e ciredtf related to llejlfiqJal busi1ess «m ~- nsuch
cases. toe peiSOn a ilfenneciary shaR be tooSide'ed merely' as M agent d the~ v.tlo shal be responsllle t the
defS il the sane !MYlei'Md extent as I the lal!rYII!f'e d'redtf en¢'fed by hin.
3 Mal 107. kldiect ~- -The ~II the iTmedialely ~ ri:le shall ikev.ise IWf t Tiff pe!SOil,
~. associatioo a COipOOIIioo m, n1t bei1g m ~. IXXltu wih 111 ildependent ta'llrm b' 11e
perfamance d aiT'f work,1ask, .00 or. projel;t.
4 Ar1i:te 108. PostiYJ d Bond. - fvl E!lf4lioyel cr i1<iect ~klyer may require the cooP:IDr cr sWcomadlr t foolish a
ba1d ec,.Jal Ul tl1e w;t of labor lllder IXX\R:t, Cl1 ton<iliCI1 flat the bald Yoil ii1SWer b' lhe wages due lhe ~
should the IXXltracUlr or subcontacb',as lhe case may be,lail t pay 11e scme.
s Ari:le 109. Soiday l.iabity.- The proW;iCI1s c1 exSti1g laws ID the cootray ~.IM!:f ~a ildi:ect
~ shal be hek1 responsiJie v.ilh his oordJadDr or subcootradl:r lor <Iff vWiJn of Cl'tf pn:Msion d llis Code. Fa
purposes ddelenri1i'l;l the extentoftheircivi Ially undertlis ~. 1hey shalbe ronsklered as <fred~.
-~,.
CH,o;.PTERlV
243
POST EMPLOYMENT
have been issued by various DOLE Secretaries over the years, the latest of
which is Department Order No. 174, Series o/2017, issued by DOLE Secretary
Silvestre H. Bello III on March 16, 2017 entitled "Rules Implementing Articles
possessed of the power to 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. 2
1.
CONTRACTING VS. SUBCONTRACTING
The Syllabui uses the term "subcontracting" instead of
"contracting" which is the more appropriate term. To avoid any confusion,
there is a distinction between these two terms, which the iaw itself, Article 106
of the Labor Code, makes, to wit:
"Article I06. ConJrador or SubCIJntractor. - Whenever an employer
enters into a contract with another person for the perfonnance of the
fonner's work, the employees of the contractor and of the latter's
subcontractor, if any, shall be paid in accordance with t.~e provisions of
this Code.
"In the event that t.'le contractor or subcontractor fail~ to pay the wages
of his employees in accordance with this Code, the employer shall be
jointly and severally liable with his contractor or subcontractor to such
employees to the extent of the work petfonned under the contract, in the
same manner and extent that he is liable to employees-directly employed
by him."
the "contractor"; while the party which subcontracts with the contractor is
called "subcontractor." "The term "contracting", therefore, should be
correlated to the "contractor"; while the word "subcontracting", should be
used in relation to the "subcontractor."
However, under D.O. No. 174, the foregoing distinction is no longer
underscored in the defmition of terms. Thus, it appears now that the foregoing
terms may be used interchangeably for they are now {{efined as follows:
(l) "Contracting" or "Subcontracting" - refers to an arrangement
whereby a principal agrees to farm out to a contractor the
performance or completion of a specific job or work within a
1
This issuance supefSeded Depatrrent Order No. 18-A, Series d 2011 ·[NcNember 14, 20111. Past siiir issla1ces are
Oepament Otder No. 1~. Series d 2002lfebruay 21' 20021, Md Depment Order No. 3, Series d 2001 [May 08,
20011 Mmg olhels.
1
SeeSedion4, DepatlmeotOrderNo. 174, Seriesol2017.
3
RereniYJ 1D the 2017 S)tabus.
244 BAR REVIEWER ON lABOR lAW
defmite or predetennined period, regardless of whether such job or
work is to be performed or completed within or outside the
1
premises of the principal.
(2) "Contractor" - refers to any person or entity engaged in a
legitimate contracting Q! subcontracting arrangement providing
services for a specific job or undertaking farmed out by principal
2 b. Contractor.
under a Service Agreement.
2.
TRILATERAL RELATIONSHIP
l.MEANING.
"Trilateral relationship" refers to the relationship in a contracting or
subcontracting arrangement where there is a service contract for a specific job,
work or service betwe~n the I!rincipal and the contractor, and a contract of
employment betweer. the coil tractor ::nd its workers.
2. THREE (3) PARTIES INVOLVED.
As the tenn "trilateral" connotes, there are three (3) parties involved,
to wit:
1) The "Principal" which refers to any natural or juridical entity,
whether an employer or not, who puts out or farms out a job or
3
work to a contractor;
2) The "Contractor" as defmed above; and
4 e) Self-organization, collective bargaining and peaceful concerted
3) The "contractor's employee" which refers to the employee of the
contractor hired to perform or complete a job or work farmed 5out by
the principal pursuant to a Service Agreement with the latter.
3. FURTHER DISCUSSION.
a. PrincipaL
Under Article 107 of the Labor Code, a "principal" is also referred to
as an "indirect employer." As defined therein, an "indirect employer" refers to
any person, partnership, association or corporation who/which contracts with an
independent contractor for the performance of any work, job, task, project or
service. The principal therefore is not the direct employer of the workers
1 Sedkx13[c), DepartmentOrderNo.174, Senesof2017.
2 Sedkx13{d), Ibid.
3 Sedkx13ffi, Ilk!.
• Sedkx13{d), Ibid., 1huS: (d) 'Olltradlf- refefs 1o Wf pe!SOil or en1ily engaJEd il alegbnale ~ or SI.JbcOOrading
anr~JerneMpro'li!fllQ setVices for a~ PJ or undertakilg fanned ooJ by p!iqlal under aSeM::e ~reement.
5 Seclioo 3[e11Jid.
CHAPTER IV 245
POST EMPlOYMENT
employed by the contractor ("contractor's employees") and assigned to the
principal.
Within the context of a valid contracting/subcontracting arrangement, a
"principal" or "indirect employer" is also known as a "statutory employer" or,
simply an "employer. "1
The "contractor" or "subcontractor" is the "direct employer" of the
"contractor's employees" who are supplied to the principal and made to
perform the principal's (or indirect/statutory employer's) work, job, task or
project.
c. Contractor's employees.
All contractor's/subcontractor's employees are entitled to certain rights
such as the right 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
activities, including the right to strike. 2
4. TWO (2) KINDS OF CONTRACTS REQUIRED lN A TRILATERAL
RELATIONSHIP.
In a trilateral relationship, there are two (2) kinds of contracts that
should be ex-ecuted by the parties, to wit:
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
[279t and 295 [280] 1 of the Labor Code, as amended, including the
1 BcrJuio v. NLRC, GR Nos. mJ4.00, Oct 4, 1991, 202 SCRA ~-
2 Seotion 10 [Rghts ct Caltlacb'siSubcootractors Emp\oyees1 ilk!.
3 Miele 294 {279] of lhe L.alxr Code ~es: 'Security of !enure. -In cases of regular~ 1he erJllk!Yer shall not
temi1ate 11e seM:es ct an ~except tlr ajJst cause oc m au1hOiized by 115 Tille. fv1 llfTilklyee 1'100 is un)Jst!y
dislrissed from 'Ml!k shal be mliled 1o reinstalemen1 >Mthout kiss d seniorily rijlls and ofler p!M\eges and 1o his ful
~. i1ciJsNe d a\k71.tms, and to his ol1er beneti\s or fleir monelary equMI\ent cornpuEd from 11e time his
~was IWhheld lim1 hin up 1o \he time of his actual reilstatement'
246 8AR REviEWER ON lABOR lAW
provisions on general labor standards. It shall include the following
stipulations:
i. The specific description of the job or work to be 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. 2
b) Service Agreement between the principal and the contractor
containing the terms and conditions governing the performance or
completion of a speciiic job or work being farmed out for a definite
or predetermined period. 3 The Service Agreement shall include the
following:
i. The specific description of the job or work being subcontracted,
including its term or duration;
ii. The place or work and terms and conditions governing the
contracting arrangement, to include the agreed amount of the
contracted job or work as well as the standard administrative fee
of not less than ten percent (10%) of the total contract cost; and
iii. A provision on the issuance of the bond/s, 4 renewable every
'year.5
5. EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP.
In legitimate contracting or subcontracting arrangement, there exists an
1 Mi:le 295 (2801. Regua llld Casual~- The ptMsixlS d l\litlen 8iJieement tllle may ncttlitiS!and'llQ
llld Iegatless dlle cral ~d l1e paties,lll ~ shal be deemed tl be lligl&v.ilefe l1e en1Jk7iee has
been qaged tl perbm at.ilies Q:h ae IJSIIIty necessay or desi'aije illle urual busiless or biKie c/.lle l!llfJaler,
exceptv.ilefe l1e flf11li1Jment has been fixed i:lr aspedft prqecta: ~ l1e COO'flleOOn orErnliBion dv.tli:tl has
been deen'i1ed at lle lioo d lle engagement d lle aJtlloYee a: lW1ere the 1\al( a: servk» b be pelfaTred is
seascm il nai!Je 111<1 lle~is !or 11e dtralil1 c/.lheseason.
AA ~stat be deemed b be casta Klis not oovaed 1:rt 1he prececi1g p<rag!l¢ PnJWied, That iiTf en1Jbiee
.00 has rendered at least ooe )'IS' c/. seM:e, W1elher 5001 ser.bl is <Xll1limls a: broken, . . be axlSi:!ered a regular
~ wifl respect tile ldiitf nv.tth he is~ IIlii his~ sha!IXX)Iilue wlie suc11 adM!y exm.
(f>s reiU'I'bered pursulllt 1D Sediln 5, RA No. 10151, June 21, 201111ld DOLE Oepalment AIMsay No. 01, Series of
2015 (RemJrileMQ oflle LiM Code c/.1he Phlippines, as l>rnended), Issued oo Jutt 21, 2015).
2 SecOOn 11, Ibid.
3 SecOOn 3(j), llid.
4 The leml 'lxlnd" is defrlOO i1 Secbi 3(a), lbid.,lhus: a) 'Bond' •refets to t1e bood ll1der Miele 108 d the~ Code lila!
111e p!l1dpal may require mile cootracla' to be posted equa1 to 11e coot of lalla: tmder oonB::t'
5 Selion 11,1bid.
···~·-,
CHAPTER IV 247
POST EMPLOYMENT
employer-employee relationship between the contractor and its employees it
engaged to perform the specific job, work or service being contracted with the
1
principal. Thus, it is essential that contracts of employment be executed
between the contractor and the contractual employees.
It bears emphasizing, however, that there is no employer-employee
relationship between the principal and the contractor's employees supplied by
the latter to the fonner. The contractor's employees remain its employees and do
not become the employees of the principal by virtue of the contracting or
subcontracting arrangement. If ever, the principal becomes an "indirect
employer" only in respect to the solidary obligation to pay unpaid wages and
other unpaid benefits under the Service Agreement. 2
6. EFFECT OF VIOLATION OF THE PROVISIONS ON THE RIGHTS
OF CONTRACTOR'S EMPLOYEES AND REQUIRED CONTRACTS.
A fmding of violation of either the rights of the
contractor's/subcontractor's employees3 or the required two (2) contracts4 afore-
mentioned, shall render the principal the direct employer of the employees of
the contractor/subcontractor, pursuant to Article 109 of the Labor Code, as
amended. 5
7. EFFECT OF TERMINATION OF EMPLOYMENT.
The tenllination of employment of the contractor's/subcontractor's
employee prior to the expiration of the Service Agreement shall be governed
by Articles 297 [282],6 298 [283]' and 299 [284]1 of the Labor Code.2
1
Sedioo 5[a1 Depal1ment0rder No. 1S.A, Series of 2011.
2
Bagub v. NI.RC, G.R Nas. 79004-08, Oct 4, 1991, 202 SCRA -165; See Article 109, lalx:f Code; See also Secb113,
Depa1ment Older No. 174, Series ct 2017, wl1kt1 prMjes fa' d:la'y obfgalion to perf~ wa.Jes Cl1d olher ~
beneflls lllder 1he Ser.U ~reement, iK:Wi1g unremtted lega nmdalo!y rormilutioos, e.g., SSS, PhlHdl, Pl9-IBIG,
ECC.
3 As provided il Sedb110, Depal1ment Older No.174, Seriesd2017.
4 See SecOOn 11, bid. .
5 SecOOn 12,1!1:!.
6
'MX:te 297[282j. Temmicrl by e!Jllbyer. HI eiJllbyer may kmilate 111 ~k¥oont for 211'/ ollle ~cases: a)
SerixJs l1'isoo1dlxt a: wlful <lsOOedience by lle ~ d 1he laY4JI ordels d his ~ cr ~ il
amection 'Mih his work; 'lXI
7 'Mide 298 [283). ~ c/. E':sW!shrnentllld ROOUC!ioo of l'elsonnel. · The EfllJIJya: may also ~the
empbtment of iiTf ~rue 1o the ilsWiJn of fabor-saWIQ deW:es, redundlllty, retrendlment kl prevent bsses or
the OOsirJ or cessatm ct ~ of the eslallistm!nt a: unde!taki1g urJess 11e c1osi'Q is b' 11e purpose of
cia.lmvenling lle pfO'Iilions ct tlis T111e, by seM1g a wriUen notice on the wers llld the tiby of Lmor 111<1
~at least cne (1) montt1 before 1he intended dale llereof. In case of tem1i1alion 00e to the ilstallciln of Iaber·
savi'g devices or redundancy, l1e woriler affected 1hereby shall be entitled 1D aseparation pay eqiMent to at least his cne
(1) montt1 perf or to at least one (1) 10011111 pay !or fM!J'f year of service,~ is hgher.ln case ct retJend1ment to
pre;ent bsses and il cases ct dosures or cessation of qJe~alions of establishment or ~ rxt due b seOOu5
business losses or frlalcial reverses, the sepaatm perf shal be eq!Walent to one (1) rrmtl perf a: at least ooe-hal rhl
montt1 pay fa' rmry year c/. service, v.t1iclleYer is hgher. Afraction of at least six (6) nmths shal be considefed one (1)
v.f1ole year.,
248 BAR REviEWER ON lABOR lAW CHAPTER IV 249
POST EMPLOYMENT

In case the termination of employment is caused by the pre- (1) The contractor or subcontractor is engaged in a distinct and
termination of the Service Agreement not due to authorized causes under independent business and undertakes to perform the job or work on
Article 298 [283],3 the right of the contractors/subcontractor's employee to its own responsibility, according to its own manner and method;
unpaid wages and other unpaid benefits, including unremitted legal mandatory
contributions, e.g., SSS, PhilHealth, Pag-IBIG, ECC, shall be borne by the party (2) The contractor or subcontractor has substantial capital to carry ...
at fault, without prejudice to the solidary liability of the parties to the Service out the job farmed out by the principal on his account, manner
Agreement. 4 ·
and method, investment in the form of tools, equipment,
machinery and supervision;
Where the tennination results from the expiration of the Service
Agreement, or from the completion of the phase of the job or work for which (3) In performing the work farmed out, the contractor or subcontractor
the employee is engaged, the latter may opt to wait for re-employment is free from the control and/or direction of the principal in all
within three (3) months to resign and transfer to another contractor- matters connected with the performance of the work except as to
employer. Failure of the contractor to provide new employment for the the result thereto; and
employee shall entitle the latter to payment of separation benefits as may be (4) The Service Agreement ensures compliance with all the rights
provided by law or the Service Agreement, whichever is higher, without and benefits for all the employees of the contractor or
prejudice to his/her entitlement to completion bonuses or other emoluments, subcontractor under labor laws. 1
including retirement benefits whenever applicable. The mere expiration o( the
Service Agreement shall not be deemed a~ a termination of emplcvment of the Absence of any of the foregoing requisites makes it a labor-only
. 2
contractor'slsubcontractor's employees who are regular employees ofthe latter. 5 contractmg arrangement.
8. GOVERNING LAW. 2. IMPORTANT POINTS ON THE ABOVE ELEMENTS.
The Employment Contract is governed by the Labor Code; while the (a) ON NOS. 1 AND 3 ELEMENTS ABOVE.
Service Agreement is governed by the Civil Code. 6 This is the "Right of Control" test which basically addresses the issue
of whether the contractor's/subcontractor's manner and method of performing
3. the contracted job or work is completely free from the control and direction of
PERMISSffiLE CONTRACTING the principal except as to the result thereof. If the issue is answered in the
OR SUBCONTRACTING ARRANGEMENTS affirmative, then this requisite of permissible contracting arrangement is fully
satisfied.
1. ELEMENTS.
Illustrative cases:
It bears noting that the Labor Code does not define what constitutes a
• In Digital Telecommunications Philippines, Inc. v. Digitel
pennissible contracting or subcontracting arrangement. However, under
Employees Union CDEID/ besides the lack of substantial
Department Order No. 174, Series of 2017 and relevant jurisprudence,
capitalization that indicates labor-only contracting, it was further
contracting or subcontracting shall only be allowed if all of the following
held that Digitel Service, Inc. (Digiserv), a non-profit enterprise
circumstances concur:
engaged in call center servicing, was a labor-only contractor of
petitioner Digitel because it does not exercise control over the
1 'Miele 299 !284]. Disease as Groood for Termination.-ME!J1lloyer IT'a/ lefmilate lhe sefVices of M et11Jioyee M1o has
been foond kl be suffeli'9 tom lll)' diSease Md 1\tlose coolr1ued ~is pnjliJEd by law or is pejxlidal kl his
heaiiJ1 as wei as kl f1e heaiU1 of his ~ees: PrtMded, That he is paid sepaalion pay~ klat least me (1) 1 Section a, Depa1ment Order No. 174, Series of2017; See aso Almeda v. ~i Glass Phiippiles, h'lc.• GR. No. 1mas.
roonlh safely or kl ooeflalf w~ rmnth scar for fMS'j ye:!l of seM:e, YotlicheYer is greater, afraction a at least six (6) Sept3, 2008; Acevedo v. Advanslar Co., Inc., G.R No. 157656, tm. 11, 2005; Mania Eledri: Con1Jany v. Benamila, GR
mooths beilg cooside!l!d as ooe (1) 'Allele yew." No. 145271, Ju~ 14, 2005; Mrlia WatEr Co., klc. v. Pena, G.R No. 158255, Ju~ 8, 2004; De los Santos v. NLRC, G.R No.
2 SecOOn 13, Depa1ment Order No. 174, Series ol2017. ! 121327, Dec. 20,2001,423 PhH.1020, 1032; Co!por.i, Sr. v. NLRC, G.R No. 129315, Oct 2,2000,395 Phi. 890; Vl110'fcl
3
4
5
Miele 298 [2831. !lJstJe ct Eslali'IShmeot il1d Reduction o1 ~-(See <llx1Je for ruu text ol81is article's proyisioos).
Section 13, Depal1mentOrderNo.174, Series ol2017.
kl.
I 2
v.NLRC,GR.No.126586, Feb.2, 2000,324SCRA469.
Philippine SdJOO ofBusi1ess Admi1is1raOOn [PSBA}Minia v. NLRC, GR No. 114143, Aug. 28, 1996; Tm v. Califomia

L
Manufactwi-g Co., klc., GR No. 80680, Jan. 26, 1989, 169 SCRA 497.
6 See Section 9amd Section 5~], respedivetf, DepartmentOrderNo.18-A, Series ol2011. 3 GR Nos. 184~. Oct 10,2012.
250 BAR REviEWER ON lABOR lAW
affected employees. The NLRC highlighted the fact that Digiserv
shared the same Human Resources, Accounting, Audit and Legal
Departments with Digitel which manifested that it was Digitel who
exercised control over the performance of the affected employees.
The NLRC also relied on the letters of commendation, plaques of
appreciation and certification issued by Digitel to the Customer
Service Representatives as evidence of control.
• The same ruling of lack of control by the contractor was cited as
additional justification for declaring the contractor as a labor-only
contractor in Norkis Trading Corporation v. Buenavista. 1 Thus,
together with the DOLE Regional Director's fmding that Panaghiusa
sa Kauswagan Multi-Purpose Cooperative (PASAKA), a duly-
registered cooperative, evidently lacked substantial capital or
investment required of legitimate job contractors, the cooperative
failed to dispute the respondents' allegation that officers of Norkis
Trading s'lpervised the work and paid the salaries of its employees.
(b) ON NO.2 ELEMENT ABOVE.
This is the "Substantial Capital or Investment" test which seeks to
address the issue of whether the contractor or subcontractor has substantial
capital or investment in the form of tools, equipment, machineries, work
premises, and other materials which are necessary in the conduct of its
business. 2 If the answer is in the affirmative, then this requisite of permissible
contracting arrangement is fully complied with.
Significant points:
A. Tbe · amount of substantial capita[ is now fu:ed under the
Implementing Rules. Under Department Order No. 174, the term
"substantial capital" shall now mean:
l. In the case of corporations, partnerships or cooperatives -
paid-up capital stocks/shares of at least Five Million Pesos
(PS,OOO,OOO.OO); or
2. In the case of single proprietorship ·a net worth of at least
Five Million Pesos (PS,OOO,OOO.OO)?
It bears noting that:
• The threshold amount of P3 M was fiXed for the first time in
the earlier Department Order No. 18-A, Series of 2011.
1 G.R. No. 182016, Od. 10, 2012.
2 lv'ooKa Eledric~v. Beoarriia, G.R No.1~271, MJ 14, 2005; lv'ooKa Waer Co., rc. v. Pena, G.R No. 158255,
July 8, 2004; Corporal, Sr. v. NLRC, G.R. No. 129315, Oct 2, 2000, 395 Phil. 890.
3 Sedioo 3{11, Depmen\Oider No. 174, ~of 2017.
CHAPTER IV 251
POST EMPLOYMENT
Previous to this issuance, no amount was fixed in the law.
The permissible amount thereof varied from case to case.
• There is no clear-cut requirement as to whether the amount of
PS M should be maintained only at the time of the
registration of the contractor/subcontractor with the DOLE or
when the Service Agreement is inked or that the same should
subsist during the lifetime of the Service Agreement.
B. "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 detennining whether
there is permissible contracting or subcontracting arrangement.'
(c) ON NO.4 REQUISITE ABOVE.
This is the "Legal Rights and Bmejits Compliance" test which
addresses the issue of whether the Service Agreement between the principal
and contractor/subcontractor is compliant with the rights and benefits2 of
3
workers under labor laws. If answered in the affirmative, the contracting or
subcontracting arrangement is deemed permissible.
4.
LABOR-ONLY CONTRACTING
l. MEANING.
"Labor--only contracting" refers to an 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 the
Implementing Rulei are present. 5
1. ABSOLUTE AND TOTAL PROHIBITION.
Labor.anly contracting is absolutely6 and totally1 prolnoited under
Article 106 of the Labor Code2 and the implementing rules.3 Towards this end,
Neri v. NLRC, G.R Nos. 97008-09, July 23, 1993,224 SCRA 7171.
SeeSectioo10ciD.O.No.174.
3
Mania WatsrCo, Inc. v. Pena, G.R No. 158255, .lutf 8, 2004; C<rpoml, Sr. v. NLRC, G.R No. 129315, Oct 2, 2000, 395
Phil. 890.
4
See Sectioo 5, Depment Order No. 174, Series of 2017.
5
Section 3(h), Ibid.
6
See Sectioo 4, Ibid., v.ilich pe!1i1enlly declares, 10 wit "Sedicx1 4. RegulaOOn of Contractilg or SubconiJacling. The
Secretlry of Lalor Mel Eflllk1fmeol shall regulale conlradif"IJ and sutx:onlradilg aii'BIIgement by absokJtely prohi>Hing
labor-only conlractilg, Clld restricting ill conbacting alk1Ned under1he prtNisioosof1he Labor Code, as amernled.'
252 BAR REVIEWER ON lABOR lAW CHAPTER IV 253
POST EMPLOYMENT

the DOLE Secretary 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. 4
2. ELEMENTS.
The latest DOLE issuance, Department Order No. 174, Series of2017, 5
cites the following elements oflabor-only contracting:
(a) The contractor/subcontractor does not have either (i) substantial
capital !!! (ii) investments in the form of tools, equipment,
machineries, supervision, work premises, among others, and the
contractor's/subcontractor's employees recruited and placed are
performing activities which are directly related to the main
business operation of the principal;
Q!.
(b) The contractor/subcontractcr does not exercise the right to control
over the performance of the work of the emplayee.6
3. SOME IMPORTANT POINTS ON THE FOREGOING ELEMENTS.
1) There is labor-only contracting even if only one of the two (2)
elements above is present. 7
2) Letter (a) above enunciates the "Direct Relation to Principal's
Business" test which seeks to address the issue of whether the
employees recruited, supplied or placed by a
contractor/subcontractor to the principal are perfonning activities
which are directly related to the main business operation of the
principal. If this poser is answered in the affirmative, the
contractor/subcontractor is deemed a labor-only contractor and its
t See SecOOn 5, tid., v.itilslales, ilsda"aspectilert, his: 'Section 5. Absdute PrOOilllioo r.Jailstl.abor-oo~ ~·
l.abor-altf~. m is ~prohlliled.-m:
2 Terg v. ~. G.R No. 169704, Nov. 17, 20W; &4JerklrPacka,jilg ColpcxaOOnv. Baagsay, G.R No. 178009, Oct 10,
2012.
3 k; tr as lhe ~li'g rules ire aJilOOIIled, Depamlent Onlef No. 174, Selils d 2017, is not 1l1e fifSt reglllalioo tl
absolutely¢lllitlalor-oo~ ~. (SeeSectioos411ld 5thereof).lhejlfdllml was enilodied illhe criJilal rules
~ Mdes 100 t1 109 issuechijht atlerllel.abor Code lookeffed.i11974. Earlier, IJepMment Ordefs Nos. 1&-a
{Series of2011], 1~2. [Series d2002], 3, [Series o120011 and 10. [Series of 1991] asomanoo asinilar prohhili:xl.
~ Sectm 4, Deparbne!i Oilier No.174, Series of 2017, entitled "RegulaOOn ofCootacliY;I or Subcootracti'l;.'
5 See SecOOn 51he!eof.
6 See Al1kle 106, Labor Code; No.9, DOLE F'rilrfr on Contracti1g CK1d ~. 8lects of Oepartrnent O!tler No. 3,
Series of 2001; See also Philippine Airlines, Inc. v. Ligan, G.R No. 146408, Feb. 29, 2008; See also Arneda v. k;ahi
Gass Phlippines, Inc., GR No. 1m85, Sept 3, 2008; Coca-Cola Botllers Pllils., Inc. v. Pljito, G.R No. 179546, Feb. 13,
2009; Mania Wailf Co., oc. v. Pena, <3.R No. 158255, J~ 8, 2004; Sando'lal ~.Inc. v. Pepilo, G.R. No. 143428,
June 25, 2001; Esccm v. NLRC, G.R No. 124055, June 8, 2000.
7 Coca-Cola Bottle!S Phils., Inc. v. Agito, GR No.179546, F~. 13,2009,579 SCRA445,400-461; Aboitiz Haulels, Inc.
v. Oimapatol, G.R No.148619, Sept 19, 2006.
employees supplied to the principal become direct employees of the
latter.
• In Coca-Cola Bottlers Phils., Inc. v. Agito/ the contractor was
declared a labor-only contractor because the respondent-workers
supplied by it to petitioner company worked therein as salesmen.
In the Delivery Agreement between petitioner and the
contractor, it is stated that petitioner is engaged in the
manufacture, distribution and sale of softdrinks and other related
products. The work of respondents, constituting distribution and
sale of Coca-Cola products, is clearly indispensable to the
principal business of petitioner. 2
3) The validity of job contracting arrangement does. not depend on
whether the job, work, or service is done within or outside the
company premises of the principa1.3
4. AN UNREGISTERED CONTRACTOR IS PRESUMED TO BE A
LABOR-ONLY CONTRACTOR.
Consistent with the authority of the DOLE Secretary to restrict or
prohibit the contracting out of labor to protect the rights of workers, it shall be
maudatory for all persons or entities acting as contractors to register with the
Regional Office uf 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. 4
5.
OTHER ILLICIT FORMS OF EMPLOYMENT
1. ADDITIONAL PROHIBITED ARRANGEMENTS.
In addition to labor-only contracting as described above,5 the same
Department Order No. 174, Series of 2017, 6 declared the following as being
prohibited for being contrary to law or public policy:
a) When the principal farms out work to a "Cabo". The term "Cabo"
refers to a person or group of persons or to a labor group which,
under the guise of a labor organization, cooperative or any entity,
supplies workers to an employer, with or without any monetary or
GR No. 179546, Feb. 13, 2009.
See also Norkis Trading Corporation v. Buenavista, G.R No. 182018, Oct 10, 2012.
Acevedo v. Advanstar Co., Inc., GR. No. 157656, Nov. 11,2005.
Section 14, Deparonent Order No. 174, Series of 2017, enti1!ed 'Mandatory Registration and Regisby of legitimate
Conlraclors.'
5
6
Per Section 5of Department Order No. 174, Series of2017.
See Section 61hereof.
254 BAR REVIEWER ON lABOR lAW
other consideration, whether in the capacity of an agent of the
1 contract is divisible into phases for which substantially different
employer or as an ostensible independent contractor.
b) Contracting out of job or work through an "In-bouse Agency". An
"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
2
which operates solely or mainly for the principal.
c) Contracting out of job or work through an "In-house Cooperative"
which merely supplies workers to the principal. An "In-bouse
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 principae
d) Contracting out of a job or work by reason of a strike or lockout,
whether actual or imminent.
e) Contracting cut of a job or work being pilrformed 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 [248] 4 of the Labor Code, as amended.
f) Requiring the contractor's/subcontractor's employees to perform
·functions which are currently being 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 frqm 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
1 Section 3(b), lbkt
Section 3(~. lljj,
Section 3(g), Ibid.
~ Pmlartf, paagl3ph (c) thereof v.ilk:h pltllides: "ArtDe 259 !248J. lJn!af 1..a1xr ·l'laci;eS o1 ~- -I shall be
llllaY.ful b-ill enJ,lloyer to oormit 8lTf atle ~ unfcir l<ilor~: l<XX (c) To cootlact out seM:es or functioos
· being pertonned by LJliln members v.tlen such VIi ilBfere v.ilh, restrain oc ooeroo ~ees In lhe exm d 1hef lijht;
to selkxganaatiorll.f
CHAPTER IV 255
POST EMPLOYMENT
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.
6.
EFFECTS OF LABOR-ONLY CONTRACTING AND ENGAGING
IN OTHER ILLICIT FORMS OF EMPLOYMENT
In the event that there is a fmding that the contractor or subcontractor is
engaged in labor-only contracting and other illicit forms of employment
arrangements, the following are the effects:
(1) The principal shall be deemed the direct employer of the
contractor's or subcontractor's employees as if it directly
employed them. 1 The principal will be responsible to them for all
their entitlements and benefits under labor laws.
(2) 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 wili bind the principal.
(3) The principal and the labor-only contractor will be solidarity
treated as the direct employer.
(4) The labor-only contractor's employees will become employees of
the principal, subject to the classifil:ations of employees under
Article 295 [280] of the Labor Code?
7.
SUBCONTRACTING VS. LABOR-ONLY CONTRACTING
The chief distinctions between permissible contracting, on the one
hand, and prohibited labor-only contracting, on the other, are as follows:
1. In the former, no employer-employee relationship exists between
the contractor's employees and the principal; while in the latter, an
employer-employee relationship is created by law between the
principal and the employees supplied by the labor-orily contractor.3
1 Section 7, Depatnent Older~- 174, Series of 2017.
2 Mcrlia Eledric~ v. Benm, GR No. 145271, Ju~ 14, 2005; See also DiJital Teleaxmulk:ations AliJWjnes,
re. v. !N;litel ~lo)'ees UnkX1 (!lEU), GR Nos. 184~. <Xl10, 2012; Supelior Packag~ Caporation v. Bal!rJsay,
G.R No. 178ro9, Oct 10. 2012; fliliado v. Procter &Gairble Phis., nc, G.R No. 160506, May9, 2010; Malldaue GaDeoo
Tilde, lnc.v.Andales,GR ~.159668, tlach 7,2008;Acevedov.MrcrlstlrCo., Inc., GR No.157656, NoY.11,2005.
3 AlMada v. Procler &Gairble Phis., re., GR No. 160506, Way 9, 2010 and June 6, 2011 Resciltioo on 1he ~ lltltion ft
Reconsideration of Respondent P&G; Coca-Cola Bottlers Alils., nc. v. Agito, GR No. 179546, Feb. 13, 2009; Ft.
256 BAR REviEWER ON lABOR lAW
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 labor-only contractor's employees in
accordance with the last paragraph of Article 106 of the Labor
Code. 1
3. In the former, the solidary obligation of the principal and the
contractor is only for a limited pumose, 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 contractor's employees; while in the latter, the principal
becomes solidarity 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 himlher.Z
4. In the former, the contractor undertakes to perform a specific job for
the principal; while in the latter, the labor-only contractor merely
provides, suppiies, recruits and places the personnel to work for the
principa1.3
8.
SOLIDARY LIABILITY
1. CIRCUMSTANCES WHEN PRINCIPAL IS TREATED AS DIRECT
EMPLOYER AND THUS SOLIDARILY LIABLE WITH THE
CONTRACTOR.
An exa,rnination of the pertinent provisions of the Labor Code. and its
Implementing Rules enunciated in the latest Department Order No. 174, Series of
2017, indicates that under the following circumstances, a principal shall no longer be
treated as indirect but direct employer and therefore it shall be deemed solidarily
liable with the contractor:
l) In case of violation of any provision of the Labor Code, including the
fiillure of the contractor to pay wages of its employees supplied to the
principal;4
2) In case oflabor-only contracting;'
Aul!rnaticnCenEr, Inc. v. NLRC, G.R No. 115920, Jell. 29, 1996, cili'q f'hiiWi1e Sri. ri ConmJni::alioos v. Nl.RC, G.R
No.66598,Dec.19, 1986, 146SCRA347.
Sedb17,.[)epa1mentOrderNo.174, Seresri2017;PCIAulcmation Center, Inc. v. NI.RC,suplll.
Sedb13{k), Oepatnent Order No. 174, Series ri 2017; See also PCl Aum1aiJln Center, Inc. v. NLRC, sup!ll, citi'g
~ Bri ri Coimu'dcations v. NLRC, suprn; See ~ Coca-Cola Bo!llefs Phils., k. v. ~ito. G.R No. 179546, Feb.
13,2009.
3 PClAubnatiooCenler, Inc. v. NlRC,supia.
4 SedOO 31\l ald Sedkv19, l:lepMmenl Order No.174, Series d 2017.
~ -~
CHAPTER IV 257
POST EMPLOYMENT
3) In case of commission of any of the following acts prohibited under
Department Order No. 174:
(a) In case of commission of "other illicit forms of employment
arrangements" under Section 62 thereof;
(b) In case of violation of the "rights of contractor's/subcontractor's
employees" under Section 103 thereof;
(c) In case of violation of the "required contracts under the Rules"
mentioned in Section 114 thereof, referring to: [1] Employment
contract between the contractor and its employee; and [2] Service
Agreement between the principal and the contractor;
4) In case the termination of employment is caused by the pre-termination
of the Service Agreement not due to authorized causes under Article
298, the right of the contractors/subcontractor's employee to unpaid
wages and other unpaid benefits including unremitted legal mandatory
contributions, e.g., SSS, PhilHealth, Pag-IDIG, £CC, shall be borne by
the party at fault, without prejudice to the solidary liability of the
parties to the Service Agreement 5
5) In case the principal has contracted with a delisted contractor in which
case, the prirtcipal shall be considered r:he direct employer of all
employees under the Service Agreement pursuant to Articles l 06 and
l 09 of the Labor Code, as amended 6
6) In case of non-corupliance with legally mandated wage increases
wherein, under R.A. No. 6727,7 the principal is also considered
solidarily liable with the contractor.
2. SOLIDARY LIABILITY OF PRINCIPAL
In permissible contracting arrangement, the term "solidary liability" shall
refer to the liability of the principal, pursuant to the provisions of two (2) articles of
the Labor Code, namely:
8
(1) Article 106, regarding the liability of the principal, in the same
manner and extent that he/she is liable to his/her direct employees, to
the extent of the work performed under the contract when the
1 Sedb15,1d.
2 Entilled 'Other llicil Foons of~ Arrangerent."
3 Enlilled 'Rijlts of Cooliacla'~s En1Jio'fees.'
4 En1illed "Reqtired Con1racls lllderflese Rules."
5 Sedb113 ofDeparbnent Older No. 174, entitled "Effect ofTemilation of Employment'
6
Sedb126, Ibid., entitled "EEfeds of Ccn:elatioo ct Registration."
7 OlherMse knrNm as 1he 'W<~Je Rati<Mrzatioo M'
8 Al1icle 106slales il ilsseam paagraph, thus: 'In the eventllaltheconlracta'ocsulxxJitrac1Ix't.ils1o paylhewa"Jesofhis
eiT(llc7fees il acx:ordance IWh this Code, the employer shal be jlinlly and severaltf iOOie IWh his cootractor (J
subcoolladl:lr to such employees 1o 1he ex1ent of 1he I¥J11\ pelfooned under 1he coollacl, illhe same manner and extent 1hat
he is liable to~ees !hc1ly e!11lk1/ed by him."
 BAR REviEWER ON lABOR lAW
258
1
contractor fails to pay the wages of his/her employees.
(2) Article 109/ as direct employer together with the contractor for run:
3 the same manner and extent that he is liable to employees directly employed by
violation of!!!I provision of the Labor Code.
The solidary liability of the principal under No. 2 above should be
qualified in the sense that not all violations of the provisions of the Labor Code and
other social legislations by the contractor would make the principal "solidarily ·
liable" therefor. Such solidary liability of the principal would only be "to the
extent of the work performed under the employment contract", and should
only involve the violations connected to or related with the employment contract.
The solidary liability rule certainly does not cover such liabilities of the contractor
to its employees not in any Ytay related to the "work performed under the
employment contract." This is clear from Section 9 of Department Order No. 174,
thus:
"Section 9. Solidary Liability. In th~ event of violatimi 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,4
In other words, once the job contractor, although legitimate, fails to pay
the wages of its employees supplied to the principal (2nd paragraph, Article 106) or
violates any of the provisions of the Labor Code (Article 109), the principal would
no longer be considered merely as an indirect employer but as direct employer for
the limited purpose of complying with the wage requirement or legal provisions
violated. Being by legal fiction the direct employer, the principal now becomes
solidarily liable with the legitimate contractor for the payment of wages and for
pmposes of complying with the legal provisions violated.
It bears stressing that the status of the principal as indirect employer holds
true only in situations where the job contractor with which it is dealing is legitimate
and is fully compliant with the requirements of the law and the implementing rules.
Otherwise, if the contractor is a labor-only contractor, then the principal will never
· be considered an indirect but dirtct employer of the contractor's employees supplied
to it and the above discussion will not apply and thus would be solidarily liable for
all the claims for wages and benefits by the latter.
CHArTER IV 259
POST EMPLOYMENT
3. PERTINENT JURISPRUDENCE.
The phrase "to the extent of the work performed under the contract, in
him" was explained in the case of Rosewood Processing, Inc. v. NLRC. 1 In this
case, the security guards farmed out by the security agency to petitioner were
assigned to its other clients. WithaL fairness dictates that the petitioner should not be
held liable for wage differentials incurred while the security guards were assigned to
other companies. Under Articles 106, 107 and 109 of the Labor Code, should the
contractor fail to pay the wages of its employees in accordance with law, the indirect
employer {the petitioner in this case), is jointly and severally liable with the
contractor, but such responsibility should be understood to be limited to the extent of
the work performed under the contract, in the same manner and extent that he is
liable to the employees directly employed by him. This liability of petitioner covers
the payment of the workers' performance of any work, task, job or project. So long
as the work, task, job or project has been performed for petitioner's benefit or on its
behal~ the liability accrues for such period even i~ later on, the employees are
eventually transferred or reassigned elsewhere. To reiterate, the principal's (indirect
employer's) liability to the contractor's employees extends only to the period during
which they were working for the petitioner, and the fact that they were reassigned to
another principal necessarily ends such responsibility. The principal is made liable to
his indirect employees because it can protect itself from irresponsible contractors by
withholding such sums and paying them directly to the employees or by requiring a
bond from the contractor for this purpose.
The said principle in Rosewood was reiterated in the 2010 case of GSIS v.
NLRC.2 In this case, DNL Security Agency, the direct employer of the private
respondent security guards which assigned them to petitioner GSIS office in
Tacloban City, informed respondents in February 1993, that its service contract with
petitioner was terminated. This notwithstanding, DNL Security Agency instructed
respondents to continue reporting for work to petitioner. Respondents worked as
instructed until April20, 1993, but without receiving their wages; after which, they
were terminated from employment The High Court ruled that petitioner's liability
does not cover only the payment of respondents' salary differential and 13th month
pay during the time they worked for petitioner but additionally, petitioner is
solidarily liable with DNL Security for respondents' unpaid wages from February
1993 until April20, 1993. While it is true that respondents continued working for

l
petitioner after the expiration of their contract, based on the instruction of DNL
Security, petitioner did not object to such assignment and allowed respondents to
1 Sectioo3~10epmientOiderNo.174,Seriesof2017. render service. Thus, petitioner impliedly approved the extension of respondents'
2 Miele 109 declares: 'Article 109. &ilay iilbilitj. ·The pr<MsiooS d existing lew; to the COOI!l!iy ~llg. f!Nel'j services. Accordingly, petitioner is bound by the provisions of the Labor Code on
a
~eror ildiect employer shal be held respoosille with hisamactor orSI.Jbooniacformr anyviolcml atrf prcMsion
of llis COOe. For puipOSeS of d$rnili'l;l the extent of their cMIIiOOilly under tis Ctlapter, ihey shal be considered as
died emp~oye~s; 1
3 ld. G.R No. 116476-84, 21 May 1998, 290 SCRA 408,427.
2 G.R.No.1B0045,Nov.17,2010.
~ l.klderscat1g suppied.

~~
" '""'~~""-
260 BAR REVIEWER ON L\BOR L\W
indirect employment Petitioner cannot be allowed to deny its obligation to
respondents after it had benefited from their services. So long as the work, task, job,
or project has been perfonned for petitioner's benefit or on its behal~ the liability
accrues for such services. The principal is made liable to its indirect employees
because, after all, it can protect itself from irresponsible contractors by withholding
payment of such sums that are due the employees and by paying the employees
directly, or by requiring a bond from the contractor or subcontractor for this purpose.
4. THE CONTRACTOR'S EMPLOYEES MAY COLLECT FROM
EITHER OR BOTH THE PRINCIPAL OR LEGITIMATE
CONTRACTOR.
As held in Eparwa v. Liceo de Cagayan University/ as far as the
security guards are concerned, the actual source of the payment of their wage
differentials and premium for holiday and rest day work does not matter as long as
they are paid. This is the import of petitioner Eparwa's and respondent LDCU's
solidary liability. Creditors, such as the security guards, may collect from anyone of
the solidary debtors. Solidal"; liability does not mean that, as between themselves,
two solidary debtors are liable for only half of the payment.
5 TO HOLD TilE PRINCIPAL LIABLE, THERE IS NO NEED TO PROVE
INSOLVENCY OR UNWILLINGNESS TO PAY ON THE PART OF THE
JOB CONTRACTOR.
The second paragraph of Article 106 of the Labor Code states:
"In the event that the contractor or subcontractor.f!!!l:! to pay
the wages ofhis employees in accordance with this Code, xxx.,l
According to pevelopment Bank of the Philippines v. NLRC,lthe term
"fails" in the afore-quoted provision does not mean that it should be proven first that
the contractor is insolvent or is unwilling to pay. There is nothing in said provision
which justifies this argument The rule is clear that in legitimate job contracting, the
principal is jointly and severally liable with the contractor to pay the wages of the
latter's employees.
As held in Del Rosario and Sons Logging Entemrises, Inc. v. NLRC,4
even in situations where the principal has not paid adequately the contractor in
accordance with the law, the latter may not successfully exculpate itselfby claiming
that it has no fault since what was paid by the principal was insufficient to defray the
wages and other legally-required benefits of its employees. As an employer, the
contractor/subcontractor is charged with knowledge of labor laws and the adequacy
1 GR No. 150402, Na.l. 28, 2006.
2 ~suppie:j.
3 EpawaSeariyMdJanilOOaiSeMces, Inc. v.l.k:eode~Unt.oe~si\y{LDCU), GRNos.100376-n,June17, 1994.
~ GR No. L-64204, May 31,1985,136 SCRA669.
~-'-'··~
CHAPTER IV
PO>r EMPLOYMENT 261
of the compensation that it demands for contractual services is its main concern and
not any other's.
6. LIABILITY OF PRINCIPAL VIS-A-VIS A LEGITIMATE
CONTRACTOR DISTINGUISHED FROM ITS LIABILITY IN
RELATION TO A LABOR-ONLY CONTRACTOR.
Based on the foregoing disquisition, the liability of a principal vis-a-vis a
legitimate contractor is different .from its liability in relation to a labor-only
contractor.
In legitimate job contracting, the law creates an employer-employee
relationship between the principal and the employees supplied by the job contractor
for a limited purpose, i.e., to ensure that the contractor's employees are paid their
wages. The principal becomes solidarily liable with the job contractor only for the
payment of the employees' wages whenever the contractor fails to pay the same.
Other than this,
1
the pri.."lcipal is not responsible for any claim made by the contractual
. employees. On the other hand, in labor-only contracting, the statute creates an
employer-employee relationship between the principal and the employees supplied
by the labor-only contractor for a comprehensive purpose, i.e., to prevent
circumvention of labor laws. Consequently, the labor-only contractor is considered
merely an agent of the principal and the latter is responsible to the employees of the
labor-only contractor a~ if such employees had been directly employed by the
pri.ncipal. The principal therefore becomes solidarity liable with the labor-only
contractor for all the rightful claims of the employees.2
B.
TERMINATION OF EMPLOYMENT
(NOTE: The presentation of the topics in this portion of tlie Syllabui
has been altered to provide for amore comprehensive and orderly discussion).
1.
TERMINATION BY EMPLOYEE
I.
RESIGNATION, IN GENERAL
I. CONCEPT.
While nonnally it is the employer4 who is possessed of the right to
terminate the employer-employee relationship, the Labor Code, 1 in recognition of
Sa1 lli,Juel Colpoo!tioo v. ~Integrated Ser.Us, loc., G.R No. 144672, Jlij 10, 2003, cq PBC v. N!RC, G.R No.
1
66598, Dec. 19,1986,146 SCRA347.
Sa11Ji:juel ~v. M\ERC lni!gra!ed Ser.Us, r.c., ld.
2
' Re!errilg lo l1e 2017 &,1labus.
~ Under Artides ?!J7 [282], 298 [283] Md 299\2841 ct lle Lm Code, l1e employer is the cregi<Wed SUdl riJhl.
 CHAPTER IV 263
POST EMPLOYMENT
BAR REVIEWER ON lABOR lAW
262

I
(3) In the former, the employee resigning is required to tender or submit a
the equality of the parties to such relationship, grants to an employee the. right to written notice of resignation to the employer at least one (1) month in
tenninate the employment relationship he has with his employer at any time he advance; while in the latter, no such notice of resignation is necessary
wishes and with or without just cause. as he/she can tenninate the employment relationship as soon as there is
evidence of any of the acts em.unerated under paragraph (b) of Article
Moreover, there is a strong constitutional basis for allowing employees to
300[285].
resign. The Constitutiolf expressly prohibits involuntary servitude, thus:
(4) In the former, the fuilure of the employee to serve the notice at least one
"Section 18. xxx: (2) No involuntary servitude in any fonn shall
exist except as a punishment for a crime whereof the party shall have (1) month prior to the effectivity date of the resignation will make
him/her answerable for damages; while the employee in the latter is not
been duly convicted."
subject to such adverse consequence.
2. TWO (2) KINDS OF TERMINATION BY THE EMPWYEE UNDER
(5) In the former, there is no illegal dismissal to speak of; while in the
THE LABOR CODE.
latter, the employee is deemed constructively dismissed.
Under Article 300 [285],3 an employee may terminate his employment in
either of two (2) ways, to wit:
II.
VOLUNTARY RESIGNATION
(1) Voluntary resignation - without just cause as provided in paragraph
(TEPJ'.1INATION BY EMPLOYEE WITHOUT JUST CAUSE)
(a) thereof;4 or·
(2) Involuntary resignation - with just cause under paragraph (b) 1. VOLUNTARY RESIGNATION, DEFINED.
thereof. 5 Per jurisprudence, "resignation" is defined as the voluntary act of an
3. PR!NCIPAL D:ISTINCfiONS. employee who finds himself in a situation where he believes that personal reasons
cannot be sacrificecl in favor of the exigency of the service sc much so that he has no
The following are the principal distinctions between the two (2) kinds of
other choice but to dissociate himself from his employment 1 Viewed differently,
termination under paragraph (a) and paragraph (b) of Article 300 [285]:

I
"resignation" is the formal pronouncement of relinquishment of an office, with the
(1) The termination contemplated under the former is in the nature of intention of relinquishing the office accompanied by the act of relinquishment 2 In
voluntary resignation; while that contemplated under the latter is in the other words, the resignation must show the concurrence of {I) the intent to relinquish
nature of involuntary orforced resignation and constructive dismissal. and (2) the overt act of relinquishm.ent.3 Consequently, the acts of the employee
(2) The termination in the former is without just cause; while in the latter,
it is for just cause.

1 Gal v. Galdenna Phi~iles. klc., <3.R No. 1n167, Jan. 17, 2013; Celvri!s v. PAL MJiine Colpmml, G.R No.
175209, Jal. 16, 2013; Hi!oo Heavy EquiJmertCorpoodion v. Oy, G.R t«l. 164800, Feb. 2, 2010, 611 SCRA 329, 336-
, See Ar\i:le :m !285lflereet, 337; BiRlao v. Saudi Alabia1 Aitiles, G.R No. 183915, De;. 14, 2011, ~ SCRA 540, 549; BMG Reards (Ptis.), klc. v.
2 See Seclioo 18(2), Alticle 1n (Iii of Rghls) llereof. ~. G.R No. 153290, Sept. 5, 'lfYJ7, 532 SCRA 300, 313-314; Slie Jie Corpoodion v. NaOOnal Fedelml d labor,
3 Mi:ie:D>l2851. Temmatix!by~.- G:R. No. 153148, Ju~ 15, 2005; Furgo v.l.rutfes Sdlool d Mandcitp1g, G.R No. 152531, Jut{ 'll, 2007; Alheona
(a) M eJl1lk7iee may~ v.i1IW jJSt coose lhe ~ rela~ by seNi'g a 'Mitten notice oo lhe 1n!emationa1 M1'lpower Setvk:es, Inc. v. Vb1os, GR No. 151303, ~i15. 2005; Alfarov. CA, GR No. 140812, Aug. 28,
eJl1lk1fer at least me (1) nmll i1 OOvallee. The ~ ~ 'lollom no su::h notice was ser.oed may OOkllhe ~ 2001.

I
~are b" dana;jes. 2 lnlel Tedmology f'hi~Wne$, h:. v. NLRC, G.R No. 200575, Feb. 5, 2014; Gov. CA, G.R No. 158922, Mly 28,2004, 430
(b) ki e!1'flb/ee may put 111 em to l1e ~ v.ilhool seM1g fir/ notice oo l1e 00'4)bya- lor fir/ of lhe ~jist SCRA 358, 367; Emco Plytiood ColpoJa5on v. Abelgas, G.R. No. 148532, Apll 14, 2004; Cheniver Deoo Plill Technk:s
causes: ColpaaOOn v. NLRC, G.R. No. 122876, Feb. 17, 2000; Valdez v. Nl.RC, G.R No. 125028, Feb. 9, 1998, ~ SCRA 87,
1. Serious ilsult by lle ~a his representaWe oo the hon<X" 11\d peiSOO of the eJl1lloYee; dlilg Doschv. NLRC, G.R No. L-51182, Jutt5, 1983,208 Phi. 259; 123 SCRA296; Maglolov. NLRC, G.R No. 63370,
2. lnhunllrlllld uOOeaable ieabnent acoooled1he ~by1he ell1lk7fera his representative; Nov. 18, 1985, 140 SCRA 58; MlaYe TOOlS CorpOJation v. NLRC, G.R No. 112909, Nov. 24, 1995, 250 SCRA 325, 330,
3. Corm'ission of aaine a olfense by the llJ1'4lioYer a his represen1ative ~ains! lhe peiS0!1 rJ.1he employee a il.'lf cl the
citirg lnleltrod Mrine, Inc. v. NLRC, G.R t-MW87, June 19, 1991. 198 SCRA318.
im1e<iate membefs cl his fanity; and 3 Zenakla D.lleodoza v. HMS Cred"tt Co!pooltion, G.R No. 137232, Apnl17, 2013; San M;Juel Propenies Phl~. Inc. v.
4. Olher causesmabJous1D arrtof1he foregoing. Gucaban, G.R No. 153982, Ju~ 18, 2011, 654 SCRA 18;
4 ld.
5 ld.
264 BAR REVIEWER ON lABOR lAW
before and after the alleged resignation must be considered in detennining whether
he or she, in fact, intended to sever his or her employment.' · in making his resignation void but only in making him liable for damages. 1 Thus, a
To constitute a resignation, it m\!St be unconditional and with the intent to
operate as such. It is settled doctrine that the resignation of an employee is presumed
voluntary, unless established otherwise. 1 Thus, the fact that the employee has
prepared her resignation letter in her own handwriting and that she has signed an
undertaking evidencing her receipt of separation pay, when taken together with her
educational attainment and the circumstances surrounding the filing of the complaint
for illegal dismissal, comprise substantial proof of the employee's voluntary
resignation. 3 Contrarily, there is no valid resignation where it was made without
proper discernment, such as when an employee's act of writing and handing in his
resignation letter to his employer was a knee-jerk reaction triggered by that singular
moment when he was left with no alternative but to accede, having been literally
forced into it by being presented with the more unpleasant fate of being tenninated. 4
2. REQUISITES IN RESIGNATION WITHOUT JUST CAUSE.
In case of tennination effected by the employee without just cause, the
following requisites must concur:
(1) The resigning employee should tender a written (not verbal) notice of
· the tennir.ation (commonly known as "resignation letter");
(2) Service of such notice to the employer at least one (I) month in
advance;5 and
l
(3) Written acceptance by the employer of the resignation.
The ~nt requisite above is not expressly provided in Article 300 [285] but
is given such character of a mandatory requirement under well-established
jurisprudence.6
3. LIABILITY FOR DAMAGES IF REQUISITES NOT COMPLIED WITIL
a. Resigning employee's liability for damages.
The failure by the resigning employee to comply with the legal
requirement of service of a written notice within the prescribed period does not result
, k1E1 Teciu:lobJY Phippiles, k1c. v. NL.RC, supra; Goo v. Gak1erma Ph~, Inc., G.R No. 177167, Jill 17, 2013;
Nab'MideSeariyandAIIied SeM:es, R:. v. valder.ma, G.R No.ta6614, Feb. 23,2011,644 SCRA299, 307-308. 8M3
Reo:xds tphis.), R:. v. Ap;recb, GR No. 153290, Sept. 5, 'JJXJ7, 532 SCRA 300, 313-314; Gov. CA. G.R No. 158922,
May 28, 2004.
2 St.MdlaeiAcademyv. NlRC, G.R No.119512,Ju~13, 1998,292SCRA478.
3 Bibao v. SaOOi Arablirl Ai1iles, G.R No. 183915, Dec. 14, 2011, 662 SCRA 540, 549.
~ Meta TlirlSl OlgCilization, Inc. v. NL.RC, G.R No. 122046, Jill. 16, 1998, 284 SCRA 308.
5 ArtiCle 300(a) f285(a)L l1W Code.
6
Shie Jkl Ccrp. v. National Federation ct Labor, G.R No. 153148, .lutf 15, 2005; See also BfvlG Reaxds [Pflis.), k1c. v.
Apaecio, <l.R No. 153290, Sept 5, 'JJXJ7; Reyes v. CA. G.R No. 154448, AuJ. 15, 2003; lndophH NJ:yfc lv'a1ufacUJmg
Q:xpcwatioov. Nl.RC, G.R. No. 96488, Sept 27,1993,226 SCRA 723.
CHAPTER IV
POST EMPLOYMENT
265
resignation made effective "immediatelY' or short of the 30-day period violates the
law and may subject the resigning employee to damages, if there exists no just cause
to warrant the immediate termination of employment by the employee.
b. Amount and extent of damages.
The law is silent on the form or amount ofdamages for which an employee
who violates the one (I) month prior written notice requirement in Article 300 [285]
may be held answerable. It may be deduced, however, that the damages
contemplated therein refer to actual damages that the employer may have suffered as
a consequence of the undue termination of the employment relationship by the
employee.
c. Resigning/retiring employee's obligation to reimburse employer for
cost of training him for higher position.
The case of Alm:.rio v. Philippine Airlines, Inc. 2 affirmed the right of the
employer to be reimbursed for the cost of training a resigning employee to higher
positimt In this case, petitioner was hired by respondent as a Boeing 747 Systems
Engineer. Later, petitioner, then about 39 years of age and a Boeing 737 (B-737)
First Officer at P.AL, successfully bid for the higher position of Airbus 300 (A-300)
First Officer. Since said higher position required additional training, he undetwent,
at PAL's expense, more than 5 months of training consisting of ground schooling in
Manila and flight simulation in Melbourne, Australia After completing the training
course, petitioner served as A-300 First Officer ofPAL, bat after 8 months of service
as such, he tendered his resignation, for "personal reasons. " In holding petitioner
liable to reimburse PAL for the training costs, the Supreme Court cited, among other
grounds,. Article 22 of the Civil Code on unjust enrichment which recognizes the
principle that one may not enrich himself at the expense of another. Thus, petitioner
was ordered to pay PAL the sum ofP559,739.90, to bear the legal interest rate of 6%
per annum from the filing of PAL's complaint on February l i, 1997 until the finality
of the decision, the High Court ratiocinated:
"Admittedly, PAL invested for the training of Almario to
enable him to acquire a higher level of skill, proficiency, or technical
competence so that he could efficiently discharge 1he position of A-300
First Officer, Given 1hat, PAL expected to recover the training costs by
availing of Alrnario's services for at least three years. The expectation of
PAL was not fully realized, however, due to Almario' s resignation after
only eight months of service following the completion of his training
course. He cannot therefore refuse to reimburse the costs of training
without violating the principle of unjust enrichment"
1
Semrlov.NLRC,G.RNo.117040,Jan.27,2000.
2
G.R. No. 170928, Sept 11, 2007.
266 BAR REviEWER ON lABOR lAW
The above ruling in A/mario was used as basis in holding petitioner liable
for the same training cost in the 2012 case of Elegir v. Philippine Airlines, Inc, 1
involving the retirement of petitioner Elegir who was a former pilot of respondent
airline. In 1995, PAL embarked on a refleeting program and acquired new and
highly sophisticated aircrafts. Subsequently, it sent an invitation to bid to all its flight
deck crew, announcing the opening of eight (8) B747-400 Captain positions that
were created by the refleeting program. Petitioner, who was then holding the
position of A-300 Captain, submitted his bid and was fortunately awarded the same.
Petitioner, together with 7 other pilots, was sent for training at Boeing in Seattle,
Washington, United States of America on May 8, 1995, to acquire the necessary
skills and knowledge in handling the new aircraft. He completed his training on
September 19, 1995. On November 5, 1996, after rendering 25 years, 8 months and
20 days of continuous service, petitioner applied for optional retirement under the
CBA between PAL and the Airline Pilots Association of the Philippines (ALPAP),
in which he was a member of good standing. h1 response, PAL asked him to
reconsider his decision, asseverating that the company has yet to recover the full
value of the costs of his training. It warned him that if he leaves PAL· before he has
rendered service for at least 3 years, itshall be constrained to deduct the costs of his
training from his retirement pay. Petitioner refused such deduction from his
retirement benefits.
The Supreme Court, however, allowed t.1.e deduction, in accordance with
its ruling in said case of A/mario. It considered PAL's act of sending it~ crew for
training as an investment which expects an equitable return in the fom1 of service
within a reasonable period of time such that a pilot who decides to leave the
company before it is able to regain the full value of the investment must
proportionately reimburse the latter for the costs of his training. To allow the
petitioner to leave the company before it has fulfilled the reasonable expectation of
service on his part will amount to unjust enrichment
4. SOME PRINCIPLES ON VOLUNTARY RESIGNATION:
1) ON THE 30-DAY PERIOD.
• 30-day period for the benefit of the employer and not for
resigning employee.1 The employer may thus:
(l) insist on the full observance by the resigning employee of the
entire 30 days; or
(2) shorten it to such number of days as he/she may deem
appropriate or necessary; or
(3) waive it completely.
1 GR. No. 181995, Jut{ 16, 2012.
2 Phim:o h1duslries, Inc. v. NLRC, G.R No.118041,June 11, 1997,273SCRA286.
CHAPTER IV
POST EMPLOYMENT
267
illustrative of No.2 above is Hechanova Bugay Vilchez Lawyers v.
Atty. Leny 0. Matorre/ where respondent employee, in a meeting
with Atty. Hechanova, the Managing Partner of petitioner law finn,
on August 19, 2008, expressed her intention to resign and requested
that it be made effective on September 30, 2008. But thinking that the
said date was too far off; Atty. Hechanova accepted the resignation,
with the condition that it be made effective on September 15, 2008.
Respondent alleged that the shortening of the period was an act of
harassment on the part of Atty. Hechanova The Supreme Court,
however, disagreed and held that it is not an act of harassment. This
is so because the 30-day notice requirement is actually for the benefit
of the employer who has the discretion to waive such period. Its
pwpose is to afford the employer enough time to hire another
employee if needed and to see to it that there is proper tum-over of
the tasks which the resigning employee may be handling.
• Unilateral extension by the employer cf the period beyond 30
days not allowed.
• The resigning emp!ayee should still work within the 30-day
period.
2) ON ACCEPTANCE OF RESIGNATION.
• Written acceptance of resignation necessary to make it binding
and effective.
• Resigning employee may withdraw his resignation anytime
before acceptance is made by the employer. Once accepted,
however, withdrawal thereof can no longer be made by the resigning
employee, except with the consent or agreement of the employer. 2
• A duly accepted resignation effectively terminates the employer-
employee relationship. 3
• The employee cannot claim illegal dismissal if the employer does
not accept withdrawal of the duly accepted resignation.4 To say
that the employee who has resigned is illegally dismissed is to
encroach upon the right of the employer to hire persons who will be
5
of service to him. Such acceptance of the withdrawal of the
1
GR No.198261, Oct 16,2013.
2
CusiDdb v. Mnisby cl Lab<J and ftllJk1fment, G.R No. 64374, Jltj 19, 1990; Phqlpiles Todcrf, hlc. v. NLRC, GR. No.
112965, Joo. 30, 1997, 334 Ph!. 854,877.
3
PhHjlpile National Constuc00n Corporntion v. NLRC, G.R No. 120961, Oct 2, 1997, 280 SCRA 116; See also BMG
Recoo!s (PhilsJ, Inc. v. ~. GR No. 153200, Sept 5, 2007; !ligiEI TelecoomJnicatio PhiJWiles, hlc. v. Soriano,
4
G.R No.166039,June26,ml,492SCRA, 704, 743and~T<XIay,lnc.v. N!RC,supra
lntemxl Mmne, Inc. v. NLRC, G.R No. 81087, June 19, 1991, 198SCRA318.
5 ld.
268 BAR REviEWER ON lABOR lAW
resignation is, it must be emphasized, the employer's sole
1
prerogative.
• Acceptance of resignation should be expressed by the employer
in no uncertain terins. The usual practice of employers of simply
noting such acceptance on the face of the resignation letter and not
communicating it to the resigning employee is not the acceptance
that would be binding on the latter. The acceptance should be in
writing and must be duly conveyed to and served upon the resigning
employee in order to bind him. If not duly informed of such
acceptance, the resigning employee may still validly withdraw his
resignation anytime. The date of acceptance therefore becomes a
critical factor to consider in determining whether or not the
withdrawal of resignation was seasonably made by the resigning
employee. Needlessly, before service to him of such notice of
acceptance, the resignation may be withdrawn anytime 2
3} ON VOLUNTARINESS OF RESIGNATION.
• Resignation of managerial employees different from that of rank-
and-file employees. Being managerial employees holding responsible
positions, they are not ordinary laborers or rank-and-flle personnel who
may not be able to completely comprehend and realize the consequences
of their acts. They are •;ducated individuals. Under these circumstances,
it can hardly be said that they were coerced into resigning from the
company. The quitclaim they executed in favor of the company amounts
to a valid and binding compromise agreement To allow them to
repudiate the same will be to countenance unjust enrichment on their
3 believe tha~ upon re-application, they would be re-employed by the new
part The Court will not permit such a situation.
• Hefty salary an.d high corporate perks, not indicia of
involuntariness of resignation. Employees resign for various reasons.
A big salary is certainly no hindrance to a voluntary cessation of
4
employment Human resource studies reveal that various factors (in and
1 ld.
2 MJra v. AVf!!ti]J !Jaketilg Colpaation, G.R. No. 177414, Nov. 14, 2008.
3 Salmiego v. ti.RC, G.R No. 93059, JIJ'Ie 3, 1991, 198 SCRA 111; Cali1llla v. NLRC, G.R. No. 105083, Aug. 20, 1993,
22S SCRA 526; Dlroondoo v. NLRC, G.R No. 154376, Sept 30, 2005,471 SCRA 559; kri.rt Teci1100Jy Phqlpines,lnc.
v..luaY;!co, G.R No. 166507, .krl. 23, 2007; Gkile Telecom v. CrisobJo, G.R No. 174644, Aug. 10, 2007, 529 SCRA 811,
818; G.lelzm, Jr. v. P~ IImtries, klc., G.R No. 170266, Sept 12, 2008; Ga1 v. Galdem1a ~. hlc.,G.R No.
177167, Jal. 17, 2013.
4 The human resoorre Sludies cited as Foarlae No. 50 in fle deciskln illlis Gbbe Teleoom case refer 1D the ones IT'ade by
Slephen P. ROObils il his book "'OgarizaDlla BeMiia" 9" ed., 22-23 vmere! was adv!rlced thus: 'A~ mi1f eiD1er
be 111 indM:lual leYel vaiallle or a g~ leYel varicille. kldMlual leYel variOOies are l1ooe f1a relate 1D a pe!SO!l's
d1aradEristics such as his or her ~. gender, roles illd marla! slabJS. On the other lmd, group leYel varicbe; are 1hose
lha! pei1ain Ill the worK erMroornent and agcrizational W1ure. Exafr4lles d lhis are communicatioo patterns, leadersh~
CHAPTER IV 269
POST EMPLOYMENT
out of the workplace) affect an employee's employment decision. 1
• Voluntariness may be inferred from the language used. A resignation
letter which contains words of gratitude and appreciation to the employer
can hardly come from an employee who was forced to resign. 2 Clearly,
the employee's use of words of appreciation and gratitude negates the
notion that she was forced and coerced to resign.3 Allegations of
coercion are belied by words of gratitude coming from an employee who
is just forced to resign. 4
• Words of gratitude may not, however, be considered indicative of
voluntariness of resignation in certain cases. While resignation letters
containing words of gratitude may indicate that the employees were not
coerced into resignation, this fact alone, according to the 2013 en bane
decision in the case of SME Bank, Inc. v. De Guzman,5 is not
conclusive proof that they intelligently, freely and voluntarily resigned
To rule that resignation letters couched in terms of gratitude are, by
themselves, conclusive proof that the employees intended to relinquish
their posts would open the floodgates to possible abuse. In order to
withstand the test of validity, resignations must be made voluntarily and
with the intentioo of relinquishing the office, coupled with an act of
6
relinquishment Therefore, in order to determine whether the employees
truly intended to resign from their respective posts, the teuor of the
resignation letters cannot be merely relied upon, but must take into
consideration the totality of circumstances in each particular case.
Here in SME Bank, the records show that some of the respondent
employees only tendered resignation letters because they were led to
management As it turned out, they were not rehired by the new
management who bought the majority block of the stocks in the bank.
Their reliance on the representation that they would be re-employed
gives credence to their argwnent that they merely submitted courtesy
resignation letters because it was demanded of them, and that they had
no real intention ofleaving their posts. They therefore did not voluntarily
resign from their work; rather, they were terminated from their
style, pa.¥el' illd paitics inlle\E!s d ronflict nmagement. Apa1icul<r vcrialre or a oorrbi1ation d simiar or ilissinilar
variablest:a1 i11'IJence 111 en1lfoyee il resign.'
1 GklbeTelecomv. CAioobJo,G.R No.174644,Aug.10,2007,529SCRA811,818.
2 St.Mchael~v.NLRC,GRNo.119512,Ju~
13, 1998,292SCRA47a. VICel11ev.CA,G.RNo.175988,Aug.24,
2007,531 SCRA240;WPiHcm Eneprises, v. Maghuyop, G.R th.160348, Dec.17,2004.
3 Biboo v. Saudi Arobian Mles, G.R No. 183915, Dec. 14, 2011, 662 SCRA 540, 549; See also Gcl1 v. Galdem1a
l'tilippines, Inc., GR. No. 177167, .lifl. 17, 2013; Gklbe Telecanv. Qisro;jo, supra.
4 Auza, Jr. v. MOL Phi~. klc., G.R No. 175481, Nov. 21, 2012.
5 G. R Nos.184517 &186641,0ct8,~13(EnBanc).
6 See Mag1o1o v. Nl:RC, G.R No. 63370, Nov. 18, 1985, 224f'lli. 210,222-223, cili1g Patten v. Miler, 190Ga. 123,8 S.E.
2nd757, 770; Sadlerv. Jes\er,D.C. Tex., 46 F. Supp. 737, 740; a'd Black's Law DictioMy(Re;ised Four1h Edition, 1968).
270 BAR REviEWER ON lABOR lAW
employment.
• No weight should be given to the employee's resignation letter which
appears to have been written and submitted at the instance of the
employer. Its fonn is of the company's and its wordings are more ofa
waiver and quitclaim. More so when the supposed resignation was not
1
acknowledged before a notary public.
• Resignation letters which are similarly worded and of same tenor
are actually waivers or quitclaims which are not sufficient to show
valid separation from work or to bar the employees from assailing.
their termination. They also constitute evidence of forced resignation
or that they were summarily dismissed without just cause. 2
• The voluntariness of the resignation cannot be said to have been
weakened or reduced in efficacy simply because it was tendered
under threat of being terminated for just cause. For as long as the
threatened administrative action is well supported by evidence, the
resignation proferred by the employee to avoid it should continue to be
3 etnployment chances, to which petitioners agreed. However, he later
treated as having been made voluntarily.
• The act of employee of terminating employment relationship due to
disease is tantamount to resignation.4
• Tile burden of proof devolves on the employer who alleges
voluntariness of resignation. The case of the employer must stand or
fall on its own merits and not on the weakness of the employee's
5
defense.
• Burden of proof shifts to the employee to prove involuntariness of
. t'Ion.6
res.gna
4) ON VALIDITY OF GIVING EMPLOYEE THE OPTION TO
RESIGN INSTEAD OF BEING DISMISSED FOR JUST OR
AUTIIORIZED CAUSE.
• Giving an option to an erring employee to voluntarily resign rather
than be terminated for just cause has been upheld as valid in a
1 A' Prine Securiy SeMces, klc. v. NLRC, G.R No. 107320, Jat 19, 2000; M:DIIe Pro!edlve &Detective ~encyv. Orr!)ad,
G.R.No.159195,Miy9,2005.
2 Great Soothem Maitine Services Caporatioo v. AC1tia. G.R No. 140189, Feb. 28, 2005; Blue ~ Ma1power ald
~ SeMces, klc. v. Hoo. CA, G.R. No. 161196, Julf 28,2008.
3 lmoodoo v. NLRC, GR No. 154376, Sept 30, 2005, 471 SCRA 559, citing Travis v. Tcmna Nlk Sd100I Distrk:t, 120
Wash. App. 542, 85 P.3d 959, Mrch 9, 2004 (See Foohl!e 22 8lered].
4 Villinlelv. YeoHanGuan,G.R No.169191,June 1,2011.
5 Payno v. Orizon TICKling Co!p., G.R No. 175345, Allg. 19, 2009; ~-oo v. Equitable !leneia Se!vices, Inc., GR No.
185269, Jooe 29, 2010; Cabalef1 ~Co., Inc. v. Ouianilao, G.R No. 169494, Ju1124, 2007, 528 SCRA 153;
Mt1e ProiEdNe &l:lell!cWe ~encyv. Ompad, G.R No. 159195, May 9, 2005, 458 SCRA 308, 323.
e flloo v. Saudi Arabia1 Airiles, G.R No. 183915, Dec. 14, 2011,662 SCRA 540, 549; 1/K:en~ v. CA (Fooner 17111
IJN9ln), G.R No. 175988, Aug. 24, 2007, 531 SCRA 240; 1J9!e1 TelecoomJnicalio Philippines, Inc. v. Soriano, G.R
No.166039, .lll1e 26,2006.
CHAPTER IV
271
POST ~MPlOYMENT
1
number of cases. In Cathay Pacific Airways, Ltd. v. Marin,2
respondent was asked to resign voluntarily or else face the adverse
I,, consequences of not being extended regular employment on account of
unsatisfactory work perfonnancf!. Had he resigned voluntarily before the
expiry of the probationary period, he would have brighter prospects of
employment with another airline or other business entities. However,
respondent rejected the suggestion and opted to file his complaint with
the NLRC. A decision of petitioner to afford respondent a graceful exit is
perfectly within its discretion. 3
In Sutherland Global Services (Pbilippines1 Inc. v. Labrador,4
respondent, a call center agent, has committed several infractions which
were established by evidence dtuing the administrative investigation
conducted by petitioners. However, instead of being dismissed for just
cause, he requested that he be allowed to resign from the company
effective immediately, to protect his reputation and his future
filed a constructive/illegal dismissal case against petitioners. Raised as
one of the issues was whether his resignation letter was voluntarily
executed. The Supreme Court, however, found this issue moot This is so
because even if respondent Labrador had not submitted his resignation
letter, .petitioner Sutherland could still not ~ held liable for constructive
dismissal given the existing just cause to tenninate his employment
5) ONVALIDITYOFSPECIALVOLUNTARYRESIGNATION
(SVR) PROGRAM.
Employers may lawfully and effectively reduce their personnel by
offering resignation benefits through a VoluntaJ.y Resignation Program
where employees are afforded the right to voluntarily terminate the
employment relationship. If made in good faith, such a scheme should be
considered a valid form of terminating employment Consequently, the
employer need not comply with the requirement under Article 298 (283]
of the Labor Code that notice be sent to the Department of Labor and
Employment at least a month prior to the effectivity of the termination of
employment The reason is that by applying to voluntarily resign, the
1
Diana E. Belaunllmv. ~c. GR. No. 120038, Dec. 23, 1996, 265 SCRA 800.
2
G.R No.148931, Sepl12, 2006.
3
WiU Hahn Enteqxises v. Mcrjruyop, G.R . No. 1&!348, Dec. 17, 2004; Seee also C1i11g Kai Shek Colege v. Rosalilda M
Torres, G.R No. 139456, Aprl 02, 2014; Mnlapatv. Add Folte Personnel Ser>mes, klc., GR No. 180285, July 6, 2010.
4
G.RNo.193107,Mith24,2014.
272 llAR REviEWER ON lABOR lAW
employee thereby acknowledges the existence of a valid cause for
terminating his employment. 1 . 300 [285] where the law requires prior written notice, the employee may terminate
6) ON EMPWYMENT ELSEWHERE.
• Assumption of new job with another employer by resigning
employee prior to current employer's acceptance of resignation
indicates intent to relinquish position. 2
• Employment elsewhere during the pendency of a case does not
3 · There is forced resignation where the employee is made to do or perform
amount to resignation.
m.
INVOLUNTARY/FORCED RESIGNATION
OR CONSTRUCTIVE DISMISSAL
(TERMINATION BY EMPLOYEE WITH JUST CAUSE)
1. INVOLUNTARY RESIGNATION.
The termination initiated by the employee based on the just causes
descnbed and enumerated in paragraph (b) of Article 300 [285] is in the nature of
involuntary resignation. Thus, an employee may put an end to the employment
relationship without need of serving any notice on the employer for any of the
following just causes:
(1) Serious insult by the employer or his representative on the honor and
person of the employee;
(2) Inhuman and unbearable treatment accorded the employee by the
employer or his representative;
(3) Commission of a crime or offense by the employer or his representative
against the person of the employee or any of the immediate members of
his family; and
(4) Other causes analogous to any of the foregoing. 4
Tennination initiated by an employee is involuntary in character if the just
causes expressly enumerated above or other similar or analogous circumstances exist
in a given situation. In this instance, the service of a written notice to the employer
commonly called "resignation letter" becomes unnecessary and immaterial to
detennine the validity or legality of t.lJ.e tennination. The law expressly does not
require such notice.
1 Dole Phi~. Inc. v. NLRC, GR No. 120009, Sept 13, 2001; kltematiooal Hatttlare, Inc. v. NLRC, G.R No. 80770,
Aug.10, 1989, 176 SCAA256.
2 l'tlqlpilesToday, Inc. v. NLRC, G.R No.112965,JM. 30,1997,267 SCAA202.
3 Q-ea!Soothem Maritime SeM:es Corpaml v. Awia, G.R No.140189, Feb. 28, 2005.
4
Article 300(b) [28S(b)], l.abocCode; Section 11, R1k I, Booi<VI, !Us to 1!11llementlhe l.mCode.
~
CHAI'TERIV 273
POST EMPLOYMENT
Thus, unlike resignation without just cause under paragraph [a] of Article
his employment without serving any notice, verbal or written, to the employer if
such is occasioned by any of the just cause:; mentioned in paragraph [b] or by any
act, fact or circumstance clearly showing the involuntary or forced nature of the
resignation.
2. FORCED RESIGNATION.
an involuntary act, that is, the submission or tender of resignation letter meant to
validate the action of the employer in inveigling, luring or influencing or practically
forcing the employee to effectuate the tennination of employment, instead of the
employer doing the termination himself.
3. CONSTRUCTIVE DISMISSAL
There is constructive dismissal when any of the following three (3)
circumstances exists:
(I) \Vhen continued employment is rendered impossible, unreasonable or
unlikely;
(2) When there is a demotion in nmk and/or a diminution in pay; or
(3) When a clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee that it could foreclose any choice
by him except to forego his continued employment. 1
Verily, the law recognizes and resolves this situation in favor of employees
in order to protect their rights and interests from the coercive acts of the employer..
Whereas valid termination by the employee under Article 300 [285] contemplates
1 Gitt G. leo v. ~ Ted1lx*Jgy klslilute, klc., G.R No. 185100, Ju~ 09, 2014; t.t:Mer C<xpaalkln, Inc. v. NI..RC, G.R.
No. 193421, .IIJle 04, 2014; ChiMg tea S1ek Cdlege v. Roscmda MTooes, G.R ttl. 189456, ~ 02, 2014; llilml1d
Taxi ard &ym Ong v. F. Uanas, ¥., G.R ttl. 1ID724, Math 12, 2014; CosiJe v. 8roOOcan k;ia, klc., G.R. ttl.
201298, FEb. 5, 2014; Gerrila. Jr. v. Bri:wise. klc., G.R ttl.175365, Od. 23, 2013; St.£ Bank. rev. DeGuznllll. G. R
Nos. 184517 &186641, Od. 8, 2013 (En Balc); MQ v. Sal Joaquil, Jr., G.R No.185549, AIIJ. 07, 2013; Gal v. Galderma
PhfWiles, klc., G.R ttl. 177167, .!at 17, 2013; Verd<Kiero v. ~ hJtiles Group of Cort1)Ciies TflllSIXXI, re,
G.R No. 195428, Aug. 29,2012,679 SCRA 545, 555; Galq v. Maasugli, G.R No. 174173, Mrch 7, 2012,667 SCRA
622, 634-635; M:Bes v. Hllbolr Cem Pat Tennilal, Inc., G.R No. 174208, Jal. 25, 2012,664 SCRA 110, 117; The
University ollhe mra:ulale Ca1ception v. NLRC, G.R No. 181146, JM. 26, 2011, 640 SCAA 608, 61U19; PeWo' v.
Ouldoor Clot\ilg Millufa:luril:J ColporaOOn, G.R No. 177114, April13, 2010, 618 SCAA 208; FonnMies v. l»lcan
Phamaceu1icals, GR No. 170661, Dec. 4, 2009; ~ v. Tri-Unk:Xl ~ Co!p., G.R. No. 176700, Sept4,
2009,598 SCRA 370, 376; Peo1a;Ja1 Steel Gapaaliln v. CA. G.R No. 174141, Ju1e 26,2009,591 SCRA 100, 174-175;
La Rosa v. Milassador Hotel, G.R. No. 177059, Mlrtl113, 2009, 581 SCRA 340, 346-J47; 544 SCRA 279; SUgue v.
Tlilm;lh lntema1ioocj (Phis.), Inc., G.R Nos. 164804 & 164784, Jill. 30, 2(m, Endi:o v. Quil1bJm Foods~
Center, G.R No. 161615, Jan. 30, 2009, 577 SCRA 299, 310; Uni.vide Sales Wll91oose CtJb v. NLRC, G.R No. 154503,
Feb. 29, 2008; NOOc.is Tradilg Co., Inc. v. Gnio, G.R No. 159730, Feb. 11,2008, Frcrx:isoo v. NLRC, G.R ttl. 170087,
Aug. 31, 2006, 500 SCRA 600, 702-703; Unicorn Safely Glass, Inc. v. BasMe, G.R ttl.154689, Nov. 25, 2004; Chia!YJ Kai
Shek Coiegev. Hoo. CA. GR. No. 152988, Aug. 24, 2004.
274 BAR REviEWER ON lABOR lAW
such act to be voluntary, an employee who is forced to relinquish the position held
through the employer's unfair or unreasonable acts is deemed to have been illegally
1
terminated or discharged and as such the termination is implied to be involuntary.
Indeed, the law on constructive dismissal is a well-settled rule in both Philippine and
foreign jurisdictions.2
4. COMMON DENOMINATOR.
Involuntary and forced resignation are embraced within the general
concept of constructive dismissal. The common character pervading involuntary or
forced resignation or constructive dismissal is the act of "quitting" from
employment by the employee because of the attendant just causes, acts, facts or
circumstances which render the continued employment impossible, unreasonable or
unlikely.3 Thus, if there is no cessation of work, there can be no constructive
dismissal. 4
5. TEST OF CONSTRUCTIVE DISMISSAL
The test of wnstructive dismissal is whether a reasonable person in the
employee's position would have felt compelled to give up his position under the
circurnstances.5 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.6 Constructive dismissal is therefoie a dismissol in
disguise. 7 The law recognizes and resolves t.i.is situation in favor of the employees
in order to protect their rights and interests from the coercive acts of the ernployer.8
Following above test, it was held in Tuason v. Bank of Commerce,9 that
petitioner was constructively dismissed by respondent BOC not only when the latter
has exerted pressure on petitioner to resign from her work but when the fonner,
while on leave, was replaced by another in her post.
t Wle Teleoom, 8:. v. Fkmbfbes, G.R No. 150092, Oct 20, 2003 {Resok!tKln oo MlOOn b Pa::onsKielalb1 ct the
~ilal decisb1 ~ 00 Sept 'll, 2002).
2 ld.
3 t.wePru!Edive& lleleciNe~v. Qn1JOO, GR. No.159195, May9,2005.
4 UMsly lithe hi1B:ulakl Conceplioo v. NI..RC ll1d TeodolaAxalcrl, GR. No.1811o16, Jal. 26, 2011.
5 WI«Ccrpaaliln, klc. v. NLRC, GR. No. 193421, .lllle 04, 2014; TM Bd1els Qxpora'iJn ctl!asiM Cit; v. Escudero,
GR. No. 188711, JUy 08, 2013; Pf1iWi1e Velenrls Book v. Nl.RC, G.R No. 188882, MM:h 30, 2010, 617 SCRA 204,
213; 1k1iM!e Sales Wlllillouse WI v. NlRC, G.R No. 154503, Feb. 29, 2008; PqM v.lluger Machi1e Hol:frgs
Colpolatix1. G.R No. 172062, Oct ~. 2006, 536 Phi. 985; 506.SCRA 266, 273; GIOOe Telecan, roc. v. Fkxendo-fbes,
supra
6 CRC Agri:ull.ral Trad"DJ v. Nl.RC, G.R. No. 177664, Dec. 23, 2009, 609 SCRA 138, 149.
T Ang v. San ~Iii. ~.• G.R No. 185549, Aug. 07, 2013; GaiMg v. Malasu;Jui, G.R No. 174173, Mcrt:h 7, 2012, 667
SCRA622.~.
s Ocroond Ta>d ll1d 8lyCil Ong v. Felpe llamas, Jr., G.R No. 190724, Mlt:h 12, 2014;~ v. Broadcoo1 Asia, klc., G.R
No. 201298, Feb. 5, 2014; !lin!gM v. !:latv.ms lkli1ed, IDxporated, GR No. 191053, Nov. 28, 2011, 661 SCRA 438,
4<16; CRC AgrX:ull.n3 TlliMg v. Nl.RC, G.R No. 177664, Dec. 23, 2009; Globe Teleoom, klc. v.lbrend<rFiores, G.R No.
150092, Oct 20, 2003, SC E-LillafY.
9 G.R.No.192076,NoY.21,2012.
4
CHAI'TER IV 275
POST EMPLOYMENT
In accordance with the same test, the following acts were considered
· indicative of constructive dismissal in the case of Globe Teleeom, Inc. v. Florendo-
Flores:1
"Although respondent continued to have the rank of
supervisor, her functions were reduced to those of a mere house-to-house
sales agent This amounted to a demotion. She was deprived of bonuses,
allowances and other benefits given to another of the same or similar
rank and position, benefits that she used to receive. Despite her having
complied with company policies, her immediate superior, Luzon Head·
Regional Sales Cacholo M. Santos, never accomplished and submitted
her performance evaluation report thereby depriving her of salary
increases, bonuses and other incentives. The intolerable, unreasonable
and hostile conditions in the working environment set by Cacholo M.
Santos, Globe Telecom manager, wtdoubtedly coerced respondent to
relinquish her employment involuntarily, for which she sought redress
through legal means. This is a clear-cut case of constructive dismissal"
The fact that respondent in Tan Brothers Corporation of Basilan City v.
Escudero/ was deprived of office space, was not given further work assignment
and was not paid her salaries until she was left with no choice but stop reporting for
work, all combine to make out a clear case of constructive dismissaL
Petitione~, in another case, Philippine Advertising Counselors, Inc. v.
NLRC/ argues that private r~spondent did not suffer any demotion in rank since he
has "retained his rank of Vice President, continued to work in the same office, and
received the same salaries, benefits and privileges." In holding that private
respondent was constructively dismissal, the Court emphasized that constructive
dismissal does not always involve such kinds of diminution; an act of clear
discrimination, insensibility, or disdain by an employer may become so unbearable
on the part of the employee that it could foreclose any choice by him except to
forego his continued employment
The fact that an employee continues to report for work, according to The
Orchard Golf and Countrv Club v. Francisco,4 does not suggest that constructive
dismissal has not occwred nor does· it operate as a waiver. Constructive dismissal
t G.R No.150092, Oct 20,2003(ResOOtiooC11 Mlblb"RecoosidooltMxl dhHIIJjilal decision p!OOUJadoo Sept 'll,
2002). .
2 G.R No. 188711, July 08, 2013. nJuly 1991, Respondent Edna R Esrudero (Escudero) was hied as bOOd<eeper by
pelitiooer Till Brolhers CorpaatiCil ct Basiill Cly {TM Brothels), a coqxxation prirrOOiy ergaged illle real estale
business. On 1Seplenter 2004, Escudero lied ~ TM 8rolhers acomplailt klr legal disrrissal,ll!delpaymeri ct
wages, oost ctMY;J alkHrcrlce and 13~ rrooll ~· In support lithe Cl:lfl1l'ai1l, Escudero aleged il herp:dm ~that,
~ July 2003, her IT01II1tt saay rJ. P2,!Al0.00 was not~ on 1i11e by Tcr~ll!dhe!s. After~ the oorporation's
office remodeled il the eat( part of 2004, Till Brothers alklgedtj rene! out lle office space Escudero used kl OCCUI'f and
ceased gNilg her lJither assiJnrneniS. E\tentualy ronstrm to slop repa1i"g lor IWI1I becaJse ct her die 1i1ancial
coodition, EsaJdero cl<ined flat Till Brolhels 'shrewd~ maneuvered' her illega dismissal !tool errc>iaJmenl
3 GR. No. 120008, Oct 18, 1996.
4 G.R No. 178125, Mlth 18, 2013.
 276 BAR REviEWER ON lABOR lAW
occurs not when the employee ceases to report for work, but when the unwarranted
acts of the employer are committed to the end that the employee's rontinued
employment shall become so intolerable. In these difficult times, an employee may
be left with no choice but to continue· with his employment despite abuses ··
committed against him by the employer, and even during the pendency of a labor·
dispute between them. This should not be taken against the employee. Instead, we
must share the burden of his plight, ever aware of the precept that necessitous men
. are not free men."
6. VOLUNTARY RESIGNATION VS. CONSTRUCTIVE DISMISSAL
Voluntary resignation is likewise distinct from constructive dismissal. For
instance, an employee who tendered her voluntary resignation and signed the
quitclaim after receiving all the benefits due her for her separation cannot claim that
she was constructively dismissed. The fact of her transfer due to a new secretarial
staffing pattern which she objected to, or the allegeJ hostility on the part of her
employer, cannot render nugatory the voluntary nature of her resignation. She was
not eased out much less was she forced to resign. This is a case of voluntary
resignation and not constructive dismissaL'
The transfer of the location of an employee's office from under the steps of
the stairs to the kitchen which allegedly caused her mentai torture which forced her
to resign does not amount to constructive dismissal but a case of voluntary
resignation. It was not shown that her transfer was prompted by ill will of
management It merely involved a change in location of the office and not a change
of her position.2
An indication that the resignation was voluntary and does not constitute
constructive dismissal is the act of the employee who resigned and took a leave of
absence on the date of effectivity of his resignation and while on leave, he wo!Xed
for the release of his clearance and the payment of his 13th month pay and leave pay
benefits. In doing so, he, in fact, performed all that an employee normally does after
he resigns. If indeed he was forced into resigning, he would not have sought to be
cleared by his employer and to be paid the monies due him. The voluntary nature of
his acts has manifested itself clearly and belied his claim of constructive dismissal.3
An example of a resignation which was deemed indicative of constructive
dismissal is the 2014 case ofDreamland Hotel Resort v. Johnson.4 Respondent, an
Australian citizen, wo!Xed as Operations Manager for about 3 months with petitioner
1 Cooaei! flOOiegales v. NLRC, G.R No. 82458, Sept. 7, 1989; See also ~ile Wreless,lnc. tpockelbell] v. NlRC, G.R
No.112963,Jutj20,1999.
2 Ad!Tial ~ Coo1l&lf, nc. [Admial Hotel] v. NlRC, GR No. 112043, May 16,1999.
Gov. CA, G.R No.158922, May 28, 2004.
G.R. No. 191455, Math 12,2014.
CHAPTER IV 277
POST EMPLOYMENT
hotel but he was not paid his salaries corresponding thereto, prompting him to tender
his resignation letter, the tenor of which reads:
"I hereby tender my resignation to you, Mr[.] Wes Prentice,
Dreamland Resort, Subie, Zambales, Philippines.
r
I "Since joining Dreamland Resort & Hotel over three months
ago, I have put my heart and soul into the business. I have donated many
Ii hours of my personal time. I have frequently worked seven days a week
and twelve to thirteen hours a day. I am now literally penniless, due
totally to the fact that I have lent you and your resort/hotel well over
$200,000AU (approx 8million pesos) and your non-payment of
wages to me from I" August 2007 as per Employment Agreement.
I
XXX.
The above statement only goes to show that while it was Johnson who
tendered his resignation, it was due to the petitioners' acts that he was constrained to
resign. The petitioners cannot expect Johnson to tolerate working for them without
any compensation. It is impossible, unreasonable or unlikely that any employee,
such as Johnson, would continue working for an employer who does not pay him his
saiaries.
7. ILLEGAL (ACTUAL) DiSMISSAL VS. CONSTRUCTIVE
DISMISSAL
There obviously is a fine distinction between or "illegal actual" dismissaL
on the one hand, and "constructiv2" dismissa~ on the other, although, in some
cases,2 the Supreme Court conjoins the words "illegal constructive" dismissal or
"unlawful constructive" dismissal to underscore the patent illegality of the
dismissal.
"Dlegal dismissal" or "actual dismissal" is readily shown by the act of
the employer in openly and expressly seeking and effecting the termination of
employment of an employee; while "constructive dismissal," being dismissal in
disguise, is not readily shown or indicated by any similar act of the employer that
would openly and expressly show its desire and intent to terminate the employment
relationship. Notably, ronstructive dismissal does not always involve forthright
dismissal or even diminution in rank, compensation, benefit and privileges.3
More ooncretely, the employer in illegal dismissal cases would normally
~ !lld ~ SI.Wied illle c.O:linal textdlle deci5ion.
Seeb"ilsta1celle2014caseriOOJG.Ioov. SyslemsT~nstiUe. klc., G.R. No.185100,JUy09,2014,11Alere
l1e ~ Jllli':l~ d 11e ~ states: "M1en ooolher ell1)IJyee is SWl after ~ tl a posi1ion lllflidl f1e
e!J1llo'ier daims has been cblished, v.flile l1e et'J1lloYee v.OO 1m tl va::a1e lhe same is ill1sfefred SJailst her l'liiiD a
pa;itm M1k:h does not exist nile corp<Xae strucrure. there is evk1enlly acase rJ illegal CXIIlSlnJdNe dismisSal.'
3 Hyatt Taxi Selvk:es,lnc. v. Caliloy, G.R No. 143204, June 26, 2001, 412 Phi. 295, ci1il;J MasagMa Calcrete Products v.
NLRC, G.R No. 106916, Sept 3, 1999,313 SCRA 576, 593; See~ ErAJe Daiy Corpomtion v. NLRC, G.R No. 129843,
Sept 14, 1999, 314 SCRA 401.
L·
278 BAR REVIEWER ON lABOR lAW
defend and justify the tennination but in constructive dismissal, there being no
express dismissal to speak of, the employer would normally contend that there was
no termination at all.
In terms of evidence, in illegal diSmissal cases, documentary, testimonial
and other forms of evidence are adduced by the employer to secure affirmation from
the courts of the validity of the termination; in constructive dismissal, the employer,
who normally denies the termination, would advance arguments against the·
circumstantial evidence being presented by the employee to prove his constructive
dismissal.
A1l far as the reliefs under Article 294 [279] of the Labor Code are
concerned, the same are available to both cases of illegal and constructive
dismissal. 1
8. CONSffiUCTIVE DISMISSAL WS-A-VIS TRANSFER OF EMPWYEE
FROM ONE POSITION OR WORKPLACE TO ANOTHER.
a. Three (3) conditions when transfer constitutes constructive
dismissaL
While transferring an employee from one position to another or from one
workplace to another within the same establishment generally does not amount to
constructive dismissal, however, it may be considered constructive dismissal when
any of the following conditions should concur:
(1) When the transfer is unreasonable, inconvenient or prejudicial to the
employee;
(2) When . the transfer involves a demotion in rank or diminution of
salaries, benefits and other privileges; or
(3) When the employer performs a clear act of discrimination, insensibility,
or disdain towards the employee, which forecloses any choice by the
latter except to forego his continued employment1
To illustrate, the transfer of the respondent Aflsistant Vice-President in the
case of The Philippine American Life and General Insurance Co. v. Gramaje3
from the Pensions Department .to the Legal Department was declared not a
, Mr1t Roche kllemational v. NLRC, G.R No. 123825, Al.g. 31, 1999; See also General Baptist Bille Colege v. NLRC, G.R
No. 85534, Mm15, 1993, 219 SCRA 549, 555. Ulderscori'(l supplied.
2 Dearmt Hotel Resort v. Johnson, G.R No. 191455, l.latt\12, 2014; SHS Pelforaild Materials, klc. v. Diaz, GR. No.
185814, Oct 13, 2010, 633 SI'..RA 258; SaNaoza v. tlRC, G.R No. 182086, Nai. 24,2010; Megatixte SeaJrity em Afted
Servtes, 0:. v. Laclao, G.R No.160940, »( 21, XOS, 559 SCRA 110, 117-118; f11io v. CA, G.R No. 171764, June 8,
2007; Duklulalv. CA, G.R No. 164893, Mml1, 2007,517 SCRA 191, 199; Slifaov. Cinech System Cooslrudioo, Inc.,
G.R No. 171392, Oct. 30, 2006; Fb'en Hotel v. NLRC, G.R No. 155264, May 6, 2005; Phil. En'4JIOy SeM:es and
Resoortes, Inc. v. Parll11io, G.R No. 144786, Api 15, 2004, 471 Phi. 753, n£; Mendoza v. Rural Book rJ lucba1, G.R
No. 155421, Julf 7, 2004; Blue Daiy Capaam v. NLRC, G.R No. 129843, Sept 14, 1999, 314 SCRA 401.
3 G.R. No.156963, Nov.11, 2004.
CHAPTER IV 279
POST EMPLOYMENT
legitimate exercise of management prerogative on the part of petitioner. Before the
order to transfer was made, discrimination, bad faith, and disdain towards
respondent were already displayed by petitioner leading to the conclusion that she
was constructively dismissed.
The case of Star Paper Corp. v. Espiritu 1 is another good example of
transfer amounting to constructive dismissal. Here, the combined circumstances of
the immediate transfer of respondents to far-off provinces after their refusal to sign
the signature sheet of the document for the ratification of the Addendum to the 1995
CBA, and petitioner's emphasis on respondents' alleged previous infractions at
work, point to the fact that the transfers are motivated by ill-will on the part of
petitioner. Petitioner's order for respondents to report for work in petitioner's
provincial branches on the very same day that they were served with the Memo of
Transfer is extremely unreasonable as the relocation would unduly inconvenience
not only respondents but their respective fumilies. Petitioner therefore failed to
sufficiently prove that respondents' transfer is for a just and valid cause and not
unreasonable, inconvenient, or prejudicial to them, making it liable for constructive
dismissal.
In Jarcia Machine Shop and Auto Supply, Inc. v. NLRC/ private
respondent, a machinist who had been employed with the petitioner company for 16
years, was reduced to the service job of transporting filling materials after he failed
to report for work for one (1) day on account of an urgent fumily matter. This is one
instance where the employee's demotion was rightly held to be an unlawful
coll$1ructive dismissal because the employer fiilled to show substantial proof that the
employee's demotion was for a valid and just cause.
b. The transfer is valid when none of the conditions are present.
Needlessly, when all the three (3) conditions afore-mentioned are not
attendant in a given case, the transfer must necessarily be affirmed as valid and legal.
Thus, 1he employee may not complain that it amounts to a constructive dismissae
Peckson v. Robinsons Supermarket Corooration,4 exemplifies valid
transfer. Petitioner contended 1hat she was constructively dismissed because her
transfer from her position of Category Buyer, a frontline position in the day-to-day
business operations of respondent supermarket, to Provincial Coordinator,
constitutes a demotion since the latter position was non-supervisory and clerical in
nature. Despite several directives, the petitioner refused to tmn over her
responsibilities to the new Category Buyer, or to accept her new responsibilities as
Provincial Coordinator.
1 G.R. No. 154006, Nov. 2, 2006.
2 Jiltia Machile Shop em Auil&Wf, Inc. v. NLRC, G.R No. 118045, .lal. 2, 1997, 266 SCRA 97; 334 Pl'dl. 84.
3 PEd\soo v. Robi11SOOS Supelll'al(e!Co!poration, G.R No. 198534,.ltJ~ 03, 2013.
4 G.R No. 198534, July 03, 2013.
280 BAR REVIEWER ON lABOR lAW
In declaring that petitioner was not constructively dismissed, the High
Court, cited the following reasons:
(I) There is substantial showing that the transfer of the petitioner from
Category Buyer to Provincial Coordinator was not unreasonable, inconvenient, or
prejudicial to her. The petitioner failed to dispute that the job classifications of
Category Buyer and Provincial Coordinator are similar, or that they command a
similar salary structure and responsibilities. The Provincial Coordinator's position ·
does not involve mere clerical functions but requires the exercise of discretion from
time to time, as well as independent judgment, since the Provincial Coordinator
gives appropriate recommendations to management and ensures the faithful
implementation of policies and programs of the company. It even has influence over
a Category Buyer because of its recommendatory function that enables the Category
Buyer to make right decisions on assortment, price and quantity of the items to be
sold by the store,
(2) The petitioner's claim cannot be sustained that she was not accorded
due precess and that the respondents acttd toward her with discrimination,
insensibility, or disdain as to force her to forego her continued employment. In
addition to verbal reminders from her immediate superior (Srute), the petitioner was
asked in writing twice to explain within 48 hours her refusal to accept her transfer.
In the first, she completely remained silent, and in the second, she took 4 days to file
a mere one-paragraph reply, wherein she simply said that she saw the Provincial
Coordinator position as a demotion, hence, she could not accept it. Worse, she may
even be said to have committed insubordination when she refused to turn over her
responsibilities to the new Category Buyer, Padilla, and. to assume her new
responsibilities as J:>rovincial Coordinator and report to the Metroeast Depot as
directed. This was precisely the reason why petitioner was kept on floating status.
To her discredit, her defiance constituted a neglect of duty, or an act of
insubordination.
(3) It is untenable for petitioner to contend that the respondents deliberately
held her up to mockery and ridicule when they cut off her email access, sent
memoranda to her clients that she was no longer a Category Buyer, and to the
various Robinsons branches that she was now a Provincial Coordinator on floating
status and that Padilla was taking over her position as the new Category Buyer. It
suffices to state that these measures are the logical steps to take for petitioner's
unjustified resistance to her transfer, and were not intended to subject her to public
embarrassment.
c. No constructive dismissal if transfer is made to comply with
government directive.
If transfer is occasioned by a government directive, there can be no
constructive dismissal to speak of The case in point is Bisig Manggagawa sa
CHAI'TERIV 281
POST EMPLOYMENT
Tryco v. NLRC/ where respondent Tryco Phanna Corporation, a manufacturer of
veterinary medicines with principal office in Caloocan City, ordered the transfer of
petitioners from Caloocan City to San Rafue~ Bulacan by virtue of a letter dated
March 26, 1997 from the Bureau of Animal Industty (BAI) of the Department of
Agriculture reminding it that its production should be conducted in San Rafael,
r
Bulacan and not in Caloocan City. Petitioners contend that the transfer order
I amounted to their constructive dismissal. They maintain that the letter ofBAI is not
credible beca.use it was not authenticated; it was only a ploy, solicited by private
respondents to give them an excuse to effect a massive transfer of employees. They
point out that the Caloocan City office is still engaged in production activities illltil
now and respondents even hired new employees to replace them. The Supreme
Court, however, ruled:
"We refuse to accept the petitioners' wild and reckless
imputation that the Bureau of Animal Industry conspired with the
respondents just to effect the transfer of the petitioners. There is not an
iota of proof to support this outlandish claim. Absent any evidence, the
all~~ation is not only hig.11y irresponsible but is grossly urJair to the
government agency concerned. Even as this Court has given litigants and
counsel a reiatively wide latitud~ to present arguments in support of their
cause, we will not tolerate outright misrepresentation or baseless
accusation. Let this be fair warning to counsel for the petitioners.
"Furthennore, Tryco' s decision to transftr its production
activities to San Rafael, Bulacan, regardless of whether it was made
pursuant to the letter of the Bureau of Animal Industry, was within the
scope of its inherent right to control and manage its enterprise effectively.
While the law is solicitous of the welfare of employees, it must also
protect the right of an employer to exercise what are clearly management
prerogatives. The free will of management to conduct its own business
affairs to achieve its purpose cannot be denied.
"This prerogative extends to the management's right to
regulate, according to its own discretion and judgment, all aspects of
employmen~ including the freedom to transfer and reassign employees
according to the requirements of its business. Management's prerogative
of transferring and reassigning employees from one area of operation to
another in order to meet the requirements of !he business is therefore
generally not constiMive of constructive dismissal. Thus, !he consequent
transfer ofTryco's personne~ assigned to !he Production Departrrient was
well within the scope of its management prerogative.
XXX
"Indisputably, in the instant case, the transfer orders do not
entail a demotion in rank or diminution of salaries, benefits and other
1 G.R No.151309, Oct 15,2008.
282 BAR REviEWER ON lABOR lAW
privileges of the petitioners. Petitioners therefore anchor their objection
solely on the ground that it would cause them great inconvenience since
they are all residents of Metro Manila and they would incur additional
expenses to travel daily from Manila to .Bulacan.
"The Cowt has previously declared that mere incidental
inconvenience is not sufficient to warrant a claim of constructive
dismissal. Objection to a transfer that is grounded solely upon the
personal inconvenience or hardship that will be caused to the employee
by reason of the transfer is not a valid reason to disobey an order of
transfer."
9. OTHER INSTANCES 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. 1
• 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?
• Instructing the employee to go on indefinite leave and asking him to return
to work only after more than three (3) years from the time he was instructed
to go on indefinite leave during which period his salaries were withheld.
3 minimum wage. The terms of the redeployment thus became unacceptabie
4 for said employees and foreclosed any choice but to reject the employer's
• Implementing a rotation plan for reasons other than business necessity.
• Sending to an employee a notice of indefinite suspension which is
5 • Preventing the employee from reporting for work by ordering the guards not
tantamount to dismissal.
• Demoting a worker or re-assigning him involVing a demotion in rank or
6 • Transfer of respondent employee from Credit and Collection Manager to
diminution of salaries, benefits and other privileges.
• Reducing the employee's functions which were originally supervisory in
nature and such reduction is not grounded on valid grounds such as genuine
7 salary. In holding that there was constructive dismissa~ the court took note
business necessity.
• Imposing indefinite preventive suspenSion without actually conducting any
investigation. It was only after almost onell) year that the employer made
8
known the findings in its investigation which was conducted ex parte.
Pasill C)fl1der t.f.l., Corp. v. Roll, GR No. 173631, Sejt 8, 2010.
New Ever Marke!DJ, he. v. CA, G.R No. 140555, Jtl'/14, 2005.
l>ftmic ~ OliOOa AtMJtisi"g SeMces, klc. v. Poblgoo, G.R No. 156589, June 27, 2005.
t.mm ScielyGass, k1C. v. Basate, G.R No. 154689, Nov.25,2004.
Orienlal MndoroEiedric~, oo. v. Nl.RC, G.RNo.111905,JUy31, 1995.
Glltiav. Nl.RC, G.R No.116568, Sept 3, 1999; O!mledesma &~v. Nl.RC, G.R No.110930,July 13, 1995,
246SCRA47,51.
7 Globe Teleaxns, klc. v. Fklrerxlo.fklre G.R No.150092,Sept27,2002,390SCAA201.
e C. Ak3t1a &Soos, Inc. v. NLRC, G.R. No. 73521, Jcrt 5, 1994'.
CHAPTER IV 283
POST EMrLOYMENT
• Threatening a sickly employee with dismissal if he will not retire and
promising employment to his son and daughter. The employee retired and
signed two (2) quitclaims entitled "Receipt and Release" in favor of the
1
company.
• Forcing the employee to resign with threat that if he will not resign, he will
file charges against him that would adversely affect his chances for new
employment.
2
• Asking the employee to choose whether to continue as a faculty member or
to withdraw as a lawyer against the mayor with whom the former owes
certain favors, makes the cessation from employment of said employee not
voluntary. Such act is in the nature of a contrivance to effect a dismissal
3
without cause.
• Asking the employee to file a resignation on the condition or promise that
she would be given priority for re-employment and in consideration of
immediately paying her two (2) months' vacation which she desperately
needed then because she was ill. The employer's refusal in bad faith to
reempioy her despite its promise to do so amounted to illegal dismissal. 4
• Changing the employee's status from regular to casual constitutes
5
constructive dismissal.
• Offer made by a labor contractor to reassign its employees to another
company but with no guaranteed working hours and payment of only the
offer, involving as it does a demotion in status and diminution in pay.6
7
to let her in. This is clear notice of dismissal.
Marketing Assistant which resulted in demotion as it reduced his duties and
responsibilities although there was no corresponding diminution in his
of the fact that the former position is managerial while the latter is clerical
8
innature.
Zllbim, Sr. v. NLRC, G.R. No.103679, Dec. 17, 1993.
Gualson klanaiona!TraYel!lldTOI.IIS, klc. v. Nl.RC, GR No.100322,tlmM, 1994.
3 Rizal Melraial ~ Faaiy Union v. NLRC, G.R No. 59012-13, Oct 12, 1989.
Reyes v. NLRC, G:R No. 78997, Aug. 31, 1989.
i Sjv. NRC, G.R No. 85365, J111e 21, 1989.
R P; 1A1g1asM Constru:tion, klc. v. Atienza, G.R No. 156W4, Jooe 29, 2004.
l
6
7 lirlj.Ja Gro14JdCaT!Jaliesv. Vgan, GR No. 143723,JIIle28, 2001; See also SUdao v. Cinech Sysen Consfrudion,
klc., GR No. 171392, Oct. 30, :mi.
8 Norlds TI!KfO;l Co., klc. v. Gnilo, G.R No.159730,Feb.11, 2008.
L"
284 BAR REVIEWER ON lABOR lAW
• Reducing the number of trips of the drivers and shortening their workdays
1 reason of the transfer is not a valid reason to disobey an order oftransfer."1
which resulted in the diminution of their pay.
• Forcing the employee to tender her resignation letter in exchange for her
13th month pay, the reason being that the employee was found by the
employer to have violated its no-employment-for-relatives-within-the-third-
degree-policy, she having been impregnated by a married co-employee?
10. SOME PRINCIPLES ON CONSTRUCTIVE DISMISSAL OR
INVOLUNTARY OR FORCED RESIGNATION.
• Mere allegations of threat or force do not constitute evidence to support a
finding of forced resignation or constructive dismissal?
• A threat to sue the employee is not unjust and will not amount to forced
resignation or constructive dismissal. For instance, a threat to file estafa
case, not being an unjust act, but rather a valid and iegal act to enforce a
claim, cannot at all be considered as intimidation. A threat to enforce one's
clai..'ll through competent authority, if the claim is just or legal, does not
4 threatened, shouted at, and treated insolently by Fernandez on May 18, 2004 inside
vitiate consent.
• Employee who alleges that he was coerced or intimidated into resigning
5
has the burden to prove such claim.
• Giving the employee the choke or option between resignation and
6
investigation is not illegal.
• The facts of the case should be considered to determine if there is
constructive dismissal. 7 The case should be dismissed if a close scrutiny of
the facts of the case will bear out that the employee indeed failed to state
8
circumstances substantiating his claim of constructive dismissal. More so if
the records are bereft of any showing of clear discrimination, insensibility or
disdain on the part of petitioners in transferring respondents - both sewers on
piece-rate basis - to perform a different type of sewing job. It is unfair to
charge petitioners with constructive dismissal simply because the respondents
insist that their transfer to a new work assignment was against their will. It has
long been stated that "the objection to the transfer being grounded solely upon
1 ~ v. JB l.ile Bico1 Express, Inc., G.R No. 163n5, Oct. 19, 'JI/J7.
2 Stir ~cap. v. Si'rba, Coo'ia il1d Estrella, G.R No. 164774, ~ 12,2006.
3 ~v. Add Face Personnel ServiceS, Inc., G.R No. 180285, July 6, 2010.
c camta v. NI.RC, G.R No. 105083, !IJ.Jg. 20, 1993, 225 SCRA 526.
s Gaw.GaldelmaPh~,lnc.,G.R No. 177167,Ji11.17,2013.
s Be1aunzaran v. NlRC, G.R No. 120038, Dec. 23, 1996, 265 SCRA 600; Mandapat v. Add Face Pe!SOOnel Se!vices, Inc.,
G.R No. 180285, July 6, 2010; Gaa1ay Pacific Airways, Lid. v. Wain, G.R No. 148931, Sept12, 2006.
1 Philippine Rural Recons1rudion M;mment [PRRMj v. I'Ugar, GR No. 169227, July 5, 2010; Ma1dapat v. Add Face
Pelsonnel Se!vices, Inc., G.R No.180285, July 6, 2010; Velasoov. TransitAub'oo!Ne Supptf, klc., G.R No. 171327, June
18, 2010; Sugue v. Tli.nrqlh ntoo1atkx1al (Phils.), klc., GR Nos. 164804 & 164784, Jan. 30, 2009; l.lni'Mde 8aes
Warehouse().Jbv. NLRC andAmaia P. Ka.vada, GR. No.154503, Feb.29, 2008.
B Germa, Jr. v. Bankwise, Inc., G.R No. 175365, Oct. 23,2013.
CHAPTER IV 285
POST EMPLOYMENT
the personal inconvenience or hardship that will be caused to the employee by
• Voluntary resignation is different from constructive dismissal. An
employee who tendered her voluntary resignation and signed the quitclaim
after receiving all the benefits due her for her separation cannot claim that
2
she was constructively dismissed.
11. EXAMPLES OF CASES WHERE FACTS PROVED CONSTRUCTIVE
DISMISSAL
1. Girly G. leo v. Systems Technology Institute, Inc./ where it was
declared that petitioner was constructively dismissed because all proceedings and
actions taken in regard to petitioner's employment and case, beginning on May 18,
2004, were all but a farce, done or carried out in bad faith, with the objective of
harassing and humiliating her, all in the fervent hope that she would fold up and quit.
There is no doubt that petitioner was subjected to indignities and humiliated by the
respondents. As correctly observed by the Labor Arbiter, she was bullied,
the latter's own office. She was shamed when, on her very first day at the School
Compliance Group, all of the employees of the department have gone on an official
out-of-town event without her and, as a result, she was left alone at the office for
several days. Respondents did not even have the courtesy to offer her the
opportunity to catch up with the groL'P so that she could make it to the event, even if
belatedly. Then again, on May 20, 2004, STi made an official company-wide
announcement of Jacob's appointment as new STI President and CEO, Fernandez as
new STI-Makati COO, and Luz as new STI-Makati School Administrator, but
petitioner's appointment as new Compliance Manager was inconsiderately excluded.
Respondents made her go through the rigors of a contrived investigation, causing her
to incur unnecessary legal expenses as a result of her hiring the services of counsel.
Her well-deserved awards and distinctions were unduly withheld in the guise of
continuing investigation - which obviously was taking too long to conclude;
investigation began formally on May 28, 2004 (start of audit), yet by August l7
(date of memorandum informing petitioner of the withholding of Korea travel
award), the investigation was still allegedly ongoing. She was deprived of the
privilege to attend company events where she would have received her ·well-
deserved awards with pride and honor, and her colleagues would have been inspired
by her in return. Certainly, respondents made sure that petitioner suffered a
1 GR.No.191281,Dec.05,2012.
2 Concrete Aggregates v. NLRC, G.R. No. 82458, Sept 7, 1989.
G.R. No. 185100, July 09, 2014. Petitiooer, as Deil1 ci STJ..QJadaklpe, was praroEd 1D the position ci Chief Oper.!1ing
Officer (COO) of SlHJakati, lllder the sane pasitioo classilicalkxl iWl my level of 'Job Qafe Mil1a;!er B'. She
al!lCUrrentiy seNed as STI-Makali SdKJOI Adn'ilistratr. Respondent Systems Tec:llnobJy Institute, Inc. (STI) is an
educational ilsti1ulioo v.!lile respondent Mml v..JmJ (Jaoob) il1d Peter KFernandez {Fenilldez) are sn otficefs, lhe
I fooner berg the Presklenl and Chief Executive Ofti:a' (CEO) and lhe IaUer Sookr VICEH'resi:fent
r
~
286 BAR REviEWER ON lABOR lAW
humiliating fate and consigned to oblivion. Indeed, petitioner could not be faulted
for taking an indefinite leave of absence, and for altogether failing to report for work
after August 9, 2004. Human nature dictates that petitioner should refuse to subject
herself to further embarrassment and indignities from the respondents and her
colleagues. All told, petitioner was deemed constructively dismissed as of May 18,
2004."
2. McMer Corporation, Inc. v. NLRC and Libunao, Jr./ where private
respondent Libunao, Jr. 2 was declared as having been constructively dismissed based
on the following acts committed by petitioners against him:
(1) About noon of July 20, 2007, petitioner Roque, McMer's General
Manager, went to private respondent's office at the height of his anger with threat to
inflict physical harm, shouted a command for private respondent to proceed to
petitioner's office; private respondent was approached sarcastically with
commanding voice by petitioner Roque even in front of some officers and rank-and-
file employees and newly-hired employees; and private respondent's professional
eiliic or moral belief was compromised due to certain business practices of petitioner
McMer that were never exposed due to the employee's fear ofreprisa~ as shown in
private respondent's Position Paper.
(2) As may be gleaned from tlte records, what transpired on July 20, 2007
was not merely an isolated outburst on the part of petitioner Roque. The latter's
behavior towards his employees shows a clear insensibility rendering the working
condition of private respondent unbearable. Private respondent had reason to dawdle
a'ld refuse to comply wi1h the summon of petitioner Roque out of severe fear that he
will be physically harmed In fact, the same was clearly manifested by his immediate
reaction to the situation by going to the Valenzuela Police to report the incident
(3) Private respondent has exhibited a strong opposition to some company
practices resulting in a severe marginal distance between him and petitioners Roque
and Alvestir, McMer's Presiden~ at the workplace. This, together with the
harassment and intimid;ltion displayed by petitioner Roque to his employees,
became so unbearable for private respondent to continue his employment with
petitioner McMer. The fuct that none of the employees complained or brought this to
the attention of the appropriate ·authority does not validate petitioners' actions. For
private responden~ retaining the employment despite his despair was a matter of
principle. Private respondent reasoned that it was difficult for him to look for another
employmen~ considering that at the time he filed his Position Paper, he was already
G.R No.193421,June04, 2014.
l'lNale respondent was Elllflic1ted by petitioner M:Mer QxpolaOOn. klc. (tidier) oo Alldust 5, 1999 as Legal AssSant and
was evenlualy promoted as Head of Legal Depmert. and ooncunenl!y, as Officer-iH:harge ci petitioner M:Mers Legal
and Adrri1istrative Deparonent, effective oo J111uary 3, 2000.
CHAPTER IV 287
POST EMPlOYMENT
58 years old. His eventual decision to leave petitioners due to the agonizing situation
at the worlq>lace cannot, therefore, be discmmted.
The NLRC and the CA, therefore, correctly appreciated the foregoing
events as badges of constructive dismissal, since private respondent could not have
given up a job he has engaged in for eight years unless it has become so unbearable
for him to stay 1herein. Indeed, private respondent felt compelled to give up his
employment
As far as private respondent is concerned, how the working place is being
run has caused inordinate strain on his professional work and moral principles, even
stretching to desecration of dignity in the workplace. The allegation that all of
private respondent's staff were removed one by one until finally only the latter was
left alone performing managerial and clerical duties is merely part of the greater
scheme brought forth by the insensibility of petitioners in dealing with the
employees.
3. Cosare v. Broadcom Asia, Inc. 1 where it was held that petitioner
Cosare was constructively dismissed since it is clear from the cited circumstances
that the respondents already rejected Cosare's continued involvement with the
company. Even their refusal to accept the explanation which Cosare tried to tender
on April2, 2009 further evidenced the resolve to deny Cosare of the opportunity to
be heard prior to any decision on the termination of his employment. The
respondents allegediy refused acceptance of the explanation as it was filed beyond
the mere 48-hour period which they granted to Cosare under the memo dated March
30, 2009. However, even this limitation was a flaw in the memo or notice to explain
which only further signified the respondents' discrimination, disdain and
insensibility towards Cosare, apparently resorted to by the respondents in order to
deny their employee of the opportunity to fully explain his defenses and ultimately,
retain his employment. The Court emphasized in King of Kings Transport, Inc. v.
Mamac, 1 the standards to be observed by employers in complying with the service
of notices prior to termination which require compliance with the reasonable period
of at least five (5) calendar <lays from receipt of the notice within which to explain
his side. In sum, the respondents were already resolute on a severance of their
working relationship with Cosare, notwithstanding the facts which could have been
established by his explanations and the respondents' full investigation on the matter.
In addition to this, the fact that no further investigation and final disposition
appeared to have been made by the respondents on Cosare's case only negated the
claim that they actually intended to first look into the matter before making a final
I determination as to the guilt or innocence of their employee. This also manifested
r
from the fact that even before Cosare was required to present his side on the charges
I 1 G.R. No. 201298,Feb. 5, 2014.
l
2 G.R.No.166208,JIJie29,2007.
288 BAR REviEWER ON lABOR lAW CHAPTER IV 289
POST EMPLOYMENT

of serious misconduct and willful breach of trust, he was summoned to Arevalo's
office and was asked to tender his immediate resignation in exchange for financial
assistance. 1
4. Formantes v. Duncan Pharmaceuticals Phils., Inc. 2 which-
presents the very unique case of an employee being declared as having been
3 1
constructively dismissed and at the same time legally dismis{ed. Petitioner
was constructively dismissed because, while still employed with the respondent,
he was compelled to resign and forced to go on leave. After being confronted
with the complaint for sexual abuse lodged by a subordinate female employee
and before being required to explain his side, petitioner was no longer allowed
to participate in the activities of respondent company. His salary was no longer
remitted to him. His subordinates were directed not to report to him and the
company directed one of its district managers to take over his position and do
his functions without prior notice to him. He was required to explain his side on
the issue of sexual abuse as well as the charge of insubordination only after
these things have already been done to him. However, his dismi~sal was
considered legal because there was a just cause for his dismissal from the
service consisting of his sexual abuse of a subordinate female employee which,
although not cited in the Notice of Termination served on him when he was
terminated, was duly proved during the trial of the case before the Labor
Arbiter. Since the dismissal, although for a valid cause, was done without due
process of law, the employer was ordered to indemnify petitioner with nominal
damages in the amount ofP30,000.00.
2.
TERMINATION BY EMPLOYER
(NOTE: The presentation of the topics In this portion of the Sy/labus4
has been altered to provide for amore comprehensive and orderly discussion).
L him by his employer or duly authorized representative;
TWO-FOLD DUE PROCESS REOUIREMENF
Dismissal of employees requires the observance of the two-fold due
process requisites, namely:
l. Substantive aspect which means that the dismissal must be for any
of the (1) just causes provided under Article 297 [282] of the Labor
Code or the company rules and regulations promulgated by the
employer; or (2) authorized causes under Articles 298 (283] and
299 [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.
2. JUST CAUSES VS. 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
2
devices, redundancy, retrenchment, closure or cessation of business operations
3
or disease.
a.
JUST CAUSES
1. JUST CAUSES UNDER THE LABOR CODE.
The just causes in the Labor Code are found in tht: following provisions
thereof:
(I) Article 297 [282]- (Termination by the Employer) which provides
for the following grounds:
(a) Serious misconduct or willfui 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
(d) Commission of a crime or offense by the employee against the
person of his employer or any immediate· member of his family
or his duly authorized representatives; and
(e) Other causes analogous to the foregoing.
(2)Article 279(a) (264(a)]- (Prohibited Activities) which provides for
the termination of the following:

1 See also Tuasoo v. Balk of Commerce. G.R No. 192076, Na.t. 21, 2012. 1 Pasrua v. Nt:RC, G.R. No. 123518, Mcrcll13, 1998; Mrlla BEm: Co. [M:RALCO] v. NLRC, G.R No. 153180, Sept 2,
2 G.R. No. 170661, December 4, 2009. 2005; St. l.i!e's ~i:al ta18", klc. v. Ndaio, G.R No. 152166, Oct 20, 2010; Lilla l.ald, klc. v. Cuevas, G.R No.
3 The Acting Disbicl Manager of respondent for the !locos Disbict. 169523, .ltl1e 16, 2010.
' Relerri1g 11 the 2017 SyilcdxJs. 2 Miele 298 (283], labor Code.
5 Relevant Provisions: Articles 292(b) (277(b)), 294 (279), 297 (282) and 298 (283), labor Code. 3 Article 299 (284), Ibid.

L ~

290 BAR REviEWER ON lABOR lAW
(a) Union officers who knowingly participate in an illegal strike
and therefore deemed to have lost their employment status.
(b) Any employee, union officer or ordinary member who
knowingly participates· in the commission of illegal acts during
a strike (irrespective of whether the strike is legal or illegal), is
also deemed to have lost his employment status.
(3)Article 278(g) (263(g)] - (National Interest Cases) where strikers
who violate orders, prohibitions and/or injunctions as are issued by
the DOLE Secretary or the NLRC, may be imposed immediate
disciplinary action, including dismissal or loss of employment
status.'
(4)Artic!e 259(e) [248(e)] - (Union Security Clause) where violation
of the union security agreement in the CBA may result in
termination of employment. Under this clause, the bargaining union
can demand from the employer the dismissal of an employee who
commits a breach of union security a.-rangement, such as failure to
join the union or to maintain his membership in good standing
th~rein. 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 2
2. JUST CAUSES IN ACCORDANCE WITH PREVAILING
JURISPRUDENCE.
In addition to the just causes mentioned in the Labor Code, just causes
are also found in prevailing jurisprudence.3 The following may be cited as just
causes in accordance with prevailing jurisprudence:
l. Violation of company rules and regulations. 4 OF THE LABOR CODE.
2. Theft of property owned by a co-employee5 as distinguished from
company-owned property which is considered serious misconduct.
3. Incompetence, inefficiency or ineptitude.'
See asoNo. 33, NCMl Plineron sm. Pk:keli'g crld Lockoot. 2nd Edi!OI,Dec.1995.
klgulo v. Frst Phqlpi1e Scales, he., G.R No. 165407, June 5, 2009, 588 SCRA 471; ftJaba1g Colllty Wl, k1c. v. NLRC,
G.R No.170287, Feb.14,2008, 545 SCAA351, 361; Del Mxlle ~he. v. Saldivar, G.R No.158620, Oct 11,
2006, 504 SCRA 192; liag Textie Mils v. Bmoo, G.R. No. L-27029, Nov. 12, 1981, 109 SCRA 87.
3 k1g1J1J v. FIISI ~ile Scales,lnc., supm.
4 ~uita AulD TrMSpOrt Capora1ioo v. NlRC, GR. No. 197384, Jm. 30, 2013; Subl v. t-lRC, G.R. Nos. 146762,
153584 cnl163793, Jal. 30, 2007, 513 SCRA 325; Nol1ds Tradi'g Co., Inc. v. N.RC, G.R No. 168159, Aug. 19, 2005, 467
SCRA 461, 47G471; Phbm EnlJioyees lh1i:xl v. Ph~Wlne ConvnJnicDs Cl1d Phloom Caporatioo, GR No. 144315,
Jtit 17,2006.
5 Jclln HMcod< Lie &1slmce Gap. v. £lavS, G.R. No 169549, Sepl3, 2008; MF. YIOicrJoOier Tank Trucks v. NLRC, G.R.
Nos. 5695().51, Sepl30, 1982, 117 SCRA 544, 202 Phil. 872 and A. M1quez, he. v. Leogardo, G.R No. L-63227, Mcrch
15,1984,213 Phi.217;0Ciliav. NI..RC, GR Nos. 97162.Q4,June 1,1995,244SCRA669, 674.
CHArTER IV 291
POST EMPLOYMENT
2
4. Failure to attain work quota.
5. Failure to comply with weight standards of employer. 3
4
6. Attitude problem.
3. DISMISSAL BASED ON COMPANY RULES AND REGULATIONS
NOT ILLEGAL.
If the ground cited is based on the Company Rules and Regulations or
Code of Conduct or Code of Discipline, it is to be expected that the same is not
to be found in Article 297 [282) of the Labor Code since the latter merely
enumerates the just causes or grounds in general terms.
In Sampaguita Auto Transport Corporation v. NLRC, the Supreme
5
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 /aha! ng schedule nailalabas,' [']mababa ang revenue ng bus, /aging
kasama an[g) asawa sa byahe' and 'maraming naririnig na kwento tungko! sa
_kanya, nag-t;utos ng conductor para kumita sa hindi magandang paraan[,]' xxx
are not among those enumerated under Article 297 [282] of the Labor Code as
• just causes for termination of employment." The irregularities or infractions
committed by private respondent in connection with his work as a bus driver
constitute serious misconduct or, at the very least, conduct analogous to serious
misconduct, under the above-cited Article 297 [282] of the Labor Code. The
requirement in the company rules that '3. to obey traffic rules and regulations
as well as the company policies. 4. to ensure the safety of the riding public
as well as the other vehicles and motorist (sic)' is so fundamental and so
universal that any bus driver is expected to satisfy the requirement whether or
not he has been so informed.
4. DISCUSSION OF THE JUST CAUSES UNDER ARTICLE 297 [282]
The grounds mentioned in Article 297 [282] shall be discussed herein
seriatim.
1 Rejes-Rayel v. ~ile Luen Thai ftili1gs Gap., G.R No. 17-1893, Jutt 11, :MJ12; IWia v. New fvle ~k:s, klc.,
GR No. 192190, ~ 25, 2012; Sk~ ~led Padflc. Inc. v. t.b;luad, G.R No. 166363, Aug.15, 2000; Cu!resrna v.
Em:juez. AM No. MTJ-9H08, Sept 20, 1995, 248 SCRA 454; &lola v. Honrado, A.M. No. 202&CFlllec. 19, 1981, 196
Phi.514.
2 AJq v. Felicia1o, G.R No. 185829, ,6flnl25, 2012; Lin v. NlRC, G.R. No. 118434, Julf 26, 1996, 259 SCRA 485; Buiser
v. ~.Jr., GR. No. L-63316, July 13, 1984, 131 SCRA 151; l..eonaldo v. NLRC, G.R No. 125303 June 16, 2000, 333
SCRA 589; Phi~ AlneOCcrl En'tlrOOeries v. EirdJIOOefy em Gament Walte!S, GR No. L·:Ml143, Joo. 27, 1969, 26
SCRA 634, 639.
3 Y~iv.PhfippileAi1iles,lnc.,G.RNo.168081,0ct 17,2008.
4 Reyes-Raye1 v. Philippile Luen Thai l1oldings Gap., G.R No. 174893, Juti 11, 2012; ~ MCilia,lnc. v. The CA. G.R
No. 154410, Oct 20, 2005.
s G.R No. 197384, J<n 30, 2013.
292 BAR REviEWER ON lABOR lAW CHAPTER IV 293
POST EMPLOYMENT

I. • Misconduct must relate to employee's duties and must show his

1
SERIOUS MISCONDUCT 1 unfitness to continue working for the employer.
• Series of irregularities, when put together, may constitute ·serious
1. REQUISITES. misconduct.
2

For misconduct or improper behavior to be a just cause for dismissal, • Acts destructive of the morale of co-employees constitute serious
3
the following requisites must concur: misconduct.
1. It must be serious; • Committing libel against an immediate superior constitutes serious
2. It must relate to the performance of the employee's duties; misconduct. 4
3. It must show that he has become unfit to continue working for the • Possession or use of shabu or other drugs is a valid ground to
employer;2 and terminate employment. 5
4. It must have been performed with wrongful intent. 3 • Drug abuse inside the company's premises and dwing working hours
constitutes serious misconduct The Comt has taken judicial notice of
The 2014 case oflmasen Philippine Manufacturing Corporation v.
scientific findings that drug abuse can damage the mental faculties of the
Ramonchito A. Alcon and Joann S. Papa, added the 4ih requisite above which,
it said, is "equally important and required." user. 6
• To justify termination, the drug test must be conducted by authorized
All the above requisites must concur. 4
drug testing center.7
2. SOME PRINCIPLES ON SERIOUS MISCONDUCT. • To be valid, both screening and confirmatory tests should be conducted
prior to termination. 8 The screening test must be conducted first before
• Serious misconduct implies that it must be of such grave and
the confinnatoi"J tesL 9
aggravated character and not merely trivial or unimportant. 5 • Immorality, as a general rule, is not a just ground to terminate
• Simple or minor misconduct would not justify the termination of the employment. The exception is when such immoral conduct is
services of an employee. 6 10
prejudicial or detrimental to the interest of the employer.
• The charge for serious misconduct must not be a mere afterthought. 7 • Immoral act committed beyond office hours is a valid ground to
• There mw.i be a valid company rule or regulation violated.8 .
termmate empIoyment. u

1 Relevant provision: Article 297(a) [282 (a)], labor Code.
2 Ybtv.Mria Elecl!k:Coi11mY,GRNo.190436,Jan.16, 2012,663SCRA92; NiSSCI1 M:JtcrPhils., klc. v.Angelo, G.R
No. 164181, Sept. 14, 2011, 657 SCRA 520, 530; Nail~ lias lfJ Mil'gg<rJiMa sa Kei1i1 v. Kellil PfliWiles
Caporalioo, GR No. 171115, Aug. 9, 2010, 627 SCRA 179, 188; MINai Trading, k1c. v. NLRC, G.R. No. 169600, June
26,2007, 525scRA 708, 727; Lqli!Zv. N.RC, GR. No.167385, Dec.13,2005; ~v. flliWileH'Liles, klc., GR.
No.152329,April22, 2003; PlfllpileAeokJsA!DnoWe l.k1ited Colporablv. NLRC. G.R. No.124617,April28, 2000,387
Plil250, 261; Austiav. NLRC, G.R No. 124382, Aug. 16, 1999,371 Phi340, 360.
3 This 4h reqtisle was added nmasen flt1qlpkle M:nJfad1Ji1g Co!pooibl v. Ram1chlto A. Al::on and Jocm s. Papa,
GR No.194884, Oct 22, 2014; See aso&hevenia v. Venul!!k 1/edka, klc., G.R No. 169231, Feb. 15,2007,544 Phi.
763,770.
4 Coca-Cola Bolllels, Phis., Inc. v. Kapisanan ng Malayang Manggagawa sa Coca-Cola-FFW, G.R. No. 148205,
Feb. 28, 2005.
5 f'hi\lpile Nablall!crik v. Velasco, G.R No. 166096, Sepl11, 2008; CdegO de SM Jua1 de l.eiTCI1·Calarba v. Vilas,
G.R. No. 137795, M!th 26, 2003; See aso Balloo v. CA, G.R No. 162342, Oct 11, 2006, 504 SCRA 227, 236 dlilg
Fu;tsu ~ Producls C<xporaOOn cllhe l'hifWines v. CA, GR No. 158232, March 31, 2005,454 SCRA 737, 767·
768; VilcrncrGcfCkJb v. Pehid, G.R No.166152, Oct 4, 2005,472 SCRA 36, 48; St Mchael's lnstiiJJ!ev. SMios, G.R
No.145280, Dec.4,2001.
Ra00Coommicaliooso11he PhifWiles, Inc. v. NLRC,G.R. No.113178. Julf5, 1996.
Coca-COO Exp<rt Cap. v. Gacayan, G.R No. 149433, Dec. 15, 2010.
e Nar.rjov. BklmedicaHdl care. he., G.R. No 193789, Sept 19,2012.
1 Watelftoot Cebu City casi1o Holfll, he. v. lldeb!1rdo Ledesma; G.R No. 197556, MJd125, 2015; lmasen Plippine
~ Caporation v. RimJ1d1io A. A1coo Cl1d .1om S. ~ GR No. 194884, Oct.22, 2014; JooaM Sa1Q-M
v. Equator KniJhls Delfldive il1d Secoriy ~ency. he., G.R. No. 173189, Feb. 13, 2013; YOOut v. Moria Eledri;
~. G.R No. 1!Kl436, Jat 16, 2012; TOIIlala, Sr. v. RFM Gaptxa1iorrBake Fklur~ G.R No. 1s:iz70, Sept
11,2009,599 OCRA381,391;Coca<:cla BotlleiS. Phis, klc. v. ~ ng MalayarJ ~saCocatdafFW.
:m
G.R. No. 148205, Feb. 28, 2005; Sansoo v. NLRC, GR No. 121035, Apli 12, 2000, SCRA 460, 471; Edge Appcnl,
Inc. v. NlRC, G.R. No. 121314, feb. 12, 1998, 286 SCRA 302.
2 Piedad v. L.no del Nom Elelit ~. he., GR No. 73735, Aug. 31, 1987, 153 SCRA 500; See also Quialrilao v.
MriaEJecn::~.G.RNo.171023,Dec.18,2009.
3 Citilri, NA. v. NLRC, G.R. No. 159302, Feb. 6, 2008.
~ TOITeda v. Toohlla i1foonaOOn fquipment [Phis.j, hc., G.R. No. 165960, Feb. 8, 2007.
s Roquero v. Philippi1e Ai'l.iles, lnc.,G.R No. 152329,.6¢22,20031 Plallalion l3crf Rest:rtand ~ v.ruxioo, G.R. No.
182216, Dec. 4, 2009.
6 BiJa'do Bugh<rN, Jr. v. Treasue Island Industrial cap., G.R No. 173151, Mald1 28, 2008; Bematlo B. Jose, Jr. v.
~Phils.,lnc., G.R.No.169606,Nov. 27,2009.
7 Nacague v. Su~ Liles, Inc., G.R No. 172589, AlltJ. 8, 2010; hlb110We£ngile Rebti!els, klc. (AER) v. ~lxlng
Unyon ng rnga t.mgg~asa AER, GR Nos. 160138 &160192, July 13, 2011.
8 Nacaguev. Sulpi:ioliles, klc.••.
9 P1an1a1ion Bay Resatand Spa v. Oubrico, G.R No. 182216, Dec. 4, 2009.
10 Sanlos, Jr. v. NLRC, G.R No.115795, March6, 1998,287 SCRA 117.
11 Navarro Ill v. Damasco, G.R No. 101875, July 14, 1995.

,......._ __ _
 CHAPTER IV "'1:>
294 BAR REVIEWER ON lABOR lAW PoST EMPLOYMENT

• OrganiziJig a credit union by employees in a bank is a serious

• Sexual intercourse inside company premises constitutes serious 2
1 2 misconduct.
misconduct. More so when it was done during working hours.
• Deceiving a customer for personal gain is a just cause for
• The act of a 30-year old lady teacher in falling in love with a 16-year 3
3 tennination.
old student is not immoral. .
• Contracting work in competition with employer constitutes serious
• An employee may commit serious misconduct when his letter- 4
explanation uses accusatory and inflammatory language.
4 misconduct.
• Employer need not suffer any damages resulting from a serious
• Circulating e-mail message may give rise to the charge of serious 5
misconduct if its contents constitute a wrongful act 5 misconduct committed by an employee against a customer.
• Fighting is a ground for termination but only the instigator or • Intoxication which interferes with the employee's work constitutes
6
aggressor and not the victim who was constrained to defend himself serious misconduct.
should be dismissed.
6 • The act of a teacher in pressuring a colleague to change the failing
7
• Filing of criminal case by an employee does not indicate his grade of a student is serious misconduct.
. 7 8
mnocence. • Sexual harassment is a just ground to dismiss.
9
8 • Sleeping while on duty is a ground for tennination.
• Challenging superiors to a fight is a just cause for termination. 10
9 • Dismissal b too harsh a penalty for eating while at work.
• Assaulting another employee is a just cause for termination.
• Utterance of obscene, insulting or offensive words constiiutes serious • Pilferage or theft of company-owned property is a just cause to
10 11
misconduct. tenninate.
• Disrespectfui conduct is not serious misconduct if provoked by • Theft of funds or property not owned by employer is not a ground to
. or emp Ioyer. u 12
supenor tenninate.
13
• Gambling within compa!ly premises is a serious misconduct.
12 • Act of falsification is a valid ground to terminate employment.
• Instigating husband to maul her supervisor, a serious misconduct 13 • Punching-in of time cards of other employees is a just cause for
14
• Rendering service to business rival is a just cause to tenninate termination.
15
14 • Circulating fake meal tickets is a just cause for tennination.
employment.
• Selling products of a competitor is a just cause for tennination.
1 • Using employer's property, equipment and personnel in the personal
16
business or benefit of the employee is serious misr.onduct.
Stanford tMosystems, Inc. v. NLRC, G.R. No. L-74187, Jan. 28, 1988.
krasen Ph~ Mcrl~ ColpaaOOn v. R<ml1chiD A. Ak:oo Cl1d .loav1 S. Papa, G.R No. 194884, Oct. 22, 2014, azade ln1emaliooal [Phis~. nc. v. CA, G.R No. L-40553, Feb. 26, 1981, 103 SCRA247.
ci1DJ EdleYerriav. VOOJ!ek Medial, n:., G.R No. 169231, Feb. 15,2007, 544 Phi 763, no. Aboc v. Metropo1tM Bat il1d Trust~. G.R Nos. 170542-43, Dec. 13, 2010.
3 ~v.CiaYe,G.RNo.l-49549,Aug.30, 19!K>, 189SCRA117. 3 PLOT v. NLRC, G.R. No. 74562, July 31, 1987; Barba and Gonzales v. Hat CA, NLRC and PhiHppine Ailines,
4 Nss1r1 MU Pit;., 0:. v. ~. G.R No. 164181, Sept 14, 2011,657 SCRA 520, 530; ~ v. Ma1ia TmesA.a
Inc., G.R No. 169731, Milth 28, 2007.
Vquria Nlistilg, ~ G.R No. 164181, Sept 14,2011,657 SCRA520, 530. . Lopezv. NLRC, GR. No. 167385, Dec. 13, 2005, 4n SCRA 596,602.
6 Plllzalv. ETSITecllloqJies, 0:., G.RNos. 170384$,Milth9,2007. Pauleik>v. CAP Phi~. 0:., G.R No. 161305, Feb. 9, 2007.
& Gcldav.NLRC,G.RNo. 116568,Sepl.3, 1999; ~SieelpPeCcxp. v.Batlaje,GRNo. 170811,Apli24,2007. s Sa¥! Travel CoqlOiation v. Nt.RC, G.R No. 121449, Oct 2, 1997; Club~. Inc. v. Sebastian, GR No. 85400, Ju¥ 23,
7 Flores v. NLRC, G.R. No. 109362, May 15, 1996, 256 SCRA 735.
1992, 211 SCRA 717.
8 Luzoo !i!Yedoltg Ccxpolablv. CR. G.R. No. L-18683,1lec. 31,1965. 7 Padilav.NLRC,G.RNo.114764,June13, 1997,273SCRA457.
9 Haverlon Shipping Ltd. v. NLRC, G.R. No. 65442, April15, 1985, 135 SCRA 685. 8 R.A. No. 78n (Anti-Sexual Harassment Act); ;Phi!Jpile hDJs 1\utrm:JtNe LIMed COiporatioo v. NLRC and Rosalnda
1o EdleYenia v. VerutEk Medial, 0:., G.R No. 169231, Feb. 15, 2007; Scii 1Jeo1e1opment Co!pa'aOOo Workers Associa100
C.Cai!z, G.R No. 124617, April28, 2000.
(SOCWA-lM'P) v. Sorld ~ Corpool&rl, G.R No. 165995, hrj. 14, 2007; ~ f'tiwine Corporalion v. 9 FrstDomlr.ion ResrutesColp. v. PeilclandaandVidai,G.R. No. 166616,Jal, 27,2006.
Eslava, G.R No. L--18814, .klle 27, 1985, 137 SCRA 259; Asia\ DesiJn 11111 McrufactJri"Q Capaalioo v. Deputy Mllisler 1o TCilduayDistilelyt.mUnioo v. NLRC, G.R No. 73352, Oec.06, 1995.
dlixr Cl1d Cispill.avlrez, Jr. G.R. No. 70552, t.'ay 23, 1986, 142 SCRA 79; 226 Phi. 20; Oela Cruz v. NLRC, G.R No. u Nag~ Lalasrg Millggcr:Jawasa Keihin (Nl.M<.()I.ALIA-KMJ)v. Keilil PlllWines Cap., G.R No.171115,hrJ.
82703, Sept 15, 1989, m SCRA 626; BorOOc v. NLRC, G.R No. 103209, .hit 28, 1997, 276 SCRA 288; Soli:! . 9,2010.
IJeo.ielopmeft Corporation Wolter.; Assodatioo (SOCWMMIP) v. Soli:1 Development Coqxxatkln, G.R No. 165995, Aug. 12 Vi11amar Golf Club v. Pehid, G.R No. 166152, Oct 4, 2005.
14,2007. 13 Ramxan v. J<rdine CMG l1e lnsullllCe Co., Inc., G.R No. 13'1943, Feb. 22,2000.
11 Golden Thread Knitting lndustriesv. NLRC, G.R. No. 119157, March 11, 1999.
14 San Mguel Corporation v. NLRC, G.R No. 82467, June 29, 1989.
12 IAnalanlii v. Seae!lry of t.m, G.R. No. 83854, May 24, 1989.
15 lbarrientos v. NLRC, G.R. No. 75277, July 31,1989.
13 Gmlsv. Quatiy House, he., GR. No.156766, Aprl16, 2009. 1s ZencoSales, Inc. v.NLRC,G.R No.111110,Aug2, 1994;JoseA.Ibarrienlllsv. NLRC,G.R No. 752n,Ju~31, 1989.
14 ABSCBN ~k:tjeesllnioov. NLRC,G.R No. 111211,Jutt24, 1997,276SCRA 123.
296 BAR llEVIEWER ON lABOR lAW
n.
INSUBORDINATION
OR WILLFUL DISOBEDIENCE OF LAWFUL ORDERS1
1. REQUISITES.
One of the fundamental duties of an employee is to obey all reasonable
rules, orders and instructions of the employer. In order to validly invoke this
ground, the following requisites must be complied with, to wit:
1. The employee's assailed conduct must have been willful or
intentional, the willfulness being characterized by a wrongful and
perverse attitude; and
2. The order violated must be based on a reasonable and lawful
company rule, regulation or policy and made known to the
employee and must pertain to the duties for which he has been
engaged to discharge. 2
• Requisites for va!idity of company rules and regulations;
As far as the second requisite for insubordination or willful disobedience is
concerned, it is required that there should exist a rule, regulation or policy upon
which the order is based which must be:
1) lawful and reasonable;
2) sufficiently known to the employee; and
3) in connection with the duties for which the employee has been engaged
to discharge.3
An order which is not based on a rule, regulation or policy which does not
satisfy the foregoing 3 requisites is not lawful and thus may not be invoked as basis
for terminating an employee on the ground of insubordination. Needlessly, absent
any of the foregoing elements would make the refusal ofthe employee to comply
wilh the rule, regulation or policy justified and not constitutive of ''willful
disobedience" as would warrant the imposition of the penalty of dismissal for such
refusal.
1 Relevant provision: Article 297(a) !282(a)), Labor <:ode.
2 The Calee llealllld Tea Lea~ klc. v. Rolf P. Arenas, GR No. 208908, Marth 11, 2015; Maelsk~
Oe\WYJ, klc. v. Aveslruz, GR No. , 207010, Feb. 18, 2015; lbYpl v. Rapkl MlYels ax! F~ Co., h:., G.R No.
163431, Aug. 28, 2013; M!ll1l lf'h~i1es] Co!poo6:x1 v. Saki, G.R No. ffi7598, Nov. 21, 2012; -Reakla v. New kJe
Graphics, klc., G.R No. 192190, Apri 25,2012; Nisscrl tiOOr Pills., Inc. v. Angelo,G.R No.1641S1, Sepl14, 2011,657
SCRA520, 530; GraodtEq Industrial S1eel ProOOcls, b1c. v.fskela, G.R No.192416,Mard123, 2011,W\ SCRA391, 400;
EquilablePCISankv. Ooolpoc, GR Nos.163293 &163297, Dec. B. 2010;
3 MCI1ila B~ ~ v. NLRC, G.R No. 121975, Aug. 20, 1998; See also ArePnmmn and t.'al<eling Corp. v.
lima, G.R No. 111703, Sept 22, ~; Genuilo Ice ~. klc. v. ~. G.R No. 147790, June 27, 2006;
Stol-Nielsen Marine SeM:es [Phils.], h:. v. NLRC, G.R No. 109156, .lutf 11, 1900, 258 SCRA 643, 648.
L.
CHAPTER IV 297
POST EMPLOYMENT
• Employer has prerogative to formulate and implement company rules
and regulations or policies. 1
• Company rules and regulations or policies are presumed valid until
amended or nullified. Until and unless the rules or orders are declared to
be illegal or improper by competent authority, the employees ignore or
disobey them at their peri1.2
• Filing of a case questioning validity of rules and policies does not
prevent employer from enforcing them.3
• Violation of a company policy which oftentimes has been relaxed in its
implementation or has been tolerated or acquiesced to by superiors
cannot be a valid ground to terminate. 4 But laxity or leniency in the
enforcement of rules and procedures is not an excuse for commission of
wrongful acts. 5
• The employee's transgressions cannot be mitigated by the supposed
approval of his actions by his superiors.6
2. SOME PRINCIPLES ON INSUBORDINATION.
• Making false allegations in complaint does not constitute insubordination.'
• Failure to answer memo to explain constitutes willful disobedience. 8
• .1\nother notice is required in case of termination on the ground of failure to
9
answer memo to exp lam.
0
• Willfulness of conduct may be deduced from the manner the reply is
10
written.
• Refusal to undergo random drug testing constitutes both serious misconduct
and insubordination. 11
• Making false allegations in a complaint filed with the NLRC does not
12
constitute insubordination.
13
• Prolonged practice, not an excuse for commission of wrongful acts.
1 Alilem C'.oopefaWe. klc. v. BMdilla, .k'., GR No. 173489, Feb. 25, 2013; ~ v. NI.RC, G.R No. 121004, Jan. 28,
1998,285 &:R/\251; SalaVilliav. Lem Ccilge. G.R No. 110396, Sept 25, 1998,296 SCAA 184, 190.
2 Benguet Elecii: ~ v. Flanla. G.R No. 158600, Mrd1 9, 2004; Aled Banl<tg Capomfioo v. CA. G.R No.
144412, tb. 18, 2003; GTE lliectlOOs Co!pcratioo v. Sanchez, G.R No. 76219. Mlrf27, 1991, 197 SCRA452, 467-468.
3 Ak:alflra,.t. v. rA, G.R No. 143397, Aug. 6, 2002.
4 CocaCcla BotlleiS PhfWiles, klc. v.wa, G.R No. 154384, Sept 13,2004.
5 San t.'f:luel CorpQaOOn v. NLRC, G.R No. 50321, MJth 13, 1984; San Mguel Copcxalion v. NI.RC, G.R Nos. 146121·22,
~16,2008.
t.blt~) CorporaOOnv. Safu, G.R No.197598, Nov. 21,2012.
·Petoo Corp. v. NLRC, G.R No. 154532, Oct. 27,2006.
B Ace Pronmoo and Milketing Co!p. v. Ursi:bia, G.R No. 171703, Sept 22, 2006.
9 ld.
1o ePoci1ic Gl:lbal Contact CeniEf, Inc. v. CabMsay, G.R. No. 167345, Nov. 23, 2007.
11 ~and Its Meni>els v. Kingsport ExpressaxiWJlsOC, G.R No. 194813}¢125, 2012.
12 Petoo Corp. v. NLRC and ChilD C. McKltos, G.R No. 154532, Oct. 27, 2006.
13 Santos v. San M~guel Corporation, G.R. No. 149416, March 14,2003.
298 BAR REVIEWER ON LABOR LAW
• Refusal to render overtime to meet production deadline constitutes
1
insubordination.
• Refusal to comply with a lawful transfer constitutes insubordination?
• Penalty for insubordination or willful disobedience should follow the rule
on reasonable proportionality.3
m.
GROSS AND HABITUAL NEGLECT OF DUTIES4
l. REQUISITES.
The following are the requisites:
(I) There must be negligence which is gross and/or habitual in
character; and
(2) It must be work-related as would make him unfit to work for his
employer.
2. SOME PRINCIPLES ON GROSS AND HABITUAL NEGLECT OF
DUTIES.
5
• Simple negligence is not sufficient to terminate employmeut.
• The negligence must be gross in character which means absence of that
6
diligence that an ordinarily prudent man would use in his own affairs.
• As a general rule, negligence must be both gross and habitual to be a valid
ground to dismiss. 7
• Habituality may be disregarded if negligence is gross or the damage or loss
is substantiaL 8"Habitual negligence" implies repeated failure to perform
9
one's duties for a period oftime, depending upon the circumstances.
RB. Mchael Press.v. Gall, G.R No. 153510, Feb. 13, 2008.
San Miguel Corp. v. PontiDas, G.R No. 155178, May 7, 2008; Westin Philippine Plaza Hotel v. NLRC, G.R No.
121621, May 3, 1999.
! GoldO;y~PatServioos, Inc. v.NLRC,G.RNo.861XXl,Sept.21, 1990.
4 Relevant provision: Article 297(b)i282(b)J, Labor Code.
St. Luke's Medic3 CenU, ~ v. NIBil, G.R. No. 152166, Oct. 20, 2010; TaidMo v. Falcon .Mcriine &Allied Servioos,
n:., G.R No. 172031, Jut)' 14, 2008.
01avez v. NLRC, G.R. No. 146530, Jat 17, 2005; Lmn Mlb'Corpolation v. NLRC, G.R No. 159738, IRe. 9, 2004; Sec.
4343.01(21, Depabrentdi..OOor Mrual.
1 k1lemational SchOO tlooia v. kltemational School Alialce d EducaiD!s (~. G.R. No. 167286, F~. 5, 2014; Cavi!e
~.Inc. v. Mrquez, GR No. 172044, Feb. 6, 2013; ~ v. Phiex lvi1ilg Caporation, G.R No. 178976, J~ 31,
2009; Nissan Mior Phis., klc. v. MJe!o, G.R No.164181, Sept 14, 201U57 SCRA 520, 530; GemD!Ice~.
Inc. v. M:lgpantay, G.R. No. 147790, June 27, 2006, 493 SCRA 195, 205; Uni;Jn Mlfor Colporalion v. NLRC, G.R. No.
159738, IRe. 9, 2004; Phiippine Aeok.Js Alitofroli,oe Uli!Ed Colporation v. Nt.RC, G.R No. 124617, Apri128, 2000; Judy
Pfli!Wites. Inc. v. NLRC, G.R No. 111934, Apri129, 1998, 289 SCRA 755; 352 Pill. 593; Sec. 00.01[2].1leplrtnent of
8
I..OOorMilual.
Fuentes v. NLRC, G.R No. 75955, Oct. 28, 1988; Associaledllalkv. NLRC, G.R No. 86023,June29, 1989.
9 Premiere Development Bank v. Mantal, G.R. No. 167716, March 23, 2006, 485 SCRA 234, 239.
CHAPTER IV 299
POST EMPLOYMENT
• Negligence is a question of fact. 1
• In the absence of any form of negligence, the dismissal is illegal. 2
• Actual damage, loss or injury is not an essential requisite. 3
• Higher degree of diligence is required in the banking industry. 4
• Gross negligence may result to loss of trust and confidence. 5
• No negligence if the act alleged to be so is in accordance with standing
• 6
company practice.
• No negligence if the act is in accordance with management-sanctioned
deviations from the company policy. 7
• Absences, if authorized, cannot be cited as a ground to terminate
employment. 8
• Tardiness or absenteeism, if not habitual, cannot be cited as a ground to
.
termmate empIoyment.9
• Tardiness or absenteeism, if habitual, may be cited as a ground to terminate
employment. 10
• Tardiness or absenteeism, if habitual, may be tantamount to serious
misconduct. 11
• Absences or tardiness due to emergency, ailment or fortuitous event are
justified and may not be cited as just cause to terminate employment. u
• Mere aliegation of absences or tardiness is not sufficient; the burden of
proof is on the employer. 13
• Unblemished record belies allegation of gross and habitual neglect.
14
• Unsatisfactory or poor performance, inefficiency and incompetence are
considered just causes for dismissal only if they amount to gross and
habitual neglect of duties.
15
1 School dlhe Holy Spirit of Quezon Cityv. Taguiam, G.R. No. 165565, July 14, 2008; Reyes v. Maxim's Tea House,
G.R No. 140853, Feb. 27, 2003.
2 Sll.uke'sMd:al Cem, klc. v. Nlml.~
3 Sec. 4343.01[21, IJepatl1ent d l.m'Minlal.
Dycoco, .t.v. E!Jlliille PCI Balk (naw BalCo de Oro), G.R No. 188271, hlg. 16, 2010.
5 ld.
6 Raros v. BPI Farily ScNi'gs Bri, ~. G.R No. 203186, IRe. 04,2013.
1 l.b;a-Tatv. Sliiis lntemationaiiW,G.R No. 77457, Feb. 5,1990, 260 Pli 166.
8 Oriental t.imo 8ed!ic CooperaWe, R:. v. NLRC, GR. No. 111905, Mj 31, 1995; Alias Conscidated Mnilg and
l:leYeqlrnertCorporationv. NLRC, G.R No. 75751, Oct. 17, 1990, 190 SCRA 505.
9 Gerum Ice Coo'paly, klc. v. ~. G.R No.147790, Jllle 27,2006.
10 Vcisao v. Hon. CA. GR No. 146621, ~ 30, 2004, 435 SCRA 543; Pl1qlpile Geo1hem1al, tic. v. NLRC, G.R No. 106370,
Sept. 8, 1994; ScjJnas v. NLRC, G.R No. 49286, March 15, 1990; Malia Eledric CorlllanY v. NLRC, G.R No. 114129,
Oct. 24, 1996.
11 ~v. Manila Eledric Colr!mf, G.R No. 171023, IRe. 18, 2009.
12 PLDT v. Teves, G.R No. 143511, Nov. 15, 2010; Na.ran'o v. c:ooH:ola Bo!lers Phils., klc., G.R No. 162583, June 8, 2007.
I 13 Ered!lr AMrtisi1g Sgn G!wp, klc. v. N.RC, G.R No. 167218, Ju1i 2, 2010.
14 Union MJmr Caporation v. NLRC, G.R No.159738, Dec. 9, 2004.
I 15 Mrcmav.Careon,G.RNo.143540,Apli11,2003,401 SCRI\303,309.
~.
300 BAR REVIEWER ON lABOR lAW
CHAPTER IV 301
POST EMPLOYMENT

IV. • No hearing is required to validly dismiss an employee for abandonment. 2

1
ABANDONMENT OF WORK
l.CONCEPT.
Abandonment is a form of neglect of duty; ·hence, a just cause for
termination of employment under Article 297(b) [282(b)] of the Labor Code. 2
2. REQUISITES.
To constitute abandonment, two (2) elements must concur, namely:
1) The employee must have failed to report f{)r work or must have
been absent without valid or justifiable reason; and
2) There must have been a clear intention on the part of the employee
to sever the employer-employee relationship manifested by some
overt act. 3
• 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
3
employee's current whereabouts.
• Service of the notices of abandonment of work after the six-month period of
"floating status" is not valid. 4
• Immediate filing of a complaint for illegal dismissal praying for
reinstatement negates abandonment. 5
• Lapse of time between dismissal and filing of a case is not a material
indication of abandonment. Hence, lapse of 2 years and 5 months6 or 20
7 8 9
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.
10

3. SOME PRINCIPLES ON ABANDONMENT. • The fact that an employee filed a complaint for illegal dismissal is not by
4
itself sufficient indicator that he had no ir.tention of deserting his
• Mere absence is not enough to constitute abandonment. employment if the totality of his antecedent acts palpably display the
5
• Clear intention to sever employment relationship is necessary. contrary. !I
• An empioyee who stopped working because of her mistaken belief that she • Filing of a case to pre-empt investigation of the administrative case is
has been dismissed is not guilty of abandonment. 6 tantamount to abandonment.
12
7
• Abandonment is a factual issue. • When what is prayed for in the complaint is separation pay and not
• Employer has the burden of proof to prove abandonment. 8 reinstatement, the filing of complaint does not negate abandonment. 13
• There is no abandonment when it was the employer who prevented the • It is abandonment when what is prayed for in the complaint is separation
9
workers from reporting for work. pay and it was only in the position paper that reinstatement was prayed
14
• Due process in abandonment cases consists only of the service of 2 notices for.
to the employee, viz.: • Employment in another firm coinciding with the filing of complaint does
1
a. First notice directing the employee to explain why he should not be not indicate abandonment.
declared as having abandoned his job; and
b. Second notice to inform him of the employer's decision to dismiss him 1 ~ MnJ!acWri1g C<xporabl v. NLRC, GR Nos. 110452-54, Nov. 24, 1994; Cebu Ra(cll P'alt [San ~
on the ground of abandonment. 1 ~Jv. Hon. Deputy t.tlisB'ctl.alor, G.R No. 58639,hJJ.12. 1987, 153 SCRA381987.
2 lne1r.mCoolailerliles, lnc.v. BiUisla, G.R No.187693,.llf 13.2010.
3 AgcbJn v. NLRC, G.R No. 158693, Nov. 17,2004.
MaiJ«!v. ~GeneraiSeM:es.lnc..~.R No.165269,.Ule29,2010.
Pmi;1 Cyilder MQ., Cap. v. Rokl, GR No. 173631, Sept. 8, 2010; ~i:an Safety Glass, Inc. v. Basft, G.R No. 154689,
1 Releval!Plwisioo: Artkie 297{b) i282(b)L Lalor Code.
2 Forever~ &General SeM::es v. Fbres, GR No. 147961, Sepl7, 2007; Panilgfm lndus!Jial Sales CapcxaOOn v.
6
Cosmos-
Nov. 25, 2004; See also Cap. v. ~r.rna. Jr, GR No. 164403, Man:h 4, 2008. .
Reno Foods, Inc. v. NI.RC, G.R No.116462. Oct 18, 1995,249 SCRA379, 387.
Caslllleda, GR Nos. 169~~. Nw. 20,2006.
3 CRC Agriculhllal Trading v. NlRC, G.R. No. 177664, Dec. 23, 2009; RBC Galle Master System v. Baluyot G.R 7 Arv,jeles v. Femaldez. G.R No. 160213, Jan. 30, 2007.
No. 172670, Jan. 20, 2009, 576 SCRA 668.
8 NS Transport Se!Vices, Inc. v. Zeta, G.R. No. 158499, Aprl4, 2007.
( New Ever Mariteting, Inc. v. CA, G.R No. 140555, July 14,2005. 9 PdaMachneShopv.Javigas,GRNo.175960.Feb.19,2008.
10 Pare v. NLRC, G.R. No. 128957, Nov. 16, 1999,
CRC Agricultural Trading v. NLRC, G.R. No. 177664, Dec. 23,2009.
lR1Mkle Sales Will!house CkJb v. NLRC, G.R No.154503, Feb. 29,2008. 11 l.oopad ln\egraled SeM:es, Inc. v. t.lacalinao, G.R No. 159808, Sept 30, 2008, 567 SCRA 192; PhBippkle Rural
7 Premiere Development Bank v. NLRC, G.R No. 114695, July 23, 1998. Recoi'QrucOOn M:Nanent [PRRMI v. Pug;r, G.R. No. 169227, Jutj 5, 2010.
8 Northwest Tourism Co!p. v. Fonner Special Third Division of the Hon. CA, G.R. No. 150591, June 27, 2005. 12 k1tet1rw Con1ainer Liles, Inc. ald Tumbay v. M3. Teresa BaJtisfa. G.R. No. 187693, Ju¥ 13, 2010.
13 Jov. NLRC, G.R No. 121605, Fell. 2, 2000; Bombasev. NLRC, G.R No. 110889, June 30, 1995,245 SCRA496, 500.
9 Pasig ~ lvtJ., Gap. v. Rollo, G.R No. 173631, Sept 8, 2010.
14 Ca!¢fv.NLRC, G.R. No.166411,AujJ.3,2010.

L.
302 BAR REviEWER ON lABOR lAW
• Offer of reinstatement by employer during proceedings before Labor
Arbiter and refusal by employee does not indicate abandonment but more of
2
a symptom of strained relations between the parties.
• An employee may be absolved fro!TI the charge of abandonment of work but
adjudged guilty of AWOL. 3 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.4
• An employee who failed to comply with the order for his reinstatement is
5
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.6
• 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.
7
• 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 tht: normal course
of the administration ofjustice. 8
• Employer's insistence on commission of wrongful acts Eke estafa and/or
qualified theft by the employees negates the charge of abandonment.
Rather, it strengthens the fmding of petitioner's discrimination, insensibility
and antagonism towards the employees which gave no choice to the latter
except to forego their employment. 9
v.
FRAUD 10
1. CORRELATION OF FRAUD AND LOSS OF TRUST AND
CONFIDENCE.
Frarid is provided under paragraph (c) of Article 297 [282] of the Labor
Code, thus: "(c) Fraud or willful breach by the employee of the trust reposed in him
by his employer or duly authorized representative."
1 1t1a. ~ Iv. NlRC, GR No. 120556, Jan. 26, 1998; NS Transport SeM:es, klc. v. Zeta, G.R No. 158499, Apri 4,
2007.
2 HimtTradilg Co., Inc. v. CA, G.R No.148241, Sept 27,2002.
3 Melro Trans~Organizalion,lnc. v. NLRC, G.R No. 119724, May 31, 1999.
4 Ranov. Befooo,GR No.L-55629,Jult39, 1981.100SCRA221.
s EastAsiaticv. CIR, GR No. L-29008,fwg. 31,1971,40 SCRA521.
6 Casfilk>v. CIR,G.R No. L-26124 and L-32725, ~ 29,1971,39 SCRA 75.
7 Sandoval Shipyardv. Clave, G.R. No. L-49875, Nov. 21,1979,94 SCRA472.
a Gamua, Jr. v. NLRC, GR No. 158731, Joo. 25, 2007.
9 Rorn(sFreijl!SeNice v. Gaslro, GR. No. 141637, June 8, 2006.
10 Relevant provision: A!ticle 297(c) !282(c)l, Labor Code.
L . _,.....,...
·CHAPTER IV 303
POST EMPLOYMENT
Fraud is separate and distinct from the other ground provided in the same
paragraph, that is, loss of trust and confidence (willful breach by the employee of the
trust reposed in him by his employer or duly authorized representative)! However,
the commission of fraud by an employee against the employer will necessarily
result in the latter's loss of trust and confidence in the former. On the other
hand, the ground of willful breach by the employee of the trust and confidence
reposed in him by the employer may not necessarily involve fraud but some
other acts that would similarly result in the loss of such trust and confidence.
2. REQUISITES.
The following are the requisites of this ground:
1) The employee has committed fraud, an intentional deception and used
dishonest methods for personal gain or to damage the employer; and
2) The fraud is work-related and rendered him unfit to work for his
employer. 2
3. SOME PRINCIPLES ON FRAUD.
• Falsification constitutes not only serious misconduct bt.Tf fraud under the
Labor Code.3
4
• 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. 5
• Lack of misappropriation or shortage is immaterial in case of unauthorized
6
encashment of personal checks by teller and cashier.
7
• Restitution does not have absolutory effect.
VI.
WILLFUL BREACH OF TRUST AND CONFIDENCE8
1. REQUISITES.
For the doctrine of loss of trust and confidence to apply, the following
~Aitoo~v.Rosales,GRNo.169260,1.1ad123,2011.
De Ia Cruz. s. v. NLRC, GR. No. 145417, Dec. 11, 2003; Eg,juena v. Vale Venle CoiJ1Iry WI, GR No. 173012, .hJ1e 13,
2012.
3 Pm&tf, tl1der Article 297(a) ll1d (c) rm(a) ll1d (c)L respedNely, d l1e I.aJor Code; Sill Mguel Capaabt v. NLRC,
GR No. 82467, June 29, 1989; Mroel C. Feix v. Eneriidl9Jslems lrdlstres, Inc., G.R No. 142007. t.m:ll28, 21Xl1.
~ Akleguer &Co., klcJL.oaldeBoutiquev. Tooiloc, GR No.147633,Jutj28, 2008.
5 Wallewv. NLRC, G. R No.129413,Jutj 27, 1998; Di.mnl tkm Capaationv. CA. GR No.151981, Dec. 1, 2003.
s Ce00a1 Pcllgasim Eledri: ~. klc. v. MaccmJ, G.R No. 145800. Joo. 22, 2003.
7 Goozales v. NLRC ar:1 PEpsfCo1a Protllds, Plis., re., GR. No. 131653, Milth 26, 2001.
,M\282(<)), """""'
304 BAR REviEWER ON lABOR lAW
requisites must be satisfied:
(1) The employee holds a position of trust and confidence;
(2) There exists an act justifying the loss of trust and confidence,1 which
means that the act that betrays the employer's trust must be rea~ ie.,
founded on clearly established facts; 2
(3) The employee's breach of the trust must be willful, i.e., it was done
intentionally, knowingly and purposely, without justifiable excuse; 3 and
(4) The act must be in relation to his work which would tender him unfit to
perform it.4
2. GUIDELINES.
As a safeguard against employers who indiscriminately use "loss of trust
and confidence" to justify arbitrary dismissal of employees, the Court, in addition to
the above elements, came up with the following guidelines for the application of the
doctrine: 5
(1) The loss of confidence must not be simulated;
(2) It should not be used as a subterfuge for causes which are illegai,
improper or unjustified;
(3) It may not be arbitrarily asserted in the face of oven.vhelming evidence
to the contrary; and
(4) It must be genuine, not a mere afterthough~ to justify earlier action
taken in bad faith. 6
-18aJuio Central University v. Galenle, G.R No. 188267, Dec. 02, 2013; fWarez v. Golden Tli Bloc, nc., G.R No. 202158,
Sept. 25, 2013; Phqlpi1e Plaza Hoklilgs, Inc. v. Fklra Episcqle, G.R No. 192826, Feb. 27, 2013.
2 lla;Jub CenballJJWelsily v. Gallenle, supra, cililg Brisrol ~ Squilb (!'hils.), Inc. v. Balan, G.R No. 167449, Dec. 17,
2008, 574 SCRA, 198,200.
3 8a;JOO Cen1ia1 UnWelsiy v. Galenm, SUjlfll, citing Baron v. NLRC,G.R No. 182299, Feb. 22,2010,613 seRA 351, 360;
See also TOII\lS v. RlJal Sri of SM Juan, Inc., G.R. No. 184520, M3n:h 13, 2013; Phfippile Plaza Hokfngs, nc. v.
Episoope, G.R. No.192826, Feb. 27, 2013; Prudential Guarillk!e i:l1d Assulooce ~ LaborUnloo v. Nl.RC, G.R No.
185335, Jme 13, 2012, 672 SCRA 375, 386; Jerusalem v. Keppel Mxlte Balk, G.R. No. 169564,.4¢1 6, 2011, 647 SCRA
313, 323-324; ~ v. PrtxB &GimJie Plil., nc., G.R No. 160506, 1.4ay 9, 2010; Ak3llara v. The Phi~
Coomeldal i:l1d k1duslrial Bat, G.R No. 151349, Oct. 20, 2010; Renilkl (lnitia) Ph~ R:. v. Snhez, G.R No.
176219, Dec. 23, 2008, 575 SCRA 324, 333; BrisiDI ~ SquiJb tphls.), nc. v. Bm1, G.R No. 167449, Dec. 17, 2008,
574 SCRA 198, 205-206; &l\lldOI..Iles, nc. v. Gttte, G.R No. 149930, Feb. 22, 2002; Goozales v. NLRC i:l1d Pepsi-{:da
Produds, Phis" klc., GR No. 131653, Mirth 26, 2001.
4 ~ n1JSI be made that ooly 1he list 2 oot d 11e 4 requisftes were cited i1 Wesle'fcil UnNersily-Phippiles v. NaNela
Reyes, G.R No. 208321,-lltj 30, 2014, based mlle nll1g i1 MM' Zaldefl'hifwi1es, R:. v. En!ijuez;GR No. 169173,
JL11e 5, 2009, 588 SCRA 590; See also P.J. Uluilier, k1c. v. F'adeliz Vrkl{o, GR No. 198620, Nov. 12, 2014, cililg
Jerusalem v. Keppel Mlofe Sri, G.R No. 169564, Ap!i 6, 2011, 647 SCRA313, 323-324. See bller Mri1ez v. Central
Pqasilifl Eledric ~. he. (CENPB.CO), G.R No. 192306, Jutj 15, ~13, v.11K:h siriarttded rltj lle fvst 2
reqLisites ci10J as basis llered, Plippile Plaza~. R:. v. Episcope, G.R No. 192826, Fell. 27, 2013 v.1lich also
di!d Jerusalem v. Keppel Mlnte Bat, supra
s Vi111r1ueYa,Jr. v. NI.RC, G.R No.176893,June13, 2012.
s Wesiey.¥1 ~ v. Nowela Reyes, G.R No. 208321, Jutj 30, 2014; Mi11ia Jockey W!, Inc. v. Ainee 0.
T~, G.R No. 160982, June 26, 2013; ~ v. Keppel Sri. Philippines, lnc.;GR. No. 176800, Sept. 5, 2011,656
SCRA 718, 729; BwJuio Centrall.lnPJersil¥ v. Gallen\e, supm; lhe Coca-Cola Elqlort Cap. v. Gacaycwi, G.R No. 149433,
Dec. 15, 2010; Equitable PCI Balk v. ~. G.R Nos. 163293 & 163297, Dec. 8, 2010; ROOia v. NlRC, G.R. No.
A
CHAPTER IV 305
POST EMPLOYMENT
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. 1 The Court has been very scrutinizing in cases
of dismissal based on loss of trust and confidence because the same can easily be
concocted by an abusive employer. Thus, when the breach of trust or loss of
confidence theorized upon is not borne by clearly established facts, such dismissal
on the ground of loss of trust and confidence cannot be countenanced. 2 While .an
employer is at liberty to dismiss an employee for loss of trust and confidence, he
cannot use the same to feign what would otherwise be an illegal dismissal.3
A classic example of a case where the invocation of the doctrine of loss of
trust and confidence was not genuine but a mere afterthought is Manila Jockey
Club, Inc. v. Aimee 0. Trajano. 4 The Court had unavoidably noted here that the
invocation of loss of trust and confidence as a ground for dismissing respondent
Trajano was made belatedly. In its position paper dated September 2, 1998,
petitioner MJCI invoked the grounds under paragraphs (a) and (b) of Article 297
[282] of the Labor Code to support its dismissal ofTrajano, submitting then that the
unauthorized cancellation of the ticket.constituted a serious violation of company
policy amounting to dishonesty. The first time that MJCI invoked breach of trust
was in its motion for reconsideration of the decision of the NLRC. MJCI also
thereafter urged the ground of breach of trust in its petition for certiorari in the CA.
Such a belated invocation of loss of confidence broadly hints the ground as a mere
afterthought to buttress an othenvise baseless dismissal of Trajano.
3. POSffiON OF TRUST AND CONFIDENCE, MEANING.
A ''position of trust and confidence" is one where a person is "entrusted
with confidence on delicate matters," such as the custody, handling, or care and
protection of the employer's money, assets or propertyh.oss of confidence, as a just
cause for dismis~ is never intended to provide employers with a blank check for
terminating their employees. Such a vague, all-encompassing pretext as loss of
confidence, if unqualifiedly given the seal of approval by the Court, could readily
reduce to barren form the words of the constitutional guarantee of security of tenure.
Having this in mind, loss of confidence should ideally apply only to cases involving
178621, ~ :16, 2010; Bllim Filii"$ i:l1d Mls v. Lab, GR No. 157861, Feb. 2, 2010; Md1ela v. Desily F~Slda
PIMs, G.R No. 179702, Feb. 16, 2010; MtW Zalder ~. klc. v. Efviluez, G.R No. 169173, Jllle 5, 2009, 588
SCRA590;FiriJOV.I.wdesSd!odof~,GRNo.152531,.Jutt27,2007. Nokanv.NI.RC,G.RNo.140043.
.k.tf 18, 2000, 390 Phi. 1228, 1244; Mabeza v. NLRC, G.R. No. 118506, Aplil18, 1997, 271 SCRA 670, 683.
, Tares v. R1ra1 Ba* d SM .kiM, he., G.R. ttl. 184520, Mirth 13, 2013; Wcil Yuen Restam v. Ja)'ona. GR.
No. 159448, Dec.16, 2005.
2 The Coca-Qlla Expat Cop. v. Gacaycr1, G.R No. 149433, Dec.15, 2010.
3 Calcade Hotel v. CA, G.R No. 144089, Aug. 9, 2001.
4 G.R No. 160982, Jllle 26, 2013. . .
s llklerllm BkJe.JoiliVriresC<xr(lcrlyv. Gjza Esl!ibal, G.R. No.192582, Aplil07, 2014; Lynvi FIShil;J En\elpriseS, he.
v. A001a, G.R No. 181974, Feb. 1, 2012; callex (Phil~). Inc. v. Agad, G.R No. 162017, Ap!i 23, 2010, 619 SCRA 196,
214; Tliln1Jh ~lematialal (Phils.), k1c. v. Apostol i:l1d ClpuBlcia, G.R No. 164423, June 16, 2009, 589 SCRA 185.
306 BAR REVIEWER ON lABOR lAW
employees occupying positions of trust and confidence or to those situations where
the employees are routinely charged With the care and custody of the employer's
money or property. 1
The relationship of employer and employee, especially where the latter has
access to the former's money or property, necessarily involves trust and confidence.1
Where the rules laid down by the employer to protect its property are violated by the
very employee who is entrusted and expected to follow and implement the rules, the
employee may be validly dismissed from service?
As firmly entrenched in jurisprudence, loss of trust and confidence as a just
cause for termination of employment is premised on the fact that an employee
concerned holds a position where greater trust is placed by management and from
whom greater fidelity to duty is correspondingly expected.4 The betrayal of this trust
is the essence of the offense for which an employee is penalized.5
4. THREE (3) CLASSES OF POSITlONS OF TRUST.
There are three (3) classes of positions of trust: 6
(1) Managerial positions;
(2) Supervisory positions; and
(3) Fiduciary rank-and-file positions. 7
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. Their primary duty
consists of the management of the establishment in which they are employed or of a
department or a. subdivision thereof and to other officers or members of the
managerial staff 8
1 Prudrial Gucmee 1111 Assua1oe En1Jbyee taxr lMl il1d Valota v. NI.RC, G.R No. 185335, June 13, 2012, diYj
SeealsoMcblzav.NlRC,G.R~.11~.Apii18,1997,271 SCRA670.
2 f'liWileEducabiCo.,kiv.lkillu~EWcatioo~G.RNo.L-13778.Ap!I29,1960,107Phl1003.
3 TliJI1lh ~{Phis.), k1c. v.~ llld ()plin:ia. •
4 S5lden Aitai ~ v. A:1sa1es, G.R No. 169260, Mrdl 23, 2011; Lina Lllld, nc. v. Cuevas, G.R No. 169523,
.b1e 16, 2010; Qivt v. NLRC, G.R No. 154308, Mclttl10, 2005; EmJiez v. Balk d the Phi!Jpile lsllllls, G.R ~-
172812, Feb. 12, 2008; ~Liles, k1c. v. Gukle, G.R ~- 1~. Hib. 22. 2002; Sin:hez v. NLRC, G.R No. 12.00,
hlg. 19, 1999.
s L)11Yi F!Shi";J Eneprises, klc. v. AOOia, GR. No. 181974, Feb. 1, 2012; Lopez v. AlhJas Grol4l u ~. G.R ~.
191008, Apr811, 2011,647 SCRA568. 573-574; ~ v. SM ~ Cofpol3ioo, G.R No. 149416, Mird114, 2003;
Cema Pin;lasi1ill fJedJk: CoopelaiNe, k1c. v. Maaraeg, G.R ~- 145800, .lal. 22, 2003, 395 SCRA 720, 727.
s Abelv. PIExt.'ilrgQxpaalbl,G.R No.178976,July31,2009; Malezav.N.RC, G.R~.118506,Ap!l18,1997,271
SCRA670,&2.
1 We!iJefatt llrWelsey~ v. NowelaReyes, G.R No. 208321, Jltf 30, 2014, cftirg M+W Zlllder Philipphes,lnc. v.
~G.RNo.169173,JIJ!le5,2009,588SCRA590. . 7 AMHez v. Golden Tri Bloc, Inc., GR No. 202158, Sepl25, 2013; Esguena v. Vale Velde Cwll!y CkJb. GR No. 173012,
a tvmz v. Golden Tri Bklc, re, GR. No. 202158, Sepl25, 2013: flhiWie Plaza Hokmgs, Inc. v. Episcope, GR. No.
192826, Feb. 'll, 2013; &istd Mjels l4ilb [Phils.], klc. v. BabM, G.R No. 167449, Dec. 17, 2008: MtW Zooder
Plllipjiles,lnc. v. Enriluez. SIJil3: Mlbezav. NLRC, G.R No. 118506, Apnl18, 1997,271 SCRA670.
~
I.
CHAPTER IV 307
POST EMPLOYMENT
The second class consists of supervisory employees who, in the interest of
the employer, effectively recommend such managerial actions if the exercise of such
authority is not merely routinary or clerical in nature but requires the use of
1
independent judgment.
The third class is comprised of fiduciary rank-and-file employees, such
as 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.1 These employees, though rank-and-file, are routinely charged
with the custody, handling or care and protection of the employer's money or
4
property,3 or entrusted with confidence on delicate matters, and are thus classified
as occupying positions of trust and confidence.
5
• Supervisory positions are also reposed with trust and confidence.
Per jurisprudence, only the first and third classifications are generally cited
as positions of trust and confidence. There is, however, a need to include and add the
second classification of supervisory employees because while the Supreme Court
6
has always applied this doctrine to managerial employees, it is likewise well
established that supervisory personnel occupying positions of responsibility and th'lS
reposed with trust and confidence may be dismissed based on the loss thereof.'
• Two (2) kinds of rank-and-file employees.
For purposes of the application of this doctrine, the general classification of
rank-and-file employees should further be classified into two (2), to wit
1) Fiduciary rank-and-file; and
2) Ordinary rank-and-file.
It is only in the 151 class above that this doctrine may be applied because, as
mentioned above, this is the 3rd class of positions reposed with trust and confidence.
1 SeeMk:te219(m)!212(m)]dllellbJCOOe.
2 Eli: AMrez v. Golden Tri Bklc, tic., G.R No. 202158, Sept 25, 2013; CenUy koo WOO<$, Inc. v. Bafias, GR No.184116,
·.M1e 19, 2013; ~v. Keppel Sri~. klc., G.R No. 176800, Sept. 5, 2011,656 SCRA 718,727.
Mil1i1ez v. CaDI Pqa5im Ele<:tt Coope!iM, Inc. (CEtflELCO), G.R ~- 192300, July 15, 2013; WesleyM
~i1es v. lblella Reyes. • : 8istll Mters SqljJb [Phls1. k1c. v. Bal. supra: See also ANsfez v.
Golden Tri Bklc, klc., ~ ~Plaza~. klc. v. Episcope. S~.V<~: Abel v. Phlex ~ Capoo!OOn, supra;
MtWZlllderflhWles, k1c. v. £m:p!z. ~ Mlbeza v. NLRC, supra
4 Wo(clv.FISlSOOd PJ.Jilberklduslries, klc., G.R No.184011, Sept 18, 2013;Abelv. PhiexMnklQ COipaatiln,suprn, citing
Pirdayv. NI.RC, G.RNo.67664, Mit{20,1992,209SCRA 122,125.
s pJ.troitlier, n:. v. Fkxdeiz Velayo, GR. No.198620, Nov. 12, 2014; M+WZMderPhiWiles,lnc. v. Erri:!uez. supra.
& GIOOeMD.ayCimle llld Radi:>Colporalion v. NLRC, G.R No. 82511, Mcltti3,1992;Asicwlftd Nl!SlD:I House, Inc. v.
Ople, G.R No. L-56398, .key 23, 1987, 152 SCRA 219; Cilytrust Fncme Corp. v. NLRC, G.R No.75740, Jill. 15, 1988,
157SCRA87.
June 13, 2012; Yab!Jt v. Mooia EJem: CorrcJany, G.R No. 100436, Joo. 16, 2012, 663 SCRA 92; The eoca.cda Expcxt
Clxpoo!tion v. Gacayoo, G.R No. 149433, June 22,2011: Too v. NLRC, G.R No. 128290, Nov. 24, 1998, 299 SCRA 169,
183.

.:JUU lJI'U\. I'.CYit:nt:r\.VI'I U1.DVI\. U\.YY
It is, therefore, clear from the above disquisition tha~ insofar as the doctrine of trust
and confidence is concerned, its application is limited to the three (3) classes 1 of
employees occupying positions of trust and confidence, namely: (1) managerial; 2 (2)
supervisocy;3 and (3) fiduciary rank-and-file.4 Consistently, this doctrine has not
·been rrpplied in tennination of ordinary rank-and-file employees. 5
Marina Port Senices, Inc. v. NLRC/ expounds:
"To be sure, every employee must enjoy some degree of trust
and confidence from the employer as that is one reason why he was
employed in the first place. One certainly does not employ a person he
distrusts. Indeed, even the lowly janitor must enjoy that trust and
confidence in some measure if only because he is the one who opens the
office in the morning and closes it at night and in this sense is entru:,ted
with the care or protection of the employer's property. The keys he holds
are the symbol of that trust and confidence.
"By the same token, the security guard must also be
considered as enjoying the trust and confidence of his employer, whose
property he is safeguarding. Like !he janitor, he has access w his
property. He too, is charged with its care and protection.
''Notably, however, and like the janitor again, he is entrusted
only with the physical task of protecting that property. The employer's
.trust and confidence in him is limited to that ministerial function. He is
not entrusted, in the Labor Arbiter's words, 'with the duties of
safekeeping and safeguarding company policies, management
instructions, and company secrets such as operation devices.' He is not
privy to these confidential matters, which are shared only in the higher
echelons of management It is the persons on such levels who, because
they discharge these sensitive duties, may be considered holding
1 As eafierpoi'lled rut, jJisprudence cites oo~ 11W Clld !Qfvee classes.
2 Altl:le 219(m) 1212(m)) ct the l..axlr Code dehs a 'rrrim;)edal ef11lloyee" as "ooe v.ro is vested v.ith paNelS or
perogiMs tllay daM Clld exeale ~ pli:les Clldlor tll*e, lnrlsfer, suspend, lay a'f, recat, disdlage, assi;Jn
crclsqlile 8J1lbyees." "Scrnson v. tlRC, G.R No. 121035, Apri 12, 2COO, 386 Pli 669,687, lle ~ Coort,
c:1DJ Seem 2(b), Ride I, Bodt IUd the Onrilus IU!s ~ lhe Lm Co:le, erunemled lle aMtions h ooe
tl be propeltf ccnsilenld alllii8JefB erte*Jyee:
11) Thei' pinery Wly coosisl\l d lle ll1!l1aQEilllll d lle esliJistment i1 v.tth t.ey ae ~ cr d a depa1rne!t cr
SIM.isixlllerect;
'(2) They rusbnaltj Clld fli!IUiclt{ cfred lhe Y«Xk d WHJI'IIQ9 ~ llereil; [Mdj
"(3) They heM! lle aihaiy tll*e cr ill fAhEr en1J1aiees dbte' rri; cr lhei' suggeslix1s Clld recoomenda!Kxls as tl
lle hirilg Clld firh;J Clld as b lhe prarotkln or 8/'f/tller c:llqect stailsd dhEr erT'flk7tees ae gNer1 pcrtkUa'weght."
3 Ulderthe me crticle, a~~ Is ooe 'Wlo, illle i1Erest d the~. el!ecWely reconmends such
n
111mJe1ia1 actions f the exercise d such aJt1100¥ Is IQ •lllJ&lay cr cleli:al naiiR& but reqlires lhe use ct
DJeperdentjJ!g!T1elt.
4 The me ri:te !lstilglishes Clld deli1es "riilk.;nt.lle ~ as ~: "AI ei11JkJyees not faRO;! wilhin 11ese t.vo
deliliti:lns ere consilered 'rlllk-ald-fie ~·The lcr.v, lnlever, does not make 8l'f/ distinclion between fi:fucicry a'1d
ordilay fri-(fld.jjfe Efl1llc1lees.
5 Zenada D. Mendoza v.lf.IS Credit Corpcxati:xl, G.R. No. 187232, Apl17, 2013; Ela.dloo, Jr. v. ~m Liles, Inc., G.R.
No. 148410, Ja1.17, 2005, 448 SCRA 516,529.
6 G.R. No. 80962 Jill. 28, 1991, 193 SCRA 420, 426.
LHAPTER IV o)U;?
POST EMPLOYMENT
positions of trust and confidence. The security guard1 does not belong in
such category."
It must be emphasized that it is not the job title but the actual work that the
employee perfonns which is material in determining the issue of whether it is
reposed with trust and confidence.2 For instance, while an employee's position was
denominated as Sales Clerk, the nature of her work included inventory and
cashiering, a function that clearly falls within the sphere of rank-and-file positions
imbued with trust and confidence. Given that she had in her care and custody the
store's property and funds, she is considered as a rank-and-file employee occupying
3
a position of trust and confidence.
5. SOME PRINCIPLES ON THE DOCTRINE OF LOSS OF TRUST AND
CONFIDENCE.
• Factual evidence of loss of trust must be established. The basis for the
dismissal must be clearly and convincingly established but proof beyond
reasonah\e doubt is not necessary4 to justify the loss as long as the employer has
reasonable ground to believe that the employee is responsible for 1he
misconduct and his participation therein renders him unworthy of the trust and
5
confidence demanded of his position.
• Rules on termination of managerial and supervisory employees
different from those applicable to rank-and-file employees. As a general
rule, the doctrine of "trust a.'ld confidence" is restricted to managerial
employees.6 This means that the rules on termination of employment
applicable to managerial or fiduciary employees are different frcm those
involving ordinary employees not holding positions of trust and confidence.
In the latter case, mere accusations by the employer will not be sufficient.'
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
1 Butn ~l..lllterCo., n:. v. NLRC, G.R No. L-54424,Aug. 31, 1989Cild caielev. N!RC, G.R No.130425, Sept 30,
1999, 1was lalllat asecurit1~hoijs aposlion rJ trust Md CXX'1Iilerm n bls. he may be legaly dismissed til' loss
of trust en! crilence.
2 ~ v. Phiex Mlq Corporalioo, supra, c:IDJ ~ Mjers Squilb tpllk). n:. v. Bcban, supra.
3 Bklefllm file JoiltVeniJ.Jres Corr4mfv. Glyza Estebal, G.R No.192S82. Apll 07, :Ml14.
fWalez v. G1*1en lri Bloc, Inc., G.R No. 202158, Sept. 25, :M113;.Jerustilm v. Keppel t.tlrm Bank. G.R No. 169564, ,6¢1
4
6, 2011,647 SCRA 313, 324; Abel v. Fhlex Mlilg CorporaOOn, supra, c:iliY,I Gaida v. NLRC, <lR. No. 113n4, Apri115,
1998, 289 SCRA 36, 46.
5 P.J.l.huler Inc. v. National Labor Relations Commission. G.R No. 158758, P¢129, 2005, 497 Phil. 298, 311; Reyes v.
Zil1oo. G.R No.L-46732, May5, 1979, 179Phi. 71, 89.
6 The~~Co!p.v.Gacayoo,G.RNo. 149433,Dec.15,2010.
L.amsan Tradil:J, Inc. v. LeogM!o, GR. No. 73245, Sept 30, 1986; Mefro1)rug C<xporatioo v. Nl.RC, G.R No. 72248, July
7
22, 1986; Gonzaes v. NLRC and PepsiCola Prod\Jds, !'hils., Inc., G.R No. 131653, March 26, 200t
 310 BAR REviEWER ON lABOR lAW l.,.HAI1 ltK.lV
POST EMPLOYMENT

managerial employee, the mere existence of a basis for believing that he • The fact that the amount of loss is insubstantial is inconsequential in
has breached the trust of his employer would suffice for his dismissal. 1 dismissal based on loss of trust and confidence?
• The loss of trust and confidence must have some basis and proof beyond • Full restitution does not absolve employee of offense which resulted in the
reasonable doubt is not required. It is sufficient that there must only be some loss of trust and confidence. 3
basis for such loss of confidence or that there is reasonable ground to believe if • Good faith of the employee dismissed for loss of trust and confidence is
not to entertain the moral conviction that the concerned employee is responsible inconsequential.4
for the misconduct and that the nature of his participation therein rendered him
absolutely unworthy of trust and confidence demanded by his position. 1 It is vn.
thus a settled rule that the mere existence of a basis for believing that a COMMISSION OF CRIME OR OFFENSE5
managerial employee has breached the trust of the employer justifies dismissal. 3 1. REQillSITES.
In termination for loss of trust and confidence, the fact that the employer
did not suffer losses is of no moment. 4 The following are the requisites for the valid invocation of this ground:
• Employer has burden of proof. s 1) Acrime or offense was committed by the employee;
• Dismal perfonnance, poor work attitude, gross negligence and incompetence of 2) It was committed against any of the following persons:
a managerial employee constitute sufficient grounds for dismissal due to loss of (Q His employer;
trust and confidence. 6 (ii) Any immediate member of his employer's family; or
• Dismissal due to feng shui mismatch is not a valid ground to lose trust and (iii) His employer's duly authorized representative.
7
confidence.
2. SOME PRL~CIPLES ON THE COMMISSION OF CRIME OR
• Command responsibility of managerial employees is a ground io dismiss. 8 OFFENSE.
• Confidential empioyee may be dismissed for loss of trust and confidence. 9
• Grant of promotions and bonuses negates loss of trust and confidence. 10 • Because of its gravity, work-relation is not necessary. Neither is it necessary
• Long years of service, absence of derogatory record and small amount to show that the commission of the criminal act would render the employee
involved are deemed inconsequential insofar as loss of trust and confidence unfit to perform his work for !he employer.
is concemed. 11 • The phrase "immediate members of the family" refers to those persons
having family relations under Article ISO of the Family Code, to wit:
• Dropping of crjminal charges or acquittal in a criminal case arising from the
same act does not affect the validity of dismissal based on loss of trust and ( l) Between husband and wife;
u .
confidence. (2) Between parents and children;
• In termination for loss of tr.JSt and confidence, the fact that the employer did not (3) Among other ascendants and descendants; and
suffer losses is of no moment1 (4) Among brothers and sisters, whether of the full or half-blood.6

3. ILLUSTRATIVE CASE.
I Ak:rila v. The f'liWi1e Conrneniallrld nlusbial an, GR. ~- 151349, Ocl31, 3110; PlOT v. Billa, G.R No.
143688.~.17,2007. The case of Jeffrey 0. Torreda v. Toshiba Information Equipment
2 DeJesus v. tbt RaH. Aqlilo, GR. Nos. 164662 &165787, Feb.18, 3113; ~Plaza IWPJS, tic. v. ~.
G.R. No. 192826, Feb. 'll, 2013; Jerusalemv. Keppelt.td!Bri, G.R ~.169564,Ap16, 201U47 SCRA313, 323. IPhils.], Inc.! best illustrates this ground of commission of a crime against the
Reres-Rayefv. ~LuenlhaHoldilgsQxp"G.R ~.174893,Julf11,3112;Sinv.NLRC,G.R No.157376, Oct.
3

2, 'JS:JJ7, 534 SCAA 515, 524; Coole v. MRC, G.R No. 115491, Nov. 24, 1998.
c Arg v. ~ Nati1m Bri, G.R ~- 178762, .kJle 16, 3110.
6 Feflxv. NLRC, G.R.No.148256, Nov.17, 2004.
& Retes-Rayelv. ~ l.uen Th!i Hol:lilgsCo!p., G.R~.174893,Julf 11,2012.
7 Wensha Spa Center, oc v. YlllQ, G.R No.185122,hlg. 16,2010.
a Mlaje-Tuaznn v. Wenp1JJ C<xp., G.R. No.162447, ~ 'll, 2006.
9 PlDTv. &rla,G.R~.143688.~.17,2007.
10 Easyca'l Cormuik;atioos Phils., klc. v. Kilg, G.R. No.145001, Dec.15, 2005.
n Et:Ldlal, Jr. v. ~ ~. klc., G.R. No. 148410, Jat 17,2005.
12 Mllro Trm OlgillizlD:ln, Inc. v. CA. G.R. No. 142133, ~- 19, 2002.
1 AI¥;! v. Ptllwine National Bri, G.R. No.178762, June 16, 2010.
2 PJ.l.huilier, k1c. v. Fkxdeliz V9iJ.{a, G.R No. 198620, NoY. 12, 2014.
3 SriJs v. Sal MiJuel Coijl., G. R No. 149416, Milch 14, 2003,447 Phil. 264.
4 BagubCenbaiUnr.oecsityv. GaDente. G.R No.188267, Dec.02, 2013.
s Relevant provision: Article 297(d) [282(11)],labor CQde.
6 See !lepal1menl Oldef No. 18 issued by the DOLE Sooetary oo May 18, 1994, p~ating the Riles ll1d Regulations
~ RA No. 7658 entitled 'lvl hl PrOOM1g the~ of Chik1ren Bebw Fi!Een (15) Yeas of hJe i1
Publi:; and f'livclle Undertakilgs, ~ Section 12, Mide VIII d RA No. 7610, olhelwise knat.fl as the Special
Protection of Olildren Against Olild Abuse, Expkitation and Disainination Act. J111e 17, 1992."

A

312 BAR REviEWER ON lABOR lAW
person of a superior. Petitioner Torreda was employed by respondent Toshiba as
finance accountant under the Finance and Accounting Department headed by Kazuo
Kobayashi, Vice-Presiden~ and Teresita Sepulveda, Finance Manager. Petitioner
accused Sepulveda of committing robbery of P200.00 when the latter ordered the.
forcible opening of the former's drawer. Petitioner was later dismissed on the
ground of grave slander conunitted against Sepulveda His charges against
Sepulveda were found, after investigation, to be unsubstantiated. Holding that the
dismissal was for just cause, the Supreme Court ruled that the NLRC did not err
much less conunit grave abuse of its discretion when it based its ruling on Article
297(a) [282(a)] of the Labor Code on its finding that petitioner committed serious
misconduct for falsely accusing his immediate superior of robbery. The false
attribution by petitioner of robbery (theft) against Sepulveda was made in writing;
patently then, petitioner committed libel, not grave slander against Sepulveda. The
malicious and public imputation in writing by one of a crime on another is libel
under Article 353, in relation to Article 355, of the Revised Penal Code. There is
abundant evidence on record showing that petitioner committed libel against his
immediate superior, Sepulveda, an act constituting serious misconduct which
warrants his dismissal from employment. Petitioner maliciously and publicly
imputed on Sepulveda the crime of robbery of P200.00. As gleaned from his
Complaint daterl September 7, 1999 which he filed with the General Administration,
he knew that it was Deios Santos who opened his drawer and not Sepulveda. Thus,
by his own admission, petitioner was well aware that the robbery charge against
Sepuiveda was a concoction, a mere fabrication with the sole purpose of retaliating
against Sepulveda's previous acts.
VIII.
OTHER ANALOGOUS CAUSES2
l. ANAWGOUS CAUSES UNDER ESTABLISHED JURISPRUDENCE.
The following may be cited as analogous causes:
1) Violation of company rules and regulations.3
2) Theft of property owned by a co-emplo;ee, as distinguished from
theft of property owned by the employer.
3) Incompetence, inefficiency or ineptitude.5
4) Failure to attain work quota. 1
1 G.R. No. 165960, Feb. 8, 2007.
2 Relevant prtNision: Article 297(e) [282(e)J, Labor Code.
3 ~ula Auto Tra1Sp0It Coqxxationv. NI.RC, G.R No.197384, Jill. 30, 21113.
4 Jdm HMcock life i"wance Gap. v. t:Javic;, G.R. No. 169549, Sepl3, 2008; See ai;o M.E V10lago OierTank Trucks v.
NI..RC, G.R Nos. 56950-51, Sepl30, 1982, 117 SCP.A 544,202 Phil. Sn ll1d A. Marquez, Inc. v.i..ooJCido, G.R. No. L-
63227, M!rd\15, 1984,213 Phi. 217; Oaliav. NlRC, G.R Nos. 97162-M,JIIle 1,1995,244 SCRA669, 674.
5
lnEmatklnal Sci'IOO Mirlia v. 1ntematkx1a Schooi.Arlance ct Educatxs (ISAE), G.R. No. 167286, Feb. 5, 2014; Reyes-
Rayel v. Plil)pile Luen Thai Holdilgs CUp., G.R No. 174893, Ju~ 11, 2012; Reak!a v. New~ Graphk:s, loc., G.R. No.
192190, Apli 25, 2012; 5qJpels Uniild PacifK;, Inc. v. Maguoo, G.R. No. 166363, Aug. 15, 2006.
LHA.I'ItK.IV .:>•.:>
POST EMPLOYMENT
5) Failure to comply with weight standards of employer~2
6) "Attitude problem" is analogous to loss of trust and confidence.3
IX.
OTHER JUST CAUSES RECOGNIZED
UNDER OTHER PROVISIONS OF THE LABOR CODE
In addition to and distinct from the just causes mentioned in Article 297
[282], the Labor Code likewise provides for other just causes to terminate
employment in other provisions thereof, to wit
1. The act of union officers in knowingly participating in an illegal strike is
ajust cause to terminate their employment. 4
2. The act of an employee, either a union officer or an ordinary member, in
knowingly participating in the commission of illegal acts during a strike (irrespective
of whether the strike is legal or illegal), is also a just cause to terminate his
employment.5
3. The act of strikers in violating orders, prohibitions and/or injunctions as
are issued by the DOLE Secretary or the NLRC, is a just cause for which they may
be imposed immediate disciplinary action, including dismissal or loss of
employmeni strtus.6
4. The act of any union officer or member of violating the union security
clause stipulated in the CBA is a just cause that may be cited as basis in termination
of employment.7 The contracting 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
contracting union can also demand the dismissal of a member who commits an act
8
of disloyalty to the union, such as when the member organizes a rival union.
1 !kg v. FadcrlO, G.R. t«l. 185829, ,6¢1 25, 2012; PhfWile hnericM Errtroidelies v. EnD00ery a1d Garment
WoOO!Is, G.R No. L-20143, .lat. 27, 1969, 26 SCRA 634, 639; &iserv.l.eogaRlo, Jr., G.R No. L-63316, Ju~ 13, 1984,
131 SCRA 151,158.
2 Yrasuegt.iv.PhqJpi'leAiiles,~G.R.No.168081,0ct.17,2008.
3 ~v. f'hHWileLuenThaltioldi1gsCop., G.R. No.17~. JiJif 11, 2012;SeealsotlealyittMiria, klc. v. The
CA. G.R No. 1544ro, Oct 20, 2005. HoweYer, nllis case ct ~ peti1ioners have I¥t shaM! suiiDen1ly dea' !lid
COI'Ni1cPJ e'lidence c i-JS!Jy respoo:1ent anplafee's emi1atioo fer her alllblde problem. The mere mriln ct negative
iledback froo1 her team mentets regMlilg her kiN penonnance r.ii1g ll1d her WOI1I atlibJde is I¥t prod cl her attitude
problem. l.iewise, her fabe tJ rete peti1i:lneff;' allegatioos ct her negi!We atlilude does I¥t <mUt" adnissioo. See
also Navm mv. Damasoo, G.R No. 101875, Ju~ 14, 1995, 246 seRA 260, 265.
4 Mkle 2~a) (264{a)], l.alct-Code.
5 Miele 279(a) (264{a)], ld.
6 Mkle 27~) [263(9)], ld.; No. 33, NC!v'B Priner on S1rike, PidleliY:J !l1d l.ockoot. 2nd Edition, Dec. 1995.
7 Pursuant to Article 259(e) (248(e)]of1he Labor Code.
8 LiagTextile Mils v. Blanco, G.R. No. L-27029, Nov.12, 1981, 109SGRA87.
314 BAR REVIEWER ON LABOR LAW
Dismissal based on this ground has been reiterated in the case of Alabang
Country Oub, Inc. v. NLRC/ where the Supreme Court declared that, in addition
to the grounds mentioned in Articles 297 [282], 298 [283], 299 [284] and 300 [285]
of the Labor Code, another cause for termination is dismissal from employment du~
to the enforcement of the union security clause in the CBA. Here, Article IT of the
CBA on union security contains the provision on union shop and maintenance of
membership shop. Termination of employment by virtue of a union security clause
embodied in a CBA is recognized and accepted in our jurisdiction. This practice
strengthens the union and prevents disunity in the bargaining unit within the duration
of the CBA. By preventing member disaffiliation with the threat of expulsion from
the union and the consequent termination of employment, the authorized bargaining
representative gains more numbers and strengthens its position as against other
unions which may want to claim majority representation.
b.
t\UTHORIZED CAUSES2
1. TWO (2) CLASSES.
Under the Labor Code, authorized causes are classified into two (2)
classes, namely:
(1) Business-related causes. - Referring to the grounds specifically
mentioned in Article 298 [283], to wit:
a) Installation of labor-saving device;
b) Redundancy;
c) Retrenchment;
d) Closure or cessation of business operations NOT due to serious
business losses or financial reverses; and
e) Closure or cessation of business operations due to serious
business losses and fmancial reverses.
(2) Health-related causes. - Referring to disease covered by Article
299 [284] of the Labor Code.
2. USE OF MODERN NOMENCLATURES, IMMATERIAL
The demands and complexities of modem business have spawned a
number of schemes aimed at leaning out the operations of business establishments.
While cutting cost· by improving efficiencies and avoiding wastes remains the
primordial thrust, reduction of personnel is usually done as a matter of last resort
These modern schemes of reducing personnel are denominated quite differently
from the nomenclatures used in the law. Terms like "modernization", "automation",
G.R No.170287, Feb.14, 2008.
ReleYlll! PrtNisklns: Ar1X:Ies 298 {283] and 299 {284), Labor Code.
CHAPTER IV 315
POST EMPLOYMENT
"computerization", "reorganization", "re-engineering", "streamlining",
"downsizing', "rightsizing", "reconstructing" or "redesigning'' of operations, or
similar modem descriptions, are often used to label what traditionally and legally are
known as installation of labor-saving device, redundancy or retrenchment
From the standpoint of the law, however, the validity of these modem
thrusts and schemes should be measured on the basis of their compliance with the
requisites for authorized cause terminations. As pointed out above, the authorized
causes mentioned in Article 298 [283] are exclusive in nature and thus no other
grounds may be invoked in lieu or in substitution thereof.
For example, if termination of employment is effected by reason of
"modernization," "automation," "computerization," the requisites applicable to
installation oflabor-saving device should be fully complied with.
If the reduction of personnel is occasioned by "re-engineering,"
"streamlining," ''reconstructing" or "redesigning" of operations, the requisites of
either redundancy or retrenchment should be satisfied. Thus, if the same is being
implemented because of existence of redundant positions, then the redundancy
requisites should be complied with; if it is done because of existence of substantial
losses or to prevent such losses, then what would apply are the retrenchment
requisites.
3. COMMONALITY OF REQUISITES OF THE AUTHORIZED CAUSES
UNDER ARTICLE 298 [283].
There are certain requisites that are common to the five (5) grounds in
Article 298 [283]. To simplify the discussion, the following five (5) common
requisites are applicable to the said grounds:
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
employee and the DOLE at least one (1) month prior to the intended
dateofterminatio~ ·
4. Separation pay is paid to the affected employee, 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 fmancial reverses. - One (I) month pay or at
least one-half (l-'2) month pay for every year of service, whichever is
higher, a fraction of at least six (6) months shall be considered as
one (1) whole year.
A
316 BAR REVIEWER ON lABOR lAW
(c) If closure is due to serious business losses or financial reverses, NO
separation pay is required to be paid.
(d) In case the CBA or company policy provides for a higher separation
pay, the same must be followed instead of the one provided in
Article 298 [283].
5. Fair and reasonable criteria in ascertaining what positions are to be
affected by the tennination, such as, but not limited to: nature of work;
status of employment (whether casual, temporal)' or regular);
experience; efficiency; seniority; dependability; adaptability; fleXIbility;
trainability; job performance; discipline; and attitude towards work. 1
Failure to follow fair and reasonable criteria in selecting who to
terminate would render the termination invalid.2
4. REQUISITES UNIQUE TO EACH OF THE GROUNDS.
Each of the five grounds has its own unique requisite/s that distinguishes it
from the others. For instance, the requisite of extreme business losses or financial
reverses is distinctively applicable to retrenchment in order for tennination based on
this ground to be valid and legal. Termination due to redundancy does not require
existence of losses or financial reverses to validate it. While losses or reverses may
be considered as a major factor in cases of closure or cessation of business
operations, but their relevance is only in relation to the determination of whether the
employer is liable for sepa_ration pay or not Consequently, if the closure or cessation
of business operations is due to serious business losses Oi financial reverses, the
employer is not liable to pay any separation pay; otherwise, he is so liable.3
I.
INSTALLATION OF LABOR-SAVING DEVICE
1. ADDITIONAL REQUISITE UNIQUE TO THIS GROUND.
In addition to the five (5) common requisites above, the unique requisite
for this ground is that the purpose for such installation of labor saving device/s must
be valid,4 such as to save on cost, enhance efficiency and other justifiable
economic reasons.5
1 CUiv. Easan Te~eamr~Jri:ailn Phqlpiles, ~ G.R No. 165381, Feb. 9, 2.011; l.qlez &lga'Colpaation v. Franco,
2
3
G.R No. 148195, May 16, 2005; Asufm, s. v. Sall.tJuel Colp., G.R No. 156658, Mildl10, 2004, 425 SCRA 270, 275;
~ Tube!tWsis Scxilly, ~ v. NI.RC, GR No. 115414,hlg. 25, 1998.
LarOert Pav.nbdess In! Jeot.l*yCo!p. v. Bi1ania, GR No.170464, Jltj 12, 2010.
SeeNOJtil.laJaoMnilg\.orpooiOOnv.NLRC, GR No.112546, Mirth 13, 1996,254SCRA 721.
, d) Sepaatioo Pat is paid tl U1e alfeded ~ i1 such anount equWalent tl at least his ooe (1) IIXXIill pay or lo at
I
4 Phi!Wile Sheet Metal Wlness UIOOn v. CIR, G.R No. L-2028, ~ 28, 1949,83 Phi. 453.
5 Mxe pa1iculatj, In aderklvaldt{i"Mlkettm grruld, the~ requisiles 1111St0llalr.
a) Thei1trtxifdion ollhemachilely, ~or oh!rde>kes JOOSt be done i1 good fcilh;
b) The pupooe for StJdl i1b'cldu!ioo roost be val'xl, StJdl as to save oo coot. enha1ce efficiel1cy and Other j.lstifiable
L.
ecooorrk reasoos;
CHAPTER IV ,jLf
POST EMrlOYMENT
2. SOME RELEVANT PRINCIPLES.
• The installation of these devices is a management prerogative and the courts
will not interfere with its exercise in the absence of abuse of discretion,
arbitrariness, or malice on the part of management. 1
• Redundancy results from installation of labor-saving device. The
installation of labor-saving device will result in making the positions being
held by employees who will be adversely affected thereby redundant and
unnecessary. 2
• Modernization program through introduction of high-speed machines is
valid. 3
• Proof oflosses is not required.
n.
REDUNDANCY
1. ADDITIONAL FACTORS UNIQUE TO TillS GROUND.
In addition to the five (5) common requisites earlier mentioned, any of the
following factors must be present when redundancy may be cited as a valid ground
.
to termmate employment: 4
c) There is oo !tier optioo Cflailable tllhe ef1llkJyEr but !he iltroductioo of the rr.adlilely, eqlipment or deVice and lhe
ronsequent tami1afb1 ci ~ ci 1flose atreded ttlereby,
d) The ooe (1) 110181 JXb' ll1ilEn noli:e requianent under Mk:le 298 !2831 shoukibe ~ v.;t~;
e) There shOOd be~ and rar smdclds or aiBia i1 ~ v.tlo ro M1ale sudl as nalure of m, s1a1us of
fle ~ (Yiilelher casua, lenlJOOI}' or regular), ~. e10Ciency lllfilg and seoiafty, CliWJ other
cor.si:leJaOOns: and
Q Sepaab1 Pat J11lSI. be paid U>lhe affecEd ~ i1 such !rOOJ11I eqtWaloot bl at least his one (1) Jl'001h pay or to
at least ooe (1) month pay b' fM?J'I year of seril:e, v.flidleYer is ~.a lractioo d at least six (6) mooUls shall be
coosijered as one (1) v.t101e year. In case !he CBA or C00'4JMY policy prcNides b' ahghef sepa-a!ion paf, !he 5m1e
JruS!be ~ ilsml ct !he ooe provi1ed i1 Mk:le 298 [283]. ·
, MagrdaOaiyl'Rm:lsCo!poollkxl v. NlRC, G.R. ~- 114952, JM. 29, 1996, 252 SCRA 483.
2 Solim, Jr. v. NlRC all PLOT, G.R No. 1~94. 1fJti 23, 2.007.
3 Abapo v. CA. G.R No. 142405. Sept. 30, 2004. ms case ~ i1lrcductioo ci hgf1.speed machiles mbe I.ISOO i1 the
nmJaduie of beer by Sal t.t:luel Coiprxation ills t.mdaJe plirrt.
4 Mlre ~. lleilbtkg ~roost be present tl valkltt ilvokeredoo1ancy:
a) There is good fall i1 alxislq U1e Jedundmtposi!ioos;
b) There is no oller optioo ~ tl U1e efTllkJyerexcept tltlnmale reOOldM! ~;
c) W!l1en nob! is S1liV9.1 oo bolh !he al!in!d en1Jbiee$ all U1e Depainent d t.m In!~ at least ooe (1)
monthprb'tllle i1enda1 dat! ct mni1atilt;
least ooe (1) monlh pay b" wery year d ser.te, Mlichever is llgher, a lractioo ct at least six (6) InJn1hs shal be
considered as roe {1) v.t10ie year. In (300 the CBA or COOllillY palicy prcNides for ahgher sepaa6oo pay, the 5m1e
must be fdloY.Ild ilsQI of U1e ooe prcNided i1 Aitk:le 298 (283).
e) Far and reasonable aileria i1 ascer1ainilg v.toat posilioos are 1o be dedared redunda1t and accooling~ abo&shed. (See
Lopez Sug<r Coqiomion v. FICII1CO, G.R No. 148195, May 16, 2005; See also SPI TedlnOOgies, Inc. v. Vctxia K.
Mapua, G.R No. 191154, Apli07, 2014; Genemf Mllilg Qrpolalion v. V1<1ar, {l.R No. 181738, Jcr~. 30, 2.013; catex
[Phils.tlnc. v. NLRC, G.R No.159641, Od. 15, 2007; Asian Ab:lhol Gorporali:Jnv. NLRC, G.R No.131108, Mmt 25,
1999).
318 BAR REviEWER ON lABOR lAW CHArTER IV 319
POST EMPLOYMENT

(1) Where the services of employees are in excess of what is reasonably
demanded by the actual requirements of the enterprise. 1
(2) Where the position is superfluous because of a number of factors, such
as over-hiring of workers, decreased volume of btisiness, dropping of
a particular product line or service activity previously manufactured or
undertaken by the enterprise or phasing out of service activity priorly
Wldertaken by the business?
(3) Where there is duplication of work. Indeed, in any well-organized
business enterprise, it would be surprising to find duplication of work
and two (2) or more people doing tlie work of one person.3
(4) Where it is validly resorted to as a cost-cutting measure and to
streamline operations so as to make them more viable. 4
Time and again, it has been ruled that an employer has no legal obligation
to keep more employees than are necessary for the operation of its business. 5 Thus,
the employer has the prerogative to implement reorganization and redWldancy as
well as to adopt such measures as will promote greater efficiency, reduce overhead
costs a.1d enhance prospects of economk gains, albeit always within the framework
of existing laws. 6
However, if ti}ere is no proof that the essential requisites for a valid
redundancy program as a grmmd for the termination of the employee a.re present, the
termination should be declared illegal.7
2. SOME PRINCIPLES ON REDUNDANCY.
• Elimination of undesirables, abusers and worst performers through
redundancy is not an indication of bad faith. 1
• The act of the employer in hiring replacements is not an indication of
bad faith if the positions have no similar job descriptions. 2
• Redundancy to save on labor costs is valid. 3
• Redundancy resulting from use of high technology equipment is valid. 4
• Abolition of positions or departments is valid. 5
• Reorganization through redundancy is valid. 6
• Contracting out of abolished positions to independent contractors is
7
valid.
• Hiring of casuals or contractual employees after redundancy is valid. 8
• Advertisement on hiring for new position similar to the alleged
redundant position is evidence that the position is not redundant. 9
• Where two or more persons are performing the same work which may
be effectively accomplished by only one, the employer may terminate
10
the excess personnel and retain only one.
• Even if there is a seniority rule, such as the LIFO (Last In, First Out)
rule, the nature of work and experience of the employees should still be
11
taken into account by the employer.
~ The LIFO or FILO (First In, Last Out) rule has no basis i!1law. 12
• LIFO rule is not controlling as employer has the prerogative to choose
who to terminate.
13

• The wisdom, soundness or characterization of service as redundant by

the employer is not subject to review. The only exception is when there
m.
is a showing that the same was done in violation of law or attended RETRENCHMENT
8
with arbitrary and malicious action. I. RETRENCHMENT, DEFINED.
• Burden of proof in redundancy rests on the employer.9
0 Retrenchment has been defined as ''the termination of employment
• Evidence oflosses is not required! initiated by the employer through no fault of the employees and without

1 Dole~ tx:. v. NLRC, GR. No.120009, Sert 13, 2001.

2 Santosv. CA, G.R No.141947,July5, 2001.
t ~ lblsi'g Phi., klc. v. L£ynes. G.R No. 177816, hJJ. 3, 2011,655 SCRA n; Edge Appilel. he. v. NLRC, G.R No. 3 De Ocampo v. NLRC, G.R No. 101539, Sepl4, 1992,213 SCRA 652.
121314,Feb.19,1998,286SCRA302,311. 4 Soriirto,Jr. v.NLRCMdPI.OT,GR.No.165594,Apri23,2007.
2 ~ lblsi'g Phl, he. v. L£ynes. ~ AMA ~Cciegev. Gada, G.R No. 166703, Apri 14,2008. 5 Sal t.tJuel Cop<xaion v. NLRC, G.R No. 99266, Mirch 2, 1999; Pamn:o North Express, tx:. v. Nl.RC, G.R No.
3 CrMex [Phils.1 tx:. v. NLRC, G.R No. 159641. Ott 15, 2007; Becbx1 Dicki1son Phis., he. v. NLRC, G.R Nos. 159969 & 100516, Sept 21, 1999.
160116, tbl. 15, 2005, 475 SCRA 123; ~ File Co, tx:. v. G.R No. 82249, Feb. 7, 1991, 193 SCRA 665, 6n. 6 hlemablal Hcrves!1ir !Ja:lecxl, klc. v. lAC, 149 SCRA 641 [1987); See also Dole PfliiWiles, klc. v. Nl.RC, G.R No.
4 M!ya FC1111S ~ Organizali:Jn v. NI.RC, GR No.100256, Dec. 28, 1994.
120009, Sept 13, 2001.
s · M:xaes v. Melropolital ~ Md Trust~. G.R No. 182475, tbl. 21, 2012, dli'g Am:ldiel v. NLRC, G.R. No. 7 Serrano v. NLRC, G.R No. 117040, Jan. 27,2000.
100641,June14,1993,223SCRA341,348. 8 Dole Plf~. he. v. N..RC, G.R No. 120009, Sert 13,2001.
s Smcr!Cormlllli:ations,lnc. v. Astclga,G.R No. 148132,Jat 28,2008. 9
SPI Technologies, OC. v. VK:ixia KMapua, G.R No.191154, Apri 07,2014.
7 LarbertPawnbroker.; Md J~ Coip. v. Bilarira, G.R No. 170464,Ju~ 12, 2010. 10
Wilshire File Co., roc. v. NLRC, G.R No. 82249, Feb. 7, 1991, 193 SCAA 665; See also Becton Dicki1soo Phils., Inc. v.
s Smcrt CalmJnicalions, Inc. v. Amga, GR. No. 148132, .la1. 28, 2008; caHex tphils.), Inc. v. Nl.RC, G.R ~- 159641, NLRC, G.RNos.159969& 160116, tb/.15, 2005,475SCRA 123.
Od. 15, 2007. t1 Maya Foons ErrclkJyees Otga1izaOOn v. NLRC, G.R No. 100256, Dec. 28, 1994.
9 Coca-Cola Bot11e1S Phfll!li1es,lnc. v. Del Villa', G.R. No. 163091, Ott 6, 2010. 12
10 Sebuguerov. NLRC, G.R No.115394, Sept 27, 1995; Esccrealv. NLRC, G.R No. 99359, Sept 2, 1992, 213 SCRA 472.
Asian Ak::otld Ccxporatioo v. Nl.RC, G.R No.131108, Mirch 25, 1999.
13
De Ia Sal'e Unive!siyv. De Ia SallelJrWe!Sity~As9:x:iation. G.R No.100002, Apri112, 2000.
320 BAR REviEWER ON lABOR lAW
prejudice to the latter, resorted by management during periods of business
recession, industrial depression, or seasonal fluctuations; or during lulls
occasioned by lack of work or orders, shortage of materials; or considerable
reduction in the volume of the employer's business, conversion of the plant for a
new production program or the introduction of new methods or more efficient
machinery, or of automation." 1
2. ADDITIONAL REQUISITE UNIQUE TO TIDS GROUND.
Proof of losses or possible imminent losses is the distinctive
requisite of retrenchment This is the only statutory ground in Article 298
[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. 2
3. VALID JUSTIFICATIONS FOR RETRENCHMENT.
The Supreme Court had the opportunity to rule, in several cases, on the
validity of the varied justifications adduced by employers in tennination of
employment based on the authorized cause~ under Article 298 [283]. In the case of
retrenciunent, the justifications mentioned below may be invoked fJr as long as the
purpose is to minimize or prevent losses:
1. Actual losses or to minimize or prevent losses;
2. Financial reverses;
3. Lackofwork;
4. Reduction in the volume of business;
5. Reorganization of the company made in good faith;
6. Phasing out or abolition of a section, division, branch or department;
7. Conservatorship of company under Section 24sJ of the Insurance Code;
1
F. F. Miri1e Capaatioo v. The Hon. SeaXld IMm, NLRC, G.R No. 152039, ~ 8, 2005; See alsO Anale v. ~
CoosWttkn, G.R No. 183233, Dec. 23, 2009; Maval v. ·flhl4ipile T~ ood Telephale Cap., G.R No. 172363,
t.mtl7, 2008;T<Iljmv.flhlWile Poslal Sa'lir¥Js8at, k¥:., G.R No.155278, &¢ 16,2003.
Predskvl Ele!:tooi::s ~ v. NLRC, G.R No. 86657, Oct 23, 1989.
2
3
Sedion 248 d fle mr.m Coded ll!e Ph~ pnMles: 'Sec. 248. Kat art tinebetre, « *·
11e suspensi:n cr
revocation cllle ~ d allxriy d 111 ilstla1ce aJI1IMY as pttMied illlepletedilg ti1le. lie Qmnissi:ner rms
81at sud! ~is il astated cmlilung idy cr 11Mi1i'Qness tlll1itilail aaxdiln d !dMicy cr iJfkly deemed
alequale tl paEct 1lle i1Best d polcy hokteiS ood adls. he may appoilt aa:nsavau to t:e d1alge d 11e !ISSIE.
laliities, ood the~ of sudl OOIJ1lMY, oolect al moneys ax! debts due saki COI1lJMY ax! exercise al pc7MliS
necessay to PllSI!Mllle assets d sai:l ~. reagalize lie~ 8tered, ood reslae Is~. The saKI
ID1SeiVilllr shal Mle 11e pa.ver mO'leiiUie cr revoke lhe adions d the prevW5 mooagemem Md boMI diiecDs d the
saMl ~. art provisDI of law, or of the cricles d ilaxpaaOOn cr by• 4' l1e ~. tl lle IXriay
rdvtithstnfllQ, ood such oGler paNelS as l1e CarnissDlershall deem nea!SSay.
'The arJSefVab' may be anolher i1surance arJ1la'lY doing busi1ess ilthe PhfWi!es, by otrm or dfl:ers d such
COIJ1lC!IlY, cr artt olhe' ~ ood qu3lfied person, 1im or capomtion. The rei1Jlllelalion of lhe tooSeiVaklr ood olhe'
expeoses attendM!tllle~ shal bebanebylle ilsurcltce~axmned.
'The oonseMtor shal not be subject to 8lT'J adioo, clain.cr denmd by, or labii!y to, artt pe!SOil il respect d ll1')ti'I;J dale
or omlled to be dooe i1 good failh il fle exen:i'le, or i1 !Xll1f1edixl with the exertise, d the paNelS 001feRed on the
conseiVator.
CHAPTER IV 321
POST EMPLOYMENT
8. Fire which resulted in considerable decrease in business;
9. Streamlining the company into a lean and trim centralized organization
by shedding-off marginal business activities!
4. STANDARDS TO DETERMINE VALIDITY OF LOSSES AS
JUSTIFICATION FOR RETRENCHMENT.
The general standards in terms of which the act of an employer in
retrenching or reducing the number of its employees must be appraised are as
follows:
1) The losses expected should be substantial and not merely de
minimis or insubstantial and inconsequential in extent.
2) The substantial loss apprehended must be reasonably imminent, as
such imminence can be perceived objectively and in good faith by
the employer.
3) Retrenchment must be reasonably necessary and likely to
effectively prevent the expected losses. The employer should have
taken other measures prior or parallel to retrenchment to forestall
losses, i.e., cut other costs than labor costs.
4) The alleged losses, if already realized, and the expected inuninent
losses sought to be forestalled, must be proved by sufficient and
convincing evidence through presentation of externally audited
financial statements. 2
5. "RETRENCHMENT TO PREVENT LOSSES," MEANING.
Article 298 [283] uses the phrase "retrenchment to prevent losses." In its
ordinary connotation, this phrase means that retrenchment must be undertaken by the
employer before the losses anticipated are actually sustained or realized. The
Supreme Court, in a plethora of cases, has thus interpreted it to mean that the
employer need not keep all his employees until after his losses shall have
materialized3 This is never the Intention of the lawmaker. If such an intent were
expressly written into the law, that law may well be vulnerable to constitutional
attack as unduly taking property from one man to be given to another.
"The aJJSeMi:r ~ shal rep00 ood be responsiJie tllhe Connisskx1er lldi sud! tine as lhe Gamisslooer i;
sc£sfied llal11le iwa1ce OJillllllY all aQiUl tlf4)elate 00 Is a.m ard lheamervabslip shal Jt.ewil;e be Emilakld
stm1 be~. oo the basis dlle leportdlhe Cll1SeiVStr crdlis OM1 ~ dee1me llatthe cri1lalce
il busi1ess d lhe i1strcrlce ~ v.ookl be hazirdoos tl pcicy tdders ood adxs, il Yoi1ich case 1lle ~ d
Tille 15 shal appl)'.'
1
Revklad v. N.RC, G.R No. 111105, June 27, 1995; PrOOsb1 Elecllooi::s Copocl6JI v. NLRC, G.R No. 86657, Oct 23,
1989.
2
Andrada v. NLRC, G.R. No. 173231, Dec. 28, 2007; Orienlal Petroleum and Minerals Corp. v. Fuentes, G.R. No.
151818, Oct. 14, 2005; Clarion Plinling House, Inc. v. NLRC, G.R No. 148372, June 27,2005.
3 /1siM Alcohd ColpcratiJn v. NLRC, G.R No. 131W8, 1Jatil25, 1999,305 SCRA416; TP1 PhqJpi1es CEment cap. v.
Ccf,Jc:om VII, GR. No.149138, Feb. 28, 200i; Lr4JezSuga'Cap. v. Federa!OO dFmeWaters, G.R t«ls. 75700-01, Aug.
30, 1990, 189 SCRA 179.
 CHAPTER IV v•v
322 BAR REvlf\VER ON LABOR LAW POST EMPlOYMENT

• The fact that there has been economic or other crisis besetting a particular
At the other end of the spectnnn, it seems equally clear that not every
sector or the country as a whole is not sufficient justification for
asserted possibility of loss is sufficient legal warrant for the reduction of personnel. 1
In the nature of things, the possibility of incurring losses is constantly present, in retrenchment.
2
greater or lesser degree, in the carrying on ofbusiness operations, since some, indeed • Article 298 [283] applies only to permanent retrenchment or lay-off.
3
many, of the factors which impact upon the profitability or viability of such • Cost-reduction or cost-saving measures prior to retrenchment are required.
operations may be substantially outside the control of the employer. 1 Hence, there is • The phrase "retrenchment to prevent losses" means that retrenchment
a need for concrete and substantial proof of imminently expected substantial losses must be undertaken by the employer before the losses anticipated are
that the employer would incur in the event that the retrenchment of the employees is actually sustained or realized. The employer need not keep all his
not effected.2 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
For instance, in Talam v. NLRC. The Software Factory, Inc., etc./ another.
4
petitioner Talam tried to negate the dire financial picture besetting respondent TSFI • Employer bears the burden of proof to show business losses or financial
claiming that the very financial statement cited by TSFI showed a uet income of 5
reverses.
P298,725.00, referring to the period ending on September 30, 2002. Such a claim,
• Best evidence of losses - financial statements audited by independent
however, cannot erase the fact that the company had suffered substantial 6
accutnulated losses ofP2,474,418.00 and retained earnings deficit ofP7,424,250.00 auditors (not by internal auditors).
for the period ending December 31, 2002. For a small company like TSFI (with only • Best evidence of losses in a government-controlled corporation -
7
20 employees), the losses it suffered were not merely de minimis in extent but were, finar.cial statements audited by COA.
8
at the time Talam was dismissed, actual and with more losses reasonably imminent. e Period covered by fmancial statements, material.
9
Significantly, the employer objectively and in good faith perceived the imminence of • Income tax retums, not valid since they are self-serving documents.
10
more losses as it was based on the report of its external auditor. • Mere affidavit on alieged losses is not sufficient.
• Mere notice of intention to implement a retrenchment program is not
6. SOME PRINCIPLES ON RETRENCHMENT. . l1. -
su ffic1ent.
• If said standards are present, wisdom to retrench cannot be questioned. 4 12
• Rehabilitation receivership presupposes existence of losses. However, the
5
• The retrenchment must be done in good faith. . fact that the employer is undergoing rehabilitation receivership does not by
6
• Notoriety of the employee is a valid criterion. itself excuse it from submitting to the labor authorities copies of its audited
• The progressive manner of implementing the streamlining and downsizing financial statements to prove the urgency, necessity and extent of its
13
of operations resorted to by a construction company in order not to retrenchment program.
jeopardiu the completion of its projects is valid. Thus, several departments
like the Civil Works Division, Electro-mechanical Works Division and the 1 CerGa1 Azu:aela de Ia Ccr1:Xa v. N.RC, G.R. No. 100092. Dec. 29, 1995, 251 SCRA 589.
Territorial Project Management Offices, among others, were abolished in 2 Sebuguerov.NLRC,G.R.No.115394,Sepl27,1995.
the early part of 1996 and thereafter, the Structural Steel Division by the · 3 L1rrbert PcrM1brokers ll1d Jeweky Colp. v. Bimia, G.R. No. 170464, .htf 12, 2010.
4 AsiM Akohol Corporation v. NLRC, G.R No. 131108, March 25, 1999, 305 SCRA 416; lPI PhiWineS Cement
end of year 1997.' Cclp. v. cajucom VII, G.R. No. 149138, Feb. 28, 2006.
5 Emco Plywood Colporationv. Ab6olas. G.R No. 148532, Apli 14,2004.
6 Dcr1zas ~lilenlal. klc. v. ~. GR No. 154368, ~ 15, 2005; ~ Entetpri;es. klc. v. Capaoso, G.R
No.159919, Aug. 8, 2007.
7 N!JC.Gutvie Plirtalioos, klc. v. NLRC, G.R No.110740, Aug. UX11.
8 ~AIIendools 111<1 SlewadsAssOOaOOn of the PhiippilesfASAPJv. Phippi1e Anles, he., GR No.178083, Jutt 22.
1 RENktcKl v. NLRC, G.R No. 111105, June 27, 1995: See aso Cajucoo1 VII v.lPI f'hqlpi\e Cement~. G.R No. 2008. .
149090, Feb. 11, 2005; Lopez Sl.gm"Co!por.ltion v. F~ of Free WO!Kers, G.R. Nos. 757~1. hlg. 30, 1900, 189
SCRA179.
9 C8siiJio v. Stem Rea Estate, klc., Rentlaldt Hotel, G.R No. 162233, Mim110, 2006; Favia v. tlRC, G.R No. 126768,
2 Bana1a Growe1s ColecWe at !Wid Fams v. NLRC, GR. No. 113958, July 31, 1997, 276 SCRA 544. June 16, 1999, '!fiT Phi. 584,595.
3 G.R No.175040,,6¢16,2010,617 SCRA408.
10 MJmMP~IndustJieS,Inc.v.NLRC,G.R.No.118973,Aug.12,1998.
11 ~Enterprises,lnc.v.~,G.R.No.159919,hlg.8,2007.
4 N:CGutlrie Plrillilns, Inc. v. NLRC,G.R No.110740, hlg. 9, 2001.
s Sentilei!M!glaled Servk:es, klc. v. Reloo, G.R No. 188223, July 5, 2010.
12 Claron Pli1li'g House, Inc. v. Nl.RC, G.R. No. 148372. June 27, 2005.
6
Shinizu Phis. Coollaclols, Inc. v. Qlmla, G.R No. 165923, Sept 29, 2010.
13 Fight Al!endi:rJlS and Slewanls Ass00a1ion of the Philippines IFASAP! v. ~e Ait1iles, Inc., GR No. 178083, Ju~ 22,
7 ld. 2008.

~
324 BAR REviEWER ON lABOR lAW
• Audited financial statements should be presented before the Labor Arbiter
or the NLRC but not belatedly before the Court of Appeals or Supreme
1
Court.
• Retrenchment effected long after the business losses is not valid. 2
• Profitable operations in the past do not affect the validity ofretrenchment.3
• Compulsory retirement to prevent further losses is valid. 4
• Early Retirement Program (ERP) to prevent further losses and implemented
prior to retrenchment is valid.
5 different circumstances, thus, they are in no way interchangeable.
• Rotation of work may be tantamount to constructive dismissal or
retrenchment. 6
7
• 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 substantia~ sustained and real. 8
• Litany of woe3, in the absence of any solid evidence that they translated
into specific and substantial losses that would necessitate retrenchme:1t, will
9 concepts have been highlighted in Arabit v. Jardine Pacific Finance, Inc.
not suffice to justify retrenchment.
• In an enterprise which has several branches nationwide, profitable
operations ir.. some of them will not affect the validity of the retrenchment if
overall, the fmancial condition thereof reflects losses. 10
ill-A.
REDUNDANCY VS. RETRENCHMENT
1. NEED FOR CLEAR-CUT DISTINCTIONS.
Before leaving the topics of redundancy and retrenchment, a clear-cut
distinction should be made between these terms since a reading ofsome decisions of
the High Court indicates that confusion continues to hound employers in
determining the proper term to be used to describe their personnel reduction
schemes. The improper use of the term will have far serious adverse effects in terms
oflegal consequences as well as the amount of separation pay involved.
1 ld.
2 Taggatlndusbies, Inc. v. NLRC, G.R. No.120971, Marth 10,1999.
3 Mllalad v. Phi"qlpile T~ emTelephooeCorp., GR No. 112363, Mm17, 2008.
4 Lopez Sugar Corporation v. Fedil131ion of Free WMes, G.R. Nos. 75701).41, Aug. 30, 1990.
s Koleal p.; Co., l.k!. v. Yusoo, G.R No.170369, June 16, 2010.
6 kllemaOOnalliardwae, Inc. v. NLRC, G.R No. 80770, Aug. 10, 1989; See also Unicorn Safety Glass, Inc. v. Basarte, G.R
No. 154689, Nov. 25, 2004.
Henmdezv. Phiippi1e l3loomi!Y;) MIS Co., Nl.RCNCRCaseNo. 3-1223-83,Ju~26. 1985.
l.arbel! Pav.flbrok8s em Jeweky Corp. v. Binarrila, G.R No. 110464, J\.tf 12. 2010.
9
Centat Azuccma de Ia car1ota v. N'..RC, G.R No. 100092, Dec. 29, 1995, 251 SCRA 589, 321 Phil. 989, 997.
1o Manaladv. Ph~ TelegrapiHIIdTelephooe<np., G.R No. 172363, Mard17,2008.
CHAPTER IV 325
POST EMPLOYMENT
For instance, in the case of AMA Computer CoUege, Inc. v. Garcia/
petitioner itself apparently is confused as to the real reason why it terminated
respondents as it raised different grounds to justify their dismissal, i.e., before the
Labor Arbiter, it cited retrenchment; before the NLRC, it claimed redundancy; and
before the Court of Appeals, it averred both retrenchment and redundancy. The High
Court observed that although governed by the same provision of the Labor Code,
retrenchment and redundancy are two distinct grounds for termination arising :from
In AG & P United RBnk & File Association v. NLRC,Z private
respondent Atlantic Gulf and Pacific Company of Manila, Inc.'s ''redundancy
program" was wrongly denominated as such when it should have been precisely
termed ''retrenchmenf' because it is primarily intended to prevent serious business
losses.3
2. DISTINCTIONS.
That the grounds of redundancy and retrenchment are two different
(Formerly MB Finance),4 where respondent Jardine posited that the distinction
between redundancy and retrenchment is not material. It contended that employers
resort to these causes of dismissal for purely economic considerations. Jardine
further argued that the immateriaiity of the distinction between these two just causes
for dismissal is shown by the fact that redundancy and retrenchment are found and
lumped together in just one single provision of the Labor Code (Article 298 [283]
thereof).
The Supreme Court disagreed with this contention. It said that it cannot
accept Jardine's shallow understanding of the concepts of redundancy and
retrenchment in determining the validity of the severance of an employer..:.employee
relationship. The fact that they are found together in just one provision does not
necessarily give rise to the conclusion that the difference between them is
immaterial. It has already been ruled before that retrenchment and redundancy
are two different concepts; they are not synonymous; thus, they should not be
used interchangeably.5
1 G.R No. 166703, Apri 14, 2008.
2 GRNo. 108259,Nc71.29, 1996,332Phl.937.
3 Mllalesv. Metqlo&tal Balk em Trust CcJr!lanY, G.R No. 182475, Nc71. 21, 2012.
4
GRNo.181719,~21,2014.
5 Arm:la v. NlRC, G.R No. 173231, Dec. 28, 'J!JJ7, cii1g lle cased Sebuguero v. t-I.RC, GR No. 115394, Sept.27,
1995, 248 SCRA 532, 542, 1\flere it was dcrilied: "Redtlldancy exists l\1lere lhe seM:es d 111 ~ ae il excess rJ.
v.ta is lllaSilMij denmded by lhe actual requilmenls rille eneprise. Aposili:x1 is re(m!c1111\1lere it is super(uoos,
em ~ rJ. a posftioo or positioos may be lle outrome of a IUI'ber rJ. facbs, such as CNer lllilg of WCJIIIers,
deaeasOO V!ime rJ. busiless, oc ~ d a pri::uB' pllDJct i1e a seM:e octMiy prMxJsiJ mMUfa<ilred oc
llldelt<ten by 1he enbllprise. Remhnenl. on lle other hilld, is used ~ Mh lhe Elm 'la'f-d!." k is lhe
\lnni\atixl of llfl'4lbfment ilitialed by lhe ~ lhrooJJh no faJI d lhe ~·sen! v.;vru pre;!dice ID lhe laller,
326 BAR REviEWER ON lABOR lAW
CHAPTER IV 327
POST EMPLOYMENT
"Redundano/' exists when. the services of an employee are in excess of It is only in the first that payment of separation pay is required. No
what is required by an enterprise. "Retrenchment," on the other hand, is resorted to such requirement is imposed in the second. 1
primarily to avoid or minimize business losses. Thus, a "Redundancy Program,"
2. SOME PRINCIPLES ON CLOSURE.
while denominated as such, is more ·precisely tenned "retrenchment' if it was
primarily intended to prevent serious busineSs losses.' • Employer may close its business whether it is suffering from business
Redundancy does not need to be always triggered by a decline in the losses or not; court cannot order employer to continue its business?
business. Primarily, employers resort to redundancy when the functions of an • Principle of closure under Article 298 [283] applies in cases of both total
employee have already become superfluous, duplicitous or in excess of what the and partial closure or cessation of business operations. Management may
business requires. Thus, even if a business is doing wel~ an employer can still choose to close only a branch, a department, a plant, or a shop?
validly dismiss an employee from the service due to redundancy if that employee's • Closure of department or section and hiring of workers supplied by
4
position has already become in excess of what the employer's enterprise requires. 2 independent contractor as replacements is valid.
5
• Relocation ofbusiness may amount to cessation of operations.
In terms of monetary consequence, the employer stands to pay more • The burden of proving that the closure or cessation of business operations
separation pay if it denominates the personnel reduction program it is implementing 6
is bona-fide falls upon the employer.
as redundancy and not retrenchment. Under Article 298 {283], redundancy would
• Closure may constitute an unfair labor practice if it is resorted to as a ruse
require the employer to pay its employees a separation pay equivalent to at least their
one (l) month pay or to at least one (l) month pay for every year of service, or scheme to get rid of employees on account of their union activities.'
whichever is higher; while r0trenchment would entail only half of this amount.3 • Closurt: by reason of enactment of a law is valid. Example: The closure
of the Philippine Veterans Bank by operation of law (R.A. No. 7169 [An
Act to Rehabilitate the Philippine Veterans Bank Created Under Republic
IV. 8
Act 3518, Providing the Mechanisms Therefor and for other Purposes]
CLOSURE OR CESSATION OF BUSINESS OPERATIONS or closure of the employer's business because a large portion of its estate
!.CONCEPT. was acquired by the Department of Agrarian Reform pursuant to the
Comprehensive Agrarian Refonn Program (CARP) under R.A. No.
Closure or cessation of business is the complete or partial cessation of
the operations and/or shutdown of the establishment of the employer. It is 6657.9
• Closure of business to merge or consolidate with another or to sell or
carried out to either stave off the financial ruin or promote the business interest 10
of the employer. 4 · dispose all of its assets, held valid.
• Proof of losses is required if ground is serious business losses or fmancial
Closure involves two (2) situations:
reverses. There should be clear proof of such losses since no separation
(a) When NOT due to serious business losses or fmancial reverses; or pay to the employees is required to be paid under the law.
11

(b) When due to serious business losses or financial reverses 12

• Audited financial statements necessary only in closure due to losses.

re&X1ed tll7{ ~ diJilQ peOCds d txJsiless recessioo, ildtSia! depessioo, or seasooalllcbJatioos, or dlli1g
Us oa:asbned by lack d ORiels, sholtJJe it malerials, OOIM!fSi:ln d lle pmt b" a new produdi:x1 JXOJ!Ml or the 1 NOOh Dawo 1.t1iJ,J capaatioo v. NI.RC, G.R No. 112546, Mllth 13, 1996, 254 SCRA 721, 727.
i11rodudiln d new methods or more ElfDert rnadi1ely, or d ~- SiJW !U, l is an a:t of lle ~ of 2 Pei1ann:ia ToorsilldTIIM!ITranspat, Inc. v. Samienkl,G.R No.178397, Oct. 20,2010.
3 E1!ge Appa8, Inc. v. N.RC, G.R No. 121314, Feb. 12, 1998, 286 SCRA 302; Phi. Engileelilg Qxp. v. CIR, G.R No. L·
~ ~ because d bsses illle operation d abusi1ess, leD d IWik, and~ reOOdi:ll oo f1e
vOOrlle dhis liusiless, afl:lht IXXlSislenllf recog1ized and aftinred 17{ llis Curt' 278SO, Sept. 30, 1971,41 srnA89.
1 4 Asoocic6ln of ln!egraEd SectJily Force dllisfiJ {AISFBj-ALU v. Hon. CA. illd PICOP, G.R No.140150, AIIJ. 22, 2005.
Mm:Gulfilld PadficCoo"4lanY of Mril, kE. [AG &P). v. NLRC,.G:R. No. 127516, Mly 28, 1999;AG &PUnited Rank 5 Ole!WerDecoPriliTectrtsColpoJaiXxlv. NLRC, G.R. No.122876, Feb.17, 2000.
&Fie Associatioo v. NLRC, G.R No. 108259, Nal. 29, 1996, 332 Phi. 937;Edge ~.Inc. v. NlRC, G.R No. 121314, 6 JAT. General SeM:es v. NLRC, G.R No. 148340, Jal. 26, 2004; ll1dt.lstB Tniler Co!poraOOn v. NLRC, G. R Nos.
Feb. 12, 1998; Witshie File Co., klc. v. NI.RC, G.R No. 82249, Feb. 7, 1991; Precision EJeaooi::s capcxation v. NLRC,
G.R. No. 86657, Oct. 23, 1989. 107302-107300 &10855!1-10860, June 10, 1997, 339 Phil. 395,404.
7 St. John Colleges, Inc. v. St. Jdvl Acaderrri Faculty and Empcyees Unkxl, G.R No. 167892, Oct. 27, 2000.
2 Andradav. NLRC, Sllpla.
3 The sepaalion PiJf i1 case rl retrenctment is ~ivalenl kl one (1) rmnth pay or at least oneMf Cl~ rroolh pay for wery s ComistaOomilgov.NLRC,G.RNo.156761,0ct.17,2006.
9 Na1ional Federation oftmv. NLRC,G.R. No. 12n18, Mcrch 2, 2000.
yea-of seND!, Yo11kilever ish~her. Alracli:rl of aleastsb< (6) moothsshal be 001Sklered one(1) l'tlloleyear.
1o Espi1a v. Hon. CA, G.R ttl.164582. f..4aJth 28, 2007.
4
Eastidge ~Club, Inc. v. Easbidge ~ CUJ, nc. Lalor Unixl- &!per, G.R. No. 166760, flliJ. 22, 2008; ~ v. CA.
11 Nath Da.oo Mining Gaporationv. NLRC, G.R No. 112546, Mcldl13, 1996, 254 SCRA 721.
G.RNo.164582,Midl28,<m7.
12 Danzas lntertootinen1al, Inc. v. ~uman. G.R. No. 154368, Aprtl15, 2005.

A
""-•>::.._,.__ ,,
328 BAR REviEWER ON lABOR lAW
• Evidence of losses in a closure case should not be presented for the frrst
1 while the two are often used interchangeably and are interrelated, they are actually
time on appeal with the Court of Appeals or Supreme Court.
• For closure to be a valid basis, it must be invoked at the time of
2 Tennination of an employment may be predicated on one without need of resorting
termination and not after.
• Closure ·of a department or section due to losses amounts to
retrenchment. 3
IV-A.
RETRENCHMENT VS. CLOSURE OF BUSINESS
1. PRINCIPAL DISTINCTION.
In a number of cases, retrenchment has been confused with closure of the
entire business establishment or a departmen~ division m outlet thereof For
instance, in the 2004 case of J.A.T. General Services v. NLRC,4 while the Court of
Appeals defined the issue to be the validity of dismissal due to alleged closure of
business, it cited jurisprudence relating to retrenchmeni to support its resolution and
conclusion. In <mother case decided in 2005, Alabang Country Club Inc. v.
NLRC,5 the opposite of what the CA did in JAT traJI.spired in that it found this case
of Alabang one for retrenchment and not for closure of a department It resolved the
issue using the standards fo;· retrenchment rather than for closure. Finally, the same
issue of confusion over what principle should apply has occurred in Manila Polo
Club Employees' Union (MPCE!D FUR-TUCP v. Manila Polo Club, Inc., 6 a
case akin to Alabang, involving as it does the closure of the F& B Department due
to the substantial losses this department suffered over the years. Similarly, the CA
affinned in toto the Voluntruy Arbitrator's decision holding that the closure of the F
& B Department was a case of retrenchment
1 M!-S1un Co1poJa00n v. Me-Shum WOIXe!S Union- FSM, G.R tokl. 156292, Jcrl. 11, 2005.
2 Sapia1 v. JB 1.i1e Bi::c1 Express, ~.• GR No. 163n5, Oct 19, 2007.
3 Sall.tJue!Qxp. v. AbaBa, GR No. 149011, June 28, 2005.
4 G.R No. 148340, Jan. 26, am. Hwas held it flis case ihal1he issues and oone1bls nm centsed on dosure ci
busi1ess opell1tkln lllfler l1an Jelrenchment. W1at gave rise b lle c.m.e ls fie 4ecile illle sale ci heavy equipment
becaJse ci lle Asicll rureocy aisis. Consequenltj, JAT lerr.,aatt suspended Is~ llinaE!y, oo Decenter 14,
1998, JAT led an EstaJiisl1menl TenTinalion Report Nt11he DOLE, OOif,tg 1he lli!Erd its dedskxl tl cllse Is busi1ess
~due tl busiless losses and tnanciallllYe!SeS.
s G.R No. 157511, Aug. 9, 2005, 503 FW. 937.1n lhis case, rea~ZDJ llatlwasno bY:Jerptdilableb' ACCIID maillilil its
l7i«1 F &8 Oepa!1ment, lle managemeiJl dedded Ill cease from opeJa6ng lle depa1men! and Ill ~ tie sarre Ill a
axtlraetJr, La Tasca Re!.tlm Inc. (La Tasca) vtth would be y,frg Ill opa21s aM filed ald bever.rJe busiless 'Mlllin
lle cilb. This JeSUIIed illle cklsure ci lhe F&8 Depcrbnent v.bose ~were Emli1ated effective Januay 1, 1995.
The ll!allQelllE!!1 is 11at ll1ey l'«llAA be pai:l sepnon pay ~ tl ooe hltldred twenty fNe (125%) percent d lheir
~ my b" IM!f'J year (t serlice. ACCI lEo i1lonned llem lh<t La Tasca agreed Ill mxb m1 affecled employees
im1edialely 'Mllllle starus of regula' ~ees v.itlout need ci llldeJgci'g a~ period, and V1at an a1!ected
~ vru:l receM! lhe same sa1a1y 111ey were receNi1g fnxn ACCI at lle tine of ter temilalion.
& G.R No. 172846,.Mj 24, 2013.lle ilAiabang, !his~ also ilvc*"eslle<hlure ciMania Polo's F&8 Department due
Ill extreme bsses. kresulled illlle lemlilation ol123 employees gJlllllled 00 retenchment<!Jld not dosure. Aa:xllding Ill
lhe &qlreme Court, lhis case ilvot.les a dosure of business undertaki'iJ, not relmncllment
CHAPTER IV 329
POST EMPlOYMENT
Thus, in the afore-cited cases, the rule was enunciated and reiterated that
two separate and independent authorized causes for termination of employment.
to the other.
Closure ofbusiness, on one hand, is the reversal of fortune of the employer
whereby there is a complete cessation of business operations and/or an actual
locking-up of the doors of the establishmen~ usually due to financial losses. Closure
of business as an authorized cause for termination of employment aims to prevent
further financial drain upon an employer who cannot pay anymore his employees
since business has already stopped.
On the other hand, retrenchment is a reduction of personnel usually due to
poor financial returns so as to cut down on costs of operations in terms of salaries
and wages to prevent bankruptcy of the company. It is sometimes also referred to as
dov.n-sizing. Jt is an authorized cause for tennination of employment which the law
accords an employer who is not making good in its operations in order to cut back
on expenses for salaries and wages by laying off some employees. The purpose of
retrenchment is to save a financially ailing business establishment from eventually
collapsing.'
Unlike retrenchmen~ closure or cessation of business, as an authorized
cause of termination of employmen~ need not depend for its validity on evidence of
actual or imminent reversal of the employer's fortune. Article 298 [2i3] authorizes
termination of employment due to business closure regardless of the underlying
reasons and motivations therefor, be it financial losses or not1
v.
DISEASE3
1. TWO ASPECI'S OF THE REQUISITES.
Disease is one of the authorized causes to terminate employment In the
2014 case of Deoferio v. Intel Technology Philippines, Inc} the requisites that must
be complied with before termination of employment due to disease may be justified
were specifically divided into two, namely:
(1) Substantive requisites; and
(2) Procedural requisites.
1 Sand1 Fullen Pht, R. v. Benm1o and Taghoy, GR No. 187214, All;!. 14, 2013; E'asiOOge Gel Ck!b, Inc. v. Easttilge
Golf Cldl, ~ .• l.abcJ IBn-Super, GR No. 166760, ~. 22, 2008, 563 SCRA 93, 106.
2 t.mia Polo CUI ~· lkl01 (r..f'CEU) FtR-TUCP v. ManUa Polo CI.Jb, klc, G.R No. 172846, J1ii 24, 2013;
~Gal C'dl, R. v. Elmlge Gol CI.Jb, Inc., Lalor-Union,~. supra.
3 Relevant PrrNiskln: Pliil299 [2841, Labor Code.
4 G.R No. 202996, June 18,2014.
330 liAR REVIEWER ON lABOR lAW
POST EMPlOYMENT

2. SUBSTANTIVE REQUISITES. The employee should be given reasonable opportunizy to answer and to
2 be heard on his defense. Although sufferance of disease is not to be equated with
Based on the Labor Code 1 and its Implementing Rules, the following three commission of a wrongful act which is the primordial feature of a just cause
(3) requisites, according to Deoferio, may be drawn therefrom, to wit: termination, the ailing employee needs to be given ''reasonable opportunity to
(1) An employee has been found to be suffering from any disease; answer and to be heard on his defense" before he could be validly dismissed on the
(2) His continued employment is: ground of disease. Consequently, once the substantive requisites for termination due
(a) prohibited by law; or to disease are complied with, the employer should comply with the other equally
(b) prejudicial to his health as well as to the health of his co- important procedural requisites as prescn'bed in Deoferio.
employees; and Per Deoferio, the 2"d required notice infonning the employee of his
(3) A competent public health authority issues a medical certificate that dismissal should be "issued !dk! the employee has been given reasonable
the disease is of such nature or at such a stage that it cannot be cured opportunity to ~ and to be heard on his defense." This requirement, in effect,
within a period of six (6) months even with proper medical treatment 3 dictates that before an employee may be terminated due to disease, he must first be
3. PROCEDURAL REQUISITES. given a show-cause notice that wouid afford him a ''reasonable opportunity to
answer'' the charge of his being terminable by reason of his suffering a disease and,
a. Due process in termination due to disease is similar to due process secondly, for him to be afforded a "hearing on his defense."
for just cause termination but different from authorized cause
termination u:tdt!r Article 298 [283). Comparatively, the authorized grounds under Article 298 [283] such as
instaliation cflcl>or-saving device, redundancy, retrenchment or closure or cessation
Deoferio,4 pronounced the rule that the employer must finnish the of business operations do not, in any way, involve any contributory cause on the part
employee two (2) written notices in terminations due to disease, namely: of the employee. These grounds are solely c.aused by the employer, never by the
(1) The nGtice to apprise the employee of the ground for which his employees. The case of the authorized ground of disease under Article 299 [284],
dismissal is sought; and however, is different as it is the employee who supplies the cause for his termination;
(2) The notice informing the employee of his dismissal, to be issued after hence, there is a need for him to be afforded the twin requirements of notice and
tlie employee has been given reasonable opportunity to answer and to hearing where he shall have the opportunity to defend himself from his possible
be heard on his defense. termination.

It is thus the rule that the twin-notice requirement for just cause
!).OW 3.1. THE FUJI RULE- THE EMPLOYEE SHOULD BE GNEN THE
termination does apply to authorized cause termination due to disease under Article CHANCE TO PRESENT COUNTERVAILING MEDICAL
299 [284] of the Labor Code. However, it is different from authorized cause CERTIFICATES.
termination under Article 298 [283]. This ruling reinforces the State policy of Subsequent to Deoferio, another 2014 case, Fuji Television Network,
protecting the workers from being terminated without cause and without affording Inc. v. Arlene S. Espiritu/ has further expounded on the due process requirement
them the opportunity to explain their side of the controversy.5 in termination due to disease, this time by categorically specifying the right of the
ailing employee to present colllltervailing evidence in the form of medical
1 Miele 299 12841 Uleleof. certificates to prove that his dismissal due to disease is not proper and therefore
2 Sedloo a, RJje I, Boat VI ct the Rides il fn1llemen! the Lalor Code. il 1\t "Sec. 8. Disease as aground roc dsn'issal. - illegal.
W1ere 11e ~ su11e1s m amsease inl his CO!l1ilJed ~is prohllild by law or prejldidalto his heath or
mile hd1 d his ~. f1e employer shal not Emila!e his ~ lJlleSs 11e:e is a cd:ation by Indeed, affording the ailing employee procedural due process in the
~pubic heat~ aulhorily liB the disease is of such naueor at such a stage 11at l carrdbe oored Mhi1 a peOOd manner prescribed in Deoferio and !:!ill proceeds from the premise that he is not
a six (6) monlhs even v.tt ~ meci::allreatment. ~the cisease or ament em be rured 'llill1i1 the peOOd, the ~
dismissible solely on the basis of his suffering from a disease. He should not be
WI not enme the~ but shal ask the f!l11lloYee il ~au! alea'le. The erJ1liOyer shal reilSiale such efl'1lklYee to
his bmerposition irmediak!tt upon the restoration of his nooml hdl.' dismissed outright upon showing alone that he is suffering from a disease. While an
3 Per I:Jeofem v.lnlel Tecllnotlgy Philppiles, Inc., supra.; See also Fu; Tele'lision NetNOO<, Inc. v. Arlene S. Espirilu, G.R employee may have become afflicted with a contagious disease such as pulmonary
Nos. 204944-45, Dec. 03, 2014.
4• Gq the cases d Sy v. CA, G.R No. 142293, Feb. 27, 2003, 4o16 Ph~. 404, and~ Express, klc. v. Payong, Jr., G.R.
No.167462,0ct25,2005.510Ph0.818.
5 Deoferlov.lntelTechnologyPhii'IJlpines, Inc., supra. 1 FuFeiENisi:xl Net.vm, Inc. v. Al'ene S. Espirit.l, GR. Nos. 204944-45, Dec. 03, 2014.
L

a.",
~liiliiliiiilifiio.oc•'c••...__• ~
332 liAR REVIEWER ON IASOR lAW
tuberculosis {PTB), and that under Article 299 (284], an employer may tenninate the
services of his employee found to be suffering from any disease and whose
continued employment is prohibited by law or is prejudicial to his health as well as
to that of his co-employees, however, the fact that an employee is suffering from
such a disease does not ipso facto make him a sure candidate for dismissal.
4. SOME PRINCIPLES ON TERMINATION DUE TO DISEASE.
···
• The fact alone that an employee is suffering from a disease is not generally a
sufficient ground to terminate his employment. That a person has a disease does
not per se entitle the employer to terminate his or her services! Tennination is
2
the last resort. Even if the disease is. a contagious one, like pulmonary
3
tuberculosis {PTB), mere sufferance thereof by an employee does not ipso
facto make him a sure candidate for dismissal. 4
• An example of a disease made subject of a specific law but termination
based thereon is declared unlawful is R.A. No. 8504, otherwise knoYm as the
"Philippine AIDS Prevention and Control Act of 1998. "5 Sufferance of
IDV/AIDS under this law will not justifY termination of employment of the
ailing employee based on the following provision: "Sec. 35. Discrimination in
the workplace. - Discrimination in any form from pre-employment to post-
employmen~ including hiring, promotion or assignmen~ based on the actua~
·perceived or suspected HIV status of an individual is prolubited. Termination
from work on the sole basis of aetna~ perceived or suspected mv status is
deemed unlawfuL'"
• Contagious or communicable diseases or infections, like sexually transmitted
diseases or infections (STDs or STis), tuberculosis, hepatitis A, malaria, among
others, are certainly the best examples of diseases which would render an
employee's "continued employment prejudicial to his health as well as to the
health ofhis co-employees." This ground may not, however, be solely confined
7
to these kinds of diseases. Deoferio enunciates that the phrase "prejudicial to
his health as well as to the health of his co-employees" should be hberally
construed to mean "prejudicial to his health ru: to the health of his co-
employees." It is clear, therefore, that the intent of the law is to allow the
termination of an employee if he suffers a disease and his continued
employment will either: (1) be prejudicial to his own health; or (2) to the health
kl.
kl.
3 kllle case d General Texties, klc. v. NLRC, G.R No. 102969, April 4, 1995, pummy UJemJiosis (PTB) was
prOOOlllCed as a~ious disease.
4 Tillv. NLRC,G.R No.116807,Aprl14, 1997.
s Appn:Nedoo Februay 13,1998.
s ·I.Jnderscailg ~- Plea see aso Section 46, Rule 8d the Rules illd Regt.dalioos ~ the Philippile Ails
Preventioo and Coob'olh:td 1998(RA8504), issued oo ~ 13, 1999 by the Ph'flJpile Nma1 Ails Comcil.
7 Deoleliov.lnte!Tedlnol:lgy ~. klc., G.R No. 202996, June 16, 2014.
CHAPTER IV 333
I POST EMrLOYMENT
of his co-employees. This is so because the scope of this phrase is not limited to
contagious or communicable diseases for the reason that this phrase is preceded
l 1
by the phrase "!!!Y disease" under Article 299 [284] of the Labor Code.
• Consistent with this construction, this provision has been applied in resolving
illegal dismissal <:ases due to non-contagious diseases such as stroke, heart
attack, osteoarthritis, and eye catarac~ among others. In Baby Bus, Inc. v.
Minister of Labor,2 the labor arbitration's finding was upheld that private
respondent bus driver's continued employment - after he suffered several
strokes- would be prejudicial to his health. In Duterte v. Kingswood Trading
Co., Inc.,3 the applicability of Article 299 [284] to heart attacks was recogniz£d.
In that case, it was held that private company's failure to present a certification
from a public health authority rendered petitioner's termination due to a heart
4
attack illegal. This provision was also applied in Sy v. CA, to determine
whether private responden~ Jaime Sahot, was illegally dismissed due to various
ailmerls such as presleyopia, hypertensive retinopathy, osteoarthritis, and heart
enlargemen~ among others. In Manly Express, Inc. v. Payong, Jr., it was
5
ruled that petitioner company's non-presentment of a certification from a public
health authority with respect to respondent's eye cataract was fatal to its
defense.
• Disabillty is not equivalent to disease as thes<;: terms are understood within
the context of the law. The former should not be confused with the latter. One
noteworthy distinction lies in the fact that disability itself, irrespective of
whether it is temporary or permanent, is not a ground for termination. R.A. No.
7277,6 otherwise known as the "Magna Carta for Disabled Persons" [now
1
known as "Magna Carta for Persons with Disability'1, prolubits the
termination of a person with disability based on disability alone. This
constitutes an act of discrirnination8 which is treated as a criminal offense for
which the offender may be fined and/or imprisoned for its commission.
1
'M. 299{2M). Disease as !JOll1d uenmiln.- AA ~may Emi'laE the seM:esd ill enl*7fae v.to has been
1
fcund t1 be sulleliYJ fRxn IJhf dseaSe illd v.llooe CXX1Iilued ~is pJdlilitOO by law« is (XIIjxtiJro lis heflh as
v.All as ro the /"efJih of his~ PrtM!ed, That he is pakl sepciU pay~ t> least me (1) mon1h a
sa1cry ct t1 ~ ~ I11IXllh sa1ay b' INl!l.'f year d seM:e. YttlK:reler is·grem, a fiacliiXl d a least six (6) monU1S
beiY,I cmsiderOO as ooe (1) v.tde yecr.''(Underscores, lai:s illd ell¢ases-suppied i'l Ule OliJilal ExldUle ~
Coot dedskln i1 t11s cased DeofeOO).
2 G.R No.54223,feb.2.6,1988,241 Ri 1017.
• GRNo.160325,0ct4,2.007,561 Phi.11.
4 G.R No. 142293, Feb. 27, 2003, 446ilhi. 404.
s G.R No. 167462, Oct 25, 2005. 510 Pli 81a.
6 Entitled M h:t ~ fettle Rehdlation, Self-Developmeol aiid Self.Reliance d DisOOIOO Pelsoos and Thei'
lmegJatkxllltl Ule Mailstreiln d SocietyJfld for 0111er Purposes], olherMse knoY.Il as Ule ·~na Cat! fctll;ab\ed
PemG" appi'O'o'ed en Mrt:h 24, 1992,
7 PercrreodmentdRA No. 7277, OOxlJced bySedion4ofRA No. 9442(eflectrleApril30, 2007).
a Section 32dRA No. nn prookles:"Sedioo 32. Disaiflinaliooon ~·No entity, whelherpJJicorprivale, shall
disaiMate against a qualified .disal\ed pei5IXl by reason d disabiily in regild to f:lb applicatioo piOO!dures. the hililg,
promotion, or discha!ge of~. err¢Yee ~. ;Jblramg, and olher Elms, condii:rls, aiid privileges of
li!'
334 BAR REVIEWER ON lABOR lAW
• The third element on presentation of a medical certificate issued by a competent
public health authority substantiates the contention that the employee has indeed
been suffering from a disease that: (1) is prejudicial to his health as well as to
the health of his co-employees; and {2) cannot be cured within a period of six
months even with proper medical treatment
• Without the medical certificate, there can be no authorized cause for the
employee's dismissal. The absence of this element thus renders the dismissal
void and illegal.
• Deoferio instructs that this 3111 element is not merely a procedural requirement
but a substantive one. The certification from a competent public health authority
is precisely the substantial evidence required by law to prove the existence of
the disease itself; its non-curability within a period of 6 months even with
proper medical treatmen~ and the prejudice that it would cause to the health of
the sick employee and to those of his co-employees.
• An employer must not terminate if disease is curable within 6 months with
proper medical treatment. The employee must be allowed to take a leave of
absence and reicstated 2fter being cured. Based on this requisite, even if the
employee suffers from a disease and his continued employment is prohibited by
law or prejudicial to his health or to the health of his co-employees, if the
disease or ailment can be cured within the period of 6 months with proper
medical treatmen~ the employer shouid not terminate the employee but merely
ask him to take a leave of absence. The employer should reinstate him to his
former position inunediately upon the restoration of his normal health.2
• The employer must not terminate merely on the basis of medically certified
"unfitness to work" without proof that it cannot be cured within 6
months.3
• Meaning of"competent public health authority." The word "competent" in
the legalpbrase "competent public health authority" refers to a government
doctor whose medical specialization pertains to the disease being suffered by
the employee. For instance, an employee who is sick of tuberculosis should
consult a goverilment-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.
• Company physician, not competent The company's own physician engaged
by the employer as its employee or hired on a retainer fee basis to whom sick
~ The tlbWlg oonstitute 1¥:5 d disainilatioo: xxx {g) Disrlissi1g a EnTilatrg lhe seiVi:es of adis<illed
eflllkiYee by reasoo d his clsaliily lllless !he ~CCI'! PflM! flat he ~ lhe satisfactoly perbnmoo d 11e vm
i1voNed Dlle prejJdi:e d lhe busi1ess entity: Proo(ded, lla.oeler, That lhe ~list SOOJhl ID prMie reasonable
acconrroclaioos for disOOied pe!SOOS[.f
t See Sedioo46.(Pe!J.jCklJseJctRA.No. nn.
2 Set1ioo 8, ~le I, Book VI, Rules b ~ lhe Uilor Code; Sevillana v. I.T.jlntemationalJ Cap., G.R No. 90047, April
16,2001.
Pedro Sdisv. NLRC<rid PhiexMning Corporatioo, 3 G.R No.116175. Ott 28,1996.
CHAPTER IV 335
POST EMPLOYMENT
workers are referred for consultation or treatmen~ is not the "competent public
health authority" referred to in the law. Hence,· a medical certificate issued by
the company's own physician is not an acceptable certificate for purposes of
·terminating an employment based on Article 299 [284], it having been issued
not by a "competent public health authority," the person referred to in the law.1
• In the absence of the required certification by a competent public health
2
authority, an employee's dismissal based on disease is not valid. Without
the required certification, the characterization or even diagnosis of the disease
would primarily be shaped according to the interests of the parties rather than
3
the studied analysis of the appropriate medical professionals. Clearly, it is only
where there is a prior certification from a competent public authority that the
disease afflicting the employee sought to be dismissed is of such nature or at
such stage that it cannot be cured within 6 months even with proper medical
treatment that the latter could be validly terminated from his job.
• Medical certificate is evidence of illness even if not notarized.5
• Medical certificate cannot be dispensed with by reason of the fact that the
l illness lasted for more than a year.
6
I' • Non-presentation as evidence of the medical certificate. Evidencewise, if the
required certification was not presented, it was because the disease was not of
such a nature or serioi.!Sness that it could not be cured within a period of six
months even with proper medical treatment. If so, dismissal was unquestionably
. 7
a severe and unlawful sanction.
l • Even in cases of OFWs, the medical certificate issued by pl!blic health
I
authority of a foreign government should conform to the requirements of
Article 299(284].8
• Employer must procure the medical certijicllte and not the employee. The
employer is burdened to prove that the employee was suffering from a disease
9
which prevented his -continued employment
1 CebuRoycH'Iillt{San MgueiGapa<Dxl]v. Hoo. DepulyMnislerdl..iW,G~R No.58639,hlg.12, 1987,153 SCRA38
[1987].
2 Mrif&press, klc. v. Pcrjoog, Jr. GR No. 167462, Ott 25,2005;Cruzv. NlRC, G.R No. 116384, Feb. 7, 2000; Tanv.
NlRC, G.R No. 116807,"¢114, 1997; See alsoCrayoos ~. ~ v. Pula, GR. No. 167727, Ju1i 30,2007.
3 Crayons Processing, Inc. v. Na, supla
4 Taw.NLRC,G.RNo.116807.~1i14, 1997,271 SCRA216.
5 UnionM:llaGaporalionv. NLRC,G.RNo.159738,Dec. 9,2004.
6 Gene1a Textile, Inc. v. NLRC, G.R No.102969, Apnl4, 1995.
7 Cebu Royal Plant (San Mguel Coipoollkln) v. Deputy t.tm d I.1W <rid Ran100 Pilooes, GR No. l-58639, Aug. 12,
1987, 153 SCRA 38.
8 ATCI Ovefseas Corporation v. CA, G.R No. 143949, hlg. 9, 2001.
9 Phtl. Employ Setvk:es and Resoortes, klc. v. Plranlio, inlla; Crayoos Processing, Inc. v. Pula, G.R No. 167727, July 30,
2007; ATCI O;etseas Corpola1kK1 v. CA, G.R No. 143949, Aug. 9, 2001, 414 Phil883, 893; Tan v. NIRC, G.R No.
116807,April14, 1997,271 SCRA216.
I
L~ .
336 BAR REviEWER ON lABOR lAW CHAPTER IV 337
POST EMPlOYMENT

• Burden of proof includes existence of medical certificate. The burden of "Constitutional due process" protects the individual from the
proving the existence of the medical certificate required under the law is upon government and assures him of his rights in criminal, civil or administrative
1
the employer, not the employee. . proceedings; while "statutory due process" protects employees from being
• Article 299 [284] is applicable only if it is the employer who terminates; it is .. unjustly terminated without just cause after notice and hearing. Put differently,
not applicable if it is the employee who terminates based on his sickness as the Bill of Rights is not meant to be invoked against acts of private individuals
it amounts to resignation. 2 like employers. Private actions, no matter how egregious, cannot violate the
3 constitutional guarantees.
• In case of death, Article 299 [284] does not apply.
• In case the employee unreasonably refuses to submit to medical 2. THE ABBOTT LABORATORIES DOCTRINE: CONTRACTUAL DUE
examination or treatment upon being requested to do so, the employer may PROCESS.
tenninate his services on the ground of insubordination or willful a. New doctrine.
4
disobedience oflawful order. The norm since Agabon is that compliance with the statutorily-
• Hearing is not required, disease being an authorized cause. prescribed procedural due process under Article 292(b) [277(b)] 1 would suffice.
Whether there is an existing company policy which also enunciates the
c. procedural due process in termination cases need not be considered nor given
DUE PROCESS5 any weight in determining the validity of the termination.
1. However, under the latest doctrinal en bar.c ruling in the 2013 case of
TWIN-NOTICE REQUIREMENT Abbott Labor~tories, Philippines v. Pearlie Ann F. Alcar~2 it is now
required that in addition to compliance with the statutocy due process, the
2. employer should still comply with the due process procedure prescribed in its
HEARING; AMPLE OPPORTlJNITY TO BE HEARD 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
(NOTE: The foregoing topics will be discussed herein jointly nominal damages, the amount of which is equivalent to the P30,000.00 awarded
In the fight of their close Interrelation). under the Agabon doctrine.
1. THEAGABONDOCTRINE: DUE PROCESS IN TERMINATION OF It was found in this case of Abbott Laboratories that respondent
EMPLOYMENT REFERS TO STATUTORY, AND NOT Alcaraz, 3 who was hired as a probationacy managerial employee, was afforded
CONSTITUTIONAL, DUE PROCESS. both the statutorily-mandated substantive and procedural due process, when she
Per Agabon doctrine,' it is now the prevailing rule that it is not the due was terminated4 for failure to qualify as a regular employee. Nonetheless,
process provided in the Constitution7 that is required in termination of despite the existence of a sufficient ground to terminate Alcaraz's employment
employment but the statutocy due process provided under Article 292(b) and Abbott's compliance with the Labor Code termination procedure, it was
[277(b)] of the Labor Code.
1 As provided il Mi:le 292(b) !277(b)l of t1e La!orCode ll1d as iltelpleted i1 Ule cased 1<r1g ct l<i1gs TllllS)lOit. Inc. v.
J.lanac, G.R No. 166208, JIJle 29, 2fil7.
2 G.R No. 192571, July 23, 2013.
I ATCI Ol'erseas Ccxpoodion v. CA, S14118;T111V. NLRC, G.R No. 116807, Apri 14, 1997, 271 SCRA216; Cebu Royal P'alt 3 Respondert AA;;m. was lial as Medil3 Md RegWfay Mas Mllager (RegWtlry Alfaro Manage!) d petitioner,
[Sal t.tJuel CccporaiooJ v. fm. Deputy t.iisEr d Lm, Sl.pa subject tl a 6iOOnll prOOaiooay etrpk:rjrnelt Upoo berg emilaled, she lk!d a COOlJiaill tr i!BJal lismissal and
2 Pd! v. RIJal Blllk d Nibr1tl.r.l1, "-· G.R No. 199338, Jal. 21, 2013; Vilaruel v. Yeo fm ~. G.R No. 169191, da!ra;jes dami1g lhat she should have cteady been ~ as a regl!W and not a pnMoray ~ee g,'ven
.krie 1' 2011. Abbafs faikJre to ilfonn her d lle ~ slandads ftJ her regularization upoo her ~~ as required under
3 Ganez v. Certal V~ Oil, GR No. l·22702, J1ti 28, 1969, 28 SCRA 845. Allicle 296 [281] d lhe t.mCode.
• Mi:le 297(a) J282(a)J, Lm Code. 4 fl.s lhe records show, Ak:a'az's dismissal was effecled lhroogh a leiiEr dated Ntlf 19, 2005 v.l1id1 she rmed on Mly 23,
s Relevlllt PltN9ln: A11i::1e 292(b) 1277lblL t.mCode. 2005 Md a;Jain on Mly 27, 2005. Slated ttlerein were 1lle reasoos loc her terminalion, i.e., that after proper evak.Jation, ·
s "Erulciated illle 2004 en blllc dedsirl i181ecase d ~ v. NRC, G.R No. 158693, Nov. 17, 2004. Abbott delemJi1ed that she laled t> meet the reasoneble stmams ror her reguiCHizalion con~ her lock c1 time and
1 Section 1, Alticle 111 [Bil of Rights], 1987 Constitution m &~ails 11a1 'no peBOO shal be de¢.'ed d i!, ilertf or a
peqJie mana:Jement ard dedsiJn.making skils, m ae oo:es;ay nile perloorooce her functions as Regulato!y
prqJerty v.ilhootdue process d law, ncrshal lilY peoo~ be denii!d lhe equa JXO(edbl d l1e 1avts.~ Per~ v. NLRC, Aff<irs Ma:lager..Undeniably, llis writ!el1 notice su1ficieotly mee1s 1lle afleria set fOOh ri:I::Ne, fnereby legilinizilg the cause
514M11· and manner c1 Abraz's diinissal as aprctJalionaJy employee under lhe parameters set by lhe labor Code.
 SAR R£\IIEWER ON lABOR lAW
338
found that petitioner Abbott breached its contractual obligation to Alcaraz
when it failed to abide by its own procedure in evaluating the performance of a
probationary employee. Company personnel policies create an obligation on
the part of both the employee and the employer to abide by the same.
Records show that Abbott's PPSE1 procedure mandates, inter alia, that
the job performance of a probationary employee should be fonnally reviewed
and discussed with the employee at least twice: first, on the third month and
second, on the fifth month from the date of employment. Abbott is also required
to come up with a Performance Improvement Plan during the third month
review to bridge the gap between the employee's performance and the standards
set, if any. In addition, a signed copy of the PPSE form should be submitted to
Abbott's HRD as the same would serve as basis for recommending the
confirmation or termination of the probationary employment.
In this case, it is apparent that Abbott failed to follow the above-stated
procedure in evaluating Alcaraz. For one, there lies a hiatus of evidence that a
signed copy of Alcaraz's PPSE form was submitted to the HRD. It was not even
shown that a PPSE fonn was completed to fonnally assess her performance.
Neither was the performance evaluation discussed with her during the third and
fifth months of her employment. Nor did Abbott come up with the necessary
Performance Improvement Plan to properly gauge Alcaraz's performance with
the set company standards.
While it is Abbott's management prerogative to promulgate its own
company rules and even subsequently amend them, this right equally demands
that when it does create its own policies and thereafter notify its employee of
the saine, it accords upon itself the obligation to faithfully implement them.
Indeed, a contrary interpretation would entail a· disharmonious relationship in
the work place for the laborer should never be mired by the uncertainty of
flimsy rules in which the latter's labor rights and duties would, to some extent,
depend.
b. Proper sanction for lack of contractual due process.
In imposing the penalty of indemnity in the form of nominal damages
upon petitioner Abbott, it was held that while there lies due cause to terminate
Alcaraz's probationary employment for her failure to meet the standards
required for her regularization, and while it must be further pointed out that
Abbott had satisfied its statutory duty to serve a written notice of termination,
the fact that it violated its own company procedure renders the termination
of Alcaraz's employment procedurally infirm, warranting the payment of
nominal damages.
1 Shortt~' Probatiooaly Pe!fornm:e SI<Kldards and Ev<Walioo (PPSE).
CHAPTER IV
339
POST EMPLOYMENT
Evidently, the sanctions imposed in both Agabon1 and Jakel- proceed
from the necessity to deter employers from future violations ofthe statutory due
process rights of employees. In similar regard, the Court deems it proper to
apply the same principle to the case at bar for the reason that an employer's
contractual breach of its own company procedure - albeit not statutory in source
-has the parallel effect of violating the laborer's rights. Suffice it to state, the
contract is the law between the parties and thus, breaches of the same impel
recompense to vindicate a right that has been violated. Consequently, while the
Court is wont to uphold the dismissal of Alcaraz because a valid cause exists,
the payment of nominal damages on account of Abbott's contractual breach is
warranted in accordance with Article 2221 3 of the Civil Code.
c. Proper amount of nominal damages.
Anent the proper amount of damages to be awarded, the Court
observes that Alcaraz's dismissal proceeded from her failure to comply with the
standards required for her regularization. As such, it is undeniable that the
dismissal process was, in effect, initiated by an act imputable to the employee,
akin to dismissals due to just caus~s under Article 297 4 [282) of the Labor Code.
Therefore, the Court deems it appropriate to fix the amount of nominal damages
at the amount of P30,000.00, consistent with its rulings in both Agabon5 and
Jaka. 6
3. PROCEDURAL DUE PROCESS VARIES DEPENDING ON THE
GROUND/S INVOKED.
Based on law and jurisprudence, it is clear that the procedural due
process required to validly terminate an employee depends on the ground
invoked. There is no uniform procedural due process that should be applied in
all cases.
4. THE KING OF KINGS TRANSPORT DOCTRINE: PROCEDURAL
DUE PROCESS IN JUST CAUSE TERMINATION.
a. Procedural steps.
In just cause termination, the twin-notice requirement applies. More
particularly, the following procedure in the order presented below should be
followed:
I. Service of first written notice;
1 ~abon NLRC, G.R ~.158693,
v. Nov.
17,2004.
2 Jaka Food f'rocesshJ
Qrpcrafion v. Pa:o!, G.R 151378, t.m:ll28, 2005.
3 Article 2221. Nomi1al dclnages ire adjudi:a!ed il OldefN a~hi of the plaillff, m has been violated or ilvaded by the
defendan~ may be vi'di:3!d or rero.Jnized, ood ra ror the fliJfllOSe of ildelmilyD:J the plailtiff ror 8lTf loss suffered by him.
4 This was refelred kl i1 the decision as Article 296 releRi1g kl Article 297 [28~ ct the labor Code. This author renUIIlbers ft
as Article 297with k!gal reasoo, purnuanttoRA. No.10151,June21, 2011.
5 Agabon v. NLRC, G.R ~. 158693, Nov. 17, 2004.
6 Jaka Food Processirg Corpor.ltion v. PacoL G.R 151378, Maoch 28,2005.

BAR REVIEWERO.N lABOR I.AW
340
2. Conduct of hearing; and
3. Service of second written notice.
b. The King of Kings Transport doctrine.
Based on this doctrine which was enunciated in King of Kings
Transport, Inc. v. Mamac/ the following requirements should be complied
with:
(1) First written notice.
The frrst written notice to be served on the employee should:
a) Contain the specific causes or grounds for tennination against
him•
'
b) Contain a directive that the employee is given the opportunity to
submit his written explanation within the reasonable period (lf
FIVE (5) CALENDAR DAYS from receipt of the notice:
l) 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 297 [282] is
being charged against the employee.
(2) Hearing required,
After serving the first notice, the employer should schedule and
conduct a hearing or conference wherein the employee will be given the
opportunity to:
1) explain and clarify his defenses to the charge/s against him;
2) present evidence in support of his defenses; and
3) rebut the evidence presented against him by the management.
1 G.RNo.166208,June29,2007.
CHAPTER IV 341
POST EMPLOYMENT
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 tennination of employment is justified, the
employer shall serve the employees a written notice of termination indicating
that:
l) all circumstances involving the charge/s against the employee have
been considered; and
2) grounds have been established to justify the severance of his
employment. 1
c. The foregoing rule does not apply in case of abandonment.
Abandonment is a just cause to terminate employment. It is considered
a form of gross neglect of duties under Article 297(b) [282(b)] of the Labor
Code. However, the procedural due process is different from the process
·described above. For obvious reason, due process in abandonment cases does
not involve the conduct of hearing. Compliance with the foliowing two (2)
notices suffices, viz.:
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.
d. Th~: Perez doctrine.
The 2009 Perez doctrine2 enunciates the new guiding principles on the
hearing aspect of procedural due process. This dramatically modified the
concept of hearing in just cause termination. (See separate discussion in No. 9
below).
6. PROCEDURAL DUE PROCESS IN AUTHORIZED CAUSE
TERMINATION.
Due proc-ess in authorized cause termination is deemed complied with
upon the separate and simultaneous service of a written notice of the intended
termination to both:
(I) the employee to be terminated; and
(2) the appropriate DOLE Regional Office, at least one (l) month
before the intended date of the termination specifying the ground/s
1 1<iwJ of~ Troosport, Inc. v. Mama:, Si.Jpra; See also !.ina lald, Inc. v. Cuews, G.R No. 169523, June~. 2010;
lnguftlov. FI!StPililppileScakls, Inc., G.R No.165407, Jll1e5, 2009, 588SCRA471,491.
2 Based oo the en bane decisioo in the 2009 case of Perez v. PhqJpine Teleg~ Md Te!Eiphclle Company, G.R No.
l52048,Apri7,2009,584SCRA 110.
342 BAR llEVIEWER ON !.AllOR LAw
CHAI'TERlV
POST EMPLOYMENT 343
therefor and the undertaking to pay the separation pay required
under Article 298 [283] of the Labor Code. {a) "Ample opportunity to be heard" means any meaningful
opportunity (verbal or written) given to the employee to answer the
7. PROCEDURAL DUE PROCESS IN DEFINITE-PERIOD charges against him and submit evidence in support of his defense,
EMPLOYMENT. whether in a hearing, conference or some other fair, just and
Procedural due process is not required in tennination of the following: reasonable way.
1. Project employment which automatically tenninates upon
completion of the project; (b) A formal hearing or conference is no longer mandatory, It
2. Seasonal employment which automatically tenninates upon the end becomes mandatory only under any of the following
circumstances:
of the season;
3. Casual employment which antomatically tenninates upon the lapse (1) When requested by the employee in wriJing; or
of the agreed period; (2) When substantial evidentiary disputes exist; or
4. Fixed-term employment which automatically terminates upon the (3) When a company rule or practice requires it; or
expiration of the fiXed period. (4) When similar circumstances justify it.
8. PROCEDURAL DUE PROCESS IN TERMINATION OF (c) the "ample opportunity to be heard" standard in the Labor Code
PROBATIONARY EMPLOYMENT.
prevails over the "hearing or conference" requirement in its
Probationa.t-y employment may be terminated prior to the lapse of the Implementing Rules and Regulaticms. This is hew the Supreme
probationary period fur just or authorized cause; in which case, the Court resolved the conflict in the following provisions of the Labor
appropriate, applicable procedural due process should apply. Code and its implementing rules:
However, if the ground invoked is the failure of the probationary
employee to qualify as a regular employee based on the reasonable standards I) Under Article 292(b) [277(b)] of the Labor Code, the employer
made known to him at the time of his engagement, no due process is required. it is required to afford the employee "ample opportunity to be
is sufficient that a written notice of termination is served to the probationary heard and to defend himself with tbe assistance of his
representative if he so desires"; while-
employee within a reasonable time from the effective date thereof setting forth
the justification of such termination.' 2) Under Section 2(d), Rule I, Book VI of the Implementing Rules
Per Abbott Laboratories doctrine, 1 however, if the employer has of the Labor Code, the employer is required to afford to the
prescribed in its company rules a certain procedure for the termination of employee a "hearing or conference during which the
probationary employment, the same should be complied with; otherwise, the employee concerned, with the assistance of counsel, if he so
employer will be penalized with an indemnity in the form of nominal damages desires, is given opportunity to respond to the charge,
in the amountofP30,000.00. present his evidence or rebut the evidence presented against
him."
9. THE PEREZ DOCTRINE: NEW GUIDING PRINCIPLE ON THE
HEARING REQUIREMENT. The Perez doctrine is now the prevailing rule as shown by a catena of
cases' which cited it after its promulgation.
The concept of hearing as part of due process has been significantly
changed by the Perez doctrine. 3 It enunciates the new guiding principles on the 10. SOME PRINCIPLES ON HEARING REQUIREMENT.
hearing aspect of procedural due process. It has interpreted the term "ample
opportunity to be heard" in a new light, thus: • If employee does not answer, hearing should still proceed. 1

GaiJs v. Qualty House, klc., G.R No.156766, ~ 16, 2009; New Puerto CorrrneltBv.l.llpez, G.R No.169999, ~ 26,
1

1 Sectioo 2, Rule I, B1xi VI, Rules klinl>lementthe Lm Code, as emended by Mi:le Ill, Depatnent CJnla" No. 10, SEries
lt1997.
2 Abbo1t Laxxabies, ~ v. Peafie Ann F. Ak:alal, G.R No. 192571, Ju~ 23, 2013(En llalc).
3 B!;ed oo 11e en ll!llc dec6ioo illle 2009 case It Pe'ez v. PhfWi1e Teleg~ a1d Telephone~. GR No.
152048,.6~ri 7, 2009, 584 SCRA 110.
2010; Nagkakaimj Lakas ng Ma'lggCIJawa sa Keihln (NlMK.owJA-KMU) v. Keii1 F'llqlpines Corp., G.R. No. 171115,
Aug. 9, 2010; PhMnacia !W1d Uppln, Inc. v. Allayda, Jr., G.R No. 172i24, Aug. 23, 2010; lopez v. Allutas Group of
~. G.R No.191008, April11, 2011,647 SCRA 568; Prudential Gunlleetn!Asslrcrlce ErrpkJyee Lm'Unixl
!W1d V®ta v. NI.RC, Prudentia Guarantee and Assurance, Inc., G.R No. 185335, Jll\e 13, 2012; Esguerra v. Vale Veroe
CooniJy Cllb, G.R No. 173012, June 13,2012: Reyes-Rayel v. Philippine luen Thai l'drgs Corp., GR No. 174893, .lutj
11. 2012; ~ao del Norte Eleclric CooperaWe, Inc. v. Gonzaga, G.R No. 1sn22..il1e 10, 2013.

-lliiiill~--~
-----···- -·---·-·-----~--
 CHAPTER IV 345
344 liAR REVIEWER ON lABOR lAW POST EMPLOYMENT

7. Termination after 6 months of bona-fide suspension of operation

• Outright termination violates due process? 3 under Article 301 [286]. For purposes of satisfying due process,
• Investigation still required even if incident was witnessed by many .
• Meeting, dialogue, consultation or interview is not the hearing required by
4
law. It may not be a substitute for the actual holding of a hearing. 5 Department of Labor and Employment at least one (1) month before
• Prior consultation with union is not part of the due process requirement.
• Cross-examination or confrontation of witnesses is not necessary in
6
company investigations. 7 9. Termination due to expiration of tenure made coterminous with
• Co-conspirator's confession is not sufficient to merit dismissal.
• If a party was not initially given a chance to be heard at the company level,
but later was given full opportunity to submit position papers or present his
8
case and arguments before the Labor Arbiter, this defect is cured. But if
9
the dismissal is not justified, this principle does not appiy.
11. 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
10
start of the employment.
3. Termination due to abandonment of work.
4. Termination due to authorized causes under Article 298 [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 r-efute and defend
11
themselves from.
12
5. Termination due to disease under Article 299 {284].
6. ·Termination by the employee (resignation) under Article 300 [285].
what is required is simply that the notices provided under Article
298 [283] be served to both the affected employees and the
the termination becomes effective. 1
8. Termination due to retirement under Article 302 [287].
lease. 2
10. 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. 3
11. Termination due to expiration of contractual employment in a
legitimate contracting or subcontracting arrangement. 4
12. Termination of employee who has admitted his guiit for the offense
charged. 5
12. 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:
I. The dismissal was for a just cause under Article 297 [282]: for an
authorized cause under Article 298 [283], or for health reasons under
Article 299 [284], and due process was observed- This termination is
LEGAL.6
2. The dismissal was without a just or authorized cause but due process
was observed- This termination is ILLEGAL.7 ·
3. The dismissal was without a just or authorized cause and due process
8
was not observed- This termination is ILLEGAL.

1
~ 1ba1 Bri, k1c. v. NI.RC, GR. No.122075,Ja'l. 28, 1998,285 SCRA 297. 1 Sebuguerov. NLRC, GTI SportswearColporalion, G.R. No. 115394, Sept 27,1995.
2 Robusta Agro Marine Products, Inc. v. Gorombalem. G.R. No. 80500, July 5, 1989. 2 Hladov.l.eogatlo,G.RNo.L~.June11, 1986.
3
Wenphi Co!pocaOOn v. NLRC, G.R No. &.\587, Feb. 8, 1989. 3 l.r.der AI1X:Ie 128 J!:l ci l1e t.m Code.
4
Maneja v. NLRC, G. R. No. 124013, June 5,1998. 4 Sedbl5, 1U! lnlt-A, Boat Ill, 1U!s b ~ lhe t.m Code, lfi aT'I!n100 by M::le I, ~Order No. 10,
5
Centwy Textile Milts,lnc. v. NLRC, G.R No. n859, May 25, 1988. Series It 1997 (:XI May 1997.
6 Ak:cnara v. The Pll~ile Conmerdal Cl1d k1dusbial Balk, ~.R No. 151349, Oct. 20, 2010; PLDT v. Honrado, G.R. No.

7
189366, Dec. 8, 2010.
CenlulyTextileMis,lnc.v. NLRC,G.R. No. 77w.!,May25, 1988.
8 Pepsi-Caa t:lisllilubsoflhePhirippiles, lrx:. v. ttRC, GR No.100686,Alr,j.15, 1995.
5

6
•m~•~
PllqlpileAmes, Inc. v. NI.RC, G.R No. 115785, Aug. 4, 2.000.
-
Phfwile Pizza, h:. v. &n!!cmoog, G. R No. 154315, May 9, 2005; Roche~] v. NLRC, G.R No. 83335, Oct 5,

9
7 ACO nvest1Jaion Seariy f.~Jeoo/, h:. v. Daquera, G.R No. 147473, lla'dl30, 2004; PioneerTexUIID;I Ctvporalion v.
HeDenic Philippine Shipping, Inc. v. Siete, G.R No. a4082, March 13, 1991. NLRC, G.R No. 118651, Oct 16, 1997; Oaliav. NLRC, G.R Nos. 97162-64,Jllle 1, 1995, 244 SCRA 668.
10
Phi~pineDailyklquirer, Inc. v. ~.Jr.,G.R.No.164532,July24,2007. 8 Lambert Pawnbrokers and Jewell'f COip. v. Binamira, G.R. No. 170464, July 12, 2010; JGil and Associates, Inc. v.
11
'NftlshieFile Co. v. ti.RC, GR. No. 82249,Feb. 7,1991. NLRC, G.R. No.109390, March 7,1996.
12
Agabon v. NLRC, G.R No.158693, NO/. 17,2004.
 BAR REVIEWER ON lABOR lAW CHAPTER tV 347
346 POST EMPLOYMENT

4. The dismissal was for a just or authorized cause but due process was operations or when, as in this case, he undertakes to implement a retrenchment
1
not observed- This termination is LEGAL. program
5. The dismissal was for a non-existent cause - This termination is b. Some principles under the Agabon doctrine.
ILLEGAL. 2 1. Measure of penalty or indemnity - no longer full backwages but
6. The dismissal was not supported by any evidence of termination - This nominal damages.
termination is NEITHER LEGAL NOR ILLEGAL as there is no 2. Since the dismissal is considered legal, any award of backwages
dismissal to speak of.3 Reinstatement is ordered not as a relief for must be deleted and replaced by award of indemnity.'
illegal dismissal but on equitable ground.
3. Amount of nominal damages may be reduced. 2 But as far as the
7. The dismissal was brought about by the implementation of a law- This upping of the amount is concerned, a survey of Supreme Court
4
termination is LEGAL. decisions indicates that there has yet been no decision increasing the
indemnity beyond what has been prescribed in Agabon and Jaka.
13. INDEMNITY IN THE FORM OF NOMINAL DAMAGES.
d.
a. Application of the Agabon and Jaka doctrines.
RELIEFS FOR ILLEGAL DISMISSAL3
Termination for a just cause or authorized cause but without affording
the employee procedural due process should no longer be considered- illegal oi 1. RELIEFS UNDER ARTICLE 294 (279) OF THE LABOR CODE.
ineffectual5 but legal. Under this article, 4 an illegally dismissed employee is entitled to the
Consequently, the employee will not be ordered reinstated but will be following reliefs:
awarded an indemnity in the form of nominal damages the amount of which will (l) Reinstatement without loss of seniority rights and other
depend on whether the termination is grounded on just cause or authorized privileges;
cause, thus: (2) Full backwages, inclusive of allowances; and
1. If based on just cause- P30,000.00 per Agabon doctrine.' 7 (3) Other benefits or their monetary equivalent.
2. If based on authorized cause- P50,000.00 per Jaka doctrine. 2. OTHER RELIEFS NOT FOUND IN ARTICLE 294 [279) BUT
AWARDED IN ILLEGAL DISMISSAL CASES.
According to Jaka, the indemnity is "stiffer" in case of authorized The following reliefs that are awarded in illegal dismissal cases are
cause termination because, unlike in the case ofjust cause termination where the missing in Article 294 [279]:
employee has committed a wrongful act, an employee dismissed based on
authorized cause has not committed any blameworthy act nor any delinquency (1) Award of separation pay in lieu of reinstatement.
or culpability on his part. Instead, the dismissal process is initiated by the (2) Award of penalty in the form of nominal damages in case of
employer's exercise of his management prerogative, i.e., when the employer termination due to just or authorized cause but without observance
opts to install labor saving devices, when he decides to cease business of procedural due process.

I ~ v. NLRC, G.R No. 158693, tb/.17, 2.004.
2 Slamd Eledri: McllJiacbM.I caporaliln v. stMckvd Ele<:bt ~ Uniln-NAFLU-KMU. G.R No. 166111, Aug.
25, 2005; Mag\oUl v. tlRC, G.R No. 63370, Nai. 18, 1985; Pepito v. Secrel<ly ctutxr, GR No. L-49418, Feb. 29, 1980,
96SCRA454;Pedlllsov. Castro, GRNo. 70361,.1M. 30, mG.
3 Ledesma. Jr. v. NLRC, G.R. No. 174585, Oct 19, 2007.
4 St. Mly's N:2JJemJ ct ~ aty v. l'alail, G.R No. 164913, Sept.8, 2010; 'St. tuke's Medical Ce!ller Errqlloyees
AssociiD:xH\FW ald Sa:lloS v. Nl.RC,{>.R. t-kl.162053, March 7, 2S'JJ7.
s Per Serrano v. NLRC, G.R. No. 117040, Jan.~7, 2000.
6 Based oo the case tU~aboo v. NlRC, G.R No. 158693, tbl. 17, 2004.
1 Based on Jaka Fool Processir¥J Capor3ioo v. Pacot, G.R 151378, l.laltl128, 2005.
, 8ecto System k1dusMes Corp. v. NLRC, G.R t-kl. 165282. Oct 5, 2005.
2 &JSiless SeMlls It lhe Furure Today, R:. v. CA, G.R No. 157133, Jm. 30, 2006; lndustriaiTITberCap. v. Ababon, G.R
No.164518, tJath 30, 2006. .
3
This topic is des~nated as No. 3uooer lhe general topic of 'Due Process." It is lhe view of the author that this topic
has no direct relation to due process and,lherefore, must be treated as aseparate and distinct topic.
~ Article 294 (279]. Sectlily of terlll9. ncases of regular employment lhe empklyer shall not tenni1a!e lhe seMc:es of an
enllbJee ex~tklr ajist cause orll11en authorized by this Tille. fv1 ~k7jeev.to is unjusltf disrrissed from work shaH be
entiUed t reinstatement ~ loss <i seniority ri;!ht and other p!Mieges and t his ful ilackw!JJes, i1cfusNe of
li.oNirx:es, and to his illher benefi!s a their ~ eql!Nalent canputed from lhe time his C001jleiiS8IiCI was l'liDlheld
from hill up to the time of his actua rei1stalernenl
 BAR REVIEWER ON lABOR lAW
348
(3) Reliefs to illegally dismissed employee whose employment is for a
fixed period. The proper relief is only the payment of the
employee's salaries corresponding to the unexpired portion of the
employment contract.
(4) Award of damages and attorney's fees.
(5) Award of financial assistance in cases where the employee's
dismissal is declared legal but because of long years of service, and
other considerations, fmancial assistance is awarded.
(6) Imposition of legal interest on separation pay, backwages and
other monetary awards.
(NOTE: The reliefs of reinstaternen~ separation pay in lieu of reinstatement
and backwages are discussed below).
l.
REINSTATEMJ~NT
1. VARlO US PROHSIONS OF THE LABOR CODE ENUNCIATING
THE REMEDY OF REINSTATEMENT.
The Labor Code grants the remedy of reinstatement in various forms
and situations. Its provisions recognizing reinstatement as a remedy are as
follows:
1. Article 229 (223] which provides for reinstatement of an employee
whose dismissal is declared illegal by the Labor Arbiter. This form of
reinstatement is self-executory and must be implemented even during the
pendency of the appeal that may be instituted by the employer. (NOTE: See
discussion of this topic under Major Topic "VVII. Jurisdiction and Remedies; A. Labor
Arbiter", infra).
2. Article 278(g) (263(g)] which provides for automatic return to work
of all striking or locked-out employees, if a strike or lockout has already taken
place, upon the issuance by the DOLE Secretary of an assumption or
certification order. The employer is required to immediately resume operation
and readmit all workers under the same tenns and conditions prevailing before
the strike or lockout.
3. Article 292(b) [277(b)] which empowers the DOLE Secretary to
suspend the effects of termination pending the resolution of the termination
dispute in the event of a prima facie finding by the appropriate official of the
DOLE before whom such dispute is pending that the termination may cause a
serious labor dispute or is in implementation of a mass iay-off.
4. Article 294 [279) which grants reinstatement as a relief to an
employee whose dismissal is -declared illegal in a fmal and executory judgment.
CHAPTER IV 349
POST EMPLOYMENT
5. Article 301 (286] which involves bona~ fide suspension of operation
for a period not exceeding six (6) months or the rendition by an employee of
military or civic duty. It is required under this provision that the employer
should reinstate its employees upon resumption of its operation which should be
done before the lapse of said six-month period of bona-fide suspension of
operation or after the rendition by the employees of military or civic duty.
2.
SEPARATION PAY IN LIEU OF REINSTATEMENT
1. NO PROVISION IN mE LABOR CODE EXPRESSLY GRANTING
SEPARATION PAY IN LIEU OF REINSTATEMENT.
Article 294 [279] expressly mandates only reinstatement and never the
alternative remedy of separation pay in lieu thereof. But jurisprudence clearly
enunciates the award of separation pay in the event reinstatement is not possible
o; f~asible. 1 Undeniably, it is a recourse based on equity that has been
sanctioned by the Supreme Court in a catena of cases. 2
2. SPECIFIC INSTANCES WHERE SEPARATION PAY IN LIEU OF
REINSTATEMENT WAS AWARDED.
It is now well-settled that separation pay in lieu of reinstatement should
be awarded in tha following situations:
(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). 3
(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 be may be reinstated. 4
t Session De!i;Jht Ice Qm n1 Fast foals v. CA {Sixii!:Msioo), G.R No. 172149, Feb. Ul10, 612 SCRA 10; See also
Belli RIJ'alllirlk, tic. v. De Guznm, G.R No.170904, tbt. 13, 2013; capii v. NLRC, G.R No. 117378, Milth 26, 1997,
270 SCRA 488; Man!Joo v. MRC, G.R No.105338, Dec. 27, 1994.
2 f'hiiJ'eOO rre &RubberCapoabw. VK:en!e, G.R No. 142759, tbt. 10, 2004; Boli1ao Searily Cl1d k1vesligation SeM:e,
lrl:. v. Toston, G.R 1-b. 139135, .len 29, 2004; ~ RalllitBus Liles, klc. v. tiRC, G.R 1-b. 122078, Apti 21, 1999,
300 SCRA 155.
3 Bot1omeo v. CA, G.R 1-b. 161596, Feb. 20, 2013; Nnjl v. Bianedica Heafth Cere, k1c., GR No 193789, Sept 19,
2012; Ailing v. Fefdcm, G.R No. 185829, April25, 2012; Velasoo v. NLRC, G.R No. 161694, June 26, 2006, 492 SCRA
686, 699; St. luke's M!di:al CerEr, klc. v. Nrml, GR. No. 152166, Oct 20, 2010; Manila WIS Co., klc. v. Pena, G.R.
No. 158255, Ju~ 8, 2004.
~ Sa1 tJi;)uel Corporationv. Teolosb, G.R No. 163033, Oct2, 2009; NatioM Union ofW<rtelsillhe Hotel, RestuantCild
Allied Industries [NlM'HRAIN-APL-IUF]Dustt Hotel Ni<ko ~v. The Honorable CA, GR Nos.163942111d 166295,
tbt.11,2008.
350 BAR REviEWER ON lABOR lAW
CHAPTER IV
POST EMPLOYMENT
351
(b) Where the dismissed employee's position is no longer available
at the time of reinstatement for reasons not attributable to the (i) Takeover of the business of the employer by another company
fault of the emp Ioyer. 1 and there is no agreement regarding assumption of liability by
the acquiring company. 1
(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 (3) Where the employee decides not to be reinstated as when he does
dismissal to the final resolution of the case2 or because of the not pray for reinstatement in his complaint or position paper but
realities of the situation. 3 . asked for separation pay instead. 2
(d) By reason of the injury suffered by the employee. 4 (4) When reinstatement is rendered moot and academic due to
(e) The employee has already reached retirement age under a supervening events, such as:
Retirement Plan. 5 (a) Death of the illegally dismissed employee.3
(f) When the illegally dismissed employees are over-age or beyond (b) Declaration of insolvency of the employer by the court. 4
the compulsory retirement age and their reinstatement would (c) Fire which gutted the employer's establishment and resulted in
unjustly prejudice their employer.6 its total destruction. 5
(g) When reinstatement of a security guard can no longer be ordered (d) In case the establishment where the employee is to be reinstated
because he was past the age qualification for a security guard has closed or ceased operations.6
license. 7
(h) When the gen~ral sales agency contract between the employer (5) To pievent further delay in the execution of the decision to the
and its client has been terminated and reinstatement is no longer prejudice of private respondent. 7
8
feasible. 8 (6) Other circumstances such as (!!) when reinstatement is inirnical to
9
the employer's interest; (b) reinstatement does not serve the best
interests of the parties involved; 10 (c) the employer is prejudiced by
the workers' continued employment;n or (d) that it will not serve
any prudent purpose as when supervening facts transpired which
1 Sec1m 4{b), Rule I, Book VI, Rules 1D irrlJ!emenllhe L.abcr Code; Ta'dlay CAstillety Labor Uniln v. NLRC, G.R. No. 73352, made execution l!l'just or inequitable. 12
Dec. 06, 1994; RCP1 v. NLRC, G.R Nos. 101181-84, June 22, 1992, 210 SCRA 222; Torillo v. Leog!Vdo, k., G.R No.
n2JJ5, Mr(27, 1991,197 SCRA471;Pizza lmv. NLRC, G.R.No. 74531,June28, 1988. 3. COMPONENTS OF SEPARATION PAY IN LIEU OF
2 Sa100 F~ Phils., klc. v. Berrmlo Mel Ta;Jhoy, G.R No. 187214, hlg. 14, 2013; Bkle Sky Trdlg ~. klc. v. REINSTATEMJ.:NT PER PREVAILING JURISPRUDENCE.
Bias, G.R. No. 190559, Mrth 7, 2012, 667 SCRA 727; Alma v. NLRC, G.R. Nos. 154113, 18m8, 187861 Md 196156,
Dec. 07, 2011; St. Luke's Medi:a Center, Inc. v. Nolario, G.R No. 152166, Oct 20, 2010; ~rirulural il1d k1duslrial The amount of separation pay that should be paid in lieu of
Supples Cap. v. Siazar, G.R No. 177970, Aug. 25,2010.
3 ~ B¥TU v. Zamra, G.R. Nos. L~766-7, April1, 1980,97 SCRA 5, as died ilGI:Jbe.Mcday COOle en! Radn
reinstatement is not provided under the Labor Code. ~urisprudence, however,
Capctalion v. NLRC, 1;.R. No. 82511, IIM:h 3, 1992 Mel l'oodayv.II.RC, G.R. No. 67664, May 20, 1992.1he reasoo dictates that the following should be included in its computation: ·
ciEd by tle COlitis 1hct 'it is m plllp« 1hit lhis pnXrac:IOO lli;lrm1 stnill8llfil pendi"g 1tr ana11er ~
heailg." f.SJ, II Esccrb v. NLRC, G.R No. 160302. Sept 27, 2010, l1e ~ fcGl were tEd: (a) l v.oold 'ilfiicl
cbup&xl Mel qlpfessbl upoo lhe ~;(b) "petiiOne!s Jlilll• ave( b" more t1an 15 )'&IS; (c) ils miles 1 Ca'lcrltlv. CM1a1m R1i!1Jpiles, GR No. 70615,0ct.28, 1986. .
2
had depredaled ll1d had been replaced v.il new!!", beiEr ones; en! {d) I now sdd goods V1rouQh ildependent lftsfJW:lrs, F. F. Mime Cccpcxation v. 1he Hon. Socond !Mim NLRC, G.R. No. 152039, Apl8, 2005; caiefe v. NLRC, G.R No.
leeby llllolisltw;l tleposilioos relcm:ll> sales Mel lf~st~Jutiln.ll Macatig v. M.RC, G.R. NO. 158095, lb. 23, 2007, it 131467, Apl21, 1999; ~ v. NLRC, GR No. 117378, IIM:h 26, 1997, 270 SCRA 488; Labor v. NI..RC, G.R No.
was hekt 'The OOslily ci pMie respoodent was I!100e mriest m she CXIlSidered lhe fiiYJ ct 11e case as pelliooer's 110388, Sept 14, 1995; GCIXI v.lhe Hon. NLRC, G.R No.104690, Feb. 23, 1994.
a:t ct exac1ivJ nmey 1roo1 her. 11 foci. shelllanded pelliooer asQle rm was Vfi.Y good at aclilg, ll1d v.00 had mastered 3 ll!ertan!i1enla ~Cap. v. Beneofdo, GR No. 152843, July 20, 2006; Maxi Seariy Mel lleleciMl N}erq v.
lhe at of gai1i1g ~ ~·s ~- 1he mties d lhe siJailn precludes a ~ ~. shook! NLRC, G.R No. 162850, Dec. 16, 2005.
~becxdered." ~ Eleclruct PS.a, Inc. v. Meris, G.R No. 147031, Jlif27, 2004.
4 Vdrxy Liler, lie. v. ~. G.R No. 164820, t.bth 28, 2007; See aloofle ReookJtion on Mltion lor Recoosidelation, Dec. 5 Bagong Ba(cl1 ~ v. Ople, G.R No. 73334, Dec. 8, 1986.
8,2008.
6
Sectm 41bl. Rille I, Boo11 VI, Rules tl ~ 11e Lalor Code; Pli::e v.llnoda!a Phis, lncJmodata Cap., G.R No.
5 Tooes, Jr. v. NLRC, G.R. No. 172584, Nov. 28, 2008. 178505, Sept 30, 2008; Phitread Tre & Rubber Cop<Ja!ion v. VK:ellle, G.R. No. 142759, Nov. 10, 2004; Ooo;ihsoo
6 &st!manEv. NLRC, G.R. No.111651, Nov. 28, 1996; Sagaesv.~·s ComnerciaColp.,G.R No.166554, Nov. 27,
7
Constuctioo Co. W. v. tlRC, GR. No. 72945, l.trf 29, 1986; Pizza Inn v. tlRC, G.R No. 74531, June 28, 1988.
2008;Jacullev. SillilmlkWefsity, G.RNo.156934, Mlldl16,2007;-Temms, Inc. v. M:lbe8a, G.R No. 149074, Sealand SeNice.lnc. v. NLRC, G.R No. 90500, Oct 5, 1990, 190 SCRA 347.
8
Alxj. 10, 21m; Befl;juet ColpaaOOn v. NLRC and Feizardo A. Guicr1an, G.R. No. 124166, Nov. 16, 1999; Espejo v. ti.RC, As cited in Esc<riov. NLRC, GR. No.160302, Se!t 27,2010. . .
9
GR No. 112678, Mcrr.h 29, 1996, 255 SCRA 430,435. SantJi;JueiCccpcxationv. OepulyMnisErofl..aborll1dEflllklyment, G.R. No. L-58927 &L-59870, Oct 27,1986.
7 ScWaloza v. NLRC, G.R No. 182086, Nov. 24, 20i0.
10
CentutyTextiie Mls, Inc. v. NLRC, G.R. No. nas9, May 25, 1988, 161 SCRA 528.
11
8 Asia PaciOCCh<Kterilg [Phils.], Inc. v. Farol<il, G.R No. 151370, Dec. 4, 2002. Q.lbacv. NlRC, G.R No. 81946, July 13, 1990,187 SCRA412.
12
Seaiand SeM:e, Inc. v.NLRC,G.R. No. 90500, Oct.5, 1990,190 SCRA347.
!t
352 BAR REviEWER ON lABOR lAW
\ CHAI'TER !V
(1) The amount equi~'!llent to at least one (1) month salary or to one (1)
month salary for eve!'j year of service, whichever is higher, a
fraction of at least six (6) months being considered as one(l) whole
year. 1
(2) Allowances that the employee has been receiving on a regular
basis. 2
4. PERIOD COVERED.
· a. From start of employment up to the date of finality of decision.
Separation pay in lieu of reinstatement is computed from the
commencement of employment up to the time of termination, including the
3
imputed service for which the employee is entitled to backwages. More
definitively, it should be reckoned from the first day of employment until the
finality of the decision. 4
b. When employer has already ceased its operations.
When employer has ceased its business operations, the separation pay
5 7. STRAINED RELATIONS RULE
in lieu of reinstatement should be computed only up to that date of closure.
5. SALARY RATE TO BE USED IN THE COMPUTATION,
The salary rate prevailing at the end of the period of putative service
should be the basis for colilputation which refers to the period of imputed
6
service for whkt. the employee is entitled to backwages.
6. SOME PRINCIPLES ON SEPARATION PAY IN LIEU OF
REINSTATEMENT.
• Award of separation pay in lieu of reinstatement is not proper if there is no
finding of illegality of dismissal. This is so because the principal remedy of
reinstatement may only be granted in case the dismissal is illegal. 7
t Sectix14¥JL ~I, Bod~ VI, RUes 1o 1n1J1ementlle Lmor Code; Soolh East Wenlat<rB Ralla1, klc. v. Jesus J. CooiJJ,
GR No. 186621, Mrdl12, 2014; St.ltie's Mecfcal CenU, klc. v. Nolaio, G.R No. 152166, Ott 20, 201(); Agrruuat
IIIII Rfuslrial ~Corp. v. Siazlr, G.R No. 177970, AIJ;I.25, 2010;Pk:opResoortes. Mrplr.Ed{PRI) v. AnacleiD L
Ta'leca,etlli.,G.R No.11i0828,Aug. 9, 2010; ~rnoo v. VMnadeMilll.lad!riYJQxponml. G.R No.149552,Midl
10, 2010; CRCAgrk:IAJral Traci1g v. NLRC, G.R No. tn664,tlec. 23,2009,609 SCRA 138,151;
2 P1c111ers ProWcts, klc. v. NLRC, G.R No. 78524,JM. 20, 1969.
3 ~CoocreleProdldsv. NLRC, G.R No.106916,Sept.3,1999; RefomlstllniooctRB..L.iler, Q:. v. Nl.RC,G.R
No.1al482, Jlfl. 27, 1997,266 SCRA 713, 725;Seala'ld SeM:e,loc. v. NI..RC, G:R. No. 00500, Ott 5, 1900,190 SCRA
347.
~ Agtbltua IIIII lnduslriaiSupplies C.O.lJ. v. Siazcl, G.R No. 1n970, Aug. 25,2010; ~~ Pa'lay~v. NLRC, GR.
No.180718, Ott 23,2009,604 SCRA 362, 371.
5 Polymer RubberCaporatioo Md .lose4Jh Ang v. Bayokl Salaru:!i1g, GR No. 185160,.lltj24, ~13.
s Masagala Cooae1e Products v. NLRC, GR No. 106916, Sept. 3, 1999; Reloonist Uoioo ct R.B.I.iler,loc. v. NI.RC, GR
No. 120482, Jlfl. 27, 1997, 266 SCRA 713, 725; Seaa1d ~. klc. v. NLRC, G.R. NQ. 00500, Od. 5, 1990, 190 SCRA
347.
1 l.eqlMI SeaJrity Md kNes!JJation Agencyv. QIR:Pf, GR No. 186JA.4, Feb. 20, 2013.
POST EMPLOYMENT
353
• Separation pay, as a substitute remedy, is only proper for reinstatement but
not for backwages. 1
• Separation pay and backwages are not inconsistent with each other. Hence,
both may be awarded to an illegally dismissed employee. 2 The payment of
separation pay is in addition to payment ofbackwages.3
• Employer does not have the option to choose between actual reinstatement
and separation pay in lieu thereof. Actual reinstatement has the primacy as
the proper relief to which an illegally dismissed employee is entitled.
Payment of separation pay should be ordered only in the event that there is
a showing that reinstatement is no longer possible by reason of the
justifications allowed under established jurisprudence. 4
• Reinstatement cannot be granted when what is prayed for by employee is
separation pay in lieu thereof. 5
• Grant of separation pay in lieu of reinstatement converts the award of
reinstatement into a monetary award; hence, legal interest may be imposed
thereon. 6
The doctrine of "strained relations" or "antipathy and antagonism" or
"irretrievable estrangement' applies when reinstatement will no longer be in the
best interest of beth the employee and the employer considering the animosity
and antagonism that exist between them brought about by the ftling of the labor
case.7
However, standing alone, the doctrine of strained relations will not
justify an award of separation pay, a relief granted in instances where the
t Colgafe.Pamlive Phqlpiles, klc. v. ()pie, GR No.l-73681, June 30, 1988; Phesdtem lndusmal Gaporatioo v. Mlldez,
G.RNo.161158,May9,2005.
2 St. Wte's Medical Center, Q:. v. NolaOO, G.R No. 152166, Oct 20, 2010; AgtbJllal Cl1d hduslrial &wfies Corp. v.
Siazlr, G.R No. 177970, Aug. 25, 2010; CenUy ~Gap. v. Rari, G.R No. 171630, Aug. 8, 2010; CerUyCaritg
CooJrml v. Vlcel!e, GR No. 171630, Aug. 9, ~10; Nssan Ncxth Edsa ~ Q.Jezoo City v. Semo, k. GR No.
162538, .kite 4, 2009, 588 SCRA 238, 247-248; t1a:asero v. Southern k'dSial Gases~ G.R No.178524, Jlfl.
30, 2009, fiT7 SCRA 500.
3 ~ v. Felam, GR No. 18582.9, Aprl25, 2012, cili'g M1casero v. Soomn D11s1ria1 Gases ~ GR No.
178524, .Ia!. 30, 2009, fiT7 SCRA 500, 507; t.t Camel Cdlege v. Resuena. G.R No. 173076, Ocl. 10, mr, 535 SCRA
518,541.
~ Johnsoo &Johnson [Phis.), R:. v. Johnson otrx:e &Sales Union- FFW, G.R No. 172799, J~ 6, mT, ~ v.
NI.RC, ~.R No. 105338, Dec. 27, 1994.
5 SM: Blflk, blc. v. De Guznm, G. R N~. 184517 &186641, Ott 8, 2013 (En Bcn::t Johansen Wort! Grol4l Qrpaalioo
v. Rene Manuel Goozales Ill, G.R No. 198733, Ott 10,2012, Goklen .6ll! Buikfelsv. Takle, G.R No. 187200, 5tlaf 2010,
620SCRA28.
6 Session Delights lceOeamand F~Foodsv. CA(Sixth Diviskln), G.R No. 172149, F8J. 8, 2010,612 SCRA 10.
. 1 Wensha Spa Center, klc. v. Ylli'Q, G.R No.185122, Aug. 16, 2010; AgrbJI1llaiMd nNsbial Supples Corp. v. Siazcr, G.R
No. 177970, Aug. 25, ~10; CenbJ1y Qmi1g Corp. v. Rami!, G.R No. 171630, Aug. 8, 2010; NiJ::agUe v. ~LileS,
Inc., G.R. No. 172589, Aug. 8, 2010; Lanbert P~ and Jewely Corp. v. Bimira, G.R No. 170464, Jtlf 12, 2010;
Goco v. The Han. NLRC, G.R No. 104690, Feb. 23, 1994; See also ~ v. NLRC, G.R No. 107940, Jl.lle 17, 1994;
liri<elkai Sons t&rg, loc. v.l.lclnera. G.R No.152514, July 12, 2005.
354 BAR REviEWER ON lABOR lAW CHAPTER IV 355

common denominator is the fact that the employee was dismissed by the
tI, POST EMPlOYMENT

operation of his employer's business, invocation of this doctrine is not

. !
employer. 1 Even in cases of illegal dismissal, the doctrine of strained relations is proper.
1

not applied indiscriminately as to bar reinstatement, especially when the • Non-settlement of dispute after long period of time is not indicative of
employee has not indicated an aversion to returning to work or does not occupy strained relations?
a position of trust and confidence or has no say in the operation of the • The refusal of an employee to be reinstated is indicative of strained
employer's btisiness. Although litigation may also engender a certain degree of relations.
3
hostility, it has likewise been ruled that the understandable strain in the parties' • Criminal prosecution confirms the existence of "strained relations'' which
relations would not necessarily rule out reinstatement which would, otherwise, would render the employee's reinstatement highly undesirable. 4
become the rule rather than the exception in illegal dismissal cases. 2
• A managerial employee should not be reinstated if strained relations
5
In a plethora of cases, the Supreme Court has been consistent in its exist.
holding that the existence of strained relations between the employer and the • In case of new ownership of the establishment, reinstatement is proper if no
illegally dismissed employee may effectively bar reinstatement of the latter. 3 strained relations exist with new owner.
6

7.1. SOME PRINCIPLES ON STRAINED RELATIONS. 3.

• Strained relations must be proved and demonstrated as a fact. 4 BACKWAGES7
• Litigation, by itself, does not give rise to strained relations that may justify
non-reinstatement. The filing of the complaint for illegai dismissal does not
by itself justify the invocation of the doctrine of strained relations.
5 Under Article 294 [279], an employee who is unjustly dismissed is
• No strained relations should arise from a valid and legal act of asserting
one's right; otherwise, an emp1oyee who asserts his right could be easily
separated from the service by merely paying his separation pay on the
pretext that his relationship with his employer had already become
6 of his illegal dismissal) up to the time of his actual reinstatement. 8
strained.
• Indeed, if the strained relations engendered as a result of litigation are
sufficient to rule out reinstatement, then reinstatement would become the
7
exception rather than the rule in cases of illegal dismissal.
• The nature of position is material in determining the validity of
"strained relations." If the nature of the position requires that trust and
confidence be reposed by the employer upon the employee occupying it as
would make reinstatement adversely affect the efficiency, productivity and
performance of the latter, strained relations may be invoked in order to
justify non-reinstatement. Where the employee, however, has no say in the
l.eopcld SeQ.Mitya¥1 ~ ~v. Clt*7{, GR No. 186344, F«<. 20, 2013.
SeemsoM. carmel Colegev. Resueda. GR No. 173076, Oct. 10,2007,535 SCRA518,541; Velascov. NLRC, GR No.
161694, 2.6 June 2006, 492 SCRA 686, 699; Coal-Cola Botllels Phis., Inc. v. Daliel, G.R No. 156893, June 21, 2005, 460
SCRA 494; Proder and G<mlle Pliippi1es v. Bcrdest!, G.R No. 139847, Math 5, 2004; .Abalos v, Philex r.DY,1
CorponDln, G.R No. 140374, Na.l. 27, 2002; ~ v. NLRC, G.R No. 117378, March 26, 1997,270 SCRA 488; GI:IJe.
Mackay<:aJ!e and RaOO Calpoollion v. Nl.RC, GR No. 82511, t.m:h 3, 1992, 200 SCRA 701, 709.
3 Wensha Spa Center, Inc. v. Yung, G.R. No. 185122, Aug. 16, 2010; Cenb.Jry Canning Corp. v. Ramil, G.R No.
171630, Aug. 8, 201{); CRC Agricultural Trading v. NLRC, G.R. No. 177664, Dec. 23,2009.
.4 Pagoo TrmsportCorpaam v. NLRC,.G. R No. 119500, Aug. 28, 1998.
5 ld.; capili v. NLRC, G.R. No. 117378, March 26, 1997,270 SCRA488, 495.
6 GIOOe-MackayCableMd Ra010 Corporationv. NLRC,GR No.82511 ,MM:h 3,1992,206 SCRA 701,709.
7 Procierood Gamble Philippinesv. Bondeslo, G.R No.139847, March 5, 2004.
Q
I
.,J
&"'
1. CONCEPT.
entitled not only to reinstatement, without loss of seniority rights and other
privileges, but also to the payment of his _full backwages, inclusive of
ailowances and ot.1er benefits or their moneta.")' equivalent, computed from the
time his compensation was withheld from him (which, as a rule, is from the time
The raison d' etre for the payment ofbackwages is equity. Backwages
represent compensation that should have been earned by the employee but were
lost because of the unjust or illegal dismissal. 9
Simply stated, an employee whose dismissal is found to be illegal is
considered not to have left his office so that he is entitled to all the rights and
privileges that accrue to him by virtue of the office that he held. 10
But if the dismissal is not illegal, an award of backwages is not proper. 1
, AcesiteColporation v. NLRC, G. R. No.152308, Jan. 2.6, 2005.
2 Palmeria v. NLRC, G.R Nos. 113290-91, Aug. 3, 1995.
3 Sentinel Security Agency, Inc. v. NLRC, G.R. No. 122468, Sept 3, 1998; Philippine American Life Insurance
Companyv. NLRC, G.R. No.122716, Sepl3,1998.
4 RDSTruckilJ,v.NLRC,GRNo.123941,Aug.27, 1998;Gabab.Jicrlv.Buat,-<3R.No.147142,Feb.14,2005).
5 Golden Donuts, Inc. et at. v. NLRC, G.R. Nos. 1~758-59, Feb. 21, 1994; See also Wensha Spa Center, Inc. v.
Yung, G.R No. 185122, Aug. 16, 2010.
6 PI.DTv.Tolenlioo,G.RNo.143171,Sept21,2004.
7 Relevoot PrMion: MK:Ie 294 [279J, LOOorCode.
B ~Jwnalisls, ~- v. Mlsqueda, G.R. No.141430, f/aj7, 2004;Ro00Juez,Jr. v. NLRC,G.R No.153947,Dec. 5,
2002,393 SCAA 511,517.
9 PLDTv.NLRC,G.R.No.106947,Feb.11,1999.
1o Buhailv. ThelbtCA, G.R No.143709,July2,2002.
356 BAR REVIEWER ON lABOR lAW
2. THE BUSTAMANTE DOCTRINE.
In 1996, the Supreme Court changed the rule 2 on the reckoning of
backwages. It announced a new doctrine in the case of Bustamante v. NLRC,l
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. 4
3. COMPONENTS OF BACKWAGES.
The components ofbackwages are as follows:
1. Salaries or wages computed on the basis of the wage rate level at
the time of the illegal dismissal and not in accordance with the
latest, current wage level of the employee's position. 5
2. Allowances and oiher benefits regularly granted to and received by
the employee should be made part ofbackwages. 6 F..xamp_tes:
a. Emergency living allowances and 13th month pay mandated
under the law. 7
b. Fringe benefits or their monetary equivalent. 8
c. Transportation and emergency allowances. 9
d. Holiday pay, vacation and sick leaves and service incentive
leaves. 10
e. Just share in the service charges."
1 Telefunken Semiccnduclofs En1Jioyees Union-FFWv. Court of Appeals, G.R. Nos. 143013-14, Dec. 18, 2000, 348
SCRA 565, 590.
2 Earlier, there were II'Kl (2) rules on backwages. Theist is the~ 'MeR:uy Drug Rule'v.tlich refels kltherulelist
erm:.iBI il the case ct Mmly Drug Co., ~ v. 00, G.R No. L-23357, ~ 30, t974, 56 SCRA 694, v.t1ict1 !l1illdales
tta il case the ilegal cfiSITiissal d M ~ has lasEd ilr l1'a1'f ye;.rs, he is entitled b backwaJes ilr afixed period d
tree (3) yeas, 'voii100t iri1er ~ « deOOdkxls.' The Meltuy Drug IUl was superseded 1a1er by lle 'fErrer
~ lail dcrM1 il the cased Farer v. NLRC, aR No. 100898, July 5, 1993, 224 SCRA 410, 423, Nth grri!d
~ il u but lle ~may dedud af/ il1lXI1l v.t1ich the~ may have eoo1ed elseAtlere !Ui1g the
pOOcxl dhis legal emiiiDn
3 G.RNo.111651,Nav.28, 1996,265SCRA61.
4 See aso Kay Produds, K. v. CA, G. R No. 162472, ~ 28, 2005; Trnders Ra(<ll Billk v. NLRC, G.R. No. 127864, Dec.
22,1999.
5 See also PLDTv. NLRC, G.R. No. 106947, Feb. 11, 1999; Genellll ~Bille Coleges v. NLRC, G.R. No. 85534, March
5,1993,219 SCRA549
& ~ v. NLRC, GR. No. 93915, Oct. 11, 1995; PnrortV11)'1 Producfs ~ v. NlRC, G.R No. 81200, Oct
17,1990.
7 Espejo v. NLRC, G.R No. 112678, Mardl 29, 1996, 325 Phi. 753, 760; General Bapfist Bble Colleges v. NLRC, G.R No.
85534, March 5, 1993, 219 SCRA 549.
.s lv:JSia Coqxxa1i:Jn v. ttRC, G.R No. 152308, Jal. 26, 2005.
9 Salles v. NLRC, GR No. 76n1, Sepl21, 1987; Slmlov. NLRC, G.R. No. L-75510, Oct 27, 1987.
1o St L.ou5e Colege ctTuguega:ao v. NLRC, G.R No. 74214, kg. 31, 1989; On sel'lice i1oentive leave, see Femandezv.
NlRC, G.R No. 105892, Jal. 28, 1998,285 SCRA 149.
11 Marcm.ti fWs &ResortC<Xporalioo v. NLRC, G.R No.123880, Feb. 23, 1999.
I' CHAPTER IV
POST EMPLOYMENT
357
f. Gasoline, car and representation allowances. 1
l g. Any other regular allowances ·and benefits or their monetary
equivalent. 2
4. SOME PRINCIPLES ON BACKWAGES.
1
The computation of said regularly paid allowances and benefits as part of
backwages should be made up to the date of reinstatement as provided
under Article 294 [279] of the Labor Code or, if reinstatement be not
possible, up to the finality of the decision granting full backwages.3
1 Salary increases during period of unemployment are not included as
component in the computation ofbackwages. 4
1 Dismissed employee's ability to earn is irrelevant in the award of
backwages. 5
• The failure to claim backwages in a complaint for illegal dismissal is a mere
procedural lapse which cannot defeat a right granted under substantive law.
Hence, the illegally dismissed employee may still be awarded backwages
6
despite said failure.
• When Labor Arbiter or NLRC failed to award any back."Wages, the same
may be corrected on appeal even if worker did not appeal. 7
1 In case reinstatement is ordered, fhll backwages should b~ reckoned from
the time the compensation was withheld (which, as a rule, is from the time
of illegal disnussal) up to the time of reinstatement, whether actual or in the
payroll.
8
1 H separation pay is ordered in lieu of reinstatement, full backwages
should be computed from the time of illegal dismissal until the fmality 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
9
rest.
• Tbe rule is different if employment is for a definite period. The illegally
dismissed fixed-term employee is entitled only to the payment of his
1 ~ Rllaltlalktcagayan Valle'f), Inc. v. NLRC, G.R No. 123810,Jill. 20, 1999,301 OCRA.rtJ.
2 BlJe Day~ v. M.RC, G.R No. 129843, Sepl14, 1999.
3 Femilldez v. NLRC, G.R. No. ~05892, Jill. 28, 1998, 285 SCRA 149.
4 Eq1iab1e Banki1g Corp. v. Sadoc, GR No.164772, JIJ1e 8, 2006.
5 Tomas0aud'10 Mlm:lrial Cdlege,lnc. v. CA, G.R No.152568, Feb. 16,2004.
~ !RiaQuzv. NlRC, G.R No.121288, Nov. 20, 1998,299 SCRA 1,12-13: I_ T. Dab! &Co., Inc. v. NLRC,G.R. No.H3162.
Feb. 9, 1996,253 SCRA 440,453.
7 Aurora Land Projeds Colporation v. NLRC, G.R. No. 11473~. Jan. 2, 1997, 266 SCRA 48 .
8
The Coca-Cola Export Co!p. v. Gacayan, G.R No. 1~433, Dec. 15, 2010; Buenviaje v. CA, M. No. 147806, 12
Nov. 2002, 391 SCM 440. .
9 CRC Agricultural Tradill!l ~. t.!1.i«;, G.R. No. 177664, Dec. 23, 2009;-Gaco v. NLRC G.R No. 104600, 23 Feb.
!I! 1994,230 SeRA.~. 2B9.
I
I
>~.%--'
 CHAPTER IV 359
358 BAR REVIEwER ON lABOR lAW
POST EMPLOYMENT

·salaries corresponding to the unexpired portion of his fixed-term • Any amount received during payroll reinstatement is deductible from
employment contract.
1 backwages. 1
1 If the illegally dismissed employee has reached the optional retirement age
5. VARIATIONS IN THE GRANT OF BACKWAGES.
of 60 years, his backwages should only cove~ the time when he was
illegally dismissed up to the time when he reached 60 years. Under Article The discussion above dwells on cases where backwages are granted in
302 [287], 60 years is the optional retirement age.
2 full in accordance with the clear mandate of Article 294 [279] of the Labor
1 If the employee has reached 65 years of age or beyond, his full backwages
Code. However, in certain instances, backwages are not granted at all or are
should be computed only up to said age. The contention of the employer granted but only for a limited amount.
3
that backwages should be reckoned only up to age 60 cannot be sustained. The discussion below will point out the variations in the grant of
4
In Jaculbe v. Silliman University, it was declared that since petitioner has backwages as follows:
already reached seventy-one (71) years of age at the time the decision was
(a) When reinstatement is granted without backwages; or
rendered by the Supreme Court in this case, the award of backwages in her
(b) When reinstatement is granted with limited backwages.
favor must be computed from the time of her illegal dismissal up to her
5
compulsory retirement age of sixty-five (65). 6. REINSTATEMENT WITHOUT BACKWAGES.
• If termination was made effective immediately, the backwages should be
6 Under the following situations, reinstatement of an illegally dismissed
• reckoned from the date of the termination lettei where such was stated. employee is granted without the accompanying backwages:
• If employer has already ceased operations, full backwages should be
computed only up to the date of the closure. To allow the computation of (1) When the dismissal is deemed too harsh a penalty;
the backwages to be based on a period beyond that would be an injustice to {2) When the employer acted in good faith; or
the employer. 7 (3) Where there is no evidence that the employer dismissed the
1 If valid retrenchment supervened during the pendency of the case, full employee.
backwages should be computed only up to the effectivity date of the • Illustrative cases of the FIRST situation above:
8
retrenchment.
1 In case the employee dies during pendency of the case, his full backwages
(1) Associated Labor Unions-TUCP v. NLRC,l where reinstatement
with no backwages was ordered because the penalty of dismissal imposed on the
should be computed from the time of his dismissal up to the time of his
9 employee for {;Ommitting theft of company property was reduced to suspension
death. due to mitigating circumstances. The justification was that the entire period
10
• The period of valid suspension is deductible from backwages. when the employee was out of job because of his dismissal should already be
11
1 Backwages should include period of preventive suspension.
1
considered as the period of his suspension; hence, he should no longer be
• Employer's offer to reinstate does not forestall payment of full backwages. entitled to backwages for the same period.
1
backwages. (2) Yupangco Cotton Mills, Inc. v. NLRC/ where, after finding that
the employee was illegally dismissed but at the same time guilty of misconduct,
1 ~ Transp<lt SeMces, ki v. NLRC, G.R No. 95449, kg. 18, 1997; O!loodo Fams Gr!Mers it was ruled that there was no grave abuse of discretion in the resolution of the
AssocialkliVGic AncNerv. NLRC, G.R ttl. 120076, Nal. 25, 1998, 299 SCRA 364.
2 Espe;lv.NIRC,G.R No.112678,Mardl29, 1996,255SCRA430,435.
NLRC which meted only the penalty of suspension without backwages.
3 St Michael's Institute v. Santos, G.R No. 145280, Dec. 4, 2001. (3) Pepsi-Cola Distributors of the Philippines, Inc. v. NLRC,4 where
4 G.R. No. 156934, March 16, 2007.
s See also~~ Colp. v. BerteciKtl, GR No. 152843,Ju~ 20, 2006. the employee filed a leave of absence for one day after he suffered stomach ache
6 RDS TlllliilJ, v. tlRC, G.R No. 123941,kg. 27, 1998. and upon the advice of his doctor, he took a rest for 25 days without prior leave.
7 Chroni:le Seairities Corporcm1 v. ~RC. G.R No. 157907, Nai. 25, 2004]; See also Price v.lnnodata Pllt., lncllnnodata

Colp., BR No. 17~5. Sept 30, 2008.

t.tsubishi Mills Phil~ Caporcm1 v. Chlysler PhJWirie; l.aba' Uniln, G.R No. 148738, June 29, 2004. 1
GbyPhiJWiles, Inc. v. Veigilll, G.R No. 176627, Aug. 24, 'JffJ7.
M::xi Secuity axll:letEdNeAgencyv. NIRC, G.R No.162850, Dec.16, 2005. 2
G.R. No. 120450, Feb. 10, 1999.
io ld., Metro TlllllSitOigalizali:xl, Inc. v. NLRC, G.R No.119724, May 31, 1999;PI.DTv. Teves, G.R No. 143511, Na/.15, 3
G.R No. 94156, Ju~ 30, 1990.
2010. 4
G.R. No. 100686, Aug.15, 1995, 247 SCRA 386.
11 Bl.ilail v. The Hoo. CA, G.R No.143709, Ju~ 2, 2002

..
·--~:.._·
360 BAR REVIEWER ON lABOR lAW
When he reported back for work, he was told that he had been dismissed for
being absent without leave. It was held that while he was at fault, the employee
could not be dismissed. He was ordered reinstated but he was denied backwages.
• lllustrative cases of the SECOND situation above:
(l) In Itogon-Suyoc Mines, Inc. v. National Labor Relations
Commission,1 the employee was found guilty of breach of trust for stealing ore
with high gold content. However, his dismissal was considered drastic and
unwarranted considering that he had rendered twenty three (23) years of service
without previous derogatory record and he was prematurely suspended during
the pendency of the case. Consequently, he was ordered reinstated but without
granting him any backwages. Tne High Court pronounced that "[t]he ends of
social and compassionate justice would therefore be served if private respondent
is reinstated but without backwages in view of petitioner's good faith."
(2) Finding factual similarity with the fmegoing case of Itogon-
Suyoc, the Supreme Court, in Pepsi-Cola Products Philippines, In~. v.
Malon} deems it appropriate to render the same disposition insofar as one of
the respondents in this case was concerned - Saunder Santiago Remandaban III.
This case involves a stri.'<e which the DOLE Secretary certified to the NLRC for
compulsory arbitration. A return-to-work order was issued as a consequence of
such certification. However, Remandaban failed to report for work within
twenty-four (24) hours from receipt of the said order. Because of this, he was
served with a notice of loss of employment status (dated July 30, 1999) which
he challenged, asserting that his absence on that day was justified because he
had to consult a physician regarding the persistent and excruciating pain of the
inner side of his right foot. In ordering his reinstatement but without backwages,
the Supreme Court cited the following as its bases:
(a) While Remandabari was remiss in properly informing Pepsi of his
intended absence, the penalty of dismissal is too harsh for his
iilfractions considering that his failure to report to work was clearly
prompted by a medical emergency and not by any intention to defy
the July 27, 1999 return-to-work order.
(b) Pepsi's good faith is supported by the NLRC's finding that
''the return-to-work order of the Secretary was taken lightly by
Remandaban." In this regard, considering Remandaban's ostensible
dereliction of the said order, Pepsi could not be blamed for sending
him a notice of termination and eventually proceeding to dismiss
him.
t G.R. No. L-54280, Sept 30, 1982,117 SCRA523, 529.
2 G.R No.175002, Feb. 18, 2013.
CHAPTER IV 361
POST EMPLOYMENT
(3) It was likewise held in Integrated Microelectronics, Inc. v.
Pionella/ on motion for reconsideration by petitioner, that the backwages 2
should be deleted on the grounds that (a) the penalty of dismissal was too harsh
of a penalty to be imposed against Pionilla for his infractions;3 and (b) petitioner
IMI was in good faith when it dismissed Pionilla as his dereliction of its policy
on ID usage was honestly perceived to be a threat to the company's security. In
this respect, since these concurring circumstances trigger the application of the
exception to the rule on backwages as enunciated in the above-cited cases, the
Court found it proper to accord the same disposition and consequently directed
the deletion of the award of backwages in favor of Pionilla, notwithstanding the
illegality of his dismissal.
• Illustrative cases of the THIRD situation above:
(l) In Best Wear Garments v. De Lemos,4 where the records are
bereft of any showing of clear discrintination, insensibility or disdain on the part
of petitioners in transferring respondents - both sewers on piece-rate basis - to
perform a different type of sewing job which would amount to constructive
dismissal. That respondents eventually discontinued reporting for work after
their plea to be returned to their former work assignments was their personal
decision, for which the petitioners should not be held liable particularly as the
latter did not, in fact, dismiss them. Indeed, there was no evidence that
respondents were dismissed from employment. In fact, petitioners expressed
willi'lgness to accept them back to work. There being no termination of
employment by the employer, the award of backwages cannot be sustained. It is
well settled that backwages may be granted only when there is a finding of
illegal dismissal. In cases where there is no evidence of dismissa~ the remedy is
reinstatement but without backwages.
(2) In Leopard Security and Investigation Agency v. Quitoy,S as
well as in the earlier case of Security and Credit Investigation, Inc. v.
NLRC/ reinstatement without backwages was ordered because petitioners were
1 G.R ltl. 200222, AIJJ. 28, 2013 (Res001iln on Mmn b" Reoonsideraliln).
2 Respondg'itwas ordered rei1slaEd pkJs ba:kwages by lle Cwt ci ~·
3 Respoodent Pklnla has w:xXed v.i1h petiOOner IMI as Is pnxlJdkx1 Wilker si1ce NcNerOOer 14, 1996, 01 May 5, 2005,
Pionila I'I!CeM!d a m fRxn IMI requiiDJ hin il explai1 tle l1cidert W1ich ocx:uned tJe daf before r.t1ere he was seen
~ alady il bolrd lhe ~shuttle bus alle Alimq Temiial. kwas repaet by l1e bus IIB'Shallhat l1e lady
was weailg a~ klenlk:ation cad (D) - v.tlich serves as afree pass b" side bus passEI'IQers- eY91 f she was
jJSt ajciJ ~at IM. ~ llis regald, Pionilla OOriled llal he lent lis ID tl tJe lady 'IIIlo hlned out il be his relatNe. He
fulther i1linaled flat he risked ~her his 10 ilSCNe onllei' tJalspatiOOn l!liPflllSE!S. Nevel1heless, he apcla;jized b"
hisd:xls.
4 GR No.191281,DEc.05,2012.
s G.R. No. 186344, F~. 20, 2013.
6 G.R. No. 1143ffi, Jal. 26, 2001.
362 BAR REviEWER QN lABOR lAW
found not to have dismissed respondents (security guards) and that the latter, for
their part, have not abandoned their employment. 1 · years:
(3) Leonardo v. NLRC ·where the Supreme Court ordered the
reinstatement sans backwages of the employee (Fuerte) who was declared
neither to have abandoned his job nor was he constructively dismissed. As
pointed out by the Court, in a case where the employee's failure to work was
occasioned neither by his abandonment nor by a termination, the burden of
economic loss is not rightfully shifted to the employer. Each party must bear his
own loss.
7. REINSTATEMENT WITH LIMITED BACKWAGES.
While in the aforementioned cases of illegal dismissal, the Supreme
Court ordered the employees' reinstatement but without backwages, there are
also instanc;es where the backwages were not given in full but merely limited for
the same reason of good faith on the part of the employer.
• Illustrative cases where awsrd of backwages was limited to l
year:
(a) In San Miguel Corporation v. Javate, Jr./ the High Court
affirmed the consistent findings and conclusions of the Labor Arbiter, the
NLRC, and the Court of Appeals that the employee was illegally dismissed
since he was still fit to resume his work; but the employer's liabiiity was
mitigated by its evident good faith.in terminating the employee's services based
on the terms of its Health, Welfare and Retirement Plan. Hence, the employee
was ordered reinstated to his former position without loss of seniority and other
privileges appertaining to him prior to his dismissal, but the award ofbackwages
was limited to only one (l) year considering the mitigating circumstance of
good faith attributed to the employer.
(b) In Procter and Gamble Philippines v. Bondesto,4 the Supreme
Court, while affirming the illegality of the dismissal of the employee, did not
grant him full backwages. It agreed with the fmdings of the NLRC and the Court
of Appeals that in view of the employee's absences that were not wholly
justified, he should be entitled to backwages limited to one (1) year only.5
1 See also Ledesma, Jr. v. NLRC, G.R No. 174585, Oct 19, 2007; lndophil Aaylic ~ Caporatioo v. NLRC, GR
No. 96488, Sepl ZT, 1993,226 SCRA 723.
2 G.R. Nos. 125303 &126937, June 16, 2000.
3 G.R No. 54244, Jan. ZT, 1992, 205 SCRA 469.
4 G.R. No.139847, Malt:h 5, 2004.
s GR No. 87673, Jan. 24, 1992,205 SCRA 348.
...
·.:. ,
CHAPTER IV
POST EMPLOYMENT
363
• Illustrative case where award of backwages was limited to 2
In Dolores v. NLRC/ the employee was terminated for her continuous
absence without permission. Although it was found that the employee was
indeed guilty of breach of trust and violation of company rules, the High Court
still declared the employee's dismissal illegal as it was too severe a penalty
considering that she had served the employer company for 21 years, it was her
first offense, and her leave to study the French language would ultimately
benefit the employer who no longer had to spend for translation services. Even
so, other than ordering the employee's reinstatemen~ the said employee was
awarded backwages limited to a period of two (2) years, given that the employer
acted without malice or bad faith in tenninating the employee's services.
• Illustrative case where award of backwages was limited to 5
years:
In its resolution on the motion for reconsideration filed by the petitioner
in Victory Liner, Inc. v. Rae~/ the High Tribunal reduced and limited the
original award of full backwages to five (5) years in the light of the evident good
faith of the employer. While petitioner's argument that respondent had already
abandoned his job in 1994 was not upheld, the Court conceded that petitioner,
given the particular circumstances of this case, had sufficient basis to reasonably
and in good faith deem respondent resigned by 1998.
e.
PREVENTIVE SUSPENSION3
1. LEGAL BASIS.
The Labor Code does not contain any provision on preventive
suspension. The legal basis for the valid imposition thereof is found in Sections
8 and 9, Rule XXID, Book Vofthe Rules to Implement the Labor Code. 4
2. PURPOSE AND JUSTIFICATION.
Preventive suspension may be legally imposed against an errant
employee only when his alleged violation is the subject of an investigation. This
remedy may thus be resorted to only while the errant employee is undergoing an
investigation for certain serious offenses. Consequently, its purpose is to
prevent him from causing harm or injury to the company as well as to his fellow
employees. It is justified only in cases where the employee's continued
1
G.R No. 87673, Jan. 24, 1992, 205 SCRA 348.
G.R No. 164820, Dec. 8, 2008.
RelevootPn:Ms.ioos: Sedions 8and 9, Rules XXIII, Book V, Rules ~ lmple!oont tle l..abcJ COOe {No proo.1sb1 on Preven!Ml
Suspension illhe.l.aborCOOe].
4
fo.s amended by Mide 1, Depcrtnent On!er No. 09, Series ol1997.
364 BAR REVIEWER ON lABOR lAW
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.'
3. SOME PRINCIPLES ON PREVENTIVE SUSPENSION.
• An employer has the right to preventively suspend the employee during the
pendency of the administrative case against him as a measure of self-
. l
protection.
• 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
3
co-workers simply "by incurring repeated absences and tardiness."
• The grounds of violation of the school rules and reguiations on the wearing
of uniform, tardiness or absence, and maliciously spreading false
accusations against the school, do not justify the imposition of preventive
. 4
suspenswn.
• The failure by an employee to attend a meeting called by his supervisor will
5
not justify his preventive suspension.
6 8
• Preventive suspension does not mean ihat due process may be disregarded.
7 9
• 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 ~ked to answer and explain.
8
9
• Preventive suspension is neither equivalent nor tantamount to disrnissa1.
• Preventive suspension should only be for a maximum. period of thirty (30)
days. After the lapse of the 30-day period, the employer is required to
reinstate the worker to his former position or to a substantially equivalent
position.
• During the 30-day preventive suspension, the worker is not entitled to his
wages and other benefits. However, if the employer decides, for a justifiable
reason, to extend the period of preventive suspension beyond said 30-day
period, he is obligated to pay the wages and other benefits due the worker
1 Sedkxls 8 en! 9, Ride XXIII, Bed V, R!Es; MHk:iov. tlRC,G.R No.172988, Ju~ 26, 2010; ~v. Add Faa!
Peniomel Se!vices, nc., G.R. No.180285,Jutt 6, 2010; Bailezv. De La Sa'le UWersily, GR No. 167177, Sept 27,2006.
2 ~Natiooal Briv. VPlis:IJ, GRNo.166096, Sept.11,2008.
3 Vafoov. Han. CA, G.R No. 146621, July 30,2004.
4 WocxiOOge School [naN knc1M1 as Woo<kklge Colege, klc.j v. BenOO, G.R No. 160240, Od. 29, 2008.
s M1icakm IMi1Q Cocp. v.l:leoolbl, GR No. 15863V'!l'112, 2006.
6 RB. Mchael Press v. Gait, G.R No. 153510, Feb. 13, 2008; Tna v. NLRC, G.R No. 116588, Jat 24, 1996, 252 srnA
314,321.
Philippine Airlines, Inc. v. NLRC, G.R. No. 114307, JulyS, 1998,292 SCRA40.
1 Pklov. NLRC, G.R No. 169812, Feb. 23,2007.
8 See also Atlas Fertiizer CapooD:xlY. NLRC, G.R No. 120030, June 17, 1997, 273 srnA 549.
9 Jo Cilema COiporation v. Abellana, G.R. No. 132837, June 28,2001.
CHAPTER IV 365
POST EMPLOYMENT
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. 2
• Preventive suspension lasting longer than 30 days, without the benefit of
valid extension, amounts to constructive dismissal. 3 Similarly, indefinite
preventive suspension amounts to constructive dismissal. 4
• Failure to state the duration of the preventive suspension in the notice does
not mean it is indefmite. There is a reasonable and logical presumption that
said suspension in fact has a duration which couid very well be not more
than 30 days as mandated by law.~
• Salaries should be paid for improperly-imposed preventive suspension. 6
• Preventive suspension is different from suspension of operation under
Article 301 [286f of the Labor Code. Preventive suspension is also
different from "floating status."
c.
RETIREMENT 10
1. COVERAGE OF THE RETIREMENT PAY LAW.
The following employees are eligible to avail of retirement benefits
under Article 302 {287] of the Labor Code:
1 Sectioo 9, Rule XXIII, ~loci V, Rules b ~ the 1..m' Code, as M'!el1ded by Article 1, ilepa1n'e1t Older No. 09,
Series d 1997 !21 June 1997; See also~ AiflleS, k1c. v. tlRC, {>.R No. 114307, !Jiy 8, 1998, 292 OCRA 40;
~ BatofSallsklro [N£j, klc. v. Paez, G.R No. 158707, tbt. 27,2006.
2 PEreZv. ~T~ iH1d Telephooe Con'!mY. G.R No. 152048, J.jlrii7,Zl09, 584 SCRA 110{8t Bmlc).
3 Hyall Taxi SeNi:es, klc. v. GaMey, G.R No. 143204, June 26,2001.
4 Pepsi-Cda llsllill.txs d the Phiippiles, ~ v. NLRC, G.R No. 100831, Mly 6, 1997, 272 SCRA 267, 2n; C. PK1o v.
NLRC,G:R. No.169812, Feb. 23, 2007; Ak311a1a &Sons, Inc. v. NIRC, GR No. 73521, Jat 5, 1994.
5 ~v. Add ForcePersorvlel SeM:es, k1c., G.R No. 180285, Ju~6. 2010.
6 Proglessi.lelleveqlmentColpaaOOn ·PizzaHutv. Sarrnienlo, GR. No.157076, Sept 7, 2007.
1
Entitled~ EJi1lloymelrt Not Deemed Tenninated.'
8
Mcm1um MniY:JCoql. v. Oecorion, GR. No. 158637, Apri112, 2006.
9
10 Relevant flrooilsioos: ArtDe 302 [287] of 111e t.roor Code, as amended by RA No. 7641 ~anuary 7, 19931 and RA. No.
8558lfebruary 26, 1998j.
366 BAR REVIEWER ON LABOR LAW
1. All employees in the private sector, regardless of their position,
designation or status and irrespective of the method by which their
wages are paid;1
2. Part-time employees;
3. Employees of service and other job contractors;
4. Domestic helpers or persons in the personal service of another; 2
3. Underground mine workers; 3
4. Employees of government-owned and/or controlled corporations
organized under the Corporation Code (without original charters).4
2. EXCLUSIONS FROM COVERAGE.
Article 302 [287], as amended, does not apply to the following
employees:
1. Employees of the national government and its political subdivisions,
induding government-owned and/or controlled corporations, if they
arc covered by the Civil Service Law and its regulations.
2. Employees of retail, service and agricultural establishments or
operations regularly employing not more than ten (10) employees.
These tem1s are defmed as follows:
a. "Retail establishment" is one pP.ncipally engaged in the sale
of goods to end-u3ers for personal or household use. It shall
lose its retail character qualified for exemption if it is engaged
in both retail and wholesale of goods.
· b. "Service establishment" is one principally engaged in the sale
of service to individuals for their own or household use and is
generally recognized as such.
c. "Agricultural establishment/operation" refers to an employer
which is engaged.in agriculture. This term refers to all farming
activities in all branches and includes, among others, the
cultivation and tillage of soi~ production, cultivation, growing
and harvesting of any agricultural or horticultural commodities,
dairying, raising of livestock or poultry, the culture of fish and
other aquatic products in farms or ponds, and any activities
performed by a farmer or on a farm as an incident to, or in
1 Section 1, Rule II, Implementing Rules of the Retiement Pay law; labor Advisoly on Retirement Pay law dated
Ocl24, 1996, issued by Secreta!y leonardo A. Quisumbil¥;!.
2 tm-Mirnyoo RefiementPay Law daB! Oct. 24, 1996. ~: Ulderthe ~versm of 11e AJies ~the
New Reliemenl Pay Law (Repvbic Ad. No. 7641), cfanesOC helpels and persons i1 the pasooal seMce of adler ~~ere
dedcl'ed nct:rovered Vlereby. However, tleywete ~ ilcluded i1 is oo,oerage by IJitue of Depanment On1er No.
20, ~ by Seaelily Ma. N'leYeS Roldoo Cofesa' on May 31, 1994. On OdOOer 24, 1996, Secretary l.eonMio A.
Quismtilg issued lis l..alxr Mimy 00 the Rt&'ement Pay Law Wlere tiler M.<e been expressly a-d calegOO::altf
ilOOded v.ill1illhe ro.oeraae of IIi; law).
3 RA No. 8558.
4 PoslfJo, etal., v. Phifippile Tuberrubsis Society, h:., G.R No.155146, Jan. 24,2000.
CHArTER IV
POST EMPLOYMENT
367
conjunction with, such farming operations, but does not include
the manufacture and/or processing of sugar, coconut, abaca,
tobacco, pineapple, aquatic or other farm products. 1
3. OPTIONAL OR COMPULSORY RETffiEMENT AGE.
a. Under Article 302 [287].
This article provides for two (2) types of retirement:
(I) Optional retirement upon reaching the age of sixty (60) years. 2
(2) Compulsory retirement upon reaching the age of sixty-five (65)
years. 3
It is the employee who exercises the option under No. 1 above. 4
b. Under retirement plan.
The optional and compulsory retirement schemes provided under
Article 302 [287] come into play or.ly in the absence of a retirement plan or
agreement setting forth other forms of optional or compulsory retirement
schemes. Thus, if there is a retirement plan or agreement in an establishment
providing for an earlier or older age of retirement (but not beyond 65 which has
been declared the compulsory retirement age), the same shall be controlling.
c. Retirement at an earlier age or after rendering certain period of
service.
5
Based on Article 302 [287] the employers and employees are free to
agree and stipulate on. the retirement age, either in a CBA or employment
contract. It is only in the absence of such agreement that the retirement age shall
be fixed by law, that is, in accordance with the optional and compulsory
retirement age prescribed under Article 302 [287].6
This is so because retirement is the result of a bilateral act of the
parties, a voluntary agreement between the employer and the employee whereby
1
Sedm 2, Rule II, ~ Rules of l1e Retilernoot Pay Law; LOOa Miwy oo Retirement Pay taN daEd Oct 24,
1996.
2
kti!302!287], Labor Code; Section4.1, Rule II, ln1plementirg RulesdtheRetirementPaylaw.
3
ld.; Sedi:rt 42, Rule II, Ibid.
4
~v.tlRC,G.RNo.120802,June17, 1997,273SCRA576.
5
Tlis pnMsioo states that '(a)ny efl1lkryee may be retired upon read1irYJ lhe retirement a:~e eslabished illhe c;oiJedive
balgailOJ a;Jreement or other appli::able flll1lloYmen! contact'
6
Easan 91iJpi'lg Liles, klc. v. Anmkl, G.R No. 171587, Oct 13, 2009; ~ Shippilg Liles, Inc. v. Sedal, G.R No.
159354, ~ 1, 2000; UnNersal Robila Sugcr Mlling Gaporation [URSUMCO] v. Cabaleda, G.R No. 156644, Ju~ 28,
2008.
368 BAR REviEWER ON lABOR lAW
the latter, after reaching a certain age, agrees to sever his or her employment
1 Following Jaculbe, the retirement of petitioner in the 2010 case of
with the former.
d. By mutual agreement, employers may be granted the sole and
exclusive prerogative to retire employees at an earlier age or
after rendering a certain period of service.
This agreement may be stipulated in an employment contract or a CBA.
By entering into an employment contract containing such stipulation, the
employee is bound to adhere thereto. In the same vein, by their acceptance of
the CBA, the union and its members are obliged to abide by the commitments
and limitations they had agreed to cede to the employer. It is not repugnant to
the constitutional guarantee of security oftenure.2
Cainta Catholic Schoo! v. Cainta Catholic School Employees Union
[CCSEUJ/ where the Supreme Court upheld the exercise by the school of its
option to retire employees pursuant to the existing CBA where it is pmvided that
the school has the option to reiire an employee upon reaching the age limit
of sixty (60) or after having rendered at least twenty (20) years of service to
the .school, the last three (3) years of which must be continuous. Hence, the
tennination of employment of the employees, arising as it did from an exercise
of a management prerogative granted by the mutualiy-negotiated CBA between
the school and the union is valid.
In Pantranco North Express, Int. v. NLRC,4 the Supreme Court
upheld the validity of the CBA stipulation that allowed the employee to be
compulsorily retired upon reaching the age of sixty (60) "or upon completing
[25] years of service to [Pantranco]."
e. To be valid, retirement at an earlier age must be voluntarily
consented to by the employee.
In Jaculbe v. Silliman University,5 the Supreme Court ruled that in
order for retirement at an earlier age to be valid, it must be shown that the
employee's participation in the plan is voluntary. An employer is free to impose
a retirement age of less than 65 for as long as it has the employees' consent.
Stated conversely, employees are free to accept the employer's offer to lower the
retirement age if they feel they can get a better deal with the retirement plan
· presented by the employer.
1 Certado v. ~Inc, G.R. No.188154, 0!1 13, 2010 dliv;l ~v. PNB, G.R. No. 166198, July 17, 2009, 593
SCRA 195, 199; UWefsal Robila Sugar Mrng Ccxpa'albl {URSUMCOI v. cabaleda, G.R. No. 156644, Ju~ 28, 2008,
560SCRA 115,132.
2 Espejov. NLRC, G.RNo.112678, Mcrch 29, 1996,255SCRA430;SeealsoP<rltrmlNor1h Express, klc. v.NLRC, G.R
No. 95940, ~ 24, 1996,259 SCRA 161.
3 ~R No.151021,May4,2000.
4 G.R. No. 95940, Ju~24, 1996, 259 SCRA 161.
s G.R. No.156934, Mfdl16, 2007.
CHAPTER IV 369
POSf EMPLOYMENT
Lourdes Cercado v. Uniprom, Inc. 1 at the age of 47, after having served
respondent company for 22 years, pursuant to its Employees' Non-Contributory
Retirement Plan, which provides that employees who have rendered at least 20
years of service may be retired at the option of the company, was declared
illegal because it was not shown that she has given her consent thereto. Not even
an iota of voluntary acquiescence to respondent's early retirement age option is
attributable to petitioner. The assailed retirement plan was not embodied in a
CBA or in any employment contract or agreement assented to by petitioner and
her co-employees. On the contrary, it was unilaterally and compulsorily imposed
on them.
f. Retiring at an earlier age will amount to illegal dismissal if
employee did not consent thereto.
In the same cases of Jaculbe and Lourdes Cercado, having tenninated
the employee solely on the basis of a provision of a retirement plan which was
not freely assented to by the employee, the employer was held guilty of illegal
dismissal.
4. M!NIMUM YEARS OF SERVICE REQUffiEMENT.
a. Significance of five (S) years.
Five (5) years is the minimum years of service that must be rendered by
the employee before he can avail of the retirement benefits upon reaching
optional or compulsory retirement age under Article 302 [287].
But this period holds true only "in the absence of a retirement plan or
agreement providing for retirement benefits of employees in the establishment."
Hence, the employer and the employee are free to stipulate a different period in
the retirement plan, employment contract or CBA.
However, being in the nature of "minimum" requirement, the parties
cannot stipulate a period higher than five (5) years since this will run counter to
the intention of the law to grant retirement benefits not upon reaching the
''maximum" but merely the "minimum" requirement - a rule that obviously
favors the workers and therefore deserves to be construed for their benefit. ·
b. Components of the minimum 5-year service requirement.
The minimum length of service of at least five (5) years required for
entitlement to retirement pay under Article 302 [287) includes . authorized
absences and vacations, regular holidays, and mandatory fulfillment of a
military or civic duty. 2 In case, however, the business establishment has closed
its operations for sometime, only the period of actual service should be counted
GR No. 188154, Oct 13, 2010.
Sedioo 4.4, RUe II,~ R1Jes It the Retirement Pay Law.
 CHAI'TERIV 371
370 BAR REVIEWER ON lABOR lAW
POST EMPLOYMENT

and reckoned in computing the retiring employee's length of service. The period b. Underground mine employee.
1
of time when the business establishment was closed should not be included. An underground mine employee refers to any person employed to
c. The age and service requirements are cumulative; non- extract mineral deposits underground or to work in excavations or workings
compliance with one negates entitlement to the retirement such as shafts, winzes, tunnels, drifts, crosscuts, raises, working places whether
benefits. abandoned or in use beneath the earth's surface for the purpose of searching for
and extracting mineral deposits. 1
Simply stated, in the absence of any retirement plan or applicable
agreement, an employee must (1) retire when he is at least sixty (60) years of c. Different optional and compulsory retirement age.
age and (2) serve at least {5) years in the company to entitle him/her to the The optional retirement age of underground mine workers is ~ (50)
2
retirement benefits provided under the law.z years of age; while the compulsory retirement age is sixty (60) years old
Thus, where an employee like the petitioner in Padillo v. Rural Bank d. Minimum years of service requirement
of Nabunturan, Inc./ terminated his employment due to disease4 when he was To be entitled to retirement benefits, the underground mine worker
at 55 years of age, his claim for retirement benefits was not granted and instead, should have rendered service as such for at least five (5) years, in addition to the
4
he was simply awarded financial assistance of P75,000.00, exclusive of the age requirement. The minimum length of service of at least five (5) years
PlOO,OOO.OO benefit under the Philam Life retirement/insurance plans earlier required for entitlement to retirement pay shall include authorized absences and
taken out for the employees by respondent bank in anticipation of its possible vacations, holidays, and mandatory fulfillment of a military or civic duty. 5
closure and the concomitant severance of its personnel. In the absence of any
applicable contract or any evolved company policy, Padillo should have met the 6. E~11TLEMEI'i1 OF EMPLOYEES DISMISSEil FOR JUST CAUSE
age and tenure requirements set forth under Article 302 [287] of the Labor Code TO RETIREMENT BENEFITS.
to be entitled to the retirement benefits provided therein. Unfortunately, while a. General rule.
Padillo was able to cumply with the five (5) year tenure requirement- as he
served for twenty-nine (29) years -he, however, fell short with respect to the Management discretion may not be exercised arbitrarily or capriciously
sixty(60) year age requirement given that he was only fifty-five (55) years old especially with regards to the implementation of the retirement plan. As held in
when he retired. Razon, Jr. v. NLRC/ upon acceptance of employment, a contractual
relationship is established giving the employee an enforceable vested interest in
The 2014 case of Intel Technology Philippines, Inc. v. NLRC and
the retirement fund. Hence, the dismissed employee is entitled to the retirement
Jeremias Cabiles,S similarly held that if the retirement plan requires a minimum
benefits provided thereunder.
number of years of service as a pre-requisite to entitlement to retirement
benefits, the employee seeking such benefits should fully comply therewith. b. Cases where just cause termination was cited to validly deny
5. RETIREMENT OF UNDERGROUND MINE WORKERS. claim for retirement benefits.
a. Special treatment of underground mine workers. However, in a number of cases, the Supreme Court ruled that an
As a manifestation of concern for the welfare of underground mine employee who is dismissed for cause loses his right to claim for his retirement
workers, Article 302 [287] was amended by R.A. No. 8558.6 Department Order benefits.
No. 09, Series of 1998 was issued to implement this law.' ·· In San Miguel Corporation v. Lao,' an employee who was dismissed
for just cause was held not entitled to the retirement benefits under the
1 Santiago v. Bilallalfll Estate, G.R No. L·2268, Oct 20, 1950, 87 PhH. 538. company's retirement plan which concededly prohibits the award. of retirement
2 Padil v. Rua1 Bat of Naburitul<ul, klc., G.R No. 199338, Jan. 21, 2013.
3 G.R.No.199338,Jfll.21,2013.
~ ~ WCVA ~ AcOOentj with shatEimmem:rybss.
1
s G.R No. 200575,Feb. 5, 2014. Sedioo 1, Rule 11-A, lbil.
6 Enlilbi'An M. Amend'rg Artide 302 (287] of P.O. No. 442, as Amerxfed, OlleiWise KnoYm as Vle l1ixr CQde of the
2
Sedioo 2.1' !Uli~A, Ibid.
PtJiippiles by Reduci'9 the Re!iremenl kJe ct Undetgltlllld t.ft W<ners·m SMy (60) mFlly (50).' Thi5 was approved
3
Sec!ion 22, !Uli~A, Ibid.
4
oo Feb. 26, 1998. Article 302 [287], as anendedby RA No. 8558.
5
7 See Sectixl8,RIOO I~A. Rules Presa'llirl,) the Relilement kJe tr lblelgRuld Mile ~ees, llepa1mer¢ Older No. Sedioo 2.3, IU! 11-A, lbkl.
6
09, Series ct 1998 [tJay 4, 1998. This Oepment Older enurx:iated l1e ~iUs d RA No. 8558. Kwas issued G.R No. 80502, May 7, 1900, 185 SCRA 44.
oo May 4, 1998 but it elfedM!ywas made refroadive Ill M1l:h 22, 1998vdlen said l<fN 11m! i1to la're.
7
G.R No. 143136-37, Ju~ 11, 2002.

372 BAR REviEWER ON lABOR lAW
benefits to an employee dismissed for just cause, a proscription that binds the
parties to it.
Distinguishing Razon and San Miguel, the Supreme Court declared that
in Razon, the employer's refusal to give the employee his retirement benefits is
based on the provision of the retirement plan giving management wide
discretion to grant or not to grant retirement benefits, a prerogative that
obviously cannot be exercised arbitrarily or whimsically. But in San Miguel, the
retirement plan expressly prohibits the grant of retirement benefits in case of
dismissal for just cause. Hence, the employee is bound by such prohibition.
In the case of PLDT v. Bolso/ the same ruling in San Miguel was
made. Thus, it was held in this case that since the employee was dismissed fot
just cause, neither he nor his heirs can avail of the retirement benefits.
In the 2010 case of Philippine Airlines, Inc. v. NLRC,2 it was held
that private respondent's termination for cause thereby rendered nugatory
any entitlemeilt to mandatory or optional retirement pay that she might
have previously possessed."
In the 2013 case of Daabay v. Coca-Cola Bottlers Phils., Inc} the
Supreme Court relied 011 the above ruling in Philippine Airlines in denying the
claiin for retirement benefits of petitioner Daabay in view of his lawful dismissal
by Coca-Cola on the grounds of serious misconduct, breach of trust and loss of
confidence.
7. RETIREMENT BENEFITS VS. SEPARATION PAY.
a. Distinctions.
R~tirement
pay and separation pay are two distinct benefits granted
under the law. Their distinctions are as follows:
1. While both retirement pay and separation pay are fixed by law,
retirement pay differs from separation pay in that the former is paid by reason of
retirement; while the latter is required in the cases enumerated in Articles 298
[283] and 299 [284] of the Labor Code and as substitute remedy in cases where
reinstatement is not possible. 4
2. The purpose for the grant of retirement pay is to help the employee
enjoy the remaining years of his life thereby lessening the burden of worrying
I G.RNo.159701,Au.l.17,2007.
2 GR »:1.123294, Oct. 20, 2010,634 SCRA 18.
3 GR No. 199890, Aug. 19, 2013.
4 Aquilov.NLRC,G.R.No.87653,Feb.11, 1992.
...
: .}
CHAPTER IV 373
POST EMPLOYMENT
for his financial support. It is also a form of reward for the employee's loyalty
and service to the employer. 1 ·
Separation pay, on the other hand, is designed as a wherewithal during
the period that an employee is looking for another employment after his
termination. 2
b. When both retirement pay and separation pay must be paid.
There are cases where both retirement pay and separation pay for
authorized cause termination were awarded and ordered paid. The most eloquent
example of this situation is Aquino v. NLRC/ where the Supreme Court
ordered the payment to the retrenched employees of both the separation pay for
retrenchment embodied in the CBA as well as the retirement pay provided under
a separate Retirement Plan. The argument of the company that it has more than
complied with the mandate of the law on retrenchment by paying separation pay
double that required by the Labor Code (at the rate of one [l] month pay instead
of the one-half [Y2] month. pay per year of service) was not favorably considered
by the Supreme Court because the employees were not pleading for generosity
but demanding their rights embodied in the CBA which was the result of
negotiations between the company and the employees. The company's counsel
should have made it a point to categorically provide in the Retirement Plan and
the CBA that an employee who had received separation pay would no longer be
entitled to retirement benefits. Or to put it more plainly, collection of retirement
benefits was prohibited if the employee had already received separation pay.
This, however, he failed to do.
c. When separation pay may be charged to retirement pay.
In Ford Philippines Salaried Employees Association v. NLRC, 4 a
case decided before the advent ofR.A. No. 7641, the Supreme Court ruled that
if it is provided in the retirement plan of the company that the retirement, death
and disability benefits paid in the plan are considered integrated with and in lieu
of termination benefits under the Labor Code, then the retirement fund may be
validly used to pay such termination or separation pay because of closure of
business.
d. When employees are entitled to only one form of benefit
In Cipriano v. San Miguel Corporation,5 it was ruled that in case the
retirement plan of the company provides that the employee shall be entitled to
1
Aquino v. NLRC, supm; IHJillil v. WCC, G.R. No. L-45785, Mrth 21, 1988, 159 SCRA 91, 99. .
2 kl.
3
G.R No. 87S53,Feb. 11, 1992
4
G.R No. 75347, Dec. 11,1987.
5
GR No. L-24n4, Aug. 21,1968.
374 BAR REVIEWER ON lABOR lAW
CHAPTER IV 375
PO;r EMPLOYMENT
either the retirement benefit provided therein or the separation pay provided by
law, whichever is higher, the employee cannot be entitled to both benefits. 1 1.
AMOUNT OF RETIREMENT PAY
In the case of Zuellig Pharma Corporation v. Sibai,Z respondents (36
l. COMPONENTS OF RETIREMENT PAY.
in all), were terminated on the ground of redundancy. They were properly
notified of their termination and were paid their respective separation pay in a. The Superioritv ofBenefits Rule: Article 302 [287] is not
accordance with the CBA3 for which respondents individually signed Release controlling but the retirement plan in the CBA or employment
and Quitclaim in full settlement of all claims arising from their employment contract.
with Zuellig. Controversy arose when respondents later on filed separate At the outset, it must be underscored that once an employee retires, it is
Complaints (which were later consolidated) before the Labor Arbiter for not Article 302 [287] that is controlling but the retirement plan under the CBA
payment of retirement gratuity and monetary equivalent of their unused sick · or other applicable employment contract. 1 Article 302 [287] becomes relevant
leave on top of the separation pay already given them. Respondents claimed that only in the matter of ensuring that the retirement benefits are not less than those
they are still entitled to retirement benefits and that their receipt of separation provided therein.
pay and execution of Release and Quitclaim do not preclude pursuing such
claim. In ruling against respondents, the Supreme Court declared that the b. Instances when Article 302 [287] applies.
provision in the CBA is an effective bar to the availment of retirement benefits Article 302 [287] only applies in a situation where:
once the employees have chosen separation pay or vice versa. Thus, having (1) there is no CBA or other applicable employment contract
chosen and accepted redundancy pay, respondents are thus precluded from providing for retirement benefits for an employee; or
seeking payment of retirement pay under the CBA, which enunciates express
prohibition against "double recovery." (2) there is a CBA or other applicable employment contract providing
for retirement benefits for an employee, but it is below the
8. RETffiEMENT PAY UNDER THE LABOR CODE OR RETIREMENT requirements set by law. 2
PLAN VS. RETIREMENT PAY UNDER SSS, GSIS AND PAG-ffiiG.
The reason for the first situation is to prevent the absurd situation
a. SSS retirement pal is separate and distinct from the retirement pay where an employee, who is otherwise deserving, is denied retirement benefit5 by
under the Labor Code,5 retirement policy or plan of the employer or the nefarious scheme of employers in. !l0t providing for retirement benefits for
underaCBA. their employees. The reason for the second situation is expressed in the Latin
b. GSIS retirement benefits6 apply to government employees only. maxim pacta prt11ata juri publico derogare non possunt. Private contracts
Cailll.~t derogate from the public law. "Ang kasunduang pribado ay hindi
c. The coverage of the Pag-IBIG Fund7 may be treated as a substitute makasisira sa batas publiko.'.;J
retirement benefit for the employee within the purview of the Labor c. One-half (Yz) month salary.
Code.
In the absence of a retirement plan or agreement providing for
retirement benefits of employees in the establishment; an employee, upon
1 See also Cruz v. ~ Global Conmmications, Ire, G.R No. 141868, May 28, .2004; Salanoo v. Assodalloo d reaching the optional or compulsory retirement age specified in Article 302
WemabJal ShWhgliles, klc., G.R NO. 156317, ~ 26, 2005; Slaez, Jr. v. Nali<lM SEe! Ccxp., G.R No. 150180, [287], shall be entitled to retirement pay equivalent to at least one-half (Yz)
Oct 17, 2008; Sa1tls v. SeMer Phifppiles.lnc., GR. No.166377, Nov. 28,2008.
2 G.R No. 173587, JtJy 15, 2013.
3 Section~). Artide 'tN [Retirement Glab.Jlyj thereof.
4 lbJer Sedion 12-8, RA. No. 8282, o«terMse kooM1 as l1e "Soda Sec:uri!y Mit 199T (bmeltf kooM1 as lhe "Social
Sealitt Law' ftA. No. 1161, as anendedD. anended, prMjed l1at such ~ does I'd i1 flTf W<1f IXXll!aYene M exiilir,j CBA or other~ llilreemenl.
5 Specli:atJ oodef Artide 302 [287) llereof. Thus, lhe P!Q-IBIG Fllld 131 be c:onsklered as asubsllute retirement pSI d lhe ~lor ils eflllbiees pO'.'ided Ita
6 Section 13,AA No.8291, oftlefwisekooM1 as lhe"GMmmentSe!Vice lnsunn:e~Actd199r(l'onneltf P.o. No. m sdleme dlas benefits m ae nm lhat~ at least equal'> 11e berds under RA. No. 7641. 1sail scheme
1146, ~ kooM1 as 'The ReVISed Goveo1nM mrance M of 1977']. HaNever, see Postigo v. Ph~ !WcMdes lor less 1hat v.t1a! 1he ~is entitled 1D under RA. No. 7641, ihe ~is liable to pay lhe dilfe'ence.
TIAlen:Bosis Society, klc., G.R No. 155146, Januay 24, 2006]. v.l1ere oo1Jk7tees covered by lhe GSIS law are also en6tled 1
Oxalesv. Uni1edl.alaalr.re;,lnc, G.R No.152991,.J!!ft21. 2008. ·
b retnmen! pay under lhe l.llboc Code because d. M emJf1YIIhe i1S'ple(aOOn of lhetw. 2
Obuscn v. Phippile NaW Bri. G.R No. 181178, JtJy 26, 2010; See also EJe;: v. Philippile Ames, tlc., G.R No.
7 ~proWled i1 RA. No. 7742, [Ajlpfwed oo Jooe 17, 1994J, apmate efl1lloyer shall Mv<e lheoplion b teatlle ~ d 181995, July 16,2012.
1he Pa,t!BIG Fund as asubstitute retirement beneli lor lhe ellllioYee concemed mlhe ptJView d 1he Labor Code as 3
Translalion d.lhis maxin kl ~ was made by 11e Supreme Court i1sef il its dfx:isioo illhe case d ~ v. United
l..abaataies, Inc., G.R No. 1,52991, July 21, 2008.
376 SAR REVIEWER ON lABOR lAW
month salary for every year of service, a fraction of at least six (6) months being
considered as one (1) whole year. 1 · 1112 of the 5-day service incentive leave. 1
d. Components of one-half(~) month salary.
For purposes of determining the minimum retirement pay due an
employee, the term "one-half month salary" shall include all of the following:
(l) Fifteen (15) days salarv of the employee based on his latest
salary rate. The term "salary" includes all remunerations paid by
an employer to his employees for services rendered during normal
working days and hours, whether such payments are fixed or
ascertained on a time, task, piece or commission basis, or other
method of calculating the same, and includes the fair and
reasonable value, as determined by the DOLE Secretary, of food,
lodging or other facilities customarily furnished by the employer to
his employees. The term does not include cost of living
allowances, profit-sharing payments, and other monetary benefits
which are not considered as part of or integrated into the regular
salary of the employees;
(2) The cash equivalent of.five (5) days of service incentive leave;
(3) One-twelfth {1/12) ofthe 13'h month pay due the employee; and
(4) All other benefits that the employer and employee may agree
upon that should be included in the computation of the employee's
retirement pay. 2 .
e. "One-half ('lz) month salary" means 22.5 days.
To dispel. any further confusion on the meaning of "one-half {~)
month salary" provided in Article 302 [287], the Supreme Court, in the case of
Capitol Wireless, Inc. v. Confesor, JG.R. No. 117174, November 13, 1996,
264 SCRA 68, 77), simplified its computation by declaring that it means the
total of "22.5 days" arrived at after adding 15 days plus 2.5 days representing
one-twelfth [1112] of the 13lh month pay plus S days of service incentive leave.
Evidently, the law expanded the concept of "one-half month salary" from the
usual one-month salary divided by two.3
2. FIVE (5) DAYS OF SERVICE INCENTIVE LEAVE, HOW
RECKONED.
The five (5) days of service incentive leave provided under Article 302
[287] as part of the retirement benefit of one-half(~) month salary for every
I Mk:le 302 [287), I.OOor Code; Sedm 5.1, Rule II, ~ RuMls rJ lhe Reliement Pay law; l.aba' Mis:ty 00
. ReirementPaylaNdaEdOct. 24,199619sood by SeaWry t.e.:xwdo A.~~.
2 MX:1e 302 j287),uw Code; Section 51, Rule II, ~lemenlilg Rules d lle Retirement Pay Law.
3 t.mAcMsolyoo Re!i'emeotPaylawdated Oct 24,1996, issued by SecrelalyleooardoA. Quis!lnting.
CHAPTER IV
377
Posr EMPLOYMENT
year of service should be paid in full. It should not be computed on the basis of
·
3. 1/12 OF 13m MONTH PAY AND 5 DAYS OF SERVICE INCENTIVE
LEAVE (SIL) SHOULD NOT BE INCLUDED IF THE EMPLOYEE
WAS NOT ENTITLED TO 13m MONTH PAY AND SIL DURING HIS
EMPLOYMENT.
Supposing the retiring employee, by reason of the nature of his work,
was not entitled to 131h month pay or to the SIL pay pursuant to the exceptions
mentioned in the 13th Month Pay Law and the Labor Code, should he be paid
upon retirement, in addition to the salary equivalent to fifteen (15) days, the
additional2.5 days representing one-twelfth [1/12] of the 13lh month pay as well
as the five (5) days representing the service incentive leave for a total of 22.5
days?
This question was answered in the negative in R & E Transport, Inc.
v. Latag/ The Supreme Court in this case ruled that employees who are not
entitled to 13\b month pay and SIL pay while still working should not be paid the
entire "22.5 days" but orJy the fifteen (15) days salary. In other words, the
additional2.5 days representing one-twelfth (1/12] of the 13th month pay and the
five {5) days of SIL should not be included as part of the retirement benefits.
The employee in this case was a taxi driver who was being paid on the
"boundary" system basis. It was undisputed that he was entitled to retirement
benefits after working for fourteen (14) years with R & E Transport, Inc.
However, he was not entitled to the 13th month pay since Section 3 of the Rules
and Regulations Implementing P.D. No. 85tl exempts from its coverage
employers of those who are paid on purely boundary basis. He was also not
entitled to the 5-day service incentive ieave pay pursuant to the Rules to
4
Implement the Labor Code which expressly excepts field personnel and other
employees whQ~~ perfonnance is unsupervised by the employer. 5
4. DISTINCI'ION BETWEEN DRIVERS PAID ON "BOUNDARY
SYSTEM" AND CONDUCTORS PAID ON "COMMISSION" BASIS.
The said R & E Transport case should be di~tiguished from the 2010
case of Serrano v. Severino Santos Tran~6 which involves a bus conductor
(petitioner) who worked for 14 years for respondent bus company which did not
adopt any retirement scheme. It was held herein that even if petitioner as bus
I ~ Serutt Seritces,lnc. v. Cabot!je, G.R No. 147993, July 21, 2006.
2
G.R. No.155214, Feb. 13,2004.
3
Granting lhe 13~ M:lnth Pay.
4
See Section 1of Rule V. Book Ill thereof.
5
See also Article 82 of the labor Code.
6
G.R. No.187698, Aug. 9, 2010.
378 BAR REviEWER ON lABOR lAW
CHAPTER IV
POST EMPLOYMHIT 379
conductor was paid on commission basis, he falls within the coverage of RA. of one-hii!f (Yz) month salary are the same as those prescribed in Article 302
. i
7641 and its implementing rules. This means that his retirement pay should [287] as discussed above. 1
include the cash equivalent of the 5-day SIL and 1/ 12 of the 13th month pay for a
total of22.5 days. The affirmance by u'ie.Court of Appeals of the reliance by the I 2.
NLRC on R & E Transport case was held erroneouS. For purposes of applying RETIREMENT BENEFITS OF
1
the law on SIL as well as on retirement, there is a difference between drivers i WORKERS PAID BY RESULTS
paid under the "boundary system" and conductors paid on commission basis. !
'
This is so because in practice, taxi drivers do not receive fixed wages. They 1. ONE-HALF MONTH SALARY OF EMPLOYEES WHO ARE PAID
BY RESULTS.
retain only those sums in excess of the "boundary" or fee they pay to the owners
or operators of the vehicles. Conductors, on the other hand, are paid a certain For covered workers who are paid by results and do not have a fixed
percentage of the bus' earnings for the day. It bears emphasis that under P.O. monthly rate, the basis for the determination of the salary for fifteen (15) days
No. 851 and the SIL Law, the exclusion from its coverage of workers who are shall be their average daily salary (ADS). The ADS is the average salary for the
paid on a purely commission basis is only with respect to field personnel. last twelve (12) months reckoned from the date of their retirement, divided by
the number of actual working days in that particular period_z
The earlier case of Auto Bus Transport Systems, Inc., v. Bautista/ 2. PROVISION IN THE IMPLEMENTING RULES.
clarifies that an employee who is paid on purely commission basis is entitled to
S!L. Section 8, Rule VII-A, Book III of the Rules to Implement the Labor
Code provides that:
5. CONTRIBUTORY OR NON-CONTRIBUTORY RETIREMENT "(a) On petition of any interested party, or upon its
PLAN. initiative, the Department of Labor shall use all available
a. Right to contributory retirement plan. devices, including the use of time and motion studies and
consultation with representatives of employers' and workers'
Where both the employer and the employee contribute to a retirement organizations, to determine whether the employees in any
fund in accordance with a CBA or other applicable employment contract, the industry or enterprise are being compensated in accordance
employer's total contribution thereto *ould not be less than the total retirement with the minimum wage requirements of this Rule.
benefits to which the employee would have been entitled had there been no such "(b) The basis for the establishment of rates for piece,
retirement fund. In case the employer's contribution is less than the retirement output or contract work shall be the performance of an
benefits provided under the law, the employer should pay the deficiency. 2 ordinary worker of minimum skill or ability.
b. Right to non-contributory retirement plan. "(c) An ordinary worker of minimum skill or ability
The . employees have a vested and demandable right to a non- is the average worker of the lowest producing group
contributory retirement plan. It is an existing benefit voluntarily granted to them representing fifty percent (50%) of the total number of
by their employer. The latter may not unilaterally withdraw, eliminate or employees engaged in similar employment in a particular
diminish such benefits.3 establishment, excluding learners, apprentices and
handicapped workers employed therein.
6. RETIREMENT BENEFITS OF UNDERGROUND MINE WORKERS.
"(d) Where the output rates established by the

I
The retirement benefits to which an underground mine worker is
employer do not conform with the standards prescribed herein,
entitled shall be the retirement benefits provided under Article 302 [287] of the
or with the rates prescribed by the Department of Labor in an
Labor Code, as amended. 4 The components of the retirement benefits consisting
appropriate order, the employees shall be entitled to the
I difference between the amount to which they are entitled to
1
2
3
G.R No. 156367, Mly 16, 2005, 458 SCRA 578, 587-588.
Section 3.3, IUl !1, lfr4llementil9Rules oftheRetirementPayLaw.
Neslle ~. klc. v. NLRC, G.R. No. 91231, Feb. 4, 1991; Razon, v. NLRC, G.R No. 80502, Mly 7, 1990; Republic
C<:cren! Cclpolalkwl v. ~ PMel li Arbitram, G.R. No. 89766, Feb. 19, 1990; T~ v. l.ecgildo, G.R No. L-
I .
57636,May16, 1983, 122SC'RA267. 1 Sedil142, Rule I~A. Ibid.
~ Sedion4.1, rue I~A. w. 2 Sedioo 5.3, !Ulll, Ibid.
g8o BAR REVIEWER ON lABOR lAW CHArTERV g8t
MANAGEMENT PREROGATIVES

receive under such prescribed standards or rates and that

actually paid them by the employer."' CHAPTER FIVE
3. UNDERGROUND MINE EMPLOYEES PAID BY RESULTS. ~AGEMENTPREROGATNES
The rule mentioned above is the same for underground mine
employees. 2 TOPICS PER SYLLABUS
3.
RETIREMENT BENEFITS OF PART-TIME WORKERS v.
MANAGEMENT PREROGATIVES
1. PART-TIME WORKERS ARE ENTITLED TO RETIREMENT
BENEFITS. A. Discipline
There can be no question that part-time workers are also entitled to B. Transfer of Employees
retirement pay of "one-half month salary" for every year of service under Article C. Productivity Standard
302 [287], as amended by Republic Act No. 7641, after satisfying the following D. Bonus
conditions precedent for optional retirement: (a) there is no retirement pian E. Change of Working Hours
between the employer and employee; (b) the employee should have reached the F. Marriage Between Emp!oyees of Competitor-Employers
age of sixty (60) years; and (c) shou\4 have rendered at least five (5) years of G. Post-Employment Ban
service with the employer. Meanwhile, the compulsory retirement age under the ------------------------
law is sixty-five (65) years. 3
I.
2. HOW COMPUTED.
~~AGEMENTPREROGATnffiS
Applying, therefore, the principles under Article 302 [287], as
amended, 4 the components of retirement benefits of part-time workers may 1. RIGHT OF EMPLOYER TO REGULATE ALL ASPECTS OF
likewise be computed at least in proportion to the salary and related benefits due EMPLOYMENT.
them. It is ~
well-recognized principle that employers have the right and
?rerogative to r~gulate_ every ~pect ~f their ~usiness, fen~rall~ ~itho~t ~estraint
maccordance wtth therr own dtscretlon and JUdgment. ThiS pnvtlege ts inherent
-=~---oOo---
in the right of employers to control and manage their enterprise
effectively. 1 Such aspects of employment include hiring, work assignments,
working methods, time, place and manner of work, tools to be used, processes to
be followed, supervision of workers, working regulations, transfer of employees,
lay-off of workers and the discipline, dismissal and recall of workers. 3
Our laws and jurisprudence extend recognition and respect to such
exercise by the employers of their rights and prerogatives. For this reason,
courts often decline to interfere in legitimate business decisions of
employers. In fact, labor laws discourage interference in employers' judgment

1 Sedioo 8, Rule VIl-A, Boci Ill, Rules 1D ~tile labor Code.

1
2 Sedioo 4.3, !l'Je I~A. Rules Presczili1g tile Retiieme!l! fl:;e fci Unde!gnml ~ Employees, Depa1ment ~ No. 09, Deles, Jr. v. NlRC, G.R No. 121348, March 9, 2000; C!9llo v. NI..RC, G:R. No. 104319, Jl.lle 17, 1999; Autubus WOikels'
~ c: 1998 [May 4, 1998. 2
Union v. Nl.RC, G.R No.117~; Ji,re 26, 1998, 291 SCRA219, 228.
Mendoza v. Rural Bank ri lu<ban, G.R. No. 155421, 07 Ju~ 2004.
..
~ txplanat01y Bulletin on Part-Time Employment dated Jan. 02, 1996 issued by Acti"B DCU: Secrelafy Jose S. 1 Pllif!)pine Airliles, Inc. v. NRC, G.R No. 115785, Aug. 4, 2000; OSS Seauity Cl1d Allied SeNices, Inc. v. Nt.RC, G.R No.
Blillantes.
4 As amended by R.A. No. 7641. 112752, Feb. 9, 2000, 325 SCRA 157.
3l:S4 BAR REVIEWER ON lABOR lAW
5. RIGHT TO PRESCRIBE COMPANY RULES AND REGULATIONS
OR CODE OF DISCIPLINE.
The prerogative of an employer to prescnoe reasonable rules and
regulations necessary or proper for the conduct of its business and to provide
certain disciplinary measures in order to implement said rules and to assure that
the same would be complied with has been recognized in this jurisdiction. 1
6. RIGHT TO IMPOSE PENALTY; PROPORTIONALITY RULE.
The employer may lawfully impose appropriate penalties on erring
workers pursuant to its company rules and regulations. 2 However, the
"proportionality rule" should be observed. This means that infractions
committed by an employee should merit only the corresponding sanction
demanded by the circumstances. The penalty must be commensurate with the
gravity of the offense, the act, conduct or omission imputed to the employee and
imposed in connection with the employer's disciplinary authority. 3 Accordingly,
in determining the validity of dismissal as a form of penalty, the charges for
which an employee is being administratively cited must be of such natu!'e that
would merit the imposition of the said supreme penalty. Dismissal should not be
imposed if it is unduly harsh and grossly disproportionate to the charges. 4
7. RIGHT TO CHOOSE WHICH PENALTY TO IMPOSE.
The matter of imposing the appropriate penalty depends on the
employer. It is certainly within the employer's prerogative to impose on the
erring employee what it considered the appropriate penalty under the
circumstances pursuant to its company rules and regulations. Like all other
business enterprises, its prerogative to discipline its employees and to impose
appropriate penalties on erring workers pursuant to company rules and
regulations must be respected. 5
8. RIGHT TO IMPOSE HEAVIER PENALTY THAN WHAT THE
COMPANY RULES PRESCRIBE.
The einployer has the right to impose a heavier penalty than that
prescribed in the company rules and regulations if circumstances warrant the
imposition thereof. The fact that the offense was committed for the first time or
has not resulted in any prejudice to the company was held not to be a valid
excuse. No employer may rationally be expected to continue in employment a
person whose lack of morals, respect and loyalty to his employer, regard for his
1
Phimcolndustrles,lnc.v.NLRC,G.R.No.118041,June11, 1997.
2 flliiWi1e Aililes, Inc. v. NLRC, G.R No. 115785, Aug. 4, 2000, 337 SCRA 286.
3 Ferra v. CA, G.R No. 133259, Feb. 10, 2000; Milia t.t:mooal Partt Cemeey, Inc. v. Pooado, G.R No. 167118, June 15,
20C6.
4 Feixv. t-A.RC, G.R. No. 148256, Nov. 17, 2004; Glfurez v. ~a- SeMl;J Machile Con'!>any, G.R No. 140982, Sepl23,
2003.
s China Banking Corporation v. Borromeo, G.R No. 156515, Oct. 19,2004.
L
. ..
CHAPTERV 385
MANAGEMEN:r PREROGATIVES
employer's rules, and appreciation of the dignity and responsibility of his office,
has so plainly and completely been bared. Company rules and regulations
cannot operate to altogether negate the employer's prerogative and
responsibility to determine and declare whether or not facts not explicitly set out
in the rules may and do constitute such serious misconduct as to justify the
dismissal of the employee or the imposition of sanctions heavier than those
specifically and expressly prescribed therein. This is dictated by logic,
otherwise, the rules, literally applied, would result in absurdity; grave offenses,
e.g., rape, W()uld be penalized by mere suspension, this, despite the heavier
penalty provided therefor by the Labor Code or otherwise dictated by common
sense. 1
In Cruz v. Coca-Cola Bottlers Phils., Inc} admittedly, the violation
of the company rules committed by petitioner is punishable with the penalty of
suspension for the first offense. However, the Supreme Court affirmed the
validity of his dismissal because respondent company has presented evidence
showing that p.:ltitioner has a record of other violations from as far back as 1986.
B.
TRANSFER OF EMPLOYEES
I. CONCEPT.
a. Two (2) kinds oftransfer. - A transfer means a movement:
I. From one position to another of equivalent rank, level or salary,
3
without a break in the service; or
4
2. From one office to another within the same business establishment.
b. Other forms of transfer. - The prerogative to transfer is broad
enough to include the following prerogatives that involve movements of
personnel:
I. Prerogative to reorganize;
2. Prerogative to promote; and
3. Prerogative to demote.
2. SOME PRINCIPLES ON THE PREROGATIVE TO TRANSFER
EMPLOYEES.
• The exercise of the prerogative to transfer or assign employees from one
office or area of operation to another is valid provided there is no demotion
in rank or diminution of salary, benefits and other privileges. The transfer
1 Stanford.Mtcrosystems, Inc. v. NLRC, G.R. No.l-74187, Jan. 28, 1988.
2 G;R No. 165586,June 15,2005. .
3 <:oca-cola£ot!le!s Ph~,k1c. v. DeiVIII<r, GR No. ~1. Oct.Ul10.
4 SentK1el Security~. k1c. v. NLRC, G.R No. 122468, Si!ilt S, m&;Blle Daily Colpaation v. NLRC, GR No. 129843,
Sepl14, 1999.
.
386 BAR REviEWER ON lABOR lAW
should not be motivated by discrimination or made in bad faith or effected
1 • The refusal of an employee to be transferred may be held justified if there is
as a form of punishment or demotion without sufficient cause.
• The Court cannot look into the wisdom of the transfer of an employee?
• Commitment made by the employee in the employment contract to be re-
assigned anywhere in the Philippines is binding on him. 3
• Even if the employee is performing well in his present assignment,
management may reassign him to a new post. 4
• The transfer of an employee may constitute constructive dismissal when it
amounts to an involuntary resignation resorted to when continued
employment is rendered impossible, unreasonable or unlikely; when there is
a demotion in rank and/or a diminution in pay; or when a clear
discrimination, insensibility or disdain by the employer becomes unbearable
to the employee leaving him with no option but to forego with his continued
5
employment.
• More specifically, the following three (3) conditions must concur in order
for the transfer to be considered as constructive dismissal: ·
l) When the transfer is unreasonable, inconvenient or prejudicial to the
employee;
2) When the transfer involves a demotion in rank or diminution of salaries,
benefits and other privileges; and
3) When the employer performs a clear act of discrimination, insensibility,
or disdain towards the employee, which forecloses any choice by the
latter except to forego his continued employment.6
• Transfer made in compliance with a government order does not amount to
constructive dismissal. 7
• Burden of proof in transfer cases is on the employer. 8
• An employee cannot claim any vested right to his position. While an
employee may have a right to security of tenure, this does not give her such
a vested right to her position as would deprive the employer ofits
prerogative to change her assignment or transfer her where her service will
be most beneficial to the employer's interest.
9 position is valid. 1
1 fll1an'OOa 8ld Uppll, k1c. v. Allayda, Jr. G.R. No. 172724, hG. 23, 2010.
2 ld.
3 ld.
4 ld.; See also Abbd!Lmaatcries {Phils.), klc. v. M.RC, G.R No. L-76959, Ocl12, 1987, 154 SCRA 713.
5 Fknn IW v. Nl.RC, G.R No.155264, MayS, 2005; We'tlklza Y. Rilal Bri II l..ucbal, G.R No.155421, Ju~ 7, 2004;
&ilao v. Cinech SysEm Coosm:tixl, klc., G.R No. 171392, Oct. 30, 2000; 8lle Daiy Capcxation v. NlRC, GR No.
129843, Sepl14, 1999, 314 SCRA 401.
s Tmv. CA. G.R No. 171764, June 8, 2007; Mendoza v. Rulal Bri d l..ucbM, G.R. No. 155421, Ju~ 7, 2004.
7 BisiJMin;lgaga.o~asaTryoov.NLRC,G.RNo.151309,0ci.15,3Xla.
8 The~ AAle!tall.le and General mmce Co. v. ~G. R No. 156963, Nov. 11, 2004; Suldao v. Cinech
St*m~. Inc., G.R No.171392, Oct. 30,2005.
9 OSS Seariy &Alied SeM::es, Inc. v. NLRC, G.R No. 112752, Feb. 9, 2000; See also Ta~ v. NLRC, GR. No. 128290,
Nov. 24, 1998, 299 SCRA 169, 180.
L
.
.
CHArTER V 387
MANAGEMENTPREROGATN<S
a showing that the transfer was directed by the employer under questionable
circumstances. For instance, the transfer of employees during the height of
their union's concerted activities in the company where they were active
participants is illegal. 1
• An employee who refuses to be transferred, when such transfer is valid, is
guilty of insubordination or willful disobedience of a lawful order of an
employer under Article 297 [282] of the Labor Code.Z For example: The
dismissal of a medical representative who acceded in his employment
application to be assigned anywhere in the Philippines but later refused to
be transferred from Manila to a provincial assignment, was held valid. The
reason is that when he applied and was accepted for the job, he agreed to
the policy of the company regarding assignment anywhere in the
Philippines as demanded by his employer's business operation.3
• Refusal to transfer due to parental obligations, additional expenses,
inconvenience, hardship aud anguish is not v~lid. An employee could not
validly refuse lawful orders to transfer based on these grounds.
4
• Refusal to transfer to overseas assignment is valid.5
• Refusal to transfer consequent to promotion is valid. 6
7
• Transfer pursuant to the company policy of preventing connivance is valid.
• Transfer in accordance with pre--determined and established office policy
8
and practice is valid.
• Rotation among employees of banks as required in the Manual of
Regulations for Banks and Other Financial Intermediaries issued by the
9
Bangko Sentral ng Pilipinas is valid.
• Transfer due to the standard operating procedure of rotating employees
10
from the day shift to the night shift is valid.
11
• Transfer to avoid conflict of interest is valid.
• A transfer from one position to another occasioned by the abolition of the
1 Yuco Chemical Industries, Inc. v. Mnistry of Labor and fl!llloymen~ {;.R·No. 7565~. May 28, 1990.
Pharmacia and Upjohn, Inc. v. Albayda, Jr., G.R No. 172724, Aug. 23, 2010; SM Miguel Corp. v. Pontillas, G.R
4
No.155178, May7,2008.
3 Abbott laboratories, Inc. v. NLRC, G.R. No. 76959, Oct 12,1987.
4 ABied Balkb:J Gapolabl Y. CA, GR No. 144412, Nov. 18, 2003; lion'leaMiels Savn;)s 8ld loan Associa&xl, Inc. v.
NLRC, GR. No. 97f1if, Se!t 26, 1996, 262 SCRA 400.
5 A!rled~ QxpcJamv. CA. GR. No. 144412, Nov.18, 2003);DJschv. N.RC, GR No. L-51182, .kty'5, 1983,208
Ptll.259; 123 SCRA 296.
Dosd1 v. NLRC, [supm.
Ciiema,~andRadbEntelfainmentFreeWakeJSv.tiR, GR. No.L-19879,Dec.17, 1966, 18SCRA 1008.
e Phil'ippile kldusiM SeaJity ~ v. Dapilon, G.R. ~- 127421, Dec. 8, 1999, 320 SCRA 124, 138.
9 AUied Banking Colporation v. CA, G.R No. 144412, Nov. 18,2003.
1° Castillov. CIR, G.R Nos.L-26124 and L-32725, May 29, 1971,39 SCRA 75.
11 D.lncmAssocialiondDetaiJman.PTGWOv. GlaxoWeloomePhilippine;,1!1C.,GR No.162994, Sept 17,2004.
 CHAPTERV 389
388 liAR REviEWER ON lABOR lAW MANAGEMENT PREROGATIVES

in the nature of a gift or reward. Any person may refuse to accept

1 Reassignment and transfer pending investigation of irregularities is valid?
a gift or reward. Such refusal to be promoted is a valid exercise
1
3. PREROGATIVE TO REORGANIZE. of such right and he cannot be punished therefor.
1 An employee cannot be promoted without his consent even if
• Implementation of a job evaluation program or a reorganization is valid for merely as a result of a transfer. A transfer that results in
as long as it is not contrary to law, morals or public policl and it is carried promotion or demotion, advancement or reduction or a transfer
out in good faith. 4 that aims to lure the employee away from his permanent position
• If the purpose of a reorganization is to be achieved, changes in the positions· 2
cannot be done without his consent.
and rankings of the employees should be expected. To insist on one's old 1 An employee cannot be dismissed because of his refusal to be
position and ranking after a reorganization would render such endeavor promoted. It cannot amount to insubordination or willful
ineffectual. 5 disobedience of a lawful order of the employer.
3
• It is hard to accept the claim that an employer would go through all the 1 Employer's decision on whether to promote an employee or not is
expenditure and effort incidental and necessary to a reorganization just to valid for as long as it does not appear to have been actuated by
dismiss a single employee whom they no longer deemed desirable. 6 bad faith.
4

• Reorganization does not necessarily give rise to promotional increases. 7
4. PREROGATIVE TO PROMOTE.
a. Promotion, defined.
Promotion is the advancement from one position to another involving
increase in duties and responsibilities as authorized by law and usually
accompanied by an increase in compensation and benefits. 8
b. Transfer vs. Promotion.
Promotion denotes a scalar ascent of an officer or an employee to
another position, higher either in rank or salary; while transfer involves lateral
movement from on~;: position to another of equivalent leve~ rank or salary.9
c. Some principles on promotion.
• An employee has the right to refuse promotion. There is no law
which compels an employee to accept a promotion. Promotion Is
1 ~8edric~V.Fiii1Za,G.RNo.15B606,Mcrch9,2004;~Brii"gCapcrablv.NI.RC,G.RNo.
102467, J\l1e 13, 1997, 339 Phi. 541.
2 1:Wi11 v. TheCA alii BagOO Cdleges foll1dabl, GR. No. 164893, Mill::h 1, 2007; Cmdla8l Food cap. v. N..RC,
G.R No. 118647, Sept 23,1999,315 SCRA 129; 373 Phi 751.762.
3 lbijkoog alii Shqhai Bil1ki1g Corpaaloo ~ tm1 v. NLRC, G.R No. 125038, NaJ. 6, 1997, 281 SCRA
SOO;See also Naj~ Narurruo sa Dasuceco-Na!OOa Federatioo d IJiJa' (tW.W)MR) v. Davao Suga' Cen:Ja
Co., k1c.. GR. No.145848,Aug.0,2003.
4 SCA Hygn Procb:ls Corp. ~ AssocialioofFW v. SCA H)>Jn Pnxflds Corp., GR. No. 182877, hlg. 9,
2010.
5 Anieta v. NLRC, G.R No. 126230, Sept18, 1997, 279 SCRA 326.
6 Ibid.
7
SCA Hygiene Pnxfuds Corp. Eirplajees Associali:xrFFW v. SCA Hygiene Pnxfucls Corp., GR. No. 182877, Aug. 9,
2010.
8
CoCa-Coo Bottlers ~.Inc. v. Del Vilar, GR. No. 163091, Oct 6, 2010; Mbes v. &.Ddo, G.R No.l-23281, Aug.
10, 1967, 20 SCRA 954, 127 Phi. 370, 378.
9 t.llilesv. Subido, G.R No. L-23281,Aug.10,1967,20 SCRA954,127 Phi. 370,378.
i
~
5. PREROGATIVE TO DEMOTE.
a. Concept
Demotion involves a situation where an employee is relegated to a
subordinate or less important position constituting a reduction to a lower grade
or rank with a corresponding decrease in duties and responsibilities and usually
accompanied by a decrease in salary.
5
b. Some principles on demotion.
1 Demotion may result from transfer when the same results in
6
reduction in position and rank or diminution in salary.
1 Transfer from a highly technical position to one requiring
mechanical work - virtually a transfer from a position of dignity
7
to a servile or menial job- is demotion.
Change in workplace may result in demotion. Hence, there is
demotion in the case of transfer of an employee from the
laboratory - the most expensive work area, on a per square-meter
basis in the company's premises - to the vegetable processing
section which involves processing of vegetables alone. Definitely,
I Dosch v. tlRC, G.R No. 511a2. Jltf 5, 1983; See also Elasmo v. Hoole klsl.m2 &Gucranty Colpooixl. GR. No.
139251' Aug. 29,2002.
2 Phlippine T~ &Telephale C01poca&x1 v. CA. G.R No. 152057, Sepl29, 2003.
3 Ibid.
4 Nagkahi.&nj Naruruo sa 0asuc1eoo-Na1io Fedeiation a labor [NAMIIDA-NFI.j v. Davao Sugcr Cental Co., Inc.,
G.R No. 1~. ~- 9, 2003.
5 Coca-ilia BotiJefs Phiippines,lnc. v. Del va. GR ttl. 163091, Oct 6, 2010; rmv. CA, G.R No.171764, ma. 2001.
PhiT!ppine Wireless, Inc. [Pocke1bel] v. NLRC, G.R. No. 112963, July 20, 1999; BIIrils v. Guevana, G.R No.L-22586,
Feb. 27, 1969,27 SCRA 138; Femaldo v. SID. Tanas, G.R No. 112309, July28, f994, 234 SCRA 5o16; Qx:a.CrAa Sot!lers
Philippines,lnc. v. Del Vir, G.R No. 163091, Oct 6, 2010. .
7 Blue Dairy capaatiln v. NLRC, GR. No. 129843, Sept 14, 1999; Quiscma v. Sla. Jroes.Mel!ie Veneer and l't{Mxxl,lnc.,
No. L·38088,Aug. 30,1974,58 SCRA 771.
 390 BAR REVIEWER ON LABOR LAW
this is a transfer from a workplace where only highly trusted
authorized personnel are allowed to access to a workplace that is
not as critical. 1
• Mere title or position held by an employee in a company does not
determine whether a transfer constitutes a demotion. Rather, it is
the totality of the following circumstances, to wit: economic
significance of the work, the duties and responsibilities conferred,
as well as the rank and salary of the employee, among others, that
establishes whether a transfer is a demotion. 2
• The employer has the right to demote and transfer an employee
who has failed to observe proper diligence in his work and
incurred habitual tardiness and absences and indolence in his
assigned work. 3
• Demotion may be validly imposed due to failure to comply with
productivity standards. 4
• Due process principle in termination cases applies to demotions. 5
Simply put, even the employer's right to demote an employee
requires the observance of the twin-notice requirement.'
c.
PRODUCTnnTYSTANDARD
l.CONCEPT.
The employer has the prerogative to prescribe the standards of
productivity which may be used as:
l. an incentive scheme; and/or
2. a disciplinary scheme.
As an incentive scheme, employees who surpass the productivity
standards or quota are usually given additional benefits.
As a disciplinary scheme, employees may be sanctioned or dismissed
for failure to meet the productivity standards or quota.
• Illustrative cases:
In the 2014 case of International School Manila v. International
School Alliance of Educators USAEl/ the teache? was held guilty of gross
lllJeDaiy~v. NlRC, ~ra
Tmv. CA. G.R.No.171764,June8, 2007; SeealsoRIJral BankofCantila1, klc. v.Jt.t.e, G.R. No.169750, Feb. 27, 'lfJJT.
Pelrophi Corporation v. NlRC, G.R No. l ~. Allg. 29, 1986; lnternatiooal Harvester Madeod, Inc. v. lAC, GR. No.
3
7'm7, May 18, 1987.
l.eooadov. NLRC, G.R. No.125303, June 16, 200081d Fuerev.Pqlilo, G.RNo.126937,June 16,2000.
1.eooM1o v. NlRC, supra; liJe Daiy Cixpomti:xJ v. NLRC, SIJillll; Jarcia Madli1e !:tql and Aim Supptj, Inc. v. NLRC,
G.RNo.118045,JM.2,1997,266SCRA97.
AJoo HeEl v. NlRC, G.R. No. 1552.64, May 6, 2005; Jatia Machi1e Shop em Au1D St.W/, ~ v. NLRC, supra.
6 5 G.R. No.L.m316, July 13,1984,131 SCRA 151, 158.
CHAPTERV 391
MANAGEMENT PREROGATIVES
inefficiency meriting her dismissal on the basis of the Court's finding that she
failed to measure up to the standards set by the school in teaching Filipino
classes.
In the 2012 case of Reyes-Rayel v. Philippine Luen Thai Holdings
Corp.,' the validity of the dismissal of petitioner who was the Corporate Human
Resources (CHR) Director for Manufacturing of respondent company, on the
ground of inefficiency and ineptitude, was affirmed on the basis of the Court's
fmding that petitioner, on two occasions, gave wrong information regarding
issues on leave and holiday pay which generated confusion among employees in
the computation of salaries and wages.
In another 2012 case, Realda v. New Age Graphics, Inc.,4 petitioner, a
machine operator of respondent company, was dismissed on the ground, among
others, of inefficiency. In affirming the validity of his dismissal, the Supreme
Court reasoned:
"xxx (T)he petitioner's failure to observe Graphics, Inc.'s work
standards constitutes inefficiency that is a valid cause for dismissal. Failure to
obse-rve prescribed stat1dards of work, or to fulfill reasonable work
assignments due to inefficiency may constitute just cause for dismissal. Such
inefficiency is understood to mean failure to attain work goals or work quotas,
either by failing to complete the same within the allotted reasonable period, or
by producing unsatisfactory results."
in Buiscr v. Leogardo, Jr..S the petitioners' failure to meet the sales
quota assigned to each of them was deemed a just cause for their dismissal,
regardless of the permanent or probationary status of their employment. Failure
to observe prescribed standards of work, or to fulfill reasonable work
assignments due to inefficiency, well constitutes a just cause for dismissal.
In fine, according to Aliling v. Feliciano,' an employee's failure to
meet sales or work quotas falls under the concept of gross inefficiency, which in
turn is analogous to gross neglect of duty that is a Just cause for dismissal under
Article 297 [282] of the Labor Code. However, in order for the quota imposed to
be considered a valid productivity standard and thereby validate a dismissal,
management's prerogative of fixing the quota must be exercised in good faith
for the advancement of its interest. The duty to prove good faith, however, rests
, G.R No. 167286,Feb. 5, 2014.
2 EvcrlgemSalbs was tisthied bylleSchod 111978 as afuJ.&re Spaish lquage leacher.. kl~ 1992. SMmfied
for ll'ld was grDd a leaved~ br lle school ye;~1992-1993. Sle CM1e ba::!l mn her leaved cilser¥:e
sanetrne 11 August 1993. Upoo Scm's reun 1D lle SchOO, rrif ooe clasS of Spalsh was MiOOie br her to ~­
Thus, br lhe school ye;~1993-1994, SriJS agreed 1o leoch one clasS d Spanish ood W' other classes of Fi(Jilo flat
were left behild by aretired teache': SOOsequent to this, she laugh! oo~ ~until herlelrnilatioo.
3 G.RNo.174893,July11,2012
• G.R No.192190, Apri125, 2012.
6 GR No. 185829, April25, 2012.
...
.
 392 BAR REvlEWER ON lABOR lAW
with the employer as part of its burden to show that the dismissal was for a just
cause. The employer must show that such quota was imposed in good faith.
2. DOLE TO ESTABLISH STANDARD OUTPUT RATES.
In appropriate cases, the DOLE intervenes, motu proprio or upon the
initiative of any interested party, to establish productivity standards.
For instance, in the case of workers paid by results who are
considered "non-time" workers as their compensation is based not on the basis
of the time spent on their work but according to the quantity, quality or kind of
job and the consequent results thereo~ it is subject to more regulations in order
to ensure the payment of fair and reasonable wage rates. Thus, on petition of any
interested party or upon its own initiative, the DOLE shall use all available
measures, including the use of time and motion studies and individual/collective
bargaining agreement between the employer and its workers as approved by the
DOLE Secretary and consultation with representatives of employers' and
workers' organizations, to determine whether the employees in any industry or
enterprise are being compensated in accordance with the minimum wage
requirements of the rule on wages. 1
In the case of homeworkers, at the initiative of the DOLE or upon
petition of any interested party, the DOLE Secretary or his authorized
representative is mandated to establish the standard output rate or standard
minimum rate in appropriate orders for the particular work or processing to be
performed by the homeworkers. 2
3. STANDARD OUTPUT RATES OR PIECE RATES; HOW
DETERMINED.
The standard output rates or piece rates shall be determined through
any of the following procedures:
a. Time and motion studies;
b. An individual/collective agreement between the employer and its
workers as approved by the DOLE Secretary or his authorized
representative; or
c. Consultation with representatives of 1m1ployers' and workers'
organizations in a tripartite conference called by the DOLE
Secretary.
4. TIME AND MOTION STUDIES.
The time and motion study is the more scientific and preferred method.
The basis for the establishment of rates for piece, output or contract work is the
PJJies 1o ln'(llement !he Uilor Code, as anended by~ CiWar ttl. 3, N<w. 4,
1 ·Sedbl5 {a], Rule VIl-A, 8001111,
1992.
2 Sedion 7, Depmen!OrderNo. 5[Rule XIV, Book Ill, Rules lo in1J!ementlhe l.alxrCOOe.
~
·~·-
CHAI'TER V 393
MANAGEMENT PREROGATIVES
performance of an ordinary worker of minimum skill or ability. 1 An ordinary
worker of minimum skill or ability is the average worker of the lowest
producing group representing fifty percent (50%) of the total number of
employees engaged in similar employment in a particular establishment,
excluding learners, apprentices and handicapped workers employed therein. 2
In the case of homeworkers, the time and motion studies should be
undertaken by the DOLE Regional Office having jurisdiction over the location
of the premises used regularly by the homeworker/s. However, where the job
operation or activity is being likewise performed by regular factory workers at
the factory or premises of the employer, the time and motion studies should be
conducted by the DOLE Regional Office having jurisdiction over the location of
the main undertaking or business of the employer. Piece rates established
through time and motion studies conducted at the factory or main undertaking of
the employer shall be applicable to the homeworkers performing the same job
activity. The standard piece rate shall be issued by the DOLE Regional Office
within one (1) month after a request has been made at said office. Upon request
of the DOLE Regional Office, the Bureau. of Working Conditions (BWC) shall
3
provide assistance in the conduct of such studies.
5. ALLOWED TIME; MEANING.
In incentive wage system, the number of minutes allowed for tool care,
personal needs and fatigue, is added to operating time in establishing job
standards or "task" as a basis for determining piece rates or incentive bonus.
6. BASE RATE; MEANING.
In incentive wage system, the rate for the established task or job
standard production is called "base rate." The base rate usually represents the
one hundred percent (100%) basis for measuring the incentive bonus. It is also
used to describe the regular rate for time worked which is the established rate
per hour for the assigned job, exclusive of extras resulting from merit or service
increase or overtime, among others.
7. OUTPUT RATES IN WORK PAID BY RESULTS; EFFECT IF
DETERMINED BY EMPLOYER OR BY DOLE.
The employer shall basically prescribe the output rates in work paid by
results. He may prescn'be it himself or secure first the prior approval of the
DOLE.
If the output rates are prescn'bed solely by the employer and the same
do not conform with the standards prescribed under the implementing rules, or
with the rates prescribed by the DOLE in an appropriate order, the employees
1 Sec&xl5 [b1 Rule VIl-A, llo:t HI, !Ulsm lrrtlJemenlthel..abc1Code, as001ellded byMell'aa100mCialla"No. 3, Nov. 4,
1992.
Sedioo 5Jc), ~le VIl-A, Book Ill, llil.
Sectioo 7' Ibid.
394 UAR IUVIEWER ON LASOR LAW
are entitled to the difference between the amount which they are entitled to
receive under such prescribed standards or rates and that actually paid to them
by the employer. 1
Moreover, if by multiplying the. rate per piece as determined by the .
employer without the approval of the DOLE and the actual output of the worker
paid by results, the amount arrived at conforms with or exceeds the statutory
minimum wage, then such worker should receive such higher amount. But if
after such computation, the amount arrived at is less than the statutory minimum
wage, then, the employer should pay the difference in order to assure the worker
of the statutory minimum wage. . agreement making such bonus part of the compensation of the employees. 6
In the case of Framanlis Farms, Inc. v. Minister of Labor/ the High
Court ruled that respondent Minister of Labor did not err in requiring the
petitioners to pay wage differentials to their "pakyaw" workers who worked for
at least eight (8) hours daily and earned less than PS.OO per day.
The same thing may not be said if the output rates are prescribed by the
DOLE, in which case, the employer is duty-bound to follow it. Consequently,
the wages of workers paid by results under this situation are determined by
simply multiplying the number of pieces produced by the rate ftxed per piece.
Consequently, whether or not the eight-hour normal working hours is exceeded
or that the total output is equivalent to, more than or less than the statutory
minimum wage, is immateriaL What is material is the actual output or earnings
for that particular day.
D.
BONUS
l. GENERAL RULE; NOT DEMANDABLE OR ENFORCEABLE.
Bonus, as a general rule, is an amount granted and paid ex gratia to the
employee. Its payment constitutes an act of enlightened generosity and self-
interest on the part of the employer rather than as a demandable or enforceable
obligation. 3
It is an amount granted and paid to an employee for his industry and
loyalty which contributed to the success of the employer's business and made
1 SecOOn 5~.Rule VIl-A, Book HI, Rules to l~llelaba"Code, as Mlellded byMemorcrldwnCirularNo. 3, Na./.4,
1992.
2 GR. Nos. 72616-17, Man:tt 8,1989,171 SCRA87.
3 ProclJcers Balk d 1t1e Phi4Jpines v. NlRC, G.R No. 100701, March 28, 2001, 355 SCRA 489; Phiippine Oupicakxs,loc.
v.NLRC,G.R No.110068,Feb.15,1995.
CHArTERV 395
MANAGEMENT PREROGATMS
1
possible the realization of profits. It is somethinf given in addition to what is
ordinarily received by or strictly due the recipient.
It is a gratuity or act of liberality of the giver which the recipient has no
right to demand as a matter of right? Its grant is a management prerogative. 4 It
cannot be forced upon the employer who may not be obliged to assume the
onerous burden of granting bonuses or other beneftts aside from the employees'
basic salaries or wages. It is something given in addition to what is ordinarily
received by, or strictly due to, the recipient. 5 If there is no profit, there should
be no bonus. If profit is reduced, bonus should likewise be reduced, absent any
2. BONUS; WHEN DEMANDABLE AND ENFORCEABLE.
Notwithstanding the fact that a bonus does not form part of the wage or
salary of the employees, it becomes demandable and enforceable under any of
the following circumstances:
l) When it is stipulated in an employment contract or CBA;
2) When the grant of bonus is a company policy or practice; 7
3) When it is granted as an additional compensation which the
employer agreed to give without any condition such as success of
business or more efficient or more productive operation and, thus,
must be deemed part of wage or salary; hence, demandable.8
It thus becomes a demandable and enforceable obligation only when it
is made part of the wage or salary or compensation. When considered as part
of the compensation and, therefore, demandable and enforceable, the amount is
usually fixed. But if the amount of bonus is dependent upon the realization of
9
profits, the bonus is not demandable and enforceable.
3. FORFEITURE OF BONUS.
It is valid for an employer to establish as policy that once an employee
is found guilty of an administrative charge, he shall forfeit his bonus in favor of
the employer.
1 UST Faaiy Union v. tlRC, G.R No. 00445, Oct 2, 1990, 190 SCRA 215; Ph~ EOOcation Co.,~ v. CIR, G.R No.
L-5103,Dec. 24,1952,92 Phl381,385.
2 Prolacilv. LayaMmlghaya&Co.,G.RNo. 168654,Mrch25,2009.
3 AraJoo v. Cebu Pa1lood Cement Co., 61 0. G. 4597.
4 Producers Sri d the Phiippiles v. NlRC, GR. No. 100701, M.W128, 2001, 355 SCRA 489, 496.
5 Kana(ctPOOti-Wv. NLRC,GR.No. 75289,Aug.31,1989,177SCRA 160.
s 1.umn Stevedori1g Capomfion v. Crutd k1duslria Re!alions, G.R No. L-17411, Dec. 31, 1965.
7 Mcmls v. NlRC, G.R. No. 111744, Sept. 8, 1995; lv'alila Eleclrlc CoillJanY v. Seaetary of labor, G.R No. 127598, Jan.
27, 1999; Da'lao Fruits COipo!atioo v. Associaled laba"Unions, G.R No. 85073, Aug. 24, 1993, 225 SCRA 562.
8 Alii Bg Wedge Mni"MJ Co., i'lc. v.Aili BiJ Wedge MJtua Benefit Association, GR No. L-5276, ~ 3, 1953,92 Phil.
754.
Prtt!cio v. Laya lv'ala!YJhaya &Co., G.R No. 168654, Ma!th 25, 2009; See also The Mania Bankilg Colpora1ion v.
NLRC, GR No. 107487, Sepl29, 1997; 345 Pili. 105, 106.
- y+r.....:.r:·etXZ'
396 BAR REviEWER ON lABOR lAW
In the case of Republic Planters Bank, now known as PNB-Republic
.Bank v. NLRC, 1 the Supreme Court recognized as valid the forfeiture of the
1988 mid-year and year-end bonus of an employee who was found guilty of an
administrative charge in 1988, in accordance with the existing company policy
of the employer.
E.
CHANGE OF WORKING HOURS
1. PREROGATIVE TO CHANGE WORKING HOURS.
Employers have the freedom and prerogative, according to their
discretion and best judgment, to regulate and control the time when workers
should report for work and perform their respective functions. 2
2. ILLUSTRATIVE CASES.
Sime Darby Pilipinas, Inc. v. NLRC. 3 - The exercise of this
prerogative is best exemplified in this case where it was held that management
retains the prerogative to change the working hours of its employees whenever
exigencies of the service so require.
Manila Jockey Club Employees Labor Union- PTGWO, v. Manila
Jockey Club, Inc. 4 - The validity of the exercise of the same prerogative to
change the working hours was affirmed in this case. It was found that while
Section I, Article IV of the CBA provides for a 7~hour work schedule from 9:00
a.m. to 12:00 noon and from 1:00 p.m. to 5:00p.m. from Mondays to Saturdays,
Section 2, Article XI thereof expressly reserves to respondent the prerogative to
change existing methods or facilities and to change the schedules of
work. Consequently, the hours of work of regular monthly-paid employees
were changed from
the original9:00 a.m. to 5:00p.m. schedule to 1:00 p.m. to
8:00p.m. when horse races are held, that is, every Tuesday and Thursday. The
9:00 a.m. to 5:00 p.m. schedule for non-race days was, however, retained.
Respondent, as employer, cited the change in the program of horse races as
reason for the adjustment of the work schedule. It rationalized that when the
CBA was signed, the horse races started at 10:00 a.m. When the races were
moved to 2:00 p.m., there was no other choice for management but to change
the work schedule as there was no work to be done in the morning. Evidently,
the adjustment in the work schedule is justified.
1 GR No. 117460, Jan. 6, 1997.
2 ~ Aililes, Inc. v. NLRC, G.R No. 115785, Aug. 4, 2000; OSS SeQriy and Alried Setvices,lnc. v. NLRC, G.R No.
112752,Feb.9,2000,325SCRA 157.
G.R No.119205,Apri 15,1998,289 SCRAB6.
G.RNo.1snoo.March7,2007.
I._
CHAPTERV 397
MANAGEMENT PREROGATIVES
F.
~GEBETWEENEMPLOYEES
OF COMPETITOR-EMPLOYERS
1. PREROGATIVE TO PRESCRffiE RULE ON MARRIAGE.
The employer has the prerogative to establish a policy on marriage.
Jurisprudence has recognized and established some definitive standards to
determine whether such marital policy is valid or not.
2. RULE AGAINST MARRIAGE, WHEN VALID.
In the case of Duncan Association of Detailman-PTGWO v. Glaxo
Welcome Philippines, Inc./ the contract ofemployment expressly prohibited
an employee from having a relationship with an employee of a competitor
company. It provides:
"10. You agree to disclose to management any existing or future
relationship you may have, either by consanguinity or affinity with co-
employees or employees of competing drug companies. Should it pose a
possible conflict of interest in management discretion, you agree to resign
voluntarily from the Company as a matter of Company policy."
The Supreme Court ruled that this stipulation is a valid exercise of
management prerogative. The prohibition against personal or marital
relationships with employees of competitor-companies upon its employees is
reasonable under the circumstances because relationships of that nature might
compromise the interests of the company. In laying down the assailed company
policy, the employer only aims to protect its interests against the possibility that
a competitor company will gain access to its trade secrets, manufacturing
formulas, marketing strategies and other confidential programs and information.
3. RULE AGAINST MARRIAGE, WHEN NOT VALID.
Article 134 [136] of the Labor Code considers as an unlawful act of the
employer to stipulate, as a condition of employment or continuation of
employment, that a woman employee shall not get married, or that upon getting
married, a woman employee shall be deemed resigned or separated. It is
likewise an unlawful act of the employer, to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by reason of her
marriage. 2
In PT & T v. NLRC,l it was held that a company policy of not
accepting or considering as disqualified from work any woman worker who
contracts marriage runs afoul of the test of, and the right against, discrimination
1 G.R. No. 162994, Sepl 17, 2004.
2 See also Section 13 [e],IMJ XII, 8o1:t Ill, Rules lo ln'(llement lhe Labor Code; Guallerto v. M:mduque Mnilg Industrial
Coiporation, C. A.-G.R No. 52753-R. June 28, 1978.
3 G.R No. 118978, May 23, 1997, 272 SCRA 596,605.
398 BAR REVIEWER ON lABOR lAW
afforded all women workers by our labor laws and by no less than the
Constitution. 1
In a case decided by the Office of the President/ Zialcita v. Philippine
Airlines, Inc} the stipulation in the contract between PAL and the flight
attendant which states that "flight attendant-applicants must be single and that
they shall be automatically separated from employment in the event they
subsequently get married" was declared null and void and cannot thus be
enforced for being contrary to Article 134 (136] of the Labor Code and the
protection-to-labor clause in the Constitution.
4. "REASONABLE BUSINESS NECESSITY RULE" AS APPLIED TO
THE PROHIBITION AGAINST MARRIAGE POLICY.
The employees in Star Paper Corp. v. Simbol,4 were terminated on
various occasions, on the basis of the following company policy, viz.:
"I. New applicants will not be allowed to be hired if in case he/she has
[a] relative, up to (the] 3'd degree of relationship, already employed
by the company.
"2. In ca~e two of our employees (both singles [sic], one male and
another fem3le) developt:d a friendly relationship during the course
of their employment and then decided to get married, one of them
should resign to preserve the policy stated above."
According to the employer, said rule is only intended to carry out its
no-employment-for-relatives-within-the-third-degree-policy which is within the
ambit of the prerogatives of management. The Supreme Court, however,
disagreed. It ruled that said policy failed to comply with the standard of
reasonableness which is being followed in our jurisdiction. The cases of Duncan
[supra] and PT&T[supra] instruct that the requirement of reasonableness must be
clearly established to uphold the questioned employment policy. The einployer
has the burden to prove the existence of a reasonable business necessity. The
burden was successfully discharged in Duncan but not in PT&T. The High
Court similarly did not find a reasonable business necessity in the case at
bar. Thus, it pronounced:
"Petitioners' sole contention that 'the company did not just want to
have two (2) or more of its employees related between the third degree by
affinity and/or consanguinity' is lame. That the second paragraph was
meant to give teeth to the frrst paragraph of the questioned rule is
evidently not the valid reasonable business necessity required by the law.
"It is significant to note that in the case at bar, respondents were hired
after they were found fit for the job, but were asked to resign when they
I GJalbErtl V. Mlilduque t/ili1g &kldls1Jial Corpofalion, supra.
2
3
4
At the time when an appeal to lite Office of the President was stin the rule.
Case No. R04-3-398-76, Feb. 20, 1977.
GR No. 164n4, April12, 2006.
L contract prohibiting the employee within a certain period from and after the
CHAPTERV 399
MANAGEMENT PREROGATIVES
married a co-employee. Petitioners failed to show how the marriage of
Simbol, then a Sheeting Machine Operator; to Alma Dayrit, then an
employee of the Repacking Section, could be detrimental to its business
operations. Neither did petitioners explain how this detriment will happen
in the case of Wilfreda Cornia, then a Production Helper in the Selecting
Department, who married Howard Cornia, then a helper in the cutter-
machine. The policy is premised on the mere fear that employees married
to each other will be less efficient. If we uphold the questioned rule
without valid justification, the employer can create policies based on an
unproven presumption of a perceived danger at the expense of an
employee's right to security of tenure.
"Petitioners contend that their policy will apply only when one
employee marries a co-employee, but they are free to marry persons other
than co-employees. The questioned policy may not facially violate Article
134 [136] of the Labor Code but it creates a disproportionate effect and
under the disparate impact theory, the only way it could pass judicial
scrutiny is a showing that it is reasonable despite the discriminatory, albeit
disproportionate, effect The failure of petitioners to pmve a legitimate
busintss concern in imposing the questioned policy cannot prejudice the
employee's right to be free from arbitrary discrimination based upon
stereotypes of married persons working together in one company."
G.
POST-EMPLOYMENT BAN
1. RIGHT TO IMPOSE POST-EMPLOYMENT PROillBITIONS.
The employer, in the exercise of its prerogative, may insist on an
agreement with the employee for certain prohibitions to take effect after the
termination of their employer-employee relationship.
The following stipulations in an employment contract are illustrative of
the prohibitions normally agreed upon by the employer and the employee:
1) Non-Compete Clause;
2) Confidentiality and Non-Disclosure Clause;
3) Non-Solicitation Clause;
4) Non-Recruitment or Anti-Piracy Clause;
5) Inventions Assignment Clause (Intellectual Property Clause).
I.
NON-COMPETE CLAUSE
1. FREEDOM TO CONTRACT.
The employer and the employee are free to stipulate in an employment
- o n of hi• employmen~ from:
400 BAR REviEWER ON lABOR lAW
(1) starting a similar business, profession or trade; or
(2) working in an entity that is engaged in a similar business that
might compete with the employer.
The non-compete clause is agreed upon to prevent the possibility that
upon an employee's termination or resignation, he might start a business or
work for a competitor with the full competitive advantage of knowing and
exploiting confidential and ~ensitive information, trade secrets, marketing plans,
customer/client lists, business practices, upcoming products, etc., which he
acquired and gained from his employment with the former employer. Contracts
which prohibit an employee from engaging in business in competition with the
employer are not necessarily void for being in restraint of trade.
2. PHILIPPINE JURISPRUDENCE ON THE NON-COMPETE CLAUSE.
The nature and extent to which a non-compete clause is legally allowed
usually varies from one jurisdiction to another. L'l the Philippines, several cases
dating back to as early as 1910 have dealt with issues on the validity of "non-
compete" or "non-involvement" stipulations, also known as Covenant Not to
Compete (CNC) in an emplo0nent contract. In order to appreciate the
principles affecting this clause in our jurisdiction, the following cases of
significance may be cited and are worth looking into:
I) Carlos Gsell v. Pedro Koch; 1
2) Anselmo Ferrazzini v. Carlos Gsefl,.l
3) William 01/endorf v. Ira Abrahamson (En Banc); 3
4) G. Martini (Lid.) v. J. M Glaiserman (En Banc); 4
5) Alfonso del Castillo v. Shannon Richmond;5
6) Raquel P. Consulta v. CA, Pamana Philippines, Inc.; 6
7) Yusen Air and Sea Service Philippines; Inc. v. Villamor; 1
8) Daisy B. Tiu v. Platinum Plans Philippines, Inc. 8
Two (2) cases dealing with the issue of jurisdiction over breach of the
non-compete clause have also been decided by the Supreme Court, namely:
l) Dai-Chi Electronics Manufacturing Corporation v.
Villarama; 9 and
2) Portillo v. RudolfLietz, Inc. 10
t G.R. ~- ~7. Mild! 22, 1910.
2 G.R. ~- 10712, Aug. 10, 1916.
3 G.R No.13228, Sept 13, 1918.
c G.R. No.l-13699, Nov.12, 1918.
s {JR. ~.21127,Feb. 9,1924.
s G.R ~- 145443, Mrch 18,2005.
7 G.R ~- 154000, Aug. 16,2005.
s G.R.No.163512,Feb.28,:m7.
9 G.R.No.112940,Nov.21, 1994.
to G.R. No.196539, Oct 10, 2012.
I CHAmRV
MANAGEMENT PREROGATIVES
401
l 3. ILLUSTRATIVE CASE.
The most significant case that would broadly describe the historical
development as well as illustrate the legal complications and implications of a
non-compete clause is the 2007 case of Daisy B. Tiu v. Platinum Plans
Philippines, Inc} where the non-compete clause (called "Non-Involvement
Provision" in this case) in the employment contract stipulates as follows:
"8. NON-INVOLVEMENT PROVISION- The EMPLOYEE further
undertakes that during his/her engagement with EMPLOYER and in case
of separation from the Company, whether voluntary or for cause, he/she
shall not, for the next TWO (2) years thereafter, engage in or be involved
with any corporation, association or entity, whether directly or indirectly,
engaged in the same business or belonging to the same pre-need industry
as the EMPLOYER Any breach of the foregoing provision shall render
the EMPLOYEE liable to the EMPLOYER in the amount of One Hundred
Thousand Pesos (PI 00,000.00) for and as liquidated damages."
Starting on Januarj I, 1993, petitioner worked for respondent as Senior
Assistant Vice-President and Territorial Operations Head in charge of its
Hongkong and Asean operations under a 5-year contract cf employment
containing the afore-quoted clause. On September 16, 1995, petitioner stopped
reporting for work. In November 1995, she became !he Vice-President for Sales
of Professional Pension Plans, Inc., a corporation engaged also in the pre-need
industry. Consequently, respondent sued petitioner for damages before the RTC
of Pasig City. Respondent alleged, among others, that petitioner's employment
with Professional Pension Plans, Inc. violated the above-quoted non-
involvement clause in her contract of employment. Respondent thus prayed for
PIOO,OOO as compensatory damages; P200,000 as moral damages; PIOO,OOO as
exemplary damages; and 25% of the total amount due plus Pl,OOO per counsel's
court appearance, as attorney's fees.
Petitioner countered that the non-involvement clause was
unenforceable for being against public order or public policy: First, the restraint
imposed was much greater than what was necessary to afford respondent a fair
Hon.
and reasonable protection. Petitioner contended that the transfer to a rival
company was an accepted practice in the pre-need industry. Since the products
sold by the companies were more or less the same, there was nothing peculiar or
unique to protect. Second, respondent did not invest in petitioner's training or
improvement. At the time petitioner was recruited, she already possessed the
knowledge and expertise required in the pre-need industry and respondent
benefited tremendously from it. Third, a strict application of the non-
involvement clause would amount to a deprivation of petitioner's right to
engage in the only work she knew.
1
G.R No.163512,Feb.28,2007.
'\'
i&L
402 llAR REVIEWER ON lABOR lAW
In upholding the validity of the non-involvement clause, the trial court
ruled that a contract in restraint of trade is valid provided that there is a
limitation upon either time or place. In the case of the pre-need industry, the
trial court found the two-year restriction to be valid and reasonable.
On appeal, the Court of Appeals affirmed the trial court's ruling. It
reasoned that petitioner entered into the contract on her own will and volition.
Thus, she bound herself to fulfill not only what was expressly stipulated in the
contract, but also all its consequences that were not against good faith, usage,
and law. The appellate court also ruled that the stipulation prohibiting non-
employment for two years was valid and enforceable considering the nature of
respondent's business.
In affirming the validity of the Non-Involvement Clause, the Supreme
Court ratiocinated as follows:
"Petitioner avers that the non-involvement clause is offensive to public
policy since the restraint imposed is much greater than what is necessary to
afford respondent a fair and reasonable protection. She adds that since the
products sold in the pre-need industry are more or less the same, the transfer
to a rival company is acceptabie. Petitioner also points out that respondent
did not invest in her training or improvement. At the time she joined
respondent, she aln:ady had ti-Je knowledge and expertise required in the pre-
need industry. Finally, petitioner argues that a strict application of the non-
involvement clause would deprive her of the right to engage in the only work
she knows.
"Respondent counters that the validity of a non-involvement clause has
been sustained by the Supreme Court in a long line of cases. It contends that
the inclusion of the two-year non-involvement clause in petitioner's contract
of employment was reasonable and needed since her job gave her access to
the company's confidential marketing strategies. Respondent adds that the
non-involvement clause merely enjoined her from engaging in pre-need
business akin to respondent's within two years from petitioner's separation
from respondent. She had not been prohibited from marketing other service
plans.
"As early as 1916, we already had the occasion to discuss the validity of
a non-involvement clause. In Fmazzini v. Gsel~ we said that -such clause
1 any pre-need business akin to respondent's.
was unreasonable restraint Of trade and thereftlre against pubiic policy. In
Fmazzini, the employee was prohibited from engaging in any business or
occupation in the Philippines for a period of five years after the tennination
of his employment contract and must first get the written permission of his
employer if he were to do so. The Court ruled that wJllle the stipulation was
indeed limited as to time and space. it was not limited as to trade. Such
prohibition. in effect forces an employee to leave the Philippines to work
should his employer refuse to give a written pennission.
1 G. Mm1tii.)V. J. M. GlaisemlM. G.R No. L-13699, NaJ.12, 1918{En I!MC).
AlfooOO del casfil1ov. stmnon Rictm:lnd, GR No. 21127, Feb. iJ, 1924.
Raquel P. Consulta v. CA. PamMa Pl1ilipjli1es, Inc., (3.R No. 145443. McJ"ch 18, 2005.
1 Anserno Fenazzili v. Ccrios Gsell, GR No. 10712, Aug. 10, 1916.
·ri~~
L,c.
MANAGEMENT PREROGATIVES
"In G. Martini, Ltd. v. GlaiserltUln/ we also declared a similar
stipulation as void for being an unreasonable reStraint of trade. There, the
employee was prohibited from engaging in any business similar to that of his
employer for a period of one year. Since the employee was employed only
in connection with the purchase and export of abaca, among the many
businesses of the employer, the Court considered the restraint too broad
since it effectively prevented the employee from working in any other
business similar to his employer even if his employment was limited only to
one of its multifarious business activities.
"However, in Del Castillo v. Richnwnd/ we upheld a similar
stipulation as legal. reasonable. and not contrary to public policy. In the said
case, the employee was restricted from opening, owning or having any
connection with any other drugstore within a radius of four miles from the
employer's place of business during the time the employer was operating his
drugstore. We said that a contract in restraint of trade is valid provided there
is a limitation upon either time or place and the restraint upon one party is
not greater than the protection the other party requires.
3
"Finally, in Consulta v. Court cf Appeals, we considered a !!Q!\:
involvement clause in accordance with Article 1306 of the Civil Code.
While the complainant in that case was an independent agent and not an
employee, she was prohibited for one year from engaging directly or
indirectly in activities of other companies that compete with the business of
her principal. We noted therein that the restriction did not prohibit the agent
from engaging in any other business. or from being connected with any other
company. for as long as the business or company did not compete with the
principal's business. Further, the Q_rohibition applied only for one year after
the termination of the agent's contract and was therefore a reasonable
restriction designed to prevent acts prejudicial to the employer.
"Conformably then with the aforementioned pronouncements, a
non-involvement clause is not necessarily void for being in restraint of
trade as long as there are reasonable limitations as to time. trade, and
place.
"In this case, the non-in,·olvement clause has a time limit: two years
from the time petitioner's employment with respondent ends. It is also
limited as to trade, since it only prohibits petitioner from engaging in
"More significantly, since petitioner was the Senior Assistant Vice-
President and Territorial Operations Head in charge of respondent's
Hongkong and Asean operations, she had been privy to confidential and
highly sensitive marketing strategies of respondent's business. To allow her
to engage in a rival business soon after she leaves would make respondent's
trade secrets vulnerable especially in a highly competitive marketing
environment. In sum, we find the non-involvement clause not contrary
 'fV;)
CHAcPTERV
V/\.t\.E\.C.YII::YVtK.UN LAHUK lAW
MANAGEMENT PREROGATIVES

to public welfare and not greater than is necessary to afford a fair and
reasonable protection to respondent
"In any event, Article 1306 of the Civil Code provides that parties to a
contract may establish such stipulations, clauses, terms and conditions as
they may deem convenient, provided they are not contrary to law, morals,
good customs, public order, or public policy.
"Article 1159 of the same Code also provides that obligations arising
from contracts have the force of law between the contracting parties and
should be complied with in good faith.. Courts cannot stipulate for the
parties nor amend their agreement where the same does not contravene law,
morals, good customs, public order or public policy, for to do so would be to
alter the real intent of the parties, and would run contrary to the function of
the courts to give force and effect thereto. Not being contrary to public
policy, the non-involvement clause, which petitioner and respondent freely
agreed upon, has the force of law between them, and thus, should be
complied with in good faith.
"Thus, as held by the trial court and the Court of Appeals, petitioner is
bound to pay respondent PI 00,000 as liquidated damages. While we have
equitably reduced liquidated damages in certain cases, we cannot do so in
this case, since it appears that even from the start, petitioner had not shown
the least intention to fulfill the non-involvement clause in good faith." 1
II.
OTHER POST-EMPLOYMENT PROHIBITIONS
distributor, merchandiser, or advertiser of the employer for the purpose of
offering to that person or entity goods or services which are of the same type as
or similar to any goods or services supplied by the employer at termination.
3. NON-RECRUITMENT OR ANTI-PIRACY CLAUSE.
This clause prohibits the recruitment by the employee of personnel or
employees of the employer for a certain period after his termination of
employment, either on his own account or in conjunction with or on behalf of
any other person.
4. INVENTIONS ASSIGNMENT CLAUSE (INTELLECTUAL
PROPERTY CLAUSE).
In industries engaged in research and development and related
activities, this clause requires the employee, within a certain period, to disclose
in confidence to the employer and its subsidiaries and to assign all inventions,
improvements, designs, original works of authorship, formulas, processes,
compositions of matter, computer software programs, databases, mask works
and trade secrets, whether or not patentable, copyrightable or protectible as trade
secrets (coilectively, the "Inventions"), which the employee may solely or
jointly conceive or develop or reduce to practice, or cause to be conceived or
developed or reduced to practice, during the period of his employment with the
employer.

l. CONFIDENTIALITY AND NON-DISCWSURE CLAUSE. ---oOo---

The confidentiality and non-disclosure clause reflects the commitment
of the employee that he shall not, either during the period of his employment
with the employer or at any time thereafter, use or disclose to any person, firm
or corporation any information concerning the business or affairs of his
employment, for his own benefit or to the detriment of the employer. This clause
may also cover Former Employer Information and Third Party Information.
2. NON-SOLICITATION CLAUSE.
To protect the legitimate business interests of the employer, including
its business relationships, the employee under this clause, may, directly or
indirectly, be prohibited from soliciting or approaching, or accept any business
from any person or entity who shal~ at any time within a fixed period preceding
the termination of his employment, have been (a) a client, talent, producer,
designer, programmer, distributor, merchandiser, or advertiser of the Company,
(b) a party or prospective party to an agreement with the employer, or (c) a
representative or agent of any ciient, talent, producer, designer, programmer,

, ~ a1d ll'ldelscoli1g suppled.

jill

.L,,
 406 LHAffiRVI "tV/
SOCIAL WELFAilE LEGISLATION

A social, civic, professional, charitable and other non-profit

CHAPTER SIX organizations which hire the services .of employees are considered
SOCIAL WELFARE LEGISLATION "employers."
b) A foreign government, international organization or its wholly-
owned instrumentality such as an embassy in the Philippines, may
TOPICS PER SYLLABUS enter into an administrative agreement with the SSS for the
coverage of its Filipino employees. 1
VI. 2. COMPULSORY COVERAGE OF EMPLOYEES.
SOCIAL WELFARE. LEGISLATION a) A private employee, whether permanent, temporary or provisiona~
who is not over 60 years old.
b) A domestic worker or kasambahay who has rendered at least one (1)
A. SSSLaw month of service. 2
l. Coverage and Exclusions c) A Filipino seafarer upon the signing of the standard contract of
2. Dependents, beneficiaries employment between the seafarer and the manning agency which,
3. Benefits together with the foreign ship owner, act as employers.
d) An employee of a foreign government, international organization or
B. GSIS Law their wholly-cwned instrumentality based in the Philippines, which
l. Coverage and Exclusions entered into an administrative agreement with the SSS for the
2. Dependents, beneficiaries coverage of its Filipino workers.
3. Benefits e) The parent, spouse or child below 21 years old of the owner of a
single ~ 1 )prietorship business.3
C. Portability Law
3. COMPULSORY COVERAGE OF SELF-EMPLOYED PERSONS.
D. Employee's Compensation - Coverage and When Compensable A self-employed person, 4 regardless of trade, business or occupation,
with an income of at least Pl,OOO a month and not over 60 years old, should
register with the SSS. Included, but not limited to, are the following self-
I. employed persons:
SOCIAL WELFARE LEGISLATION a. Self-employed professionals;
b. Business partners, single proprietors and board directors;
A. c. Actors, actresses, directors, scriptwriters and news reporters who
SSSLAW1 are not under an employer-employee relationship;
d. Professional athletes, coaches, trainers and jockeys;
1. e. Farmers and fisherfolks; and
COVERAGE f. Workers in the informal sector such as cigarette vendors, watch-
your-car boys, hospitality girls, among others. 5
1. COMPULSORY COVERAGE OF EMPWYERS.
a) An employer or any person who uses the services of another person
in business, trade, industry or any undertaking. 1 sss website at h!lps:IJwAw.$$.gOY.jJWsssrmex2.pp?sedd=107&cat::2&pg=nul, last accessed: Mly al, :!!14.
2 Sedioo 30 (Social ClldOttl!J Benelils), Artkil N, RA. No.10361.
3 sss website at htlps:/lwHN.sss.gov.piVsss{Uldex2.jsp?sedd=108&cal=2&pg=nul, Last accessed: Miy al, :!!14.
4
~ under Sedioo B(s), RA No. 8282 as folows: 'SeiJ.errllloYe - Alrj person lll1ose i1cane is rot detM!d fulm
~ as defined lllder lhis M, as wei asV!ooe 'MJJkels enumemled i1 Secfun Nile-A hered.'
5 Sectioo 9-A, RA No. 8282; See also SSS website at hllps:/hv.lw.sss.govphlsssllldex2jsp?sedd=112&cat=2&pg=nt41,
1 RA No. 8282. Last ao::e;sed: May 20, 2014.
408 BAR REviEWER ON LABOR LAW SOCIAl WElfARE LEGISLATION

3) For self-employed- The compulsory coverage of the self-employed

Unless otherwise specified, all provisions of the law, RA. No. 8282, 1
person shall take effect upon his registration with the SSS or upon
applicable to covered employees shall also be applicable to the covered self- payment of the frrst valid contribution, in case of initial coverage.
2

employed persons. 1
A self-employed person shall be both employee and employer at the
same time. 1
4. VOLUNTARY COVERAGE.
1. Separated Members
A member who is separated from employment or ceased to be self-
employed!OFW/non-working spouse and would like to continue
contributing. 3
2. Overseas Filipino Workers (OFWs)
A Filipino recruited in the Philippines by a foreign-based employer
for employment abroad or one who legitimately entered a foreign
country (i.e., tourist, student) and is eventually employed. 4
3. Non-working spouses ofSSS members
A person legaliy married to a currently employed and actively
paying SSS member who devotes fuJI time in the management of
household and family affairs may be covered on a voluntary basis,
provided there is the approval of the working spouse. The person
should never have been a member of the SSS. The contributions
will be based on 50 percent (50%) of the working spouse's last
posted monthly salary credit but in no case shall it be lower than
Pl,000.5
5. EFFECTIVE DATE OF COVERAGE.
For compulsory coverage:
1) For employer - Compulsory coverage of the employer shall take .
effect on the first day of his operation or on the fJTSt day he hires
employee/s. The employer is given only 30 days from the date of
employment of employee to report the person for coverage to the
sss.'
2) For employee • Compulsory coverage of the employee shall take
effect on the frrst day of his employment.'
For voluntary coverage:
1) For an OFW- upon first payment of contribution, in case of initial
coverage.
2) For a non-working spouse- upon first payment of contribution.
3) For a separated member- on the month he/she resumed payment
of contribution?
6. EFFECT OF SEPARATION FROM EMPLOYMENT.
When an employee under compulsory coverage is separated from
employment, his employer's contribution "'n his account and his obligation to
pay contributions arising from that employment shall cease at the end of the
month of separation, but said employee shall be credited with all contributions
paid on his behalf and entitled to benefits according to the provisions of this Act.
He may, however, continue to pay the total contributions to maintai.'l his right to
4
full benefit.
7. EFFECT OF INTERRUPTION OF BUSINESS OR PROFESSIONAL
INCOME.
If the self-employed realizes NO income in any given month, he shall
not be required to pay contributions for that month. He may, however, be
allowed to continue paying contributions under the same rules and regulations
applicable to a separated employee member.
5
2.
EXCLUSIONS FROM COVERAGE
l.EXCLUDEDEMPLOYER.
Government and any of its political subdivisions, branches or
instrumentalities, including corporations owned or controlled by the
Government' with original charters.
2. EXCLUDED EMPWYEES.
Workers whose employment or service falls under any of the following
circumstances are not covered:

1 llid. 1 ld.
2 Sectioo B(c) ll1d (d), RA No. 8282. 2 SSS 'MJbslle at htlps1/w.lw.sss.gcw.phlsssfndex2jsp?sedd=114&cat=2&p;j=nuU, L.astaa:essed: ~ 20, 2014.
3 SSSwebsile at htlps111w.w.sssp.p1Vss&'ildex2j;p?secid=113&:at=2&pg=nul, Last accessed:~ 20,2014. 3 SSSwebsMe at htlps1/w.lw.sss~cw.phlsssfndex2.jsp?secid=113&cat=2&pg=nuR, Lastaa:essed: May 20, 2014.
4 ld 4 Section 11, RA No. 8282.
5 ld. 5 Section 11-A, RA No. 8282.
6 SSSwebslte at hUps1JwN.v.sss.gcw.ph/sssmldex2j;p?secid=114&cal=2&pg=ooll, Last accessed:~ 20, 2014. 6 Sedion8(c), RA No. 8282.
Sectioo 10, RA No. 8282;
410. BAR REviEWER ON lABOR lAW
SOCIAL WELFARE LEGISLATION

(1) Employment purely casual and not for the purpose of occupation or 2. SECONDARY BENEFICIARIES.
business of the employer; The following are secondary beneficiaries:
(2) Service performed on or in connection with an alien vessel by an
1. The dependent parents, in the absence of the primary
employee if he is employed when such vessel is outside the.
Philippines; beneficiaries.
(3) Service performed in the employ of the Philippine Government or 2. Any other person designated by the member as his/her secondary
instrumentality or agency thereof; beneficiary, in the absence of all the foregoing primary beneficiaries
(4) Service performed in the employ of a foreign government or and dependent parents.
international organization, or their wholly-owned instrumentality:
Provided, however, That this exemption notwithstanding, any 4.
foreign government, international organization or their wholly- BENEFITS
owned instrumentality employing workers in the Philippines or
employing Filipinos outside of the Philippines, may enter into an 1. TWO (2) MAIN CLASSIFICATIONS.
agreement with the Philippine Government for the inclusion of such The SSS benefits may be classified as follows:
employees in the SSS except those already covered by their
respective civil service retirement systems: Provided, further, That (a) Social security benefits:
the terms of such agreement shaH conform with the provisions of 1) Sickness
R.A. No. 8282 on coverage and amount of payment of contributions 2) Maternity
and benefits: Provided, finally, That the provisions of this Act shall 3) Retirement
be supplementary to any such agreement; and 4) Disability
(5) Such other services performed by temporary and other employees 5) Death and funeral.
which may be excluded by regulation of the Social Security (b) Employees' compensation benefits.
Commission. Employees of bona-fide independent contractors shall
not be deemed employees of the employer engaging the service of 4.1.
said contractors.• SOCIAL SECURITY BENEFITS
1. SICKNESS BENEFIT.'
3.
DEPENDENTS, BENEFICIARIES • What is the sickness benefit?
1. PRIMARY BENEFICIARIES. The sickness benefit is a daily cash allowance paid for the number of
days a member is unable to work due to sickness or~
The following are primary beneficiaries:
• How does an SSS member qualify for the sickness bf!llejit?
1. The dependent spouse until he or she remarries;
1. He is unable to work due to sickness or injury and confined either in
2. The dependent legitimate, legitimated or legally adopted, and a hospital or at home for at least four (4) days;
illegitimate children who are not yet 21 years of age. 2. He has paid at least three months ofcontnbutions within the 12
The dependent illegitimate children shall be entitled to 50% of month period immediately before the semester of sickness has been
the share of the legitimate; legitimated or legally adopted children. paid;
However, in the absence of the dependent legitimate, legitimated 3. When all company sick leaves with pay for the current year has
children of the member, his/her dependent illegitimate children been used up;
shall be entitled to 100% of the benefits
1 The discussklo 1hilt fullaNs is based on tre ilfonnatiJn iftEd from the SSS websi1e at hllpst/ol.wN.sss.gov.ph/ (Last
1
accessed: Mly 30, 2014).
Sedion8(j),RA.No.8282.
412 BAR REVIEWER ON lABOR lAW
4. The employer has been notified, or, if a separated, voluntary or self
employed member, the SSS directly.
• How much sickness benefit is a member entitled to receive?
The amount of a member's sickness benefit per day is equivalent to
ninety percent (90%) of the member's average daily salary credit.
• How is the sickness benefit computed?
1. Exclude the semester of sickness.
A "semester" refers to two consecutive quarters ending in the
quarter of sicknes~.
A "quarter" refers to three consecutive months ending March,
June, September or December.
2. Count twelve (12) months backwards starting from the month
immediately before the semester of sickness.
3. Identify the six (6) highest monthly salary credits within the 12-
month period.
"Monthly salary credit" means the compensation base for
contributions and benefits related to the total earnings for the
month. (The maximum covered earnings or compensation is
P15,000 effective Jan 1, 2002).
4. Add the six (6) highest monthly salary credits to get the total
monthly salary credit.
5. Divide the total monthly salary credits by 180 days to get the
average daily salary credit.
6. Multiply the average daily salary credit by 90 percent to get the
daily sickness allowance.
7. .Multiply the daily sickness allowance by approved number of days
to arrive at the amount of benefit due.
For example, let us say that an SSS member gets sick or injured in
October 2004 for 20 days:
a) The semester of sickness would be from July 2004 to December
2004.
b) The 12-month period would be from July 2003 to June 2004
within which the six highest monthly salary credits will be
chosen.
c) Let us assume that the six highest monthly salary credits are PIS,
000 each. The total monthly credit would be P90, 000 (PIS, 000
x6).
CHAPTER VI 413
SOCIAl WElFARE LEGISlATION
d) The total monthly salary would be divided ·by 180 to get the
average daily salary credit or P500 {P90, 000/180).
e) The sickness benefit due is P9,000 (P4SO x 20 days).
• How many days in ayear can a member avail himself of the
sickness benefit?
A member can be granted sickness benefit for a maximum of 120 days
in one calenqar year. Any unused portion of the allowable 120 days sickness
benefit cannot be carried forward and added to the total number of allowed
compensable days for the fullowing year.
The sickness benefit shall not be paid for more than 240 days on
account of the same illness. If the sickness or injury still persists after 240 days,
his claim will be considered a disability claim.
• How would an employed member be paid his sickness benefit?
The payment of the daily sickness allowance is advanced by the
employer every regular payday. The SSS will then reimburse the employer of
the amount legally advanced upon receipt of satisfactory proof of such payment
and legality thereof.
The SSS will reimburse the employer only for confinements within the
one (1) year period immediately precedi..11g and the date the claim for benefit or
reimbursement is received by the SSS, except for confmements in hospital (i.e.
SSS receives the employer's reimbursement claim on Oct. 3, 2004 for the
sickness period September 23 to Oct. 14, 2003. The employer will be
reimbursed for the period Oct. 4 to 14, 2003 only as Sept. 23 to Oct. 3, 2003
falls outside the prescribed one-year period for reimbursement claim).
• How about the unemployed, self-employed or voluntary member?
The sickness benefit will be paid directly by the SSS to the
unemployed, self-employed or voluntary members.
• What is the prescribed period for filing for a member who is
confined in a hospital?
For hospital confinement, the claim for benefit must be ftled within one
(1) year from the last day of confinement from the hospital. For home
confmement, the claim for reimbursement by the employer must be ftled within
one (1} year from the start of illness. Failure to file the claim within the
prescribed period will result to denial of the claim.
414 BAR REVIEWER ON lABOR lAW
1
2. MATERNITY BENEFIT.
• What is the maternity benefit?
The maternity benefit is a daily cash allowance granted to a female
member who was unable to work due to childbirth or miscarriage.
• What are the qualifications for its entitlement?
1. She has paid at least three (3) monthly contributions within the 12-
month period immediately preceding the semester of her childbirth
or miscarriage.
2.. She has given the required notification of her pregnancy through her
employer if employed, or to the SSS if separated, voluntary or self-
employed member.2
Pregnant women, whether married or unmsrried, are entitled to
maternity leave benefits.
Entitlement to maternity !eave benefits is not dependent on the civil status
of the pregnant woman. Every pregnant woma_n in· the private sector, whether
married or unmarried, is entitled to the maternity leave benefits.3
Maternity benefits, not part of 13th month pay comput2tion.
Maternity benelfits, like other benefits granted by the SSS, are granted to
employees in lieu of wages and therefore may not be included in computing the
employee's 13111 month pay for the calendaryear.4
• Is the voluntary or self-employed member also entitled to the
maternity benefit?
Yes, a voluntary or a self-employed member is entitled to the maternity
benefit provided that she meets the qualifying conditions.
• How much is the maternity benefit?
The maternity benefit is equivalent to 100 percent of the member's
average daily salary credit multiplied by 60 days for normal delivery or
miscarriage, 78 days for caesarean section delivery.
• How is the maternity benefit computed?
I. Exclude the semester of contingency (delivery or miscarriage).
1 The disaJSSioo M fol7,w is based oo l1e i1bmafioo ifted fran lle SSS 'Mlbsile at htlps:/ftMw.sss.gov.phl (last
occessed: ~ 30, 2014).
2 See also No. XI, DOLE Handbook on WorKer.; Staluby M:lnelary Benefit.
3 ld.
4 ld.
CHAPTER VI 415
SOCIAL WELFARE lEGISLATION
A "semester" refers to two consecutive quarters ending in the
quarter of contingency.
A "quarter" refers to three consecutive months ending March,
June, September or December.
2. Count 12 months backwards starting from the month immediately
before the semester of contingency.
3. Identify the six highest monthly salary credits within the 12-month
period.
"Monthly salary credit" means the compensation base for
contributions benefits related to the total earnings for the month.
4. Add the six highest monthly salary credits to get the total monthly
salary credit.
5. Divide the total monthly salary credit by 180 days to get the average
daily salary credit. This is equivalent to the daily maternity
allowance.
6. Multiply the daily maternity allowance by 60 (for normal delivery
or miscarriage) or 78 days (for caesarean section delivery) to get the
total amount of maternity benefit.
For example, iet us say that an SSS member gives birth in
December 2004.
a) The semester of contingency would be fi·om July 2004 to
December 2004
b) The 12-month period before the semester of contingency would
be from July 2003 to June 2004
c) Let us assume that the six highest monthly salary credits are
Pl5,000 each. Thus, the total monthly salary credit would be
P90,000 (Pl5, 000 x 6).
d) The daily maternity allowance would be P500 (P90,000/180).
e) The total maternity benefit due would be P30, 000 (P500 x 60·
days) for normal delivery or P39,000 (PSOO x 78) for caesarian
cases.
• How many deliveries are covered under existing laws?
The maternity benefit shall be paid only for the first four (4) deliveries
or miscarriages starting May 24, 1997 when the Social Security Act of 1997
(R.A. No. 8282) took effect
• Can a member apply for sickness benefit if she has been paid the
mmernity benefit?
No. A female member cannot claim for sickness benefit for a period of
60 days for normal delivery or miscarriage or 78 days for caesarean delivery
416 BAR REVIEWER ON lABOR lAW
within which she has been paid the maternity benefit. As a rule, no member can
be entitled to two benefits for the same period.
• Is it necessary to notify the S~S of a member's pregnancy?
·Yes. As soon as a member becomes pregnant, she must immediately
notify her employer (if employed) or the SSS (if separated/voluntary/self-
employed) of such pregnancy and the probable date of her childbirth at least 60
days from the date of conception by accomplishing SSS FORM MAT-1
(Maternity Notification Form) and by submitting proof of pregnancy.
The employer must, in tum, notify the SSS through the submission of
the maternity notification form and proof of pregnancy immediately after the
receipt of the notification from the employee member. Failure to observe the
rule on notification may result to the denial ofthe maternity claim.
• How would the claimant be paid the matemity benefit?
(I) For employed members - the benefit is advanced by the
employer to the qualified employee, in full, within 30 days from
the date of filing of ihe maternity leave application. The SSS, in
tum, shall immediately reimburse the employer l 00 percent of
the amount of maternity benefit advanced to the female
employee upon receipt of satisfactory proof of such payment and
legality thereof. If the employee member gives birth or suffers
miscarriage without the required contributions having been
remitted by the employer, or the employer fails to notify the
SSS, the employer will be required to pay to the SSS damages
equivalent to the benefits the employee would otherwise have
been entitled to.
(2) For separated/voluntary/self-employed members- the amount
of benefit is paid directly to them by the SSS.
3. RETIREMENT BENEFIT.'
• What is the retirement beneftt?
It is a cash benefit either in monthly pension or lump sum paid to a
member who can no longer work due to old age.
• Who may quaUfy for a retirement benefit?
1. A member who is 60 years old, separated form employment or
ceased to be self-employed, and has paid at least 120 monthly
contributions prior to the semester of retirement.
I The clisaJssOllhat folklw3 is based 00 f1e iJbmation lf\ed fiool f1e SSS v.rosite at htlps1fwi.W.SSS.gtrl.ph/ (Last
accessed: May 30, 2014).
OiAPTIRVI 417
SOCIAL WELFARE LEGISLATION
2. A member who is 65 years old whether employed or not and has
paid at least 120 monthly contributions prior to the semester of
retirement.
For Underground Mineworkers:
1. Has reached the age of SS years old and is an underground
mineworker for at least S years (either continuous or accumulated)
prior to the semester of retirement but whose actual date of
retirement is not earlier than March 13, 1998; separated from
employment or in the case of self-employed, has ceased self-
employment, and has paid at least 120 monthly contributions prior
to the semestt:r of retirement.
2. Has reached the age of 60 years old whether employed or not.
• What are the types of retirement beneftts?
Tney are:
1. the monthly pension, and
2. the lump sum amount.
The monthly pension is a lifetime cash benefit paid to a retiree who
has paid at least 120 monthly contributions to the SSS prior to the semester of
retirement.
The lump sum amount is granted to a retiree who has !Q! paid the
required 120 monthly contributions. It is equal to the total contributions paid by
the member and by the employer including interest.
• How much monthly pension will a retiree receive?
The monthly pension depends on the members paid contributions,
including the credited years of service (CYS) and the number of dependent
minor children but not to exceed five. The amount of monthly pension will be
the highest of:
1. the sum of P300 plus 20 percent of the average monthly salary
credit plus 2 per cent of the average monthly salary credit for each
accredited year of service (CYS) in excess often years; or
2. 40 per cent of the average monthly salary credit; or
3. Pl,200, provided that the credited years of service (CYS) is at least
10 or more but less than 20 or P2,400, if the CYS is 20 or more. The
monthly pension is paid for not less than 60 months.
418 BAR REVIEWER ON lABOR lAW
A retiree has the option to receive the first 18 monthly pension in lump
sum discounted at a preferential rate of interest to be determined by the SSS.
The option should be exercised upon filing of the first retirement claim. Only
advance payments shall be discounted on the date of the payment. The
dependents' pension and 13th month pensions are excluded from the 18 months
lump sum pension.
The member will receive the monthly pension on the 19th month and
every month thereafter.
• What happens when the retirement pensioner resumes
employment?
The monthly pension shall be suspended upon the re-employment or
resumption of self-employed of a retired member who is less than 65 years old.
The member shall again be subjected to compulsory coverage. At 65 year old
whether employed or not, he can already claim for retirement benefit.
• How much is the monthly pension of a member who retires after
age 60 and who has contributed the required 120 monthly
contribution.~?
The monthly pension shall be the higher of the following:
1) the monthly pension computed at the earliest time the member
could have retired had been separated from self-employment
or ceased to be self-employed plus all adjustments thereto; or
2) the monthly pension computed at the time when the member
actually retires.
A pensioner who retires more than once shall be entitled to the
higher of:
1) the monthly pension computed for the first retirement claim;
or
2) the re-computed monthly pension for the new claim.
• Aside from the retirement benefit, what else can a retiree receive?
The retiree is entitled to a 13th month pension payable every December.
All retiree pensioners prior to the effectivity of R.A. No. 7875 1 on March 4,
1995 are automatically considered members of PhilHealth and he and his legal
dependents are entitled to its hospitalization benefits. On the other hand, retirees
effective March 4, 1995 up to the present will be entitled to hospitalization
benefits under PhilHealth only if they have contributed 120 monthly Medicare
1 lhlslawisolherwiseknoMI as lhe'Naoonal HeaUh lnsu~"MCeAd.of1995."
CHAPTER VI
SOCIAL WELFARE lEGISLATION
419
contributions. The counting of 120 monthly contributions shall start in 1972,
when the Medical Care Act of 1969 started implementation.
• Are the children of a retiree member entitled to the dependent's
pension?
The legitimate, legitimated. or legally adopted and illegitimate children.
conceive on or before the date of retirement of a retiree Will each receive
dependents' pension equivalent to 10 percent of the member's monthly pension
or P250, whichever is higher.
Only five minor children, beginning from the youngest, are entitled to
the dependents' pension. No substitution is allowed.
If there are more than five dependents, the legitimate, legitimated or
legally adopted children shall be preferred.
• For how long will the dependent child receive his pension?
The dependents' pension stops when the child reaches 21 years old,
gets married, gets employed or dies. However, the dependents' pension is
granted for life for children who are over 21 years old, provided they are
incapacitated and incapable of self-support due to physical or mental defect
which is congenital or acquired during minority.
• What will happen to the monthly pension of a retiree in case of
death?
Upon the death of a retiree pensioner, the primary beneficiaries as of
the date of retirement shall be entitled to I00 per cent of the monthly pension
and the dependents to the dependents' pension.
If the retiree pensioner dies within sixty {60) months from the start of
the monthly pension and has no primary beneficiaries, the secondary
beneficiaries shall be entitled to a lump sum benefit equivalent to the total
monthly pensions corresponding to the five-year guaranteed period excluding
the dependents' pension.
4. DISABILITY BENEFIT. 1
• What is the medical and functional assesstneRt under the new
disabUity program?
Under medical assessment nature and degree of impairment of
affected body part/system is determined through physical examination and
interview supported by appropriate diagnostic tests; while, under functional
assessment the capacity of the individual to perform activities of daily living
(ADL) is tested using the Functional Independence Measure (FIM).
Member should have 20% medical impairment to qualify for functional
assessment.
, The disa.tssioo t1at ftho,s is based 00 lhe ilformalion ifled from lhe sss websile ci ~.sss.gov.ph/ (Last
accessed: May 30, 2014).
 \..HAl'ltK VI 421
420 BAR REviEWER ON lABOR lAW SOCIAL WELFARE LEGISLATION

The lowest monthly pension is P1,000 for members with less than 10
• Wh() is qualifred for disability benefit under the new program?
credit years of service (CYS); Pl,200 with at least 10 CYS and P2,400 with at
A member who suffers partial or total disability with at least one (1) least 20 CYS.
monthly contribution paid to the SSS prior to the semester of contingency is
qualified.
• Is the monthly pension for life?
• What are some of the permanent partial disabilities? Only totally and permanently disabled members will receive a
A complete and permanent loss or use of any of the following body lifetime monthly pension. However, the pension will be suspended .if the
parts and does not totally prevent a member from engaging in any gainful pensioner recovers from the illness, resumes employment or fails to report for
annual physical examination when notified by the SSS. The member may
occupation.
request for a domiciliary or a home visit if the disability inhibits the member
one thumb one big toe
one hand from reporting for re-examination by the SSS physician at any of SSS branch
one index finger
one middle finger one arm offices.
one ring fmger one foot
one little fmger one leg The monthly pension of a partially disabled member is paid up to a
hearing of one ear one ear certain number of months only according to the degree of disability. If with
hearir.g of both ears both ears deteriorating and related permanent partial disability, the percentage degree of
sight of one eye disability of previously granted claim shall be deducted from the percentage
degree of disabiiity of the current claim.
• What are some of the permanent total disabilities? The monthly pension is also given in a lump sum if duration ofpension
is payable for less than 12 months.
The following fall under permanent total disability:
1. Complete loss of sight of both eyes; • IIow much is the lump sum amount?
2. Loss of two limbs at or above the ankle or wrists; For permanent total disability, the lump sum benefit is equivalent to
3. Permanent complete paralysis of two limbs; the monthly pension times the number of monthly contributions paid to the SSS
4. Brain injury resulting to incurable imbecility or insanity; and or twelve (12) times the monthly pension, whichever is higher.
5. Such cases as determined and approved by the SSS.
For permanent partial disability, the lump sum is equivalent to the
• What are the types of disability benefits? monthly pension times the number of monthly contributions times the
percentage of disability in relation to the whole body or the monthly pension
They are:
times 12 times the percentage of disability, whichever is higher.
1. the monthly pension; and
2. the lump sum amount. • Aside from the disability benefit, what else can a disability
pensioner receive?
The monthly pension is a cash benefit paid to a disabled member who
has paid at least 36 monthly contributiQ!!§ to the SSS prior to the semester of In addition to the monthly pension, a sup_plemental allowance of
P500.00 is paid to the total or partial disability pensioner. The allowance will
disability.
provide additional fmancial assistance to meet the extra needs arising from the
The lump sum amount is granted to those who have not paid the disability.
required 36 monthly contributions.
Total disability pensioners and their legal dependents prior to the
• How much is the monthly pension? effectivity of R.A. 7875 on March 4, 1995 are entitled to hospitalization
The amount of the monthly pension will be based on the member's benefits under PhilHealth. Total disabled pensioners upon the effectivity ofR.A.
number of paid contributions and the years of membership.
1 This law is olheMisekool.ll as the 'National Heafth klsllllilCS Act of 1995.'
422 BAR REviEWER ON LABOR LAW
7&75 on March 4, 1995 and thereafter, are no longer covered except when they
have accumulated one hundred twenty (120) Medicare monthly contributions
and have reached age sixty (60).
However, those who wish to avail ofPhilHealth benefits may enroll in
the Individually-Paying Program (for voluntary/self-employed) or the Indigent
Program (IP) ofPhilHealth.
• Are the children of a disabled member entitled to the dependent's
pension?
The dependent legitimate, legitimated, legally adopted and illegitimate
children, conceived on or befoi"e the date of contingency of a totally disabled
pensioner will each receive a dependent's pension equivalent to 10 per cent of
the member's pension or P250, whichever is higher.
Only five minor-children, beginning from the youngest are entitled to
the dependents' pension. No substitution is allowed. Where there are legitimate
and illegitimate minor children, the legitimated or legally adopted ones will be
preferred.
The minor children of a partially disabled pensioner are not entitled to
the dependent's pension.
• For how long will the dependent child receive his pension?
The dependent's pension stops when the child reaches 21 years old,
gets married, gets employed or dies. However, the dependent's pension is
granted for life to children who are over 21 years old, provided, they are
incapacitated and incapable of self-support due· to physical or mental defect
which is congenital or acquired during minority.
• What will happen to the monthly pension in case the pensioner gets
re-employed, resumes self-employment, r.ecovers from his
permanent total disability or his failure to present himself/herself
for examination upon notice by SSS?
The monthly pension of the member and the dependent's pension will
be suspended upon the reemployment or resumption of self-employment or the
recovery of the disabled member from permanent total disability or failure to
present himself/herself for examination at least once a year upon notice by SSS.
• What will happen to the monthly pension of a disability pensioner
in case of death?
Upon the death of the permanent total disability pensioner, the primar·y
beneficiaries as of the date of disability, shall be entitled to 100 per cent of the
monthly pension and the dependents to the dependents' pension.
CHAPTER VI
SOCIAL WELFARE LEGISLATION
423
If the totally disabled pensioner has no primary beneficiaries and dies
I
I
within sixty (60) months from the start of the monthly pension, the secondary
beneficiaries shall be entitled to a lump sum benefit equivalent to the total
monthly pensions corresponding to the balance of the five-year guaranteed
period excluding the dependent's pension.
I The pension stops when a partial disability pensioner retires or dies.
• What is the prescriptive period in filing disability claims?
The prescriptive period in the filing of disability benefit claim is ten
(10) years from the date of occurrence of disability.
5. DEATH AND FUNERAL. 1
• What is the death benefit?
It is a cash benefit either in monthly pension or lump sum paid to the
beneficiaries of a deceased member.
• What are the types of death benefits?
They are:
l} the monthly pension; and
2) the lump sum amount.
The monthly pension is granted oniy to the primary beneficiaries of a
deceased member who had paid 36 monthly contributions before the semester of
death.
The lump sum is the amount granted to the primary beneficiaries of a
deceased member who had paid less than 36 monthly contributions before the
semester of death. The secondary beneficiaries shall be entitled to a lump sum
benefit.
• How much is the monthly pension?
The monthly pension depends on the member's paid contributions,
including the credited years of service (CYS) and the number of dependent
minor children but not to exceed five (5).
• The amount ofmonthly pension will be the highest of:.
1. the sum of P300 plus 20 percent of the average monthly salary
credit plus two percent of the average monthly salary credit for each
credited year of service (CYS) in excess of 10 years; or
2. 40 percent of the average monthly salary credit; or
1
The diialSSion that ftlllaNs is based on 11e ilfllnmlion lifted from lhe SSS website at hHps:/Aw.w.sss.gov.ph/ (last
accessed: May 30, 2014).
·n···m·tt
 BAR REVIEWER ON lABOR lAW
424
3. Pl,OOO if the member had less than 10 credited years of service
(CYS); Pl,200 if with at least 10 CYS; or P2,400 if with at. least 20
CYS. The monthly pension is paid for not less than 60 months.
• If the deceased member is sutvived by legitimate, legitimated, or
legally adopted and illegitimate children, how is the monthly
pension divided?.
If a deceased member is survived by less than five (5) minor legitimate,
legitimated, or legally adopted children, the illegitimate minor children will be
entitled to 50 percent of the share of the legitimate, legitimated or legally
adopted children in the basic pension and 100 percent of the dependents'
pension.
In cases where there are no legitimate, legitimated, or legally adopted
children, the illegitimate minor children shall be entitled to 100 percent of the
basic pension.
• How much is the lump sum death b€nefit?
The primary beneficiaries of a deceased member who has paid less than
36 monthly contributions shall be entitled to lump sum benefit which shall be
the higher of:
1) monthly pension times the number of monthly contributions paid
prior to the semester of death; or
2) twelve (12) times the monthly pension.
The secondary beneficiaries of the deceased member shall be entitled
to a lump sum benefit equivalent to:
a. 36 times the monthly pension; if the member has paid at least 36
monthly -contributions prior to the semester of death; or
b. monthly pension times the number of monthly contributions paid or
twelve (12) times the monthly pension, whichever is higher, if the
member has paid less than 36 monthly contributions prior to the
semester of death.
• Is there anything else a deceased member's benefiCiaries can avail
of?
Yes, the deceased member's beneficiaries are entitled to a l31h month
pension payable every December and the funeral benefit, which is paid to
whoever, shouldered the funeral expenses of the deceased member.
I..HAI'ItR VI 425
SOCIAL WELFARE LEGISLATION
Survivorship pensioners prior to the effectivity ofRA. 7875 1 on March
4, 1995 are also entitled to hospitalization benefits under PhilHealth. They need
to register under PhilHealth and must submit a DDR print-out indicating the
type of claim is survivorship in nature and the effectivity date of pension or a
copy of Death/Survivorship Certification issued by the SSS indicating the
effectivity of the pension shall be submitted to PhilHealth.
Survivorship pensioners under the effectivity of RA 7875 on March 4,
1995 and thereafter, are no longer covered. However, those who wish to avail of
PhilHealth benefits may enroll in the Individually-Paying Program (for
voluntary/self-employed) or the Indigent Program (IP) ofPhilHealth.
• If the deceased member has not paid any single contribution, are
the beneficiaries still entitled to the death and funeral benefits?
The primary or secondary beneficiaries of a deceased employee-
member, who had no contribution payment at all and who was reported for
coverage shall be entitled to funeral benefit only.
• Are the children of a deceased member entitled to the dependents'
pension?
The dependent legitimate, legitimated, legally adopted or illegitimate
children, conceived on or before the date of death of a deceased will each
receive a dependents' pension equivalent to 10 percent of the members' monthly
pension or P250, whichever is higher.
Only five (5) minor children, beginning from the youngest, are entitled
to the dependents' pension. No substitution is allowed.
Where there are more than five (5) legitimate and illegitimate minor
children, the legitimate shall be preferred.
• For how long will the dependent child receive his pension?
The dependents' pension stops when the child reaches 21 years old,
gets married, gets employed or dies. However, the dependents' pension is
granted for life to children who are over 21 .years old, provided they are
incapacitated and incapable of self-support due to physical or mental defect
which is congenital and acquired during minority.
• What is the funeral benefit?
The funeral benefit is a variable amount ranging from a minimum of
P20,000 to a maximum of P40,000, depending on the member's paid
contributions and CYS.
1 This law is olleMise knoiM1 as 11e 'Natiooal Heath lnsur.rx:e M. a 1995."
426 1\AR REVIEWER ON lABOR 11\W
4.2.
EMPLOYEES' COMPENSATION BENEFITS
This is the second class of benefits under the SSS Law, the first being
the Social Security Benefits discussed above. For purposes of discussing this
topic in an orderly fashion, the same shall be presented under the topic "D.
Employee's Compensation.:... Coverage and When Ccompensable", infra.
B.
GSISLAW1
1.
COVERAGE
J. COMPULSORY MEMBERSHIP lN THE GSIS. 2
(l) All government personnel, whetht:r elective or appointive,
irrespective of status of appointment, provided they are receiving Hxed monthly
compensation and have not reached the mandatory retirement age of 65 years,
are compulsorily covered as members of the GSIS and shall be required to pay
contributions.3
(2) However, employees who have reached the retirement age of 65 or
more shall also be covered, subject to the following rules:
An employee who is already beyond the mandatory retirement age of
65 shall be compulsorily covered and be required to pay both the life and
retirement premiums under the following situations:
a) An elective official who at the time of election to public office is
below 65 years of age and will be 65 years or more at the end of his
term of office, including the period/s of his re-election to public
office thereafter without interruption.
b) Appointive officials who, before reaching the mandatory age of 65,
are appointed to government position by the President of the
Republic of the Philippines and shall remain in government service
at age beyond 65. 4
c) Contractual employees including casuals and other employees
with an employee-government agency relationship are also
1 RA No. 8291, entitied'TheGovemmentSeM:elnsur.me~Act-of1997~
2 Section 2., Rule II,~ Rules and"RegulationsdRA. No. S291.
3 Section 2.1., Rule II, Ibid.
~ Section 22., Rule II, IJid.
L_
.
SOCIAL WELFARE LEGISLATION
compulsorily covered, provided they are receiving fixed monthly
compensation and rendering the required number of working hours
for the month. 1
I 2. CLASSES OF MEMBERSHIP.
r
Membership in the GSIS is classified either by type or status of
membership. 2
!
• As to .!l:P! of members, there are regular and special members:
(a) Regular Members - are those employed by the government of
the Republic of the Philippines, national or local, legislative
bodies, government-owned and controlled corporations (GOCC)
with original charters, government financial institutions (GFis),
except uniformed personnel of the Armed Forces of the
Philippines, the Philippine National Police, Bureau of Jail
Management and Penology (BJMP) and Bureau of Fire
Protection (BFP), who are required by law to remit regular
monthly contributions to the GSIS.
(b) Special Members - are constitutional commissioners, members
of the judiciary, including those with equivalent ranks, who are
required by law to remit regular monthly contributions for life
insurance policies to the GSIS in order to answer for their life
insurance benefits defined under RA 8291.3
• As to status of membership, there are active and inactive members.
(a) Active member - refers to a member of the GSIS, whether
regular or special, who is still in the government service and
together with the government agency to which he belongs, is
required to pay the monthly contribution.
(b) Inactive member - a member who is separated from the service
either by resignation, retirement, disability, dismissal from the
service, retrenchment or, who is deemed retired from the service
4
under this Act.
3. EFFECTMTY OF MEMBERSIDP.
The effective date of membership shall be the date of the member's
5
assumption to duty on his original appointment or election to public office.
I
i Sedm23., Rule II, Ibid.
,I Section 2.4., Rule II, lbkl.
3 Sedion2.4.1., Rule II, Ibid.
4 Sedion 2.41., Rule II, Ibid.
5 Sedion 5, Rule II, Ibid.
f
.
"' -~--
 SOCIAL WELFARE LEGISLATION

(a) The legitimate spouse dependent for support upon the member or
4. EFFECT OF SEPARATION FROM THE SERVICE.
pensioner;
A member separated from the service shall continue to be a member, (b) The legitimate, legitimated, legally adopted child, including the
and shall be entitled to whatever benefits he has qualified to in the event of any illegitimate child, who is unmarried, not gainfully employed, not
contingency compensable under the GSIS Law. 1 over the age of majority, or is over the age of majority but
incapacitated and incapable of self-support due to a mental or
2. physical defect acquired prior to age of majority; and1
EXCLUSIONS FROM COVERAGE (c) The parents dependent upon the member for support.
Gainful Occupation - Any productive activity that provided the
1. EXCLUSION FROM COMPULSORY COVERAGE OF GSIS LAW. 2
member with income at least equal to the minimum compensation of
The following employees are excluded from compulsory coverage: 2
government employees.
(a) Uniformed personnel of the Atmed Forces of the Philippines 4.
(AFP), Philippine National Police (PNP), Bureau of Fire Protection BENEFITS
(BFP) and Bureau of Jail Management and Penology (BJMP); 3
(b) Barangay and Sanggunian Officials who are not receiving fixed 1. KINDS OF BENEFITS.
monthly compensation; 4 The following arc the benefits under the GSIS Law:
(c) Contractu!!! Employees who are not receiving fixed monthly
compensation;5 and (a) Compulsory Life Insurance Benefits under the Life Endowment
(d) Employees who do not have monthly regular hours of work and Policy (LEP)
a..re not receiving fixed monthly compensation. 6 (b) Compulsory Life Insurance Benefits under the Enhanced Life
Policy (ELP)
3. (c) Retirement Benefits
DEPENDENTS, BENEFICIARIES (d) Separation Benefit
(e) Unemployment Benefit
1. BENEFICIARIES. (t) Disabiiity Benefits
There ru:e two (2) kinds of beneficiaries under the GSIS Law as (g) Survivorship Benefits
follows: (h) Funeral Benefits
2. COMPULSORY LIFE INSURANCE BENEFITS UNDER THE LIFE
I. Primary beneficiaries - The legal dependent spouse until he/she
remarries and the dependent children. ENDOWMENT POLICY (LEPl
2. Secondary beneficiaries - The dependent parents and, subject to A member under this policy may be entitled to any of the following
the restrictions on dependent children, the legitimate descendants. 7 benefits, depending on the circumstances:
2. DEPENDENTS. a) Maturity benefits, which is the face amount payable to the member
upon maturity of the policy.
Dependents shall be the following: b) Cash Surrender Value, which is earned values during the tenn of the
insurance payable to the member when he is separated from the
service before maturity date of the policy or when he is considered
1 Section 4, RA No. 8291.
2
as a case ofPTD.
Section 3., Rule II, llid.
3 Section3.1.1.,Rulell, llid.
4 Section 3.12., Rule II, Ibid.
s Section 3.1.3., Rule II, llid.
1 Section 2(~. Ibid.
Section 2(p), lbkl.

......_
2
6 Section 3.1.4., Rule II, Ibid.
7 Section 2(g), RA No. 8291.
3 Section 18., Rule IV, Ibid.

. -
430 BAR REviEWER ON LABOR LAW
c) Death Benefit, which is the face value of the policy payable to
designated beneficiary/beneficiaries or legal heirs, in the absence of
the former, upon the death of a member,
d) Accidental Death Benefit (ADB) is an additional benefit equivalent
to the amount of Death Benefit when the member dies by accident.
In this connection, proof must be presented to sufficiently establish
that the cause of the member's death is accidental.
e) The right to present sufficient proof to show that death was
accidental shall prescribe if the claim for ADB is filed four (4) years
after the death of the member.
f) Cash Dividend. A policyholder is entitled to dividends subject to the
guidelines as approved by the GSIS Board. This is not a guaranteed
benefit. 1
3. COMPULSORY LIFE INSURANCE BENEFITS UNDER THE
ENHANCED LIFE POLICY (ELP).1
A member under this policy may be entitled to any of the fallowing
benefits, depending on the circumstances:
l. Death Benefit equivalent to the latest annual salary multiplied by
amount of insurance (AOI) factor which is 1.5 or 18 times the
current monthly salary of the member or as determined by the
GSIS, payable to the legal heirs, less all outstanding obligations of
the member in accordance with the CLIP.
2. Termination Value. The policy earns a Termination Value during
the life of the policy computed from the percentage of life insurance
premiums actually remitted and paid to GSIS.
• Termination value is equivalent to a percentage of monthly life
insurance premiums as determined by the GSIS, due and paid in
ful~ either by direct remittance or through an APL facility.
• 'The accumulated termination value will grow at such rate as
determined by the Actuary.
• The termination value shall be paid to the member upon his
separation from the government service less all indebtedness of
the member with the GSIS in accordance with CLIP.
3. Cash Dividend. A policyholder is entitled to dividends, subject to
the guidelines as approved by the GSIS Board. This is not a .
guaranteed benefit. 3
1 Sectioos 18.1. to 18.5., Rue IV, lbk!.
Sedioo 19., Rule IV, llid.
3 Sectioos 19.1. il19.3., Rule IV, Ibid.
1.__
SOCIAL WELFARE LEGISLATION
1
4. RETIREMENT BENEFITS.
The retirement benefit consists of a monthly pension which is
computed based on years of creditable service and Average Monthly
Compensation (AMC) for the last 3 years.
a. Eligibility.
The member:
1) has rendered at least Fifteen (15) years of service;
2) is at least Sixty (60) years of age; and
3) is not receiving a monthly pension benefit from permanent total
disability.1
b. Retirement Benefit Options.
A retiring member has the following options:
(1) Five (5) year lump sum equivalent to sixty (60) months of the basic
monthly pension (BMP), subject to qualification requirements, less all
outstanding obligations of the member ir1 accordance with the Claims and Loans
Interdependency Policy (CLIP), plus an old-age pension benefit equal to the
BMP payable for life, starting on the first day of the month following the
expiration of the five year guaranteed period; or
(2) A cash payment benefit equivalent to eighteen (18) times of the
BMP, subject to qualification requirements, less all outstanding obligations of
the member in accordance with the CLIP, plus monthly pension for life payable
3
on the first month following the date ofretirement.
c. Conversion in the mode of retirement.
Conversion in the mode of retirement from R.A. No. 8291 to any other
retirement laws and vice versa administered by the GSIS shall not be allowed.
Those who became GSIS members prior to the implementation ofRA.
No. 8291 shall have the option to retire under PD 1146, RA 660, or RA 1616,
4
subject to eligibility.
d. Change of retirement benefit option under RA 8291.
Change of retirement benefit option from eighteen (18) months cash
payment plus immediate pension to five (5) year lump sum, or vice versa, shall
not be allowed. The GSIS shall process the claim for retirement benefits based
on the member's records in the GSIS database.s ·
1 Section 20., Rule IV, llid.
': ._ 2 Se<mns20.1.1. ~ 20.1.3, Rule IV, Ibid.
3 Se<mns 202.1.10 2022, ROO IV,IbKl.
4 Section 20.3., Rule IV, Ibid.
; Section 20.4., Rule IV,IIli:l.
. .
432 DAK tu:VItWtK. UN LAHUK. U\YV
e. Processing of retirement benefits of members who died while
their claims are being processed.
For those qualified for retirement benefits:
I. If the deceased member opted for five year lump sum benefitas
indicated ·in his/her claim for retirement application, his legal heirs
shall be entitled to five-year lump sum benefit equivalent to sixty
(60) months basic monthly pension (B:MP). However, the
survivorship pension to qualified primary beneficiaries, if any, shall
be granted after the end of the 5-year guaranteed period, but filing
of claim for survivorship benefit should be done before the end of
the 4-year prescription period.
2. If the deceased member opted for immediate pension as indicated in
his/her claim for retirement benefit his legal heirs shall be entitled to
retirement benefits equivalent to eighteen (18) months ofBMP, plus
accrued pension, if any, up to the date of death of the retiree. The
corresponding survivorship pension shall be paid tc the qualified
primary beneficiaries, if any, and shall be computed from the date
of death of the retiree, subject to filing of claim.
3. In case the deceaSed member failed to indicate in his/her retirement
option, it shall be computed as if he/she opted for immediate
pension.
4. The proceeds of retirement benefits shall be paid and distributed to
the legal heirs in accordance with the law on succession under the
Civil Code of the Philippines. 1
For those not qualified for retirement benefits, the GSIS shall determine
if he/she is qualified to other a~plicable benefits under R.A. 8291 or such other
laws administered by the GSIS.
f. Effects of re-employment.
When a retired/separated member is re-employed or reinstated in the
service, his/her previous services credited at the time of his/her
retirement/separation for which a corresponding benefit had been awarded, shall
be excluded in the computation of service. In effect, he/she shall be considered a
new entrant.
However, for those who retired prior to the enactment ofR.A. 8291, the
previous services of a retired/separated member may be added in the
1 SecOOn 20.5.1., RLde IV, Ibid.
2 SecOOn 205.2., Rule IV, Ibid.
\..,ntu-a&:I\.YI
SOCIAL WELFARE lEGISLATION
computation of his creditable services (subject to premium-based policy) upon
subsequent retirement under R.A. 8291 only when both conditions are met: (a)
the retiree re-entered government service before June 24, 1997; and (b) the total
amount of benefit previously received, if any, including the prescnbed interest
1
was refunded to GSIS on or before March 2, 2006.
g. Basis of computation of total service.
Total Length of Service (TLS) is the number of years in government
service regardless of status of employment, with or without premium
contributions.
For purposes of computing the total length of service under part-time
status of employment, services shall be converted to their full-time equivalent
2
using forty-hour week and fifty two-week a year as basis.
h. Computation of creditable service.
The computation of creditable service for the purpose of determining
the amount of benefits payable shall include the period or periods of service ·
3
with the required premium contributions.
i. Computation of Average Monthly Compensation (AMC).
The AMC shall be computed on the basis of the average salary of the
member for the last 36 months of creditable service immediately preceding his
retirement or separation.
The basis for computing the AMC of a separated or retired member
requesting for computation of benefits shall be the prevailing policy on AMC at
4
the time the claim is being processed.
j. Computation of Revalued Monthly Compensation.
5
AMC plus Seven Hundred Pesos (P700.00).
k. Computation of Basic Monthly Pension.
The formula for computing the BMP may be adjusted subject to the
approval of the Board upon the recommendation by the President and General
Manager.
As a general rule, the B:MP shall only be computed for those members
or dependents/heirs of members who are eligible to receive benefits under this
1 Sections 20.6.1. kl20.62., Rule N, Ibid.
2 Sections20.7.1. kl20.7 .2., RuleN, Ibid.
3 Section 20.8., Rule W, lllil.
~ Sections 20.9.Uo 20.9.2., Rule N, Ibid.
5 Section 20.10., Rule IV, llid.
 OAKKI:VItWtKUN IAHUKIAW
'IS'l
law. It shall be computed on the basis of a percentage of the RAMC at the rate
of 2.5% for every year of creditable service, but in no case shall it exceed 90%
of the AMC of the member. The formula for computing BMP shall be: BMP =
RAMC X (2.5% X RCSi
I. Adjustment/Increase in pension.
Periodic adjustments of the monthly pension of all existing pensioners
shall be done on the basis of what is sustainable and prudent for the GSIS as
recommended by its Actuary and approved by the Board.2
m. Policies affecting pension administration.
1) Regardless of the date of retirement, the monthly pension shall
commence on the 1'1 day of the month following the month of retirement.
2) Annual Renewal of Active Status (ARAS) of Old Age and
Survivorship Pensioners is required on their birth month every year.
3) Effects of non-renewal of active status as pensioner:
a) Suspension of payment of monthly pension;
b) Non-entitlemer.t to cash gift if status is suspended at the time of
declaration;
c) Non-entitlement to pension increases if status is suspended at the
time of declaration. 3
5. SEPARATION BENEFIT.4
Separation benefit is either one of the following:
(I) For those members who are separated from service and who have at
least 3 years of service but less than I5 years shall be entitled to cash payment
equivalent to 100% of the member's AMC for each year of creditable service,
but not less than PI2,000.00, payable upon reaching age 60, or upon his
separation if he is already 60 years of age at the time of separation.5
(2) A cash payment equivalent to eighteen (18) times the basic monthly
pension payable at the time of resignation or separation, provided the member
resigns or separates from the service after he has rendered at least I5 years of
service and is below 60 years of age, plus an old-age pension benefit equal to the
basic monthly pension payable monthly for life upon reaching the age of60.6
(3) Reckoning Date of Separation of Uniformed PNP, BJMP and BFP
Personnel shall be February I, 1996. The computation of benefit shall be based
t Sedioo 20.11., RiJie IV, Ibid.
2 Sedia120.12., Rule IV, Ibid.
3 Sections 20.13.1. tl20.13.3., Rule IV, Ibid.
4 Sedioo 21, Rule IV, Ibid.
s Sedioo 21.1., Rule IV, Ibid.
6 Sedioo 212., Rule IV, Ibid.
I
~
CHAPTER VI 4~:>
SOCIAL WELFARE lEGISLATION
on their basic monthly salary (premium-based) when they ceased to be members
1
of the GSIS.
(4) Processing of separation benefit of members who died while their
claims are being processed:
1) If the member dies during the pendency of his claim for
separation benefit and he has rendered at least 15 years of
creditable service, his legal heirs shall be entitled to receive
cash payment equivalent to eighteen (18) times the basic
monthly pension, plus accrued BMP, if any, up to the date of
death of the member. Thereafter, the primary beneficiaries shall
be entitled to survivorship pension?
2) If the member dies during the pendency of his claim for
separation benefit and he has rendered less than 15 years of
creditable service, his legal heirs shall be entitled to cash
payment equivalent to one hundred percent (IOO%) of AMC3for
each year of creditable service, but not less than Pl2,000.00.
4
6. UNEMPLOYMENT B£N£FIT.
A member shall be entitled to the unemployment benefits if the
following conditions are met:
I) he/she was a permanent employee at time of separation;
2) his/her separation was involuntary due to the abolition of his/her
office or position resulting from reorganization; and
3) he/she has been paying the required premium contributions for at
5
least one (1) year but less than 15 years prior to separation.
The amount of unemployment benefit is equivalent to 50% of the AMC 6
and shall be paid in accordance with the Schedule in the Implementing Rules.
7
7. DISABILITY BENEFITS.
a. Meaning.
Disability refers to any loss or impairment of the normal functions of
the physical and/or mental faculties of a member, which permanently or
, Sedioo21.3., Rule IV, IJi!.
2 Sedioo 21.4.1., RUe IV, bid.
3 Section 21.42., Rule IV, Ibid.
4 Section 22, Rule IV, lbi:!.
s Sections 22.1.1. t>22.1.3., Rule IV, lbKI.
6 Sedioo 222., Rule IV, Ibid.
7 Sedioo 23, Rule IV, Ibid.
436 BAR REVIEWER ON lABOR lAW
temporarily prevents him to continue with his work or engage in any other
gainful occupation resulting in the loss of income. 1
b. Basis of reckoning.
The corresponding disability benefits for each kind of disability shall
be granted to a member based on the duration of incapacity to work and
actual loss of income. 2
c. Kinds of disability.
There are three (3) kinds of disability which shall be determined by the
GSIS based on established medical standards:
• Permanent Total Disability
• Permanent Partial Disability
• Temporary Total Disabilitl
d. Policies governing disability benefits.
l. Permanent Total Disability (PTD) - disability due to injury or
disease causing complete, irreversible and permanent incapadty that will
permanently disable a member to work or to engage in any gainful occupation
resulting to loss of income.
The following disabilities shall be deemed total and permanent:
a) Complete loss of sight for both eyes;
b) Loss of two limbs at or above the ankle or wrists;
c) Permanent complete paralysis of two limbs;
d) Brain. injury resulting in incurable imbecility or insanity; and
e) Such other cases as may be determined and approved by the GSIS.4
2. Permanent Partial Disability (PPDl - arises due to the complete
and permanent loss of the use of any of the following resulting to the disability
to work for a limited period of time:
l) any finger 2) any toe 3) one ann; 4) one hand; 5) one foot; 6) one
leg; 7) one or both ears; 8) hearing of one or both ears; 9) sight of one
eye; 10) such other cases as may be determined and approved by the
GSIS. 5
3. Temporary Total Disability OJDl- accrues or arises when the
impaired physical and/or mental faculties can be rehabilitated and/or restored to
1 Section 23.1., Rule IV, Ibid.
2 ld.
3 ld.
c Sedion 232.1., Rule IV, Ibid.
s Section 23.2.2., Rule IV, Ibid.
CHAPTER VI 437
SOCIAl WElFARE lEGISlATION
their normal functions, but such disability shall result in temporary incapacity to
work or to engage in any gainful occupation. 1
e. Disability or injury not covered.
Any disability or injury as a result o~ or due to grave misconduct,
participation in riots, gross and inexcusable negligence. under the influence of
drugs or alcohol or willful intention to injure or kill himself or another, shall not
be compensable.2
f. Actual loss of income.
The actual loss of income shall refer to the number of days when a
member went on leave of absence without pay (LWOP) reckoned immediately
from the date of commencement of disability and for the duration of entitlement
thereto, based on medical evaluation. Any LWOP incurred after the duration of
entitlement to the benefit shall not be compensable.3
g. Entitlement in case of two or more different contingencies.
If the member has two or more different contingencies during the same
period of benefit entitlement, he shall be compensated only once for the
overlapping periods. 4
h. Exclusions by reason of P.D. 626.
All injuries, disabilities, illnesses and all other infmnities compensab!e
under P.D. 626 shall not be compensable under this Act (R.A. 8291).5
i. Suspension of benefit.
Any applicable disability benefit shall be suspended when he/she:
a) is re-employed; or
b) recovers from his/her disability as determined by the GSIS, whose
decision shall be final and binding; or
c) fails to present himself for medical examination when required by
GSIS; or
d) is receiving any other pension either from GSIS or another local or
foreign institution or organization.6
j. Computation of Benefit.
l. Permanent Total Disability (PTD). - A member who becomes
permanently and totally disabled shall be entitled to the monthly income benefits
1 Sec1ioo 232.3., Rule N, lbi:l.
2 Section 23.2.•.,Rule IV, lbkl.
3 Sedion 231.5., Rule IV, lbkl.
Seclioo 23.2S., Rule IV, Ibid.
Seclioo 23.2.7., Rule IV, lbkl.
6 Seclioo 23.2.8., Rule IV, Ibid.

438 BAR REVIEWER ON lABOR lAW
for life equivalent to the basic monthly pension (BMP) effective from the date of
disability.'
2. Permanent Partial Disability (PPD).- The period of entitlement to
PPD benefit shall be determined after due medical evaluation; but such period of
entitlement to the benefit shall not exceed 12 months for the same contingency.
Only the leave of absence/s without pay incurred during the period of
entitlement, duly certified by the authorized officer of the agency where he is
employed, shall be compensable. The amount ofPPD benefit shall be computed
by dividing the BMP by 30 days and multiplying the quotient by the number of
compensable calendar days of leave of absence without pay (LWOP). 2
3. Temporary Total Disability (TTDl. - The period of entitlement to
TID benefit shall be determined after due medical evaluation and proof of
actual loss of work resulting in loss of income by way of the incurred actual
number of days of leave of absence/s without pay duly certified by the
authorized officer of the agency where he is employed; but such period of
entitlement to the benefit shall not exceed 120 days in one calendar year.
However, if the disability requires more extensive treatment that lasts beyond
120 days, the payment of the TID may be extended by the GSIS but not to
exreed a total of 240 days.
Only the leave of absence/s without pay incurred dlli'ing the period of
entitlement shall be compensable. Entitlement, however, shall start from the
fourth day of the disability. The amount of TID benefit shall be computed by
multiplying 75% of the daily salary of the member by the number of days of
disability based on the medical evaluation but not to exceed 240 days for the
same contingency. However, the computed daily salary shall not be less than
P7Q.OO but not to exceed P340.00 per day. 3 For the purpose of computing the
corresponding benefit of inactive members for each kind of disability, the BMP,
with respect to PTD and PPD, and daily salary, with respect to TID, shall be
computed as of the time of separation from GSIS. 4
k. Conditions for Entitlement
1. Permanent Total Disability (P11)) - A member who becomes
permanently and total~¥ disabled shall be entitled to the PTD benefits when:
a) he/she is in the service at the time of disability; or
b) if separated from the service, he has paid at least thirty six (36)
months contributions within the five year (5) period immediately
1 Sedion 23.3.1., ~IV, lbkl.
2 Sedioo 23.31, Rile IV. W.
3 Sedion 23.3.3., RUe IV, W.
4 Sedion 23.3.4., Rue IV, llil.
LtiAI'ItR VI 4::SIJ
SOCiAl WELFARE LEGISLATION
preceding his/her disability; or has paid a to~l of at least one
hundred eighty (180) months contributions prior to his/her
disability;
Provided, however, that the following conditions shall be met:
• he/she is gainfully employed prior to the commencement of
disability resulting in loss of income as evidenced by any
incontrovertible proof thereof;
• he/she is not a registered member of any social insurance
institution; and
• he/she is not receiving any other pension either from GSIS or
another local or foreign institution or organization.•
In addition to the monthly income benefits for life, a cash payment
equivalent to eighteen (18) times his/her basic monthly pension (BMP), shall be
paid to a member who was in the service at the time of his/her permanent total
disabllity and who has paid a total of one hundred eighty (180) monthly
contributions. 2
A separated member who has at least three (3) years of service and
becomes permanently and totally disabled but has not paid a total of at least one
hundred eighty (180) monthly contributions prior to his/her disability shall be
entitled only to cash payment equivalent to one hundred percent (100%) of
his/her average monthly compensation for each year of service with paid
contributions but not less than twelve thousand pesos (Pl2,000.00). 3
2. Permanent Partial Disability (PPD). - A member whose disability
is partial shall be entitled to the PPD benefit when:
a) he/she is in the service at the time of disability; or
b) if separated from the service, he has paid at least thirty six (36)
months contributions within the five (5) year period immediately
preceding his/her disability; or has paid a total of at least one
hundred eighty (180) months contributions prior to his/her
disability; Provided, however, that the following conditions shall be
met:
• he/she is gainfully employed prior to the commencement of
disability resulting in loss of income as evidenced by any
incontrovertible proof thereof;
1 Sedi:xl23.4.1.1., rue IV, w.
2 Sedi:xt23.4.1.2, Rule IV, lbll.
3
Sec00n23.4.1.3.,1U!IV,tlid.
440 BAR Rf:VIEWER ClN lABOR lAW
• he/she is not a registered member of any social insurance
institution; and
• he/she is not receiving any other pension either from GSIS or
another local or foreign institution or organization. 1
I
3:Temporary Total Disability (TID). - A member shall be entitled to
the TID benefit when:
a) he/she is in the service at the time of disability; or
b) if separated from the service, he has paid at least thirty six (36)
months contributions within the five (5) year period immediately
preceding his/her disability; or has paid a total of at least one
hundred eighty (180) months contributions prior to his/her
disability; Provided, however, that the following conditions shall be
met:
• he/she is gainfully employed prior to the commencement of
disability resulting in loss of income as evidenced by any
incontrovertible proof thereof;
• he/she is not a registered member of any social insurance
institution; and
• he/she is not receiving any other pension either from GSIS or
another local or foreign institution or organization?
The payment of TID benefit may be extended by the GSIS up to a
maximum of two hundred forty (240) days, subject to medical evaluation.3
I. Forfeiture of disability benefits.
All the. foregoing provisions notwithstanding, any member who is
enjoying disability benefits shall automatically forfeit his/her right to the
continued enjoyment thereof if he/she refuses or dehberately fails to:
a) have himself/herself medically treated by a physician when required
by the GSIS; or
b) take the prescribed medications ; or
c) have himself/herself confined in a hospital without justifiable
reason, when such confinement is required by the GSIS; or
d) avail himself/herself of such rehabilitation facilities as may be duly
recommended by the GSIS and made available for him/her; or
Sdx\23.41, Rl*! IV, Ibid.
Sedioo23.4.3.1, Rule r-J, lbkl.
3 w,
SecOOn 23.4.32., rue Ibid.
....
-.,.
CHAPTER VI 441
SOCIAL WELFARE LEGISLATION
e) observe such precautionary arid/or preventive measures as
prescribed by a physician or expressly required of him/her to
prevent the aggravation or continuance of his/her disability.
However, upon compliance with the requirements, his/her benefits shall
be resumed if he/she is still qualified.'
8. SURVIVORSHIP BENEFITS.2
a. Survivorship benefits upon death of member or pensioner.
When a member or pensioner dies, the beneficiaries shall be entitled to
the following survivorship benefits, whichever is applicable:
(1) Survivorship pension consisting of:
a) the basic survivorship pension which is fifty percent (50%) of the
BMP; and
b) the dependent children's pension equivalent to 10% of the RMP
for each child but not to exceed fifty percent (50%) of the BMP.3
(2) Cash payment equivalent to eighteen (18) months BMP; 4
(3) Cash pa}ment equivalent to one hundred percent (100%) of liJ.e
AMC for every year of service with paid contributions but not less than Twelve
Thousand Pesos (Pl2,000.00).5
b. Survivorship benefits of members in active service.
( 1) If at the time of death, a member was in the service and has
rendered at least fifteen ( 15) years of creditable service:
a) his primary beneficiaries shall receive the survivorship pension and
cash payment equivalent to 18 x the BMP; or
b) in the absence of primary beneficiaries, his secondary beneficiaries
shall receive the cash payment equivalent to 18 x the BMP; or
c) in the absence of secondary beneficiaries, the legal heirs shall
receive the cash payment equivalent to 18 x the BMP.6
(2) If at the time of death, the member was in the service with less than
fifteen (15) years of creditable service; his primary beneficiaries shall receive
1
Section 23.4.6., RlAe r-J, lbkl.
2
Section 24, Rule r-J, Ibid.
3
Section 24 .1.1., Rll.e IV, llid.
~ Section 24.12., Rule IV, llid.
5
6
Section 24.1.3., Rule IV, llid.
Section 242.1., Rule IV, Ibid.
--~,
442 BAR REVIEWER ON lABOR lAW
the cash payment equivalent to 100% of the AMC for every year of creditable
service. 1
c. Survivorship benefits of inactive members.
Primary beneficiaries of inactive members who have at least 15 years
of creditable service shall receive the survivorship pension only.
1) Primary beneficiaries of inactive members who have at least 3 years
but less than IS years of creditable service and were less than 60
years old at the time of death shall receive the cash payment
equivalent to 100% of the AMC for every year of creditable service,
but not less than Pl2,000.00.
2) Primary beneficiaries of inactive members who have less than 15
years of creditable service but were at least 60 years old at the time
of separation and have received the corresponding separation
benefit, shall not be entitled to survivorship benefits. However, if
the member has nat received yet his separation benefit within fom
years after his/her separation, the primary beneficiaries sha!\ receive
the cash benefit equivalent to 100% of the inactive member's AMC
for every year of creditable service, but not less than P12,000.00. 2
d. Payment of survivorship beuefits.
The survivorship benefits shall be paid as follows:
1. When the dependent spouse is the only survivor, he shall receive the
basic survivorship pension;
2. When only the dependent children are the survivors, they shall be
entitled only to the dependent children's pension equivalent to 10%
of the BMP for every dependent child, not exceeding five {5),
counted from the youngest and without substitution;
3. When the survivors are the dependent spouse and the dependent
children, the dependent spouse shall receive the basic survivorship
pension for life or until he remarries or cohabits, and the dependent
children shall receive the dependent children's pension.
4. When the dependent spouse and dependent children are already
receiving the basic survivorship pension and dependent children's
pension, respectively, any subsequent death, emancipation or
disqualification of any one of them shall not entitle the other
beneficiaries to the forfeited share.
5. In the absence of a natural guardian, the guardian de facto of
dependent children, as well as the physically or mentally
1 SecOOn 2412., Rule IV, Ibid.
2 SecOOn 24.3.1., Rule IV, Ibid.
·,"'
CHArTER VI
SOCIAL WELFARE LEGISLATION
443
incapacitated dependent children, . must file a Petition for
Guardianship to be able to claim the survivorship benefits on behalf
of the dependent children.
6. When the pensioner dies within the 5-year period after receiving the
five-year lump sum, the survivorship pension shall be paid only
after the end of the said five-year period. However, filing of claim
for survivorship benefit should be done before the end ofthe4-year
prescription period. 1
e. Conditions for entitlement to survivorship benefits.
The primary and secondary beneficiaries, except dependent children,
shall be entitled to applicable survivorship benefits, subject to the following:
a) not engaged in any gainful occupation;
b) the surviving spouse and the deceased member were living together
a~ husband and wife;
c) not gainfully engaged in a business or economic activity (self-
employed);
d) employed/engaged in a business or economic activity but receiving
income less than the minimum compensation of government
employees.
c) not receiving any other pension from the GSIS or another local or
foreign institution or organization; and
f) In the case of the dependent spouse, payment of the basic
survivorship pension shall discontinue when he remarries, cohabits,
or engages in common-law relationship.
The foregoing conditions, except the last one, must be present
immediately preceding the death of the member or pensioner.1
9. FUNERAL BENEFITS.3
a. Nature of benefit
Funeral benefit is intended to help defray the expenses incident to the
burial and funeral of the deceased member, pensioner or retiree under R.A. 660,
R.A. 1616, P.D. 1146 and R.A. 8291.4
b. To whom payable.
It is payable to any qualified individual, in accordance with the
following order of priority:
1
Sec:1ion 24.4.1., RUe IV, Ibid.
2
Sedioo 24.5., Rule IV, lilil.
3
Sedioo 25., Rule IV, Ibid.
4
Sedioo 25.1., Rule IV, Ibid. The taws mentioned illlis sedioo refertopre.oioos lV11endataylaws kllle GSIS l..lWI.
444 BAR REviEWER ON lABOR lAW
1) Legitimate spouse;
2) Legitimate child who spent for the funeral services; or
3) Any other person who can show incontrovertible proof that he
shouldered the funeral expenses of the deceased.'
c. Amount offuneral benefit.
The amount of funeral benefit are as follows:
1) The prevailing amount approved by the Board of Trustees at the
time of death of the member or pensioner.
2) For uniformed members of the PNP, BJMP and BFP, the amount of
funeral benefit is fixed at P10,000.00. 2
d. Conditions for entitlement.
Funeral benefit shall be paid upon the death of:
1) An active member; or
2) A member who has been separated from the service with more t.1an
15 years of creditable service, but entitled to future separation or
retirement benefits; or
3) Old age or disability pensioner; or
4) A retiree who at the time of his retirement is at least 60 years of age
and with at least 20 years of service but who opts to retire under
R.A. 1616 on or after June 24, 1997; or
5) A member who retired under R.A. 1616 prior to June 24, 1997 with
at least twenty (20) years of service, regardless of age.3
c.
LIMITED PORTABILITY LAW4
1. TOTALIZING THE WORKERS' CREDITABLE SERVICES OR
CONTRIBUTIONS TO BOTH SSS AND GSIS.
a. Declared policy is to establish a unitary social security system.
It is the declared policy of the State to institute a scheme for
totalization and portability of social security benefits with the view of
establishing within a reasonable period, a unitary social security system. 5
CHAPTER VI
445
SOCIAL WELFARE LEGISLATION
b. Rationale.
R.A. No. 7699 was enacted to enable those from the private sector who
transfer to the government service or from the government sector to the private
sector to combine their years of service and contributions which have been
credited with the SSS or GSIS, as the case may be, to satisfy the required
number of years of service for entitlement to the benefits under the applicable
laws. 1 ·
c. Totalization, defined.
The term "totalization" refers to the process of adding up the periods
.-. of creditable services or contributions under each of the Systems, SSS or GSIS,
for the purpose of eligibility and computation of benefits. 2
d. Portability, defined.
On the other hand, the term "portability" refers to the transfer of funds
for the account and benefit of a worker who transfers from one system to the
othl!r.3
c. Applicability of limited portabiHty scheme..
The benefits provided under R.A. No. 7699 apply to active or inactive
members of either System (GSIS/SSS) as of the date of its effectivity on May
20, 1994. 4
f. Coverage.
R.A. No. 7699 and its implementing rules apply to all worker-members
of the GSIS and/or SSS who transfer from the public sector to the private sector
or vice-versa, or who wish to retain their membership in both Systems.5
g. Creditability and totalization of contributions and benefits in
SSS and GSIS.
Under R.A. No. 7699, 6 it is enunciated that provisions of any general or
special law or rules and regulations to the contrary notwithstanding, a covered
worker who transfers employment from one sector to another (i. e., from private
sector to public sector, or vice versa), or is employed in both sectors, shall have
his creditable services or contributions in both Systems (GSIS and SSS) credited
to his service or contribution record in each of the Systems and shall be
totalized for purposes of old-age, disability, survivorship and other benefits in
case the covered member does not qualify for such benefits iri either or both

t kt
1
2 Section 252., RlOO IV, Ibid. R.A. No. 8282, for SSSmembers and R.A. No. 8291, forGSIS members.
2 Section 2, RA No. 7699; Section 1[e], Rule Ill, Rules en! Regulations lrrcJiementing RA No. 7699.
• Section 25.3., Rule IV, Ibid.
4 RA No. 7699, ~ 'M Nl ~ Linited Patalility Scheme i1 tile Social 'Security k1slm:e System by Totalizilg Set1ion 2, lbi:l.; Secliln 1,], Rule Ill, Ibid.
11e WoOO!s' Creditltlle SeMces orCmlrilutions il Eoch of tile Systems' ~oo Mly 1, 1994. Set1ion 1, Rule VII, Rules en! Regulations ~ Republic Jld. No. 7699.
5
5 Section 1, RA No. 7699. Set1ion 1, Rule I, Ibid.
6
See Section 31tlereof.

~\ ..,
446 BAR REVIEWER ON lABOR lAW
Systems without totalization provided, however, that overlapping periods of
membership shall be credited only once for purposes of totalization.
h. Limited portability of funds.
The processes involved in the prompt payment ofmoney benefits to eligible
members are the joint responsibility of the GSIS and SSS. 1
The System or Systems responsible for the payment of money benefits
due a covered worker shall release the same within fifteen (15) working days
from receipt of the claim, subject to the submission of the required documents
and availability of complete employee/employer records in the System or
Systems.2
i. Totalization of contributions and benefits; how processed.
1. Contributions.
All contributions paid by such member personally and those that were
paid by his employers to both Systems (GSIS &nd SSS) shall be considered in
the processing of benefits which he can claim from either or both Systems,
provided, however, that the amount of benefits to be paid by one System shall be
in proportion to the number of contributions actually remitted to that System. 3
The tenn "contributions" refers to the contributions paid by the
employee or worker to either the GSIS or the SSS on account of the worker's
membership. 4
2. Creditable services or periods of contributions.
All creditable services or periods of contributions made continuously
or in the aggregate of a worker under either of the sectors shall be added up and
considered for purposes of eligibility and computation of benefits. (Section I,
Rule V, Rules and Regulations Implementing Republic Act No. 7699).
The term "creditable services" insofar as the .public sector is
concerned, refers to the following:
CHAPT£RV1 447
SOCIAL WELFARE LEGISLATION
3) The period during which an official or employee was on authorized
sick leave of absence without pay not exceeding one ( l) year;
4) The period during which an official or employee was out of the
service as a result of illegal tennination of his services as finally
decided by the proper authorities; and
5) All previous services with compensation or salary rendered by
elective officials. 1
The tenn "periods of contributions " for the private sector refers to the
periods during which a person renders services for an employer with
compensation or salary, and during which contributions were paid to the SSS. A
"self-employed person" is considered an employee and employer at the same
time?
The tenn "eligibility" means that the worker has satisfied the
requirements for entitlement to the benefits provided for under R.A. No. 7699.3
3. Benefits.
Ail services rendered or contributions paid by a member personally and
those that were paid by the employers to either System shall be considered in the
computation of benefits which may be ciaimed from either or both Systems.
However, the amount of benefits to be paid by one System shall be in proportion
to the services rendered or periods of contributions made to that System. 4
"Benefits" refer to the following:
1) Old-age benefit;
2) Disability benefit;
3) Survivorship benefit;
4) Sickness benefit;
5) Medicare benefit, provided that the member shall claim said benefit
from the System where he was last a member; and
6) Such other benefits common to both Systems that may be availed of
through totalization.5

1) All previous ~rvices rendered by an officiaVemployee pursuant to j. Totalization; when applicable.

an appointment, whether permanent, provisional or temporary; Totalization applies in the following instances:
2) All previous services rendered by an officiaVemployee pursuant to a
duly-approved appointment to a position in the Civil Service with a) if a worker is not qualified for any benefits from both Systems; or
compensation or salary;

1 SetOOn 1, ~le IV, RUes and Regula1ix1s lrrqllemenling RA No. 7699. Sedioo 1oo. Rule Ill, Ibid.
2 SetOOn 2, IM!IV, Ibid. Section 1G], ~Ill, Ibid.
J SetOOn 4, RA No. 7699. Sedioo 1~1. rue Ill, Ibid.
4
~ SetOOn 2, Republic Act No. 7699; Section 1(a).lqJie Ill, RUes il1d Regu!aions 1111llemenling RA No. 7699. Sedioo 2, Ru:e V, Ibid.
5
Section 1ffi, Rule llll:lid.
448 BAR REviEWER ON lABOR lAW
b) if a worker in the public sector is not qualified for any benefits from
the GSIS; or
c) if a worker in the private sector is not qualified for any benefits
from the SSS.
For purposes of computation of benefits, totalization applies in all cases
so that the contributions made by the worker-member in both Systems shall
provide maximum benefits which otherwise will not be available. In no case
shall the contribution be lost or forfeited. 1
Gamogamo v. PNOC Shipping and Transport Corp.2 - Following
the concept of totalization, the High Court in this case pronounced that
obviously, totalization of service credits is only resorted to when the retiree does
not qualify for benefits in either or both of the Systems. In <:ase the employee is
qualified to receive benefits granted by the GSIS or the SSS, as the case may be,
he cannot avail of the benefits under R.A. No. 7699.
k. Effect if worker is not qualified after totalization.
If after totalizatioiL, the worker-member still does not qualify for any
benefit as listed in tht: law/ the member will then get whatever benefits
correspond to his/her contributions in either or both Systems. 4
I. Effect if worker qualifies for benefits in both Systems.
If a worker qualifies for benefits in both Systems, totalization shall not
apply. 5
m. Processes of totalization; joint responsibility of GSIS and SSS.
The processes of totalization of creditable services or periods of
contributions and computation of benefits provided under R.A. No. 7699 are the
joint responsibility of the GSIS and the SSS. 6
n. Effect of overlapping periods of creditable services.
Overlapping periods of creditable services or contributions in both
Systems shall be credited only once for purposes of totalization.'
The term "overlapping ofperiods" refers to the periods during which a
worker simultaneously contributes to both Systems. 1
1 Sedkx13, Rule V, Ibid.
G.R. No.141707, Wey7, 2002.
Section 1ffi, Rule Ill, Ibid.
4 Sedkx14, Rule V, Ibid.
5 Sedkx15, Rule V, Ibid.
lI
6 Sedkx16, Rule V, Ibid.
7 Sedkx17, Rule V, Ibid.
-~~
CHAPTER VI 449
SOCIAL WELFARE lEGISLATION
D.
EMPLOYEE'S COMPENSATION-
COVERAGE AND WHEN COMPENSABLE2
1. BACKGROUND ON THE STATE INSURANCE J.?UND [SIF).
a. SIF created from contributions of employers.
The State Insurance Fund (SIF) is built up by the contributions of
employers based on the salaries of their employees as provided under the Labor
Code.
b. Two (2) separate SIFs.
There are two (2) separate and distinct State Insurance Funds: one
established under the SSS for private sector employees; and the other, under the
GSIS for public sector employees. The management and investment of the
Funds arc done separately and distinctly by the SSS and the GSIS. It is used
exclusively for payment of the employees' compensaticn benefits and no
amount thereof is authorized to be used for any other purpose.3
c. Three (3) agencies involved in the implementation of tbe ECP.
There are three (3) agencies involved in the implementation of the
Employees' Compensation Program (ECP). These are: (l) The Employees'
Compensation Commission (ECC) which is mandated to initiate, rationalize
and coordinate policies of the ECP and to review appealed cases from (2) the
Government Service Insurance System (GSIS) and (3) the Social Security
System (SSS), the administering agencies of the ECP.
d. Role of the GSIS and SSS.
Being administering agencies of the ECP, both the GSIS and SSS are
tasked to:
1) evaluate all employees compensation (EC) claims filed within a
given period and pay the corresponding EC benefits;
2) collect EC premiums remitted by employers; and
3) manage the State Insurance Fund.
Both the GSIS and the SSS invest the funds in profitable ventures to
generate earnings which will form part of the State Insurance Fund (SIF) from
which payments for employees' compensation claims are sourced.
1
SecOOn 1m. Rule m. Ibid.
2 Releliantlegal p!UJisions: AIOCies 166to 208-A, Tille II, Book IV oflhe Lm'Code.
3
AIIK:Ie 179, as !l11ellded by Sedm4, P.O. No. 1368.
450 BAR REVIEWER ON lABOR lAW \.onlu'&l:l'i.. , .

SOCIAL WELFARE LEGISLATION

e. Role of the ECC. b. Sectors of employees covered by the ECP.

. I
I
The law applies the social security principle in the handling of
workmen's compensation. Towards this end, the Employees' Compensation
Commission (ECC) administers and settles claims .·from a fund under its
exclusive control. The employer does not intervene in the compensation process
and it has no contro~ as in the past, over payment {)f benefits. The open-ended
Table of Occupational Diseases requires no proof of causation. A covered ·
claimant suffering from an occupational disease is automatically paid benefits.
f. Role of the employer.
On the part of the employer, its duty is only to pay the regular monthly
premiums to the System (GSlS/SSS). It does not look for insurance companies
to meet sudden demands for compensation payments or set up its own funds to
meet those contingencies. It does not have to defend itself from spuriously
documented or long past claims.
g. Role ofthe employee.
The injured worker does not have to litigate his right to compensation.
There is no notice of injury or requirement of controversion. The sick worker is
simply required to file a claim with the ECC which determines, on the basis of
the employee's supporting papers and medical evidence, whether or not
compensation should be paid. The payment of benefits is more prompt ad the
cost of administration is low.
The employer no longer opposes or fights a claim for compensation by
the employee. Res~ltantly, the lop-sided situation of an employer against one
employee is absent. 1
2. SCOPE OF COVERAGE OF THE ECP.
a. General coverage.
The following shall be covered by the Employees' Compensation
Program (ECP):
1) All employers;
2) Every employee not over sixty (60) years of age;
3) An employee over 60 years of age who had been paying
contributions to the System (GSIS/SSS) prior to age sixty (60) and
has not been compulsorily retired; and
4) Any employee who is coverable by both the GSIS and SSS and
should be compulsorily covered by both Systems.2
1 Sarriem:>v.ECC,G.R No.L-65680,May11, 1988,161 SCRA312.
2 Alticle168, Labor Code; Sectioo 2,flule I, Amended rues on~·~.
The following sectors are·covered Under the ECP:
1) All public sector employees including those of government-owned
and/or controlled corporations and local government units covered
bytheGSIS;
2) All private sector employees covered by the SSS; and
3) Overseas Filipino workers (OFWs), namely:
a. Filipino seafarers c<lmpulsorily covered under the SSS.
b. Land-based contract workers provided that their employer,
natural or juridical, is engaged in any trade, industry or business
undertaking in the Philippines; otherwise, they shall not be
covered by the ECP.
c. Start of coverage of employees under the ECP.
The coverage under the ECP of employees in the private and public
sectors starts on the first day of their employment.
d. Nature of coverage.
The coverage is compulsory in nature. 1
3. EMPLOYEES' COMPENSATION BENEFITS.
The following are the benefits provided under the Labor Code:
a) Medical Benefits1
b) Disability Benefits3
1. Temporary total disability 4
2. Permanent total disabilitY
3. Permanent;artial disability6
c) Death Benefit
d) Funeral Benefit'
3.1. MEDICAL BE~"EmS.
a. Conditions for entitlement to medical services, appliances and
supplies.
Any employee is entitled to such medical services, appliances and
supplies as the nature of his disability and the progress of his recovery may
, MDe 168, i*l.; See a1so Sedi:ln 1, rue 1. Ilk!.
2 Articles 185 k1190, ChaplerV, Title II, Book IV, Labor Code.
3 Al1ides 19~ to 193, Chapter VI, Tille II, Book N, Ibid.
~ Article 191, Ibid.
5 Article 192, Ibid.
6
Alficle 193, Ibid.
7
Article 194, Chapter VII, Title II, Book IV, Ibid.
• Section 1, Rule 'YJ'J, Amended Rules on En'llloYees' ~·
452 BAR REviEWER ON lABOR lAW
require, subject to the expense limitation as contained in Annex "C" of the
Amended Rules on Employees' Compensation, if all of the following conditions
are satisfied:
1) He has been duly reported to the System {GSIS/SSS);
2) He sustains an injury or contracts sickness; and
3) The System has been duly notified of the injury or sickness. 1
b. Period of entitlement.
The medical services, appliances and supplies are required to be
provided to the atllicted employee beginning on the first day of injury or
sickness, during the subsequent period of his disability, and as the progress of
his recovery may require. 2 The obligation of the SIF to provide medical services
shall continue for as long as the employee is sick. This duty is not ended even if
employment was tenninated. 3
c. Extent of services.
The employee is entitled to the benefits only for the ward services of an
accredited hospital and accredited physician. However, if the employee chooses
accommodations better than ward services, the excess of the total amount of
expenses incurred over the benefits provided under Annex "C" of the Amended
Rules on Employees' Compensation (infra), shall be borne by the employee. 4
The hospital shall provide all the medicines, drugs or supplies necessary for the
treatment of the employee at a cost not exceeding the retail prices prevailing in
local drug stores.5
Payment& shall be made directly to the providers of such services in
such amount as are prevailing in the community for similar services or provided
under the schedule set forth in said Annex "C," whichever is less. 6 The right of
the employee to seek reimbursement for medical expenses does not only pertain
to those incurred for the principal or primary ailment but extends to those
incurred for complications arising therefrom even if the same occurred after the
employee had already retired.
d. Loss of wages or earning capacity not required.
It is worthy to note that Article 191 [185] does not impose as a pre-
requisite for the grant of medical benefits, that the injured or sick employee
should show proof that he suffered loss of wages or earning capacity as a result
1 Section 1, Rule VIII, Amended Rules on Erqlbyees' ~·
2 Section 2, Rule VIII, Amended Rules on Efll>byees' ~.
I~~
3 Nllgon-Suycx: Mnes, klc. v.llulay, G.R. No. L-18974, Sept30, 1963.
4 Section3[a), ~Vlii,Amended~on~·~.
s Section 3!b1 RUe VIII, tid.
s Section 3(cl, Rule VIII, Ibid.
CHAPTER VI 453
SOCIAL WELFARE LEG1SLAT10N
of such injury or sickness. The law is clear that the injured or sick employee is
"immediately" entitled to be provided during the subsequent period of his
disability, with such medical services and appliances as the nature of his
1
sickness or injury and progress of his recovery may require.
3.2. TEMPORARY TOTAL DISABILITY.
a. Total disability, when temporary.
A total disability is temporary it; as a result of the injury or sickness,
the employee is unable to perfonn any gainful occupation for a continuous
period of not exceeding 120 days, except when such disability still requires
2
medical attendance beyond 120 days, but not to exceed 240 days.
If the disability is the result of an injury or sickness, the period of
compensability shall be counted from the first day of such injury or sickness.
An employee who later had to stop working due to a compensable
illness is also entitled to temporary total disc1bility benefits?
b. Conditions to entitlement in case of temporary total disability.
.An employee shall be entitled to an income benefit for temporary total
disability if all of the following conditions are satisfied:
1) He has been duly reported to the System (GSIS/SSS);
2) He sustains the temporary total disability as a result of the injury or
sickness; and
3) The System has been duly notified of the injur-y or sickness which
caused his disability.
His employer shall be liable for the benefit if such illness or injury
occurred before the employee is duly reported for coverage to the System
(GSIS/SSS).4
c. When to commence payment of benefits.
The income benefit in the case of templJrary total disability should be
paid beginning on the first day of such disability. If caused by an injury or
sickness, it should not be paid longer than 120 consecutive days except where
such injury or sickness still requires medical attention beyond 120 days but not
to exceed 240 days from the onset of the disability, in which case, benefit for
temporary total disability shall be paid. However, the System (GSIS/SSS) may
declare the total and permanent status at any time after 120 days of continuous
Miele 185, L.alxr Code; Coolies v. ECC;G.R. No. L-44063. feb. 27' 1979, 88 SCRA 547.
I
2 MX:Ie 191, LaborCode;Secm2{a], Rife VII, MlOOdadRlresonfn'4lloyees' ~·
3 Fedlov.WCC,G.R. No.L-43642,Jlll.17, 1985, 134SCRA56.
4 Section 1, Rule X. Amended RlJes on Employees'~-
454 BAR REVIEWER ON lABOR lAW
temporary total disability as may be warranted by the degree of actual loss or
impairment of physical or mental functions as determined by the System
(GSIS/SSS). 1
d. Cash payment of temporary total disability benefit.
Temporary total disability resulting from the injury or sickness is
compensable by cash payments and not the injury or sickness itsele
e. Income benefit for temporary total disability.
Any employee entitled to the benefit for temporary total disability shall
be paid an income benefit equivalent to ninety percent (90%) of his average
daily salary credit as determined by the System (GSIS/SSS), subject to the
following conditions:
1) The income benefit shall not be more than P200.00 per day for
private sector workers and P90.00 per day for public sector
employees and shall not be paid longer than 120 days for the same
disability unless the injury or sickness requires more extensive
treatment that lasts beyond 120 days but not to exceed 240 days
from the onset of the disability, in which case, he shall be paid
benefit for temporary total disability during the extended period.
2) The monthly income benefit shall be suspended if the employee
fails to submit a monthly medical report certified by his attending
physician as required under the Amended· Rules on Employees'
Compensation.3
An employee enjoying temporary total disability benefits shall submit
to the System (GSIS/SSS) a monthly medical report on his disability certified by
his attending physician; otherwise, his benefit shall be suspended until such time
that he complies with this requirement. Further, he must also submit himself for
examination upon being notified by the System (GSIS/SSS), at least once a
year.4 . its mere medical significance.
3.3. PERMANENT TOTAL DISABILITY.
a. Permanent disability, defmed.
"Permanent disability" is the inability of a worker to perform his job
for more than 120 days, regardless of whether or not he loses the use of any part
ofhis body. 5
1 ~ 2[a), RJJie X. Ibid.
2 ~ 3, RJJie VII, Amended RI.ESoo Elt1lk1fees' ~-
3 Sedioo 3, Rule X.llid.; See also Sedion 5d Rule IVtllereof cmdECC Resolution No. 3682 dated July 21, 1987.
4 Sedi:ln 5of Rule IV of1he Amended Rules oo Empbyees' Coo1Jensalion.
5 Crystal ~pilg, Inc. v. Nativilad, G.R No. 154798, Ocl20, 2005; GSIS v. Cadiz, GR No. 154093, July 8, 2003, 405
SCRA450,454; ljcresv. CA,GR No.105854,Aug.26, 1999,313SCRA 141,149-150.
j;
LHAI'ItK VI '100
SoCIAl WELFARE LEGISlATION
b. Total disability, defined.
"Total disability," on the other hand; means disablement of an
employee to earn wages in the same kind of work, or work of a similar nature
that he was trained for, or accustomed to perform, or any kind of work which a
person of his mentality and attainment could do. 1
Total disability is lack of ability to follow continuously some
substantial gainful occupation without serious discomfort or pain and without
material injury to health and danger to life. 2
Total disability does not mean a state of absolute helplessness. A total
disability does not require that the employee be absolutely disabled or totally
paralyzed. What is necessary is that the injury must be such that the employee
cannot pursue his usual work and earn therefrom. 3
c. Disability, when total and permanent.
A disability is tntal and permanent i~ as a result of the injury or
sickness, the employee is unable to perform any gainful occupation for a
continuous period exceeding ! 20 days. 4
Moreover, the fact that the penna..'lently and totally disabled employee
continues to work after such disability does not deprive him of the benefits
provided under the law. 5
For what is important consideration is the inability to do substantially
all material acts necessary for the prosecution of a gainful occupation without
serious discomfort or pain and without material injury or danger to life. In
disability compensation, it is not the injury per se which is compensated but the
incapacity to work. 6
Disability is intimately related to one's earning capacity. The test to
determine its gravity is the impainnent or loss of one's capacity to earn and not
1
GSISv. em, G.R No.154093, .hit 8, 2003; Tr<I"ISIIkrile Carriers, klc. v. Nl.RC, GR No. 123891, feb. 28,2001,353
SCRA 47; GSIS v. CA, GR No. 132648, Malch 4, 1999, 363 Phi. 585, 592.
2
Mlimatav. ECC, G.R No. 91m, Feb.19, 1991,194 SCRA264; Medllav. ECC, GR No. L-62400, March 22,1986.
3
Ausm v. CA, G.R No. 146636, Aug. 12, 2002, 387 SCRA. 210, 221, citirg Gooza,ja v. ECC, No. L.Q2287, .1!11. 31, 1984,
127 SCRA443.
4
Sedi:Jn 2[b), Rule VII, AAmled Rules oo Empllyees' ~; OiJpenes v. GSIS, G.R No. 96844, Jan. 23, 1992,
205 SCRA 331; AqOOo v. ECC, G.R No. 89558, All;!. 22, 1991, 201 SCRA 84; Vte11e v. ECC, G.R No. 85024, Jell. 23,
1991.
5
MakOOalv.ECC,GRNo.L-51533,Nov.29, W83.
1
Bejenroo v. ECC, G.R No. 84m, Jan. 30, 1992, 205 SCRA 598; Clystal Sh~ilg, Inc. v. Natividad, G.R. No. 154798, Oct
20,2005.
456 BAR REVIEWER ON lABOR I.AW
Seagull Maritime Corp. v. Dee.1 - It was held in this case that
although private respondent's injury was undeniably confined to his left foot
only, however, the inescapable impact of private respondent's injury on his
capacity to work as a seaman cannot be disregarded. In their desire to escap(l
liability from private respondent's rightful claim, petitioners denigrated the fact
that even if private respondent insists on continuing to work as a seaman, no
profit-minded employer will hire him. llis injury erased all these possibilities. 2
GSIS v. CA.J- The High Court held here that while permanent total
disability invariably results in an employee's loss of work or inability to perform
his usual work, permanent partial disability occurs when an employee loses the
use of any particular anatomical part of his body which disables him to continue
with his former work. Stated otherwise, the test of whether or not an employee
suffers from permanent total disability is the capacity of the employee to
continue performing his work notwithstanding the disability he incurred. If by
reason of the injury or sickness he sustained, the employee is unable to perform
his customary job for more than 120 days and he does not come within the
coverage of Rule X of the Amended Rules on Employees Compensation (which,
in a more detailed manner, describes what constitutes iemporary total
disability), then the said employee undoubtedly suffeis from a permanent total
disability regardless of whether or not he loses the use of any part of his body.
Permanent total disability does not mean a state of absolute helplessness, but
means disablement of an employee to earn wages in the same kind of work, or
work of similar nature that he was trained for, or any work which a person of
similar mentality and attainment could do.
rl. Total disabilities considered permanent.
The following total disabilities are considered permanent:
1. Temporary total disability lasting continuously for more than 120
days and prevents an employee from pursuing his usual work and
.earning therefrom. 4
2. Complete loss of sight of both eyes;
3. Loss of two limbs at or above the ankles or wrists;
4. Permanent and complete paralysis of two limbs;
5. Brain injury resUlting in incurable imbecility or insanity; and
6. Such cases as determined by the System (GSIS/SSS) and approved
bytheECC. 5
G.RNo.165156,Apfil2,2007.
See also GSIS v. Cadiz, G.R No. 154093, July 8, 2003.
G.R No.132648, llad14, 1999, 363 Phil. 585, 592.
4 Sectioo 1 lbt Rule Xl, Melded Rules ct1 ~· ~; Oiopenes v. GSIS, G.R No. 96844, Joo. 23, 1992,
205 SCRA 331; Pmlc v. Easways Marile, Inc., iira. . See ciloSocial Seariy Corrrrissm, v. CA, G.R No. 152058, Sepl27, .2004; jafesv. crutofAppeals, GR No. 105854,
s Se::tion 1[b], Rule XI, Amended Rules on Employees'~-
\....nn1·1~n. ,.,
SOCIAL WELFARE LEGISLATION
Palisoc v. Easways Marine, lnc. 1 -The petitioner here was unable to
perform his job for more than 120 days from the time of his repatriation which
entitles him to permanent disability benefits. Thus, even in the absence of an
official fmding by a company-designated physician that petitioner is unfit for
sea duty, he is deemed to have suffered permanent disability because of his
inability to work for more than 120 days. The Court of Appeals erred in ruling
that petitioner's operation involving the removal of his gallbladder is not a
compensable injury, disease, or illness under Appendix 1 of the POEA-SEC.
Permanent disability refers to the inability of a worker to perform his job for
more than 120 days, regardless of whether he loses the use of any part of his
body. What determines petitioner's entitlement to permanent disability benefits
is his inability to work for more than 120 days.
e. Litmus test and distinction between permanent total disability
and permanent partial disability.
2
In Vicente v. ECC, the litmus test and distinction between Permanent
Total Disflbility and Permanent Partial Disability, to wit:
"[W]hile 'permanent fatui disability' invadably results in
an employee's loss of work or inability to perform his usual work,
'permanent partial disability, ' on the other hand, occurs when an
employee loses the use of any particular a.'latomical part of his body
which disables him to continue with his former work. Stated
otherwise, the test of whether or not an employee suffers from
'permanent total disability' is a showing of the capacity of the
employee to continue performing his work notwithstanding the
disability he incurred. Thus, if by reason of the injury or sickness he
sustained, the employee is unable to perform his customary job for
more than 120 days and he does not come within the coverage of
Rule Xof the Amended Rules on Employees Compensability (which,
in a more detailed manner, describes what constitutes temporary total
disability), then the said employee undoubtedly suffers from
'permanent total disability' regardless of whether or not he loses the
use of any part of his body. ·.3
f. Requisites for entitlement to income benefit for permanent total
disabiUty.
An employee is entitled to an income benefit for permanent total
disability if all of the following conditions are satisfied:
I) He has been duly reported to the System (GSIS/SSS);
G.R. No. 152273,Sepl11, 2007.
G.R.No.85024,Joo.23, 1991, 193SCRA 100.
3
Aug. 26, 1999, 313 SCRA 141.
458 BAR REVIEWER ON lABOR lAW
2) He sustains the permanent total disability as a result of the injury or
sickness; and
3) The System has been duly notified of the injury or sickness which
caused his disability.
His employer shall be liable for the benefit if such injury or sickness
occurred before the employee is duly reported for coverage to the System
(GSIS/SSS). 1
g. ECC Board Resolution No. 98-09-0563 [September 25, 1998].
This enunciated the following conditions that should be taken into
account in considering disability as permanent, in addition to the existing rules
and regulations relative to permanent total disability, and in consonance with the
Supreme Court's pronouncement on liberal construction in disability claims
cases:
1. If the disability results to disablement of an employee or worker to
earn wages in the same kind of work, or work of similar nature that
he/he was trained for;
2. If the disability results to disablement of an employee or worker to
cam wages in any kind of work which a person of his mentality and
attainment could do;
3. If the disability results to the inability of an employee or worker to
do substantially all material acts necessary to the prosecution of an
occupation for remuneration or profit in substantially customary and
usual manner;
4. If the disability results to the lack of ability of an employee or
worker to follow continuously the same substantial gainful
occupation without serious discomfort or pain and without injury or
danger to life;
5. If an employee or worker is compelled to retire or cease from
employment before reaching the age of compulsory retirement by
reason of work-related contingency;
6. If, after retirement, an employee or worker dies within a reasonable
period oftime, and the cause of his death is the disability ailment or
injury, in which event, his disability shall be considered permanent
and total;
7. If the temporary and total disability shall last continuously for more
than 120 days, except as otherwise provided in Rule X of the
existing implementing rules and regulations of P.D. No. 626, as
amended.
1 &£tioo 1(a), RuleXI,Mlended Rulesoo ~·~.
CHAPTER VI '1::>~
SoCIAl WELFARE LEGISLATION
Garcia v. Compensation Appeals and Review Staff.1 - The denial of
permanent total disability benefits to the claimant in this case, who was a school
teacher with thirty-eight (38) years of dedicated service, would render inutile
and meaningless, the social justice precept guaranteed by the Constitution. The
claimant is entitled not only to partial disability but to full compensation because
her illness rendered her incapable of teaching. That claimant's employment had
contributed even in a small degree to the development of the disease is enough
for compensability of claim.2
b. Payment for all compensable months of disability.
In case of permanent total disability, the full monthly income benefits should be
paid for all compensable months of disability. 3
i. Effect of cessation of grant of employees' compensation benefits
to entitlement to benefits for the same disability in another law
being administered by the System.
After the benetlt under the Employees' Compensation Program (ECP)
has ceased, and if the employee is otherwise qualified for benefit for the sarne
disability under another law administ~red by the System (GSIS/SSS), he should
be paid such benefit in accordance with the provisions of that law. This rule
applies to contingencies which occurred prior to May 1, 1978.4
j. 5-year guaranteed monthly income benefits; grounds for
suspension of grant of benefits.
Except as otherwise provided in other laws, decrees, orders or letters of
instructions, the monthly income benefit is guaranteed for five (5) years and
shall be suspended under any ofthe following conditions:
I. Failure to present himself for examination at least once a year upon
notice by the System;
2. Failure to submit a quarterly medical report certified by his
attending physician as required under Section 5, Rule IV of the
Amended Rules 011 Employees ' Compensation;
3. Complete or full recovery from his permanent disability; or
4. Upon being gainfully employed.5
Said Section 5 of Rule IV of the Amended Rules provides that an
employee enjoying permanent disability benefit where the disability resulted
from a disease should submit to the System (GSIS/SSS) a quarterly medical
G.RNo.l-59651,Dec.6, 1985,140 SCRA376.
See also Tol:lsa v. ECC, GR No.~. Mly 8, 1985, 136 SCRA 335 ilvcM'f;! same prildple.
3 SecQxl2~. ~XI, AmoodedRules oo~·~.
4 Sedioo 2[b], Rl.de XI, lljd,
5
SecOOn 2{cl, Rule XI, Ibid.
460 BAR REviEWER ON lABOR lAW
report on his disability certified by his physician; otherwise his benefit shall be
suspended until such time that he complies with this requirement.
k. Cash payment of permanent total disability benefit.
Permanent total disability resulting from the injury or sickness is
compensable by cash payments and not the injury or sickness itself. 1
I. Monthly income benefit.
Any employee entitled to permanent total disability benefits shall be
paid by the System (GSIS/SSS) a monthly income as defined in Section 9, Rule
VI of the Amended Rules on Employees' Compensation. 2
(1) In the case of the SSS.
In the case of the SSS, the monthly income benefit is the amount
equivalent to one hundred fifteen percent (llS%) of the sum of the average
monthly salary credit multiplied by the replacement ratio and one a.11d a haif
percent (1-112%) of the average monthly salary credit for each credited year of
service in excess of ten (10) years; provided, that the monthly income benefit
shall in no case be less than P250.00; provided, however, that the monthly
pension of sUtviving pensioners shall be increased automatically and
simultaneously to the extent that the fifteen percent (15%) difference in monthly
income benefit between EC and SS and the twenty percent (20%) difference in
monthly income benefit between EC and GSIS, should be maintained.3
(2) In the case of the GSIS.
In the case of the GSIS, the monthly income benefit shall be the basic
monthly pension as defmed in P, D. No. 1146 [May 31, 1977] plus twenty
percent (20%) thereof, but shall not be less than P250.00 nor more than the
actual salary at the time of contingency.4
m. Amount of benefit for dependent children.
Each dependent child, but not exceeding five (5), counted from the
youngest and without substitution, shall be entitled to ten percent (1 0%) of the
monthly income benefit of the employee. 5 Except the benefit to dependent
children, the aggregate monthly benefit payable, in the case of the GSIS, shall in
1 Sedion 3, Rule VII, Nnended Rules on Empbyees' ConlJensaOOn,
2 Sedion3[aJl1],RllleXI,AmendedRireson~·~.
3 LO.l1286; ECC Re&iJtion No. 2799, Julj 25, 1984; Sedion 9[a], Rule VI, hrended Rules on ~byees' ~-
4 ECC ResOOOOn No. 2799, Jult
25, 1984;Sedion 9(a], Rule VI,Amen:ledRuleson fn1J!Jyees' ~.
5 Section 4, Rule XI cilheAmended Rules on Employees'~·
~-.
CHAPTER VI 401
SOCIAl WELFARE LEGISLATION
no case exceed the monthly wage or salary actually received by the employee as
of the date of his permanent total disability. 1
3.4. PERMANENT PARTIAL DISABILITY.
a. Disability, when partial and permanent.
A disability is partial and permanent if, as a result of the injury or
sickness, the employee suffers a permanent partial loss of the use of any part of
his body. 2
b. Requisites for entitlement.
An employee shall be entitled to an income benefit for permanent
partial disability (PPD) if all of the following conditions are satisfied:
1) He has been duly reported to the System (GSIS/SSS);
2) He sustains the permanent partial disability as a result of the irJury
or sickness; and
3) The System has been duly notified of the injury or sickness which
caused his disability.
His employer shall be liable for the benefit if such injury or sickness
occurred before the employee is duly rep01ted for coverage to the System
(GSIS/SSS). 3
c. Effect of gainful employment
For purposes of entitlement to income benefits for permanent partial
disability, a covered employee shall continue to receive the benefits provided
thereunder even if he is gainfully employed and receiving his wage or salary. 4
d. Income benefit in case of permanent partial disability (PPD).
Permanent partial disability is the exception to the rule that disability
resulting from the injury or sickness is compensable by cash payments and not
the injury or sickness itself. 5
Consequently, in the case where the period covered for payment of
income benefit for PPD does not exceed twelve (12) months, the System
(GSIS/SSS) may pay in lump sum; otherwise the income benefit shall be paid in
1
Per ECC Resolution No. 2819 dated August 9, 1984. (Sedbl 6, IU! XI, Amended IUs on Efl1*lyees'
~).
2
Setli:xl2 ~.Rule VII, Amended Rules on ErrtlbJees' Co~r!Jensaiion; {Tria v. ECC, G.R No. ~787, tJay 8, 1992, 200
5®.834; fmta,.K. v. ECC, G.R No. 64255, AIJJ. 16, 1989, 176 SCRA 507.
3 Setli:xl1 {a], Rule ~1•.A.rrexled1UlsooEfrlllo'lees'~.
4
Setli:xl1 ~.Rule XII, llil.
5 Setli:xl3, Rule VII, .Amended Rules on fn1J!Jyees' ~.
 BAR REVIEWER ON lABOR lAW CHAPTER VI 463
462 SOCIAL WELFARE LEGISLATION

monthly pension! In other words, if the indicated number of months exceeds that the partial loss bears to the total loss. If the result is a decimal fraction, the
twelve (12), the income benefit should be paid in monthly pension; otherwise, same shall be rounded off to the next higher integer. 1
2
the System may pay the income benefit in lump sum or in monthly pension. In case of simultaneous loss of more than one member or a part thereof,
the same monthly income shall be paid for a period equivalent to the sum of the
Permanent partial disability benefit is granted up to a maximum of240
periods established for the loss of the member or part thereof but not exceeding
days if the claimant's disability persists exceeding the 120-day limit?
seventy-five (75). If the result is a decimal fraction, the same shall be rounded
Any employee entitled to PPD benefit shall be paid by the System off to the higher integer. 2
(GSIS/SSS) a monthly income benefit for the number of months prescribed The degree of permanent disability shall be equivalent to the ratio that
4
under the Rules. [See Schedule below]. the designated number of months of compensability bears to seventy-five (75).3
e. Schedule of income benefit payment. f. Consequence of loss of a part of body.
The following rules shall apply in case of loss of a part of the
The income benefit shall be paid beginning with the frrst month of
employee's body:
disability, but no longer than the designated number of months in the following
5 1) A loss of a wrist is considered a loss of the hand;
schedule: 2) A loss of an elbow is considered a loss of the arm;
Complete and Permanent Loss 3) A loss of an ankle is considered a loss of the leg;
oftheuseo( No. o(Months 4) A loss of more than one joint is considered a loss of the whole
one thumb ·w fmge; or toe; and
one index fmger 8 5) A loss of only the first joint shall be considered a loss of one-half of
one middle finger 6 the whole fmger or toe.
5
one ring finger Other permanent partial disabilities shall be determined by t~~ Medical
one little fmger 3
Officer of the System (GSIS/SSS}. 4
one big toe 6
3 g. Unlisted injuries and illnesses (non-scheduled disabilities).
any toe
one hand 39 In cases of injuries or illnesses not listed in the schedule above, the
one arm 50 benefit shall be an income benefit equivalent to the percentage of the permanent
one foot 31 loss of the capacity for work. 5
one leg 46 3.5. DEATH BENEFIT.
one ear 10
20 a. Death; Compensable death.
both ears
hearing of one. ear 10 Within the context of the employees' compensation program, the term
hearing of both ears 50 "death" means loss of life resulting from an injury or sickness.' "Compensable
sight of one eye 256 death" refers to death which is the result of a work-related injury or sickness.
In case of permanent partial disability less than the total loss of the b. Proof required in order for death to be compensable.
member, the same monthly income shall be paid for.a portion of the period
established for the total loss of the member in accordance with the proportion Death compensation benefit cannot be awarded unless there is
substantial evidence showing that:

1 Sedixl3-A, Rule VII, ll«<.

2 Sedixl3[al, ~XI~ M1eoded Rules on~·~.
1
Section 3~]. Rule XII, lbkl.
3 Per ECC btl ResokJiion 93-08-00lalssued on August 5, 1993.
2
Section3 [cl, Rule XII, Amended Rules on Employees'~-

L ....",. . . . ,. .
4 Sedixl 3 [aL ~ XII, M1eoded RIJes on ~ ~; Section 2, Rule XII d t1e M1ended RIJes on 3 Section 2[cl, Rule XII, lbkl.
4
Section 2~]. Rule XII, Ibid.
Errfiloyees' ~- 5
Section 4(a], Rule XII, lbkl.
5 Per Sedixl2, ~XII dtle M1ended Rules on~· Con1Jensalion.
6 Sedixl2 [a[, ~XII, Amended Rules on~·~.

BAR REVIEWER ON lABOR lAW
464
(1} The cause of the employee's death was reasonably connected with
his work; or
(2} The sickness for which he died is an accepted occupational
disease; or
(3} His working conditions increased the risk of contracting the
1 Compensation Act.
disease for which he died.
c. Income benefit in case of death.
Death resulting from the injury or sickness is compensable by cash
1
payments and not the injury or sickness itself.
The monthly income benefit provided under Article 200 [194] of the
Labor Code is the new amount of the monthly income benefit for the surviving
beneficiaries upon the approval of P.D. No. 1368 [May 31, 1978] which
introduced amendments to Title II, Book IV of the Labor Code.
d. Requisites for entitlement to death benefit.
The beneficiaries of a!\eceased employee shall be entitled to an- income
benefit if all of the following conditions are satisfied:
l) The employee had been duly reported to the System (GSIS/SSS);
2) He died as a result of an injury or sickness; and
3) The System has been duly notified of his death, as well as the injury
or sickness which caused his death.
His employer shall be liable for the benefit if such death occurred 4
before the employee is duly reported for coverage to the System (<JSIS/SSS).
e. Death to be compensable must occur while in the performance of
CHAPTER VI 465
SOCIAL WELFARE LEGISlATION
Tolosa v. ECC/- It was pronounced here that the employee's widow
is not entitled to death benefits because her husband had stopped working when
he became physically disabled to do his work at the time of his retirement in
1975 and death on February 14, 1984, or almost nine (9) years after, which is
clearly not within the two-year period required by the old Workmen's
But in Manuzon v. ECC. 1 - The dependents were held entitled to the
benefits from the employee's death which occurred about 4 ~ years after
retiring from the service due to a stroke, a cardiovascular accident caused by
thrombosis. This is so because although the death occurred after the retirement,
the cause of death, myocardial infarction, is closely related to the cause of his
compulsory retirement.
In GSIS v. Cuanang,l the employee died a year after retirement. The
Supreme Court held that indeed, if the death which occurred almost 4 ~ years
after retirement was held to be within the coverage of the death benefits under
P.O. 626, as in the Manuzon case, with more reason should the death which
occurred within one year after retirement be considered as covered under the
same law. A claim for benefit for such death cannot be defeated by the mere fact
of separation from service. 4
f. Death of a member while under permanent partial disability.
Upon the death of a covered member during the period that he/she was
receiving permanent partial disability (PPD) benefits, the remainder of his PPD
benefits shall be paid to his primary beneficiaries. However, the beneficiaries
shall be entitled to the same !Jenefits enjoyed by the beneficiaries of a permanent
total disability (PTD} pensil:fner upon his death, provided that the cause of death
was the same illness or injury for which he/she was awarded :f>PD benefits.
i ·. ~-~

job; exception. g. Additional requisites; ·proof of marriage. _:,: ·:

Under the law on employees' compensation, death is compensable only If the employee has been receiving monthly income benefit for
5 permanent total disability at the time of his death, the surviving spouse must
when it results from a work-connected injury or sickness.
show that the marriage bas been validly subsisting at the time of his disability. 5
Lu v. WCC.' - It was ruled in this case that the benefits of the
b. Material date to determine the amount of death compensation
Workmen's Compensation Act for the death of the employee cannot be
extended to the claimant since it did not occur while in the performance of his benefits.
duties as a gasoline attendant. It is well-settled that the material date to determine the amount of death

I_ compensation benefits is the date of the death of the employee and not the
amount provided by law at the time of payment.
1

Gau Sherg Phis., 11¥:. v. Joaquil, G.R. No. 144665, Sept. B. 2004, d&1g Bonia v. Crutof ~. G.R No. 136453, Sept.
1
21, 2!XXl, 3o10 SCRA 760.
Sec00n 3, Rule VII, AmendedRJeil oo EmployeeS' Canpensatioo.
I
[
1
2
G.R No. 60509, May 8, 1985, 136 SCRA 335.
GR.No.88573,JlBle25, 1990.
3 Arti::le 194 {c1lm Code. 3 G.R No. 158846,June3,2004.
4 SecOOn 1(a], RIOO XIII, llid. Citi1g 1jues v. CA. G.R No.105854,Aug. 26, 1999,313 SCRA 141.

L
4
5 BuEna Obra v. SSS, G.R No. 14n45, Apli 9, 2003. 5 Section 1[b], Rule XIII, M1ended Rules oo Employees' ConlJenSation-
s G.R.No.L-43181,0ct27, 1986, 145SCRA 170.

.
·--···--------""
466 BAR REviEWER ON I.ABOR I.AW
i. Period of entitlement to death benefit.
(l) For primary beneficiaries.
The income benefit for primary beneficiaries shall be paid beginning at
the month of death and shall continue to be paid for as long as the beneficiaries
are entitled thereto.
The monthly income benefit shall be guaranteed for 5 years which in·
no case shall be less than Pl5,000.00. Thereafter, the beneficiaries shall be paid
the monthly income benefit for as long as they are entitled thereto.2
(2) For secondary beneficiaries.
The income benefit for secondary beneficiaries shall be sixty (60) times
the monthly income benefit of a primary beneficiary which in no case shall be
less than PlS,OOO.OO which shall likewise be paid as monthly pension. 3
j. Presumptive death.
( l) When death benefits should be p:dd.
Payment of death benefits shall be reckoned from the date a worker
was declared presumptively dead after he/she had been reported missing for
sometime, by proper authority, in accordance with law; except when the
declaration of death specified another date, in such a case, payment of death
benefits shall start from the latter date. 4
(2) Entitlement to funeral benefits.
The beneficiaries shall be entitled to funeral benefits as provided for
under the law, even though the body of a missing person had not been recovered
and that no burial activities had been undertaken.
k. Death benefits, not part of the estate of the deceased.
The death benefits being paid under the law are not part of the
deceased's estate. They are not in the nature of inheritance~ They are granted by
operation of law as financial compensation and aid for the death of the
employee.
It must be noted that the dependents mentioned in the law are not
referred to as the "heirs" but rather as "beneficiaries." It may be further
observed that the dependents are not necessarily the "heirs" of the deceased, as
this term is understood in civil law.
CHAPTER VI
SOCIAl WElFARE LEGISlATION 467
3.6. FUNERAL BENEFIT UNDER THE LABOR CODE.
a. Entitlement to funeral benefit
A funeral benefit of P3,000.00 shall be paid upon the death of a
covered employee or a permanently totally disabled pensioner to one of the
following:
I) The surviving spouse; or
2) The legitimate child who spent for the funeral services; or
3) Any other person who can show incontrovertible proof of his
having borne the funeral expenses. 1
b. Increases in the amount of funeral benefit.
I) The amount of funeral benefit was increased from 1'3,000.00 as
provided in the Labor Code an.d its implementing rules, to
P6,000.00. 2
2) Subsequently, in I992, the amount of funeral benefit to private
sector3 employees was increa~ed to 1'8,000.00 effective May I,
1992.
3) Effective May 1, 1994, the funeral benefit was increa~ed to
f'lO,OOO.OO for the private sector and 1'3,000.00 for the public
sector.
c. Effect of denial of death benefit on entitlement to funeral benefit
The denial of the death benefit being claimed has an adverse effect on
the claim for funeral benefit. The Supreme Court in the case ofTolosa v. ECC.t4
held that the widow is not entitled to funeral benefit in view of its ruling that
she is not entitled to death benefit.
4. DEPENDENCY.
a. Dependency, meaning.
The term "dependency" does not mean absolute dependency for the
necessities of life but rather, that the dependent looked to and relied on the
contribution of the claimant, in whole or in part, as a means of supporting and
maintaining himself in accordance with his station in life.

1 Lucerov.NLRC, G.R No. 74197, Ott.28, 1991,203SCRA218.

Section 1, Rule XN, .AroeOOed IUls on Elr(Jioyees' ~.This is il acaxt1a1ce .,;u, ECC Resokrtion No. 3682
1
2 Section 2 !AI (aj ood lb1 Rile XIII, Amended Rules on Elqlloyees' CorrcJensaOOn. This is il accordance witt ECC
ResokJtion No. 2799 dated Ju~ 25, 1964. dated Jult 21, 1987 a1d ECCResliltion No. 2799daled.lutf 25, 1984.
ByvirtueofECC Res00imNo.3003 [May 1, 1988]passedbylhe EnlJbyee$' ~ Coomisskln (ECC).
2
3 Section 2IBI {a], Rule XIII, Ibid.; Per ECC ResoluOOil No. 2799 dated Ju~ 25, 1984.
Pursuant to ECC Resolutixl No.92.07.0032 dated Ju~8. 1992.
3
~ Under ECC Board ResoluOOn 93$0068 issued on August 5, 1993.
' GR No. 60509, May 8, 1985, 136 SCRA 335.
468 BAR REVlEWER ON lABOR lAW
CHAPTER VI
SOClAL WELFARE lEGlSLATlON
469
Under this concept, a person may be considered a dependent although (3) Legal dependency.
1
he is able to maintain himself without any assistance from the decedent. For
instance, the legitimate spouse may be gainfully employed himself or herself but Legal dependency proceeds from the mandate or operation of the law,
he/she is considered a dependent for as long as he/she is living with the deceased irrespective of the ability of the dependent to support himself. This type of
employee at the time of the occurrence of death. dependency, having been established by operation of law, is conclusive.
b. Test of dependency. (4) Actual dependency.
There is no uniform test to ascertain dependency. What the law Under this type of dependency, the reasonable expectation of
imposes is that the dependency relationship should exist at the time of the continuing support appears to be the general and important criterion to consider.
occurrence of the injury. What would be ordinary necessity and comfort for one An actual dependent, therefore, is one who looked to the employee for support,
person may not necessarily apply to another. However, such factors as standards partially or wholly.
of living, station in life, the necessity and comfort required and the like, may
d. Specific dependents under the Labor Code.
prove helpful in determining dependency.
(1) Dependents provided under the Labor Code.
Total or partial dependency is a question of fact which may be
established by appropriate evidence. In Paragatos v. Barredo/ the Supreme Under the Labor Code, the tenn "dependent" refers to the following:
Court ruled that based on the evidence presented, the plaintiff-parent was
partially dependent upon his son for support, taking into account the a) The legitimate, legitirnated or legally adopted or acknowledged
circumstances and conditions prevailing in the country where any amount sent natural child who is unmarried, not gainfully employed, and not
by a son to his father who lives in the rural area and who can hardly provide for over twenty-one (21) years of age or over twenty-one (21) years
the needs of his minor children is sufficient evidence of partial dependency. of age provided he is incapacitated and incapable of self-support
due to a physical or mental defect which is congenital or
c~ Classification of dependency. acquired during minority;
Dependency may be classified as follows: b) The legitimate spoGSe living with the employee; and
c) The parents of said employee wholly dependent upon him for
i. As to the amount -partial or total; or regular support. 1
ii. As to status - legal or actual.
(2) Children as dependents.
(l) Partial dependency.
The children referred to as dependents under the law are:
A partial dependent is a person who has some means or income of his
1) Legitimate children;
own and who receives less than all of his support from the -employee. If the
contributions from the employee enable him to live in accordance with his 2) Legitimated children;
station in life, without which he could not live in accordance therewith, such 3) Legally-adopted children; and
person is a partial dependent. 4) Acknowledged natural children.

(2) Total dependency.
A total dependent is one who has no means "Of support and entirely
depends for support upon the contribution from the employee or one who may
have an income from other sources but the amount of which is too small and
insignificant as would enable him to support himself without the major support
from the employee.
1 castillov. Cadwallader &Gibson lumber Corlllany, GR No. 41267, Sept 26, 1934.
1 310.G.97.
1 1
As a general rule, minor children of the deceased employee are
conclusively presumed to be dependents.
As far as children of majority age are concerned, they should prove
their dependency in accordance with the requirements of the law. Thus, a child
who is over 21 years of age may still be considered dependent if he satisfies the
two (2) requirements as follows:
i. He is incapacitated; and
Article 167 ru. 11t>or Code.

_.L_
470 BAR REviEWER ON lABOR lAW
ii. Incapable of self-support due to a physical or mental defect which is
1
congenital or acquired during minority. · and arbitrator to help the two (2) claimants reach an amicable settlement.'
· Under the old Workmen's Compensation Act, as amended,
stepchildren as well as brothers and sisters of the deceased employee are
considered dependents. However, under the Labor Code, reference to them is
absent. Therefore, they should no longer be considered as dependents.
As far as illegitimate children are concerned, paragraph [i] of Article·
173 [167] of the Labor Code defining the term "dependent" does not mention or
make reference to them as dependents. However, paragraph OJ thereof and
Section 1 [c), Rule XV of the Amended Rules on Employees' Compensation treat
illegitimate children as secondary beneficiaries.
Legally-adopted children, to be considered dependents, must have been
judicially-decreed as such prior to the occurrence of the injury and death of the
deceased employee. Without judicial pronouncement on the adoption, as when
the child was merely taken into the home and treated as a member of the family,
would not be sufficient for purpose.s of entitlement to the benefits.
(3) Legitimate spouse as dependent.
At the outset, it bears stressing the fact that, unlike the old Workmen's
Compensation Act where Sections 9 and 10 thereof explicitly made a distinction
between "widow" and "widower" in terms of entitlemeut to benefits, thr. Labor
Code uses the generic term "spouse" which may refer either to a widow ,wife)
or a widower (husband).
In order for the widowed spouse of the deceased employee to be
entitled to compensation benefits, the law imposes the following requirements:
1) He/she is a legitimate spouse; and
2) He/she should be living with the deceased empl<lyee at the time of
death.
A widowed spouse is, as a general rule, conclusively presumed to be a
dependent when living with the deceased at the time of the latter's death,
irrespective of whether he/she is gainfully employed.
The only time when this conclusive presumption does not attach is
when the surviving spouse is not the legitimate spouse or is voluntarily living
apart from the deceased employee at the time of death.
In case there are two (2) wives claiming the benefits under the law, the
Workmen's (now Employees') Compensation Commission, according to the
Supreme Court, is empowered to rule on the issue of who is the legitimate
1 Mi::le 167 ffi, Labor Code.
CHAPTER VI 471
SOCIAL WELFARE LEGISLATION
spouse who shall be awarded the benefits. The Commission may act as referee
In case the legitimate surviving spou~e was living separately from the
deceased employee at the time of death, he/she may be treated as dependent if
such separation was necessary and justified as when the same was caused by
health or business reasons or because of the fault of the deceased spouse.·Under
these situations, it is believed that the conclusive presumption of dependency
should still apply. In Vda. de Makabenta v. Davao Stevedore Terminal
Company/ a marriage celebrated in a hospital where the deceased employee
was confined after the fatal accident where he sustained the injury but before his
death, was held sufficient for purposes of determining the dependency of the
wife. For three (3) months prior to such marriage, they were already living
together as common-law husband and wife.
(4) Policy on surviving spouse.
A polic/ has been enunciated as regards surviving spouse found not to
be living with the covered employee at the time the employee died. Said
surviving spouse is entitled to employees' compensation benefits provided that
the separation occurred owing to any of the following circumstances:
1. Refusal of the covered employee to continue living with the
surviving spouse; or the employee's abandonment of the said
spouse, without justifiable or valid cause;
2. Attempt of the covered employee against the life of the surviving
spouse, common child/children of the spouse;
3. Commission of an act of sexual abuse against the surviving spouse,
common child/children of the spouse;
4. The covered employee's recurrent commission of physical violence,
or grossly, abusive conduct, against the surviving spouse, common
child/children of the spouse;
5. The covered employee's infliction of physical violence, or
imposition of moral duress, to compel the surviving spouse,
common child/children or child/children of the spouse to change
their religious or political affiliation;
6. Attempt of the covered employee to corrupt or induce the surviving
spouse, common child/children or child/children of the spouse to
engage in prostitution, or to make them connive with the employee
in such an act of corruption or inducement;
1 Scmr Wililg Co., Inc. v. WCC, G.R Nos. L-29933-39, March 31, 1971; ~ v. GSIS, G.R No. L-28093, J<ri. 30,
1971.
1 G.R No. L-27489, Apn 30, 1970.
3 Under ECC Bocrd ResokJiioo No. 97.{)9.()5()() issued on Septerrber 4, 1997,
...... __ .... --·---~

472 BAR REviEWER ON lABOR lAW
7. Drug addiction or habitual alcoholism of the covered employee;
8. Lesbianism or homosexuality of the covered employee;
9. Contraction of bigamous marriages by the covered employee,
whether in the Philippines or abroad;
10. Sexual infidelity or perversion of the covered employee;
11. The covered employee's act of allowing the surviving spouse,
common child/ children or child/children of the spouse to be
subjected to acts oflasciviousness; and
12. 1he covered employee's contraction of serious sexually transmitted
disease extra-maritally.
(5) Parents of deceased employee as dependeuts.
In order for the parents of the deceased employee to qualify as
dependents, the law simply imposes one (1) requirement, i.e., that they are
wholly and not partially, dependent upon the latter for regular support. Living
with the deceased employee is not a requirement. The conclusive pre~umption
applicable to the other dependents is net followed in the case of parents.
Consequently, the burden of proof is upon such parents to prove dependency. As
to what is meant by "regular support, " the law and the implementing rules
failed to define or describe it. However, such regula:ity of snpport which is
certainly a question of fact may be inferred from the peculiar facts of a case.
In Malate Taxicab v. Del Villar/ the parents were considered
dependents despite the substantial income of the father who is an accountant
earning P300.00 per month. The test of dependency, according to the High
Court, is not merely whether the contributions were necessary to bare
subsistence. Dependency may exist although the dependents could have
subsisted without the assistance he received, if such contributions were relied on
by the claimant for his means of living as determined by his position in life. So,
it is immaterial that claimant could have so reduced his living expenses that he
could have been supported independently from the earnings of the employee.
One need not be actually a part of the deceased employee's household in order
to be a dependent There may be dependency notwithstanding the fact that the
employee did not WQfk steadily {)r was absent from the home at the time of his
accidental death, and notwithstanding the employee's unlawful acts or his
statement in his application for employment that he had no dependents.
S. BENEFICIARIES.
a. Beneficiaries, defined.
The term "beneficiaries" means the dependent spouse until he/she
remarries and dependent children who are the primary beneficiaries. In their
1 GR No. L·7489, Feb. 29, 1956.
CHAPTER VI 473
SOCIAL WELFARE LEGISLATION
absence, the dependent parents and· subject to the restrictions imposed on
dependent children, the illegitimate children and legitimate descendants, who
are the secondary beneficiaries, provided that the dependent acknowledged
natural child shall be considered as a primary beneficiary when there are no
other dependent children who are qualified and eligible for monthly income
benefit.'
b. General classification.
Beneficiaries under the Labor Code may be classified as follows:
1) Primary; or
2
2) Secondary.
c. Primary beneficiaries.
The following beneficiaries shall be considered primary:
l) The legitimate spouse living with the employee at the time of the
employee's death until he/she remarries; and
2) The legitimate, legitimated or legally adopted or acknowledged
natural children who are unmarried, not gainfully employed, not
over 21 years of age, or over 21 years of age, provided that he is
incap~:~citated and incapable of self-support due to a physical or
mental defect which is congenital or acquired during minority. A
dependent acknowledged natural child shall be considered as a
primary beneficiary only when there are no other dependent
children who are qualified and eligible for monthly income benefit.
If there are two or more acknowledged natural children, they shall
be counted from the youngest and without substitution, but not·
exceeding five (5).3
d. Secondary beneficiaries.
The following beneficiaries shall be considered secondary:
1) The legitimate parents wholly dependent upon the employee for
support;
2) The legitimate descendants and illegitimate children who are
unmarried, not gainfully employed and over 21 years of age, or over
21 years of age provided that he is incapacitated and incapable of
1
MDe 167m. Lalor eooe.
2 SecOOn 1[a), ROO YN, Amerded ~ onErrc>loyees' ~·
3 SecOOn 1!b). R1ite XN, Amerded Rules oo Employees'~· This rule is i1 aco:xdance Mth ECC Resolutm No.
2799 dated July 25, 1984.
.~~
474 t)A.KlU.VIt't'Yttl\.IN U\DUI\.LI\.Y'
self-support due to a physical or mental defect which is congenital
or acquired during minority. 1
e. When to determine beneficiaries.
2
Beneficiaries shall be determined at the time of the employee's death.
Consequently, although in other jurisdictions, posthumous children
who died before the employee's death are considered as dependents, 3 under the
laws of the Philippines, they cannot, as a general rule, be so considered since
beneficiaries are determined at the time of the death of the employee.
However, in Vda. de Makabenta v. Davao Stevedore Terminal
Company, 4 the daughter born after the death of the employee and, therefore, a
posthumous child, was considered a legal dependent of the deceased employee.
f. Rule on priority of beneficiaries.
(I) Priority of primary beneficiaries; secondary beneficiaries
excluded.
Primary beneficiaries have priority claim to death benefits over
secondary beneficiaries. Whenever there art: primary beneficiaries, no death
benefit should be paid to secondary beneficiaries. 5
(2) In the absence of primary beneficiaries, death benefits should
be paid to secondary beneficiaries.
If the deceased employee has no primary beneficiaries at the time of his
death, the death benefits should be paid to his secondary beneficiaries. 6
(3) In the absence of both primary and secondary beneficiaries,
death benefits shall accrue to the Employees' Compensation
Fund.
If the deceased employee has no primary or secondary beneficiaries at
the time of his death, the death benefit shall accrue to the Employees'
Compensation Fund.7
g. Benefits payable.
Primary beneficiaries shall be entitled to a monthly income benefit. In
their absence, the secondary beneficiaries shall be entitled to a monthly income
t Sedioo 1~. Rule XV, llil.
2 Sedioo 1{a], Rule XV, Ibid.
3 Krg v. ~nsws Por1land CementCo., 21s Mdt 335.
4 G.RNo.L-27489,Ajxi30, 1970.
Sedioo 2[aj, Rule XV, .Amended Rules onEnlJioyees' ~-
Sedioo 21b], Rule XV, llii. . 5
7 Sedioo 2[c], Rule XV, llid.
j
l
1:
SOCIAL WELFARE LEGISLATION
benefit not to exceed sixty (60) months and the death benefit shall not be less
than Pl5,000.00. 1
i
h. Monthly income benefit, how distributed.
The distribution of monthly income benefits shall be as follows: 2
1) Monthly income benefits shall be shared equally by all the primary
beneficiaries including dependent children who were not considered
in the determination of dependent pensions. Upon emancipation or
otherwise disqualification to entitlement to the dependent pension of
a dependent child, only ten percent (10%) shall be deducted from
the benefits and the remaining income benefits shall, once again, be
divided equally by the qualified primary beneficiaries. 3
2) If there are no primary beneficiaries, the secondary beneficiaries
shall also share equally in the monthly income benefits. 4
i. Evidence to prove relationship and dependency.
A marriage ..;ertificate issued by the parish priest who solemnized the
marriage between the surviving spouse and the deceased is sufficient to establish
marriage relationship. 5
The baptismal certificates and birth certificates of the children are also
sufficient evidence to prove the relationship of the dependenis with the
deceased. Strict observance of the technical rules of evidence is not properly
demanded in employees' compensation cases.6
---100ol---
1
Section 3, Rule XV, bkl.; Per ECC Resok1tKx1 No. 2799 daled Jutj 25, 1984.
2
The ECC passed ResokJtion No. 9Q.m.0022 [M<I1:h 23, 1990] a:lopling and p!'OIIU;jati'lg the &JppleloJy Rilles tl the
Amended Rules on ~· C<qlensaOOn. These ~ RUes JlfllWie f!r the lisdJuOOn d III0111hoY i1coote
berdKs.
3
No.I{1J flerect.
4
No.l[2]therea.
~v.lncklrg,<l.R No.48576,Aug.11, 1989, 176SCRA316.
6 kl.
476 CHAPTER VII 477
lABOR RElATIONS

CHAPTER SEVEN a. Lockout

3. Assumption of Jurisdiction
LABOR RELATIONS a. Nature
b. Effects of Assumption of Jurisdiction
TOPICS PER SYLLABUS
A.
VII. RIGHT TO SELF-ORGANIZATION1
LABOR RELATIONS
(NOTE: The presentation of the topics in this portion of the SyUabui
has been altered to provide for amore comprehensive and orderly discussion).
A. Right to Self-Organization
1. Who May Exercise the Right 1. CONSTITUTIONAL BASES.
a. Doctrine of Necessary Implication Under the 1987 Constitution, it is mandated that "the State affirms
2. Commingling/Mixture of Membership labor as a primary social economic force. It sh:dl protect the rights of
3. Rights and Conditions of Membership \\'Orkers and promote their welfare." 3
a. Nature of Relati:mship
Consequently, the State is reqdred to ''guarantee the rights of all
i. Member-Labor Union
workers to self-organization, collective bargaining and negotiations, and
ii. Labor Union-Federation
peaceful concerted activities, including the right to strike in accordance
a) Disaffiliation
b) SJJbstitutionary Doctrine with law." 4
Further, the Constitution declares that "the right of the people;
B. Bargaining unit including those employed in the public and private sectors, to form unions,
associations, or societies for purposes not contrary to law, shall not be
C. Bargaining Representative
1. Determination of Representation Status abridged." 5
2. LEGAL BASES.
D. Rights of Labor Organization The Labor Code declares as a basic policy that the State:
1. Check-off, Assessment, Agency Fees
2. Collective Bargslning (I) shall assure the rights of workers, inter alia, to self-organization
a. Duty to Bargain Collectively and collective bargaining; 6
b. Collective Bargaining Agreement (CBA) (2) shall pr<>mote ftee trade unionism as an instrument for the
1. Mandatory Provisions of CBA enhancement of democracy and the promotion of social justice and
development; and
E. Unfair Labor Practice
1. Nature, Aspects (3) shall foster the free and voluntary organization of a strong and
2. By Employers united labor movement 7
3. By Labor Organizations
F. Peaceful Concerted Activities
1. By Labor Organization 1 RelevantProvisklns:BookV, LaxrrCode Exect.JWeOrderNo.180, Series of 1987 ~une01, 1987].
a. Strike Refetring t Die 2017'S)tilus.
~ 18, MX:Ie II [IJe::tilmrc/Prilciplesand S1ale Pckies), 1987 C<mibltioo.
i. Valid Versus Illegal Strikes ~ ~ 3(taxirj, ArtiJe X1111Sodal Justice ll1d Hurr.Mffift;], 1967 CoostituOOn.
5
b. Picket Section 8, Article Ill [BiloiRijlls], 1987\:onstilutioo.
6 Mk:le 3thereof.
2. By Employer
~ ' ... ""'1 .. 101211~ .. ~~-
 CHAPTER VII 479
478 BAR REVIEWER ON lABOR lAW
lABOR REU\TJONS

1. workers' association of their own. They are, however, not. allowed to become
members of a labor union composed of rank-and-file employees. This is clear
WHO MAY EXERCISE THE RIGHT under Article 255 [245] of the Labor Code.' In case there is mixed membership
of supervisors and rank-and-file employees in one union, the new rule
1. PERSONS WHO MAY JOIN, FORM OR ASSIST A LABOR
enunciated in Article 256 [245-A] 2 of the Labor Code, unlike in the old law, is
ORGANIZATION FOR COLLECTIVE BARGAINING PURPOSES.
that it cannot be invoked as a ground for the cancellation of the registration of
The following are eligible to join, form or assist a labor organization: the union. The employees so improperly included are automatically deemed
a. In the private sector. removed from the list of members of said union. In other words, their removal
1) All persons employed in commercial, industrial and agricultural from the said list is by operation of law.
enterprises; 1 d. Right of alien employees to join a union.
2) Employees of government-owned and/or controlled corporations
without original charters established under the Corporation For an alien employee to exercise his right to self-organize, the
Code;2 following requisites should be complied with:
3) Employees of religious, charitable, medical or educational (1) He should have a valid working permit issued by the DOLE; and
institutions, whether operating for profit or not; 3 (?.) He is a national of a country which grants the same or similar
4) Front-line managers, commonly known as supervisory employees rights to Filipino workers or which has ratified eitlter ILO
4
[See discussion below]; Convention No. 8i or ILO Convention No. 98, 4 as certified by the
5) Alien employees (See discussion below]; Philippine Department of Foreign Affairs (DF A).
6) Working children (See discussion below];
7) Homewmkers [See discussion below]; e. Right of working children to self-organization.
8) Employees of cooperatives [See cliscussion below];
and Working children have the same freedom as adults to join the collective
9) Employees of legitimate contractors - not with the principals but bargaining union of their own choosing in accordance with existing law. Under
with the contractors [See discussion below]. P.D. No. 603,5 it is clearly provided that neither management nor any collective
bargaining union shall threaten or coerce working children to join, continue or
b. In the public sector. withdraw as members of such union. 6
All rank-and-file employees of all branches, subdivisions, f. Right of homeworkers to self-organization.
instrumentalities, and agencies of govemmen~ including
government-owned and/or controlled corporations with original Homeworkers have the right to form, join or assist organizations of
charters, can form, join or assist employees' organizations of their their own choosing in accordance with law.7 The registration ofhomeworkers'
owil choosing. 5 organizations or associations following the requirements prescribed by law will
vest legal personality thereto.8
c. Right of supervisors (a.k.a. first-line managers) to join a union.
There is no prohibition in the law or in the implementing rules
regarding the right of supervisory employees to organize a labor organization or 1 llil.
z Anew plll'liskln i1seB!d i1kl the L.alxJ Code by Sectioo 9d~ Act No. 9481 (effedNeon Jlrl!l14, 2007).
3 lbter Article 2 of LO CorNenm No. 87 !Freedool d Assa:ialioo il1d flole!;bl d the Ri;lht b Orgoolze) d ~k:h the

PhftWiles is a sgnaby, 'V.Q1(ers il1d ~. v.hlt dis&1ctioo v.tasoeYer, shal have the liJht tl establish llld
1 Al&:le 253 [243), t..m Code. subject on~ mthe rules d fie OJQ!Ilization OOI'ltOTlBd. P, Olgalizi6:m of !her aMl chlosi1g v.thoot prevkxJs
2 Article 254 (2441, Labor Code.
llllhorizalioo.'
3 Article 253 (2431. lllbor Code; Seem 2, Rl.lle II, 8o<i V, RJJies t1 irr1JIIrnen! the l.alxr C<XIe, as anended by ~ Artide 2of ILO CortJelltioo No. 98 1\flk:h dwells on the RiJht b Olgalize llld Co'lecWe Bagamg.
Depcr1ment Order No. 40-00, Seres ci 2003, [Feb. 17' 2003] !Wld lui1her anended by Dep;r1moot ()der No. 40-C-05, 5 OtheiWise kn<Mrl as 'The Ctid !Wld Youll Welfcre C<XIe.'
Series d 2005 !Marth 7, 2005; See also Al&:le 243, t..m Code. 6 Altide 111, Chapter 3, Tille VI, P.O. No. 603, as ll!1el1ded byPiesi:letltiaiOecree No. 1179v.tW:h blk ellecton Al..g. 15,
Article 255 (245!, labor Code; P..,er kldusiJ1es Capaatioo ci the Phqlpiles v.l.aguesma, GR No. 101738, ~ 12, 1977.
200lt lJni!d Pepsi-Cola SupeNisoly lJnkxl [\JPSUj v.l.aguesma, GR No. 122226, 1/M:h 25, 1998, 288 SCRA 15, 21-23. 7 Sectm 3, Depatne!lt Order No.5, Feb. 04, 1992.
5 SedXlns 1!Wld 2, Exea.We ()der No. 180, June 01, 1987; Sectioos 1!Wld 2, Rl.lle II, Rules and Regulabls 1D G<Nem the 8 Sectm 4, Ibid.
Exoo:ise ci the Ri;lht ci GoYemmenl Efl1Jioyees lo Sef.()rg<Vlization.
480 BAR REVIEWER ON L\BOR L\W
g. Right of members or employees of cooperatives to self-
organization.
Members of a cooperative have no right to form or join labor
organizations for purposes of coliective bargaining for being themselves co-
owners of the cooperative. This prohibition covers employees of the cooperative
who are at the same time members thereof. 1 However, insofar as the
cooperative's employees who are not members or co-owners thereof are
concerned, they are entitled to exercise their right to self-organization and
collective bargaining as guaranteed in the Constitution and existing laws. It is
the fact of ownership of the cooperative and not involvement in the
management thereof which disqualifies a member from joining any labor
organization within the cooperative. But employee-members of a cooperative
may withdraw as members of the cooperative for purposes of joining a labor
union. 2
b. Right of employees of legitimate contractors to self-organization.
An employee of a legitimate job contractor is entitled to all the rights
and privileges due a regular employee as provided in the Labor Code, such as
the right to self-organization, collective bargaining and peaceful concerted
activities, including the right to strike.3 But this right cannot be exercised and
invoked against the principal but only against the independent contractor which
employed them.
2. EMPLOYEES WHO ARE ALLOWED TO ORG~IZE A LABOR
ORGANIZATION ONLY FOR MUTUAL AID AND PROTECTION.
Ambulant, intermittent and other workers, the self-employed, rural
workers and those without any definite employers may form labor organizations
for their mutual aid and protection and other legitimate purposes except
collective bargaining. 4 The reason for this rule is that these persons have no
employers with whom they can collectively bargain.
3. 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. 5
• Right to join a union cannot be made subject of a CBA stipulation.6
1 Coopeatle Rural Balk d Davoo Ctf, k1c. v. Felref-Calleja, G.R. No. 77951, Sept 26, 1988; Sal Jose EledJic Servk:e
~. klc. v. J.tRy dl..cM, G.R. No. n231, Mer)' 31, 1989.
2 Central Nejros EleciJic Corpolalioo v. Seaetry dl.abor, G.R No. 94045, Sept 13, 1991.
3 Section 10(e), Depmen!OnlEJNo.174, Seriesd2917.
4 AIOC!e243, LaborCode;FElHlrJfiCCIIOI"ReyesMedicaiFoundaOOn, Inc. v. Trajano, G.R. No. 76273,Jldy31, 1987.
s Altle 292(c) [2n(c)), labor Code; No. 10, Basic Amen<knents ll1der R A. 6715, prepaed by Mmlels ct the Senate-
Hoose Conference Cormitlee d Coo:Jress.
s Southern~ Fedela!ioo of labor (SPFL) v. Calleja, G.R. No. 80882, ~ 24, 1989, 172 SCRA676.
LHAPTfR VII 4111
L\BOR RElATIONS
• The separation of unions doctrine1 has already been rendered nugatory by
the latest amendment of Article 255 [245] of the Labor Code introduced by
2
R. A. No. 9481 which added the phrase: "The rank-and-file union and the
supervisors' union operating within the same establishment may join the
same federation or national union. " This doctrine prohibits the situation
where the supervisory union and the rank-and-file union operating within
the same establishment are both affiliated with one and the same federation
because of the possible conflict of interest which may arise in the areas,
inter alia, of discipline, collective bargaining and strike.
4. SOME PRINCIPLES ON GOVERNMENT EMPLOYEES' RIGHT TO
SELF-ORGANIZATION.
• The labor organization in the government sector is technically called an
"employees' organization."3
• Registration of employees' organizations is made with both Civil Service
Commission (CSC) and the Bureau of Labor Relations (BLR) of the
Department of Labor and Employment (DOLE). Once registered, it is
technically called a "registered employees' organization." 4 In the private
sector, this is theoretically known as a "legitimate labor organization."
Cancellation of registration of an employees'. organizatiGn is likewise made
by both the CSC and the.BLR.
• The sole and exclusive bargaining union is called an "accredited
5
employees' organization." In the private sector, this is in principle
known as a "sole and exclusive bargaining agent (SEBA)."
• The unit where the government employees' organization seeks to operate
and represent is called "organizational unit." It is the employer's unit
consisting of rank-and-file employees unless circUtnstances otherwise
require.6 In the private sector, this is technically known as "bargaining
unit."
• The right to strike is absolutely prohibited in the government sector. 7
1 Erundaled i1 Alias~ Sel'lices, klc. v.l.ap!slm, G.R. No. 96566, Jat 6, 1992;toaslal &lbk: Bay Temilal, Inc.
V.llepatment d Labor illd ~ It the Seaetay, GR No. 157117, Nov. 20, 2006) and il other related
cases.
2
SecOOn 8of Repldlic Act No. 9481 [elfedM! June 14, 2007.
3
SecOOn 1[111 Rule I,~ and Regulations~ GJJem the Exen:ise-d the Rij1l of GoYemmeot ~ees to Self-
O!gmatioo.
4
SecOOn 1!iJ, Rule I, lbKI.
s SecOOn 1m. Rule l.lbl:l.
6
Section 9, Execuwe Older No. 180.
7
esc Memoroodum<:mJI<r No.6, s. 1987. 1APri121, 19871 pi001Uigaled by 111e Civi Service ConmissQ1 categoricaDy
prohili1s all gwemment o1!icials illd employees rom slll;lilQ ~es. denms1rali:X1S, mass leaves. wa1k-oots and other
fonns of mass actioo 1\tth v.;)l msu1t illhe te~ stlppage or disrupfioo of public 5e!Vices. AbYlg tlem 1o slii:e or
conduct the said prohilired ads s to undermine or ~ 4le gcNEIM1el1l system. Executive Older No. 180, ~une 1,
1987], v.flich prCNides the guidelines on !he exe!dseofl!le ri;lhlofgCM!fT1111e1111'1011<efS klOI!Ianize, ~idtly endolsed said
482 liAR REVIEWER ON lABOR lAW CHAPTER VII 483
lABOR RElATIONS

2. to another and are not always a reliable guide to membership in the highest
management classification.
WHO CANNOT FORM, JOIN OR ASSIST
LABOR ORGANIZATIONS Middle Management. - This refers to more than one level in an
organization. Middle managers direct the activities of other managers and
1. PERSONS NOT ALLOWED TO FORM, JOIN OR ASSIST LABOR sometimes also those of operating employees. The middle managers' principal
ORGANIZATIONS. responsibilities are to direct the activities that implement their organization's
a. In the private sector. policies and to balance the demands of their superiors with the capacities of their
I. Managerial employees; and subordinates. A plant manager in an electronic firm is an example of a middle
2. Confidential employees. manager.
b. In the public sector. First-Line Management. - This is the lowest level in an organization
The following are not eligible to fonn employees' organizations: at which individuals are responsible for the work of others. First-line managers
1) High-level employees whose functions are nonnally considered direct operating employees only; they do not supervise other managers.
as policy-making or managerial or whose duties are of a highly Examples of first-line managers are the "foreman" or production supervisor in a
confidential nature; 1 manufacturing plant, the technical supervisor in a research department, and the
2) Members of the Armed Forces of the Philippines; clerical supervisor in a large office. First-level managers are often called
3) Police officers; supenisors.
4) Polic~;:men; Based on the above classification, "managerial employees" may fall
5) Firemen; and into two (2) distinct categories: namely:
6) Jail guards. 2
I) The "managers" per se composed of top and middle managers; and
2. RIGHT OF MANAGERIAL EMPLOYEES TO JOIN A UNION.
2) The "supervisors" composed of first-line managers.
a. Types of managerial employees for purposes of exercising right
b. Not all managerial employees are prohibited from forming,
to self-organization.
joining or assisting a union.
There are 3 types of managerial employees:
No. 1. above are absolutely prohibited from furming, joining or
l) Top Management; assisting any labor unions for purposes of collective bargaining. 1
2) Middle Management; or
Only No. 2 above are allowed to fonn, join or assist a labor
3) First-Line Mct11agement (also called supervisors).3
organization for purposes of collective bargaining.
Top Management - This is composed of a comparatively small group
of executives.· It is responsible for the overall management of the organization. 3.
It establishes operating policies and guides the organization's interactions with DOCTRINE OF NECESSARY IMPLICATION
its environment. Typical titles of top managers are "chief executive officer,"
''president," or "senior vice-president." Actual titles vary from one organization 1. CONFIDENTIAL EMPLOYEE RULE.
Within the context of labor relations, "confidential employees" are
those who meet the following criteria:
{l) They assist or act in a confidential capacity;
esc t.'elncmlum Ci'cua No.6, s. 1987, dated Apri 21. 1987 [sl¥al by sfali1g N 11e CM SeM:e Law em ruk!s (2) To persons or officers who fonnulate, determine, and effectuate
~ c:oncemd diities em sllies il the gcNellVI1el1l ser.te s11a1 be OOse!YOO. (Jacirto v. Hon. CA. GR No.
12454{). Nal. 14, 1997). management policies specifically in the field of labor relations.
1 Secful3, Executr.<e Order No. 180, June 01, 1987; Section 2, Rule II, Rules ald Regulatklos to Ga.iem the Exercise ci the
RiJht aGoYemment ~llyees to Serogmaoon.
2 Secful4, ExealtNe Order No. 180; Section 1, Ru!e II, llil.; See also~ 6, Boo~\ V, AclrrilistraWe COOe ci 1987
IExeculi.te Order No. 292.
3 ~ Industries CaporaOOn ci lle Phiippiles v. t.aauesma, GR No. 101738, April12, 2000j; UnitEd Pepsi-COO 1
This is clear under Al1i:le 245 of the labor Code.
&Jperiisay Uni':Jn [UPSU] v.l.agues!M, G.R No. 122226, Mrch 25, 1998, 288 SCRA 15,21-23.
484 BAR REviEWER ON lABOR lAW
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. 1
A confidential employee may be a rank-and-flle or supervisory
employee but because in the normal course of his duties, he becomes aware of
management policies relating to labor relations, he is not allowed to assist,
form or join a rank-and-file union or supervisory union, as the case may be. His
exclusion from the bargaining unit is justified under the "confidential employee
rule." To allow him to join a union would give rise to a potential conflict of
interest. Management should not be required to handle labor relations matters
through employees who are represented by the union with which the company is
required to deal and who, in the normal performance of their duties, may obtain
advance information on the company's position with regard to collective
bargaining negotiations, the disposition of grievances, or other labor relations
matters. 2
However, the mere ac~;ess of an employee to confidential labor
relations information which is merely incidental to his duties and, therefore,
knowledge thereof is not necessary in the performance of said duties, does not
make such employee a confidential employee. If access to confidential labor
relations information is to be a factor in t.IJ.e determination of an employee's
confidential status, such information must relate to the employer's labor
relations policies. Therefore, access to information which is regarded by the
employer to be confidential from the business standpoint, such as financial
information or technical trade secrets, will not render an employee a confidential
employee. An employee may not be excluded from an appropriate bargaining
unit merely because he has access to confidential information concerning the
employer's internal business operations which is not related to the field of
labor relations.3
Thus, even a bank cashier who also serves as the secretary of the board
of directors may not be classified as a confidential employee disqualified to join
a union. True, the board of directors is responsible for corporate policies, the
exercise of corporate powers and the general management of the business and
affairs of the corporation. As secretary of the bank's governing body, the
employee serves the bank's management, but could not be deemed to have
1 Tunay na Pagkakaisa ng Manggagawa sa Asia Brewert v. Asia BreweJY, Inc., G.R. No. 162025, Aug. 3, 2010;
Sugbuanon Rural Bank, Inc. v. Laguesma, G.R No.116194, Feb. 2, 2000.
2 Sal Mguel Corp. SupeMsors lr1d Exe!l1ll Empbyees 1ro1 v.Laguesma, G.R No. 110399, hlg. 15, 1997, 2n SCRA
370, 374-375.
3 See Sal ~uel Corpcrntion SUpervisors Md Ex~ Elqlloyees Unkln v. Laguesma, supra; National Associa1ion ctTrade
l.k1klns- RepOOiic f'tanler.; Book SupeiViso!s ~v. Tones, G.R. No. 93468, Dec. 29, 1994,239 SCRA 546, 560.
CHAPTER VII 485
!ABORREIATIONS
access to confidential information specifically relating to the bank's labor
relations policies, absent a clear showing on this matter. 1
2. DOCTRINE OF NECESSARY IMPLICATION.
The doctrine of necessary implication is the legal basis for the
ineligibility of a confidential employee to join a union. The disqualification of
managerial and confidential employees from joining a bargaining unit of rank-
and-file employees or supervisory employees is already well-entrenched in
jurisprudence. While Article 255 [245] of the Labor Code limits the ineligibility
to join, assist or form a labor organization to managerial employees,
jurisprudence has extended this prohibition to confidential employees or those
who, by reason of their positions or nature of work, are required to assist or act
in a fiduciary manner to managerial employees and, therefore, are likewise privy
to sensitive and highly confidential records?
Article 255 [245] of the Labor Code does not directly prohibit
confidential employees from engaging in union activities. T.oeir disqualification
proceeds merely from the application of the "doctrine of necessary implication"
because what Article 255 [245] singles out as ineligible to join, assist or form
any labor organization are managerial employees. By necessary implication,
confidential employees are similarly disqualified. This doctrine states that what
is impiied in a statute is as much a part thereof as that which is expressed.3
Simply stated, in the collective bargaining process, managerial
employees are supposed to be on the side of the employer to act as its
representatives and to see to it that its interests are well protected. The employer
is not assured of such protection if managerial employees themselves are union
members. Collective bargaining in such a situation can become one-sided. It is
the same reason why the positions of confidential employees are included in the
disqualification found in Article 255 [245] as if such disqualification was
written in the provision. If confidential employees could unionize in order to
bargain for advantages for themselves, then they could be governed by their own
motives rather than the interest of the employer. Moreover, unionization of
wnfidential employees for the purpose of collective bargaining would mean the
extension of the law to persons or individuals who are supposed to act "in the
interest of' the employers. It is not far-fetched that in the course of the
collective bargaining negotiations, they might jeopardize that interest which they
are duty-bound to protect.
&lgbualoo RlniBalk, klc. v. L.aguesma, G.R No.116194,Feb.2, 2000.
Stlld<rd ClftRld Bank~ Lm1 (SCBEU-NlJBEl v. Staldad Clm!led BCI1I<, G.R No. 161933, ~ 22, 2008;
MeiJdab Industries, k1c. v. ~. G.R No. 108855, Feb. 28, 1996, 254 SCRA 182; 324 Phil416.
3 OuJa v. CM SeMce Convrission, G.R No. 88979, Feb. 7, 1992, 206 SCRA 65.
486 BAR REVIEWER ON lABOR lAW
3. CASES WHERE CONFIDENTIAL EMPLOYEES WERE NOT
ALLOWED TO JOIN UNIONS.
Based on jurisprudence, the following are considered confidential
employees under the confidential employee rule:
1. Accounting personnel and radio and telegraph operators;'
2. Division secretaries, all Staff of General Management, Personnel
and Industrial Relations Department, Secretaries of Audit, EDP and
Financial Systems; 2
3. Legal secretaries who are tasked with, among others, the typing of
legal documents, memoranda and correspondence, the keeping of
records and files, the giving of and receiving notices, and such other
duties as required by the legal personnel of the corporation.3
4. Executive secretaries of the General Manager and the executive
secretaries of the Quality Assurance Manager, Product
Development Manager, Finance Director, Management System
Manager, Human Resources Manager, Marketing Director,
Engineering Manager, Materials Manager and Production Manager
were also considered confidential employees since they have access
to "vital labor information." 4
4. CASES WHERE CONFIDEl'I'TIAL EMPLOYEES WERE ALLOWED
TO JOIN UNIONS.
Confidential employees are not absolutely pr-ohibited from joining
unions. This is the correct view since confid.'lntial employees are allowed to join
unions in some cases.
For instance, in Southern Philippines Federation of Labor v. Ferrer-
Calleja,5 the inclusion of the confidential rank-and-file employees in the
bargaining unit of rank-and-file employees was upheld ~y the Supreme Court.
Much earlier, the High Court proclaimed in Filoil Refinery Corporation v.
Filoil Supervisory and Confidential Employees Association,6 that
confidential rank-and-file employees may join the union of supervisors,
especially in a situation where the confidential employees are very few in
number and are, by practice and tradition, identified with the supervisors in their
role as representatives of management vis-a-vis the rank-and-file employees.
Such identity of interest bas allowed their inclusion in the bargaining unit of
1 Golden F11111S, l'lc. v. Ferrer-Caleja, G.R No. 78755, J~ 19, 1989, 175 SCRA471.
2 flt1qlS ~ Deveqxnent, h:. v. NLRC, G.R No. 68957, June 25, 1992, 210 SCRA339.
Pilr 8Mastre &S1evedori'g Services, klc. v. ~. [G.R No. 110854, Feb. 13, 1995, 241 SCRA 294.
tletrolab lnckJslries, ktc. v. Rotlal-Confesa, G.R No. 108855, Feb. 28, 1996, 254 SCRA 182; 324 Phi. 416.
s G.R No. 80882, Apn124, 1989, 172 SCRA 676.
& G.R. No. L-26736, Aug. 18, 1972.
CHAPTER VII
lABOR RELATIONS
487
supervisors for purposes of collective bargaining. They remain employees in
relation to the company as their employer. This identity of interest logically calls
for their inclusion in the same bargaining unit and at the same time fulfills the
law's objective of insuring to them the full benefit of their right to self-
organization and to collective bargaining which could hardly be accomplished if
the respondent association's membership were to be broken up into five separate
ineffective tiny units_
Jurisprudence, therefore, has established that there is no legal
prohibition against confidential employees who are not performing managerial
functions to form and join a union. 1
4.
COMMINGLING/MIXTURE OF MEMBERSIDP
l. LEGAL BASIS.
The following provision in the Labor C,ode2 addresses the issue of
coilllllingling or mixture of membership in the union, thus:
Article 256 [245-A]. Effect of Inclusion as Members of
Employees Outside the Bargaining Unit - The inclusion as union
members of employees outs!de the bargaining unit shall not be a
ground for .the tiincellation of the registration of the union. Said
employees are automatically deemed removed from the list of
membership of said union.3
2. EVOWTION IN THE DOCfRINAL RULINGS ON MIXED
MEMBERSIDP.
a. The Toyota doctrine.
Under this doctrine, supervisory employees are allowed to fonn their own
labor organization but they cannot join the labor organization of rank-and-file
employees. 4 The statutoxy authority for the exclusion of supervisory employees from
a rank-and-file union, or vice-versa, is Article 255 [245] of the Labor Code.5 Due to
the antipathy and irreconcilability of the interests between supervisors and rank-and-
1 Soo l.tJuel Co!po1a1oo SupeMsors and ExenlJt Efi1lloyees Union v.l.a}Jesma. G.R No. 110399, h.Q. 15, 1997, Zl1
SCRA 370; National A$ociatioo ciTrade Unions· Republ't Plcllle!s Bri ~ ~ v. Tones, G.R No. 93468,
Dec. 29, 1994, 239 SCAA 546, 560.
2
Sedi:Jn 9of RA No. 9481 ilselted Artk:1e 256 (245-A] i"lto the Utxr COOe i12007.
3
k1bodlx:ed as new prcMsion by Section 9, RA. No. 9481 v.i1i:h lapsed i11o law oo May 25, 2007 and becalle effective oo
June 14, 2007; As renurrbered pwsuanttl Sedi:Jn 5, RA. No. 10151,June 21,2011 and DOLE DepabnertAcMsay No.
01, Series of2015 (Renunbeling of the Labor Code of the Philqlpines, as Amended), issued oo .Mt 21,2015.
~ Article 266 [2541 Labor Code; De La Sale Unive!Si\y Wedk:al Cen\er and College of Medicile v. tw.;Juesma, G.R No.
102084, AuJ. 12, 1998.
5
Tagaytay lfghlands lnternaOOnal GolfCIJb Inc. v. Tagaytay flidhialds ~ees Union-PG1WO, G.R No.142000, Jan.
22,2003.
488 BAR REVIEWER ON lABOR lAW
file employees, it was held in Tayotrl that "clearly, based on this provision/ a labor
organization composed of both rank-and-file and supervisory employees is no labor
organization at all. It canno~ for any guise or pwpose, be a legitimate labor
organization. Not being one, an organization which carries a mixture of rank-and-file
and supervisory employees cannot possess any of the rights of a legitimate labor
orga::rization, including the right to file a petition for certification election for the
pwpose of collective bargaining. It becomes necessary, therefore, anterior to the
granting of an order allowing a certification election, to inquire into the composition
of any labor organization whenever its status is challenged on the basis of Article
255 [245] of the Labor Code.3
b. The Dunlop doctrine.
In the same vein, it was held in Dunlo/ that for as long as the supervisors'
union counts rank-and-file employees among its members, it has no legal right to file
a petition for certification election to represent a bargaining unit composed of
superviso:-s.
c. Toyota & Dunlop no longer apply under the present state of the law
and rules.
That the above doctrinal rulings in Toyota and Duniop ''no longer hold
sway in the present altered state of the law and the rules" brought about by the
enactment of the amendatory R.A. No. 9481, has been expressly pronounced in the
2008 case of Kawashima 5 This is so in the light of the above-quoted Article 256
[245-A],6 a new provision inserted into the Labor Code by R.A. No. 9481.7 Under
this provision, the inclusion as union members of employees outside the bargaining
unit is not a wound for the cancellation of the registration of the union. The
employees so impr.operly included are automatically deemed removed from the list
of members of said union by operation oflaw.8
The same ruling was made in the 2011 case of Charter Chemical9
involving the mixed membership of supervisory and rank-and-file employees in the
1 Taj~E MU~ v. T(rf~E MU Philppiles Ccrpaati:x1 lmorllnkxl,{;.R No. 121084, Feb. 19, 1!197, 268 SCRA
573.
2 hti:le 255!245) rJ lle Lalor Code.
3 See 8so Ta,da t.tlklr Philippiles CcqxxaOOn 1m Unkx1 v. Toyola MlliJ f'tliWiJes Coipolalix1 fn1llcYees !lld
Wo!teist.ml, Ta,Qa M:UPhippilesCOiporaOOn,GR No. 135806,Aug. 8, 2002.
c Dlrilp Slazenger [Phis.]; h:. v. Seaefaiy cl Lalor !lld ~ GR No. 131248, Dec. 11, 1998, :KXl SCRA 120,
128.
s Rep!Ji:fitle~, Represented byDOI.Ev. Kawashina Texilt.IJ.,Phiippines, Inc., G.R No. 100352.Jlti 23,
. 6
7
2008.
lnia.
SecOOn 9Vlereof. RA No. 9481 kick effect on JLIMl14, 2007.
a See also Section 6, Rule YN, Book V, RUes D~I the Labor Code, as ilserted by Department Older No. 40-F-03,
Series cl2008(0ct. 30, 2008].
s ~ Mmggagawa sa a-n CheiTtal Solklaiy ct unms nile Phi~Wfles fi:Jr ~ Md Reforms
(SI.CCSUPER)v. ChaterChemk:al and Coating Caporation, G.R No.1697171, Man:h 16,2011.
CHAPTER VII 489
lABOR RElATIONS
rank-and-file union. Thus, it was held that the inClusion of supervisory employees in
petitioner union does not divest it of its status as a legitimate labor organization. The
CA's reliance on Toyota is misplaced in view of the subsequent ruling in
Kawashima where it was explained at length how and why the Toyota doctrine no
longer holds sway under the altered state of the law and rules applicable to this case. 1
3. EXCLUDED MEMBERS AUTOMATICALLY REMOVED BY
OPERATION OF LAW.
As is now provided in Article 256 [245-A], any excluded members are
automatically deemed removed from the list of legitimate members of the union
concerned. Thus, if supervisory employees are included as members of a rank-and-
file union, they are deemed automatically removed from the roster of members of
said union and vice versa.
4. MIXED MEMBERSHIP, A PROHIBITED GROUND TO CANCEL
UNION REGISTRATION.
Under the Implementing Rutel of the Labor Code, mixed membership is
now deemed a prohibited ground for the cancellation of union registration.
5.
RIGHTS AND CONDITIONS OF MEMBERSIDP3
A.
NATURE OF RELATIONSHIP
i.
MEMBER-LABOR UNION
1. RELATIONSHIP OF THE UNION AND ITS MEMBERS.
The relationship between the union and its members is fiduciary in
character. The union is but an agent of its members for the purpose of securing for
them fair and just wages and proper, good working conditions. It includes the
obligation to give its members as its principals, all information relevant to the union
1 See 8so The Herila;je Hotel t.'a1ila v. Secrelay rJ Labor Md ~ G.R No. 172132, Jutt 23, 2014; Tagayfay
~ h1fetnafiorta Golf CIJl me. v. T~ 1-iJhl!llds EirclbJee5 Unbn • PGlWO, G.R No. 142001, JM. 22, 2003;
Sill l.tJuel CorpaaOOn [MMdaJe P!WJing Products Plri>) v. M!lldaue Packagilg flrtxka; Palls • Sal Packaging
Producls-Sa1 l.iJuel ColpaatOO tkxlt1lies Ralk-ood-Fle lml-ffW {tvPPP· SM'P-SI.W.flfi.I..FFV, G.R. No.
2
-iles
152356, Aug. 16, 2005; ., .Re: Pe!ful tr Cax:ellaOOn ct d1e !.Moo Registration rJ Ai Plippiles ~hi AllendMis
Association., Ai COip. v. BlR, G.R No. 155395, Jllle 22, 2006;
New Sec1ion 6, Rule YN, Book V, Rules mllllJiement the l.abor Code, as i1serted by DepiJbnent Onler No. 40-F-03,
Series of 2008 (Ott 30, 20081. Ttis section ~: '"SecOOn 6. PrOOilired Groonds fi:Jr <:ancelalion rJ Regisfratioo. -The
ilWskln as unbn l1'lefTbers rJ ~ Yttlo ere ootsi:le lle tagaining unl shat not be aQ!OOf1d k> <3lCel the union
IeQisliation. The iiet,jbte 8illJioYeesare aJianaticaly deemed reroo.oed from the listct ~of the unioo.'
3 Reieva1t pr<Msioo: AI1icle 250 [241], Labor Code.
490 BAR REviEWER ON lABOR lAW
and labor matters entrusted to it. The court has the duty to protect workers from the
unfair treatment and unjust exploitation not only by oppressive employers but also
by their own unworthy leaders. Where the union leadership is recreant in its duty
towards the: union members, the courts :QlUSt be vigilant to protect the individual.
interests of the union members.1
2. RIGHT TO UNION MEMBERSHIP.
a. Right to union membership is not absolute.
An employee cannot invoke an absolute right to union membership?
Although the right to self-organization and collective bargaining is duly guaranteed
under the Constitution, it is subject, however, to regulation by the State. For instance,
it is mandated by law that no labor organization shall knowingly admit as member or
continue in membership, any individual who belongs to a subversive organization or
who is engaged directly or indirectly in any subversive activity?
b. Freedom of choice.
An employee has the right to join or not to join a labor union. 4 A member
of a labor union may leave and cancel his membership at any time. An employee
who joins a union does not make any commitment or assume any undertaking to
continue his membership therein for a fixed period ofti'lle, much less indefinitely. In
this regard, he is a free agent. 5 The same may not be said, however, in case there is a
valid union security clause in the CBA such as a closed-shop or union-shop
arrangement between management and the union. In such a case, the employee
concerned is duty-bound to keep his union membership for the duration of the CBA
as a condition for his continued employment. If such membership in the union which
is the collective bargaining agent is validly terminated, he may likewise be dismissed
from his elllJ?loyment. The only exception to this is when the employee objects to
such membership on the ground of religious belief.6
c. Right to join a union acquired from first day of employment
By express provision of Article 292(c) [277(c)] of the Labor Code, any
employee, whether employed for a definite period or not shall, beginning on his first
day of service, be considered an employee for purposes of membership in any labor
union.
1 HeisofTeoduto M. Cruz v. CIR, G.R Nos. L-23331-3.2, Dec. 27, 1969, 30 SCRA 917.
2 l.ocal7, Press&Prilfi'g FreeWorkers(FFW)v. Tabi]ne, G.R No. L-16093, Na/.29, 1960,110 Phi.276.
a Mic:E250(e) J241{eM. Labor Code.
4 VictJriim v. Eizalde Rope WOOters Unkln, G.R No. L-25246, Sept. 12, 1974, 59 SCRA 54; UST Facu!ly Unioo \USTFU) v.
Bitooio, G.R No. 131235, Nov. 16, 1999.
s Basa v. FOITAF, GR. No.l-27113, Nov. 19, 1974, 61 SCRA 93; ~ v. Erd'quez, G.R. No. L-12999, Jutj 26, 1960,
108 Phl1010.
6
VK:biooo v. Elilade Rope Workers Unkln, SUp!ll; De La Sslle UnMllsily v. De La Salle Universi1y Emplafees Association,
G.R No. 109002, April12, 2000.
CHAPTER VII 491
lABOR RELATIONS
d. Union members who are not employees do not possess the right to
join union.
If the union members are not employees, no right to organize for purposes
of collective bargaining nor to be certified as bargaining agent can be recognized.
The question of whether employer-employee relationship exists is a primordial
consideration before extending labor benefits under the workmen's compensation,
social security, PhiiHealth, termination pay and labor relations law. It is important in
the determination of who shall be included in the proposed bargaining unit because it
is the sine qua non, the fundamental and essential condition that a bargaining unit be
composed of employees. Failure to establish this juridical relationship between the
union members and the employer affects the legality of the union itself. It means the
ineligibility of the union members to present a petition for certification election as
well as to vote therein. 1
3. RIGHTS OF UNION MEMBERS UNDER ARTICLE 250 [241].
Article 250 [241] of the Labor Code enumerates the specific legal rights of
a member of a labor union as well as the legal conditions of such membership. More
specifically, these rights and conditions may be grouped into the following
categories:
a. Fiscal rights.
Financial rights include the following:
{1) Right against arbitrary, oppressive or excessive fees, fines and
forfeitures;
(2) Right to full and detailed reports on all financial transactions in
accordance with the constitution and by-laws of the union;
(3) Right against unauthorized collection of any fees, dues or other
contributions;
(4) Right to claim receipt for every payment of fees, dues ~r other
contributions;
(5) Right to prevent funds of the organization from being applied for any
pwpose or object other than those expressly provided by the union's
constitution and by-laws or allowed expressly by written resolution
adopted by the majority of the members at a general meeting duly
called for the purpose; ·
1 Singer SeMng Machi1e Coo1JMY Y. Drikxl, G.R No. 91307, Jan. 24, 1991, 193 SCRA 270, 275; La &Jerte CiJw and
Ci;!areHe Fadoly v. Diredor d L.abor RelaOOns, G.R No. L-55674, July 25, 1983, 123 SCRA 679; Repubic Pl1rrters Bank
General SeMces Empklyees !Jnion.t.latiooal Assoda"tior. o!Tiade Unions v.l.a;Juesma, G.R No. 119675, Nov. 21, 1996,
264 SCRA 637,643.
492 BAR REviEWER ON lABOR lAW
(6) Right to demand or require that every income or revenue as well as
every expenditure of the union shall be recorded or receipted, which
record or receipt shall form part of the financial records of the union;
(7) Right against unauthorized check-off for special assessments,
· attorney's fees, negotiation fees or any other extraordinary fees
without an individual written authorization <iuly signed by the
employee;
(8) Right to vote on the compensation of union officers; and
(9) Right against unreasonable assessments to finance labor relations
seminars and other labor education activities.
b. Right to information.
Right to information includes the following:
(1) Right to require the treasurer and the other officers of the union
responsible tbr the accmmt of the union as ·well as for the collection,
management, disbursement custody or control of the funds, moneys
and other properties, to render a true and correct account thereo~ at
least once a year within thirty (30) days after the close of its fiscal
year and at such ot!)er times as may be required by a resolution of the
majority of the members of the union and upon vacating his office;
(2) Right to require that the account be duly audited and verified by
affidavit and a copy thereofbe furnished to the DOLE Secretary;
(3) Right to inspect the books of accounts and other financial records of
the union and to require full and detailed reports from their officers
and representatives on all financial transactions as provided for in the
eonstit.rtion and by-laws of the organization;
(4) Right to be informed of the provisions of the constitution and by-
laws, CBA, the prevailing labor relations system and all their rights
and pbligations under existing labor laws through the medium of
labor relations seminars or other labor education activities; and
(5) Right to seek investigation of any irregularity.
It must be noted that the law considers it unlawful for any person to make
any statement, report, or record filed or kept pursuant to the provisions of the Labor
Code, knowing such statement, report or record to be false in any material respect 1
c. Political rights.
Political rights include the following:
1 ArOCie 119, Labor Code.
CHAPTER VI!
lABOR RELATIONS
493
(1) Right to vote and be voted for as an officer of the union, subject to
! the qualifications and disqualifications mentioned in Article 250
I [241] of the Labor Code;' and
(2) Right to be appointed to appointive positions in the organization,
subject to the qualifications and disqualifications mentioned in
Article 250 [241] of the Labor Code.
d. Right to participate in decision-making.
Right to participate in decision-making process includes the following:
(1) Right to vote by secret ballot on any question of major policy
affecting the entire membership of the organization; and
(2) Right to initiate and participate in impeachment or expulsion
proceedings against an erring officer or member of the union.
ii.
LABOR UNION-FEDERATION
1.
AFFILIATION
1. 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.
2. AFFILIATE.
An "affiliate" refers to:
(1) An independent union affiliated with a federation or a national
union; or
1
(2) A local chapter which has been subsequently granted
independent registration but did not disaffiliate from the federation
or national union which created it.3
3. 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 union4 under Article
1
Such as metTilelstip naSIJbvefSive org<llizalion oc eng~mg. direcly oc ildi'ecttf, il Mrf subvelsive activity ll1d oonviction
ct aaine i1vdviYJ rooralb.lpitude.
2
Foonerty knoMlas 'ctned local." SeeMi::le 241 [234-Aj, Labor Cede.
3
Sectioo 1(a), Rule I, Book V, Rules to ~ l1e labor Code, as anended by IJep<vtment Order No. 40-{)3, Series ct
2003, [Feb. 17, 2003].
4
Federation or nafiooallllion.
494 BAR REviEWER ON lABOR lAW
241 [234-A] of the Labor Code, cannot be properly called an "affiliate" if it has
not acquired any independent registration of its own.
4. 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.'
5. CONTRACT OF AGENCY.
The mother union, 2 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-iaws of the association. 3
6. SOME PRINCIPLES ON AFFILIATION.
• Independent legal personality of an affiliate union is not affected by
affiliation. 4
• The affiliate union is a separate and distinct voluntary association owing its
creation to the will of its members. It does not give the mother federation
the license to act independently of the affiliate union. 5
• The fact that the local chapter is not a legitimate labor organization does not
affect the principal-agent relationship. 6
• Affiliate union becomes subject of the rules of the federation or national
union. 7
• The appendage of th.e 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
1 Naional Uni:x1 cl Sri ~k1fees (NUBE) v.l'tlil1allrtflrllloyees Associatioo{P8M), G.R No.174287, ALgust 12,
2013, cili"g Maayarg Sancim llJ rrga Marggagawa saM. Greenfield v. Hen. Raoos, GR No. 113907, Feb. 28, 2001,
326 SCRA 428.
2 Refenh:l m 11e fedelati:ln cr natiooal unioo.
3 f!roJressNe Develqlmenl Capaatial v. Seaellry, Depna11 d tmilll:l~ G.R No. -96425, Feb. 4, 1992,
aJ5 SCRA l!02; Pcrrba1sarg ~ llJ rrga fwi:. PiMis sa Fonney Plaslk: -NaliJnal Workers t!rol1erhood v.
laJuesma, GR No. 111836, Feb. 1, 1996,253 SCRA 96, 103; l.herty-ca!OO Mils Wailers lful v.l.herty Cclloo Ws,
Inc., G.R No.l-33987, Sept 4, 1975,66 SCRA 519.
~ Adanson !!1d Adamsoo v. CIR, G.R No.l-35120, JM. 31, 1!184, 127 SCRA268; St. luke's Med"ICaiCenrer, Inc. v. Tares,
G.R No. 99395, June 29, 1993,223 SCRA n9; fisro.EiolltilorUllon {NAfl.O) v. Ncli!l, G.R. No.l-41955, 1Joc. 29,
1977, 180 SCRA 681.
5 k1su1ar fWEnlJiaiees lJnioo.NFL v. Waletfrontlnsulcr!Wt>avao, G.R Nos.17404Q..11, Sept 22,2010, citi1J Coastal
Subk: Bet Temilal, klc. v. Depmentc:IL.axr illl:l ~ clfle Secretly, GR No. 157117, Nov. 20, 2006;
Alm:e ci Naliorl*l illl:l Genuile Labor Org. v. SanahM llJ rrga ~ Nagkakaisa sa Mria Bet SpilnDJ
Mils, G.R. No.118562, Ju~ 5, 1996, 258 SCRA 371, 3n.
s ~ P~ !rid Foold!y Corporation v. NLRC, G.R No. 115180, Nai. 16, 1999.
1 Lilerty Cotb'l Milts WoiteiS Union, v.lllerty CoUoo Mils, re, sup~a; See also~ SMlalan llJ rrga Malggagawa
saM Greenfield v. Ramos, G.R No. 113907, Feb. 28,2000,326 SCRA 428; Villarv. n:Jong, G.R. Nos. L-50283-84, April
20, 1983, 121 SCRA 444.
lABOR RElATIONS
"t7;..J
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. 1
• The fact that it was the federation which negotiated the CBA does not
make it the principal and the affiliate or local union which it
represents, the agent. 2
• However, if it was the federation which negotiated all the CBAs. in the
establishment, the local chapter cannot negotiate the renewal of the CBA
without the consent and participation of the federation. 3
• The fact that it was the name of the federation that was particularly
mentioned as the bargaining party in the CBA without specifying the local
union does not have any effect on the right of the federation to participate in
the bargaining process. 4
• It is the local union and not the federation/national union with which it is
affiliated that has the right to administer and enforce the CBA with the
employer. 5
• In case of illegal strike, the localt•nion, not the mother union, is li2ble
for damages. 6
2.
DISAFFILIATION
l. 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. 7
2. DISAFFILIATION OF INDEPENDENTLY-REGISTERED UNION
AND WCAL 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
1
Tropica Hut FoOO EfrcliJyees Union. roN v. rrop;::a Hut Food Malket, G.R No. 43495-00, Jan: 20, 1900; See also St.
l.uke'sMeoi:aiCenler, Inc. v. Torres, GR. No. 99395,June29, 1993.
2
Elisco-13'101 t.mUlKl!l [NAFLU] v. Norie!, G.R No. 41955, Dec. 29, 1977.
3
Abariav. NLRC,GRNos.154113, 18m8, 187861 &196156,0ec. 7,2011,661 SCRA686.
~ ~ Kapatiran llJ rrga Anak Pa'~Wi sa Formey Plastic Nali:lnal WolkeiS Brotherhood v. L.aguesma, GR No.
111836,Feb.1, 1996,253SCRA96.
5 Bisco-Eliol t.mUnlon{NAFLU]v. Noriei;G.R No.41955, Dec. 29, 1977.
Aipino f11e mFoondry Corporation v. NLRC. G.R No. 115180, Nov. 16, 1999.
Phif!ppfle Labor ARiance Council v. BLR, GR t-il. L-41288, Jan. 31, 1977,75 SCRA 162; Volkschel Labor Union v. BIJ'eaU
of labor Relatioos, G.R No. L-45824, June 19, 1985, 137 SCRA 42.

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. 1
3. SOME PRINCIPLES ON DISAFFILIATION.
• Disaffiliation does not divest an affiliate union of its legal personality. 3
• Disaffiliation of an affiliate union is not an act of disloyalty. 4
• 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. 6
• Disaffiliation terminates the right to check-off federation {lues. 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. 7
• Disaffiliation does not affect the CBA. It does not operate to amend it or
change the administration of the contract. 8
• As a general rule, a labor union may disaffiliate from the mother union to
form an independent union only during the 60-day freedom period prior to
the expiration ofthe existing CBA. It is not, however, legally impossible to
effect the disaffiliation prior to the freedom period, provided that the same
is approved by the majority of the members of the bargaining unit. Undei'
this situation, the CBA continues to bind the members of the new or
disaffiliated and independent union up to the expiration thereof. 9
• Disaffiliating from the federation and entering into a CBA with the
employer does not constitute an unfair labor practice!0
• Disaffiliation is not a violation of the union security clause. 1
1 See Article 234-A, Labor Code.
2 See Article 234-A,Ibid.;Warv.lncilng,G.RNos.l-50283-84,~2tl,1983,121 SCRA444.
3 Philippine Skylanders, Inc. v. NLRC, G.R No. 127374, Jan. 31, 2002; People's lndusbial and Convnercia1
Elr1!1oyees and Workers Organization [FFW) v. People's lndusliial and Commercial Co!poration, G.R. No. L-37687,
Marth 15, 1982, 112 SCRA 440
4 People's klduslrial and Commertial Employees and Worl<ers O!ganization [FFWJ v. People's Industrial and
Commercial Corporation, G.R. No. L-37687, Mard115, 1982, 112 SCRA440
5 Eisoo-8illl LaxJ 1Mt tNAfl.U] v. Naiel, G. R L41955, Dec. 29, 19n.
& vuv. hcicrg, Sllplil;l..ilertyCotloo Mils wners Unkln v. L.ilerty Collen Mils, nc., G.R -No.L-33987, Sept 4, 1975,66
SCRA512.
7 Volkschel LaxJ lkOOn v. BureaJ of Labor~. G.R. No. L-45824, June 19, 1985137 SCRA42.
B Voltsdlel Llilor Unkln v. Bureau of Labor Relations, Sllpfa
9 Associated Workers tmnPTGWOv. NLRC, GR Nos.87266-69, Ju~ 30,1990.
1o Philippi1e st\ylanders, Inc. v. NLRC, G.R No.127374, Jan. 31, 2002].
L
.
.
l..HAPTER VII 497
lABOR RElATIONS
• Election protest involving both the mother federation and local union is not
a bar to disaffiliation. 2
• The issue of affiliation or disaffiliation is an inter-union conflict the
jurisdiction of which properly lies with the Bureau of Labor Relations
IBLR) and not with the Labor Arbiter?
3.
SUBSTITUTIONARY DOCTRINE
1. CHANGE OF BARGAINING REPRESENTATIVE DURING THE
LIFE OF A CBA.
Based on Philippine jurisprudence, the substitutionary doctrine was
conceived during the time when the law has not fixed the lifetime of the CBA as
is now provided in Article 265 (253-A] 4 of the Labor Code. The uncertainty on
when and how should the majority status of the bargaining agent may be
challenged by way of a certification election was thus the lingering problem
hounding the labor front.
Thus, in General Maritime Stevedores' Union of the Philippines v.
South Sea Shipping Line,5 the July 28, 1957 CBA between respondent
company and the United Seamen's Union of the Philippines (USUP), has been
continuously automatica!Iy renewed after every two years so much so that at the
time of the writing of the High Court's decision in this case, it would appear that
the CBA will still be effective up to July 28, 1961, that is to say, about a year
therefrom. According to the claim of the petitioners, the bargaining agreement
of July 28, 1957 was but a renewal of the same or similar agreement of July
1955, so that the bargaining agreement has been in existence for about five
years, which is too long a period within which a certification election has not
1
Tropical Hut Employees Union· CGW, v. Tropical Hut Food Maltet,lnc., G.R No.L-43495-99, Jail. 20,1990.
2 Philippine Skylanders,lnc. v. NLRC, G.R No. 127374, Jan. 31,2002.
3 ld.
4 Article 265 )253-Al. Terms of a Collective Bargaining Agreement- Arrt Conective Bargaining Agreement lhat the
parties may enter into shall, ilsofar as the represenlation aspect is concerned, be for a term of five (5} years. No
pelilion questioning the majority status of the Incumbent bargaining agent shal be entertaned and no certification
election shall be conducted by the Department of Labor and En1lloyment outside of the ~ period
immediately before lhe date of expify of such five-year le!m of lhe Collective Bargaining Agreement All olher
provisions of lhe Collective Bal!laining Agreement shaD be renegotiated not later than lhree (3) years after its
·execution. Any agreement on such Other provisions of the Collective Bargaining Agreement entered ilto within six
(6) months from the date of expify of lhe tenn of such olher provisilns as fixed in such Coleche Bargaining
Agreement shall retroact to the day immediately fo8owing such date. Kany such agreement Is entered into beyond
six monlhs, the parties shall agree on the duration of retroactivity thereof. In case of a deadlock iil the renegotiation
of the Collective Bargaining Agreement, the parties may exercise lheir rights under lhis Code. (As i1capCJated by
Section 21, RA No. 6715, Mrch 21, 1989; As renunDered ptJfSIJalll hl SecOOn 5, RA No. 10151, .klle 21, 2011 and
DOLE Depa1ment AtMitJry No. 01, Series of 2015 {Renurnbefi1g ct the LaxJ Code of lhe Phiippiles, as Amended),
issued on Ju~ 21, 2015).
5
G.R.No.L-14689,July26, 1960.
49!S BAR REVIEWER ON LABOR LAW
been held. And because of the "automatic renewal clause" provided in the CBA,
the time when the challenge should be made continues to pose a problem. This
led the Supreme Court to analyze cases decided by the National Labor Relations
Board (Nl:RB) of the United States, which was the equivalent at that time of the
Court of Industrial Relations (CIR) ·and the present-day National Labor
Relations Commission (NLRC). It thus concluded:
"After reviewing the cases decided by the NLRB of the United States
and our own cases, we have arrived at the conclusion that it is reasonable
and proper that when there is a bargaining contract for more than a year, it
is too early to hold a certification election within a year from the
effectivity of said bargaining agreement; also that a two-yeai bargaining
contract is not too lnng for the purpose of barring a certification election.
For this purpose, a bargaining agreement may run for three, even four
years, but in such case, it is equally advisable that to decide whether or not
within those three or four years, a certification election should not be held,
may well be left to the sound discretion of the CIR, considering the
cenditions involve<i in the case, particularly, the terms and conditions of
the bargaining coniract.
"We also hold that where the bargaining contract is to run for more
thar. two years, the principle of substih:tion may well be adopted and
enforced by the CIR to the effect that after two years of the life of
bargaining agreement, a certification election may be allowed by the CIR;
that if a bargaining agent othr~r than the union or organization that
executed the contract, is elected, said new agent would have to respect
said contract, but that it may bargain with the management for the
shortening of the life of the contract if it considers it too long, or refuse to
renew the contract pursuant to an automatic renewal clause."1
In Benguet Consolidated, Inc. v. BCI Employees & Workers Union,
(PAFLUl/ a CBA was concluded on June 23, 1959 between petitioner
company and Benguet-Balatoc Workers Union ("BBWU"), effective for a
period of 4-1/2 years, or from June 23, 1959 to December 23, 1963. It likewise
embodied a "No-Strike, No-Lockout'' clause. About three years later, or on
April 6, 1962, before the expiration of the CBA, a certification election was
conducted by the Department of Labor among all the rank-and-file employees of
petitioner in the same collective bargaining units. Another union, herein
respondent BCI Employees & Workers Union-PAFLU (UNION-PAFLU)
obtained more than 50% of the total number of votes, defeating BBWU, and
accordingly, the CIR, on August 18, 1962, certified UNION-PAFLU as the sole
and exclusive collective bargaining agent of all employees of petitioner
company. One of the issues raised in the instant case is whether the CBA
~suppled.
G.R. No.l·24711,Apri 30, 1968,23 SCRI\465.
.if"
CHAI'TERVII 499
lABOR RElATIONS
executed between Benguet and BBWU on June 23, 1959 and effective until
December 23, 1963 automatically binds UNION-PAFLU upon its certification,
on August 18, 1962, as sole bargaining representative of all employees of
petitioner.
Petitioner invoked the afore-quoted ruling in General Maritime 1 in
support of its contention that the CBA then existing was binding on the new
bargaining agent- UNION PAFLU. The Supreme Court, however, ruled that
such invocation is not persuasive because the above-quoted pronouncement in
General Maritime was obiter dictum. The only issue in said case was whether a
CBA which had practically run for five (5) years constituted a bar to
certification proceedings. It was held that it did not and accordingly directed the
court a quo to order certification election. With that, nothing more was
necessary for the disposition of the case. Moreover, the pronouncement adverted
to was rather premature. The possible certification of a union different from that
which signed the b3l'gaining contract was a mere contingency then since the
elections were still to be held. Clearly, the Court was not called upon to rule on
the possible effects of such proceedings on the bargaining agreement. It fu;ther
held:
"But worse, BENGUET's reliance upon the Principle of
Substitution is totally misplaced. This principle, formulated by the NLRB
as its initial compromise solution to the problem facing it when there
occurs a ·shift !n employees' union allegiance after the execution of a
bargaining contract with their employe;, merely states that even during
the effectivity of a collective bargaining agreement executed between
employer and employees thru th1:ir agent, the employees can change
said agent but the contract continues to bind them up to its expiration
date. They may bargain however for the shortening of said expiration
date.
"In formulating the 'substitutionary' doctrine,' the only
consideration involved was the employees' interest in the existing
bargaining agreement The agent's interest never entered the picture. In
fact, the justification for said doctrine was:
' ...that the majority of the employees, as an entity under
the statute, is the true party in interest to the contract,
holding rights through the agency of the union
representative. Thus, any exclusive interest claimed by the
agent is defeasible at the will of the principal...'
"Stated otherwise, the 'substitutionary' doctrine only provides
that the employees cannot revoke the validly executed collective
bargaining contract with their employer by the simple expedient of
changing their bargaining agent. And it is in the light of this that the
! , GR. No.L-14689, July 26, 1960.
 :,uu ""'_._.,_,,,"UN lABOR lAW
phrase 'said new agent would have to respect said contract' must be
understood. It only means that the employees, thru their new
bargaining agent, cannot renege on their collective bargaining
contract, excev.t of 1course to negotiate with management for the
s!tortening tbereof."
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. Thus in
Benguet, it was pronounced:
The 'substitutionary' doctrine, therefore, cannot be invoked to
support the contention that a newly certified collective bargaining
agent automatically assumes all the persona! undertakings -like the
no-strike stipulation ilere - in the collective bargaining agreement
made by the deposed union. When BBWU bound itself and its officers
not to strike, it cou!d not have validly bound also all the other rival unions
existing in the bargaining units in question. BBWU was the agent of the
employees, not of the other unions which possess distinct personalities.
To consid~;;r UNION contractually bound to the no-strike stipulation would
therefore violate the legal maxim that res inter alios acta alios nee prodest
nee nocet.
"'f course, UNION, as the newly certified bargaining agent, could
always voluntarily assume all the personal undertakings made by the
displaced agent But as the lower court found, there was no showing at all
that, pri!Jr to the strike, UNION formally adopted the existing
CONTRACT as its own and assumed all the liabilities imposed by the
same upon BBWU."
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. 2
• The substitutionary doctrine is applicable also to a situation where the local
union, which was created through the process of chartering3 by the mother
ElrfJhasis SIJWied. See also Seno, v. Mendoza, GR No. L-20565, New. 29, 1967, 21 SCRA 1124.
This priqJie was alimled il1he case ct Milia Orienta Sai.mil Co. v. National l.m' Unkxl, G.R. No. L-4330, March 24,
1952, 91 Phl28.
3 SeeAIOCie241 [234-A], Labor Code.
·tABOR Ktl.AllUN~
1
· 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 [NAFLID 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 r<:gistration with the BLR and disaffiliated with NAFLU by
virtue of a resolution by its general membership.
• Substitutionary doctrine in cases of union schism or split During the
lifetime of the CBA, the majority status of the sole and exclusive bargaining
agent which negotiated it may be questioned as when there exist extraordinacy
circumstances which affect its standing in terms of membership, structure and
others as may have been occasioned by union schism or split which
completely changes the situation of the employer and the bargaining agent. A
petition for certification election may thus be filed to detennine which of the
unions has the majority status. The union certified as the new sole and exclusive
bargaining agent will thus substitute the previous one as a party to the existing
CBA. This is allowed under the same "substitutionary doctrine."
B.
BARGAINING UNIT
1. BARGAINING UNIT, MEANING.
A "bargaining unit" or more appropriately, "collective bargaining writ
(CBU)," 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. 3 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.
It is a legal collectivity for collective bargaining purposes whose
members have substantially mutual bargaining interests in the tenns and
conditions of employment as will ensure to all employees their collective
bargaining rights. To be appropriate, a bargaining unit must involve a grouping
of employees who have substantia~ mutual interests in wages, hours of work,
working conditions and other subjects of collective bargaining.4
1 Federalkxl or national trion.
2 G.R. No. 41955, Dec. 29,1977.
3 SecOOn 1, Rule I, Book V, Rules kl ~lement f1e labor Code, as amended by Depment Order No. 4003, Series ct
2003,{Feb.17,2003].
~ fulklp Slazenger [Phis.L Inc. v. ~IY <t Labor and Employment. G.R No. 131248, Dec. 11, 1998, 300 SCRA 120,
12~126.
:>U;< 01\K.I\.I:YICYYCt\. UN U\DUI\ U\YY
2. NO HARD AND FAST RULE TO DETERMINE A BARGAINING
UNIT.
There is no hard and fast rule in determining an appropriate bargaining
unit. The 'est whether the designation of a bargaining unit is appropriate is
whether it will best assure to all employees the exercise of their collective
bargaining rights. There should be a community of interest which should be
reflected in groups having substantial similarity of work and duties or similarity
of compensation and working conditions, among other criteria.•
3. TESTS IN DETERMINING AN APPROPRIATE BARGAINING UNIT.
Based on jurisprudence,2 there are certain tests which may be used in
determining the appropriate collective bargaining unit, to wit:
( l) Community or mutuality of interest doctrine;
(2) Globe doctrine;
(3) Collective bargaining history doctrine; and
(4) Employment status doctrine.
3.1. COMMUNITY OR MUTUALITY OF INTEREST DOCTRINE.
Under this doctrLIJ.e, the employees sought to be represented by the
collective bargaining agent must have community or mutuality of interest in
terms of employment and workL'lg 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.3
San Miguel Corporation v. Laguesma. 4 - The Supreme Court applied
this principle in the petition of the union which seeks to represent the sales
personnel in the various Magnolia sales offices in Northern Luzon. Petitioner
took the position that each sales office should constitute one bargaining unit. In
disagreeing to this proposition of petitioner, the High Court said: "What greatly
militates against this position (of the company) is the meager number of sales
personnel in each of the Magnolia sales offices in Northern Luzon. Even the
bargaining unit sought to be represented by respondent union in the entire
Northern Luzon sales area consists only of approximately fifty-five (55)
employees. Surely, it would not be for the best interest of these employees if
they would further be fractionalized. The adage 'there is strength in number' is
the very rationale underlying the formation of a labor union."
1 Derroaatic L.cilor AssodaOOn v. Cebu S!evedorilJ Co., nc., GR No. 10321, Feb. 28, 1958.
2 lni!maOOnal Scl1oa A1icU1ce ofEOOcabs PSAEI v. Olisun'bi'IJ, G.R No. 128845, June 1, 20001.
3 Sill ~uel Corpaation ~ lklion-PTGWO v. Confesor, G.R No.111262, Sept 19, 1996, 262 SCRA81, 98.
4 GR No. 100485, Sept 21, 1994.
CHAPTER VII 503
lABOR RElATIONS
San Miguel Corporation Supervisors and Exempt Employees
Union v. Laguesma! - The fact that the three (3) plants comprising the
bargaining unit are located in three (3) different places, namely, in Cabuyao,
Laguna, in Otis, Pandacan, Metro Manila, and in San Fernando, Pampanga, was
declared immaterial. Geographical location can be completely disregarded if the
communal or mutual interests of the employees are not sacrificed. The distance
among the three (3) plants is not productive of insurmountable difficulties in the
administration of union affairs. Neither are there regional differences ·that are
likely to impede the operations of a single bargaining representative.
Universitv of the Philippines v. Ferrer-Calleja,Z - All non-academic
rank-and-file employees of the University of the Philippines in Diliman, Quezon
City, Padre Faura, Manila, Los Banos, Laguna and the Visayas were allowed to
participate in a certification election as one bargaining unit.
St. James School of Quezon City v. Samahang Manggagawa sa St.
James School of Quezon City.3 - Respondent union sought to represent the
rank-and ·file employees (consisting of the motor poo~ construction and
transportation employees) of p~titioner-school's Tandang Sora campus.
Petitioner-school opposed it by contending that the bargaining unit should not
only be composed of said employees but must include administrative, teaching
and office personnel in its five (5) campuses. The Supreme Court disagreed with
said contention. The motor pool, construction and transportation employees of
the Tandang Sora campus had 149 qualified voters at the time of the
certification election, hence, it was ruled that the 149 qualified voters should be
used to determine the existence of a quorum during the election. Since a
majority or 84 out of the 149 qualified voters cast their votes, a quorum existed
during the certification election. The computation of the quorum should be
based on the rank-and-file motor pool, construction and transportation
employees of the Tandang Sora campus and not on all the. employees in
petitioner's five (5) campuses. Moreover, the administrative, teaching and office
personnel are not members of the union. They do not belong to the bargaining
unit that the union seeks to represent
3.2. 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} 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
1 G.R. No.110399,Aug.15, 1997,277 SCRA370,38().381.
2 G.R.No.96189,Ju~14, 1992,211 SCRA~1.
3 G.RNo.151326,NcN.23,2005.
4 3NLRB294(1937).
504 BAR REVIEWER ON lABOR lAW
purposes of collective bargaining or as three (3) separate and distinct bargaining
units, the detennining factor is the desire of the workers themselves.
Consequently, a certification election should be held separately to choose which
representalive union will be chosen by the workers. 1
International School Alliance of Educators [ISAEJ 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 fonner have not indicated their
intention to be grouped with the latter for purposes of collective bargaining.
Moreover, the collectivebargaining history of the school also shows that these
groups were always treated separately.
3.3. COLLECTIVE BARGAINING IDSTORY DOCTRINE.
This principle puts premium to the prior collective bargaining history
and affmity of the employees in detennining 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. 3
National Association of Free Trade Unions v. Mainit Lumber
Development Company Workers Union. 4 - It was ruled here that there is
mutuality of interest among the workers in the sawmill division and logging
division as to justify their formation of a single bargaining unit. This holds true
despite the history of said two divisions being treated as separate units and
notwithstanding their geographical distance from each other.
San Miguel Corporation v. Laguesma. 5 - Despite the collective
bargaining history of having a separate bargaining unit for each sales office, the
Supreme Court applied the principle of mutuality or commonality of interests in
holding that the appropriate bargaining unit is comprised of all the sales force in
the whole ofNorthem Luzon.
3.4. EMPWYMENT STATUS DOCTRINE.
The determination of the appropriate bargaining unit based on the
employment status of the employees is considered an acceptable mode. 6 For
instance, casual employees and those employed on a day-to-day basis do not
have the mutuality or community of interest with regular and permanent
1 See also Med1a1k:al Departmeot l.liJor Unkln sa Phi!Wile National Railways v. CIR, G. R. No. L-28223, AIIJ. ~. 1968.
2 G.R. No. 128845, June 1, 2000.
3 Sill Mgue1 Caporation v. laguesma, il!ia; National Associatioo d Free Trade Unions v. Mri I.IITber !leYeqHnent
~Wakers Unkln, rnra.
4 G.R No. 79526, Dec. 21,1990.
5 G.R.No.100485,Sept21, 1994.
6 R~ on liixlr RelaOOns, pp. 482-510.
CHAPTER VII 505
lABOR RElATIONS
employees. Hence, their inclusion in the bargaining unit composed of the latter
is not justified. 1
The case of Belyea Corporation v. Ferrer-Calleja,2 best illustrates
this mode. This case involves a corporation engaged in piggery and poultry
raising, planting of agricultural crops and operation of superrnarts and cinemas.
The Supreme Court ruled that it is beyond question that the employees of the
livestock-agro division of the corporation perfonn work entirely different from
those being performed by employees in the supennarts and cinemas. The
differences among them lie in their working conditions, hours of work, rates of
pay, including the categories of their positions and employment status. As stated
by petitioner in its position paper, due to the nature of the business in which its
livestock-agro division is engaged, very few of its employees therein are
permanent, the overwhelming majority of whom are seasonal and casual and not
regular employees. Defmitely, they have very little in common with the
employees of the supermarts and cinemas. To lump all its employees in its
integrated business concerns cannot result in an efficacious bargaining unit
·comprised of constituents enjoying a community or mutuality of interest.
Undeniably, the rank-and-file employees of the livestock-agro division fully
constitute a bargaining unit that satisfies both requirements of classification
according to employment status and of substantial similarity of work and duties
which will ultimately assure its members the exercise of their collective
bargaining rights. 3
c.
BARGAINING REPRESENTATIVE
l.
DETERMINATION OF REPRESENTATION STATUS
1. EXCLUSIVE BARGAINING REPRESENTATION.
a. SEBA; meaning.
"Sole and erclusive bargaining agent (SEBA)" refers to a legitimate labor
union duly certified4 as the sole and exclusive bargaining representative or agent of
1 Philippine Land-Air-Sea Labor Union v. CIR, G.R No. L-14656, N®. 29, mi.
2 G.R No. 77395, NaY. 29, 1988.
See also Demlaali: l..atxr Asso::ialkln v. Cellu SII!YeOOmQ Co., Inc., G.R lt.10321, Feb. 28, 1958, 103 Phi.1103.
4 The unkln becoo1es toe sole and exdusive bagaili1g agent 1hroogh CIJ'I d toe ~ng processes: certification election,
consent election, IUIHllf elecOOn or re-run eledion. Volunti:ry rerognition, as amode d desiJnating a SEBA, has already
been repealed em replaced by 1he new mode caled 'Request tt SEBA CertiflcaOOn' per Mlelldment by Section 3,
Dejmneot Order No. -iG-~15, Series of2015 [Seperiler 07, 2015], eotilled 'Futler Amend'llg DepM'nent.QRier No. 40,
Series of 2003, Amerdrtg V1e lmpleme!ltilg RUes and Regulations d £od< Vol1he l.liJor Code ol1he Philippines, as
Amended.'
so6 BAR REVIEWER ON lABOR lAW
all the employees in a collective bargaining unit (CBU). 1 A labor union certified as
SEBA means that it shall remain as such during the existence of the CBA, to the
exclusion cf all other labor organizations existing and operating in the same CBU,
and no petition for certification election (l;lCE) questioning its majority status shalt
be entertained nor shall certification election be conducted outside of the 60-day
freedom period immediately before the expiry date of the 5-year term of the CBA?
Once certified, what is represented by the SEBA are not only its members but also
those who are members of other unions, called "minority'' unions, who are included
in the CBU?
b. A non-certified union cannot collectively bargain witb employer.
Under Article 267 [255], it is clear that only the labor organization selected
by the majority of the employees in an appropriate CBU through any of the proper
certification processes can act as the exclusive representative or SEBA of all the
employees in such unit for purposes of collective bargaining with the
employer. Hence, if the union is admittedly not the exclusive representative of the
majority of the employees in a CBU, it could not demand from the empioyer the
right to bargain collectively in their behalf. 4
2. FIVE (5) MODES.
The SEBA of the employees in a CBU may be determined through any of
the following modes:
(l) Request for SEBA certification5 (which repealed and replaced
"Voluntary Recognition'.6 as a mode of securing SEBA status);
(2) Certification election;7
(3) Consent election;8
(4) Run-Off election.9
(5) Re-run election.10
1 Mi:le 219(j) [212(i)); SecOOn 100. RUe I, Book V, llid.
2 Mi:le265~). t.axrCode; Trale Uni:lns dlhe Pllqlpiles/Febnay Six t.blement{TUPASifSMJ v.lzq.Jesma. GR
No. 95013, Sepl. 21, 1994.
3 Nabla! Brar.ey &ABe:! kldlSies Laxr Unkln d lle Phit,lpiles v. Sal M;juel Brewely, klc., GR No. L-18170, hlg. 31,
1963,8 SCRA805; DaiyQueen Producls of fle fltiWiles, klc. v. CIR, GR No. L-35009, hlg. 31, 1977,78 SCRA 439
4 PhfWile Diaroond Hotel Mel Resat, klc. [Mania l:liamnl Hole!] v. Mooia rmm1 Holel Eil1lkJyees lkli:Jl, G.R No.
158075, Jllle 30, 2006.
5 T1ls is a new rrxx1e v.tt1t repealed Mel replcK:ed 'Voklntlry Reco;jnition', per Clf1'eldment by SecOOn 3, Depatnent Order
No. -ID+15, Series of 2015 (Septenter 07, 2015). entitled 'Flltler Amend"lllg Depcrmlnt Order No. 40, Series <Jf 2003,
An1ertdiYd fle ~ R!res Cl1d Regulations (illook Voflle labor Code dlle Phfippiles, asAmerded.'
6 Fonnel1y denorrilaled as SecOOn 2. Rule VI, Book V, Rules tl mplement the llW Code, as emended by Depmenl
Order No. 40-m, Series d 2003, [Feb. 17, 2003].
1 ld.
8 ld.
9 kl.
1o New Section 1(11), Rule 1. Book V, Rules tllrr4Jiernentlhe t.axrCode, as anended by Department Order No. 4M3, Selies
of 2003, [Feb. 17, 2003], as furt.er added through the crnendment in111:xluced by Section 2, Department Older No.4().~15,
CHAPTER VI! 507
lABOR RElATIONS
3. DISTINCTIONS IN TERMS OF NUMBER OF UNIONS
PARTICIPATINGINTHEELECTIONEXERCISE.
Before the foregoing modes are discussed individually below in seriatim,
there is a need to point out the distinctions among them in terms of the number of
unions involved in the electoral exercise.
(1) Request for SEBA Certification.
The Request will only be granted if what is involved is an unorganized
establishment with only one (1) legitimate union. It will not be granted and instead, a
certification election will be conducted, in case the Request is made in (a) an
unorganized establishment with more than one (1) legitimate. labor organization,
and (b) an organized establishment with an existing SEBA. This is as it should be
because with multiple unions present in the collective bargaining unit (CBU), the
SEBA cannot be designated on the basis of a mere Request by one of them but only
through the democratic process of certification election ir..volving all of them.
(2) Certification eledion.
A certification election may be classified as follows:
(a) Single-unum election (when tbere is only one union in contention).
This refers to the situation where only one legitimate labor organization
ftles a petition for certification election (PCE} to be certified as the
SEBA in the appropriate CBU where it seeks to operate and which it
desires to represent.' Its opponent is the "no union" vote, a choice
which is always available in all electoral exercises, except run-off
election.
(b) Multi-union"election 2 (when tbere are two or more unions in
contention). This may result in and give rise to the other kinds of
election, namely:
(i) Consent election - when the 2 or more contending unions
voluntarily and mutually agree to hold the certification election
among themselves, with or without the participation and
supervision of the OOLE.
Series of 2015 jSeptentler 07' 2015], entitled 'FIIIher Amendi"g Depment Order No. 40, Series d 2003, Mlend"ng the
lfr4llementing Rules and Regulatioos of Book Voffle labor Code ollhe flh~Wnes, as Mlended.'
1 Sedioo 1[9], Rule Ill, NCM3 Ml1ual ofProcedtJesb"Cordlation Cl1d f'revei1We Mediatioo Cases; Appe1d"IX2 [Definition
ttTenns]. NCMB Primer on stlie, Pickelilg cn:t lockoot, 2nd Edition, DecenilEr 1995; Di:ll<no v. Hon. Caxlac, G.R No.
168475, July4, 2007;Bautista v. CA. G.R 123375, Foo. 28, 2005,452 SCRA406, 420.
2 Sedioo 1(x], Rule I, !look V, Ibid.; This refers to ill}' conflict between and crnong legilirale labor uTilns iMM1g not only
representation questions for pu!]lOStlS rJ. cdledive ~ but to '&Tf o81er conflict oc o1SjJUie between them.
soB BAR REviEWER ON LABOR LAW
(ii) Run-off election - when at least 3 or more unions are involved in
the certification election and not one of them has garnered the
majority of the valid votes cast but the total votes of all the
contending unions iS equivalent to at least 50% of the valid votes
cast
(iii) Re-run election - when there is a tie or failure of election in a
certification election involving 2 or more unions thereby
necessitating the conduct of another election called re-run election.
a.
REQUEST FOR SEBA CERTIFICATION
(WHICH REPEALED AND REPLACED "VOLUNTARY
RECOGNITION")
1. NEW MODE OF DETERMINING SEBA; "VOLUNTARY
RECOGNITION" ALREADY REPEALED.
a. Complete repeal ofthe Rules' provisions on "voluntary
recognition."
Deparlment Order No. 40-1-15, Series of2015, 1 has expressly repealed the
entire set of Rulei applicable to "Voluntary Recognition" in the Labor Code's
Implementing Rules on Book V and replaced it with the freshly-minted mode of
securing the status of a sole and exclusive bargaining agent (SEBA) through a
"Request for SEBA Certification" or simply "Request. "
b. J!lstification for the repeal and replacement of "voluntary
recognition" by "Request for SEBA Certification."
It is an iron-clad, absolute rule that in an inter-union or
certification/representation dispute, an employer is, as a mere bystander, not
considered a party thereto with a concomitant right to oppose a petition for
certification election (PCE).3 This rule holds true irrespective of whether the PCE is
filed by the employer or by a legitimate labor organization.4 Ifever one may call it as
participation at all, the employer's role in such proceedings is limited to only two (2)
matters, both of which have nothing to do with involvement in the crucial decision
and voting to determine which union should be certified as SEBA but only on the
1 lssuedoo Seperber07,2015.
2 l'lrtiaDtf Is IUl VII [VoU1ay Reccgnitiool BOO< V, RUes m~ l1e L.ala'Qxle, as ll!lellded by Oepime1t
OrrJerNo. 40-03, Seriesol2003, [Feb. 17, 2003J. Tlis ptNisklr1 has been repealed lllll'eplaood by anewprrMskln entiffed,
'REQUEST FOR SOLE AND EXa.USIVE BARGAINING AGENT (SEBA) CERTFICATION', puiSUall to lhe ame00nen1
i1lroduced by Secb1 3, Depment On:ler No. 40+15, Series ol2015 (Septerrber 07, 2015], entitled "Further Amendi1g
Depcrtnent Order No. 40, Series cl2003, Arnen<ir'g he ~ Rules llll Regulations ci BOO< vd l1e l..aba" COOe
ci 11e Phippines, as Arnerl<IOO.'
3 Arlicle 271 [258-Al (~as B)Udcr), t.m eooe.
~ ld.
CHAl'TERVIl 509
LABOR RElATIONS
outlying right, as employer, (l) to be notified or informed of the filing of the PCB, in
cases where he was not the one who filed it, and the peripheral duty, also as
employer, (2) to submit the list of employees during the pre-election conference,
should the Med-Arbiter act favorably on the PCE. 1
Being the sole and exclusive concern and domain of the employees,2 the
previous mode of allowing the employer to extend "voluntary recognition" 3 to
enable a union to become a SEBA is a patently incongruous and self-contradictory
rule that runs diametrically contrary to the autonomous process of choosing the
SEBA. For by so allowing the employer to extend "voluntary recognition" to a
union, it is, in a way, no longer the employees but the employer who determines and
designates the SEBA when he is not supposed to have any iota of role in such
detennination and designation.
Although the 2015 issuance4 that repealed "voluntary recognition" failed
to explain the rationale behind it, the foregoing disquisition on the bystander role of
the employer in the certification election process can be the only logical rationale for
such repeal and its eventual replacement by the mode of filing a Request for SE8A
Certification by the union desiring to be certified as a SEBA, without need to secure
first the consent a..11d vollll1tary recognition of the employer. And lll1der this new rule,
the DOLE Regional Director is duty-bound to extend such SEBA Certification
simply on the basis of the iequesting union's compliance with the requirements.
c. Employt!r can withdraw "voluntary recognition."
What militates against the mode of "voluntary recognition" is the right of
the employer to withdraw it for certain justifications such as when it has evidence
that the recognized union has lost its majority status. Although such withdrawa~ as a
general rule, cannot be done in view of what is known in the United States as the
"Recognition Bar" doctrine,5 however, it is a fact that this doctrine has not been
1 ld.
2 The HeritrJe Hae1 Mria v. Seaeliry of L.ala' illd fmplcftmenl, GR. No. 172132, July 23, 2014; Soo "'Juel Foods, k1c.
v. Soo t.iJue1 Corpa3kln ~ llll Exen1!t !.Woo, G.R No. 146200, AL9. 1, 2011. 655 SCRA 1, 17; Trale lkioos
dhePh~crd~SeM:esv. Trajooo,G.R No.L-61153,JM.17, 1983, 120SCAA64,66.
3 kl defiled IJlder lhe preioos Rues, \d.l1lary recogrllion' refers b 11e process by vmG1 alegitnale lim lJiion is
\OOtriy ~ by l1e erl1lbJer as l1e exas.e bagaii1g represenliiM! or agent 11 a~ lllk em repaled
as sudl v.ilh l1e Regiooal O!lb!. (See SecOOn 2, PJ!Ie VII, Bodt Vci lhe rues ID ~!he Labor COOe. (See Section
1 ~1. lUll, BOO< V, Rules to ~Iemen! lhe t.m Code, as lmlllded by Depment Older No. 401J3, Series ci 2003,
[Feb. 17, 20031).
4 Depa1ment Older No. 4(H15, Series ci2015, issued oo Sepfentler07, 2015.
5 As far as lf1e 'Recogni:ln Ba' dociJi1e is oonamed, lle lli1irum "reassnabbe perild d tagainDJ' Ita is reqtired is six
mordhs, llll the maxitun lwelve nmlhs, after l1e pa(des' first bcrgai'OJ sessi:ln, ~ oo l1e Ol1SMiefafion ci frJe
la::lixs. Also dllilg llis ~ pe1iod of barg~. tie unioo's s1at1s as 1he representative of l1e ~ ccmot
be chalenged, eiU1er llrough !11 NlRB petitial tr a1 election filed by e!1Wfees, by the ef11lloya', or by a ri-lal union.
l.j(e.W;e, dulilg this peri:xl, 1he eilllkrter l1'af not~ wiVldtaw l'eWJf1ib1 from l1e union based oo adaim that the
lllkxl has lost~ suppat anJll'g 1he ~.This docti1e has been latetf ~ in l.anons Gasket Co.,
357 NLRB No. n, IMlere tlere was a CXI!T'IlleE !ll'leiSal of precedert. emilatirg both {i) lhe employees' ~hi to oontest the
~e!'s vokJn1afy iecognition d the union Ytithin 45 days d notice of 1he recognition ll1d [M) lhe ~s ~ht to
510 BAR REVIEWER ON lABOR lAW
adopted into Philippine laws, rules and jwisprudence. Resultantly, the recognition
voluntarily extended to the recognized SEBA is always subject to the threat of being
withdrawn by the employer.
This fear does not exist under· the present mode of simple filing of a
"Request for SEBA Certification" since it is no longer the employer that grants
voluntaty recognition but the DOLE Regional Director who, as earlier emphasized,
is under mandate to extend such SERA Certification upon showing by the requesting
union of compliance with the legal requirements.
2. WHERE FILED.
Any legitimate labor organization may file a Request in the DOLE
Regional Office which issued its certificate of registration or certificate of creation of
chartered local, as the case may be!
3. DOCUMENTARY REQUIREMENTS FOR THE REQUEST.
The Request should indicate:
a. The name and address of the requesting legitimate labor organization;
b. The name and address of the company where it operates;
c. The bargaining UPjt sought to be represented;
d. The approximate nu..rnber of employees in the bargaining unit; and
e. The statement of the existence/non-existence of other labor
organization/CBA.1
The certificate of registration as duly certified by the president of the
requesting union or certificate ofcreation ofchartered local as duly certified by the
president of the federation of the local is required to be attached to the Request.3
4. ACTION ON THE REQUEST.
Within one (1) day from the submission of the Request, the DOLE
Regional Director should:
a Determine whether the request is compliant with the documentary
requirements as above emnnerated4 and whether the bargaining unit
sought to be represented is organized or not; and
b. Request a copy of the payroll for purposes of SEBA certification.1
v.flhdraw reccgnition of the lriln at EfT/ line prkJ tJ a CBA being reached upon ashaM1g !hat lhe ooion did net lif*'t
mcfxity slab.ls ill'OOJ lhe ba'gaili"IJ Illi!.
1 SediJn 1, IU! VII, Book V, ~ tJ ~the IJW' Code, as !ll1el1ded b'f Depment Order No. 40{)3, Series cl
2003, !feb. 17, 2003], llld asfurhranmd b'fSediJn 3, Depa1rreiiOiderNo. 40-~15, Series cl2015 [Sepll!flter07,
2015], enti1led "FU!Iher Amendi1g Depatbnent Order No. 40, Series cl 2003, ArilerOOg lhe ~ Ruk!s Clld
Repatb1s d Book v cl the l1ilor Code cllle Phijlpiles, as Mlended.' Other 1enns used syi100yi1llUStJ C!1d
illefthalgeal*f with 'chartered loot 11e 'kx3 ~, 'kx:aUdlaptel", 'b3" or'chapter."
2 Section 2, Rule VII, lbkf.
3 ld.
~ Refemilg to the docurnen1ary requi'emenls mentiooed i1 Section 2, Rule VII, Ilk!.
.,..
lABOR RElATIONS
If he/she finds it deficient, the DOLE Regional Director should advise the
requesting union or local to comply within ten (10) days from notice. Failure to
comply within the prescribed period shall be deemed withdrawal of the Request?
4.1. THREE SCENARIOS INVOLVING A REQUEST FOR
CERTIFICATION.
There are three (3) scenarios conceived under the Rules on this mode,
namely:
(1) Request for certification in unorganized establishment with only one
(1) legitimate union;
(2) Request for certification in unorganized establishment with more
than one (1) legitimate labor organization; and
(3) Request for certification in organized establishment.
The foregoing scenarios are discussed below.
5. FIRST SCENARIO: Request for ctrtification in unorgani1.ed establishment
with only one (1) legitimate union.
a. Validation proctSs.
If the DOLE Regional Director finds the establishment unorganized with
only one (1) legitimate labor organization in existence, he/she should call a
conference within five (5) working days for the submission of the foliowing:
l. The names of employees in the covered bargaining unit who signify
their support for the SEBA certification, provided that said employees
comprise at least majority of the number of employees in the covered
bargaining unit; and
2. Certification under oath by the president of the requesting union or local
that all documents submitted are true and correct based on his/her
personal knowledge.
3
The submission shall be presumed to be true and correct unless contested
under oath by any member of the bargaining unit during the validation conference.
For this purpose, the employer or any representative of the employer shall not be
deemed a party-in-interest but only as a bystander to the process of
certification.4
1 F'urstmt tJ Section 4 [REQUEST FOR CERTIFICATION IN UNORGANIZED ESTABLISI-IMENT WITH ONLY ONE (1)
LEGITlMATE UNION; VALIDATION PROCEEDINGS] of Rule VII, Ilk!., (Section 3, ROO VII, Ibid.).
2 kl.
3 SecOOn 4, Rule VII, Ibid.
4 kl.
512 BAR REVIEWER ON lABOR lAW CHAPTER VII 513
lABOR RElATIONS

If the requesting union or local fails to complete the requirements for
SEBA cel1ification during the conference, the Request should be referred to the
1
Election Officer for the conduct of certification election.
b. Action on the submission -when SEBA Certification should be
issued.
If the DOLE Regional Director finds the requirements complete, he/she
should issue, during the conference, a Certification as SEBA enjoying the rights and
privileges of an exclusive bargaining agent of all the employees in the covered
bargaining unit1
The DOLE Regional Director should cause the posting of the SEBA
Certification for 15 consecutive days in at least 2 conspicuous places in the
3
establislunent or covered bargaining unit
c. Effect of certification.
Upon the issuance oft."te Certification as SEBA, the certified union or local
shall enjoy all the rights and privileges of a.'l. exclusive bargaining agent of all the
employees in the covered CBU. 4
d. Certification year bar mle.
The issuance of the SEBA Certification bars the filing of a petition for
certification election by any labor organization for a period of one (I) year from the
date of its issuance. It is only upon the expiration of this 1-year period that any other
legitinmte labor organization may file a PCE in the same CBU represented by the
certified SEBA for purposes of challenging the majority status of the certified
SEBA, unless a CBA between the employer and the certified SEBA has already
5 Certification election is the most democratic method of determining the
been executed and registered with the Regional Office.
6. SECOND SCENARIO: Request for certification in unorganized
establishment with more than one (1) legitimate
labor organization.
If the DOLE Regional Director finds the establishment unorganized with
more than one (1) legitimate labor organization, he/she should refer the same to the
1 ld., p!ISUCI1I il Rule IX of the Rules.
2 Section 4.1., Rule VII, llid.
3 ld.
• Sedioo 42., Rule VII, llid.
s ld., i1 aco:xdoore oMth Rule XVII d the Rules.ltrrustbe nollld lhatalls' tetifi::ation,111 f!nlllo'ler is requi'ed to bargain oMth
lhe renified SEBA for areasonable line, Yttiicb is usual)' one ye;r, iltle absence ct 'Ulusual cirunslances." The certified
SEBA for !hat peliod is condi.JsWi pleSlJ1led il represent the ~ d lhe ~ ilthe CBU; Ills presufllllioo,
hoNever, becares rebultlble after sud\ peliod. But Kthe SEBA loseS ils ~ standilg because of lhe COOVTissia1 of
ULP by the elf4lloYer against~ the SEBA CMiegalti i1sist on ils bei"g such even afoor1he ~ of lhe 1-year peOOd,
IWhout prejudice~ llle ~er bei1g prosecuted for the ULP act.
Election Officer for the conduct of certification election. 1 The certification election
shall be conducted in accordance with the Rules?
7. THIRD SCENARIO: Request for certification in organized establishment
If the Regional Director finds the establishment organized, he/she should
refer the same to the Mediator-Arbiter for the detennination of the propriety of
conducting a certification election.3
8. CONDUCT OF CERTIFICATION ELECTION UNDER TillS MODE.
It is clear that under the three (3) scenarios cited above, the 2nd and 3nl
clearly involve the conduct of certification election. It is only in the 1st that the
conduct of certification election is not the order of the day; there will be certification
election only when the requesting union or local fails to complete the requirements
for SEBA certification during the conference, in which even~ the DOLE Regional
Director shall refer the Request directly to the Election Officer, not to the Mediator-
Miter,4 for the conduct of certification election. 5
b.
CERTIFICATION ELECTION
1. DEFINITION AND NATURE.
"Certification election" refers to the process of determining through secret
ballot the SEBA ofthe employees in an appropriate CBU for purposes of c.ollecrive
bargaining or negotiations. A certification election is conducted only upon the order
of the Med-Arbiter of the BLR.6
choice of the employees of their bargaining representative? It is held to ensure that
the employees are properly represented in the exercise of their right to collective
bargaining with their employer.8 No obstacle must be placed to the holding of a
certification election for it is the statutory policy that it should not be circumvented.9
It is not a litigation proceeding in the sense in which this term is commonly
1 Sedkrl5, Rule VII, llid.
2
~~Rule IX of these Rules.
3 Section 6, Rule VII, llid. il accoo1in:e Ylill Rules VIII and IX d the Rules.
4 1 is si;lnificalt to note !hat 1 is 11e Medator·Arbaer v.11o has ~inal jJrisdiction rw m-union or celtificalion
electkn'represe lisputes. (See Al1k;le 232 (2261. Lalor Code). The Ekldioo Offk:er merely <XXlduct fle certificaOOn
election.
5 Section 4, Rule VII, il re1a1ion Md p!ISUCillto Rule IX of U1e Rules.
6 Section 1FJl, Rule I, Boct V, Rules t il1Jiemen! lhe Lalor Code, as ame!XIed by Depmert Order No. 40-00, Seres d
2003, [Feb. 17, 2003].
7 Plippine Ailines Efllllo'fees' AssociaOOn v. Ferrer-Calleja, G.R No. 76673, June 22, 1988.
8 FOrrAF v. Noriel, G.R. No. L-41937, J1tt 6, 1976, 72 SCRA 24; CCLU v. Noriel, G.R No. L-$902, Sept21, 1982, 116
SCRA694. .
9
TJade Unklns of lhe Philippines il1d Alied Se1vices WOO:! Federatioo ofTrade Unioos [TUPWM=TUJ v. L.aguesma, G.R
No.102350, June 30, 1994.
 CHAPTER VII 515
514 BAR Rio""VIEWER ON lABOR lAW
lABOR RElATIONS

understood It is a mere investigation of a non-adversary fact-finding character in said petition is guaranteed, even pending the registration process, for as long as no
which the DOLE plays the part of a disinterested investigator seeking merely to fatal defect exists in its application for registration.
ascertain the desires of the employees as to the matter of determining which labor b-1.
organization will represent the employees in their collective bargaining with the CERTIFICATION ELECTION
employer. 1 It is not therefore bound by the technical tules of evidence.1 In case of IN ORGANIZED & UNORGANIZED ESTABLISHMENTS
doubt, the PCE should be resolved in favor of the holding of a certification election.3
1. TWO (2) KINDS OF ESTABLISHMENTS.
2. DIRECT CERTIFICATION, NO WNGER ALLOWED.
Two (2) kinds of establishments are treated in the law, insofar as inter-
Direct certification originally allowed under Article 269 [2S7t of the union or representation issues are concerned, namely:
Labor Code had been discontinued by President Corazon C. Aqujno's Executive
Order No. 111 5 as a method of selecting the exclusive bargaining agent of the (a) organized; and
employees. 6 This is because the conduct of a certification election is still necessary in (b) unorganized.
order to arrive in a manner definitive and certain concerning the choice of the labor
The two consecutive provisions of Article 268 [256] and Article 269
organization to represent the workers in a collective bargaining unit. 7 This
(257], provide for the rules in cases of inter-union or representation disputes in
amendment affirms the superiority of certification election over direct certification.8
organized and unorganized establishments, respectively.
3. A UNlON CAN FILE A PCE EVEN DURING PENDENCY OF ITS
2. _"ORGANIZED ESTABLISHMENT," MEANING.
REGtSTRATION.
The fact that even du,"ing the pendency of the application for registration, a An "organized establishment" refers to an enterprise where there exists a
union can al.-eady initiate a PCE was underscored too clearly as early as the case of SEBA, 1 regardless of whether a CBA has been concluded or not by such SEBA with
U.E. Automotive Employees v. Norie/, 9 where it was ruled that a union's right to file the employer.
3. "UNORGANIZED ESTABLISHMENT," MEANING.
As distinguished from "organized establishment," an "unorganized
1 The Herilage Hole! Mooia v. Secretay ci Labor ald ~ G.R No. 1n132, lit 23, 2014; ~ establishment" is a firm or company where there is no certified SEBA.2 'Iherefore,
Mir1ggagawa sa CM1ef Chenical Soridcrity d tms i1 the~ tr ~ ood Refams (SMCC-SUPER)
v. CtmJOlemk:al em Coaling Capoiation, G.R No.1697171, Milt:h 16,2011;Repubicate~. Represented an establishment may still be considered unorganized:
by DOLE v.l<a«ashi11i! Texlie fvt,j., Pfllwiles, klc., G.R No. 160352, /df 23, 2008; f.i l.ile Pbs Assodatb:llllle
~v.CIR,G.R Nos.L-33705 em L-35200.~ 15, 1977,76SCRA274.
(1) Even if there are several unions in existence in one CBU for as long as
2 ~Labor Unioos v. FemJ-Cal'Eja, GR No. 82260, JUy 19, 1989; MJdem Flshi'g Gecr l.aborlkiln v. Norlel, G.R not one of them is duly certified as SEBA.
No. 53907, May 6, 1988.
3 NaliooaiFederatioo ofl.aborv.lhe Seaellrydl.abor, G.R No.104556,Moo:tl9, t998. (2) In CBUs therein existing that have no SEBA. For example, even if
4 The agna Arli::le 2681256] ct the l.abor COOe prcMled as blkMs: 'Artil26812561. Procedue g<MIIi1g represenlalion there is a duly certified SEBA for one CBU, say, for rank-and-file employees, the
issues.· Wlen aqueslkxl cmcemi1Q te represenlalioo ct ~ 6 !UJrrilled mlle t.tllsky, a MeciMJier sha'llu
en! decide Sldl OOIMtNersy a1d re!tify ID the pcrties n 1\!iDJ tie nanert lle lm'agRalion 11at has been des9J*d establishment is still considered unorganized if there is no SEBA yet for another
aselecild byte~ clthe wakefs illhe ~ bclgalD;J IIi as lle~ balJai1i'G ~ lflere 6 rnt CBU, say, for supervisory employees. The reason is that the CBU for rank-and-file
reasiMJie ckldlt as m1\ith u1oo te ~ taoe chosen as ht ~ b' tie pupa;e ct CXJIIedNe employees is definitely separate and distinct from the CBU of supervisory
bclgailD;J, the Med-Mller shal oolEJ an elecOOn by seaet bard mbe cm:lucEd by lle t.tl*y mascer1ail f1e freett
chosen represeo1lltJe d the efl1lloyees coocemed, lllder Sldl Mils en! regUatiOns as 11e J.tBy may presaiie, at employees.
v.llk:h elecli:x1 ~of tie oonlendi1g pcrties shal have l1e ~ ma:t as~ The 1m' 111i:ln receivi1g
11e l11<jriy d the valkl vaes cast shall be cet1ified as 11e exctJSNe ba'gaililJ repcesEiltitive dtevmers~ The case of Lepanto Consolidated Mining Company v. The Lepanto
s Issued by former President Corazoo C. Aquilo. l ilctl el!ea on Milth 4, 1987. The anendailly pro'lisi:ln c1 Sedkln 7d Capataz Union, 3 best illustrates the situation where the supervisory employees called
ExeaJWe Onler No. 111 is lle one reflecled il Arli::le 269 t257J prior ID Is lllli!IUnent by Section 24, RA No. 6715, Midi "capatazes" were historically been members of the rank-and-file union [Lepanto
21,1989 em Section 11,RA No. 9481, v.ili:h ~itllcr.vonMay25,2007 andbecameefl'ec!NeooJune 14, 2IIJ7.
s ~ Mllggagawa sa Pennex [SM?-PULLJ.TUCP) v. Secretay rl t.a;xr, G.R. No. 107792, Mi1t11 2, 1998, 286
SCRA 692; Cental Negros Electric CoopelatiJe v. Secretay of labor andfn1Jbyment, GR No. 94045, Sept. 13, 1991,
201 SCRA591. 1 Secti:ln 1 [II], Rule I, Book V, Rules lo ~Iemen! the Labor COOe, as amended by Depment Order No. 40-00, Series of
7 WesbllAgusanWalters Unionv. Trajano, G.R. No. 75724, May6, 1991. 2003, [Feb. 17' 2003].
2
a Nalionalt\ssodation of Free Tradei.Jnions(NAFLU-TIJCP)v. BlR, G.R No. 77318, Aug. 3, 1988. Mi::le 269 [257], Lalor Co:le.
s G.R No. L-44350, Nov. 25, 1976, 74 SCRA 72. 3 G.R No. 157086, Feb.18, 2013.
!>10 BAR REVIEWER ON LABOR lAW
Employees Union (LEU)], the exclusive bargaining agent of all rank-and-file
employees· of petitioner's Mine Division. In giving due course to their PCB, it was
declared that the capatazes are not rank-and-file employees; hence, they could form
their own union. They were performing functions totally different from those
performed by the rank-and-file employees. The bargaining unit sought to be
represented by the appellee are the capataz employees of the appellant. There is no
other labor organization of capatazes v.ithin the employer unit except herein
appellant. Thus, appellant is an unorganized establishment in so far as the
bargaining unit of capatazes is concerned.· Consequently, the Med-Aroiter shall,
pursuant to Article 269 [257] of the Labor Code, automatically order the conduct of·
certification election after determining that the PCE has complied with all the
requirements under the law.
b-1-A.
CERTIFICATION ELEC'OON
IN ORGANIZED ESTABLISHMENTS
l. REQUISITES IN THE FILING OF PCE IN ORGANIZED
ESTABLISHMENTS.
Under Article 268 [256], 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 PCE questioning the majority status of the incumbent bargaining
agent is filed before the DOLE within the 60-day freedom period;
(2) That such PCE is verified; and
(3) That the PCE is supported by the written consent of at least twenty-five
percent (25%) of all the employees in the bargaining unit 1
1.1. FIRST REQUISITE: THE 60-DAY FREEDOM PERIOD.
As has been repeatedly discussed, it is only during this period that a PCE
may be filed by a challenging union. It cannot be a day before or after this period. If
it is filed a day earlier or longer, then it is considered prematurely filed; if it is a day
after or longer, then it is considered belatedly filed. The 60-day period is strictly
observed in determining the validity of the filing of the petition.
1.2. SECOND REQUISITE: THE PCE MUST BE VERIFIED.
The "verified petition" mentioned in Article 268 [256] refers to the
"petition for certification election" (PCE). Per Implementing Rules,1 the PCE is
required to be in writing and verified under oath by any ofthe following:
1 Tra:leUnions d the PhiiJpiles and Allied SeMces Wor1d Federalioo of Trade Unions [TUPAS-WFTIJ) v.Laguesma, G.R
No. 102350, June 30,1994.
LHA.I'ItK. VII 517.
lABOR RElATIONS
(l) By the president of petitioning labor organization, if filed by the
2
independent union or local chapter/chartered local;
(2) By the president or duly authorized representative of the federation or
national union, if filed br a federation or national union in behalf of its
local chapter or affiliate; or
(3) By the president or any corporate officer who is authorized by the
4
Board of Directors, if filed by the owner.
The minimum number of at least 25% of the employees in the CBU
mentioned in this article need not verify the PCE. What is required is merely to
attach to the verified PCE the signatures of said number of employees.
1.3. THIRD REQUISITE: THE PCE SHOULD BE SUPPORTED BY
WRITTEN CONSENT OF AT LEAST 25% OF ALL EMPLOYEES IN
THECBU.
a. Purpose of the 25% written support.
The reason behind the 25% requirement is to ensure that the petitioning
union has a substantial interest in t.'le representation proceedings and that a
considerable number of workers desire their representation by the said petitioning
union for collective bargaining purposes. Hence, the mere fuct that 25% of the
workers in ihe bargaining unit signify their support to the petition by their written
consent, it becomes mandatory on the part of the Med-Arbiter to order the holding of
5
a certification election in an organized establislunent.
b. When 25% written consent becomes relevant
The 25% written consent requirement6 is relevant if it becomes mandatory
to hold a certification election. In all other instances, discretion should ordinarily be
7
exercised in fuvor of holding a certification election.
c. The 25% requirement need not be strictly enforced.
This means that the 25% requirement may not be strictly enforced
Compliance therewith need not be established with absolute certainty. Thus, even if
this statutory requirement has not been strictly complied with, the Med-Arbiter is
still empowered to order the conduct of the certification election for the purpose of
1 Sedion 4, Rule VIU, 13001 V, Rules_, ~the l..alxrCode, as anended by Oepmen!Oida" No.~. Series of
2008 (OdOOer 30, 2008~
2 ld.
3 ld.
4 ld.
5 Phirppr,e Association of Free Labor Uni:lns (Septerrber Convention) v. Ferrer-Cci!ja, G.R No. 79347, .lal. 26, 1989;
Sanaha1g Mi1YJgagawa rg PadfK: Mils, Inc. v. Noriel, G.R No. L·56586, Jill. 17,1985, 134 SCRA 152.
6 AI0C1e 269 ~57].l.alxrCode; Atlas Free WOOiers UnD1 v. Noriel, G.R. No.L-51005, M3y 26,1981,104 SCRA565; FFWv.
Noriel, G.R Nos. L-47182-a:l, Oct 30, 1978,86 SCRA 132.
7 National Mines and Allied Wcx1<ers Union [NAMAWJ.UIF] v. Luna, G.R. No. L-46722. June 15, 1978, 83 SCRA f1J7.
51tl liAR KEVIEWER ON lABOR lAW
ascertaining which of the contending labor organizations should be chosen as the
exclusive bargaining agent 1 It is a mere technicality which should be employed in
determining the true will of the workers instead of frustrating it All doubts as to the
number of employees actually supporting the holding of a certification election
should therefore be resolved by going through such procedure. It is judicially settled
that a certification election is the most effective and expeditious means of
determining which labor organization can truly represent the working force in the
appropriate bargaining unit2
b-l·B.
CERTIFICATION ELECTION
IN UNORGANIZED ESTABLISHMENTS
1. REQUISITES IN THE FILING OF PCE IN UNORGANIZED
ESTABLISHMENTS.
In a PCE filed by a legitimate organization involving an unorganized
establish.."Uent, the Med-Arbiter is required to immediately order the conduct of a
certification election upon filing thereof by a legitimate labor organization.3 For
obvious reason, the three (3) requisites that apply to PCEs in organized
establishments do not have any application to PCEs in unc~ganized establishments.
The only requirement is that the petitioning union should be legitimate. Being an
unorganized establishment, the obvious rationale behind the law is to make it easy
for employees to self-organize - a policy which is enunciated in the Constitution and
labor laws.
b-2.
SOME PRINCIPLES ON CERTIFICATION ELECTION
1. RULE IF PCE IS FILED BY FEDERATION OR NATIONAL UNION.
A national union or federation filing a PCE in behalf of its local chapter
shall not be iequired to disclose the names of the local chapter's officers and
members, but shall attach to the PCE the charter certificate it issued to the local
1 CrMoo1ia t.tmrcmi1g Colpaatioo v. Laguesma, GR No. 97020, June 8, 1992; Easbld P.'allfaWI1g ~. 0:. v.
Noriel, No.l...SS28, Feb. 10, 1982,111 SCRA 674; Alas Free WOO<ers lJnioo.PSSLU~v. Noriel, G.R No.l-51905,
May 26, 1981, 104 SCRA 565; Soout Raroon Albooo Mlmaia!College v. Noriel, G:R. No.l-48347, Oct 3, 1978,85 SCRA
494; Natkxlal Mnes !I'd Alied WOO<ers Union v. luna, G.R No. l-46722, June 15, 1978, 83 SCRA 607; Mm1l
lnenaliona, Inc. v. Noriel, GR Nos.l-4757().71, May 11, 1978,83 SCAA 114; K<¢am RJ IIlJa Mqgaga~oasal.a
&Jem.FOITAFv. Noriel, G.R No.l-45475, .1111e 20, 19n, n SCRA414.
2 Olienlal T11 Coo La!orUnion v. Secrelary of labor and Employment -G.R No. H6751, Aug. 28, 1998, 294 SCRA 640;
Coosoli!ated FillllS, Inc. II v. Noriel, G.R No. L-4n52, July 31, 1978, 84 SCRA 469, 472; Phiippile Associafioo of Free
t.mUnionsv.8LR, G.R No. L42115,Joo.37, 1976,69SCRA 132. . 4
3 · Artk:1e 269 (257], Labor Code, as amended by Sec6oo 24, RA No. 6715, Mlth 21, 1989; Sec6oo 1, Rule VIII, Boolt V,
Rules to ~ lhe labor Code, as il11ellded by Depaftnent Order No. 4().03, Seli!s of 2003, [Feb. 17, 2003];
FurusaNaRubberPhiippiles, Inc. v. Secrelaryofl.aborilld~bymeol, G.R No.121241, Dec.10, 1997,282 SCRA635.
r
·~-
\....MI\I'It.K. VII !)!';I
lABOR RElATIONS
chapter. 1 Needless to state, the national union or federation, by so filing, is acting as
the agent of the local chapter which, for all legal intents and purposes, is considered
the principal.
2. ROLE OF EMPLOYER.
In all cases, whether the PCE is filed by an employer or a legitimate labor
organization, the employer shall not be considered a party thereto with a
concomitant right to oppose the PCE. The employer's participation in such
proceedings shall be limited to:
(1) being notified or informed of petitions of such nature; and
(2) submitting the list of employees during the pre-election conference
should the Mediator-Arbiter act favorably on the petition. 1
3. PETITIONING UNION SHOULD BE LEGITIMATE.
In Pizza Hut,3 it was held that the Labor Code requires that in organized
and unorganized establishments, a PCE must be filed by a legitimate labor
organization. The acquisition of rights by any union or labor organization,
particularly the right to file a PCE, first and foremos~ depends on whether or not the
labor organization has attained the status of a legitimate labor organization:'
4. THE DOUBLE MAJORITY RULE.
The process of certification election requires the application of the double
majority rule for the following twin purposes:
(1) To have a valid certification election; and
(2) For a union to win in the certification election.
First Majority: To be a valid certification election, at least a majority of all
eligible voters in the bargaining unit should have cast their
~
The first majority is essential to validate the certification election process
itself. According to Article 268 [256], in order to have a valid certification election,
it is required that at least a majority of all eligible voters in the bargaining unit
must have cast their votes. 5 If less than such majority have cast their votes, the
certification election process itself is not valid and, therefore, not one of the
Artk:les 268 !256J !I'd 269 (257], labor Code; ld., ld.,
Sec00n 1, IU! VIII, Book V, RUes to in1Jiemenl lhe Laxr Code, as l!llEOded by Depment Order No. 4Q.F.03, Series rl.
2008 [Oddler 30, 2008], issued pliSUal!ID RA No. 9481, Clld as flllher amended by Section 4, Depainert Order No.
4().~15, Seriesof2015 [Seplenter07,2015],1bid.
3 PrcgressM!~Colp.~Hutv.Laguesma,G.RNo.11SOn,,Ajlril18, 1997,271 SCRA593.
See aso Ta;~<fi!aY li;Jhlmds klt!!maiXlrla Golf Cklb Inc. v. Ta;~<filaY H~hmds ~ees Union-PGlWO, G.R No.
142000, Jan. 22, 2003.
5 Mide 268 [256], Labor Code; Samahal ng Mcrgga;~awa sa Pacific P1astic v. Laguesma, G.R No. 111245, .lcrl. 31, 1997,
267 SCRA 303, 309.
:>;.(V I!AR KEVIEW~R UN LABOR LAW
contending lillions therein, even if chosen by the majority of the votes cast, can be
certified as the SEBA to represent the CBU.
Second Majority: Majority vote of the valid votes cast required in order to be
chosen as the SEBA. .
After establishing the validity of the certification election process itsel~ the
next point to ascertain and establish is whether the petitioning union, in a single-
union contest, or any of the unions, in a multi-union election, has garnered the
majority of the valid votes cast. Under the same Article 268 {256], it is required
that only "the labor union receiving the major/tv of the valid votes cast shall be
certified as the exclusive bargaining agent of aU the workers in the unit" and
under Article 267 [255], it is likewise provided that the labor organization designated
or selected by the majority of the employees in an appropriate CBU is the exclusive
representative of the employees in such unit for purposes of collective bargaining.1
• Example of the manner of reckoning the double majoritv.
To illustrate the proper reckoning of the double majority, in a bargaining
urjt for example composed of 100 employees, the first thing to detennine is how
many votes should be validly cru.t in order to have a valid process of certification
election. The second tlllng to ascertain is how many votes should a contending union
gamer in order to be declared winner and thus be proclaimed as the SEBA of all the
employees in the CBU.
Following the rule enunciated in Article 268 [256], in order to have a valid
certification election process, majority of the 100 employees or at least 51
employees should validly cast their votes. In order to win the election, a contending
union should be able to garner the majority of the valid votes cast. So, if only 51
employees cast their votes, the majority thereof or, at least, 26 employees should
vote for the winning union. This illustration is necessacy to dispel the notion that in a
bargaining unit composed of 100 employees, at least 51 employees should vote for
the winning union. As clearly shown in this illustration, a vote of26 would suffice in
order to be certified as the SEBA.
• Some notable observations on the majority rule.
Note must be made of the following principles:
(1) Absolute majority of all the members of the bargaining unit is not
required in order for a union to be validly certified as the SEBA.
Majority of the valid ballots cast Would suffice, even if only a small
proportion of the eligtble voters participated in the certification
election.z
1
lsaa: Peal v.llnitld fn1lloyees We!lae AssociaOOn, GR No. L-9831, Oct 30, 1957, 1{)2 Pli. 219; United Restauroi's
~Mdl.miJnlon.PAFLUv. Tooes,G.R No. L·24993,Dec.18,1008,26SCRA435.
2 PAFLUv. Bureaucll.mReim1s, G.R No.L43760,Auj. 21,1976, 72SCRA396.
CHAPTER VII 521
lABOR RELATIONS
(2) Majority voting is the mode but not plurality voting.
Majority voting system is one in which more than 50% of the eligible
voters should vote for the candidate-union in order for it to be declared the winning
SEBA. Plurality voting system is one in which each voter is allowed to vote for
only one candidate-union, and the candidate-union which polls more votes
(plurality) than any other candidate-union/s is proclaimed the winning SEBA.
Simply stated, a majority, on the one hand, means more than half of the
employees-electomte have voted for one candidate-union. This means that it gets at
least 50.1% of the votes. A plurality, on the other hand, means the greatest number
but less than half of the employees-electorate have voted for the candidate-union that
wins because the vote is split among more than two candidate-unions. For example,
Uniou A gets 45% of the vote, Union B- 25%, and Union C- 20%, with the other
unions getting the rest (or splitting the remaininglO%). Union A, therefore, wins by
a plurality (the most votes) but not a majority (over half the votes).
5. "NO UNION" IS ALWAYS A CHOICE IN A CERTIFICATION
ELECTION.
It is basic a principle hlabor relations that the right to join a union has the
concomitant right not to join one. It is on this basis that "No Uninn" is ~!ways a
choice in all certification elections.
In the event that the petitioning union, in a single-union certification
election, fails to muster the majority of the valid votes cast and the "No Union"
choice wins, there shall be no SEBA and no new petition for certification election
can be filed within one (1) year from the conduct of the certification election
pursuant to the statutory bar rule.
The same consequence holds true in case of a multiple-union certification
election where the "No Union" choice triumphs or where not one of the contending
unions bas garnered the majority of the valid votes cast Resultantly, there likewise
will not be a SEBA and the filing of a new petition for certification election may
only be allowed after the lapse of the statutory 1-year bar. The exception to this rule
is when the conduct of a run-offelection or re-run election is justified, in which case,
1
the same may be conducted within the l-year period.
It must be stressed that "No-Union", although a choice. in the original
certification election, should no longer be a choice in the run-off election which must
1 Underlhe Rules, a ~n election should be held: (1) in case af atie, v.i1hi1 ten (10) daysaftertheposting oflhe notice of re-
run election; or (2) in case of faWre of eledkln, Ytithin six (6) roonil'.s ian dale of declaJalion of fallre of election. On lhe
ot1er tml, aIUlXJII election is requied to be ronducled v.;ttJi'i ten (10) days from the dose ri lhe elecOOn proceedings
between lhe labcJ unions receiving lhe l'Ml h~hesl number af votes, if lhere are no objedioos or chafienges which, if
sustailed, !31 matelialiy alter !he resulls.
522 BAR REviEWER ON lABOR lAW CHAPTER VII 523
lABOR RELATIONS

involve only the labor unions receiving the two highest number of votes in said
original election.
6. GROUNDS FOR DENIAL OF PCE.
The Mediator-Arbiter may dismiss the PCE on any of the following
grounds:
(a) The petitioning union or national union or federation is not listed in the
DOLE's registry of legitimate labor unions or that its registration
certificate has been cancelled with finality; 1
(b) Failure of a local chapter (or chartered local) or national
union/federation to submit a duly issued Charter Certificate upon filing
ofthePCE;2
(f) In an organized establishment, the failure to submit the 25% consent
signature requirement to support the filing of the PCE;3
(g) Non-appearance of the petitioner for two (2) consecutive scheduled
conferences before the Mediator-Arbiter despite due rrotice; 4 aud
(h) Absence of employer-employee relationship between all the members
of the petitioning union and the establishment where the propost:d CBU
is sought to be represented. 5
(i) Violation of the various bar rules. (See discussion below).
b-3.
BAR RULES
l.NATURE.
6
The bar doctrines are meant to limit employee Jree choice in order to
promote indll$trial stability. Consequently, they protect the SEBA from possible
onslaught on its majority status by either the employer, rival unions or CBU
employees .<furing the period of bar doctrines' etfuctivity. By insulating the SEBA
against such assault for specified time periods, it gives it a chance to prove itself
worthy of its designation as representative of the CBU.
1 Section 14{a), RPe VIII [Certification EledDil. Book V d the Ruk!s tl ~ the l.itxr Code, as anended by
Oepa1ment O!de" No. 40-F-03, Series 11 2008 (Oct!lber 30, 2.0081. See Secbt 11, paaglilj)h II, ~ PJJies of
llook V, RPe XI, as ill1ellded by D.O. No.9; Sanahalrg n-ga ~sa Scmnalakassa lnd!Gbiya ng ~
Hai;Ji ng N(<r1sa (SMf.IA LIKHA) v. Soorna Clvporatioo, G.R. No. 167141, Mrch 13, 2009.
2 Section 14(1!), Rule VIII[CertiOCafioo ElecOOnl, llookVoltheRllles tllfr4!1ementlle Labor Code, Ibid.
3 SecOOn 14{~. 1Ul VIII, llid.
4 Section 14{g), Rule VIII, llid.
s Section 14(h), Rule VIII, Ibid.
6
Erl1llafee 'free choice' refers to the ri;Jht g1lllled to an empkJyee to make a clelenrdnation of v.tlettJer or not to be
represented by alriln.
2. GENERAL RULE.
In the absence of a CBA duly registered in accordance with Article 237
[231] of the Labor Code, a petition for certification election (PCE) may, as a general
rule, be filed at any time. 1
3. EXCEPTIONS.
There are, however, certain rules regarding the frequency with which
representation elections may be held. They are called "bar rules" that proscribe the
filing of a petition for certification election and these are:
(1) Contract bar rule;
(2) Statutory bar rule;
(3) Certification year bar rule;
(4) Negotiations bar rule; or
(5) Bargaining deadlock bar rult:.
L
CONTRACT BAR RULE
1. A DULY REGISTERED CBA CANNOT BE DISTURBED DURING ITS
LIFETIME.
Once a CBA is duly registered and validly subsisting, the BLR should not
entertain any PCE or any other action which may disturb the administration of the
duly registered existing CBA. 2 Neither party should tenninate nor modify such
agreement during its lifetime. Inter-union electoral contests are therefore not
allowed. 3
2. DURATION OF THE CONTRACT BAR.
For the entire 5-year lifetime of the CBA, "[n]o petition questioning the
majority status of the incumbent bargaining agent shall be entertained and no
certification election shall be conducted by the Department of Labor and
Employment outside of the sixty-day period immediately before the date of expity of
such five-year term of the [CBA]."
3. PURPOSE OF RULE.
In more specific terms, the reasons for this rule are as follows:
1 Section 3, Rille VIII, llook V, Rules to ir4llementthel.aborCode.
2 SecOOn 1,Rule VIII, Book V, Ruleskl~ttheL.aborCode,asanendedby(lepmentOrdefNo.4Q.F.OO, Series of
2008 (OdOOer 30, 2008], issued J1U1S1S11 kl RA -No. 9481, llld as U1her anended by Sedion 4, 0epam1ent Older No.
~t5. Series of2015 [Septer00er07, 2015].
3 foamlex Labor Unkln v. Noriel, G.R No. L-42349, Aug. 17, 1976, 72 SCRA 371; Association of Independent Unions il the
! Ptippi1es fAI\JP] v. NlRC, G.R. No. 120505, Manti 25, 1999,305 SCRA 219; 364 Phil. 697.
~
 CHAPTER VII 525
524 BAR REVIEWER ON lABOR lAW
lABOR RElATIONS

(1) Certification election may only be entertained within the 60-day cannot promote industrial peace as it leaves out matters which the
freedom period Any PCE filed before or after the 60-day freedom parties should have stipulated'
1
period should be dismissed outright (6) When the CBA was extended during its term as when it was negotiated
(2) When there exists a CBA, it is the duty of both parties to keep the and entered into prior to the 60-day freedom period. The agreement in
status quo and to continue in full force and effect the terms and this case is deemed hastily entered into in order to frustrate the will of
conditions of the existing agreement during the 60-day freedom period the employees in choosing their bargaining representative. 2
2
and/or until a new agreement is reached by the parties. (7) When there is a schism in the union resulting in an industrial dispute
(3) At the expiration of the 60-day freedom period, the employer should
wherein the CBA can no longer foster industrial peace. The conduct of
continue to recognize the majority status of the incumbent bargaining a certification election in such a situation becomes imperative to clear
agent where no PCE challenging such majority status is filed by any any doubt as to the real and legitimate representative of the employees.3
other union.3 (8) When there is an automatic renewal provision in the CBA but prior to
the date when such automatic renewal became effective, the employer
4. EXCEPTIONS. seasonably filed a manifestation with the BLR of its intention to
The contract bar rule admits of several exceptions where a PCE may be terminate the said agreement if and when it is established that the
validly filed, to wit: bargaining agent does not represent anymore the majority of lbe
workers in the bargaining unit.4
(I) During tiJ.e 60-day freedom period prior to the expiry date of a CBA.
(9) When the CBA does not fostei indu.:.'irial stability anymore, such as
(2) When the CBA is not registered with the BLR or any of t.i.e DOLE
where the identity of the representative is in doubt since the employer
Regional Offices. extended direct recognition5 to the union and concluded a CBA
(3) When the CBA, although registered, contains provisions lower than the therewith less than one (1) year from the time a certification election
5
standards fixed by law4 or illegal per se clauses. was conducted where the "no union" vote won. Any stability derived
from such contract must be subordinated to the employees' freedom of
(4) When the documents supporting the CBA's registration are fulsified, choice because it does not establish the kind of industrial peace
6
fraudulent or tainted with misrepresentation. contemplated by law. Such situation obtains in a case where the
(5) When· the CBA is not complete as it· does not contain any of the company entered into a CBA with the union when its status as
mandatory provisions which the Jaw requires. Such kind of agreement

1 BuiOOd rg SW;!Tnv.Casala, GR No. L-8049, Mirf9, 1956,99 Phl16.

t Sedioo3(d),~VIII,BcdV,PJJiestl~llhelmCode,asaneOOedbyDepmentOnlerNo.4GOO,Seriesof
2003, (Feb.17, 2003];1UPASv.lrY::iofl;J, G.R No. L-46499,hlg. 19,1982, 1140CRA847; NaOOna Clx'Qressoflklklns i1
lhe &lgw k100stJy oflhe f'hiWiles (NACUSIP}-TUCP v. Ferrer.caleja, ~
2 MX:Ie 264 [2531. LmCode.
3 MX:Ie 269 [2571, IJid.
4 See old pnMsiln It Section 4, Rule JM, Book V, Rules tl ~ lhe L.OOocCcxle, as illle!1ded by Articie 1, Depment
Older No. 09, Series of1997 J21 June 1997!.
s See aUnled Stales case enli!led: Pnp~ Prods. Cap., 134 NLRB 662, 6fU1 (1961). Foc ~.a OXlb'aCl v.flh 111
ilegal 'hok<lgo' clause wil not bar lfl election. A ~clause is one prohiliti1g M fll11lloYel' ftan ax1ducting
busi1ess Mth some olher per.;oo IWh v.ron lhe uokln has oc may have adspule. Sudl clause is lfl legal unfair labor
practice under NlRA Section 8(e). All1ioo v.i\1 violale lhe p!dlilitioo i1 SECIXrt 8(bX4)(A) lldcinst ooen:ing lfl el11lloYer tl
'cease doing busi1ess v.ilh arrt olher per&r•'ll uses slltes or <l'rf olher preSSllll kllate lfl ~Ioyer kl accept this type
of clause.
6 See old pnMsilo of Section 4, Rule JM, Book V, Rules tlkr4>\emenllle LmCOOe, asanended by Article 1, Depa1ment
Older No. 09, Series of 1997 [21 June 1997].
r
2 Associaal Trade lklion v. Noriei;G.R No. L-<l8367, Jlfl. 16, 1979; 88 SCRA 96; GOP.ccP Wxkers UniJn v. CR, GR.
No.L-33015,Sept 10, 197U3SCRA 116.
3 b the MiD" (i Pe11m ill' 1liect Crii:ation cr Cdi3krl8eclm, Fresble Till !I'd RliJber Corpilly Efr4lloYees
lklion v. ~ G.R Nos. L-15513-14, .IM. 6, 1978, 81 OCRA 49, Viere i was tal: 'n 11e case at ba', it is doubtU ff
ilrf caRt l'tat may haw been erEred illo bellwen respnla'tAI..U andrespcnlent ~WI fi:lsEr ~ illhe
~ ri, i1 view<llle fact l'tat a sUlstlllial rurbr d lhe ~ therei1 haw leSQned ftan ALU and P'1eCi
petitioner FBJ. AJ. <l'rf rae,llis is a ma11er that lliJSI be i1ally detm1'Wled by rneMS d a a!ltificatioo election.' See aso
FO<mexLmi.JoOOv. NaB, G.R No. L-42349,AuJ.17, 1976,72 OCRI\371.
4 Pl.DTfn1lloyees'Ulioov. PN!WileLMQ DG1Mce Tetepme~. G.R No. L.S138,hlg.20, 1955.
5 ft lliJSI be no!ed tllal 'VoUtry Recognition' as amode d ~ a SEBA has al'eatt been repealed and replaced by
lhe mx1e l<rlillw1 as 'Request b' SEBA CeltfficaiXxl,' per 0epment Order No. 40+15, Series of 2015, issued oo
Seplamer07, 2015. PMkUartj repealed is Rule VII(VW1fayReccgrm).1!oc:* V, Rules kl ~the LmCode,
as lmnled by~ 0n1er No. oiQ-00, SeOOs d 2.003, [Foo. 17, 2003~ 1lis JXMioo has been repealed and
fe!ked by a new provisioo entitled, 'mlUEST FOO SOI.E AN:> EXCLUSIVE BARGAINING AGENT (SEBA)
CERTIFICATION', pursua:rt tJ the Clllel1dment ilmx!ured by Sedkr1 3d Siid Depmenl Order No. 40+15, Series of
2015.

~ '

.
526 BAR REVIEWER ON LABOR LAW
exclusive bargaining agent of the employees has not been established
yet 1
(IO)Where the nature ofthe.operation substantially changes between the
execution of the CBA and the filing of thePCE. Such changes include ··
(i) a merger or consolidation of two or more operations creating a new
operation with major personnel changes and (ii) a resumption of
operations after an indefinite period of closing, with new employees;
However, a change in the number of employees due to a relocation
does not affect the contract bar rule.
(11) Where the CBA is executed before any employees are hired.1
n.
STATIJTORY BAR RULE
1. RECKONING OF 1-YEAR PERIOD.
The Labor Code does not contain any provision on this rule but the Rules
to Implement the Labor Codi embody a rule that bars the filing of a PCE within a
period of one (1) year from the date of a valid conduct of a certification, consent,
run-off or re-ruu4 election where no appeal on the results thereof was made.5 If there
was such an appeal from the order of the Med-Arbiter, the running of the one-year
period is deemed suspended until the decision on the appeal has become final and
executory.'
This is called the statutory bar rule which finds its roots from a similar
rule in the United States. Thus, an election cannot be held in any bargaining unit in
which a final and valid election was concluded within the preceding 12-month
period.'
t Scmtla'g Mcrgga;Jawa sa Pennex [W.f'IILlJ.l\JCPj v. Socretay cl L.m, G.R No. 10n92, Milth 2, 1998, 286
SCRA 692; See also Fll!Stlne Tre Cl1d Rubber Con1mY ~ Unkln v. ~. G.R Nos. L-45513-14, Jan. 6,
1978, 81 SCRA 49.
z E.g, apre-tire agreement nile c:oostuctm ildusby.
3 Sdx13(a), Rule VIII, Book V, Rules b ~fie L.axrCode, asanended by Depa1mellttlrderNo.«l-03, Series of
:1003, [Feb.17, 2003~ See asoSeclbl14(d), RIJeVIII{Cel1fmixl ~l BookV dlleRulestl~lhet.axr
Code, as anended by Depment Older No. 40f.03, Series cl2008 !(lctjJer 30, 2008). See !Eo Secbl42., Rule VII,
Depcmnt Older No. 40+15, Series ct2015 [Septelrber rn, 2015]; Further, see 1he old p!tMsioo of Seclbl3, Rule v,
Book Vcllhe ~.ala Code's ~Rules.
4 New Sdx11(U), Rule I, Book V, Rules tl iJ1lllement 1he L.ala Code, as anended by Depmoot Older No. 4().()3, Series
cl2003, [Feb.17, 2003), Cl1d as lultler added through lle Mle11001entillrtxluced by Sedioo 2, IJepMnal!Oider No. 40-1-
15, Series cl2015 {Sepmber 07, 2015], enti1led 'further~ Dep<r1rnent Older No. 40, Series cl2003, Mlend'ng
lle~ Rules Cl1d ReglEtioosof Book Vcllhe l..abocCode ollle Phi;lpiles, as Amended.'
5 Section 14(d), Rule VIII [Ceitilicalkln BectionL Book Vof lle Rules kl in1J1ement the labor Code, as emended by
Depcrbneot Older No. 40-f-03, Series of 2008 [Octdler 30, 2008).
6 Sdx13(a). Rule VIII, Book V, Rules tl in'4Jiement the Labor Code, as amended by Depa1ment Older No. 40-03, Series of
2003, [Feb. 17' 2003).
1
199See29U.S.C.A7159(cX3).
~
.
. .
.
LHArttR VII
5'l.'J
lABOR RELATIONS
2. THE 1-YEARPERIODMAYEITHERBEA "STATUTORY BAR" OR
"CERTIFICATION YEAR BAR."
This !-year bar may be denominated either as a "statutory bar" or
"certi[ICatUJn year bar," depending on whether or not a SEBA has been certified in
the certification, consent, run-off or re-run election. If there was none, then, it is
called the "statutory bar"; if there was, then, it is denominated as the "certification
year" bar. Simply stated, if a SEBA is certified, then another bar rule is set into
motion, i.e., the certijica!UJn year bar rule discussed below.
3. THE 1-YEARPERIOD,HOWRECKONED.
The 1-year period for "statutory bar" begins to run on the actual date of
the prior election, not from the date the SEBA was certified, 1 which is the reckoning
date for another rule- the "certification year bar. "
If the prior election results in a vote for "No Union, " the one-year period
runs from the date of that election. 2
4. INAI)PL!CABILITY TO THE CONDUCT OF RE-RUN OR RUN-OFF
ELECTION.
In situations where the conduct of a re-run or run-off election3 becomes
necessary, the statutory bar rule does not preclude it nor apply thereto since it is
required to be done and accomplished within a certain period after the failed
certification election, which period incidentally falls within one (1) year thereafter.
Thus, a re-run election should be held:
(I) In case of a tie, within ten (I 0) days after the posting of the notice of re-
run election;4
(2) In case of failure of election, within six (6) months from date of
declaration of failure of election.5
See RoiJetsoo Bros. Oep1 Store, klc., 95 M.RB 271, 273{1951); see also CdVl-Rai-MJx Co., 66 M.RB 10 1n. 1(1949).
See Bend'tX Corp., 119NI..RB 140(1969).
3 See Robertson Bros. Oep1Sbe, ~.• 95 M.RB271,273{1951); seealso-CoffiRai..Co, 86 M.RB 101 n. 1(1949).
4 New Sedioo 18, Rule IX, Book V, Rules to knpEmeot l1e L.axrOxle, as preo.1ws1f mmnded by.[Jepa1mert Older No.
40-03, SEries of 2003, {Feb. 17, .2003), and as added by SecOOn 16, 1)epment Older No. 40+15, Series cl2015
[Seplerrber 07' 2015), entilled 'fll!lher hnendirr;l ~Order No. 40, Seres of 2003, Amendilg the ~
Rules and Regulations af Book vof 1he l..aboc Code af lle Ph~. as Amended.'
5
This p!lNiskln entitled '8!ect af !abe of electioo' sholil naN be denorni:1a9l as Sdx119, Rule IX. Book v, Rules"
IJllliemert lhe Labor Code, by 'litue of 1he IMJI1ilelhj crdered by SecOOn 17, llepclbnoot Order No. 40-1-15, Series cl
2015 [Sep!elrber 07, 2015), entitled 'Further AmeOOng Department Older No. ItO, Series af 2003, ~ lle
Implementing Rules and Regulations of Book V oi l1e L.ala Code of the Ph!ippiles, as Amended.' This sedion was
~Jlally numbered Sedioo 18, per Depcl1ment Order No. 4M3, Series of 2003, [Feb. 17, 20031. but kwas subseQuenlti
reilUmbered kl Sedix117, per Depal1ment Order No. 40-F-03, Seres of 2008 [Oct 30, 2008). This latest 2015 re-
lliJmberilg was efleded through said Section 17 m slates: "Sections subsequent kl inserted new provisilns and/(J
renumbered secOOr1s are renuntered accool~~.'
52tl MR KI:VItWtN. UN U\BUN. U\YV
. And a run-off election is required to be conducted within ten (1 0) days
from the close of the election proceedings between the labor unions receiving the
two highest number of votes, if there are no objections or challenges which, if
sustained, can materially alter the results.
m.
CERTIFICATION YEAR BAR RULE
1. CERTIFICATION YEAR- THE PERIOD WHEN THE CBA
NEGOTIATION MUST COMMENCE AFTER A UNION HAS BEEN
CERTIFIED AS SEBA.
Although the Labor Code does not contain any provision on when the
collective bargaining negotiation process should start after a union is duly certified
as the SEBA of the employees it seeks to represent in a given bargaining unit, there
is, however, this provision in the Rules to Implement the Labor Code1 when the
Mediator-Arbiter may dismiss the PCE if the same is filed within one (l) year
reckoned and counted:
(1) From the date the SERA Certification is issued by the DOLE
Regional Director in cases of Request for SEBA Certification filed in
an unorganized establishment with only one (l) legitimate labor
organization;1 or
(2) From the date of issuance of certification as SEBA and not from the
date of the conduct of valid certification, consent, run-off or re-run3
election. 1
1 Secrol14(d), Rule VIII, Bocll V, Rules k> Implement lhe Lm Code, as emended by Depment Older No. 40-f-03,
Salls ct 2008 (OctOOer 30, 2008); See aso Section 42., Rule VII, ()ep<l1rre1t ewer No. 40+15, Se!ies ct 2015
[Seplenter07, 2015), ilfra.; Seeaso Section 3(a), Rule VIII, Bod\ v, Rules 1o ~llei.BlorCode, as aneoded by
Depmert Older No . .mm. Salls ct 2003, (Feb. 11, 2003~ As mer poi1ted oot. lhe 1-yea- bir is eiher caled "sla1uloly
118" a "oeetfi:<im ye;t' bir, ~ oo Yoilelher llere was a !here was no ca1ified SEllA lhct emeged floot lhe
~ eledioo. If 11ere was none, toen, it is caled lhe "ssahJby ba"; I !here was, 1ten, ais denonilaled as lhe
'ceftation yew ba".'
2 Sa:tioo 42. Rule VII, llepa1ment Older No. 40+15, Series of 2015 [Septenta' rrl, 2015J, enl1led 'Fur1her ArnendRJ
Depmert Order No. «l, Series ct 2003, Alnend'rg lhe ~ RIJes llld Regli*rls ctBook vct lhe Lm COOe
d lhe ~. as AmeOOed.' This is a new remedy ht repealed llld rep9:ed \UJUy reccgnb as a mode ct
-sele::&v aSEBA. This is prOikled IRier Sdln 3 [al. Rule 1110, Book v, (Section 5, !Ullllll Eblk V, Rules 1o ~
lie 1m Code, as anended by~ Order No. 40-03, Series of 2003, (Feb. 17, 2003).
3 'ReM elecOOn' is arelif il1roduced mode d seledilg a d\'XJSilg aSEBA. I refers b 111 eleQioo oonduded kl break a
lie bebNeen ~ lriJis, ilckJdi1g between 'no lliln" en! ooe d lhe unklns. l !Nilev.te refer 1o an eledoo
cooOOcled after a fa'lure of eledioo has been dedcled by lhe eledioo of&er ll1dla' alimed by lhe mediailr-abiler. (Neil
Sa:tioo 1(11), Rule l Bod\ V, RUes kl ~tile 1m Code, as <mended by~ Order No. 40-03, Series ci
2003, JFeb. 17, 2003L illd as M1her lKided flroutjllle IJI1eiOnent RrodJced by Sectixl2, IJepabnelt.Order No. 40+15,
Series of 2015 [Seplen'iler 07, 2015), lb!d.; See aso New Section 18, Rule IX, Bod\ V, R1Es b lnlJiement lhe L.roor Code,
as previlusly emended by Depmer4 Older No. 40-03, Series ct 2003, (Feb. 17, 20031, all as lKided by Section 16,
Oepainent Order No. 40+15, Series ct2015 JSepi!nter07, 20151, IOOsly: "Mlen amtation, W1SEI1I aiiJHlll eledoo
reSIJls b alie between f1e hYo (2) choK:es, 1he eledioo ctrw shall irmediale!y notify lle palies ct are-run elecOOn. The
elecliln ollicer shal cause lhe posting r:A l1e Idee ct re-run elecliln v.ti1. We (5) days from l1e certlication, W1SEI1I or ru!l-
olf elecliln. The re-run eledioo shal be conducted v.ilhin len (10) days after lhe posting ct 1100ce.1.
.J-7
lABOR RELATIONS
Note must be made that No. 1 above repealed and replaced "Voluntary
Recognition" as a mode of designating a SEBA2 per Department Order No. 40-I-
3
15, Series of 2015. Previously, the 1-year period is reckoned from the date of
recording of the Voluntary Recognition. However, under this new mode, the same
period is counted from the issuance of the SEBA certification which shall have the
effect of barring the filing of a PCE by any labor organization. It is only upon
expiration of this 1-year period that any legitimate labor organization may file a PCE
in the same bargaining unit represented by the certified SEBA, unless a CBA
between the employer and the certified SEBA was executed and registered with the
DOLE Regional Oftice.4
Note must likewise be made of No. 2 above where a distinction should be
made between the reckoning of the 1-year statutory bar and the 1-year
certification year bar. The 1-year period in the former should be counted from the
date of the election; while the 1-year period in the latter should be from the date of
certification of the SEBA. The union will be deprived of its entitlement to the critical
one (1) year as a certified SEBA if this period is reckoned from the actual date when
the certification, consent, run-off or re-run election was conducted. The union
certainly is entitled to a full twelve (12) months as SEBA. Until the certification is
made in its favor, its status as SEBA is not definite.
This rule is better known as the certification year bar rule5 which is
similar to the "cert:fication year" rule6 in the United States where it is provided
that the collective bargaining negotiations between the employer and the SEBA
should begin within twelve (12) months following the certification of the latter as
SEBA. This rule thus prevents the holding of a new ~rtification election until the
parties have had one year to bargain.7
I See Section 14{d), Rule VIII, Book V, Rules kl fnlJienB1t lhe labor-code, as anended by ~Order No. 40-f-{)3,
Series r:A 2008 (OckDer 30, 2008).
2 ~Is Rule VII [VoU1ay Recognibl), Book V, Rue;~ fn1!lemoot l1e Lm\.ode, as anended by~
Order No.~. Seresof2003, [Feb. 17, 2003). Tiis pi(Nisioo has been repeaed crdreplml by anewprcMsioo ril!ed,
'REQUEST FOR SOlE AND EXCI.USIIJE1!ARGAINING AGENT (SEBA) CERTIFlCATION', pli'SUCI1t b lle ll1li!IMlnent
i1tJrdJald by Sectixl3, Depalment Order No. «l+15, Series ct 2015jSeplertter 07, 2015), riled 'Fidler Amend"~
Oeplmert Order No. 40, Series-of 2003, Amend'D;IIle ~ Rli!s illd ReJliltions ctBOO< Vct lle tm Cede
ctlle Pll~. asArneOOed.'
3 Issued on Seplen'iler07, 2015.
4 See Section 42., Rule VII, Depa11ment Order No. 40+15, Selies of 2015 ~07, 2015), eilllfed 'FurUler Amendhg
0epmen1 ewer No. «J, Senes of 2003, Amend'1191he ~ RUes llld RegUalbls ct Book vr:1 lhe tm Code
of lhe ~iles. as Nnended."
5 Sectioo 14(d), Rule VIII (CertifK:alion Eleclionl Book V of lhe Rules b ~ lle Lm Code, as anended by
llepal1ment Order No. 40.f-03, Se!iesof 2008 (OctOOer 30,2008). .
6 This is em kooMl as 11e 'lllebullable Presi.Jn1ltion of Majoliy SJJlll(Xf Rule. The Uniled Slales Supreme ewt apprtNed
Ule 'Ce!tificalion ye;y Rule' i1 Brooks v. NLRB, 348U.S. 96{1954),
7 48 Am Jur 2d 991. In lhe sane case r:A &oaks v. Nl.RB, 348 U.S. 96 (1954), lhe Slpreme Coort held 11at, absent MY
UllllSUal cil:tmslances such as defundness or schism, an f!01lloyer has aduty Ill ba'gain MU1 Ule union cded as lhe
balgani'jJ ~!lor his~ !orooeye<r from lhe date of ceftiflcation.
530
l
BAR REVIEWER ON lABOR lAW CHAPTER VII 531
lABOR RElATIONS

2. EFFECT OF FAILURE TO COMMENCE CBA NEGOTIATION 2. ONCE NEGOTIATION COMMENCES, THERE IS NO MORE PERIOD
WITillN THE 1-YEAR PERIOD. TO RECKON WITH.
If the SEBA fails to commence the collective bargaining process within Once the CBA negotiations have commenced and while the parties are
said period, its being the SEBA may be questioned by another union through the engaged in this process, no challenging union is allowed to file a PCE that would
filing of a new PCE. 1 This is best illustrated by the case of KAMPIL- disturb the negotiation process and unduly delay, preempt or forestall the prompt and
KATIPUNAN v. Trajano/ where the SEBA failed to initiate the collective timely conclusion of thereof.
bargaining process within a period of more than 4 years thereby enabling another
It must be noted that there is no law or rule that imposes a time limitation
union to file a new petition for certification election.3
or cap as to when the parties should negotiate and conclude a CBA. The parties have
3. INTERRUPTION OF THE RUNNING OF THE 1-YEAR PERIOD. all the freedom to do the negotiating of the CBA's terms. In other words, the
Where an appeal has been filed from the order of the Med-Arbiter negotiation process may last for days, weeks, months, even years, and during the
certifying the results of the election, the running of the one (1) year period is deemed entire duration of negotiations, no PCE may be filed by any challenging union!s.
suspended until the decision on the appeal has become final and executory.4 v.
IV. BARGADUNGDEADLOCKBARRULE
NEGOTIATIONS BAR RULE 1. CBA DEADWCK, MEANING.
1. TilE CBA NEGOTIATION SHOULD BE VALIDLY COMMENCED "Collective bargaining dead/ocR' refers to a situation where there is a
WITHIN THE REQUIRED PERIOD. failure in the collective bargaining negotiations between the SEBA and the employtr
resulting in an impasse or stalemate.2 This happens when, despite their efforts at
Under this rulc, 5 no petition for certification election (PCE) should be
bargaining in good faith, the parties have failed to resolve the issues and it appears
entertained from the moment the SEBA and tiJ.e employer have commenced and
that there are no other definite options or plans in sight to break the standoff. Simply
sustained negotiations in good faith in accordance with Article 261 [250] of the
stated, there is a deadlock when there is a complete blocking or stoppage in the
Labor Code within the period of one (l) year6 from the date of a valid certification,
negotiation resulting from the action of equal and opposing forces?
consent, run-off or re-run election7 or from the date of issuance of the SEBA
Certification by the OOLE Regional Director in cases of Request for SEBA 2. AS A BAR, THERE MUST BE A DEADWCK IN THE CBA
Certification, 8 which replaced the mode of "Voluntary Recognition. "1 NEGOTIATION.
Under this rule, a representation question may not be entertained when a
bargaining deadlock to which an incumbent SEBA is a party has been submitted to
1 AliholJJh illle UnitEd Slates, v.11at is allov.ed " be fted is a petitioo foc decef1li;atioo eledicrl !rid lliX a pelilioo foc conciliation, compulsory or voluntary arbitration or has become the subject of a
CEf1bOOn eledioo by cml1er !Ilion. Fa" amcxe em1SNe discussion d Decertifica!ioo Electioni, please see the Ndes illd valid notice of strike or lockout.4
Comnerdson Mk:le 267 [2551, patblat,', lllderlhe qJ«;of'IX. DECERTIFlCATION', ilia).
2 ·l<aiscMI n.J ~i!¥1!1l01 ~ [KMPR.-KATIPUNAN)v. Tfl'4alo, GR No.15810, Sept 9, 1991, 201 SCRA453.
.s The sliltc, ilc:on1n:Nel1il ra::t il t1is case is l1ai tan FelxucJy Zl, 1981 • v.tJen Nalb1al Federation d t.axr lkilns
{NAFUJ) was prtd<lmlthe exGtJsr.oe bagiinilg ~of al VRON ~ ·" ,6¢ 11, 1985 • Ylflen 1 ~ prcW100 i1 Section 4.2., Rule VI~ Depatnent Order No. «H-15, Series rJ.~5 [Sepmter07, ~5]. ~eerier poned
KMflll led Is petililn tr oeftificaOOn eledion or a pel.:xl of more tal 4 yeas, no CBA. was f!JeJ exec:umd illd no at. lis is anew remedy hi repeaed ll1d replml voklray reocvption as a IIDie d ~ a SEBA. The SEBA
deidJck ea aose tan ~between NAFLU ll1d VRON IeSldlnJ il QlllCiia&ln ~s or lhe IJII"IJ of a tel1fi:3ixl shal ba" fle liilg of apelilion tr catiOCalion eledion by MJ laloragalizalion for apeOOd Cf one (1) yell" from
Vctd stite notice. 11e deE ci 11s lssum!. Upon expiration d this 1-yea- period, MJ iegi&r.ale labor Olgllliz!iion 112f fie a pellion b"
4 Section 3[a), RUe VIII, Book V, Ru!es to 1rrcJ1emen1 the Laxr Cede, as MlEil1ded by Depa1ment Order No. 40-03, Series of cef1ilication eledir1 illhe sne ba"gai1DJ U!it represenild by 1he certified lallor agooizalon, OOe5s aCBA 11et1wen f1e
2003, [Feb. 17, 2003j. Efl1lloyer ll1d fle ca1Jied labor O!!JillizaliJn was executed il1d regislered v.il1 fle Regional Office.
5 ~ pr<Nkled i1 Section 3(b), RUe VIII, Book V, Rules kl ~ lle Laxr Code, as ilrended by Depa1ment Older No. 2 Sill~ GapaaOOn v. NLRC, G.R No. 99266, Mc¥th 2. 1999; Tay<rJ &P. F. Jildiliaoo, DiiJMy d Ph~ I..OOor
40m, Seriesoi2003,[Feb.17, 2003j. Terms, p. 36; ~ 2 [Deli1ilion dTenns], NCtvfl1'rimer on Slri<e, ~ ll1d l.ockaJI. 2nd Edili:ln, Dea!rriler
6 Denonilaed as lle 'certification yea- ba"." 1995.
7 Section 14(e), rue VIII [Certification Election], Book v rJ. the Rules to Implement the 1..00or Cede, as anended by 3 CapiDI M!d"K:a!Cenler M<n:edCon®led ~ified F~ SeM::eWoikersv. Laguesma,G.R. No. 118915,
DepMmenl Older No. 46-1'.03, Series of 2008 [Od!lber 30, 2008]. Feb.4, 1997,267 SCRA503,513. .
8 Onlf v.t1en !his ~Is lied i1111 unorga]zed estali"ISfrnent Yrilh rrlt one (1) legitnale laboraganizalion wil aSEBA 4 Section 14(e), RUe VIII, Book V, RuEs m~ 11e Labor eooe, as amended by Oepalrre1t Order No. 40-F-03,
Cer1ificalion ~ be issued by the DOlE Regmal Diecklr. Hfle Request is made il an un<xganized estOOiisl1ment l'oiUlhw Series o12001 fOc;tlber 30, 2008]; SE0013(c), Rule VIII, Book V, Rilles kl ~ lle Laxr COOe, as Mlel1ded by
or more legitimate O!!Jillizalions or v.t1en 1he same is made iloo O!!Jlllized eslabtishmen1, it is the Mediatir-Aibiler l'hl has Deparonent Order No. 40.()3, Series ol2003, (Feb. 17, 2003); Nationa ~ ci Unions ilthe &J;jlr lndusl!y d the

L
jJisdiclion and power to Issue the SEBA Certification. Philippiles-TUCP v. Trajano, G.R No. 67485, Apri110, 1992; Natmal Congress of Unions ilthe &lg1r i1dustry of the

'
. .
53:! BAR Kl:VIEWER UN IAHUR lAW
3. EVEN IF THERE IS NO ACTUAL DEADLOCK, IF THE
CIRCUMSTANCES ARE SIMILAR TO A DEADWCK, THE
BARGAINING DEADLOCK BAR RULE APPLIES.
The bargaining deadlock bar .rule was applied in Capitol Medical
Center/ even if no actual CBA deadlock occurred in this case. After being certified
as the SEBA of the rank-and-file employees of respondent Capitol Medical Center
(CMC), private respondent union, CMCEA-AFW/ submitted its CBA proposals bl).t
CMC refused to negotiate a CBA, raising as an issue, the legitimacy of CMCEA-
AFW. Because of this, CMCEA-AFW staged a strike over which the DOLE
Secretary assumed jurisdiction and issued an order certifying the same to the NLRC
for compulsory arbitration where the said case was still pending at the time the
decision in this case was rendered.
After more than one year of not having any CBA negotiation because of
the pendency of the said certified case before the NLRC, another union, herein
petitioner CMC-ACE-UFSW,3 filed a petition for certification election among the
regular rank-and-file employees of respondent CMC, citing as one of the grounds,
the fact that more than 12 months have elapsed since the last certification election
was held where respondent CMCEA-AFW was voted as the SEBA and yet, there
has been no CBA negotiation or bargaining deadlock between respondent CMCEA-
AFW and respondent CMC that could effectively bar its filing of the petition.
The Supreme Court, unconvinced of this argument, ruled that although
there was no bargaining deadlock between respondent CMCEA-AFW and
respondent CMC before the filing by petitioner CMC-ACE-UFSW of the petition
for certification election which had been submitted to conciliation or had become the
subject of a valid notice of strike or lockout, what happened in this case is worse
than a bargaining deadlock for CMC employed all legal means to block the
certification of respondent CMCEA-AFW as the bargaining agent of the rank-
and-file employees; and use it as its leverage for its failure to bargain therewith.
Thus, it can only be concluded that CMC was unwilling to negotiate and reach an
agreement with respondent CMCEA-AFW. Respondent CMC has not at any
instance shown willingness to discuss the economic proposals given by respondent
CMCEA-AFW. If the law proscribes the conduct of a certification election when
there is a bargaining deadlock submitted to conciliation or arbitration, with more
reason should it not be conducted it: despite attempts to bring an employer to the
Ph!'pes (NACUSIP)-TUCP v. Fener.calleja in! Md fie NaOOnal Feddon d &lgw W<rtEIS (NFSW)- FGT-KMJ,
G.RNo.89609,.1!11.27, 1992.
1 ~ Medcal Cen1er Alia1ce d Concerned ~ified Fipino SeM:e WlrtEIS v. Hoo.l.w;juesma, GR No.
118915, Feb. 4, 1997, 267 SCRA 503. Besiles 1-bt. Bienvenklo l.w;juesma, lJnderseaetlry d the 1Rpar1mert d Labor
Md ~other responden1s kl tlis case llll the Capitol Medical Center~ AssodaiOO-Aiicr c! FqJhl
Walters,~ Mldk:al Center, Inc. and Dra. lheina Clemente, Presidenl
2 ~Medical Center En1lk>Yeesflssodali:ln..AdFdipilo Waters (0/CEMFW).
3 ~ Mldical Center Armce of Coocemed ~Filipino Servk:e Waters (CMCACE·UFSW).
lABOR RElATIONS
negotiation table by the certified bargaining agent, there was "no reasonable effort in
good faith" on the employer to bargain collectively.
It is thus only just and equitable that the circumstances in this case should
be considered as similar in nature to a ''bargaining deadlock'' when no certification
election could be held. This is also to make sure that no floodgates will be opened
for the circumvention of the law by unscrupulous employers to prevent any certified
bargaining agent from negotiating a CBA. Thus, Section 3, Rule V, Book V of the
Labor Code's Implementing Rules1 should be interpreted liberally so as to include a
circumstance, e.g., where a CBA could not be concluded due to the failure of one
party to willingly perform its duty to bargain collectively.
4. WHEN THE BARGAINING DEADLOCK BAR RULE DOES NOT
APPLY.
The case of KAMPIL-KATIPUNAN v. Trajano/ illustrates the classic
case where the bargaining deadlock bar rule was not applied. On February 27,
1981, the BLR declared NAFLU3 as the exclusive bargaining representative of all
rank-and-file employees of Viron Garments Manufacturing Co., Inc. (VIRON).
More than four (4) yea.rs thereafter, or on April 11, 1985, another union, the
Kaisahan ng Manggagawang Filipino KAMPIL-Katipunan filed with the BLR a
petition for certification election among the employees of VIRON. The petition
counted the support of more than thirty percent (30%) of the workers at VIRON.
NAFLU opposed the petition contending that at t.ite tLme the petition was filed on
April ll, 1985, it "Yias in process of collective bargaining with VIRON; that there
was in fact a deadlock in the negotiations which had prompted it to file a notice of
strike; and that these circumstances constituted a bar to the petition for election in
accordance with Section 3, Rule V, Book V of the Labor Code's Implementing
Rules.4
The Supreme Court, however, did not apply the bargaining deadlock bar
rule because of the following:
(l) Prior to the filing of the petition for certification election in this case,
there was no such ''bargaining deadlock ... (which) had been submitted to
conciliation or arbitration or had become the subject of a valid notice of strike or
lockout" To be sure, there are, in the record, assertions by NAFLU that its attempts
1 This proviskln reads: "S:C. 3. Wlen b IE. -In 11e absence of aOJiedNe bagQklilg ~ sOOni!ed il accorda1ce
'Mth Al1kle '!37 !2311 ct lle Qxle, a petition for teltifK:aOOn eledi:x1 n\CPf be lied at lJrf line. Hov.eier, no celtification
electioo may be hek:l wiilil one yell' tool the dale d isslJm! d dedclatioo cl a 1M cer1ifcaOOn eleclixlrWt. Neither
may arep1eseolaticxl ques00n be en1el1ai1ed K, before the fiilg d a petition b" cellification eledioo, a balgaililg deadlock
kl vdlich ill i1cu!rbellt oc certified bagai1ilg ageJt is apmtyM:I been Slillriled to conci!iatioo oc abiJaliln oc had becane
the subject d avail llOOce d slri<e oc kx:koul Waoolecti'Je birgaii"g ~~,;~reement has been Wly regiskred il accorda1ce
llilh Al1ide '!J7 [231] oflhetode, apetilioo forteltifK:aOOn eleclixl oc arrolioo for intelvenlioo can on~ be enleltained v.ittlin
sixty (60) days prior kl the expiyda1e dsuch ~~,;~reernoot'
2 Km1C11 ng Millggag~ ~ioo [KMf'll-KATIPUNANj v. TrcjCilo, GR. No. 75810, Sept 9, 1991, 201 SCRA 453.
3 National Federation of l..aba" Llnklns {NAFLU).
4 Supra.
534 BAR REVIEWER ON lABOR lAW
to bring VIRON to the negotiation table had been unsuccessful because of the latter's
recalcitrance and unfulfilled promises to bargain collectively; but there is no proof
that it had taken any action to legally coerce VIRON to comply with its statutory
duty to bargain collectively. It could have charged VIRON with unfuir labor
practice, but it did not. It could have gone on a legitimate strike in protest againSt
VIRON's refusal to bargain collectively and compel it to do so; but it did not.'
(2) The stark, incontrovertible fact is that from February 27, 1981 -when
NAFLU was proclaimed the exclusive bargaining representative of all VIRON
employees -to April 11, 1985 - when KAMPIL filed its petition for certification
election or a period of more than 4 years, no CBA was ever executed and no
deadlock ever arose from negotiations between NAFLU and VIRON resulting in
conciliation proceedings or the filing of a valid strike notice.
5. CAPITOL MEDICAL CENTER DISTINGUISHED FROM KAJSAHAN.
Capitol Medical Center is strikingly different from Kaisahan in that in the
former, there was proof that the certified bargaining agent had taken an action to
legally coerce the employer to comply with its statutory duty to bargain collectively,
i.e., charging the employer with unfair labor practice and conducfillg a strike in
protest against the employer's refusal to bargain. It is thus only just and equitable
that the circumstances therein should be considered as similar in nature to a
"bargaining deadlock" when no certification election could be held. In the latter
case, there was no proof that, for more than 4 years, the bargaining agent had taken
any action to legally coerce the ~mployer to comply with its statutory duty to bargain
collectively.
c.
CONSENT ELECTION
1. DEFINITION.
"Consent election" refers to the process, voluntarily and mutually agreed
upon by the eQntending unions, of determining through secret ballot the SEBA of the
employees in an appropriate CBU for purposes of collective barfaining or
negotiation. It is conducted with or without the intervention of the DOLE.
CHAPTER VII
lABOR RELATIONS
535
2. CONSENT ELECTION VS. CERTIFICATION ELECTION.
Consent election is but a form of certification election. They may be
distinguished from each other in the following manner:
(1) The former is held upon the mutual agreement of the contending
unions; while the latter does not require the mutual consent of the parties as it is
conducted upon the order of the Mediator-Arbiter!
(2) The former may be conducted with or without the control and
supervision of the DOLE; while the latter is always conducted under the control and
supervision of the OOLE;2
(3) The former is being conducted as a voluntary mode of resolving labor
dispute; while the latter, although non-adversarial, is a compulsory method of
adjudicating a labor dispute.
(4) The former is given the highest priority; while the l(T((er is resorted to
only when the contending unions fail or refuse to submit tiJ.eir representation dispute
3
through the former. This is so because under the !mplementi!1g Rules, as ame!1ded, 4
even in cases where a PCE is filed, the Mediator"Arbiter, during the preliminary
conference and hearing thereon, is tasked to determine the "possibility of a consent
election. " It is only when the contending unions fail to agree to the conduct of a
consent election during the preliminary conference that the Mediator-Arbiter will
proceed with the process of certification election by conducting as many hearings as
he may deem necessary up to its actual holding. But in no case shall the c.onduct of
the certification election exceed 15 days from the date of the scheduled preliminary
conference/hearing after which time, the PCE is considered submitted for decision. 5
(5) The former necessarily involves at least two (2) or more contending
unions; while the latter may only involve one (1) union.
(6) The former may be conducted in the course of the proceeding in the
latter or during its pendency.

1 The respondent OOverltoa.s!Jie dedcled by NAFLU on Odober 26,1986tlrrellsal ofVIRON tl ba:gail aid krvillalion
d Elms aid conditions d efl1lk7imen!, Ylflk:h was seWed by l1e paties' agreement, ll1d lo crdher sbi:e staged on
llecen1ler 6, 1986 i1 connectkln IWtl a dain d villalion d sai:! ~reemeni, a cf!Sptie whk:h has since been certified tlr
IXJ11l!Eory t:rbi!Jalioo by l1e Seaelary of Lalor &~loyment. ObvixJslf, hcMever, l1ese ocMies kXlk pla:e after the 1
SeeSedion 1[h1 RIEl. BookV, ~lies ID ~lementlllelalorCode, as amended by()epmentO!der No.40-03. Series
i1itiaOOn of 1he arification election case by KMPIL, Cl1d it was grave itluse d disaeOOn to Mie regarded llem as of2003, [Fell.17, 2003].
precluding the holdilg of 1he OOftifica1ion eledion thus prayed tlr. 2 ld.
2 Section 1 [h]. Rule I, Book V, Rules 1D lrf1Jiementlle labor Code, as emended by Depal1ment Older No. 4Gm, Series of 3
Sedion 3, Rule VIII, Book V, Rules 1D ~ l1e Labor Code.
2003, [Fell. 17, 2003]; Agie v. De !/esa, GR No. 97622, Oct 19, 1994,237 SCRA 647; W~mn Mr1u1ac1!mJ WOOters 4
Sedion 9, Rule VIII, Book V, Rules tlltr!>lement the Lalor Code, as amended by Oepartnent Older No. 40-03, Series of
Union [Vv'MMJ] v. Bureau of labor Relations, G.R No. L-76185, Mald1 30, 1988, 159 SCRA 387; United Reslauror's 2003, [Fell. 17, 2003].
~and labor Union-PAFLU v. Tares, G.R No. L-24993, Dec. 18, 1968,26 SCRA435. 5
Sedion 11, Rule VIII, Book V, lbi:l.

.~--~··n e· ·t @#'Sf
536 BAR REVIEWER ON lABOR lAW
d.
RUN-OFF ELECTION
1. DEFINITION.
A "run-off election" refers to an election between the labor unions
receiving the two (2) highest number of votes in a certification election or consent
election with three (3) or more unions in contention, where such certification
election or consent election results in none of the contending unions receiving the
majority of the valid votes cast; provided, that the total number of votes for all
contending unions, if added, is at least fifty percent (500/o) of the. number of valid
votescast 1
2. WHEN TO BE CONDUCTED.
If the above conditions that justify the conduct of a run-off election are
present and there are no objections or challenges which, if sustained, can materially
alter the election results, the Election Officer should motu proprio conduct a run-off
election within ten (10) days from the close of the election prCY"...eediP..g between the
labor unions receiving the two highest number of votes. 2
3. ILLUSTRATION.
To illustrate, in a certification election involving four (4) unions, namely:
Union A, Union B, Union C, and Union D, where there are 100 eligible voters who
validly cast their votes, and the votes they each garnered are as follows: Union A-
35; Union B - 25; Union C - 10; Union D - 15; and No Union - 15, a run-off
election may be conducted between Union A and Union B becau5e:
{l) Not one of the unions mustered the majority vote of 51 votes but Union
A and Union B got the first two highest number of votes;
(2) If all the votes for the contending unions are added up, it will result in at
least 50% of the valid votes cast (Union A- 35; Union B- 25; Union
C -10; Union D- 15 for a total of85 or 85%); and
{3) There are no objections or challenges which, if sustained, can
materially alter the results of the election.
4. THE "NO UNION'' CHOICE SHOULD NO WNGER BE INCLUDED.
For obvious reason, the choice of "No Union" should no longer be
included in the run-off election.3
CHAPTER VII
lABOR RElATIONS
537
e.
RE-RUN ELECTION
1. RULE ON RE-RUN ELECTION, NOT FOUND IN LABOR CODE BUT
LATELY PROVIDED IN A DOLE DEPARTMENT ORDER
a. Belated enunciation of rule on re-run elections.
This mode of choosing the SEBA is not expressly provided in the Labor
Code nor in the original rendering of its implementing rules. It was only in 2015 that
an issuance of the DOLE Secretary has introduced this term for the first time as an
amendment to the Rules to Implement the Labor Code and defines it as follows:
"'Re-ron election' refers to an election conducted to break a tie
between contending unions, including between 'no union' and one of the
unions. It shall likewise refer to an election conducted after a failure of
election has been declaroo by the Election Officer and/or affinned by the
Mediator-Arbiter. "1
b. Grounds cited in the Rules for re-run election.
Based on the above-quoted rule, there are 2 situations contemplated
thereunder that justify the conduct of a re-run election, to wit:
(1) To break a tie; or
(2) To cure a failure of election.
c. A third ground.
A re-run election is obviously in the nature of a corrective action meant to
cure a seriously defective and distorted certification election. Consequently, a 3m
ground that may be cited as would justify the conduct of a fair re-run election is
when the certification election is invalidated or nullified by a multitude of reasons
that negate the true will, undistorted desire and informed choice of the employees-
electorate. Apt to be cited in this connection are the following:
{l) Employer's commission ofULPs that resulted in the election not being
free, orderly, honest, peaceful and credJ.ble or that undermined a union's majority;
{2) Perpetration, not only by the employer but by the contending unions
and/or labor officials as well, of serious election irregularities such a~ massive

1 Miele 268 [256[, Laboc Code; SecOOo 1 [ssj, Rule I, Book V, IUJs lo
DepmentOrderNo.4003, Sefiesof2003, [Feb.17,2003~
2 SecOOn 1, Rule X, Book V, Ibid.
3 ld.
~~ lhe Labor Code, as anended by
1 lJndeJsaxi1g suppfied; New SecOOn 1(11), Rule I, Book V, IU!s Ill ~tie l..aba"Code, as emended by~
Onler No. 40-03, Series ci 2003, (Feb. 17, 2003[, !l1d as fuiDler added tlmlgh f1e 001e10nen1 iltnxluced by Sdx12,
Oepment OnlerNo. 40-~15, Series of2015 [Sepfemler07, 2015], entiUed 'Ful1her Pmendilg ~Qder No.«<,
Series of 2003; Arnen<fing lhe I~ Rules !l1d ReglEiicns of Book vci lhe Laboc Code ollhe l'tlilippileS. as
Amended.'

d * "'terta
 BAR REviEWER ON lABOR lAW
538
disenfranchisement of voters, lack of secrecy in the voting, election fraud or
1
bribecy.
1.1. RULE IN CASE OF ATIE.
a. Various situations where a tie may occur justifying a re-run election.
Based on the above-quoted provision of the Implementing Rules, the tie
contemplated therein which would justify the holding of a re-run election may occur
in any of the following scenarios:
(1) At least 2 unions are involved and a tie in the votes occurred:
(a) Between the 2 contending unions and the "No Union"1 choice did
not garner the majority; or
(b) Between 1of the 2 unions and the "No Union" choice.
(2) At least 3 unions are involved and a tie in the votes occurred:
(a) Between and among 2 or more or all of the contending unions and
the "No Union" choice did not muster the majority; or
(b) Between und among l or more of the contending unions and the
"No Union" choice.
(3) A tie in the votes occurred between the 2 unions involved in a run-off
election.
It bears stressing that if the "No Union" choice garners the majority of the
votes and th'us wins the certification or consent election, a tie between and among
the contending unions will no longer matter. This means that the employees in the
CBU do not want any SEBA to represent them. Consequently, no CBA negotiation
will transpire.
b. Notice of re-run election; when it should be conducted.
In any of the three (3) situations mentioned and discussed above, the
Election Officer should immediately notify the parties of a re-run election. The
Election Officer should cause the posting of the notice of re-run election within five
(5) days from the certification, .consent or run-off election. The re-run election shall
be conducted within ten (1 0) days after the posting of notice.3
1 See i:J exa11J1e 11e cases of Confederation ci Citizeos Labor lM1s v. Ncxiel, G.R No. L-56902. Sept 21, 1982, 116
SCRA694; Na00na1 Federalionollaborv. The Secretary dLabor, G.R No. 104556, Mard19, 1998,287 SCRA 599,607.
2 l l1lJSl be stressed lhat tt1e 'No Unkln" choice is aNr.t(s ooe d t1e cOOc:es il ~ certifK:alion elections, M1h 1he sole
except;Jn ci run-oil elldixls, i:J obviOuS reason.
3 New Section 18, Rule IX, B<n V, Rules to lmplamenltle Labor Code, as~ Clll81dedtrf~o.der No.
40-m, Series d 2003, [Feb. 17, 20031 and as added by Secfoo 16, Depabnent On1ef No. 4G+-15, Series d 2015
(SeptentJer 07, 2015], enti1led 'FU!!her Amending Department 01ller No. 40, Series ol2003, AmenlfllQ the htllementing
Rules and Regulations of B<n Vof the labor Code of the Phi~piles, as Amended.'
LHAPTER VII 539
lABOR RELATIONS
c. Declaration of winner in a re-run election.
The choice receiving the highest votes cast during the re-run election shall
be declared the winner and shall be certified as the SEBA accordingly. 1
1.2. RULE IN CASE OF FAILURE OF ELECTION.
a. When is there a failure of election?
h1 failure of election, the number of votes cast in the certification or
consent election is less than the majority of the number of eligible voters and there
are no challenged votes that could materially change the results of the election.Z For
example, in a CBU composed of 100 employees, the majority of 100, which is 51,
should participate in the election; otherwise, if less than 51 employees have
participated, there is here a failure of election.
b. Effect of failure of election.
A failure of election shall not bar the filing of a motion for the immediate
holding of another certification or consent election, now to be called re-run election,
within six (6) months from the date of declaration of failure of election.3
2. RUN-OFF ELECTION VS. RE-RUN ELECTION.
These two kinds of election may be distinguished from each other in that a
run-off election is usually required if no choice on the ballot receives a majority of
valid votes cast in an election involving 3 or more labor organizations, provided that
the total number of votes for all contending unions is at least 50% of the number of
valid votes cast4 Consequently, the run-off election will be conducted between the 2
choices receiving the highest number of votes and the one receiving the next highest
vote number. In certain exceptional cases, however, where all the 3 or more or all the
choices receive the same number of votes - no run-off election should be conducted;
the "inconclusive" election should be declared a nullity and a re-run election should
be held instead
1 ld.
2 Section 16 ~Section 17], Rule IX, B<n v, Rules to ki1J1ement the Lalor Code, as emended by Depment Oilier
No. «Hl3, Seriesd2003, JFeb.17, 2003Lllld asre-rumered byDepa1men!OnlerNo. 40-F-00, Series 112008 JOel 30,
2008].
3 This pnl'lision entitkld 'Eflecl d faii.Jre of eleCtion' slloukl now be deoon'inaled as SecOOn 19, Ruie IX, B<n V, Rules to
lrr1Jiement the Lalor Code, by viWe of the llHitlll'bering O!dered by Sedioo 17, l:lepcnnmt Oilier No. 40+15, Series of
2015 [SeptenDer 07, 2015], entilled 'Further Amendi1g Depment Order No. 40, Series d 2003, Aroo1dilg the
·~ RtJes Cl1d RegulationS d Book Vd lle Lalor <:ooe of the Ph~ as Amended.' 11ls sediOI1 was
OllJinal~ nurrbered Sedioo 18, per Depatment Older No. 4().{)3, Series o! 2003, [Feb. 17, 2003], but tt was subseqUelllfy
re-nuntered to Sedioo 17, per DepMment Older No. 40-F-03, Series d 2008 [Oct 30, 2008]. This laleSt 2015 re-
llUiltlering was ef!ecled lll'oUgh said Section 17 m stales: "Sedims subsequent tJ i1S81ed new p!lMsklnS <11d/or
mn~ secli:Jns are renuntered accadilJ~.·
4 Miele 268 [2561,. Lalor Code; Sedioo 1 [ss], Rule I, Book V, Rules to hr4llement the L.abor Code. as anended by
Department Order No. 40-03, Seriesof2003, JFeb.17, 2003].
""~~, """ •< w mrro·mrrrnrM
540 BAR REVIEWER ON lABOR lAW
D.
RIGHTS OF LABOR ORGANIZATIONS
1.
CHECK-OFF, ASSESSMENT, AGENCY FEES
i.
CHECK-OFF
1. CHECK-OFF, MEANING.
Broadly, the tenn "check-off means a method of deducting by the
employer from the employee's pay at prescribed periods, any amount due for fees,
fines or assessments.' Strictly speaking, "check-off' is a process or device whereby
the employer, on agreement with the union certified as the sole and exclusive
bargaining agent (SEBA), or on prior authorization from its employees, deducts
union dues or agency fees from the latter's wages and remits them direc;tly to the
union. 2
2. RIGHT TO CHECK-OFF, AVAILABLE ONLY TO THE SEBA.
The right to check off of union dues or agency fees as above-described is
available only to the SEBA. The minority union, not being the collective bargaining
agent, has no such right. The employer therefore is not under any legal obligation to
check-off any union dues and assessments for the minority union.
3. TWO (2) KINDS OF CHECK-OFF.
Based ori the above legal description of this term, "check-off" may thus
refer to two (2) things, to wit:
(1) Collection of union dues, special assessments and fees (such as
attorney's fees, negotiation fees or any other extraordinruy fees)3 by the
SEBA from its members; and
(2) Collection of agency fees from non-members of the SEBA but covered
by and inclUded in the bargaining unit who accept the benefits provided
intheCBA
1 A. L Millen TJalSP()I1aOOn Co., Inc. v. Biool Tlli1SpOI1alioo ~ Mltua Association, GR. No. l-4941, July 25,
1952,91 Phl649.
2 Gaxie1 v. The Hat Secrelay of Lm and ~ GR. No. 115949, t.m:h 16, 2lXXl; ABS-CBN ~
~ l.klkxt ~ v. ABWlN Broadcasli¥,J Cap., GR. No. 100518, M:vdt 11, 1999; Holy Cross of~
Cdlege, Inc. v. Joaqun, G.R No. 110007, Oct 18, 1996, 263 OCRA 358.
3 See~ (o) of M:le 250 [241], LmCode vtth proW!es: 'Oiherlm b'IMldaby adMiies under !he Code, no
spEdal assessmeniS, atlcmey's fees, negotiaOOn fees« M'f ~ exmdi!lay fees may be checked <ftan illY arnoont
<kle to an e!T'Ilk:tfee IWhoot an i1dMdual wiiEn aJihorizatioo 1iJly signed by l1e ~· The aJ1haization should
spec8r::ctf stm the iliOOUI1I, purpose and beneliciaty ci lhededudion.'
CHArTER VII 541
lABOR REtATIONS
4. PRINCIPAL DISTINCfiON BETWEEN THE TWO KINDS OF CHECK-
OFF.
The first kind mentioned above requires, for its validity, the execution by
the employees of individual written authorization which should specifically state the
amount, pwpose and beneficiary of the deduction;' but the second kind does not
require any such authorization since the lawl itself recognizes and allows it upon the
employee's acceptance ofbenefits resulting from the CBA.3
5. CHECK-OFF OF AGENCY FEES FROM NON-MEMBERS OF THE
SEBA.
In case a CBA is successfully negotiated and concluded by the SEBA,
check-off from non-members thereof who accept the benefits flowing from the CBA
is authorized under paragraph [e] of Article 259 (248] of the Labor Code. Thus,
such non-members may be assessed a reasonable agency fee equivalent to the dues
and other fees paid by members of the SEBA. The individual written authorization
required under paragraph (o] of Article 250 [241] is not necessruy to effect sur.h
check-off.
6. SOME PRINCIPLES ON CHECK-OFF.
• System of check-off primarily for the benefit of the SEBA and only indirectly
for the individual employees.4
• Check-off is obligatory on the part of employer. 5
• Check-off: although an extra burden to the employer, is allowed by law. 6
• Employer has the obligation to remit directly to the union whatever it has
checked-off. This is so because the right to union dues deducted pursuant to a
check off pertains to the local union which continues to represent the employees
under the tenns of a CBA, and not to the parent association from which it has
disaffiliated. 7
• SEBA has the obligation to infonn the employer of the names of employees
subject of the check-off and the particulars of the deductions to be made.
1 Ilk!.
2
See 3'l sen1ence ctlle 3-t.enlence pcragraph [eJ ci Altide 25912481 cilhe lalorCOOe.
3
Holt Crossofl:lavli!Colege,lnc. v.Joaquil, G.R No.110007, Oct 18, 1996,263 SCRA358;331 Phil. 680.
~ GOOriel v. The l·lat Seaelaly citaJor and~ G.R No. 115949. Milth 16, 2000. 384 Pill. 797, 804; ltJtj Cross
ci Davao ~ klc. v. Joaqlil, supm; ABS-CIIN Supervisors Err¢yees U.'liJn MenDers v. ABSC8N Broadcas&1g
Corp.,GR.No.100518,Mcrdl11,1999.
5
ld.; See pcragraphs kj], ~I and [0] of Alticle 250 [241] on check-dfofuni:ln dues and special~ and pcragJaph
(e) of Article 259 [248] ci lhe tm Code on agency lees.
6
A. L Arrmen Tl'a'lSflOOalbl Co.. Inc. v.llii'Jj Tlai1SpOI1ation 8npklyees MJiual .4ssociation, G.R No. L-4941, Jutj 25,
1952,91 Pltil649.
7
Volkc:hel LaborUnionv. B1.R, GR No. L-45824, .kJne 19, 1985.

~
I
8
HolyCrossofDavooColege,lnc. v. Joaquin, G.R No. 110007, Oct 18, 1996,263 SCRA358; 331 PitH. 680.

.
. ~~-·
 l,HJ\t'ltK Yll
542 BAR REVIEWER ON lABOR lAW
lABOR RELATIONS
:>4;:1

• Employer not liable to pay to the SEBA for unchecked-off union dues and parties. Any contract, agreement or arrangement of any sort to the contrary is
1
asse~sments. 1 deemed null and void. Clearly, what is prohibited is the payment of attorney's
fees when it is effected through forced contributions from the workers from their
ii. own funds as distinguished from the union funds. 2
DUES AND ASSESSMENTS 4. CHECK-OFF OF UNION DUES AND ASSESSMENTS.
l. RIGHT OF UNION TO COLLECT DUES AND ASSESSMENTS. "Check-off' means a method of deducting from the employee's pay at
All unions are authorized to collect reasonable amounts of: prescribed periods, any amount due for fees, fmes or assessments. 3 It is a
process or device whereby the employer, on agreement with the union
l. membership fees; recognized as the proper bargaining representative, or on prior authorization
2. union dues; from its employees, deducts union dues and assessments from the latter's wages
3. assessments; and remits them directly to the union. 4
4. fines;
5. contributions for labor education and research, mutual death and 5. INDMDUAL WRITTEN AUTHORIZATION, WHEN REQUIRED.
hospitalization benefits, welfare fund, strike fund and credit and The law strictly prohibits the check-off from any amount due an
cooperative undertakings; 2 and employee who is a member of the union, of any union dues, special assessment,
6. agency fees. 3 attoruey's fees, negotiation fees or any other extraordinary fees other than for
2. REQUISITES FOR VALIDITY OF UNION DUES AND SPECIAL mandatory activiiies under the Labor Code, without the individual written
ASSESSMENTS. authorization duly signed by the employee. Such authorization must specifically
state the amount, purpose and beneficiary of the deduction. 5 The purpose of the
The following requisites must concur in order for union dues and individual written authorization is to protect the employees from unwarranted
special assessments for the union's incidental expenses, attorney's fees and practices that diminish their compensation without their knowledge or consent.6
representation expenses to be valid, namely:
6. INDIVIDUAL WRITTEN AUTHORIZATION, WHEN NOT
(a) Authorization by a written resolution of the majority of all the REQUIRED.
members at a general membership meeting duly called for the
purpose; In the following cases, individual written authorization is not required:
(b) Secretary's record of the minutes of said meeting; and a) Assessment from non-members of the bargaining agent of "agency
(c) Individual written authorizations for check-off duly signed by the fees" which should be equivalent to the dues and other fees paid by
employees concerned. 4 members of the recognized bargaining agent, if such non-members
accept the benefits under the CBA. 7
3. ASSESSMENT FOR ATTORNEY'S FEES, NEGOTIATION FEES
AND SIMILAR CHARGES.
As far as attorney's fees, negotiation fees or similar charges are
concerned, 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 See Artkle 241 i1 relatioo to pa!WJraph ~ d Mi:te 222 of Ule Lalxr Code.
be imposed on any individual member of the contracting union. Such fees may GOOriel v.lhe Hoo. Seaet¥y of La1xr aiVJ ~ ~ Vqco v. Trajalo, G.R No.14453, May 5, 1989; S1elar
~ SeM:es, klc. v. NLRC, G.R. t«J. 117418, Joo. 24, 1996, 252 SCRA 323; Pala:xll v. Ferrer.caleja, G.R. No.
be charged only against the union funds in an amount to be agreed upon by the 85333, Feb. 26, 1900, 182 SCRA 710.
3 A. LAirmen Trcr1S.V. Bicol TfillSPOII~ MmJal ~. G.R. No.l-4941,Jut)'25, 1952,91 flhl.649.
1 Hc*jQossofDavaoColklge, Inc. V, Joaquil, G.R No.11!XXl7, Oct~. 1996,2.63SCRA358; 331 Phil.680. • GOOriel v. The Hon. Seaetay o1 Lalxr .m ~ G.R No. 115949, Madl16. 2001; ABS<:BN ~
2 Articles 250(o) {241(o)l aid 292(a) {277(a)], Ibid.; Sedb11, Rule XIII, :Book V, Rilles tl 1rr1>1ement 1he Labor Code, as ~ 1.JniJn Mmlecs v. AflS.CBN Broadcasti1g COip., G.R No. 106518, tlath 11, 1999; Hc*j Cross cl Oawo
liiJellded by Depatment Older No. 4003, Series of2003, !Feb. 17, 2003~ Col!ege, Inc. v. ~. G.R No. 110007, Oct 18, 1996, 263 SCRA 358..
3 Alticle 259(e) [248(e)], labor Code. 5 Artkle241 (o], l..alxrCode.
6 GaVc!doresv. Tlajcm, G.R No. 70067, Sept 15, 1986, 144 SCRA 138.
4 Article 241[o], Labor Code; Galriel v. The li:in. Sea'e1ary of Labor ood ~t supra, ABS-CBN Supef'lisors
Employees Unklo Merrbers v. Ass.cBN BroadcasWig Corp., supra 7 Mi:1e 259(e) !248(e)].l..m'Code.
544 BAR R.:"VIEWER ON lABOR lAW
b) Deductions for fees for mandatory activities such as labor relations
seminars and labor education activities.•
c) Check-off for union service fees authorized by law. 2
d) 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.3
t) 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. 4
g) Deductions from wages ordered by the court.
h) Deductions authorized by law such as for premiums for Phi!Health,
social security, Pag-IBIG, employees' compensation and the like.
7. MINORITY UNION CANNOT DEMAND FROM THE EMPLOYER
TO GF.ANT IT THE RIGHT TO CHECK-OFF OF UNION DUES
AND ASSESSMENTS FROM ITS MEMBERS.
The obligation on the part of the employer to undertake the duty to
check~ff union dues and special assessments holds and applies only to the
bargaining agent and not to any other union/s (called "Minority Union/s"). This
is clear from the manner by which the Supreme Court described check-off in the
case of Holy Cross of Davao College, Inc. v. Joaguin,5 that it is on the basis of
the agreement with the union which is recognized as the proper bargaining
representative that the employer is obligated to perform its task of checking off
union dues or agency fees. When stipulated in a CBA, or authorized in writing
by the employees concerned - the Labor Code and its Implementing Rules
recognize it to be the duty of the employer to deduct sums equivalent to the
amount of union dues from the employees' wages for direct remittance to the
union, in order to facilitate the collection of funds vital to the role of the union
as representative of the employees in the bargaining unit if not, indeed, to its
very existence.
1 Mi:le241 (o],1bkl.
2 RCPiv.Secrelayoflabor,G.R No. n959,JaJ.9, 1989.
3 Mi:1e 1700, CM Cede.
4 Al1k:le 1708, bid.
5 G.R. No.110007, Oct 18,1996,263 SCRA358;331 Ptil. 680.
\...HAI'II:.K. YJl
lABOR RElATIONS
oqo
8. SOME PRINCIPLES ON UNION DUES AND ASSESSMENTS.
1
Check-off for a special assessment is not valid after the withdrawal of the
individual written authorizations. 1
1
Unlike in authorization for union dues and assessments, disauthorization
does not require that it be written individually. The fact that the
disauthorizations were collective in form consisting of randomly procured
signatures and under loose sheets of paper, is of no moment for the simple
reason that the documents containing the disauthorizations have the
signatures of the union members. Such retractions were valid. There is
nothing in the law which requires that the disauthorizations must be in
individual form?
• The right of the incumbent bargaining representative to check off and to
collect dues is not affected by the pendency of a representation case or an
3
intra-union dispute.
1 Approval of the union dues and assessments by the majority of all the
members of the union is required. 4 The Labor Code5 and the Rules to
Implement the Labor Code5 disallow a deduction for special assessment
which was passed by a mere board resoiution of the directors, and not by
the majority of all the members of the union.
iii.
AGENCY FEES7
1. NATURE OF AGENCY FEE- NEimER 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.
8
According to Holy Cross of Davao College, Inc. v. Joaquin,
payment of agency fees to the certified collective bargaining agent which
1 Palooll v. Fener-Calleja, G.R No. 85333, Feb. 26, 1990, 182 SCRA 71(}.711.
2 l'aacolv. Fener-Calleja, fsulxa
3 See old p1tNis00 ct Sedioo 1, tU! XVIII, Book V, RuleS mkrcJ1emen! lhe Labor Cede, as lll1el'ded by Article 1,
Depment.OrderNo. 09, Seriesof1997 [21 June 1997.
4 S1elarlnduslrial Selvices, Inc. v. NLRC,G.R. No.117418, ~- 24,1996,252 SCRA 323; Palcmv. caleja,et.,supra
5 Article 241 ~]thereOf.
6 Section 13 [a], Rule VIII, Book 1111hefeof.
7 Relevant Provision: ~ Sentence, Paagiaph [e], Miele 259}2481l.abor Cede.
G.R.No.110007,0ct.18, 1996,263SCRA358;331 Phi1.680,692.
1:>40 BAR REVIEWER ON lABOR lAW
successfully negotiated the CBA in an amount equivalent to the union dues and
fees, from employees who are not bargaining union members, is recognized by
Article 259(e) [248(e)] of the Labor Code. The employee's acceptance of
benefits resulting from a CBA justifies the deduction of agency fees from his
pay and the union's entitlement thereto.
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 259(e) [248(e)] of the Labor Code
expressiy 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 or certified 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. 2
1 See also Section 4, Rule Y:IN, Book v, rues Ill in1J1ement ~Labor Code, as anended by Depa1ment<llder No. 40-03,
Seriesd2003, (Feb.17,2003].
2 Gmxiel v. The 1tn Seaetary oll.abor am~ G.R No. 115949, M!rd116, 2000; ABS-CBN SUpeMsors
En'jlklyees Uniln Menter.; v. ABSCBN Broadcasting Co!p., G.R No. 106518, Mml11. 1999; ~ Cross d Davao
College, Q:. v. Joaqli1, G.R. No.110007, Oct 18,1996,263 SCRA358.
CHAPTER VII 547
lABOR RElATIONS
6. ACCRUAL OF RIGHT OF BARGAINING UNION TO DEMAND
CHECK-OFF OF AGENCY FEES.
The right of the bargaining union to demand check-off of agency fees
accrues from the moment the non-bargaining union member accepts and
receives the benefits from the CBA. This is the operative fact that would trigger
such liability.1
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 uni.:>n members who accept the benefits
resulting from the CBA is necessary. 2
8. EMPLOYER'S DUTY TO CHECK-OFF AGENCY FEES.
It is the duty of the employer to deduct or "check-oft" the sum
equivalent to the amount of agency fees from the non-bargaining union
members' wages for direct remittan.ct: to the bargaining union. "3
9. THE NON-BARGAINING UNION MEMBERS WHO ARE PAYING
AGENCY FEES TO THE BARGAINiNG UNION REMAIN LIABLE
TO PAY UNION DUES TO THEIR OWN UNION.
The fact that the non-members of the bargaining union who are
members of the minority union are paying agency fees to the former does not
free them from their obligation as members to continue paying their union dues
and special assessments to their union (minority union). There is no law that
puts a stop to such obligation simply because their union failed to be recognized
or certified as the collective bargaining agent. Union dues are required for the
continued existence and viability of their union. Hence, they are obligated to pay .
two (2) kinds of dues:
(l) Union dues and special assessments to their own union; and
(2) Agency fee to the bargaining agent.
This is clear from a reading of Article 250 {241t which does not
qualify that the right to collect union dues and assessments; on the part of the
union, and the obligation to pay the same, on the part of its members, are
extinguished the moment the union is unsuccessful in its quest to become the
sole and exclusive bargaining agent of the employees in the bargaining unit
where it seeks to operate.
i lbkl.
1 Del Pilar Academy v. Del Piar AcaderTrt Employees Unkln, G.R No. 170112, April30, 2008; ~Cross of DaJao Colege,
ilc. v. Joaquil, supra.
3 Del PilcJ Academy v. Del Piar AcaderTrt fn1Jioyees Unkln, ~ Ga!riel v. Secre!a'Y of Laoor and Employment G.R No.
J 4
115949. Mcrch 16,2000.384 PhB. 797,804.
Entitled "Righ1s and Conditions of Merrbership in alabor Orgalization.'
~
MO MR IU:VItWtR UN IAHUR lAW
CHAPTER VII 549
lABOR RElATIONS

2. 3. BARGAINING, NOT EQUNALENT TO ADVERSARIAL

COLLECTIVE BARGAINING LITIGATION.
1. CONSTITUTIONAL FOUNDATION. Caltex Refinery Employees Association [CREAl v. Brillantes.1 -
Bargaining is not equivalent to an adversarial litigation where rights and
The right of all workers to collective bargaining and negotiations is a obligations are delineated and remedies applied. It is simply a process of
right. duly guaranteed under the Constitution. Thus, it is expressly provided in fmding a reasonable solution to a conflict and harmonizing opposite positions
Section 3, Article XIII thereof that the State, among others, shall guarantee the into a fair and reasonable compromise.
rights of all workers to collective bargaining and negotiations.
4. TWO (2) SITUATIONS CONTEMPLATED.
a. The duty to bargain collectively involves two (2) situations, namely:
DUTY TO BARGAIN COLLECTIVELY'
1. Duty to bargain collectively in the absence of a CBA;2 and
1. MEANING OF DUTY TO BARGAIN COLLECTNELY. 2. Duty to bargain collectively when there is an existing CBA.3
The "duty to bargain collectively" means the performance of a mutual
obligation to meet and convene promptly and expeditiously in good faith for the i.
purpose of negotiating an agreement with respect to wages, hours of work and DUTY TO BARGAIN COLLECTNELY
all other tenns and conditions of employment, including proposals for adjusting WHEN THERE IS NO CBA YET4
any grievances or questions arising under such agreement and executing a
contract incorporating such agreements if requested by either party but such 1. HOW DUTY SHOULD BE DISCHARGED WHEN THERE IS NO CBA
duty does not compel any party to agree to a proposal or to make any YET.
concession. z The duty t(\ bargain collectively when there has yet been no CBA in
The duty does not compel any party to agree blindly to a proposal the bargaining unit where the bargaining agent seeks to operate should be
nor to make concession. While the law imposes on boththe employer and the complied with in the following order: First, in accordance with any agreement
bargaining union the mutual duty to bargain collectively, the employer is not or voluntary arrangement providing for a more expeditious manner of collective
under any legal obligation to initiate collective bargainingnegotiations.3 bargaining; and Secondly, in its absence, in accordancti with the provisions of
2. ULTIMATE GOAL IS TO CONCLUDE A CBA. the Labor Code, referring to Article 261 [250] thereof which lays down the
Obviously, the ultimate purpose of collective bargaining is to reach an procedure in collective bargaining. 5
agreement resulting in a contract binding on the parties; but the failure to reach 2. RATIONALE.
an agreement after negotiations continued for a reasonable period does not
establish a lack of good faith. The statutes invite and contemplate a collective Clearly, the law gives utmost premium and extends due respect to the
bargaining contract, but they do not compel one. The duty to bargain does not voluntary arrangement between the parties on how they will discharge their
include the obligation to rea:ch an agreement 4 respective duties to bargain collectively before resort to the procedure laid down
in the Labor Code may be made. In other words, it is only when there is no such
voluntary arrangement that the procedure laid down in Article 261 [250] of the
Labor Code should be followed. What is essentially required, however, is that
the employer and the bargaining union should promptly meet, convene and
1 ReieYcl1t PrtMsioos: Al1icles 261 [250) kl264 !2531 and Article 259 !248), L.axr Code. confer in good faith for collective bargaining purposes.
2 A1icle 252, L.axr Code; !<a Loy v. NlRC, G.R No. 54334, Jal. 22, 1986, 141 SCRA 179; United fn1lbyees Union v.
IQiel, GR. No. L-40810, Oct 3, 1975, 67 SCRA 267; Isaac PelallloiW'g Alley v. Unilfd fnllklyees Wefcre Association, !I
G.RNo.L·9831,0ct30, 1957, 102Phi219.
3 Kklk L.oyv. NLRC, supra 1 GR No. 123782, Sept16, 1997, 279 SCRA 218, 236, 243-244.
·4 lJ001 d R~ ~. Food and ,AJJied lndusmes Unions-Kilusang Mayo Uno [UFE-IFA-KMJ] v. Nestie 2 As provided it Article262 !251) of fletaxr Code.
~. Inc. GR. Nos. 158930-31, MEh 3, 2008; 5analarg MafooiJJ<Ma sa Tq~ Foon ~.United 3 Mf)ro'Jk!OO it Article 264 J253) of lhe Lalor Code.
Wolkas d the Phi~iles [SMTFM-l.JVvP) v. NlRC, G.R No. 113856, Sept 7, 1998; Panpanga Bus Co. v. Pambusco 4
Article 262 (251), Labor Code.
~ Unkln, G.R No. 46739, Sept 23, 1939,68 Phil. 541. 5 ld.
i
.iL~.
 550 BAR REVIEWER ON lABOR lAW
ii.
DUTY TO BARGAJN COLLECTIVELY
WHEN THERE IS A CBA1
!.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
2. FREEDOM PERIOD.
The last sixty (60) days of ihe 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
3. AUTOMATIC RENEWAL CLAUSE.
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. 4
For its part, the employer cannot discontinue the grant of the benefits
embodied in the CBA which just expired as it is duty-bound to maintain the
status quo by continuing to give the same benefits until a renewal thereof is
reached by the parties. On the part of the union, it has to observe and continue to
abide by its undertakings and commitments under the expired CBA until the
same is renewed.
1 Articfe 264 [253], Ibid.
2 ld.
J Pi:op Res011t:es, rev. Talieca, G.R No. 160828, Aug. 9, 2010; tom Yad Crewv. PNR, G.R No.L-33621, Jli( 26,
1976, 72 SCRA 88; Geraal Textles Allied Wcckels Associatioo • GTAWA v. Diecilr of Bureau d Labor Relalioos, G.R
No.L-45719, .kt( 31, 1978,84 SCRA 430.
4 ArOCie 264 !253L l.aba' QJde; New I'd: Tll!lbEf &&.WI Co., Fie. v. NtRC, G.R No. 124224, Mml17, 2000, 323
SCRA 404; Pier 8Anas!le &~ SeMces, Inc. v. ~. G.R No. 110854, Feb. 13, 1995, 241 SCRA
294;Uniood~~v.NI.RC,G.RNo.9102S,Dec.19, 1900.
CHAPTER VII
lABOR RElATIONS 551
For example, the union security clause must continue to be in effect
even after the expiration of the CBA. Otherwise, there would be a gap during
·which no agreement would govern from the time the old agreement expired to
the time a new agreement is concluded by the parties. 1
4. SOME PRINCIPLES.
• If unchallenged, the majority status of the existing bargaining agent
should be respected. A petition for certification election challenging the
majority status of the existing bargaining agent should be filed within- and
not before or after - the 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 m~ority
status of the incumbent bargaining agent. 2
• All the terms and conditions of the CBA are deemed automatically
renewed. The law does not provide for any exception or qualification on
which economic provisions of the existing CBA are to retain their force and
effect. Therefore, the automaiic renewal of its provisions must be
understood as encompassing all the terms and conditions of the CBA. 3
5. KIOK LOY DOCTRINE.
This doctrine is based on the ruling In Kiok Loy v. NLRC, 4 wheie 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 hy 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 259(g) [248(g)]5 of the Labor Code.6
Wla'v.h':ilng,G.RNos.L~.~20, 1983,121 SCRA444.
1
2
Article 268 (256), lmCo:le.
faculty AssodaiD! r1 Mapua Institute c1 T~ v. Han. CA, G.R No. 164000, June 15, 2007; New Pacific Trrber &
3
Supply~, k1c. v. NlRC, GR No.124224, Mcrth 17,2000,328 SCRA404,412-413.
G.RNo.L-54334,JM.22, 1986,141 SCRA 1~, 188.
4
5
VIOiatioo of the duty~ ba'gcil oolledWey.
~ Ml~(.orpaatioo v CA, G.R No. 146728, Feb. 11, 2004].
6
 552 BAR REviEWER ON lABOR lAW
6. OTHER CASES AFI'ER KIOK LOY.
The ruling that the CBA proposed by the bargaining union may be
adopted as the new CBA if employer refused to negotiate has been reiterated in
the f~llowing cases:
1. Divine Word University of Tacloban v. Secretary of Labor and
Employment, 1 where the university refused to perform its duty to
·- tively; hence, the High Tribunal upheld the unilateral
imposition on the university of the CBA proposed by the Divine
Word University Employees Union.
2. General Milling Corporation v. CA/ where the Supreme Court
imposed on the employer the draft CBA proposed by the union for
the last two (2) years commencing from the expiration of the 3-year
term of the original CBA. This was because of the employer's refusal
to counter-propose to the union's proposals which was declared as an
unfair labor practice act under Article 259(g) [248(g)j 3 of the Labor
Code.
3.
COLLECTIVE BARGAINING AGREEMENT (CB.A}
1. CBA.
A "Collective Bargaining Agraement" 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.4 It is executed not only upon the request of the exclusive
bargaining representative but also by the employer. 5
1 G.RNo.91915,Sept 11, 1992,213SCRA759.
2 G.R No. 146728,Feb.11, 2004.
3 VIOialm of l1e duty to~ OOiecWely.
4 Se::tioo 1 (!), RUe I~ NCMl Re'lised Prtx:eckn1 Glilei1es illle Cooducl of Vokni:ry Aibilratioo ~ lOci. 15,
2004t Sectioo 1ID. Rule I, Bodt V, Rules to I~ lle l1txlr COOe, as an!nled by Depam1ent Olller No. 40-03,
Series of 2003, (Feb. 17, 2003j; Sectkn 1 [2], Ruk! IH, NCM3 Mroa of~ for CoociialbllWld l'levenWe
Mildiatia1 Cases; See Wes/efM ~ v. WeslefM li~We!sey~ Faculy lW1d Sla1f Association,
GR No. 181800, Mald112, 2014; Ph!Wine Ames, k1c. v. PllifWile Ames~ Association tpAI.EA], G.R No.
142399, ~ 12, 2008; UnNe!sly of 11e krlnmm! CoocepckJn, Inc. v.lhe Hat Secrellry of t.m lW1d EIJ1lcyment,
G.R.No. 146291, .1M. 23,2002.
5 RNem y. Espiilu, G.R No. 135547, Jan. 23, 2002; D<Mio lnleglllled Port Slevedai1g v. Abcrque?, GR No. 102132.
M:rth 19, 1993, 220 SCRA 197·204.
:h..
CHAPTER VII
lABOR RELATIONS 553
2. ESSENTIAL REQUISITES OF COLLECTIVE BARGAINING.
Prior to any collective bargaining negotiations between the employer
and the bargaining union, the following requisites must first be satisfied:
l. Employer-employee relationship must exist between the employer
and the members1 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; 2 and
0 3. A lawful demand to bargain is made in accordance with law. 3
3. SOME PRINCIPLES ON CBA.
• CBA is the law between the parties during its lifetime and thus must be
4
complied with in good faith. It lays down the norms of conduct between
the parties
5 and compliance therewith is mandated by the express policy of
the law. It incorporates the agreement reached after negotiations bet.veen
the employer and the bargaining agent with respect to the terms and
conditions of employment. 6
• Being the law between the parties, any violation thereof can be subject
of redress in court. 7
• 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.
Simply put, courts cannot stipulate for the parties or amend the latter's
1
2 Med FreeWWrs Ulion v.~Mrina, G.R No. l-22951, JM.31, 1967;
3
See MK:Ies 267 {2S5j b 27012581. taxreooe.
Artfe250,t.axrCode; loold.oyv.M.R:,G.RNo.L-54334,JM.22, 1986.
Wesfercrt I.Wssi!y-PtiWf!es v. Wes1eya1 ~ FW!y and SI5J Associatian, G.R No. 181800, Mcrt:h
4
12,2014; H=S~. k1c. v.Picr,GR. No. 168716,Apd 16,2009,585SCRA315,324.
~ 88!1 Capormn v. ~ ~ RJ ~ hdepmn lk1ion {NMS-IND-APL), GR. No.
5
185556, Midi 28, 2011. ciiJJ End'oo v. Qalunfoods CWJufm lA!n*r, GR. No. 161615, Jnay 30, 2009, m
SCRA 112,
SCRA ~ See also Dlle ~ ~. v. Pcw.is RJ ~ Obrero, GR. No. 146650, .lal. 13, 2003, 395
299, 116.
~ Nonh Express, ~. v. NLRC;GR. No. 95940, July 24, 1996, 259 SCRA 161; See also flhiiWne Airfiles, Inc. v.
6
Philil!line Ames~ Associa!ion JPAlEAJ, G.R No. 142399, MiRti 12, m!; Centro Esc:o1cr Urileisily Facufly
lW1d ~ Wal<;e15 lful.lndependert v. {;A, G.R No. 165486, Mlj 31, mi, 49J 5CRA 61; Honda Phils., Inc. v.
Sam00aJ ng Malay.nJ M!lw~ sa Honda, GR No. 145561, June 15, 2005,460 SCRA 187, 191).191.
Faculty Ass1mioo of~ ml!u!e ofTm-d:lgy v.lbl. CA, G.R No. 164060, J111e 15, 2007; Holy Cross cl Davao
1
Cdlege, Inc. v. Holy Q(lss cl{)avoo Faajy Unioo-IWNIPI, GR. No. 156098, June Z7, 2005; Ballaxk-Hiachi (Phils.),
Inc. Y. BOOoxkM {Rli5.J, Inc. M!kai~ l.ml (BHPMIJ], G.R No. 156260, Mmi 10, 2005; ~
S1ee! ~m v. ~Free Wal<;e.s Olgooizalion lMfNFRE\>V(}NFLJ Cagayan de Oro, G.R No. 130693, MJd\4,
2004; Madan WOO;e15 Union v. AbOOiz, G.R No. L-30241, June 30, 1972, 45 SCRA577, 581.
554 BAR REVIEWER ON lABOR lAW
CHAPTER VII
lABOR RELATIONS 555
agreement, for to do so would be to alter the real intention of the
contracting parties. The function of courts is to give force and effect to the • Employees entitled to CBA benefits. The. following are entitled to the
benefits of the CBA:
intention of the parties. 1
(I) Members of the bargaining union;
• Unilateral changes in the CBA are not allowed without the consent of
both parties.2 (2) Non-members of the bargaining union but are members of the
bargaining unit;'
• Management rights and prerogatives are limited by the CBA.3
• CBA is not an ordinary contract as it is impressed with public interest. 4 (3) Members of the minority union/s who paid agency fees to the
bargaining union; 2 and
• Automatic Incorporation Clause -law is presumed part of the CBA. 5
(4) Employees hired after the expiration of the CBA. 3
• The benefits derived from the CBA and the law are separate and distinct
from each other. 6 • Pendency of a petition for cancellation of union registration is not a
• Workers are allowed to negotiate wage increases separately and prejudicial question before CBA negotiation may proceed. 4
distinctly from legislated wage increases. It is provided under Article 125
• CBA should be construed liberally. s If the terms of a CBA are clear and
of the Labor Code that no Wage Order should be construed to prevent
workers in particular firms or enterprises or industries from bargaining for there is no doubt as to the intention of the contracting parties, the literal
meaning of its stipulation shall prevail. 6
hig."ter wages with their respective ~mployers. This is usualiy the case
because all CBA negotiations are conducted for the purpose of effecting 1.
increases in wages and other benefits over and above the rat~s provided for
MANDATORY PROVISIONS OF CBA7
by law. Obviously, the parties do not sit down and negotiate a CBA for the
purpose of reducing existing benefits way below what the law mandates. 1. MANDATORY STIPULATIONS OF THE CBA.
• The parties may validly agree in the CBA to reduce wages and benefits 8
The Syllabus mentions four (4) provisions that are mandatorily
of employees provided such reduction does not go below the minimum requrred to be stated in the CBA, to wit:
standards. 7
• Entering into a CBA which contains terms and conditions of employment 1) Grievance Procedure;9
below minimum standards established by law shal~ despite its registration, 2) Voluntary Arbitration/ 0
not constitute a bar to the conduct of a certification election. 3) No Strike-No Lockout Clause; and
• Ratification of the CBA by majority of all the worlcers in the bargaining 4) Labor-Management Council (LMC). 11
unit makes the same binding on all employees therein. 8 ·

I New Pa:lx: filter &Suppo/ Co., 0:. v. Nl.RC, G.R No. 124224, Maid117, 2000, 328 SCRA 404 .
2 See Al&:le 2S9(e) j248(e)J, Lalor Code.
I Nortrt Resootces Md ~ Capcllllix1 v. }l kia llri C'.apotatioo, GR. ttl. 162523, N<N. 25,lm!l, 605 SCRA 3 llid.
370, 380, diEd il Mayniad Walilf &lpeMm Assodalkxl v. t.'ayricd WatJr Ser.Us, "-• GR No. 198935, Nov.ll,
2013. 4 ~ Mlli3 Cenfer,lnc. v. Tmjalo, G.R. No. 155600, June 30, ~;See also ~ifal T~ flhi~Wiles.
2 Wesleyirl UWersily..flhr~ v. Wesfeycrl ~ Fmy lrd Star Associatioo, GR. No. 181806, Milt:h Inc. v. ~~ ~ Unbl (OOJ), G.R Nos. 184~. Oct 10, a112; legend ~ Rescm l.il1iled v.
12,~14. ~~ng!.egen1a{Kf4.~, GR. No.169154, F8>.23, 2011,644SCRA94,100.
3 ~~Inc. v. Pat.\s ng ~Oixerom.tpAtNIQ.NFL), G.R No.146650, Ja1.13, 2003. s Cifek EirpJyees Labor tJnmfFW v. ~ Elec!mnK:s, 0:., llit; Pil1balaJ Ncxll ~. 0:. v. N.RC, G.R No.
4 Ci1ek En1Jbyees 1.axJ lJnKnfFW v. Ci1ek Elecllooits, Inc., G.R No. 190515, Nov. 15, ~10, ~ Da\loo lnleglllfed Port 95940, .kif 24, 1996, 259 SCRA 161; Da\loo nEg!Clled Port~ SeNk:es v. Aba!quez, GR. ttl. 102132, Mardi
19,1993,220SCRA 197,204.
S1eYedabJ v. Mla!quez, G.R No.102132. Mrth 19, 1993, 220 SCRA 197·198.
M:1e 1370, CMl Code; WesieyM lkile!sity-PIIIJ!piles v. Wesfeyoo ~iles F.nily lrd Stmf Association,
6
s Laas ng t.mgg~ Mlkibaya18J.Nl v. Alliet'a, G.R. No.L-29474, ~)!c. 19, 1970; llleralion Slea<nsh.,Co.,lnc. v.
CtR, G.R No.L-25389, m 21. 1968. G.R No. 181800, Marr.h 12, 2014; ~ Sleel CclpOI300n v. ~ MlrQQag<PNa ng Supreme k1dependent
6 ~ Cdleges v. J)Uoo, G.R. No. 81144, Mly 7, 1990; lJni\tersal{)()m Prtxldsv. M.RC, 153 SCRA 191; CliJalk 7
lkioo(tU.IDAPL), G.R No. 185556, Mmt 28,2011,646 SCRA501, 521.
Phil~ fn1lbjees lJnioo.NATUv. Mnmctlalor,G.R No. 50184,.o\4ri11,1980, 97 SCRA52; RcdletphippilesJ ReliMW PnMsioos: Arfide 273 J260J i(lrievance MadliJely); MD!s ll4 {261JID ll5 [262J {VWDy .4Jblratioo); and
v. NLRC, G.R No. 83335, Oct. 5, 1989. Alticfe 'lfJ7 12551 [l.aOO'~Coona~, !..1m Code.
7 ()d;riov. PhiJWile Long astn::e Telephooe~. G.R No.175492, Feb.ll, ~3; Insula" Hole!~ l.kli:Jn. a ReieniYJ 1o file ~11 Syllabus. Nole roost be made lhat even previoos S)'IW u labor 1aw mentXx!ed oolf 111ese toor
JlllMsms.
NFL v. Watel1ioot mtlar Hotel Davoo, G.R Nos. 17404041, Sept 22, 2010; RHela v. Espifitu, G.R No.135547, Joo. 23, 9
Article 273 {260j,labor Code.
2002. 10
8 Artk:le237[231),t.ab<JCOOe. 11
Articles 274 {261) to 275(262(, Labor Code.
Article 267 [255],labor Code.
556 BAR REVIEWER ON lABOR l.AW
If these provisions are not reflected in the CBA, its registration will be
denied by the BLR.
All the foregoing are discussed hereunder individually.
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 iss UPs or controversies:
1. The interpretation or implementationofthe 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 compa.'ly personnel policies. 1
In order to be grievable, the violations of the CBA should be ordinary
and not gross in character; otherwise, they shall be ~.:onsidered 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
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.4 It is that part of the CBA which
1 Sedkxl1 [u1 RIOO ~ Book V, Rules 1D lqllemenllhe labor Code, as mnded by Oepil1menl Cfller No. 4Gm, Sefies of
2003, Feb. 17, 2003; Sedioo 1G], Rule I~ NCMB Revised Procedtla G!ilemes illle Cooducl of Vcimlay Arbitration
~ [0::1. 15, 2004; No.4, NCMB Pitner on Gfieva1oo SeUBnentCild VokJntay Mlifralioo. .
2 Article 274[261], Labor Code.
3 Ar1i::le 273 ]260], labor Code.
4 Rule 11117J, NCMB M<llual of Procedures !oc Conciiation and Pre'leniNe Mediation.
CHAPTER VII
lABOR RElATIONS 557
provides for a peaceful way of settling differences and misunderstanding
between the parties. 1
The terms "grievance procedure" and "grievance machinery" may be
used interchangeably.
ii.
VOLUNTARY ARBITRATION
(NOTE: To avoid repetition of discussion, please see discussion on this
topic in Chapter VIII (Jurisdiction and Remedies) below under the
heading of "/. Voluntary Arbitrator").
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
fmn 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 w!ll not stage a lockout during the lifetime thereof. It has
heretofore been held that a "No Strike, No Lockout" provision in the CBA is a
valid stipulation although the 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 Dractices.1
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.
The Supreme Court consistently ruled in a long line of cases that a
strike is illegal if staged in violation of the said clause in the CBA especially
1
No. 12, NCMB Pii:ner on Grieva1oe Settlement and Voluni<Hy MllnD:xl; See em Sedion 1[111 Rule II, Na.f! ReWied
flrooldtral Guidelines in lle Cooducl of VokJn!afy ArbmaOOn Pnx:eedilgs{Od. 15, 2004J.
~ Sarnahall"(l rrgaMrlggcrJBWc~saM. Greenfa:l~)v.Raroos,G.R No.113907,Feb.28, 2000,326
2
SCRA428,drlg Master Iron Lalor Union v. NLRC, G.R No. 92009, F«J. 17,1993,219 SCRA47; SeealsoPalayEiectric
~. Inc. v. NLRC, u.R. No. 102672, Oct. 4, 1995, 248 SCRA 688; ~le's lndusflill and Coornen:ia1 EnlJioyees
Clld Woriters Organizatioo [FFW] v. People's lnduslrial and Corrmercial Colpaalm, G.R No. L-37687, Mi:rdt 15, 1982,
112SCRA440.
558
l
BAR REviEWER ON lABOR lAW
when conclusive arbitration clause is provided therein.' . Thus, in C. Alcantara
& Sons, Inc. v. CA,2 it was declared that a strike may be regarded as invalid
although the labor union has complied with the strict requirements for staging
one as provided in Article 278 [263] of the Labor Code when the same is held
contrary to au existing agreement, such as a "no strike, no lockout" provision
that enjoins both the union and the company from resorting to the use of
economic weapons available to them under the law and to instead take recourse
to voluntary arbitration in settling their disputes.
In National Union of Workers in the Hotel, Restaurant and Allied
Industries INUWHRAIN-APL-IUFJ Dusit Hotel Nikko Chapter v. The
Hon. CA.' the strike which arose out of a bargaining deadlock in the CBA
negotiations with the Hotel was declared as an economic strike upon which the
"no strike/work stoppage and lockout" prohibition in the CBA is squarely
applicable and legally binding. 4
In Interphil Laboratories Employees Union-FFW v. lntcrpbil
Laboratories, Inc} the "overtime boycoti'' and "work slowdown" conducted
by the employees were considered an il!egal strike, the same being in violation
of the CBA which prohibits the union or employees, during the existence of the
CBA, to stage a strike or engage in slowdown or interruption ofwork. 6
iv.
LABO~MANAGEMENTCOUNCa
1. CREATION OF LMC, CONSTITUTIONALLY AND LEGALLY
JUSTIFIED.
The Labor-Management Council (LMC) whose creation is mandated
under the Labor Code,7 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.8
1 Tatola t.tJtor Phils. Corp. WOO:ers Association [TMPCWA] v. NLRC, G.R. Nos. 158786 &158789, Oct 19, 2007;
f1oon Manufacturing Corporation v. Lakas Manggagawa sa Fdcon-Lakas t.1inJgagawa Labor Center (U.f-LM.CJ,
G.R No. 150166, July 26, 2004.
2 G.R No. 155109, Sept 29, 2010.
3 GR ~.163942 Md 166295, Nov. 11, 2008.
4 Seealso~Mela!Fotlldaies,lnc. v. CtR, Nos. L-34948-<\9,May 15,1979, 90SCRA 135,141.
s GR No. 142824, Oec.19, 2.001.
& law at Sikxl ng Manggagawa v. NLRC, GR No. 91980, June 27, 1991,198 SCRA 586.
7 See 2"d paaJrapl) of Article 267[255] and Article 292{11) {277(11)] d Vie Laboc COOe.
See 1• ~ d Secticx13, Article XIII d lle Ccnstitutkxl; See also SecOOn 1, Rule XXI, 8001 V,IUis kl ~ fle
Lm Code. as lrnellded by Depatment om No. 4M3, Series of 2003,[Feb. 17, 2003}; See also Ar1K:Ie 292(9) and (h)
[277 (g) and (h)], Lalxr COOe; Mlnlia Eledric Con1Xf1Y v. Quisurrtling, G.R No. 127598, Jan. 27, 1999, 302 SCRA 173,
213.
CHAPTERVll
lABOR RELATIONS 559
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).
To avoid confusion and possible major legal complication, a clear
distinction line should be drawn between LMC and GM. The following may be
cited:
l. Constitutional origin. - The creation of the LMC is based on the
constitutional grant to workers of the right to participate in policy and decision-
1
making processes under the 1' paragraph, Section 3, Article XIII of the 1987
Constit11tion, thus:
"!t 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." 1
The creation of a GM, on the other hand, is based on a different
constitutional provision, the 2nd paragraph, Section 3, Article XIII of the 1987
Constitution, which provides as follows:
"The State shall promote the principle of shared
responsibility between workers and employers and the preferential
use of voluntary modes in settling disputes, including conciliation,
and shall enforce their mutual compliance therewith to foster
industrial peace. ,,2
2. Legal anchor.- The creation ofLMC is provided under Article 267
[255] of the Labor Code; while the formation of a GM is mandated under Article
273 [260] of the same Code.
Underscoring 514lPied.
ld.
 560 liAR REviEWER ON lABOR lAW
3. Compulsory provision in the CBA. - Both LMC and GM are
compulsorily required to be embodied in the CBA in order for it to be
considered a valid agreement.
4. Purpose for creation. - The LMC is created for the purpose of
affording workers the right to participate in policy and decision-making
processes in matters affecting their rights, benefits and welfare; while that of the
GM is to resolve disputes and grievances arising from such policies or decisions
or more specifically, to adjust and resolve grievances arising from (1) the
interpretation or implementation of the CBA or (2) the interpretation or
enforcement of company personnel policies. 1
5. Nature of functions. - The LMC is in the nature of a preventive
mechanism meant to prevent and avoid disputes or grievances by co-
determining the proper policies that should be implemented by the -employer in
respect of the workers' rights, benefits and welfare; while a GM is an
adjudicatory mechanism which is ~et into motion only when a dispute or
grievance occurs.
6. Nature of cognizable issues. - The LMC performs non-adversurial
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 confmed
to resolving and deciding disputes and grievances between management and the
workers arising from violations or transgressions of existing policies, rules or
regulations. In other words, the LMC does not resolve grievable or contentious
issues; the GM does.
A case illustrative of this principle is Cirtek Emyloyees 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 ~ontroversy, 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 Januazy 1, 2004
and P9.00 per day effective January I, 2005. Petitioner submitted the MOA to
the DOLE Secretary, alleging that the remainingcllicers 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
t See Ar1i:1e 2fJ7 J255], i1 relaiXxl to Article 273 [260J, LIW Code.
2 G.RNo.190515,Jllle6,2011,650SCRA656,663.
CHAPTER VII
lABOR RElATIONS 561
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 btit of CBA negotiations and, therefore, deserving little weight.
7. Kind of establishment where it is required to be set uq. - The
classification of the establishment, whether organized or unorganized, is not
material as far as LMC is concerned since it is required to be established in all
establishments - whether organized or unorganized; while the GM is required
only in case of organized establishments since it is mandated to be stipulated in
theCBA.
8. 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. 1
9. Procedure. - The LMC does not involve any specific procedure
prescribed by law to govern its proceedings; while the GM is required to follow
a multi-step procedure starting from a discussion of the grievance between the
employee and the tmion steward, on the one hand, and the foreman and
supervisor, on the other, and ending with the highest decision-making officials
of the company, reflecting the hierarchy of command responsibility. z
10. "Appeals." - The LMC does not make any decisions since no
dispute or grievance is cognizable by it, hence, any policy formulations are not
"appealable" to any office or authority; while the decision of the GM on any
dispute or grievance should be elevated to voluntary arbitration if not resolved
with finality by the GM within seven (7) calendar days from the date of
submission, thus:
"All grievances submitted to the grievance machinery
which are not settled within seven (7) calendar days from the date of
1
See ArOCie 2fJ7 [255], labor Code; Sedix11, Rule XIX, Book V, Rules to Implement the laba' Code, as anended by
0epmentOillerNo.40-m, Seriesof2003, lfeb.17, 2003J.
2
No. 12, NCMB P1iner on GOOvalce Mr::hinely and Volunlaly Arbilration; See also Sedix11[hj, Rule II, NCM3 Revised
Procedural GuKielines i11he ConductdVokmlaly Arllitram Proceed'OJS [Oct 15, 2004!.
 BAR REVIEWER ON lABOR lAW
562
its submission shall automatically be referred to voluntary arbitration
prescribed in the Collective Bargaining Agreement."
While strictly speaking, such elevation to voluntary arbitration may not
be considered an "appeal" as this term is technically defined in law,
jurisprudence or rules, this is clearly the intention behind the law since it is
required that the unresolved dispute or grievance be "automatically'' elevated to
a Voluntary Arbitrator or panel of Voluntary Arbitrators for voluntary
arbitration purposes if unresolved within the said 7-day period. · committed by employers;
E.
UNFAIR LABOR PRACTICE
1.
NATURE. ASPECTS
1. WHEN AN ACT CONSTITUTES ULP.
At the outset, ii 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
1
and enumerated under Articles 259 [248] and 260 [249] of the Labor Code.
The act complained of as ULP must have a proximate and causal
connection with the following:
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."z
2. THE ONLY ULP WHICH MAY OR MAY NOT BE RELATED TO
THE EXERCISE OF THE RIGHT TO SELF-ORGANIZATION AND
COLLECTIVE BARGAINING.
The only ULP which is the exception as it may or may not relate to the
exercise of the right to self-organization and collective bargaining is the act
described under Article 259(f) [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 committed ULP, the following elements must concur:
I Galaxie Steel WOO.ers Union GSWU·NAFLlJ.KMU] v. NLRC, G.R. No. 165757, Oct 17, ZOOS.
2 Allied Ba1ki1g Caporabw. CA, G.R No. 144412, Na/.18, ~;See also Tll!lay na ~ ng tliangg!);JaNa sa Asia
Brewelyv. Asia Brewely, klc., G.R No. 162025, MJ. 3, 2010.
Phlcomfnllloyees Union v. Ph~Gioba ComrrAJnic<Dlns, G.R No. 144315, July 17,2006.
CHAPTER VII
lABOR RELATIONS
563
3. LABOR CODE PROVISIONS ON ULP.
Under the Labor Code, there are only five (5) provisions related to
ULP, to wit:
I) Article 258 (247] which describes the concept of ULPs and
prescribes the procedure for their prosecution;
2) Article 259 [248] which enumerates the ULPs that niay be
3) Article 260 (249] which enumerates the ULPs that may be
committed by labor organizations;
4) Article 274 (2611 which considers violations of the CBA as no
longer ULPs unless the same are gross in character which means
flagrant and/or malicious refusal to comply with the economic
provisions thereof.
5) Article 278(c) (263(c)] which refers to union-busting, a form of
ULP, involving the dismissal from employment of union officers_
duly elected in accordance with the union constitution and by-laws,
where the existence of the union is threatened thereby.
4. PARTIES WHO/WHICH MAY COMMIT ULP.
A ULP may be committed by an employer or by a labor organization.
Article 259 [248] describes the ULPs that may be committed by an employer;
while Article 260 [249] enumerates those which may be committed by a labor
organization.
On the part of the employer, only the officers and agents of
corporations, associations or partnerships who have actually participated in or
authorized or ratified ULPs are criminally liable.1
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.2
S. ELEMENTS OF ULP.
Before an employer or labor organization may be said to have
1) There should exist an employer-employee relationship between the
offended party and the offender; and
I Miele 259 (248), l.m Code.
2
Article 260 (249), Ibid.
 BAR lL"VlEWER ON lABOR lAW
564
2) The act complained of must be expressly mentioned and defined in
the Labor Code as an unfair labor practice.
Absent one of the elements aforementioned will not make the act an
unfair labor practice.
The first requisite is necessary because ULP may only be committed in
connection with the right to self-organization and collective bargaining by
employees. Necessarily, there must be an employment relationship in order foi:
the organizational right to be validly and lawfully invoked.
The second requisite should be present since the Labor Code itself
requires that the ULP be "expressly defined by this Code." If an act is not
covered by any of the grounds expressly mentioned in the law, it cannot be
deemed a ULP act.
6. ASPECTS OF ULP.
Under Article 258 [247], a ULP has two (2) aspects, namely:
1) Civii aspect; and
2) Criminal aspect.
The civil aspect of an unfair labor practice includes claims for actual,
1
moral and exempiary damages, attorney's fees and other affinnative 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.
2.
3 under the collective bargaining agreement: Provided, that
ULP BY EMPLOYERS
1. ENUMERATION OF SPECIFIC ULP ACTS BY EMPWYERS.
Article 259 [248]. Unfair Labor Practices of Employers. - It
shall be unlawful for an employer to commit any of the following
unfair labor practices:
(a) To mterfere with, restrain or coerce employees in the
exercise of their right to self-organization;
1 See Ar1k:le 258 [247).1jl,
2 Ulder Artide 224 [217J, ltli:l.
3 ReiENant Pro'lision: Ar1i:le 259 [2481, llil.
CHAmRVII 565
lABOR RElATIONS
(b) To require as a condition of einploymerit that a person or
an employee shall not join alabor organization or shall
withdraw from one to which he belongs;
(c) To contract out services or functions being performed by
union members when such will interfere with, restrain or
coerce employees in the exercise of their rights to self-
organization;
(d) To initiate, dominate, assist or otherwise interfere with the
formation or administration of any labor organization,
including the giving of financial or other support to it or
its organizers or supporters;
(e) To discriminate in regard to wages, hours of work and
other terms and conditions of employment in order to
encourage or discourage membership in any labor
organization. Nothing in this Code or in any other law
shall stop the parties from requiring membership in a
recognized coliective bargaining agent as a condition for
employment, except those employees who are already
members of another union at the time of the signing of the
collective bargaining agreement. Employees of an
appropriate bargaining unit who are not members of the
recognized collective bargaining agent may be assessed a
reasonable fee equivalent to the dues and other fees paid
by members of the recognized collective bargaining
agent, if such non-union members accept the benefits
the individual authorization required under Article 251
[242], paragraph (o) of this Code shall not apply to the
non-members of the recognized collective bargaiDing
agent;
(t) To dismiss, discharge or otherwise prejudice or
discriminate against an employee for having given or
being about to give testimony under this Code;
(g) To violate the duty to bargain collectively as prescribed
by this Code;
(h) 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; or
(i) To violate a collective bargaining agreement.

BAR REVIEWER ON lABOR lAW
s66
The provisions of the preceding paragraph notwithstanding,
only the officers and agents of corporations, associations or
partnerships who have actually participated in, authorized or
ratified unfair labor practices shall be held criminally liable!
DISCUSSION
I.
JNTERFERENCE WITH, RESTRAINT OR COERCION OF
EMPLOYEES IN THE EXERCISE OF THEIR
RIGHT TO SELF-ORGANIZATION
l. THE INSULAR LIFE OOCfRINE: TEST TO DETERMINE
INTERFERENCE, RESTRAINT OR COERCION.
The tenns "interfere," "restrain" and "coerce" in paragraph (a) of Article
259 [248] are very broad that any act of management that reasonably tends to have
an influence or effect on the exercise by the employees of t.'leir right to self-
organization may fall within their meaning and coverage.
According to the leading case of Insular Life/ the test of the employer's
intetference with, restraint or coercion of employees within the meaning of the law
i.s whether the employer has engaged in conduct which may reasonably tend to
interfere with the free exercise of the employees' twin rights to self-organization and
collective bargaining. It is not necessary that there be direct evidence that any
employee was in fact restrained, intimidated or coerced by the statements or threats
of the employer; what matters is that there is a reasonable inference that the anti-
union condUct of the employer does have an adverse effect on the exercise of said
rights.
The significant point to consider, for a charge ofULP to prosper, is that it
must be shown that the employer's act was motivated by ill will, bad fuith or fraud,
or was oppressive to labor, or done in a manner contrary to morals, good ~ms, or
public policy, and, of course, that social humilialion, wounded feelings or grave
anxiety resUlted therefrom.' It bears emphasis, however, that according to
jurisprudenoo, basic is the principle that good faith is presumed and he who alleges
bad faith has the duty to prove it By imputing bad faith to the actuations of the
employer, the employee has the burden of proof to present substantial evidence to
1 A; anended l1t Balas PCIItMsa llm;l130, Aug. 21' 1981.
2 lnslB: Lle Assualoe Co., l.tl., En1J1oyees Associalioo-NAlU v. klslir Ue Assu!ance Co., l.kl., GR No. L-25291, Jan.
30,1971,37~244.
3 Tunay na ~ lld MqgaJawasaAsia Breweryv. Asia Brewely, klc.,}G.R No. 162025,hJ;Iust3, 2010, citDJ
Urix1 d Fqxo ~. Food nl Aled k1dusiries Lklloos-KMJ v. Nesile Phq,pi1es, ~-. G.R Nos. 158930-31
&158944-45, Mildl3, 2008, 547 SCRA 323, 335; SM Mguel Ccxp!raioo v. De! Roml, G.R Nos. 168194 &168603,
Dec.13, 2005,477 SCRA 604,619.
CHAPTEI'- VI I 567
lABOR RElATIONS
support the allegation of ULP. Should he fail to discharge this burden, his bare
allegations deserve no credit 1
In accordance with the Insular Lifo test, the following acts of petitioners in
T & H Shopfitters,l were declared as "all reek[ing] of interference on the part of
petitioners," namely: (1) sponsoring a field trip to Zambales for its employees, to the
exclusion of union members, a day before the scheduled certification election; (2)
the active campaign by the sales officer of petitioners against the union prevailing as
a bargaining agent during the field trip; (3) escorting its employees after the field trip
to the polling center; (4) the continuous hiring of sub-contractors perfonning
respondents' functions; (5) assigning union members to the Cabangan site to work as
grass cutters; and (6) the enforcement of work on a rotational basis for union
members. In declaring petitioners guilty ofULP, the Court held that indubitably, the
above various acts of petitioners, taken together, reasonably support an inference
that, indeed, such were all orchestrated to restrict respondents' free exercise of their
right to self-organization. Petitioners' undisputed actions prior and immediately
before the scheduled certification election, while seemingly innocuous, unduly
meddled in the affairs of its employees in selecting their exclusive bargaining
representative.
2. TOTALITY OF CONDUCT DOCTRINE.
In ascertajning whether the act of the employer constitutes ir.terforeilce
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. Because of its nature and consequences, a finding of ULP should not be
made based alone on the cited ULP act considered in isolation but should be viewed
on the basis of the employer's act outside of the bigger context of the accompanying
labor relations situation. Any perceived act of interference must be examined in
terms of the act's inherent import and effects, in light of the surrounding
circumstances, and weighed on the basis of the totality ofthe conduct of the entity
charged.
The totality of conduct doctrine means that expressions of opinion by an
employer, though innocent in themselves, may be held to constitute ULP 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
pennissibly uttered by one employer might, in the mouth of a more hostile
1 OJili v. Eastern TeleroomJni::alioos Phifippines, Inc., G.R No. 165381, Feb. 9, 2011; Cenlral Azucclera De Ba5
Ell1lbyees I.Jnioo.NFL [CABEU-NFLJ v. Cenlral Azucarera De BaS, Inc. [CAB1 G.R No. 186605, Nov. 17, 2010.
2 T&HSh<¢lfers Co!pJGin Queen Corp. v. T&HStqllitlers Corp/Git Queen WOOters Unioo, G.R No. 191714, Feb. 26,
2014.

s6S BAR REVIEWER ON lABOR lAW
employer, be deemed improper and consequently actionable as a ULP. 1 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 whole1 may raise a suspicion as to-
the motivation for the employer's conduct The failure of the employer to ascn'be 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.z
In Carmelcraft,l petitioner company invoked as reason to justify the
cessation of its operations the fact that it sustained losses in the small amount of
Pl,603.88 as of December 31, 1986. There is no report, however, of its operations
during the period after that date, that is, during the succeeding seven and a half
months before it decided to close its business. Significantly, the company is
capitalized at P3 million. Considering such a substantial investmen~ a loss of the
paltry sum ofless than P2,0CO.OO could hardly be cop_sidered serious enough to call
fer the closure of the company. This justification is hardly credible; in fa~ it is
preposterous when viewed in the light of the other relevant circumstan~;es. The real
reason for the decision of the petitioners to cease operations was the establishment of
respondent Carmelcraft Employees Union. It was apparently unwelcome to the 3.1. DISMISSALS CONSTITUTING ULP.
corporation which would rather shut down than deal with the union. The company
had in fact suggested that it might decide not to close t'le business if the employees
were to affiliate with another union which the management preferred. The act of the
petitioners was ULP prohibited by law.
In General Milling,4 the Supreme Court considered the act of the
employer in presenting the letters from February to June 1993, by 13 union members
signifying their resignation from the union clearly indicative of the employer's
pressure on its employees. The records show that the employer presented these
letters to prove that the union no longer enjoyed the support of the workers. The fact
that the resignations of the union members occurred during the pendency of the case
before the Labor Arl>iter shows the employer's desperate attempt to cast doubt on
the legitimate status of the union. The ill-timed letters of resignation from the union
members indicate that the employer had interfered with the right of its employees to
self-organilation. Because of such act, the employer was declared guilty ofULP.
In Hacienda Fatima,5 the Supreme Court upheld the factual findings of
the NLRC and the CA that from the employer's refusal to bargain to its acts of
1
1 k1su1cr Lie AssuralCe Co., Ltl., ~ AssocfalkxrNATU, v. k1sula' LJe Assuc11Ce Co., l.kl., supra; Salam ng
~awasaflaldom.l.M..Cv.NLRC,G.RNo.126195,Ju~11. 1997,275SCRA633.
2
2 Ro(ci ~ C<Xp<xatioo cf Vle f'hlWilesv.
CIR, G.R No. L-39040, Jure 6, 1990. 3
3 Ct:mlelaaftColpaaioo v. NLRC, G.R. Nos. oce34-35,Jme6, 1990, 186 SCRA 393.
4
4 General tJi1iJJ Capora1kln v. <'A G.R No. 146728, Feb. 11, 2004.
5 flaielllaFatinav. Nalional Federatioooi~Worilers-FoodCildGeneraiTrade, G.R. No.149440,Ji11. 28,2003.
CHAPTER VII
lA80R RElATIONS
569
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 ofULP.
3. JURISPRUDENTIALLY DECLARED ACTS OF ULP INVOLVING
EMPLOYER'S INTERFERENCE, RESTRAINT OR COERCION.
Certain specific acts have been jurisprudentially declared as ULP in a
number of cases which invariably involves interference, restraint or coercion by the
employer. These acts may be generally classified as follows:
(1) Dismissals;
(2) Threats;
(3) Questioning and interrogation;
(4) Offers and Promises;
(5) Espionage and surveillance;
(6) Interference in intra-union affairs;
(7) Other forms of interference, restraint or coercion.
• Organizing and forming a union, never a valid ground to dismiss. 1 With
more reason that such an act of interference would constitute as U'..,P if it is
perpetrated at a time when the employees have already organized their union
and about to start with the effort at having it certified as their sole and
exclusive bargaining agent (SEBA). Consequently, to dismiss union
members in order to ensure the defeat of the union in the certification election
2
isULP.
• It is ULP even if the action of the employer is short of dismissal, such as
transferring, laying off or assigning employees more difficult work tasks, or
otherwise punishing them because they engaged in organizing and forming a
• 3
urnon.
• Dismissal of union officers which threatens the existence of the union
constitutes union-busting, a different kind ofULP. 4
Scmilan ng Malggcr;a.w sa B1r1doliJo.l..MC v. NL.RC, GR No. 126195, ~ 17, 1997, 275 SCRA 633; ~ Cillni'lg
Ccrpaatkx1 v. n:knJ, G.R No. L-51494, Au;). 19, 1982, 115 SCRA 887; Mclk Radle~ v. N..RC, GR No.
123825,Au;j.31, 1999.
Sama1Mg Manggagawang V1il~v. Noriel, G.R No.L-52169,June30, 1980,98 SCRA507.
T&HShopliiBs C01pJGil Queen C01p. v. T&HShopfitm C01p.Klil Queen Waters Ulion, GR No. 191714, Feb. 26,
2014.
Colegiode Sal Jtm deletr.rlV.Associalioo cf~llld Ftn~llycfl.elrill, GR. No. 141471, Sept 18, 2000; Cathay
Pa::ilic Steel Corp. v. Hoo. CA, GR. No. 164561, Aug. 30, :mi.
570 BAR Kl:VItWtltUN IJ\DU" "'"
:~~~
• Dismissals that are occasioned by employer's interference, restraint or
coercion are always ULP? The following acts involving dismissal of
employees have been judicially declared ULPs:
&jl
(a) Dismissing the union officers and members on the ground oflosses about
two years after it has allegedly sustained them and after the dismissed
officers and members became more milita..1.t when they demanded
lI
improvement in their working conditions.2 ·
(b) Effecting discriminatory dismissal where only unionists were
permanently dismissed, even where business conditions justified a lay-off
of the employees.3
(c) The mass lay-off or dismissal of 65 employees due to retrenchment absent
any losses or financial reverses. This kind of retrenchment constitutes a
lame excuse and a veritable smokescreen of the employer's scheme to
bust the union and thus unduly disturb the employment tenure of the
employees concerned.4
(d) Dismissal occasioned by the refusal of the employe-es to give up their
union membersilip, which dismissal was under the pretext vf
retrench.'llent due to reduced dollar allocations. 5
(e) Dismissal of aa empioyee because of his act of soliciting signatures for
the purpose of forming a union.6
(f) Dismissal of employees because of their refusal to resign from their union
and to join the union favorable to the emplo~er, the latter's formation
having been aided and abetted by the company.
(g) Dismissal of employees because of their act of engaging in valid and legal
concerted union activities.8
(h) Dismissal occasioned by the implausible and unproved allegation of
overpricing of needles the employee was ordered to buy and for alleged
tampering of receipts. 9
1 UexfnllbyeesAsoociaOOnv. CIR,G.R No.L-39154,Sepl.9, 1982, 116SCRA459;Uniooct~[R. B.] NATU v.
Sea!iliry ct I.Jixr il1d RepWI"c Bri, G.R No. L-39889, tb. 12, 1981; Naliooal FaslenerCapaatioo ctlle ~ v.
CIR, G.R No. L-15834,Jill. 20,1961.
Oceri;Ai' Products, h:. v. CIR, G.R No. L-18704, Jal. 31, 1963.
2
3 Sill~ Coqlcxation v. NlRC, G.R No.108001, Man:Jt 15, 1996,255 SCRA 133, 141; See aso Balaill ShWMf CKld
Er!Ji'leelilg Co., klc. v. NLRC, G.R No. 78604, May9, 1988, 161 OCRA271; Mria Penal Co. v. CIR, GR No.l-16903,
~31,1965.
~ People'sBankandTrustCo. v.People'sBankandTrustCo. ~Unoo, G.R No.L~. Ja"a.13, 1976.
s Wenia Penci Co. v. CIR, G.R No. L-16903,Aug. 31,1965,14 SCRA955.
6 JudricCalni'g Corp<xatixl v.!nc:OOJ, G.R No. L-51494, Aug. 19, 1982,115 SCRAat\7.
7 ~~!Co!pcratb:w.CIR,GRNo.L-39546,Nov.24, 1977,80SCRA434.
e Repubk savi1gs Billk v. CIR, G.R No. L-20303, Sept 27, 1967,21 SCRA 226.
g Kapiscrlill ng r.troo~awa sa Canam Shoes v. Canara Shoes, GR No.L-50985, Joo. 30, 1982.
lABOR RElATIONS oJ/<
(i) Dismissal of an employee who had worked for 19 years because he had
filed money claims against the employer: 1
(j) Tenninating teachers who have attained permanent status because of the
employer's apprehension that there might be a future strike in the school.
This is an unwarranted interference with the rights of workers to self-
o~anization and to engage in concerted activities.
3.2. THREATS CONSTITUTING ULP.
The mere issuance of a threat by the employer, even if not actualized, may
already constitute ULP. Examples are as follows:
(a) Threatening employees with loss of jobs or benefits or promotional
opportunities if they join or vote for a union or engage in protected
concerted activity. 2
(b) Threatening to close the plant if employees select a union to represent
3
them or to discourage union activity or support. 4
(c) Stating to5 employees that union bargaining is futile or a strike is
~1evitable.
(d) Threatening the union recruiter with bodily hann when he refused to
yield the demand of the employer to surrender the union affiliation
fonns. 6
3.3. QUESTIO~G AND INTERROGATING EMPWYEF.S THAT
CONSTITUTE ULP.
The act may also amount to ULP even if it is merely in the form of a
question. The following acts well constitute ULP under this classification:
(a) Interrogating its employees in connection with their membership in the
union or their union activities which hampers their exercise of free
choice.'
(b) Questioning employees about their union sympathies or activities in
circumstances that tend to interfere with, restrain or coerce employees
in the exercise of their rights would be treated as ULP. 1
1 Silal v. Note Dim! ctQ-eatertllillla, G.R No. 75093, Feb. 23, 1990.
2 See ~ Rijt; il1d Obigaioos," Unied Sfaes' Nalicm Labor Relalioos 8oa'd {NLPB), at
htlps1Mv.w.nl'b~~; Last accessed: Octber 09, 2016. See aso
Mitmac Cem iJ P1iJic Poi;y, 'The National labor Relalioos Board md 'Urtai' Labor Pradices", by Robert P. Hunter,
published on ALg. 24, 1999, onrre vernion at htlps1!1wrw.Jl1ad(iJac.orgl2317; Last accessed: February 14, 2017.
3 kl.
~ MackilacCeola'ir Nl~ Poi;y, 'The Na!iatalaborRelafblsBoiJd illd 'Unfaitalxx'Pracfioos", by RobertP. Hunter,
SIJil3.
5 ld.
6
Velezv. PAVWathmen'sUnion,G.R No.l-12639,"¢127, 1960, 1071'111.689.
1
Sco!y's ~ Sttre v. flkaller, GR No. L-8116, Aug. 25, 1956, 99 Phil. 762; fltiWne S1m Navi;la!OO Co. v.
Ph~ Mime Office!s Gtil:l, G.R. Nos. L-20067-69, Oct 29, 1965, 15 SCRA 174.
 BAR REviEWER ON lABOR lAW
572
3.4. OFFERS AND PROMISES CONSTITUTING ULP.
The employer's act of making an offer or promise of certain favors or
benefits may also constitute as ULP. The following are illustrative of this kind:
(a) Promising or implementing employee wage increases to discourage
1
their union activity or support.
(b) Offer of reinstatement and attempt to "bribe" the strikers with
"comfortable cots," "free coffee and occasional movies," "overtime
paj' for work performed in excess of 8 hours and offer of
"arrangements" for their families so they would abandon the strike and
return to work, constitute strike-breaking which is a ULP?
(c) Offer of Christmas oonus to all "/oyaf' employees made shortly after
the request by the union to bargain; wage increase given for the pmpose
of mollifying employees after the employer has refused to bargain with
the union or to induce strikers to return to work; employer's promise of
benefits in return for the striking empioyees' abandonment of their
strike; and the employer's statement made about 6 weeks after the
strike started, to a group of strikers in a restmrant that if the strikers
returned to work, new benefits such as hospitalization, accident
insurance, profit-sharing and a new building to work in, will be given to
4 claiming that they unduly interfered with its internal affairs and discrinllnated
them.
(d) Announcement by the employer of benefits prior to the conduct of a
certification election, intended to induce the employees to vote against
5 practice, because at the time they adopted said action, a valid and existing CBA had
the union.
3.5. ESPIONAGE AND SURVEILLANCE CONSTITUTING ULP.
The act of spying and surveilling of employees to determine their
involvement and participation in union organizing, formation and concerted
activities is ULP. Examples are as follows:
(a) When management conducts espionage or surveillance of the meetings
and activities of the union. It is illegal since it shows the opposition of
the employer to the existence oflhe union, and the furtive nature 6of his
activity tends to demonstrate spectacularly the state ofhis anxiety.
lkl,
2 ~Cene'b"Plobic Poicy, 'The NaOOnal tmRelalills Bcmlllld'Unfai"LiixrP!a<i:es", by RobeltP.Iblrer,
~
3 klsUcr Lle AsSl.m:e Co., Lil., ~ Assoc:iatioo-NAlU v. Osula' life Asslmnl Co., Ill, G.R No. L-25291, Jell.
30,1971,37 SCRA244.
4 ld.
s Re l..olisicm Plastics, lnc.173 NLRB No. 218; NLRB v. Exc1mJe l'll1s Co., 375 U.S. 405.
s V51A CJS Sec. 382, p. 278.
CHAmRV!l
573
lABOR RELATIONS
(c) Requesting employees to report on the union activity of others. 1
3.6. INTERFERENCE IN INTRA-UNION DISPUTE CONSTITUTES ULP.
The act of management in meddling with purely internal concerns, issues
and affairs of the union is ULP. For example, petitioners, in De Ia Salle University/
were declared liable for ULP for which they were ordered to pay respondent union
nominal damages in the amount of P250,000 and attorney's fees in the amount of
PSO,OOO because of their act of temporarily doing the following at the height of an
intra-union dispute involving the election of officers of respondent union:
(I) Establishing a savings account for the union where all collected union
dues and agency fees will be deposited and held in trust; and
(2) Discontinuing normal relations with any group within the union
including the incumbent set of officers.
The said act of petitioners was precipitated by the request of one of the
contending groups in respondent union for them ''to please put on escrow all union
dues/agency fees and whatever money considerations deducted from salaries of
concerned co-academic personnel until such time that an election of union officials
has been scheduled and subsequent elections has been held." Petitioners' act
described above drew respondent union to file a complaint against them for ULP,
against its memberS. The Supreme Court agreed with respondent union's contention.
It thus found the said act of petitioners constitutive of interference, an unfair labor
been entered between the parties. It thus behooved petitioners to observe the terms
and conditions lhereof bearing on union dues and representation. It is axiomatic in
labor relations that a CBA entered into by a legitimate labor organization and an
employer becomes the law between the parties, compliance with which is mandated
by express policy of the law.
In the 2016 case of Reo Transport Com. v. NLRC,l petitioner's failure
to remit the union dues it has checked-<>ffto private respondent union, SMART,4 the
incumbent bargaining agent, was declared an act of interference with the exercise of
the empk>yees' right to self-<>rganize and therefore ULP under Article 259(a)
[248(a)].5 The failure to remit the union dues to SMART because of the disaffiliation
1 MlGtilacCerBtr Nlic Policy, 'The·NablaltmRelcmns Bead em 'lklfai' t.axr Pr.d:es", by ROOert P.lblB',
pmished oo kg. 24, 1999, a1li1e vetsioo at hllps:/Aw.w.rra::kila:.org/2317; last a:oessed: Fetxuay 14, 2017.
2 De Ia Sale tn.e"siy em Dr. Quebergoo v. De Ia Site l:kWelsity Errpklyees AssOOatioo (DLSlEMWTEU), G.R No.
1n283,Apli7,:w.l.
3 G.RNos.1880l0&1882532,June27,2016.
4 san,m, r.J ~sa Reo TI'CilSp(rt(SMW}.
s This was ciled 1rf lhe &lpreme Court i1 this dedsOO as Artk:1e 258 (a) llld Itt Article 259(a) VttlOl is lhe renurOOeli1g
made by lhe OOI.E Seaetay i1 her Oepa1ment NM1:Jy No. {)1' Series d 2015 {Renootlem;J rllhe l..aba QJde d 1he
PhiTlJI)iles, asAmooded), issued on Ju~ 21,2015.
574 liAR REVIEWER ON lABOR lAW
by some of its members who organized another union, RTEA/ and the voluntary
recognition extended to RTEA, were clear indications of interference with the
employees' right to self-organization. These. acts were ill-timed in view of the
existence of a labor controversy over membership in the union. Such supposed
disaffiliation and voluntary recognition ofRTEA are but a lame excuse that cannot
validate those acts.
But the foregoing cases should be contrasted with the earlier case of
Arellano University/ where the act of the university in withholding the union dues
and death benefits was not considered ULP because it was made upon tht; request of
union members in the light of their gripes against the union and its officers. The
university even deposited the amounts corresponding to the union dues and death
benefits with the DOLE where the parties could settle the issues among themselves.
The university, therefore, cannot be faulted for ULP as it in good faith merely
heeded the request of union members.
3.7. OTHER FORMS OF INTERFERENCE, RESTRAINT OR COERCION
CONSTITUTING ULP.
There are other forms of ULP by means of interference, restraint or
coercion, such as the following:
(a) Indirectly forcing the employees to join another labor union as a
condition for their re-admission fer participating in a strike.3
(b) Instructing an employee not to affiliate or join a union. 4
(c) Refusal of the employer to reinstate strikers who voluntarily and
unconditionally offered to return to work but did not accept the new
discriminatOry conditions imposed against them because of their ooion
membership or activities.5
(d) The act of the purchasers of a business establishment in replacing the
union members who were negotiating a CBA with the former owner at
the time of the sale.6
RenT1'a1Spat 8r!)loyees Associatioo (RTEA).
1
2 ~~En'IJio'teesll1dWodrersUnioov.CA,G.RNo.139940,Sept.19,m.
Madeod &CaJlmydlle Phis. v. Plo;JressNe Fedefabldt.axr, G.R No. L-7887, May31, 1955,97 Phil205. Here,
3
lle corrpany rd only liriled lself to disper1sirQ Mil lhe services d lle 38 lctttels l1hl pa&:1laEd i1 the slrie, but
ild'reclly bted l1em to Pi! MOtler 1m' lllion as a ooOOition v.llereby !hey axil be ~. This was Yl11al was
prMied i1 fie c:Wse ilserBI i1 the CXVlfra::! ct seMce enfered ilb by the ~ v.tt l1e DMl Stevedore Ttminal
Cotr.,any llt1ich provides lhat l1e ~ ct l1e menbe!s of lle tWle ga'lg 'I«Xld be - to l1e ca1dtioo lhat
11ey s11a1 cfiale lhemseM!s wittl ihe oavao Stevedcre IMJal Benefit~ nis ctause srnacts ct iflm labor
p!actk:e lle pupose of I'Ali::h is to bust awell aganized labor unial.
~ V1sayM S1evedores v. CIR, G.R No. L-21696, Feb. 25, 1967, 19 SCRA 426; N<Oml Fastener capaation v. CIR, G.R
No.L-15834,Ja1.20, 1961,1 SCRA 17.
5
CmrMtell Ct:mne!tia ~ Md 1..abore1s Uniln v. ClR, GR No. L-19778, Sept 30,1964.
Nalblall.aba' Unioo v. CIR, G.R No. L-31276, Sept 9, 1982.
6
CHAPTER \Til
lABOR RElATIONS 575
(e) The grant of concessions and privileges during the pendency of a
certification election case to members of one of the unions
participating therein. I
(f) Suspending union officers who attended the hearing in the petition for
certification election they filed 2
(g) Ceasing operation due to the establishment of the union. 3
(h) Simulated sale in bad faith of business resorted to in order to get rid of
the employees who were members of the union. 4
(i) Engaging in capital reduction to camouflage the fact that it had been
making profi~ in order for it to be able to effectuate the mass lay-off of
union member5.5
G) The retrenchment of employees who belong to a particular union, with
no satisfactory justification why said employees were singled out.6
(k) As.kin~ the employees to disclose the n&"Jles of the niembeG of the
uruon.
(I) Putting on "rotation" only the alleged members of the union. 8
(m) Compelling employees to sign an instnunent indicating that the
employer observed the labor standards provisions of the law when he
might have no~ together with the act of terminating or coercing those
who refuse to cooperate with the employer's scheme.9
(n) The cessation of a company's operations shortly after the organization
of a labor union and the resumption of business barely a month after,
gives credence to the employees' claim that the closure was meant to
discourage union membership and to interfere in union activities. 10
(o) Provoking the union officers into a fight by two recently hired
employees pursuant to a strategy of the company designed to provide
an apparently lawful cause for their dismissal. The dismissed
employees have not figured in similar incidents before or violated
company rules in their many years with the company. 11
~Oaily 9iieepsl;tesOIIi:ev.TheAssodaOOn dSweepsli:Rs SlafPermlel, G.R No. L-27546, Jt1f 16, 1982.
1
2 Oceri:Amnacalfnllk:lyees Unillv.lmlg, G.R. No. L-50568, Nov. 7, 1979.
~v. NLRC, G.R Nos. ~.Jme6, 1990; &[Chie.kllkShopv. Fedtracm~dela
3
hlusm. <3.R No. 30964, M!y 9, 1988.
4 Mn31a~Facbyv,CIR, G.RNo.L-1S065, Mml.30, 1962,4 SCAA 756;Cruzv. PAFW, G.RNo.L-26519, Oct 29,
1971,42~68; NamailltJorlgXIV, CR,G.R No. L-31276, Sejt9, 1982, 116SCRA417.
s ~&Co., Inc. v. Zanora, G.R No. L-18237, Jooe 30, 1987, 151 SCRA 355.
s Balaill ~ Md Engi'leetiij Co., klc. v. NLRC, G.R No. 78004, May9, 1988.
7 S<miwlf9Miflggagawasallc1JdamUt.Cv. NLRC, GRNo.13l195,.h.tj 17, 1997,Z75SCRM33.
a Silralalf19 Mn}.jagCMa saBifld<ilo.I..M.C v. NIRC, supra.
s Mmezav.N.RCG.RNo.118500,Aprilt8, 1997,271 SCRA670.
1o fle.SimCorpaationv.Ml-SiunWatesUnion-FSM,G.R No.156292,Jan.11,2005.
VisayaJ Bi;yde ~Co., klc. v. Nablall.aborUniln illdClR, GR No. L-19997, May 19,1965,14 SCRA5.
11

BAR REVIEWER ON lABOR lAW
576
n.
YELLOW DOG CONTRACT
1. GENERAL DESCRIPTION OF A YELLOW DOG CONTRACT.
Paragraph [b] of Article 259 [248] describes what is commonly known
as "yellow dog contract. " It is one which exacts from workers as a condition of
employment that they shall not join or belong to a labor organization, or attempt
to organize one during their period of employment or that they shall withdraw
therefrom in case they are already members of a labor organization.
2. COMMON STIPULATIONS IN A YELLOW DOG CONTRACT.
A typical yellow dog contract embodies the following stipulations:
(1) A representation by the employee that he is not a member of a
labor organization;
(2) A promise by the employee that he will not join a union; a.11d
(3) A promise by the employee ihat upon joining a labor organization,
he will quit his employment.
The act of the employer in imposing such a condition constitutes ULP
under Article 259(b) [248(b)] of the Labor Code. Such stipulation in the contract
is null and void.
m.
CONTRACTING OUT OF SERVICES AND FUNCTIONS
1. GENERAL RULE.
Paragraph [c] of Article 259 [248] describes when the act of the
employer of contracting· out of services or functions being performed by union
members is considered an unfair labor practice.
As a general rule, the act of an employer in having work or certain
services or functions being performed by union members contracted out is not
per se an unfair labor practice. This is so because contracting-out of a job, work
or service is clearly an exercise by the employer of its business judgment and its
inherent management rights and prerogatives. Hiring of workers is within the
employer's inherent freedom to regulate its business and is a valid exercise of its
management prerogative subject only to special laws and agreements on the
matter and the fair standards of justice. The employer cannot be denied the
faculty of promoting efficiency and attaining economy by a study of what units
LHAI'TER VII
lABOR RElATIONS
577
are essential for its operation. It has the ultimate right to determine whether
services should be performed by its personnel or contracted to outside agencies.•
2. WHEN CONTRACTING-OUT BECOMES ULP.
It is only when the contracting out of a job, work or service being
performed by union members will interfere with, restrain or coerce employees in
the exercise of their right to self-organization that it shall constitute an unfair
labor practice.2 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. The court usually refuses to substitute its
judgment for that of the business decision of the employer in ascertaining the
validity or legality of the motivation for the contracting out of services.
i In Shell Oil Workers Union v. Shell Oil Company of the
Philippines, Ltd.,l the Supreme Court ruled that the contracting out of security
services to an outside private security agency to undertake the work of the
company security guards who were re-assigned ro other sections of the
company, is violative of the existing CBA. It could have been purely an exercise
of management prerogative on the part of the company if it were not bound by
what was stipulated in the CBA to continue to maintain a security guard section
at least during the lifetime of the agreement.
Another instance where the employer was declared guilty of unfair
labor practice consequent to contracting out of services is the 2012 case of
Digital Telecommunications Philippines, Inc. v. Digitel Employees Union
m.E!l14In this case, petitioner closed Digiserv, a department of the company, to
outsource its call center operation. While losses may have been a valid reason to
close down its operations in the light of the decline in the volume of transaction
of operator-assisted call services as supported by Financial Statements for the
years 2003 and 2004, during which Digiserv incurred a deficit of Pl63,624.00
and Pl64,055.00, respectively, it was, however, made in bad faith. In declaring
petitioner guilty of unfair labor practice, the Supreme Court stated that the
closure of Digiserv was made after the DOLE Secretary had issued the first
assumption order to enjoin an impending strike. When Digiserv effected the
dismissal of the affected employees, the union filed another notice of strike.
Significantly, the DOLE Secretary ordered that the second notice of strike be
subsumed by the previous assumption order. Thus, it was held that bad faith was
manifested by the timing of the closure of Digiserv ap.d the rehiring of some
1 ManiaE!e!RCon1mYv.Qisl.rrbilg, G.R No.127598,JM.27, 1999,302SCRA 173, 214J; SeealsoSenmov. NLRC,
G.R No. 117040, JM. 27, 2000; De Oc:a'1JO v. NI..RC, G.R No. 101539, Sepleniler 4, 1992, 213 SCRA 652; Asim
Ak:dla Gorporation v. NlRC. B.R No. 131108, Mrd125, 1999.
2 MX:Ie2259(c)j248(c)J, l..aba'Code; Seci:Jn Sf], Depmem Older No. 18-02, Series of2002, [Feb. 21, 2002J.
3 G.RNo.L-28607, Mrf31, 1971,39SCRA276,292.
4
G.R Nos.184~. Oct 10,2012.
t
~
578 BAR REviEWER ON lABOR lAW
employees to Interactive Technology Solutions, Inc. (1-tech), a corporate arm of
Digitel. The assumption order directs employees to return to work and the
employer to reinstate the employees. The existence of the assumption order
should have prompted Digitel to observe the status quo. Instead, Digitel
proceeded to close down Digiserv. The Secretary of Labor had to subsume the
second notice of strike in the assumption order. This order notwithstanding,
Digitel proceeded to dismiss the employees.
The timing of the creation of 1-tech is dubious. It was incorporated on
18 January 2005 while the labor dispute within Digitel was pending. 1-tech's
primary purpose was to provide call center/customer contact service, the same
service provided by Digiserv. It conducts its busines& inside the Digitel office at .
110 E. Rodriguez Jr. Avenue, Bagumbayan, Quezon City. The former head of
Digiserv, Ms. Teresa Taniega, is also an officer of 1-tech. Thus, when Digiserv
was closed down, some of the employees, presumably non-union members,
were rehired by 1-tech. Thus, the closure of Digiserv pending the existence of an
assmnption order coupled with the creatior. of a new corporation performing
similar functions as Digiserv leaves no iota of doubt that the target of the
closure are the union member-employees. These factual circumstances prove
that Digitel terminated the services of the affected employees to defeat their
security of tenure. The termination of service was not a valid retrenchment; it
was an illegal dismissal of employees.
The Supreme Court ruled that the closure of Digiserv to outsource its
operations to 1-tech constitutes ULP under Article 259(c) [248(c)] of the Labor
Code. At the height of the labor dispute, occasioned by Digitel's reluctance to
negotiate with the .Union, 1-tech was formed to provide, as it did provide, the
same services performed by Digiserv, the Union members' nominal employer.
The primordial issue in BPI Employees Union-Davao City -FUBU
(BPIEU-Davao City-FUBID v. Bank of the Philippine Islands CBPD.1 is
whether or not the act of respondent BPI to outsource the cashiering, distribution
and bookkeeping functions to BPI Operations Management Corporation
{BOMC) is in conformity with the law and the existing CBA. Particularly in
dispute is the validity of the transfer of twelve (12) former FEBTC employees to
BOMC, instead of being absorbed in BPI after the corporate merger. Petitioner
union claims that a union shop agreement is stipulated in the existing CBA. It is
unfair labor practice ·for employer to outsource the positions in the existing
bargaining unit, citing the case of Shell Oil Workers Union v. Shell Oil
Company of the Philippines, Ltd.2
1 G.R No. 174912, Jttt 24,2013.
2 G.R No. L-28807, May 31, 1971, 39 SCRA 276, 292.
CHAPTER VII
lABOR RElATIONS 579
A finding of ULP necessarily requires the alleging party to prove it
with substantial evidence. Unfortunately, the union failed to discharge this
burden. Consequently, in ruling that respondent BPI did not commit ULP, the
Supreme Court cited the following ratiocinations:
(l) The union's reliance on the Shell Oil case is misplaced. The rule
now is covered by Article 274 [261] of the Labor Code. Clearly, only gross
violations of the economic provisions of the CBA are treated as ULP.
Otherwise, they are mere grievances. In the present case, the alleged violation of
the union shop agreement in the CBA, even assuming it was malicious and
flagrant, is not a violation of an economic provision in the agreement.
(2) The provisions relied upon by the union were those articles
referring to the recognition of the union as the sole and exclusive bargaining
representative of all rank-and-file employees, as well as the articles on union
security, specifically, the maintenance of membership in good standing as a
condition for continued employment and the union shop clause. It failed to take
into consideration its recognition of the bank's exclusive rights and prerogatives,
likewise provided in the CBA, which included the hiring of employees,
promotions, transfers, and dismissals for just cause and the maiiJ.tenance of
order, discipline and efficiency in its operations.
(3) The union, however, insists that jobs being outsourced to BOMC
were included in the existing bargaining unit, thus, resulting in a reduction of a
number of positions in such unit. The reduction interfered with the employees'
right to self-organization because the power of a union primarily depends on its
strength in number. It is incomprehensible how the "reduction of positions in the
collective bargaining unit" interferes with the employees' right to self-
organization because the employees themselves were neither transferred nor
dismissed from the service. As the NLRC clearly stated: "In the case at hand, the
union has not presented even an iota of evidence that petitioner bank has started
to terminate certain employees who are·members of the union. In fact, what
appears is that the Bank has exerted utmost diligence, care and effort to see to it
that no union member has been terminated. In the process of the consolidation or
merger of the two banks which resulted in increased diversification of functions,
some of these non-banking functions were merely transferred to the BOMC
without affecting the union membership." BPI stresses that not a single
employee or union member was or would be dislocated or terminated from their
employment as a result of the Service Agreement. Neither had it resulted in any
diminution of salaries anrl benefits nor led to any reduction of union
membership. As far as the twelve (12) former FEBTC employees are concerned,
the union failed to substantially prove that their transfer, made to complete
BOMC's service complement, was motivated by ill will, anti-unionism or bad
faith so as to affect or interfere with the employees' right to self-organization.

sso BAR REVIEWER ON lABOR lAW
(4) It is to be emphasized that contracting out of services is not illegal per
se. It is an exercise of business judgment or management prerogative. Absent
proof that the management acted in a malicious or arbitrary manner, the Court
will not interfere with the exercise ofjudgment by an employer. In this case, bad ...
faith cannot be attributed to BPI because its actions were authorized by CBP
Circular No. 1388, Series of 1993 issued by the Monetary Board of the then
Central Bank of the Philippines (now Bangko Sentral ng Pilipinas).
IV.
COMPANY UNION
1. COMPANY INITIATED, DOMINATED OR ASSISTED UNION.
Paragraph [d] of Article 259 [248] considers it an unfair labor practice
to initiate, dominate assist or otherwise interfere with the formation or
administration cf an; labor organization, including the giving of fmancial 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
1
defmed as unfair labor practice under the Labor Code.
2. ULP CHARGE OF COMPANY DOMINATION AGAINST UNION, A
PREJUDICIAL QUESTION THAT BARS HOLDING OF
CERTIFICATION ELECTION.
While generally, the pendency of an unfair laQ<>r practice case filed
against a labor organization participating in the certification election does not
stay the holding thereof,1 however, the pendency of a formal charge of company
domination against one of the unions which is participating in the certification
election is a prejudicial question that bars the holding thereof until its final
resolution.3 · ·
3. SUSPENSION OF CBA FOR A LONG PERIOD DOES NOT MAKE
THE UNION COMPANY-DOMINATED.
If warranted by circumstances, a CBA may be suspended for more than
the usual 5-year lifetime thereof. During the period of suspension, the parties
may mutually agree that the exclusive bargaining union's status shall continue to
be recognized as such. The question is, does this prolonged recognition
tantamount to making the union wmpany-dominated? This poser was answered
in the negative in Rivera v. Espiritu,4 where the CBA between the management
1 Article 212(i), labtt Code; Section 1[k], RUe 1,1look V, Rules 1D kr!Jiemel1t tile labor Code.
2 Barerav.CIR,G,R, No. L-32853,Sepl25, 1981,107 SCRA596.
3 IJriOO etC W!Xkers Unoo.v. BlreaJ ci t.m Relalkrls, GR. No. L-51337, Mrc1122, 1984; ~ Mnes Eflllloyees v.
~ l.abori.Jnioo, G.R. No. L-11273, NcH. 21, 1958; 104 Phi. 814; Standard Cigarette v. CIR, G.R No. L-9908, Apri122,
1957, 101 Phil.126
4
G.R. No. 135547, ~. 23, 2002.
CHAPTER VII 581
lABOR RELATIONS
of Philippine Airlines (PAL) and the bargaining union, Philippine Airlines
Employees Association (PALEA), with expirydate of September 30,2000, was
mutually agreed by the parties to be suspended until2008, to prevent the closure
of PAL because of severe financial losses. It was accordingly stipulated in the
agreement of suspension that:
"a. PAL shall continue recognizing PALEA as the
duly certified-bargaining agent of the regular rank-and-
file ground employees of the Company;"
Petitioners allege that the l0-year suspension of the CBA under the
PAL-P ALEA agreement virtually installed PALEA as a company union for said
period, amounting to unfair labor practice, in violation of Article 265 [253-A] of
the Labor Code mandating that an exclusive bargaining agent serves for five
years only. The Supreme Court, however, disagreed and pronounced that the
PAL-PALEA agreement dated September 27, 1998, 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."
4. ILLUSTRATIVE CASES OF COMPANY UNION.
In Kapisanan Ng Mga Manggagawa Ng Alak v. Hamilton Distillery
Comoany,' there were two unions existing in the company, namely: Kapisanan
ng mga Manggagawa ng Alak (NAFLU), and respondent Hamiiton Workers'
Union, (Workers' Union). The company preferred the latter union over the
fonner. It asked the president of the fonner to dissolve NAFLU and when he
refused, he was dismissed. Subsequently, some members of NAFLU resigned
therefrom and joined the Workers' Union because otherwise they would be
dismissed by the Company and those who remained affiliated with NAFLU
were allowed to work Qnly two (2) days a week. Later, 52 employees who are
members of NAFLU were also terminated for refusing to join the Workers'
Union. Because of these circumstances, the Supreme Court declared that the
Workers' Union is a company union.
In Oceanic Air Products v. CIR/ several employees were forced by
company officers to join a union. No member of the union had been dismissed
despite the implementatiQn of a retrenchment policy which resulted in the
dismissal of other employees who are officers and members of another union.
After the dismissals, the company hired several laborers. All these
circumstances indicate that the union is company-dominated.
In Philippine American Cigar and Cigarette Factory Workers
Independent Union v. Philippine American Cigar and Cigarette
1 G.R. No. L-18112, Oct 30, 1962,6 SCRA 367.
2 G.R. No. 18704, Jlll. 31, 1963,7 SCRA 208.
 LHAPTERV 383
382 BAR REVIEWER ON lABOR lAW
MANAGEMENT PREROGATIVE

concerning the conduct of their business. 1 The Labor Code and its implementing 4)
Rightto promulgate rules and regulations;
roles do not vest managerial authority in the Labor Arbiters or in the diJierent 5)
Right to impose penalty; proportionality rule;
divisions of the NLRC, or in the courts. Even as the law is solicitous of the 6)
Right to choose which penalty to impose; and
welfare of employees, it must also protect the right of employers to exercise 7)
Right to impose heavier penalty than what the company rules
what are clearly management prerogatives. The free will of management to prescnbe.
conduct its oWn. business affairs to achieve its purpose cannot be denied. 2 2. RIGHT TO DISCIPLINE.
2. LIMITATIONS ON THE EXERCISE OF MANAGEMENT The employer's right to conduct the affairs of its business according to
PREROGATIVES. its own discretion and judgment includes the prerogative to instill discipline
among its employees and to impose reasonable penalties, including dismissal,
l. Limitations imposed by: upon erring employees. The employer cannot be compelled to maintain in his
a) law; employ the undeserving, if not undesirable, employees. 1 The only criterion to
b) CBA; guide the exercise of its management prerogative to discipline or dismiss erring
c) employment contract; employees is that the policies, rules and regulations on work-related activities of
d) employer policy; the employees must always be fair and reasonable and the corresponding
e) employer practice; and penalties, when prescribed, should be commensurate to the offense involved and
f) general principles of fair play and justice? to the degree of the infraction. 2
2. It is subject to police power. 3. RIGHT TO DISMISS.
3. Its exercise should be without abuse of discretion. 5
4. It should be done in good faith and with due regard to the rights of The right of the employer to dismiss its erring employees is a measure
of self-protection.3 The law, in protecting the rights of the laborer, authorizes
labor.6
neither oppression nor self-destruction of the employer. While the constitution is
Ineluctably, the exercise of management prerogatives is not absolute. committed to the policy of social justice and the protection of the working class,
The prerogatives accorded 'to management cannot defeat the very purpose for it should not be supposed that every labor dispute will be automatically decided
which labor laws exist - to balance the conflicting interests of labor and in favor of labor. Management also has its own rights which, as such, are
management, not to tilt the scale in favor of one over the other, but to guarantee entitled to respect and enforcement in the interest of simple fair play. Out of its
that labor and management !itand on equal footing when bargaining in good faith concern for those with less privilege in life, the Supreme Court has inclined
with each other.' more often than not towards the worker and upheld his cause in his conflicts
with the employer. Such favoritism, however, has not blinded the Court to rule
A. that justice is, in every case, for the deserving, to be dispensed in the light of the
DISCIPLINE established facts and applicable law and doctrine.4
1. COMPONENTS. 4. RIGHT TO DETERMINE WHO TO PUNISIL
The right or prerogative to discipline covers the following: The employer has wide latitude to determine who among its erring
1) Right to discipline; officers or emplorees should be punished, to what extent and what proper
2) Right to dismiss; penalty to impose.
3) Right to determine who to punish;

t Coca-Cola Botllecs ~pines,lnc. v. Del Villar, G.R No. 163091, Oct. 6, 2010; Phifippine Industrial Security
Agency Corporation v. Aguinaldo, G.R. No. 149974, June 15, 2005.
2 ValiCKJv.lbtCA,G.R.No.146621,JW30,2004. 1
St1oemart, nc. v. NLRC, G.R No. 74229, hlg.11,1989.
3 Coca-Cola Boale!s l'hiiWileS,klc. v. Del Vllar. G.R No. 163091, Oct. 6, 2010; The flhiWile AlooOCan Life and General 2
St. Michael's Institute v. Santos, G:R. No. 145280, Dec. 4, 2001.
mr<m!Co.v.Grancte.G.R.No.156963,Nov.11,2004. 3 Reyes v. Mnis\eroft.tW, G.R No. 48705, Feb. 9,1989;~.1nc. v. Nl.RC, G.R. No.70546, Oct. 16, 1986.
4 Fllldv. (')., G.R No.133259,Feb.10, 200l]; ~ IJtlorllnixls-TUCPv. NlRC, G.R No.120450, Feb.10,1999. 4
Sine Dally Pi~ilas. nc. v. NLRC, G. R. No. 119205, Ap!115, 1998; PI.DT v. P"DJOI, G.R. No. 182622. Sept 8, 2010;
5 Panbanco North Express, Inc. v. NLRC, G.R. No. 106~15, Sept 21, 1999. Mcrilagol3tlewater Beach Resort, Inc. v. DJal, G.R. No. 180660, July 20, 2010.
5
5 Unicorn Safety Glass, Inc. v. ~.arte, G.R. No.154689, Nov. 25,2004. Sorianov. NLRC, G.R. No. 75510, Oct. 27,1987.
7 PhfWi\e M\es, K. ~- Pasrua, G.R No. 143258, hlg. 15,2003,409 SCRA 195.
5ts2 BAR REVIEWER ON lABOR lAW
Manufacturing Co.,t it was pronounced that one indication that the union is
company-dominated is the act of the employer in securing authorization cards
from employees and by immediately granting the union exclusive recognition as
a bargaining agent and entering into a contract therewith although it was not the
duly authorized representative of the employees. Another is when the union
approached the management rather than the employees in getting the union
organized and management extended the requested assistance to the union. The
acts of the company in soliciting membership and allowing union activities to be
held during working time and coercing employees to join the union under threat
of dismissal or demotion are clear indicia of company domination.
In Davao Free Workers Front v. CIR/ the following acts of
respondent employer, 7-UP Bottling Company of the Philippines at its Davao
branch, were cited as indicia that the union was company-dominated: It refused
to bargain with petitioner union; it interfered with and coerced its members to
vote for its hand-picked candidate as president of petitioner union; it required
the members of petitioner union to join the Seven-Up Employees Association, a
newly organized labor union obviously sponsored and favored by it with which
it immediately executed a CBA granting the members of such new union fringe
benefits while refusing to bargain with petitioner union regarding the renewal of
their just-expired contract and instead foisting upon petitioner union its
unilateral version of a CBA; and it filed a notice of lock-out and refused entry to
members of petitioner union when the latter refused to accept its unilateral
contract version. These union-busting and discriminatory acts led petitioner
union justifiably to declare a strike against w:pondents' unfair labor practices.
In Progressive Development Corporation v. ClR/ several employees
were dismissed because of their refusal to resign from their union and join the
other union being supported and aided by the company. It was ruled that their
dismissal because of their union activities is unfair labor practice.
v.
DISCRIMINATION
I. CONCEPT.
Discrimination has been defmed as the failure to treat all persons
equally when no reasonable distinction can be found between those favored and
those not favored, 4 There is discrimination only when one is denied privileges
1 G.R No. L-18364, Feb. 28, 1963,7 SCRA 375.
2 GR.No.L-29356,0ci.31.1974,60SCRA408.
3 G.RNo.L..J95o16,Nov.29, 1977,80SCRA434.
4 Bl<d's Lcr.v Di:tionay, 6th E<fition, p. 467; SUgue v. TlilJn1lh lntemalional (Phils.), Inc., G.R Nos. 164804 &164784, Joo.
30, 2009; Pattguez v. GSIS F<mly Bank [ComsaWlgs Bank], G.R No. 169570, Mlld12, 2007, ~ Phippine Amerk:iJ1
Lle Gen.~ Co. v. Gramaje, G.R. No. 156963, Nov. 11, 2004,442 SCRA274, 284-285.
CHArTER VII 583
lABOR RElATIONS
which are granted to others under similar conditions and circumstances. 1 Thus,
before a claim for discrimination can prosper, it must be established that first,
there is no reasonable distinction or classification that can be obtained between
persons belonging to the same class and, second, persons belonging to the same
class have not been treated alike. 2 It must be stressed, however, that
discrllnination per se is not unlawful. There can be no discrimination where the
employees concerned are not similarly situated.3
2. DISCRIMINATION AND CLASSIFICATION, DISTINGUISHED.
Discrimination should be distinguished from classification. While
discrimination is considered an unfair labor practice, classification is not
because it merely differentiates the employees in accordance with their
respective jobs and accords them the appropriate levels of pay or benefits due
them by reason thereof.
3. 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
• • 4
organiZatiOn. ·
4. MATERIALITY OF PURPOSE OF ALLEGED DISCRIMINATORY
ACT.
In Rizal Cement Workers Union v. Madrigal and Co.,S it was held
that for discrimination by reason of union membership to be considered an
unfair labor practice, the same must have been committed to encourage or
discourage such membership in the union. Here, this cannot be said of the act of
the company complained of. As clearly established by evidence, the refusal to
allow the employees to work and the requirement that they should stay out of the
premises in the meantime while the strike was still going on in the factory was
borne out of the company's justified apprehension and fear that sabotage might
be committed in the warehouse where the products, machinery and spare parts
were stored. It has never been shown that the act of the company was intended
to induce the employees to renounce their union membership or as a deterrent
for non-members to affiliate therewith, nor as a retaliatory measure for the
activities of the union or in the furtherance of the cause of the union.
1
Caltex [PhiWiJes],h:. v. Ph~ l.alorOtganizatioo, G.R No. L-5206,April29, 1953,92 Pli 1014.
2 WLSe and Co., h:. v. Wise <n! Co.,lnc. Employees lJnk:o.NAlU, GR No. 87672, Oct 13, 1989, 178 SCRA 536, 539.
3
WLSe and Co., h:. v. 'Mse <nf Co., h:. Eflllloyees l..lnbl, ~;Great Pacilic Life Employees Unkln v. Great Pacilic Life
Assura1ce Corpomlion, G.R No.126717, Fell. 11,1999.
4
Article 259(e) [248(e)],l.aborCo:fe.
5
G.R No. L-19767, Ap(i 30, 1964,10 SCRA 831.
 BAilREVIEWEilON IABOillAW
584
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
-nor an unfair labor practice for said employer to give such bonus to non-union
Manila Railroad Co./ the non-regularization of long-time employees because
of their affiliation with the union while new employees were immediately
regularized was declared an act of discrimination.
3 But in Manila Hotel Co. v. Pines Hotel Employees Association/ it
In Luzon Stevedoring Corporation v. Cffi, it was pronounced that
the disapproval of the application for leave of absence with pay does not
necessarily indicate discrimination, unless it could be shown that such
disapproval was due to the employee's union membership or activity.
4
In AHS/Philippines Employees Union v. NLRC, the employer
transferred the union president from the main office in Manila to Cebu at the
time when the union was still being organized. It was held that the uneven
application of its marketing plan resulting in the said transfer of d1e union
president is patently an act of discrimination constitutive of unfair labor practice.
In Bondoc v. cm,5 t.'le employee charged his employer as having
discriminated against him in the grant of promotion because he was not a
member {)f any labor union. The Supreme Court held that the employee's
contention that he was discriminated against to force him to join a labor
organization is untenable becav.se he failed to mention any specific union.
Moreover, it is not believable for the employer to harass and oppress an
employee to force him to join a union, for it cannot be comprehended how his
joining a union would benefit his employer.
5. DISMISSING ONLY A FEW BUT NOT ALL OF THE ERRING
EMPLOYEES, EFFECT.
Employees have no right to continue working upon their own terms
while rejecting the standards desired by their employer. It is not an unfair labor
practice for employer to dismiss employees who engage in slowdown. This
holds true even if the employer dismissed only some of the employees who
participated in the slowdown where such dismissal is made to6 serve as an
example to stop the slowdown and not for discriminatory reasons.
1 G.R.No.l-16003,Aug.31, 1965, 14SCRA955.
2 G.R No. L-19728, Mi 30, 1004.
3 G.R.Nos.L-17411 a1dl.-18683,0ec.31, 1965, 15SCRA"660.
4 GR No. 73721, Mard\30; 1987.
s G.R No. 33955, Joo. 26, 1989.
6 48AmJur2d937.
CHAI'TEil VII
IABOil RElATIONS
sss
6. DISCRIMINATION IN GRANT OF BONUS.
In a case decided by the NLRC, Philippine Blooming Mills ·
Employees Organization [PAFLUJ v. Philippine Blooming Mills Co., Inc./
the employer reserved its right under the CBA to grant better bonus to those who
are exceptionally good or efficient. It was held that it is neither discriminatory
members, it being clear that many union members were also given the bonus and
it was purely a valid exercise of management prerogative.
was enunciated that there was unjust discrimination when management departed
from its previous practice of dividing equally to all employees certain
percentage of its net profit as Christmas bonus - giving only to its employees in
the operation where there was no union and not giving any to its unionized
establishments.
7. RUNAWAY SHOP.
A "runaway shop" is a fonn of discriminatory act of the employer.
Teclmically, it is defined as an industrial plant moved by its owners from one
location to another to escape union labor regulations or state laws. The term is
also used to describe a plant moved to a new location in order to discriminate
against employees at the old plant because of their union activities.3 A "runaway
shop" in this sense is a relocation motivated by anti-union animus rather than for
legitimate business reasons. 4
In A. C. Ransom Labor Union-CCLU v. NLRC,S the "run-away
corporation" was declared liable not only for the backwages but also for the
reinstatement of the terminated employees of A. C. Ransom (Phils.)
Corporation. In so holding, the Supreme Court declared that aggravating
Ransom's clear evasion of payment of its financial obligations is the
organization of a "run-away corporation, " the Rosario Industrial Corporation, in
1969 at the time the unfair labor practice case was pending before the Court of
Industrial Relations (CIR) by the same persons who were the officers and
stockholders of Ransom, engaged in the same line of business as Ransom,
producing the same line of products, occupying the same compound, using the
same machineries, buildings, laboratory, bodega and sales and accounts
departments used by Ransom and which is still in existence. Both corporations
were close corporations owned and managed by members of the same family. Its
1
NLRCCaseNo. RB-IV-295175,June4, 197~.
2 G.RNo.L-30818,Sept28, 1972.
3 Texlile Workers Union v. DalfingDl tvfg. Co., 380 US 263, 12lEd.2d, 627,85, SCt. 994;Wiam P. S\a!sky, Wesfs Legal
ThesaJrus4Jicti, Special Deluxe Edition, p. 671.
4
Coo'qJiex Eleclrooi:s ~Association jCEEA], et., v. NLRC, GR No. 121315, Jltj 19, 1999; CorT1JieX Elecllmics
~v.Nl.RC,G.R.No.122136,Ju~19,1999.
5
G.R. No. L-69494, May 29, 1967.
ss6 BAR REVIEWER ON lABOR lAW
CHAPTER VII 587
lABOR RElATIONS
organization proved to be a convenient instrument to avoid payment of
backwages and the reinstatement of the 22 workers. This is another instance prohibited to be done directly shall not be allowed to be accomplished
indirectly. ·
where the fiction of separate and distinct corporate entities should be
disregarded. It is very obvious that the ~cond corporation seeks the protective__ In Itogon-Suyoc Mines, Inc. v. Baldo/ it was declared that an unfair
shield of a corporate fiction whose veil in the present case could, and should, be labor practice was committed by the employer when it dismissed the worker
pierced as it was deliberately and maliciously designed to evade its financial who had testified in the hearing of a certification election case despite its prior
obligation to its emplo.yees. request for the employee not to testify in the said proceeding accompanied with
a promise of being reinstated if he followed said request. 2
VI.
FILING OF CHARGES OR GIVING OF TESTIMONY vn.
CBA-RELATED ULPs
l.CONCEPT.
Under paragraph (f] of Article 259 [248) of the Labor Code, it is an I. THREE (3) CBA-RELATED ULPs.
unfair labor practice for an employer to dismiss, discharge or otherwise Article 259 [248] enunciates three (3) CBA-related ULPs, to wit:
prejudice or discriminate against an employee for having given or being about to 1) To violate the duty to bargain collectively as prescribed in the Labor
1
give testimony under the Labor Code. Code. 3
2. THE ONLY ULP NOT REQUIRj;.D TO BE RELATEQ TO 2) To pay negotiation or attorney's fees to the union or its officers or
EMPLOYEE'S EXERCISE OF THE RIGHT TO SELF- agents as part of the settlement of any issue in collective bargaining
ORGA.l\l'IZATION AND COLLECTIVE BARGAINING. or any other dispute. 4
It must be underscored that Article 259(t) {248(t)] is the only unfair
3) To violate a CBA.5
labOr practice that need not be related to the exercise by the employees of their No. I above has been discussed earlier under the following separate
right to self-organization and collective bargaining? topics/sub-topics: "VII. LABOR RELATIONS, 2. COLLECTIVE
In Philippine American Cigar and Cigarette Factory Workers BARGAINING."
Independent Union v. Philippine American Cigar and Cigarette Nos. 2 and 3 above are discussed hereunder seriatim.
Manufacturing Co./ the employer dismissed the brother of an employee who
filed a case against it. The Supreme Court ruled that such act of the employer
4 VIT-A.
constitutes unfair labor practice. Although Section 4(a] 5 of R.A. No. 875
would seem to refer only to the dismissal of the one who filed charges against PAYMENT OF NEGOTIATION AND ATTORNEY'S FEES
the company as constituting an unfair labor practice, the legislative intent is to
assure absolute freedom of the employees to establish labor organizations and I. WHEN PAYMENT CONSIDERED ULP.
unions as well as to proffer charges for violation of labor laws. If the dismissal Article 259(h) [248(h)] of the Labor Code considers as an unfair labor
of an employee due to the filing by him of said charges would be and is an practice the act of the employer in paying negotiation fees or attorney's fees to
undue restraint upon said freedom, the dismissal of his brother owing to the non- the union or its officers or agents as part of the settlement of any issue in
withdrawal of the charges of the former would be and constitute as much, in fact collective bargaining or any other dispute.
a greater and more effective, restraint upon the same freedom. What is

, SeeS!loSection 13[dj, ~XII, BOOt IH, Rules tlln1llementlhe l..ctiorQxle.

2 P1bn EnlJioYees· Unbl v. ~ ~ Coomri::atioos, GR No. 144315, ~ 17, 2006; See also Pepsi-Cola 1
~ klc. v. Mlkln, GR No. 175002, Feb. 18, 2013;13isig t.'algg<rJCIWllsa TI)Wv. Nl.RC, G.R No. 151309, Oct GRNo.L-17739,Dec.24,1964.
2
15, 2008; GreatPaclicUieEfl1lk!Yees tnon v. GreatPacliclileAssoon:eCo!poration, G.R No.1£6717, Feb. 11,1999, See also Na1i:x181 Faslllner Qrporation v. CIR, G.R No.l-15834, Jat 20, 1961, 1 SCRA 17; H. G. Hel1aes &Sons v.
303SCRA 113. Nablallilorlkiln, G.R No. L-17535, Dec. 28,1961,3 SCRA 765.
3
a G.R No. L·18364, Feb. 28,1963. Artk:le 259(g) (248(g)], llilor Code.
4
• NaN Miele 259(~ !248(m at 111e taxr{;(xle. Mae 259(h) (248(11)], llid.
5 Ar1X:Ie 259(i) (248(i)], llld.

-··~·--""~ -- ~ ·unw<'•ie
sss BAR REVIEWER ON lABOR lAW
...l CHAPTER VII
lABOR RElATIONS 589

2. NEGOTIATION FEES VS. ATTORNEY'S FEES.

To enlighten further, the term "negotiation fees" is different from
"attorney's fees." The law uses negotiation fees to justify payment of fees to
non-lawyers who are not entitled to attorney's fees.
1
The inclusion in Article 228(b) [222(b)] of''negotiation fees or similar
charges of any kind" is meant to address the issue of fees that should be paid to
non-lawyers who assist the contracting union in its CBA negotiations and
dealings with the employer. Being non-lawyers, they cannot be paid nor are they
entitled to "attorney's fees."
Th:S principle has been affirmed in Philippine Association of Free
Labor Unions (PAFLU) v. Binalbagan Isabela Sugar Company/ where the
sole issue was whether a non-lawyer can recover attorney's fees for legal
services rendered. The Court of Industrial Relations (CIR) in this case awarded
25% of the backwages as compensation for professional services rendered in the
case, 10% of which was ordered paid to Quintin Muning, a non-lawyer, and the
rest to two (2) lawyers. This award to Quintin Muning is sought to be voided. In
so voiding, the Supreme Court considered it "immoral and cannot be justified.
An award by a court of attorney's fees is no less immoral in the absence of a
contract, as in the present case."
The existence of an attorney-client relationship is a condition to the
recovery of attorney's fees. Such a relationship cannot exist unless the client's
representative in court be a lawyer. Since respondent Muning is not one, he
cannot establish an attorney-client relationship with his individual clients, or
with PAFLU, and he cannot, therefore, recover attorney's fees.
The fact that non-lawyers are allowed to appear in labor proceedings
does not justify their entitlement to attorney's fees. 3 A lawyer cannot share his
attorney's fees with a non-lawyer in situations where a lawyer engaged by the
union works· with, or is assisted by, non-lawyers, like union organizers or
federation representatives who may lay a claim for their services alongside the
lawyer. This is proscribed under the Code of Professional Responsibility for
Lawyers,4 thus:
"Rule 9.02 - A lawyer shall not divide or stipulate to divide a fee for
legal services with persons not licensed to practice law, xxx"
i Hence, in this situation, the fees· of the lawyer should properly be
denominated as "attorney's fees" and those of the non-lawyers, as "negotiation
fees or similar charges."
3. ATTORNEY'S FEES AND NEGOTIATION FEES SHOULD BE PAID
FROM UNION FUNDS.
Article 228(b) [222(b)] of the Labor Code requires that such attorney's
fees, negqtiation fees or similar charges should be paid from the union funds.
These fees cannot be collected from the individual employees.' Any contract,
agreement or arrangement of any sort to the contrary shall be null and void. 2
Clearly, Article 228(b) [222(b)] prohibits the payment of attorney's
fees only when it is effected through forced contributions from the workers from
their own funds as distinguished from the union funds. The purpose of the
provision is to prevent imposition on the workers of the duty to individually
contribute their respective shares in tlte fees to be paid the attorney for his
. services on behalf of the union in its negotiations with the employer. 3 This is so
because it is the union, not the employees, which is obligated to the la\vyer. 4
4. COUNTERPART PROVISION IN ARTICLE 260(e) [249(e)].
On the part of the union, asking for or accepting attorney's fees or
negotiation fees .from the employer as part of the settlement of any issue in
collective bargaining or any other dispute is considered an unfair labor practice
under Article 260(e) [249(e)] ofthe Labor Code.
VII-B.
VIOLATION OF THE CBA
1. CORRELATION.
Article 259(i) [248(i)] of the Labor Code should be read in relation to
Article 274 [261] thereof. Under Article 274 [261], as amended, 5 violations ofa
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
Pacific~ Caporation v. Clave. GR. No. 56965, Marth 7, 1984, 128 SCRA 112; ~ v. T~. G.R No.
1

7rJJrl, Sept 15, 1986, 144 SCRA 138; ~ Lmers AssociaOOn v. CIR. G.R No. L-23467, Midi '0, 1968, 22
SCRA 1266.
2
1 kprM!es: 'lv!De 222. AppeMrx:es !lld Fees.-xxx (b) No atlooley's fees, nego6ali:xl fees or siTU chages of '&'If kill! Al10l222(b), Lalor Code. -
RiYJ m '&'If coledNe ~ <r;~ieenent shall be i11Josed oo Plrf il<Miuallllli!flter of 1he oon1Jadi1g uniln: 3
GOOriel v. The liJn. Seae1ay of Lm !lld EJl1lloymenl. <l.R No. 115949, Marth 16, 2000; VI".IOO v. Tllljano, G.R. No.
Prooli:led, hciM\Yer, flat atbne/S fees may be d1aged <r;~ainst union funds illll CI'I1CXJii b be agreed upa1 by 1he paties. 74453, Mey 5, 1989; S1l!lla' r.dusfJial Servi:es, k1c. v. NLRC, G.R No. 117418, Jan. 24, 1996, 252 ~ 323; Palacd v.
Mj oonuact. <r;~reement or MMgement of Plrf sort 10 theallllrlly shal.be 001 Cl1d ..00.' Fen-er<:alleja. G.R. No. 85333, Febnay 26, 1990, 182 SCRA 710. .
G.R. No. L-23959, New. 29, 1971 (En Bane). 4
2 Pacific Bmlg QJqloratioo v. Clave, G.R No. 56965, Marth 7, 1984, 128 SCRA 112; See alsO Em:o Pl,wJod Cotpora00n
3 ld. v. ~ G.R. No. 148532. Apnl14, 2004.
5
4 PromJI;Jated on Jl.lle 21, 1988. Ca1oo 9-A ~ershal not. directly or ildreclly, assistil toe ll1al.l1haized practX:eof l<r.v. As anended by RA. No. 6715.
590 BAR REVIEWER ON lABOR lAW
l lABOR RElATIONS :>~l

violations of CBA shall mean flagrant and/or malicious refusal to comply with 3.
1
the economic provisions of such agreement. ULP BY LABOR ORGANIZATIONS1
2.CASELAW.
1. ENUMERATION OF ULPs OF LABOR ORGANIZATIONS.

I
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 · Article 260 [249]. Unfair Labor Practices of Labor
separate from any other benefits or privileges that may be forthcoming to the Organizations. - It shall be unfair labor practice for a labor
employees, is an unfair labor practice.2 organization, its officers, agents or representatives:

Refusal for a considerable number of years to give salary adjustments (a) To restrain or coerce employees in the exercise of their
according to the improved salary scales in the CBA is an unfair labor practice. 3 right to self-organization. However, a labor organization
shall have the right to prescribe its own rules with respect
The act of the employer in permitting non-union members to participate to the acquisition or retention of membership;
in the service charges, contrary to the stipulation in the CBA, is an unfair labor (b) To cause or attempt to cause an employer to discriminate
practice. 4 against an employee, including discrimination against an
VIII. employee with respect to whom membership in such
organization has been denied or to terminate an employee
BURDEN OF PROOF .. on any ground other than the usual terms and conditions
IN ULP CASES UNDER ARTICLE 259 [24RI under which membership or continuation of membership is
In unfair labor practice cases against empioyers, it is the union which made available to ether members;
has the burden to present substantial evidence to support its allegation of unfair (c) To violate the duty, or refuse to bargain collectively with
labor practice committed by ihe employer. It is not enough that the union the employer, provided it is the representative of the
believed that the employer committed unfair labor practice when the . employees;
circumstances clearly negate even a prima facie showing to warrant such a (d) To cause or attempt to cause an employer to pay or
belief. 5 deliver or agree to pay or deliver any money or other
things of value, in the nature of an exaction, for services
IX. which are not performed or not to be performed, including
PERSONS CRIMINALLY LIABLE the demand for fee for union negotiations;
FOR ULPs OF EMPLOYER (e) To ask for or accept negotiation or attorney's fees from
As provided under the last paragraph of Article 259 [248}, only the employers as part of the settlement of any issue in
officers and agents of corporations, associations or partnerships who have collective bargaining or any other dispute; or
actually participated in, authorized or ratified unfair labor practice shall be held (f) To violate a collective bargaining agreement
criminally liable therefor. Absent any such participation, authorization or
ratification, the officers and agents of said entities cannot be held personally The provisions of the preceding paragraph notwithstanding,
liable for unfair labor practice. 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
1 See fi.lh!Allendoot Cl1d Slewads Associalixutlle F'tlqlpiles{FASAP)v. ~Ames. loc.,G.R No.178083, Julj shall be held criminally liable. 2
22. m.
2 Pllqlpile ~Wo!Kers Union v. NLRC, G.R No. L-50320, Jutt 31, 1981; AllMiJra lndusllies, Inc. v. CIR, G.R No. L-
25984, Oct 30, 1970, 35 SCRA 550.
3 lla1gue!Coosc.idcmlv. Bct~andWrner.;Unia1, G.R No.L~71,MJ11127,1968, 22SCRA 1293.
4 AllaP<DldeMakali, v.AilaPatiodeMakatiEfr!lloyeesAsso::ialion, G.R No.l-31922, Mcrth 16, 1984.
5 Tuv.NLRC, G.R No.123276,Aug.18,1997, m~680.687;SeealsoScheriYJ~I.BborUnoo[SEI..U]v.
1
~ f'kx.9h Capolalioo, G.R No. 142506, Feb. 17, 2005; ~ MnJgagawa sa~ Liles, Inc. ~u v. Relevall PnMsion: MX:Ie 200 [2489,1lid.
~k:io Liles, klc., GR. No.1~. Marcfl25, 2004. 2 As anended by Balas ParilMsa Bier@ 130, Aug. 21, 1981.
592 BAR REvlEWER ON lABOR lAW
DISCUSSION
L n.
RESTRAINT AND COERCION OF EMPLOYEES
IN THE EXERCISE OF THEIR RIGHT TO SELF-ORGANIZATION
1. UNION MAY INTERFERE WITH BUT NOT RESTRAIN OR COERCE
EMPWYEES IN THE EXERCISE OF THEIR RIGHT TO SELF-
ORGANIZE.
Under Article 260(a) [249(a)], it is ULP for a labor organization, its
officers, agents or representatives to restrain or coerce employees in the exercise
of their right to self-organization. Compared to similar provision of Article
259(a) [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 tenn lies in the grant of unrestricted license
to the labor organizatiqn, 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. It becomes unlawful within the context of paragraph [a] of
Article 260 [249] only when it amounts to restraint or coercion which is
expressly prohibited thereunder.
2. RIGHT TO PRESCRIBE OWN RULES NOT ONLY ON ACQUISITION
OR RETENTION OF MEMBERSl:DP BUT THE WSS THEREOF.
Under the same provision, a labor organization is granted ''the right to
prescribe its own rules with respect to the acquisition or retention of
membership." Although not expressly mentioned in the law, it is equally the
right of the union to prescribe in the same rules with respect to the loss of
membership therein through various modes allowed by law, such as resignation,
expulsion or impeachment. These rules are normally embodied in the
constitution and by-laws of the labor organization. Pursuant to this right, the
labor organization can prescribe the proper qualifications for membership
therein as well as the rules and regulations to be followed by its members in
order to retain their membership in good standing therein.
3. THE RULES MUST BE REASONABLE.
The rules, to be valid, must be reasonable and within the bounds of the
law. Thus, the labor organization in M. D. Transit v. de Guzman,1 was
, GR No. L-18810, Apri 23, 1963,7 SCRA 726.
I CHAI'TER VII
lABOR RElATIONS 593 .
!
declared to have coinmitted unfair labor practice when it expelled a member just
because he filed charges against the union officers.
DISCRIMINATION
l.CONCEPT.
Under Article 260(b) [249(b)], it is considered 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.
2. KINDS OF DISCRIMlNATION.
I
!
There are three (3) kinds of discrimination that a union may commit under
~
I this article, to wit:
(1) The act of the union to cause or attempt to cause an employer to
discriminate against an employee, in genera~ irrespective of whether he
or she is a member or non-member of th.e union.
(2) The discriminatory act of the union against an employee ''with respect
to whom membership in such organization has been denied."
(3) The discriminatory act of the union against an employee whose
membership therein has been terminated based "on any ground other
than the usual terms and conditions under which membership or
continuation of membership is made available to other members."
2.1. FIRST KIND OF UNION DISCRIMINATION.
It is the basic characteristic of the first kind of union discrimination
mentioned above that its act which constitutes ULP consists in inducing· or
instigating the employer to commit discrimination against an employee who may or
may not be its member. The purpose is to encourage or di!courage union
membership. An example is the act of the union in convincing an employer to
penalize employees who engage in anti-union activities.
The intent and initiative to discriminate should not emanate from the
employer but from the union, its officers, agents or representatives. In fact, the
employer need not be shown to have actually acted on such indui:em.ent or
instigation of the union in order to hold the latter liable for ULP. If it is shown that
the employer has yielded and acquiesced to the inducement and instigation of the
union by actually committing the act of discrimination, it may be held liable for ULP
.-· --· . wz -r11 en H*

594
BAR REVIEWER ON lABOR lAW
....
not under Article 260(b) [249(b)], which exclusively speaks of a ULP committed by
a labor organization, but under Article 259(e) [248(e)], which is the counterpart
provision for employer ULP insofar as the charge of discrimination is concerned.
!
That Article 259(e) [248(e)] is the law violated by reason of such discriminatory
action of the employer consequent to the union's inducement or instigation is clear
from a reading of the U.S.law1 from which this provision of Article 260(b) (249(b)]
' 2.PURPOSE.
was patterned and copied.
2.2. SECOND AND THIRD KINDS OF UNION DISCRIMINATION.
The discriminatory ULP act under the 1'd and kinds of discrimination r 3. REQUISITES.
mentioned above is perpetrated by the union itself against an employee whose
membership therewith has been either: (1) denied by 1he union; or (2) terminated
by 1he union.2 The first involves an employee who has not become a member of the
union because his membership 1herein has been discriminatorily denied by 1he
tmion; while the second refers to the case of an employee who is already a member
of the union but whose membership therein is discriminatorily terminated based
"on any ground other than the usual terms and conditions under which membership ..
or continuation of membership is made available to other members."
It is noteworthy to clarify that the phrase in Article 260(b) [249(b)] that
states: "... to terminate an employee on any ground other than the usual terms and
conditions under which membership or continuation of membership is rnade
available to other members," should not be construed as referring to the termination
of employment by the employer as may be instigated or recommended by the union
but to the termination of membership of a member from the union. By so using
"employee" instead of "member" in the provision seems to suggest, nay, connote
1hat it is the "employment" rather than the "membership" in the union which is
being tenninated. This provision should have been stated more appropriately in this
manner: "... to terminate a [member] on any ground other than the usual terms and
ronditions under which membership or continuation of membership is made
available to other members."
m.
DUfY OF UNION TO BARGAIN COLLECTIVELY
I. CONCEPT.
Under Article 260(c) [249(c)],3 it is ULP for a duly certified SEBA, its
officers, age11ts or representatives, to violate the duty, or refuse to bargain
1 See the Nalilnall.alor Relab1s Pd. 29 U.S. Code§ 158. flli!Jplle lav.s had coosislen1ly adoptEd the said lega ancept
d lis kild ofULP.lrtefilst law is RA No. 875, o81erMSe knaM1 as "!he lnduslrial ~Act' m was ena:t00 oo J~n
17,1953, {See Its Section 4(bX2lJ.
2 ld.
3 IIIOCie 260(a) 1249(a)] d lhe 1100' Code 1Ja:es lis rools from a U.S. law nil p!!lW!es that i shal be ULP tlr a Ialor
«gaizaa1 cr lis agents "il refuse to ba'Qail OOiedNeti vAll a1 empbyer, jlltNided ~ is lhe representative d his
CHAPTER VII 595
lABOR RElATIONS
collectively with the employer, provided it is the representative of the employees.
This is the coooterpart provision of Article 259(g) [248(g)] in regard to the violation
by the employer of its duty to bargain collectively.
The ptupose of the law in imposing it as a duty on the part of the SEBA to
bargain collectively is to ensure that it will negotiate with management in good faith
in order for them to conclude a mutually beneficial agreement on the terms and
conditions of their employment relationship.
The following are the requisites before a union may be held liable for ULP:
(l) The union is a duly certified SEBA; and
(2) lt~mmits any of the following:
(a) It violates the duty to bargain collectively; or
(b) It re~ to bargain collectively with the employer.
3.1. First Requisite: The union is a duly certified SEBA.
At the outset, it is important to stress that the employer is not in any way
obligated to collectively bargain with a non-SEBA. It has every right to fend off any
effort on the part of a union to negotiate a CBA before it is certified as SEBA
through appropriate certification election proceedings. 1
On the other hand, a non-SEBA cannot commit ULP under this paragraph
(c) of Article 260 [249]. This is so because a non-SEBA has no duty to collectively
bargain with the employer; only a SEBA has that duty. Once certified as SEBA, it
must engage in collective bargaining with the employer since this is the very raison
d'etre of the right to self-organization- to enable worlcers to bargain in a collective
fashion with their employer.
3.2. Second Requisite: The SEBA commits any of the following: (1) It violates
the duty to bargain coUectively; or (2) It refuses to
bargain collectively with the employer.
(1) V'wliltion ofthe duty to bargain collectively.
As a duly certified SEBA, the union has the duty and responsibility to
represent all the employees in the collective bargaining unit (CBU) equally and
fairly, irrespective of whether they are its members or not This is the so-called
"duty of fair representation" which involves primordially the duty to bargain
collectively for and on behalf of all the CBU-covered. employees. the SEBA should
efl1lloYeessubj!ctkllhe~dsec0011 159(a) dillS filte{f{See National t.axrRe!ationsAd, 29 U.S. Code§ 158-
Unfairlab<r pmcti;es, Sec. 8lb]3]1hereof).
1 Lakasng ~agawlii'IJ Makabay<¥lv.MiteloEnEqxises;G.R No.L~258,tb/.19,1982, 118SCRA425.
596 BAR REVIEWER ON lABOR lAW
discharge this duty by equally representing everyone in the CBU, handling cases and
resolving issues fairly, processing grievances consistently, and observing due
process at all times. If the union violates this duty, it may be charged for ULP by any
aggrieved CBU-covered employee.
(2) Refusal to bargain coUectively with the employer.
The act of refusing to discharge the duty to bargain collectively with the
employer includes wide-ranging scenarios. May be cited as an example is when the
union restrains or coerces the employer in its choice of its representative to the
collective bargaining negotiations by refusing to bargain with the representative it
has designated for that purpose and insisting on dealing only with a particular
management representative. The employer certainly has the sole and exclusive right
to choose the person it shall designate as its representative at the negotiating table
and the SEBA cannot be allowed to meddle in any manner in that choice. It may
further be illustrated by a situation where the SEBA refuses to engage in good-faith
collective bargaining by coming to the bargaining table or listening to any of the
employer's proposals or worse, when it unduly engages in strikes, boycotts or other
concerted coercive actions that transgress its duty to bargain collectively.
IV.
FEATHERBEDDING LAW
l.CONCEPT.
Article 260(d) [249(d)] is the "featherbedding"1 provision in the Labor
Code. Patterned after a similar provision in the Taft-Hartley Act,1 "featherbedding"
or "make-work" refers to the practice, caused and induced· by a union, of hiring
more workers than are needed to perform a given work, job or task or to adopt work
procedures which is evidently senseless, wasteful, inefficient and without legitimate
justifications since it is meant purely for the purpose of employing additional
workers than are necessary. "Featherbedding" is the insistence by unions on
employment of Unnecessary workers, i.e., demanding payment for work no longer
1 ~. 11e am "'eaa1ertJedq"lriJinatt lebmd" ~ peBXt v.oo is ~. ~. cr ~
rewaded. The em 00Ji!a1ec1 il the used~ tl t1 ma11resses il beds, pll)'Jiilg lor mae ca00t. The modem use a
11e em il the litlor relalioos • • illle lW Sllres ralroad iidustiy, IM!k:h used Wlered matesses il
sleeJq QIS. RaW.ay liila"llilns, CO'IIIOOed v.!tl ~ ~ Ylftilled tl MlespeiKI ~ &XJght1D
peserve PIS by negotiatDJ conlitDs v.l1k:h requied ef1lll:rfels kl ~ 'MXKeis tl cb llle cr no 'NOtll cr IWlk:h
~ <XJ1'I)Iex Md ~ w:n lUes so as tl ~a ill dais w:n lor 111 ~v.OO ollerY.te v.wkl
rxt nmtt ~· (MenianWebsb's Oldionlry d l.a.v, 1~ at, MenBnWebsle', K. 1996.1SBN ~1;
VJSi also lhe ~e EncyOOpedia a hllp:/lwitW.Il!ferenceilibu.OOI1'IKooi.iedg Feallelbedarg.tdrrl; Last
lisiled: Jan. 30, 2017).
2
Us lhe Laxr M:rlagement RelaOOns Pdof 1947, ~ 1a101111 as lle "T~ M,'IM!k:h wasencr:ted oo June 23,
1947. ftanendedlleNamilaxJRelalblsAct,29 U.S. Code§ 158·lklflirliila"prd:es, Sec.S[b] ~llered. v.ilk:h
sttes: "kl caJSe cr atfenlll ~ caiSe 111 errpoyer 1:1 pay or defier or CY}'ee tl pay or defier~ I1'0le'f cr ~ t1i:¥J of
naue
value, illhe m
of Ill exaction, lor seM;es are ndpelfonned (J nd 1D be perbmed[.f
CHAPTER VII
lABOR RElATIONS 597
performed by workers because of machines or robots. Featherbedding dramatically
increases labor costs and decreases productivity. 1
This scheme is usually resorted to by a union as a response to the laying-off
~ of workers occasioned by their obsolescence because of the introduction· of
machines, robots or new and innovative technological changes and improvements in
the worlqJlace or as required by minimwn health and safety standards, among other
reasons. Its purpose is to unduly secure the jobs of the workers. Because of these lay-
offs, the unions are constrained to resort to some featherbedding practices.
Accordingly, they usually request that the technological changes be introduced
gradually, or not at all, or that a minimum number of personnel be retained despite
such changes. They resort to some ways and methods of retaining workers even
though there may be little work left for them to do and perform. It therefore
unnecessarily maintains or increases the number of employees used or the amount of
time consumed to work on a specific job, work or undertaking. By so increasing the
demand for workers, featherbedding obviously keeps wages higher. 2
I 2. REQUISITES.
"'
The requisites for featherbedding are as follows:
(1) The labor organization, its officers, agents or representatives have
caused or attempted to cause an employer either:
(a) to pay or agree to pay any money, including the demand for fee
. for union negotiations; or
(b) to deliver or agree to deliver any things of value;
(2) Such demand for payment of money or delivery of things of value is
in the nature of an exaction; and
(3) The services contemplated in exchange for the exaction are not actually
performed or .will not be performed.
On No. 1 above, it is important that the effort at securing payment of sums
of money or delivery of goods or things of value, emanates from and initiated by the
union.
On No. 2 above, the act of the employer in paying the money or delivering
the things of value demanded by the union, is against its will and is therefore, as the
law states, "in the nature of exaction" by the union. "Exoction", as a legal term,
means an excessive or harsh demand of a reward or fee for an official service
1
!' See Laxr l.a.v Q:)sscry, Matt Austi1 Laxr Law, hllps:/hnaflauslilfabO.«m4aaxJ-Iaw-dctiooay/; L.asl a:cessed:
CWler09,2016.
KlllJSt be nded 11ct SecOOn 8(bX6) d lhe Taft.Ha11ey Pd hasoollawed mlleibedd'DJ mmgemen~s 'llliil is aUI.P ci
2
lhe unioo makn;! tle demMd lor payment of wages b' seM;es IVt:h are net Jl(lfbmed or not tl be perbmed. lb¥ever,
lhe prohilibls WJai1st fealheibeddiVJ lll1der l1is sOOiorl are made ~ oott b payroonts lor WJkers not b 'Mik.
__..1.___ _ ................._ ..............
I Coosequenay, 1he agreement presatng rilirlllm nlBIDer a~ mbe tied Md mai1fai1ed and o111er 'mak&¥011"
598 liAR IU:VI~WtK UN LAHUK U\YV
performed in the normal course of duty, It is taking more fee or ~y for the services
than what the law allows, under color of one's official authority. While it is a fonn
of extortion,1 it should, however, be differentiated from "extortion" in tha~ in
"extortion, " the union extorts more than its due, when something is due; in
"I!XIICiion," the union exacts what is not due, when there is nothing due to it3
On No. 3 above, although the employer agrees to pay money or deliver
things of value, the employees to whom such payment and delivery are made will
not actually do or perfonn the contemplated services. Being an exaction, no services
would be rendered in exchange for the money paid or things of value delivered.
3. DEMAND FOR PAYMENT OF STANDBY SERVICES.
A union commits ULP under this provision by causing or attempting to
cause an employer to pay or agree to pay for standby services. Payments for
"standing-by," or for the substantial equivalent of "standing-by," are not payments
for "services performed" within the meaning of the law. When an employer receives
a bona-fide offer of competent performance of relevant services, it remains for tht:
employer, through free and fair negotiation, to determine whether such offer should
!
be accepted and what compensation should be paid for the work done. 4
It is an exaction constitutive ofULP within the meaning of this law for a
union to demand of the employer for a contract calling for payment of compensation
for the presence of one of its member.; at a jobsite when no unionist's work is being
doi:te ther~in, and when the employer indicated that it had no need f9r such labor, the
union staged a strike to make the employer respond to 3UCh demand. The demand
herein is considered not a bona-fide offer of competent performance of relevant
services.5
A union's demand that a theater corporation employ maintenance men at
its theater is also an arguable violation of the anti-featherbedding provision of the
law where maintenance men employed at other theaters wider union compulsion did
little or no actual work but were merely present on the premises during working
homs.6
1 t.9rq d'!'C8Cion' per USI.egaaxn b.lld athllp~.am'e'exa::lkn'.l.ast ~ Jooe ll, 2016. N<*!
llat '{IJle act d exacq nmey a fie m exa:led Is also caled exa:iln.' See *> ~.Com at
htlp:l~.aglexa:tin'. Lastao:essed: Jooe ~. 2016.
2 SeeYcaOicOOnay.amt4hHp:l/w.wl.ywtilnay~.LastVisik!d:Jooell,2016. ·
3 See USLega.can It htlp:lldefroilbls.uslegli!Xll1ll&'exdn'. Last &:~: JlJle ll, 2016..The Freeettiooay.can at
hllp~Nreedk:lknaly.corntexa:tion, ~ IIese Mil ems, his: 'B<ACTION. bts. Awllful Yt100!J
dcne lrf 111 dlicef, «by ooe v.OO,IJ'Ider mlor rJ. his m, ~ mere te «pay b' Ills seiViles 11M v.ta 1he law abo$.
BeMeen exbtion Mel exa::liJn thele. is ltis dl1!~ 11ft illle tamer case 1he dlicef exbts mere tal his liJe. v.11en
sanettf,J is rue~ hill; n1he latter, 11e exacts v.tlatis net his due,l'tflen t.ere is 110ttg duet> hi11. 'Mshad; to.l.itl. 368.'
last !mlSSEd: Jooe 30, 2016.
4 N..RBv. Gcmlle~. R:., 345US 117 97 LEd 864,73 SCt560.
s ilenationaiBrolhedlooddTeansters, et., 212 NLRB968,1974CCH tt.RB26867,87 BNA lRRM 1101.
6 CalsllilaledThelms, k1c. v. Theal1i:;al SI8;Je~lml, 69 Cal2d713, 73Cal Rpt213, 447 P2d 325.
CHAPTER VII
LABOR RElATIONS 599
4. DEMAND FOR PAYMENT OF MADE WORK.
Where work is actually done by an employee with the employer's consen~
the union's demand that the employee be compensated for time spent in doing the
1
work does not violate the law. The law leaves to collective bargaining the
detennination of what work, if any, including bona-fide "made work," shall be
included as compensable services and what rate of compensation shall be paid for
itl
A musicians' union has been held not to have violated the anti-
featherbedding provision by refusing to permit a union band to perfonn at the
opening game of the baseball season, refusing to pennit a union organist to play at
the home games, and picketing the baseball stadium, in order to force the owner of
the baseball team to hire a union band to play at all weekend home games; or by
refusing to give its consent to appearances of travelling bands in a theater unless the
theater manager also employs a local orchestra in cannection with certain programs
whet e the local orchestra is to perform actual and not token services, even though
the theater manager does not need or want to employ the local orchestra. 3 .
Similarly, a printers' union does not violate the .anti-featherbedding
provision by securing payment of wages to printers from newspapers for setting
"bogus" - duplicate forms for local advertisements although the newspaper already
has cardboard matrices to be used as molds for metal casting from which to print the
same advertisements - even though the ''bogus" is ordinarily not used but is melted
down immediately. 4
5. DEMAND FORPAYMENTOF WORK ALREADY COMPENSATED.
The anti-featherbedding provision has been held not to bar a union from
demanding payment for work for which the employer has already paid another
person Hence, a union has been held not guilty of ULP in demanding payment to it
of an amotmt equal to the wages paid by the employer to a non-union employee for
work to which the union's members were entitled. If the work is actually done by
employees, there can be no conflict with the anti-featherbedding provision,
regardless of whether or not the persons receiving payment are the ones who
perfonned the work. 5
NLRB v. GcmJie Enterprises, Inc., 345 US 117, fll Ed 864, 73 SCt 560; Americm Newspaper~ Association v.
1
NLRB, 345US 100,97 LEd852, 73SCt552,31 ALR2d497.
2 hneB:a1 NewspaperPublishersAm:ia!OOv.NLRB,345 US 100,97 bEd852, 73 SCt552, 31 AI.R2d497.
MJSkians Ulbn v. ~ C011t c:l Alimeda County, 69 Cal2ct$5, 73 Cal~ 201, 447 P2d 313; NLRB v. GaltJie
3
Eneprises, R:., 345 US 117,97 LEd~. 735 Ct560.
.Arne!icM ~ PWishers Associa1ioo v. NI.RB, 345 US 100, 97 LEd 852, 73 SCt 552, 31 AI.R2d 497; lnlematiooal
4
5
1'00 ~Bldg. &C'armrll..aba'efs Lmn,135 NLRB 11531962CCH NUll310938,49 BnA.LRRM 1638.
Rabooi'l v. NLRB [CA2! 195 F2d 906.
600 BAR REviEWER ON lABOR lAW
v.
DEMAND OR ACCEPTANCE
OF NEGOTIATION FEES OR ATIORNEY'S FEES
!.CONCEPT.
Under Article 260(e) [249(e)], it is ULP for a labor organization, its
officers, agents or representatives to ask for or accept negotiation fees or attorney's
fees from employers as part of the settlement of any issue in collective bargaining or
any other dispute.
2. COUNTERPART PROVISION.
This is the counterpart provision of Article 259(h) [248(h)] regarding the
paymen~ on the part of the employer, of negotiation fees or attorney's fees to the
union or its officers or agents as part of the settlement of any issue in collective
bargaining or any other dispute.
3. RATIONALE BEHIND THE PROHIBITION.
The reason for this policy of the law is to prevent undue influence by the
employer on the independence of the union in its decision-making over any issues it
may have with the former. Moreover, it is possible that the matt.er of fixmg the
amount of negotiation fees or attorney's fees alone would present a problem much
complicated than the more substantive issues involving the terms and conditions of
employment and the righ~ benefits or welfare of the workers.
4. REQUISITES.
Following are the requisites to hold a union liable for ULP based on this
particular ground:
(l) The union or any of its officers, agents or representatives commit
.either of the following acts:
(a) to ask for negotiation fees or attorney's fees; or
(b) to accept negotiation fees or attorney's fees;
(2) The negotiation fees or attorney's fees are demanded from, or given
by, the employer as part of the settlement of any of the following
issues:
(a) in collective bargaining; or
(b) in any other dispute.
On No. 1 above, there are 2 situations contemplated, namely:
(a) when the union, its officers, agents or representatives are held guilty of
ULP from the very moment they "ask" for negotiation fees or attorney's fees from
the employer. Under this situation, there is no need to prove that the employer has
succumbed and given in to the union's demand.
CHAPTER VII
lABOR RElATIONS 601
(b) when the union, its officers, agents or representatives are held guilty of
ULP even if they have not asked or demanded from the employer the payment to
them of negotiation fees or attorney's fees for as long as there is evidence that they
have "accepted" negotiation fees or attorney's fees from the employer.
On No.2 above, in order to be held guilty ofULP, there is a need to prove
that the union has "asked" or "accepted," as the case may be, for the payment to it
of the negotiation fees or attorney's fees by the employer, as principal consideration
for the settlement of any issues affecting labor-management relations, or even if not
a principal consideration, as part of the settlement of any such issues, chief of which
are issues affecting collective bargaining.
VI.
VIOLATION OF THE CBA
I. CONCEPT.
Under Article 260(f) [249(t)], it is considered ULP for a labor organization,
its officers, agents or representatives to violate a CBA.
2. COUNTERPART PROVISION.
This is the counterpart provision of Article 259(i) [248(i)] regarding the
employer's act of violating a CBA. But it must be noted that under Article 274 [261]
of the Labor Code, violation of the CBA is generally considered merely a grievable
issue. It becomes an un.fuir 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 with equal force to the labor
organization as well.
VII.
BURDEN OF PROOF
IN ULP CASES UNDER ARTICLE 260 [2491
For a charge of ULP against a labor organization to prosper, the onus
probandi rests upon the party alleging it to prove or substantiate such claims by the
requisite quantum of evidence! In labor cases as in other · administrative
Proceedings, substantial evidence or such relevant evidence as a reasonable mind
might accept as sufficient to support a conclusion is required. 2 Moreover, it is
1
llaptis1a v. Vimueva, G.R No. 194709, Jllo/ 31,2013, citing UST f<Dij IA:Jn v. lJnWersay d 8n> Tanas. G.R No.
180892. Apri 7, 2009, 584 SCRA 648. 662.
1
ld., carg StrldMd 01ftred Bank En1lfoyees Uni:Jn (NUBE) v. Coolesoc, GR. No. 114974, June 1s, 2004,476 Phi. 346,
-:lJ7.
6o2 BAR REVIEWER ON lABOR lAW
indubitable that all the probtbited acts constituting unfair labor practice should
materially relate to the workers' right to self-organization.
1 the interests of labor and management together with the overarching public interest. 1
vm.
CRIMINAL AND CIVIL LIABILITY
FOR ULPs OF LABOR ORGANIZATION
1. PERSONS L:iABLE.
The last paragraph of Article 260 [249] is explicit in prescribing who
should be held criminally liable for ULPs committed by labor organizations. It
states that only the officers, members of governing boards, representatives or agents
or members oflabor associations or organizations who have actually participated in,
authorized or ratified ULPs shall be so held criminally liable.
F.
PEACEFUL CONCERTED ACTIVITIES2
1.
BY LABOR ORGANIZATION
a.
STRIKE
1. NATURE~ CONCEPT OF STRIKE.
The right to strike is a constitutionae and legal4 right of the workers in the
same manner that the employers have the inherent and statutory right to lockou~ all
within the context of labor relations and collective bargaining. It is a means of last
resort and presupposes that the duty to bargain in good faith has been fulfilled and
other voluntary modes of dispute settlement have been tried and exhausted.5
It is the most preeminent of the economic weapons of workers which they
unsheathe to force management to agree to an equitable sharing of the joint product
of labor and capital Undeniably, strikes exert some disquieting effects not only on
the relationship between labor and management but also on the general peace and
1 ld., ciPJ Greci Pacli: Life En1Jklyees lkti:xw. Great PiKific Life Assura1ce Capaatioo. G.R No. 126717. Feb. 11, 1999,
362 Pill. 451' 464.
2 Re1!Mrt Pr1Mskm: Mk:1es 278 (2631 Cl1d 279 J264L t.m Code.
3 Sec6oo 3, Artk:le XJn, 1987 Coostlutioo.
4 Mk:le 278 (263), Lalor Code.
s No. 1, QJidehs GaJemi'lg Lalor Relatioos; No.4, NCMB Priner on SUi<e, Pi:ketir!J Cl1d lockout, 2nd Edition, DereniJer
1995; llawatBUOOd ~ Wslggagawa0BM)v. NLRC; G.R No. 91980,June27, 1991.
CHAPTER VII 603
lABOR RElATIONS
progress of society. Our laws thus regulate their exercise within reason by balancing
2. DEFINITION.
"Strike" means any temporary stoppage of work by the concerted action of
the employees as a result of an industrial or labor dispute. 2
3. ELEMENTS.
Based on this definition, the following are the elements of a strike:
(1) Temporary stoppage of work by the employees;
(2) Through their concerted actiog and
(2) Occasioned by an industrial or tabor dispute.
4. CLASSIFICATION OF STRIKES.
A strike may be classified:
l. As to nature:
a) Legal strike - one called for a valid purpose and conducted through
means allowed by law.3
b) Illegal strike - one staged for a purpose not recognized by law or, if
for. a valid pwpose, it is conducted through means not sanctioned by
law. 4
c) Economic strike- one declared to demand higher wages, overtime
pay, holiday pay, vacation pay, etc.5 It is declared for the pwpose of
forcing wage or other concessions from the employer which he is not
required by law to grant. 6 It is a strike which arose out of a
bargaining deadlock in the CBA negotiations. 7
d) Unfair labor practice (ULP) or political strike- one called to protest
against the employer's ULPs euumerated in Article 259 [248] of the
Labor Code, including gross violation of the CBA under Article 274
1
~Willllers lklixlv.KRC,G.R.Nos. 95494-97,Seft07, 1995,248 SCRA95;Gct1Qr~'PortServke,
nc~NPORT] v. NLRC, G.R No.103560, Jutt 6, 1995.
2 Miele 219(o) [212(oH. l.alor Cede, as llllellded tty SecOOn 4, RA. No. 6715; Sediln 1 t.rul!Ull, 8cJd( V, IU!S tl
~ l1e t.m Code, as Mmled by Depabnent Qder No. 4G-03, Selies o12003, feb. 17, 2003t No. 1, NCMB
Prineron Stri<e, Pidleti1g ClldlDdtOll, 2nd Ediion, Dlmrber1995; Section 1[24J, Rule II, toe MnJal C(Prtx:edues
b' Cadation md PreYEn1Ne Medic6Jl Cases; TCPjda M:Jb' Phis. COlp. Wakers Associailn [TM'CWA) v. NLRC, G.R
Nos. 158786 &158789 Cl1d 15879SOO, Oct 19, 2007; G&STrnportCOlp. v. w.rte, G.R No. 181303, Sept 13, 2007.
3
No.2, NCMB Prmeroo'Stlte, Meli"g a1d l.od(out, 2nd Edition, DereniJer 1995.
4 ld.
5 ld.
6
ld.; Consoi:la1ed Lalor AssociaOOn C(lle ~ v. Mrsnm &Co.,G.R Nos. L-17038Cild L-17057, Ju~ 31, 1964.
7
NationallhlioodWolkers il the HeEl, Restul111Cild Alied Qtuslries [NU'M-IRAIN-APIAUF)fui Hotelffllko Chaplerv.
TheHoo. CA. G.R Nos.163942Cild 166295,Ncw.11,2008.
6o4 BAR REVIEWER ON IAROR lAW
[261] and union-busting under Article 278(c) [263(c)] of the Labor
Code.'
e) Slowdown strike - one staged where the workers do not quit their
work but merely slacked or reduced their normal work output. 2
f) Wildcat strike - one declared and staged without the majority
approval of the certified bargaining agent 3 It is a spontaneous or
unannounced illegal concerted action by a section or group ·of
employees without the sanction or authorization of the union or in
violation of the union's constitution and by-laws4 or without .
following the proper procedure for striking such as majority approval
of the union members through appropriate union balloting5 It is also
called an "outlaw strike" or "quickie strike. "6
g) Sit-down strike - one where the workers stop working but do not
leave their place of work. 7
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 t!J.e purpose of
putting pressure on the goveilli~ent to enact certain labor-related
measures such as mandated wage increases.
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. 8
b) Urifair labor practice strike or political strike. 9
4. As to the nature ofthe strikers' action:
a) Partial strike- one which consists of unannounced work stoppages,
such as slowdowns, walkouts or unauthorized extension of rest
periods.
1 No.2, NCMB l'linerooStke, Pi::keti'g 111<1 Lockout, 2nd Edful, Decerriler1995.
2 ld.; F~uelaw. tJooeey Foods CcrporaOOn, G.R Nos.178409 &178434, June 8, 2011.
3 ld.
No.5,Ptftcy~No. 46.
amss !Ji::tiooay.<Xllll athttp1fNAw.hJsilessdK:tio.rom/del'nitioMYildc-sbike.hlmi.Lastaccessed: Feb. 14, 2017.
6 Busiless llctionay.oom, Slqll'll.
7 No.2, NCMB l'lineroo Slrie, Pi::ketilg 111<1 Lockout. 2nd&filioo, Decerriler1995; G&STranspa!Colp. v.lnlante, G.R
No. 160303, Sept 13,2007.
8 Supra.
9 Supra.
CHAPTER VI! 6os
lABOR RELATIONS
b) Sit-down strike. 1
c) Slowdown strike. 2
5. As to the extent ofthe interest ofstrikers:
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, affects
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
compa.nies, 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 t!J.e ''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.
5. SOME CASES ON FORMS OF STRIKE.
a. Sporting of closely cropped hair or cleanly shaven beads, a form of
illegal strike.
The sporting hy 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 was
considered a form of illegal strike in Dusit Hotel Nikko.4 The union's concerted
I &ova.
2~ .
3
Oeet. 01UM &Sans, Ire. v. Kaischrl ng rnga Manggagawa sal<alay sa~. G.R No. L-8149, 99 Phll1050;G &S
Tr<IISpOrtQrp. v. Willie, GR t«l. 160303, Sejt 13,2007.
~ Nitooaltm dwaKels nile Hotel, Restmrillld Arel i10Jskies [NlMHRAIN-APt-RJF) O:Jsit fbtel Nid<o ~v.
The Hon. CA, G.R Ncs. 16394211ld 1$3295, Nov.11, 2008. The llllecede!t pertilentta:L; of this 13ie ildicale tlat oo
OciOOef 24, 2000, petitioner 1.1100 submi!BI its CBA negofiabJ p!llpOSas ~ l1e HeEl. /ls negotialiooS ensued, ft1e paties
failed " CliNe at ~ mpiOOie Mls aod anfifions. ~ tl the bagaili"g dedx:k, l1e unkln, 00 December 20,
2001, filed aNotice of Stt.e oo lhegroundd the balg<inilg dedlck v.it1 the NCI.B. The!eil'ler, CXX1Ciiabt heai1Qs we1e
t:OOduc8l vmich proved ~. toosequenltj, a SVte VrJe was <XXlduded by 11e 111ion oo JanuSIY 14, 2002 oo
M1i:h ft was decided thallle lki:ln v.OOd ~a s!rile. Soon lherealter, i11he a1temoot d Jcmary 17, 2002, ft1e lrirl
606 BAR REviEWER ON lABOR lAW
violation of the Hotel's Grooming Standards which resulted in the temporary
cessation and disruption of the Hotel's operations is an unprotected act and should
be considered as an illegal strike.
b. Slowdown strike.
Work slowdown is a "strike on the instailment plan," a willful reduction in
the rate of work by the concerted action of the workers for the purpose of restricting
the output of the employer, in relation to a labor dispute. It is an activity by which
workers, without a complete stoppage of work, retard production or their
performance of duties and functions to compel management to grant their demands.
Such a slowdown is generally condemned as inherently illicit and unjustifiable
because while the employees "continue to work and remain at their positions and
accept the wages paid to them," they, at the same time, "select what part of their
allotted tasks they care to perform of their own volition or refuse openly or secretly,
to the employer's damage, to do other work." In other words, they "work on their
mom terms." 1 Simply descnbed, unlike other forms of strike, the employees involved
in a siowdown strike do not walk out of their jobs to hurt the company. They need
only to stop work or reduce the rate of their work while generally remaining in their
asstgned posts.2
0
CHAPTER VII
lABOR RElATIONS 607
employer to yield to their demands. The case o{ Intemhil Laboratories 1 has
declared this as a fonn of illegal strike.
e. Boycott of products or services.
Another fonn of strike is boycott of products or services of the employer.
This involves the concerted refusal to patronize an employer's goods or services and
2
to persuade others to a like refusal. An example is Sukothai,l where the individual
respondents were shown to have intimidated and harassed a considerable number of
customers to tum them away and discourage them from patronizing the restaurant of
petitioner; waving their arms and shouting at the- passersby, "Huwag kayong
pumasok sa Sukhothai!" and "Nilagyan na namin ng lason ang pagkain d'yan!" and
numerous other statements made to discredit the reputation of the establishment
thereby effectively preventing the entry of customers.
i.
VALID VERSUS ILLEGAL STRlKES
This new topic prescribed in the Syllabus4 would necessarily require a

discussion of the requisites for a valid strike and the reasons for declaring a strike
illegal. These are discussed below.
c. Mass leave.
The tenn "mass leave" has been left undefined by the Labor Code. Plainly, i-a.
the legislature intended that the term's ordinary sense be used. "Mass" is defined as PROCEDURAL BUT MANDATORY REQUISITES
''participated in, attended by, or affecting a large number of individuals; having a FOR A VALID Al'W LEGAL STRIKE ORWCKOUT
large-scale character;" while the tenn "leave" is defined as "an authorized absence
or vacation from duty or employment usually with pay.'.J Thus, the phrase "mass l. REQUISITES FOR A VALID STRIKE.
leave" may der to a simultaneous i!Vailment of authorized leave benefits by a large
Following are the procedural but mandatory requisites for a valid and
number of employees in a company. 4 legal strike:
d. Overtime boycott
FIRST REQUISITE - It must be based on any or both of the following
Overtime boycott consists in the act of the workers in refusing to render two (2) exclusive grounds:
overtime work in violation of the CBA; it is resorted to as a means to coerce the (1) Unfair labor practice (ULP) of the employer;5
(2) Collective bargaining deadlock (CBD).
hekl ageneral assenti)' at its cAb klcaled illhe IWs basemErt. ne sane nmbels spated cbset)' aupped heir or
~ slial'en heads. The next daf, « oo may 18, 2002, more mae lriln rnertilas cane tl v.m spa1irJ 11e scme SECOND REQUISITE - A notice of strike must be filed with the
h<t style. The 1-W preYellled l1ese Wlllkers froo1 entelilJ l1e prenises daimi'g &lat lley Vdaled the Ho!el's Q'OOring NCMB-DOLE;6
Str1da'ds. In view ct 1he Holefs m, lhe Llliln U,Jed api:ket outide lhe Hotel premises.l..ab'. olher WOikers were also
prevenled froo1 enllm;l1he HeEl autg llem tl joillle pitket. Fa' llis reason l1e I1Xel experienced a severe lack d
nmpower.wth bted 11em t ~ ceaseoperalioos il me resliulllt!;.
1 kl1erphi LallOOIIaies ~ U1ioo.fFW v.lntslphill.abaab:xies,lnc., GR No. 142824, Dec. 19, 2001; llcrN at Buldoo 1 lnBphl Lalorat!xies ErrpklyeeslJniln.FFWv. ~ll.abaafaies,lnc., G.R No. 142824, Dec. 19, 2001.
Raw at EkJIOOd ng Mirlggagawa PBMJ v. NLRC, GR ~. 91980, June 27, 1991, 198 SCRA 586.
2
ng lknggagawa v. NLRC, G.R ~. 91980, June 27, 1991, 198 SffiA 586.
Sukolhai Cuisi1e and Resfaurantv. CA., G.R No. 150437, Ju~ 17, 2006.
3
2 F~ v. Mlnmy Foods Colporciiln, G.R Nos. 178409 & 178434, June 8, 201i; Bagong Pagkaf(aisa ng
~ ng T~ lnlemaiooal v. Secrelay d the Depa1nent rJ Lm llld ~ G.R Nos. 16740111ld ' ~1Dihe2017~.
5
167407,.Al!y5,2010. See Article 259 (2481 tlr UlPs d ef11lloyers, Mkle 274 [2611 v.flich makes gross voaoon d aCBA aULP act. and Artide
3 Webs!E!'s Thld New lntemalilnal Dictionary [19811. 278(c) (263(c)l for lllKxHlusting.
National Coooliation and Mldiation Board (NCMB) athe Depa11ment of Labor and ~(DOLE).
6
4 ~v. Bio:nedk:aHea«TGare,k\c.,G.R No193789,Sept 19,2012.
608 BAR REVIEWER ON lABOR LAW CHAPTER VII 609
LABOR RELATIONS

THIRD 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,
infonning said office of the decision to conduct a strike vote, and the date, place, and
time thereof and asking it to supervise the taking of the strike vote;
FOURTH REQUISITE - A strike vote mlist be taken where a majority of
the members of the union obtained by secret ballot in a meeting called for the
purpose must approve it;
FIFTH REQUISITE - A strike vote report should be submitted to the
NCMB-DOLE at least seven (7) days before the intended date of the strike;
SIXTH REQUISITE - Except in cases of union-busting, observance of
the cooling-off period of 15 days, in case of ULP of the employer, or 30 days, in
case of CBD, reckoned from the filing of the notice of strike (per 2nd requisite
above); and
SEVENTH REQUISITE - The 7-day waiting period or strike bar1
reckoned after the submission of the strike vote report to t:h<l NCMB-DOLE (per 5th
requisite above) should be fully observed in all cases.
2. SOME PRINCIPLES ON THE REQUISITES.
a) On the FIRST Requisite
(Valid Grounds)
The law recognizes only two (2) grounds in support of a valid strike, viz.:
( 1) Unfair labor practice (ULP or Political Strike); and/or
1 need to supervise the conduct of the strike vote to prevent any acts of
(2) Collective bargaining deadlock (Economic Strike).
No other grounds may be invoked in a notice of strikellockout. A strike
or lockout not based on any of the two (2) grounds discussed above is illegal?
Therefore, the following are not valid grounds:
(a) Violations ofCBAs;
(b) Inter-union and internal union disputes;
(1;) Issues brought to voluntary or compulsory arbitration;
(d) Legislated wage orders; and
3
(e) Labor standard cases.
1 See aso Section 5, RIAe XXII, Book v, "Rules to kr!>len1elt 111e Labor Code, as iinellded by Depar1ment Older No. 4().{)3,
Series of 2003, [Feb. 17, 2003], llld as tnUler lllB1ded lrf Depar1ment Older No. 4GM3 [Meith 12, 2003t Section 1,
Rule V, NCMB Mcooal of Pllx:edures for ConciiaOOn illd Plevefltive M!diatioo Cases; No. 6, NCMl Primer on Stn'ke,
PK:ketilg ifldlockout, 2nd Edition;Decenilef 1995.
2 SanMQuelfupooltionV.NLRC,G.R No.99266,Mid12, 1999.
3 Miele 21~1 [263(blJ, Labor Code; See aso Section s, Rue xxn. Book v, Rules to k11J~ement 11e l.aboc Code, as
<mended by Depcnnent Older No. -40-03, Series d 2003,[Feb. 17, 2003j,.llld as fult1er anended by l.lepa1meot Order
No. 40M3 jMalth 12, 2003]; No.8, NCMB Primer on S1!te, PK:ketilg en! Lockout,~ EdiOOn, December1995; Section 3,
b) On tlie SECOND Requisite
(Notice of Strike)
A "notice ofstrike" refers to the notification filed by a duly registered labor
union with the NCMB-DOLE, infonning the latter of its intention to go on strike
because of the alleged commission by the employer of ULP or because of a
deadlock in the collective bargaining negotiations.'
Contents of the notice of strike/lockout The notice should state, among
others, the ilames and addresses of the employer and the union involved, the nature
of the industry to which the employer belongs, the number of union members and
workers in the bargaining unit, and such other relevant data as may facilitate the
settlement of the dispute, such as a brief statement or enumeration of all pending
labor disputes involving the same parties.
c) On the THIRD Requisite
(24-hour prior notice to NCMB)
This third requisite requires that a 24-hour notice be served to the NCiviB-
DOLE prior to the taking of t'le strike vote by secret balloting, infonnirig it of the
union's decision to conduct a strike vote, as well as the date, place, and time thereof.
This requisite was enunciated in Capitol Medical Center, Inc. v. NLRC. z
The purposes of this notice requirement are as follows:
(a) To infonn the NCMB of the intent of the union to conduct a strike vote;
(b) To give the NCMB ample time to decide on whether or not there is a
violence and/or irregularities attendant thereto; and
(c) Should the NCMB decide on its own initiative or upon the request of an
interested party, including the employer, to supervise the strike vote, to ·
give it an1ple time to prepare for the deployment of the requisite
personne~ including peace officers if need be.
d) On the FOURTH Requisite
(Strike Vote)
It is a requirement that 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
Rukl V, NCMB Mcriual d Procedures for Conciiation en! Preventive Me<fla!ion Cases; No. 7, Glideliles Govenlirg labor
Relations.
1
Section 1!18], RUe Ill, NcM8 Manual d Procedures for Coociiation and l'relenWe Me<f~alion Cases.
2
G.R. No. 147080,.6~lril26, 2005.
610 BAR REVIEWER ON lABOR lAW
meetings or referenda called for that purpose. This process is called "strike vote
baUoting. " 1
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
thereof. At the same time, it is meant to discourage wildcat strikes, union bossism
. 2
and even corrupb.on.
e) On the FIFTII Requisite
(Submission of the strike vote report)
In every case of strike vote, the union is required to furnish a report on the
resuhs of the voting to the NCMB-DOLE. Its submission is meant to ensure that a
strike vote was indeed taken and in the event that the report is false, to afford. the
3
members an opportunity to take the appropriate remedy before it is too Jate. It is a
fact, for instance, that many disastrous strikes have been staged based merely on the
insistence of minority groups within the union. The submission of the report gives
assurance that a strike vote has been taken and that, if the report concerning it is
4
false, the majority of the members can take appropriate remedy before it is too late.
A strike vote should be reported at least seven (7) days before the actual
staging of the L.1tended strikellockou~ subject to the observance of the cooling-off
periods provided under the law.
5
The failure of the union to prove that it obtained the required strike vote
among its members and that the results thereof were submitted to the NCMB would
6
render the strike illegal.
t) On the SIXm Requisite
(Cooling-off Period)
The cooling-off periods before a strike or lockout may be conducted are as
follows:
(1) In case of bargaining deadlock, the cooling-off period is thirty (30)
days;
1 See Sedkri 1 fiM!, rue 1. Bcxt v, rues" lfllllenmt 11e Lm(.(xle, as ·!l'lmled by Oeparlment{)rder No. 4Gm,
Series a2003. [Feb. 17, 2003!.
2 No.12, NCM3 Ptineroo Strile, Picketg ll1d Lockat,~Edlioo. Oecenter1995.
3 No.13, NCM3 Ptineroo Siile, PK:keli'g 111dl.:oc:kcU;2ndBfilkxl, Deoentier1995.
4 Ni11ooa1 FedelalilnofSugarWakels (NFSW)v. 0/ejela, GR. No. L-59743,May31, 1982.
s Aitide 278(1) [263(1)1. t.m Code; Sedkri 5, llJIIe )()(I~ Bcxt v, PJJies b kt1*mentlhe Lm Code, as anended by
llep<rtneit Order No. 4Gm, Series ol2003, [Feb. 17, 20031 ald as trller anended by Oep;rlment Order No. 43M3
[Mml12, 2003t,. No. 2~]. Guidelines Gc1lemirg Lm RelaOOns; No.6, NCMl Priner 00 Slme, PK:ketg in! LockCAJI,
2nd Editioo, Deoerrber 1995; Section 2, ~VII, NCM3 Mnlal of Procedllesilr Condlialioo !lld flre.reniNe M!diation
Cases.
~ P1iei0 v. NIRC, G.R No. 149610, M;). 20, 2004; S<rniilq MllggaJilWa sa~ Liles, Inc. - NAFLU v. &JIJjcio
Liles, Inc., G.R No. 140992, March 25, 2004; ~ MangglrJawa sa Wlex Produds, Inc. v. NLRC, {OR No.
119467,Feb.1,2000.
CHArTER VII 611
lABOR RElATIONS
{2) In case of unfair labor practice, the cooling-off period is fifteen {15)
days. 1
The exception to the rule on observance of the cooling-off period is in
cases of union-busting which is considered an unfair labor practice where the said
15-day cooling-off period may be disregarded completely.
In requiring a cooling-off period, the avowed intent of the law is to
provide an opportunity for mediation and conciliation by the NCMB-DOLE. It is
designed to afford the parties the opportunity to amicably resolve the dispute with
the assistance of the Conciliators-Mediators of the NCMB-DOLE. 2
g) On the SEVENTH Requisite
(7-day waiting period or strike ban)
After the taking of the strike vote, the union, in every case, should furnish
the NCMB-DOLE, the results of the voting at least seven (7) days before the acrual
staging of the intended strike or lockou~ subject to the cooling-off periods provided
therein.3
The cooling-off period and the 7-day waiting period or strike ban (waiting
periods) after the submission of the strike vote repo~ are meant to be, and should be
deemed, both mandatory.4 It would indeed be self-defeating for the law to
imperatively require the filing of a strike notice and strike vote report without at the
same time making ihe prescribed waiting periods mandatory. 5
• Purpose of the 7-day waiting period or strike ban.
The Supreme Court has elucidated on the purpose of the 7-day waiting
period or strike ban in the leading case of NFSW v. Ovejera. 6 It declared herein that
the seven (7) day waiting period is intended to give the NCMB-OOLE an
opportunity to verifY whether the projected strike really carries the imprimatur of the
majority of the union members. The need for an assurance that majority of the union
members support the strike cannot be gainsaid. Strike is usually the last weapon of
1 Mk:le 278(c) (263(c)1Lm Code; Sedi:rl7, RUe )()(II, Bcxt V, Rlres b ~ 11e Lm Code, as Mlel1ded by
Aitide 1, Depabnent Order No. 4Gm, Series ct 2003 p=eiJnay 17, 2003]', No.6, NCMl Priner 00 SH<e, Pi:ke&lg llld
Locltat, 2nd Edition, Oecenter 1995; Sedioo 5, RUe IV, NCt.tl Mci1Ual a Procedlres b' Conc:iai:rlllld P!eventive
Mldiifui Cases; No.3, Gu«kfnes GcNoot1J LmRelatkxls.
2 ~.14, NCMB Priner oo Stie, Pk:keti'g ll'llf Loctrul, ~ Ed'Ibl, Decen'ber 1995; Natiooal Fmalicrl of Suga- 'MrtEIS
(NFSW) v. Oveje!a, G.R. No. l-59743, Play 31, 1982; See also flhiro! klduslries, klc. Y. R1m:o ~ Llilor
-AssOOailn [PILAJ, G.R No. 170830, M;). 11, 2010.
3 No.6, NCt.ll Priner m Sl!ie, Pk:keti'g ll'llf Lockrul, 2nd Edilioo, Decen'ber 1995.
4 CCBPI Pai1rrix Wmas Unbl v. NIRC, G.R. No. 114521, Nov. 27, 1998; Coca-Cola Bottlers PhiS, blc. v. NlRC, G.R. No.
123491, No.o. 27, 1998; Gokl City lntegraild Pat Servioo, Inc. v. NLRC, G.R No. 103560, JU)' 6, 1995, 245 SCRA 627,
636-637.
5 See also CCBP1 Pos1rrix Wmas UnKln v. NLRC, G.R No. 114521, N!JI. 27, 1998; Coca-Cola BollfeiS Phils, Inc. v. NLRC,
G.R No.123491, Nov. 27,1998,299 SCRA410; Gokl City lniEgraled PatSeM:e, Inc. v. NLRC, supra.
6 National Federation of Sugar Workers (NFSW) v. Ovejera,G.R No. L-59743, May 31, 1982.
612 BAR REVIEWER ON lABOR lAW
labor to compel capital to concede to its bargaining demands or to defend itself
against unfair labor practices of management. It is a weapon that can either breathe
life to or destroy the union and its members in their struggle with management for a
more equitable due of their labors. The decision to wield the weapon of strike must
therefore rest on a rational basis, free from emotionalism, unswayed by the temperS
and tantrums of a few hotheads, and firmly focused on the legitimate interest of the
union which should not, however, be antithetical to the public welfare. Thus, our
laws require the decision to strike to be the consensus of the majority for while the
majority is not infallible, stil~ it is the best hedge against haste and error. In addition,
a majority vote assures the union that it will go to war against management with the
strength derived from unity and, hence, with better chance to succeed. 1
• Waiting period/strike ban vs. cooling-off period.
The 7-day waiting period or strike ban is a distinct and separate
requirement from the 15-day or 30-day cooling-off period prescribed by law. The
latter cannot be substituted for the former. This is clear from the provision of Article
278(f) [263(t)] which states that the 7-day requirement is "subjxt to the cooling-off
period herein provided." 2
The cooling-off period, on the one hand, is counted from the time of the
filing of the notice of strike up to the intended or actual staging thereof. In case of
ULP, the cooling-off period is 15 days; and in case of collective bargaining
deadlock, such period is 30 days. 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 or strike ban after the
submission of the report on the strike/lockout vote.3
• EITect on the reckoning ofthe 7-day waiting period or strike/lockout
ban if the strike/lockout vote is taken and reported within the
cooling-off period
It must be stressed that the requirements of cooling-off period and 7-day
waiting period or strike ban must both be complied with, although the labor union
may take a strike vote and report the same to the NCMB-DOLE within the statutory
cooling-off period In this case, the 7-day waiting period or strike ban should be
counted not from the date of submission of the report but "from the day foUowing
1 See also Phiml bllskies,lnc. v. Phiral k1dusbies l..alxJ Association [PILA), GR No. 170830, klg. 11, 2010; L.apanday
WccXers lm1 v. NIRC. G.R Nos. 95494-97, Sept 07, 1995, 248 SCRA 95; No. 15, NCMl Primer oo Slrte, Pi:ke!ilg ood
Lockout, 2nd EdiOOn, Oecerrtler 1995. . 6
2 &maha1g ~sa Sulpicio Liles, Inc.- NAFlU v. Supcioti"oes, Inc., GR No. 1-10992, March 25, 2004.
3 1.001 of Fipro ~ees v. Nes1le PhHippi:les, Inc., G.R No. 88710.13, Dec.19, 1990; Lllera l..alxJ Uni:Jn v. Phi. Cal
Co., G.R No. L-1834, March 28, 1952, 91 Phi. 72; Phiippi1e Airlines v. flhiWi1e Aili1es ~Association, G.R No.
l-8197, Oct 31,1958.
lABOR RElATIONS 013
the expiration of the cooling-offperiod. "1 A contrary view where both periods are
not observed in their respective full duration would certainly defeat and render
nugatory the salutary purposes behind the distinct requirements of cooling-off period
and the waiting period or strike ban.
Jurisprudence plainly enunciates that "the language of the law leaves no
room for doubt that the cooling-off period and the seven-day strike ban after the
strike-vote report were intended to be mandaton:" and therefore should be
observed separately and fully. This rule was stressed in Gold City/ and reiterated in
Sulpicio Lines.3
Moreover, the NCMB Primer on Strike, Picketing and Lockout 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 cmmted
from the day following the expiration of the cooling-off period.',s
In other words, the seven (7) days should be added to the cooling-off
period of fifteen (i5) days, in case ofULP, 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 lawihlly and validly staged.
RUNDOWN OF CERTAIN BASIC PRL~CIPLES:
• A strike mounted on the same day the strike vote report is submitted to
the NCMB-DOLE is illegal. 6
• Deficiency of even one (1) day, held fatal. 7
• One-day strike without complying with the 7-day strike ban, held
illegal.8
i-b.
REASONS FOR DECLARING A STRIKE ILLEGAL
1. WHEN IS A STRIKE CONSIDERED ILLEGAL?
A strike is illegal if it is declared and staged:
1
kl ~with No.6, NCMBPrintronS/r9re, Pkkefing inf~ 2nd Edilim, Oea!nter1995, in
2
Gad Ciy lnlegraild Port SeM:e, k1c. v. NLRC, GR. No. 103560, Jtlf 6, 1995, 245 SCRA 628, 636, cii'd Nablal
FederaOOn of Suga-Workers (NFSW) v. Ovejera, GR. No. L-59743, MJ)' 31, 1982, 114 SCRA354.
~t.m:lg~sa~l.iles,klc.-NAFLUv.~l.iles,klc.,G.RNo.140992,Mildl25,2004.
3
4
2nd Edtioo,IJecerrter 1995.
5
No. 6flereof; lJndersc001g supplied.
Nali:xlal Unioo of Workers illhe HolE!, Resla!mtand Allied Industries [MNvHRAIN-APL-IUF) M Hole! Nkko Chapterv.
The Honorable CA. G.R Nos. 16394211ld 166295, Nov.11, 2008.
7
CCBPI Pos1nix Workers Ulillv. NLRC, G.R No.114521, Ncw. 27, 1998; Coca-Cola Bottlers Phis, D;. v. tlRC, G.R. No.
123491, Nov. 27, 1998, 299 SCRA410.
8
&rnaha~ MarY:Jgagawasa Sulpicio Liles, Inc.- NAFLU v. Sulpicio l..iles, Inc., G.R. No. 140992, March 25,2004.
014 ijAR KfVItWtlt UN LA•lll< LAVY
CHAPTER VI!
lABOR RElATIONS 615
(1) Without complying with the procedural but mandatory requisites.
(8) Based on issues already brought to voluntary or compulsory
(2) For unlawful purpose such as to compel the dismissal of an arbitration. 1
employee 1 or to force recognition of the union2 or for trivial and
puerile purpose3 or to circumvent contracts and judicial orders. 4 (9) During the pendency of a case involving the same groundls cited in
the notice of strike.2
(3) Based on non-strikeable or invalid grounds such as:
(10) In defiance of an assumption or certification or return-to-work
a) Inter-union or intra-union disputes. 5 order. 3
b) Simple violation of CBA in contrast to gross violation thereof
which is deemed ULP. 6 (11) In violation of a temporary restraining order or an injunction
c) Violation oflabor standards.' order. 4
d) Legislated wage orders (wage distortion). 8 (12) After the conversion of the notice of strike into a preventive
(4) Without first having bargained collectively.
9 mediation case. 5

(5) In violation of the "no strike, no lockout' clause in the CBA. 10 (13) Against the prohibition by law. 6

(6) Without submitting the issues to the grievance machiner; or (14) By a min.Prity union.'
voluntary arbitrati0n or failing to ex.'Iaust the steps provided (15) By an illegitimate union. 8
therein. 11
(16) By dismissed employees. 9
(7) While conciliation and mediation proceeding is on-going at the
NCMB. 12 (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
1
for which is dismissal. 10
Luzon Mme Depa1ment Unkln v. Roldlrl, GR No. L-2660, May 30, 1950, 86 Pli 507.
2 8100 CorporaOOn of1he Philippiles v. SCP Employees Unioo- National Fedemlonofl.abori.Jnklns, G.R Nos.169829-30,
.A¢116, 2008. . (18) As protest rallies in front of government offices such as in the
3· LuzonMmellep<rtnentUnkln v. Roldoo, G.R No. L-2660, May 30,1950,86 Phi.507. following cases:
4 Mcrlla <lrienta Sal\mis v. NLU, G.R No. L-4330, t.mh 24, 1952,91 Phi. 28; ALPAP v. CIR, -GR Nos. L-33705 &L-
35200,.Allfl15, 19t7, 76SCRA274.
s Fbln t.tnJI<Wilg Cocporation v. L.akas ~W:Jawa sa fb:xl.L.akas t.bY}.JW:Jawa Labor CeniJ (I.M'-l.M.Cj, G.R
No. 150166, Jtlf 26, 2004. 1
Sec also Section 5, Rule XXII, Book V, ~les to ~ 1he Labor Code, as emended by lRpatnent Order No. 40-m,
v:
6 See also Sedilll5, RUe XXII, Book Rules to kr!J1eme11t the l.aborCOOe, as emended by OepOOment Order No. 40-00, Se00sof2003, ]Feb. 17, 2003], !lldasln1heranended byOepatnentOnler No..m.ro [M<rdt 12, 2003]; Nos. 6111C121,
Seriesof2003, [FBI. 17, 2003!, !lid as fu!1her anended by0epa1Jrent01dert-b. 40M3 [MM:h 12, 2003t t-b.8, NCM! NCM3 Priner on Sbi<e, Pk:keli'g !lid l.ockoul, 2'11 Edition, Deceniler 1995; Section 3, RUe V, NCtiB Mnlal of
Priner on SH<e, Pi:keiP,j !lid Lockout, 2"' Ediion, Decenter1995; Section 3, RUe V, NC~ Mllllal of Procedures iJr Procedlles iJr Conciiatia1 !lid PreYentive PledicDln Cases; Buletil NJiisltg Coporalkrl v. Scrd1ez, G.R No. 74425,
Concial'al crd PrevenWe Melialion Cases; No.7, Guideliles G:NemOj t..m !Wions. Oct 7, 1986, 144 SCRA 428. .
7 Sedilll 3, RUe V, NCM3 Mllllal d f'rooodures iJr .conciiatia'l crd PreYaM Medation Cases; t-b. 5, Guideliles 2
~Telephone Corp. v. Pip1o Telephone ~Association tpLTEA1 GR No. 160058, .ute22, 'JIXJ7.
GaJernilJ liblrRelaions; t-b. 8, NCMB Prineron Sbi<e, Pi::keti1g !lldl.nclool.2"' Edition, Dea!lrber 1995. Section 4, Rule VIII, 2011 NlRC rues d Proa!<Ue; .See also t-b. 33, Net.tl Pitner on Stte, Pk:keli'g crd l.ockoul, 2nd
a RA t-b. &27, olleMise knol.n as the 'WW:Je Ratia1aiza!iln hi' · Edb,~1995;F~v.MrmlreyFoodsCapotatbn,GRNo.178409,Jooe8,3J11.
4
9 See AJtk:le 278(c) [263(c)], Labor Code. AssOOaliln of k!dependenl Unixls i:\ fie PhifWi!es [AlliP) v. NLRC, G.R No. 120505, Mlth 25, 1999, 305 SCRA 219;
10 Malay.nJ SaMlM ~ ITYJ8 M'l'lggW:Jawa saM Greenfield {MSMG-L'Ml) v. Paros, ~.R No. 113907, Feb. 28, 2JXXl, 326 364 Ph~. 697.
SCRA 428, dli'Q Masfsr Iron l.abor Unkln v. NLRC, G.R. No. 92009, Feb. 17, 1993, 219 SCRA 47; See also Naional Unkln 5
No.18, NCMB Priner on Slrke, ~ llldl.ockool, 2nd Edb, Decenter 1995; l'hq!pile Ai1i1es, he. v. Secrelay of
ofWakels i:ltle Hdel, Restau!antand Alfled lnduslries [NWIHRAIN-A?l.-IUF) 1m! Hare! Niko~v. The Han. CA, Laxr llld~, G.R No.88210, JM. 23, 1991, 193 SCRA 223; Nl!MJRAIN v. NLRC, G.R. t-b. 125561, MJch 6,
G.R Nos.163942111C1166295,Na/.11,2008. 1998, 287 SCRA 192.
11 SecOOn 5, Rule XXH, Book V, ~to frrcllement 1he llilor Code, as am.:rded byDepment Older No. 40-03, Series of
6
SecOOn 4, Rule 111, ~ rues II1CI Regulations of ExecuWe Order No. 1so to GcNem 111e Exerdse of 11e Rgtrt of
2003, feb. 17, 20031. lf1d as fur1her am30ded by Oepatnent Order No. 40M3 tMarch 12, 2003); SecOOn 3, Rule V, GJieavnent ~ to Self.(}fgaizatm; Alticte 291 [276), Labor Code.
7
NCM:l Mnsal of Procedures for Coociialion CVld Preventive Mediatkln Cases; lJnMln of Fiipro Empklyees v. Nestle United Restauror's En'4!klyees &liblr Unmf'AFLU v. Tares, G.R No. L·24993, Dec. 18, 1968, 26 SCRA 435.
8
~. loc., G.R t-b. 88710.13, Dec. 19,1990. Alma v. NLRC, G.R Nos. 154113, 187778, 187861 &196156, Dec. 7, 2011, 661 SCRA 686; S1anbt1 tlaf<eting Corp., v.
12 Phtom Employees Unkln v. Philippine Global Communications, G.R No. 144315, Jutt 17, 200l; FqJi1o P~ and Foondl}' Julin, G.R No. 145496, Feb. 24,2004.
Capaation v. NlRC, G.R No. 115180, NcN. 16, 1999. 9
Toyo1a WJ:Jr Phis. Corp. Workers AssociaOOn [Th'PCWA] v. NLRC, supra.
10
ToyolaMllrtPhis. Corp. Workers Association [TMPCWA] v. NLRC, G.R Nos. 158786 &158789, Ocl19, 2007.

BAR REVIEWER ON lABOR lAW
616
Toyota Motor Phils. Corp. Workers Association ITMPCWAJ
v. NLRC/ where the Supreme Court ruled that the protest rallies
staged by the employees from February 21 to 23, 2001 in front of
the offices of the Bureau of Labor Relations (BLR) and the
DOLE Secretary constitute illegal strike and not legitimate
exercise of their right to peaceably assemble and petition the
government for redress of grievances. It was illegal for having
been undertaken without satisfying the mandatory pre-requisites
for a valid strike under Article 278 [263] of the Labor Code.
The ruling in Toyotd was cited in Solidbank Corporation
v. Gamier/ as basis in declaring the protest action of the
employees of petitioner Solidbank which was staged in front of
the Office of the DOLE Secretary in Intramuros, Manila, as
constitutive of illegal strike since it paralyzed the operations of
the bank. The protest action in this case was conducted because of
the CBA deadlock.
(19) As welga ng bayan which is in the nature of a general strike as
4 2. PARTICIPATION IN ILLEGAL STRIKE.
well as an extended sympathy strike.
(20) In violation of the rule~ on picketing such as the commission of
any of the following prohibited acts:
(a) Obstructing, impeding or interfering with, by fmce, violence,
coercion, threats or intimidation, any peaceful picketing by
employees during any labor controversy or in the exercise of
their right to self-<>rganization or collective bargaining, or
aiding or abetting such obstruction or interference. .
(b) Conducting a stationary picket and using means like placing
of objects to constitute permanent blockade or to effectively
close points of entry or exit in company premises.
(c) Committing any act of violence, coercion or intimidation by
any picketer.
(d) Obstructing the free ingress to or egress from the employer's
premises for lawful purposes.
(e) Obstructing public thomughfares while engaged in
picketing.5
1 G.R Nos.158786 &158789, Oct 19,2007.
2 Toyola Mlla' Phis. Ccxp. WaXels Association [TM'CWA] v. NLRC, ~-
3 GR No. 159460. Nov. 15, 2010.
4 OO'e<Phils.lnc. Latxrl.klm[NAFLU]v.Foot!exklduslrlalilld~Cotp., G.R No.155679,0ec.19,2006.
s Section 13, R* XXII, Book V, Rules 1o lfl1llemenllhe LatxrCode. as anended by Depa1menWtlfer No. 4Q.OO, Series cA
2003,[Feb.17,2003]; No.16,NCM3 Prineron Slri(e,Meli'I;J ll1d Lockout,~ Edition, Decefrber1995.
017
lABOR RElATIONS
i-c.
LIABILITY OF UNION OFFICERS'
AND ORDINARY MEMBERS
(NOTE: These two topics are not part of the Syllabus 2 but a discussion thereon is
important in order to complete the discussion on strike).
1. PARTICIPATION IN LAWFUL STRIKE.
The declaration or actual conduct of a strike does not result in the
severance of the employment relationship nor a renunciation thereof. The
employment relationship is merely suspended during the period of work
stoppage.3
An employee who participates in a lawful strike is not deemed to have
abandoned his employment but is merely exercising his right to self-
organization precisely to protect his rights as an employee and/or to obtain better
working conditions. 4 Such participation should not constitute sufficient ground
for the tennination of his employment even if a replacement has already been
hired by the employer during such lawful strike. 5
a. Distinction in the liability between union officers and ordinary
union ntembers.
1. Union officers.
The mere finding or declaration of illegality of the strike will result in
the termination of all union officers who knowingly participated in the illegal
strike. 6 Unlike ordinary members, it is not required, for purposes of termination,
that the officers should commit an illegal act during the strike. 7
Thus, Naranjo v. Biomedica Health Care, In;,S instructs that absent
any showing that the employees are union officers, they cannot be dismissed
based solely on the illegality of the strike.
In Fadriguelan v. Monterey Foods Corporation,' the Supreme Court
took pains in assessing the evidence to ascertain the individual culpability of the
1 Relevclll PttMsion: AI1Xle 279 [2641. t.aJor Code. The past Syilctlus uses lhc em "'rtfmy Wate!S', tt is submilled lhat
fle better Elm shOOd be 'Ortilay Mentels' silce fle distilction illhc law is beto¥een 'Union Ollioo!s' ii1d "'rtfnary
Mmbels" cA the striiDJ ll1kln.
2 Relenilg tJ lhe 2017 Syliilus.
3 RexTaxi:abCo. v. CIR,400.G.138, 70 Phil.621.
4 No. 029, Prineron Sbte, Pk:kelng il1d Lockout
5 Miele 279(a) [264(a)J, l.rbor Code; No. 030, PJiner on Sl!i<e, Pi:keting and Lockout.
6
LapandayWOike!SUnionv. NLRC, G.R Nos. 95494-97, Sept 7, 1995.
7 Phirrro Industries, Inc. v. Phinco kldusbies Latxr A$ociation [PK.AL G.R. No. 170830, 1\uJ. 11,2010.
B GR. No 193789, $epl19, 2012.
9 G.R. No. 178409, June 8, 2011.
618 BAR REVIEWER ON lABOR LAW
IAliOR RElATIONS. --7
i
union officers based on their participation in the illegal slowdown strike which ·:1
i,i evidence that said certifications are flawed,· they should be taken
was staged after the DOLE Secretary has issued an assumption of jurisdiction on their face value. 1 ·
order. ·
• The fact that the employees are signatories to the CBA does not in
To illustrate how the "knowing participation" of union officers may itself sufficiently establish their status as union officers during the
be ascertained and established, the following factors were taken into account in illegal strike. Neither were their active roles during the bargaining
Abaria v. NLRC,' which led to the declaration that they knowingly participated negotiations be considered as evidence of their being union
in the illegal strike: officers. 2
(l) Their persistence in holding picketing activities despite the • Only the union officers during the period· of illegal strike are
declaration by the NCMB that their union was not duly registered as a liable? If the employees acted as union officers !f!tt the strike,
legitimate labor organization and notwithstanding the letter from the they may not be held liable and, therefore, could not be terminated
federation's 1 legal counsel informing them that their acts constituted disloyalty in their capacity as such. 4
tQ the national federation; and • Shop stewards are union officers. 5 Hence, they should be
(2) Their filing of the notice of strike and conducting a strike vote terminated upon the declaration of the illegality of the strike.6
despite the fact that their union has no legal personality to negotiate with their • Union officers may be dismissed despite the fact that the illegal
employer3 for collective bargaining purposes. strike 8was staged only for 1 day 7 or even for less than 10
2. Ordinary union members. hours. This holds true in cases of defiance of the assumption/
The mere finding or declaration of illegality of a strike will not r~sult i.'1 certification order issued in national interest cases.
termination of ordi.'1ary union members. For an ordinary union member to suffer • If the dispositive portion of the decision failed to mention the
termination, it must be shown by clear evidence that he has committed illegal names of union officers, resort should be made to the text of the
acts during the strike. 4 decision. 9
b. Reason for the distinction. • Wholesale forfeiture of employment status is not allowed. The
The reason for this distinction is that the union officers have the duty to mere filing of charges against an employee for alleged illegal acts
guide their members to respect the law. If instead of doing so, the officers urged during a strike does not by itself justify his dismissal. The charges
the members to violate the law and defy the duly constituted authorities, their must be proved in an investigation duly called for that purpose,
dismissal from the service is a just penalty or sanction ·for their unlawful act. where the employee should be given an opportunity to defend
Their responsibility as main players in an illegal strike is greater than that of the himself. This holds true even if the alleged ground constitutes a
. . 1offiense. 10
cnmma
ordinary union members and, therefore, limiting the penalty of dismissal only to
the former for their participation in an illegal strike is in order. 5 • No wholesale dismissal of strikers allowed. The employer cannot
c. Some principles on illegality of a strike. just unceremoniously dismiss a hundred of its employees in the
absence of clear and convincing proof that these people were
• For purposes of identifying the union officers, the certifications as indeed guilty of the acts charged and then, afterwards, go to court
to the union officers issued by the Chief of the Labor Organization
Division of the Bureau of Labor Relations (BLR), being public
records, enjoy the presumption of regularity and deserve weight
and probative value. Thus, in the absence of a clear and convincing ' Coca-Cola Boalers Alis, Inc. v. Nl.RC, G.R No.123491, Nov. 27, 1998, 299 SCRA410.
2 ld.
3 ~ayWxters lk1ioo v. M.RC, 248 SCRA 95, 106.
4
Coca-cola BoWers Pllils, Inc. v. NLRC, {supra.
5
1 Sanla Rosa CocaCola Plcll!Empbyees l.lnbnv. CcJca.Cola.Boll Phils., klc., G.R. Nos. 164302.00, Jan. 24, 2007.
GR Nos.154113, 1Sms, 1S7861 &196156, Dec. 7, 2011,861 SCRA686. 6
C. Abma &Soos, he. v. CA, G.R No.155109, Sept 29, 2010.
The federation here is ll1e Natiooal Feder.!OOn rJ liloc vAlich frea100 by charBi1g ll1e kx:al chapter that slaJed 111e ilegal
Scmlalg ~awasaSU4Ji;klLiles, Inc. -twl.Uv. ~Liles, klc., G.R. No.140992, March 25, 2004).
2 7
strke.
Universey of San Agustin ~loyees' IJnion.ffWv. The CA. G.R No. 169632, March 2S, 2006.
8
MllroCebuCoomlnily Hospital, n;. (MCCHQ, present{ knoY.ll as lhe Vis<rjas ConlrulityMedical Center (VCMC).
NissanMJtorsf'h~, Inc. v. Secretvydllilailld~ G.RNos. 158fro.91,0ct.31, 2!XXJ.
3 9
4 Stamford Malketing Corp. v. Jurtan, G.R. No. 145496, feb. 24,2004. 10
Telefunken Semicooductols Employees Union.fFW v. Seaelaly ofLabor and Efr!lloyment G.R Nos. 122743 and
5 Solidbank Corporation v. Gamier, G.R. No. 159460, Nov. 15,2010. 127215,Dec. 12, 1997, 2S3 SCRA 145.

to seek validation of the dismissal it whimsically executed. That
certainly cannot be allowed. 1
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 tenninated. 2
b. Meaning of "illegal acts."
The term "illegal acts" under Article 279(a) [264(a)] may encompass a
number of acts that violate existing labor or criminal laws, such as the
following:
(l) Violation of Article 279(e) [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
(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 278(g) [263(g)] of
the La!xlr Code. 4
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.
c. Mere substantial evidence required to hold strikers guilty of
commission of illegal acts.
While in all cases, it is required that the striker must be identified, proof
beyond reasonable doubt, however, is not required; substantial evidence
available under the attendant circumstances suffices to justify the imposition of
1 Trres Tra'1Spa1atioo Co., Inc. v. tiRe, G.R Nos. 148500-01, Nov. 29, 2006.
2 TO)'Oia MJa Phis. Corp. Wo!iem Associatioo [IWCWA] v. NLRC, G.R Nos. 158786 &158789, Oct 19, 2007; See also
Shell Oi Wod<em Union v. Shell~ d the PhiWOOS, GR No. L-28607, May 31, 1971, 43 SCM 224; Chua v.
NLRC, G.R No. 105775, Feb. 8, 1993, 218 SCRA 545.
National Brewely and Ali!d klduslries I.JixJ Union v. San !Ji:luel Brewely, Inc., G.R No. L-19017, Dec. 27, 1963, 9 SCRA
847.
4 TC1fOia M:J1Dr Phils. Corp. Workem Associatioo [TWCWA) v. NLRC, G.R Nos. 158786 ood 158789, Oct 19, 2007.
CHAPTER VII
62i
lABOR RElATIONS
the penalty of dismissal on participating workers and union officers. 1 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
l
r commission of illegal acts may be proved thru affidavits and photographs. 2
Simply referring to them as "strikers," or "complainants in this case" is not
enough to justify their dismissae
Photographs alone, however, will not suffice. In Arellano University
Employees and Workers Union v. CA,4 while the university adduced
photographs showing the strikers picketing outside its premises, it failed to
identify who they were. It thus failed to meet the "substantiality of evidence
test" applicable in dismissal cases.
d. Some principles on commission of iUegal 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
t should not be blamed therefor. 5
• To effectively hold ordinary union members liable, those who
participated h'l the commission of illegal acts must not only be
I identified but the specific illegal acts they each committed shou !d
be described with particularity. 6
• The heated altercations and occasional blows exchanged in the
1 picket line do not affect or diminish the right to strike. 7
• Exchange of hot words in the picket line is not· an illegal act that
would impede or diminish the right to strike. 8
• Use of slanderous, libelous and obscene language during the strike
or lockout is a prohibited act. 9
1 Phm:o l1dusbies, ~ v. Phinoo kWiUies I.JixJ AssociaOOn (PLA], G.R No. 170830, Aug. 11, 2010, citDJ k>oo. of
~Lmls ilflePhR. v. NLRC,364Phl.697, 707{11199.
2 Phin:o klduslries, Inc. v. Phinco ~Lalor Association tpll.A], supra
3
Associatioo d kldeperxlenttn:n; illleA'qJpiles (AIUP) v. N..RC,GRNo.120505, Mm125, 1999,305 SCRA219;
364 Pit 697, 707;G &STIMSpatQxp. v. tla'1E, G.R No. 100303,Sept 13,2007.
GR. No. 139940, Sepl19, 20C6.
Phin:o hdusties, he. v. Phinoo lnOOs!Ji!slalor Association [PILA), supra.
6
Sof'idbalk Corporation v. Gamier, G.R No. 159460, Nov. 15, 2010; G&ST!81Sp01tCorp. v. Walte, G.R No. 160303,
Sept 13, 2007; Natiooa IJnkln It Workers illle IW, ResfaJra't Md Aled t100s1ries jNlM'HRAtl-APL-tLf) QJSit HoE!
Nikko ~ v. The Honorable CA, G.R Nos. 163942 Cl1d 166295, N<w. 11, 2008.
T The rna lJa Asst.ain:e<:o., l.tf. ~Association- NAlU v. The lnsiB Lle ~Co., Iii., G.R No. L-
25291,Jal.30, 1971,37 SCRA244.
The lnsula'L.IeAssu!MCe Co.,Ul. ~Association- NAlU v. The lnsula'LieAssurcllce Co., l.kf, supra; Republic
8
Steel Co. v. Nafi:xlaii.JixJ Relations Boird 107 F. 2d 472.
9
Uniled Seanen's Uniln dlhe Phiippilesv.Oavao Sh¢Miers Association, G.R Nos.l-18778 &L-18779,Aug. 31, 1967,
20 SCRA 1226, 1240; Cranwe11 Corrrnetial EfllJk7Jees and laborers lJniln (PTUC) v. CIR, G.R No. L-19778, Sepl30,
1964, 12 SCRA 124, 132; lilelall.ab<Jlkioov. Phll. Cal Co., G.R No. L-4834, Meith 28,1952,91 Phi. 72; Lim v. United
Plan Gtml W011tem, 15 L.Ed2d 582.
622 liAR REVIEWER ON lABOR lAW L.NAI'I tK VII
623
lABOR RELATIONS

• If violence was conunitted by both employer and employees, the 4. THE REQUISITES FOR A VALID STRIKE ARE NOT APPLICABLE
same cannot be cited as a ground to declare the strike illegal. 1 TO PICKETING.
• Dismissal of the criminal case filed by reason of the illegal acts The seven (7) requisites for a valid strike discussed above do not apply
conunitted in the course of.the strike does not extinguish liability. to picketing.
under the Labor Code. 2 5. REQUISITES FOR LAWFUL PICKETING.
The most singular requirement to make picketing valid and legal is that
b. it should be peacefully conducted. This is articulated in paragraph (e) ofArticle
279 [264] of the Labor Code in this wise;
PICKET
"(e) No person engaged in picketing shall commit any act of
1. DEFINITION. violence, coercion or intimidation or obstruct the free ingress to or egress
"Picketing' is a concerted activity of workers consisting in peacefully from the employer's premises for lawful purposes, or obstruct public
thoroughfares."
marching to and fro before an establishment involved in a labor di!;pute generally
accompanied by the carrying and display of signs, placards and banners intended to Based on the foregoing provision, the requisites may be summed up as
infonn the public about the dispute. 3 follows:
2. RIGHT TO PICKET PROTECTED BY CONSTITUTION A.lW LAW. I. The picket should be peacefully canied out;
I
Unlike a strike which is guaranteed under the Constitutional provision ~ 2. There should be no act of violence, coercion or intimidation
attendant thereto;
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 3. The ingress to (entrance) or egress from (exit) the company premises
speech and of expression and to peaceably assemble to air grievances under should not be obstructed; and
Section 4, Article III (Bill of Rights) thereof. 4 4. Public thoroughfares should not be impeded.'
The right to picket is likewise guaranteed as part of the right ''to engage 6. EFFECT OF THE USE OF FOUL LANGUAGE DURING THE
in concerted activities for purposes of collective bargaining for their mutual CONDUCT OF THE PICKET.
benefit and protection. "5
In the event the picketers employ discourteous and impolite language in
3. ABSENCE OF El\WWYMENT RELATIONSHIP BETWEEN their picket, such may not result in, or give rise to, libel or action for damages. 2
PICKETERS AND EMPWYER, EFFECT. 7. PICKETING VS. STRIKE.
Picketing, if peacefully carried out, cannot be prohibited even in the
(a) To strike is to withhold or to stop work by the concerted action of
absence of employer-employee relationship between the picketers and the employer
employees as a result of an industrial or labor dispute. The work stoppage may
being picketed.6 be ac~ompanied by picketing by the striking employees outside of the company
compound.
(b) While a strike focuses on -stoppage of work, picketing focuses on
1 MMfq ScrncMIIY,I rrga Mooggaga.\13 saM. Greenfield (MSMG-IJMl) v. Rams, G.R No. 113007, Feb. 28, 2000. publicizing the labor dispute and its incidents to inform the public of what is
2 C. Ak311aa &Sons,~ v. CA. G.R No.155109, Sept 29,2010. happening in the company being picketed.
3 Section 1 [191 Rule Ill, NCMl Mnlal ri Procedlles b' ConciliaOOn al1d l'reYeriiMl Mediation Cases; ttl. 15,
GOOeli1es GoYeniYJ ISxr RelaOOns, Octte' 19, 1987; No. 1, Na.B Priner oo Sdle, PdtetiY,J In! L.oct:oot, 2nd (c) A picket simply means to march to and fro in front of the
Edbl, Decerrber 1995; liM at Mkx!IY,I l.'a1ggaJawa PBMJ v. N!RC, G.R No. 91980, .1t11e 27, 1995; llaw ctrudcxl IYd
~v.NI.RC,GRNo. 91980,.ltl1e27, 1991, 198SCRA586.
employer's premises, usually accompanied by the display of jllacards and other
~ See also De Leon v. Nalilnalt.axr Unioo, G.R No. L-7586, Jan. 30, 1957, 100 Phil. 789; The mla' Life Assurance Co.,
W ~Association· NAHJ v. The lnsU<rl.ifeAssuralce Co., Lid., GR. No. L-25291, Jan. 30, 1971,37 SCRA 1
244. See also SecOOn 13, Rule XXII, Book V, Rules k>lnlJlementlhe labor Code, asanendedby DepCitnentORierNo. 40-03,
Series of 2003, (Feb. 17, 2003].
Maiayang ~aJCMa sa Esso v. Esso Standad Eastern, Inc., G.R No. L-24224,Ju~ 30, 1965, 14 SCRA801. 2
Ph!Wne Association of Free Lm Unions [PAFLU] v. Court d FIS!Ins1ance, G.R No. L-49580, Jan. 17, 1983, 120 SCRA Plulipjme Coornercial and tndusmiBank v. l'hlilabank Efi1Jioyees Jlssoda!ioo, GR. No. L-29630, July 2, 1981, 105
SCRA315.
1.
b24 fiAK. K.tVltWtl\. \11'1 1.1\DUt\. U'\YY
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
(PlLA). 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.
8. 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-Col:~
Bottlers Phils., Ir.c. 2 - P~titioners 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 frrst 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 KAMJ," "SAROD, 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 conductis inconsequential. To repeat, what is defmitive 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,hlg.11, 2010.
2 G.R Nos. 164302-03, Jan. 24, 2007.
·CHAPTER VII
lABOR RELATIONS
62.§
Petitioner union, in the 20 11 case .of Leyte. Geothermal Power
Progressive Employees Union-ALU-TUCP v. Philippine National Oil
Company - Energy Development Corporation/ contends that there was no
stoppage of work; hence, they did not strike. Euphemistically, petitioner union
avers that it "only engaged in picketing," and maintains that "without any work
stoppage, [its officers and members] only engaged in xxx protest activity." The
Supreme Court, however, ruled that it was a strike and not picketing or protest
activity that petitioner union staged. It found the following circumstances in
support of this finding:
(I) 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: (I) filing of the notice of
strike; (2) staging of the strike and taking control over respondent's facilities of
its Leyte Geothermal Project on the same day petitioner union filed the notice of
strike; (3) attempts by the NCMB to forge a mutually acceptable solution proved
futile; and (4) in the meantime, the strike continued with no settlement in sight
placing in jt:opar~y the supply of much needed power supply in the Luzon and
Visayas grids.
(3) Petitioner union itself, in its pleadings, used the word "strike."
(4) Petitioner union's asseverations are belied by the factual findings of
the NLRC, as affirmed by the CA thus: "The failure to comply with the
mandatory requisites for the conduct of strike is both admitted and clearly
shown on record. Hence, it is undisputed that no strike vote was conducted;
likewise, the cooling-off period was not observed and that the 7-day strike ban
after the submission of the strike vote was not complied with since there was no
strike vote taken." In fme, petitioner union's bare contention that it did not hold
a strike cannot trump the factual fmdings 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.
9. EVEN IF PEACEFULLY CARRIED OUT, PICKET IS ILLEGAL IF IT
OBSTRUCTS POINTS OF INGRESS AND EGRESS.
Peaceful moving picket may wnstitute obstruction of the points of ingress
and egress which would make the strike illegal. In Phimco/ it was held that a
1
- G.R. No.170351, Marth 30,2011.
2
Phirnoo tKlusties, Inc. v. Phimco Industries Labor Asso1:iatm (PILA), G.R No. 170830, Aug. 11, 2010.
626 BAR REVIEWER ON lABOR lAW
peaceful moving picket may still be declared illegal if it obstructed the ingress
to and egress from the company premises. As shown by the testimonies of
witnesses which were validated by the photographs taken of the strike area, while
the picket was moving, it was maintained so close to the company gates that it
virtually constituted an obstruction, especially when the strikers joined hands or
were moving in circles, hand-to-shoulder, as shown by the photographs, that, for all
intents and purposes, blocked the free ingress to and egress from the company
premises. In fact, on closer examination, it could be seen that the respondents were
conducting the picket right at the company gates. The obstructive nature of the
picket was aggravated by the placement of benches, with strikers standing on top,
directly in front of the open wing of the company gates, clearly obstructing the entry
and exit points ofthe company compound.
F.
PEACEFUL CONCERTED ACTI\1TIES
2.
BY EMPLOYER
a.
LOCKOUT
1. DEFINITION.
"Lockouf' means the temporary refusal of an employer to furnish work to
its employees as a result of an industrial or labor dispute. 1
2. ELEMENTS.
Based on this definition, the following are the elements of lockout:
(1) Temporary refusal to furnish work by the employer, and
(2) Occasioned by an industrial or labor dispute.
3. SIGNIFICANCE OF THE TERM "TEMPORARY."
The word "temporary" is highlighted because if the refusal of the
employer to provide work to his employees is permanent, it would already amount
to tennination of employment due to closure of the establishment, the consequences
and ramifications of which will be totally different from lockout, to wit:
1 Artide 219(p) (212(p)], l..aboc Code, as !ll1eOded by Sedioo 4, RA No. 6715; Sedioo 1 U,j], Rule I, 8ooft V, ~ to
~ lhe l..aboc Code, as !ll1eOded by L\lpment ()der No. 40-03, Series ct 2003, [Feb. 17, 2003]; No. 1, NCMB
1
Priner oo Sble, Pk:keliY;J iK1d l..ockoot, 2nd Edi!m, llecenter 1995; Seclm 1[14j, RlAe II~ NCMl Mrrla d Prtx:roures
a
10r Coociiatioo cm PreoJenWe Mediatioo cases; Rllralllalk Al!rm ~ lk1i:ln ]RBAEUJ v. NtRC, G.R Nos.
100342-44, Oct 29, 1999; llcrN at Bullkxl ng Manggagawav. NI.RC, G.R No. 91980, June 27, 1991, 198 SCRA 586.
2 ~ 8ectronks ~AssociatiOn [CEEAJ, elt. v. NLRC, G.R No. 121315, .1utt 19, 1999; Sla. Mesa~ &
CHAI'TERVII
lABOR RElATIONS 627
(a) Since it is already in the nature of closure of the establishmen~ the
result is the termination of employment of the locked-out employees;
(b) The validity of the employer's closure action, being pennanent, will
be measured no longer on the basis of its compliance with the
requisites for a valid lockout but on the basis of its compliance with
the requisites for a valid closure; and
(c) The affected employees would be entitled to the separation benefits in
accordance with Article 298 [283], particularly, those provided for
closure.
4. VARIOUS FORMS OF WCKOUT.
Lockout1consists of shutdowns, mass retrenchment and dismissals initiated
by the employer. It, however, may take other forms such as the employer's act of
excluding employees who are union members. 1
5. 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:
81
• 1 requisite- It must be based on a valid and factual ground;
• 2"d 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
Sectioo 3, P. D. tb. 823, as aoonded by P:O. No. 849.
EilQineE!ring Co. v. CIR, 48 0. G. 3353.

liAR REVIEWER ON lABOR lAW
628
• 71h requisite - The 7-day waiting period/lockout ban reckoned after
the submission of the lockout vote report to the NCMB-DOLE
should also be fully observed in all cases.
F.
PEACEFUL CONCERTED ACTIVITIES
3.
ASSUMPTION OF JURISDICTION
a.
NATURE
1. WHEN DOLE SECRETARY MAY ASSUME OR CERTIFY A LABOR
DISPUTE.
Article 278(g) [263(g)] of the Labor Code pro-vides t.1at 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 two (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
1
case, it will be the NLRC which shall hear and decide it.
This power may be exercised by the DOLE Secretary even before the
actual staging of a strike or lockout since Article 278(g) [263(g)]. does not
require the existence of a strike or lockout but only of a labor dispute involving
national interest.z
This law is unique in the sense that the very "opinion" of the DOLE
Secretary is conferred with the force and effect of a law. Notably, there are no
criteria set by the law on when the DOLE Secretary should assume jurisdiction over
a labor dispute or when he shoUld certify it to the NLRC for compulsory arbitration.
The choice is obviously discretionary and his alone to determine.
2. WHAT CONSTITUTES A NATIONAL INTEREST CASE?
The Labor Code vests in the DOLE Secretary the discretion to
detennine what industries are indispensable to the national interest.
Accordingly, upon the determination by the DOLE Secretary that such industry
See also ArtK:Ie 278(i) [263(i)], Lm Co:le.
Government lnsulance System Employees Association, v. CIR, GR No. L-18734, Dec. 30, 1961.
CHAPTER VII 629
lABOR RElATIONS
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. 1
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 of2013, 2 that certain
industries were specifically named, thus:
"Section 16. Industries Indispensable to the National
Interest - For the guidance of the workers and employers in the
filing of petition for assumption of jurisdiction, the following
industries/services are hereby recognized as deemed indispensable to
the national interest:
a. Hospital sector;
b. Electric power industry;
c. Water supply services, to exclude small water supply
services such as bottling and refilling stations;
d. Air traffic control; and
.... e. Such other industries as may be recommended by the
National Tripartite Industrial Peace Council (TIPC)."
Obviously, the above enumerated industries are not exclusive as other
industries may be considered indispensable to the national interest based on the
appreciation and discretion of the DOLE Secretary or as may be recommended
by TIPC.
3. A POLICE POWER MEASURE.
The power to issue assumption or certification orders is an extraordinary
authority granted to the President or the DOLE Secretary, the exercise of which
3
should be strict?' 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. The
DOLE Secretary is mandated to act to maintain industrial peace. Thus, his asswning
jurisdiction over a labor dispute or his certification thereof to the NLRC for
1 Phillread Wakecs lkP1 tpTWJ] v. Confesa, G.R No. 117169, Mm:h 12, 1997, 269 SCRA 293.
2 lssuedbyOOL£Seaelay!GafindaDillapilis-~OOOctlber21,2013.
3 No. 22, Gukfeliles GcMlrrq L.OOa RelaOOns.
4 "PClice powel' has been defiled as the JlOMll' i'h!rent il ag0Ye111111e!lt lo enact lcf.o.s, v.illil oonstirutionallinils, tl p!lli1'I:N!
lhe mler, safely, healll, lllO!l!ls a'1d general weli1e d society. The police power, b;Jelher v.ith lhe power of emilent
dom<in and lhepc:rMJ d1axa!ion, is an itle'ent power d pe!Mlen! a'1d does rd need to be~ conferred by the
Constitutioo. (Trans-Asia ShWiJg Liles, Inc. - UDlsed Cfeo.w ~loyees UnOO- ~ Labor lk1ions [fASL~
AllJ] v. CA, G.R No. 1008, Jutf 7, 2004; ~Ia Diamond Hole! fn1Jklyees' IJiion v. CA, G.R No. 140518, Dec. 16,
2004, 447 SCRA 97).

630 BAR REVIEWER ON lABOR lAW
compulsory arbitration is not intended to impede the workers' right to strike but to
obtain a speedy settlement ofthe dispute.
1 granted by the Constitution are not absolute. They are still subject to control and .
4. GRANT OF POWER FOR THE PROTECTION OF THE STATE, NOT
OFLABORNOROFEMPLOYER
Having been enacted pursuant to the police power of the State, Article
278(g) [263(g)] requires that the powers thereunder be exercised only in labor
2
disputes involving industries indispensable to the national interest This is ill
keeping with the rationale that any work stoppage or slowdown in a particular
industry can be inimical to the national economy. It is clear therefore that said article
was not written to protect labor from the excesses of management, nor was it written
to ease management from expenses, which it nmmally incurs during a work
stoppage or slowdown. It is an error to view the assumption order of the DOLE
Secretary as a measure to protect the striking workers from any retaliatory action
from the employer because this law was written as a means to be used by the State to
protect itself from an emergency or crisis. It is not for labor, nor is it for
management3
5. EXERCISE OF POWER, NOT ALWAYS BENEFICL\L TO LABOR
Even for labor, it is not always beneficial to allow the DOLE Secretary's
L.1.tervention in a labor dispute under A.'iicie 278(g) [263(g)]. Although the intention
may be to find a balance between the demands of labor and the resources of
management, intervention from the State and the derogation of the right to strike are
not always the solution to the just demands of labor. More often than not, the
intervention is more to the advantage of management which would not incur
overhead expenses that would otherwise be wasted during awork stoppage. For the
same reason, it dOes nol necessarily follow that intervention works for the protection
of labor. Even without compulsory arbitration, other remedies for resolving their
labor disputes are still available to labor and management Striking employees can
file illegal dismissal cases if they are dismissed without cause. On the other hand,
management ean dismiss employees engaged in illegal strikes, or it can negotiate
with those involved in legal strikes.•
6. GRANT OF POWER NOTVIOLATIVE OF RIGHT TO STRIKE.
The grant of assumption/certification power under Article 278(g) [263(g)]
clearly does not interfere with the workers right to strike but merely regulates it,
1 SeePillreadWor1<ers IJnklntpn\Uiv. Con!esa, G.R No.117169,Mlrch 12, 1997,269 SCRA293.
2 ~ Sc00o1 of Business ~ia v. tbiel, G.R No. L.ao648, Aug. 15, 1988, 164 SCRA 402; Samiento
v. Tulco, G.R Nos. 75271-73, June 27, 1988, 162 SCRA 676; Phiippine Aililes, Inc. v. Seaetly d I.Bbor arid
Ef1lliJyment. G.R No. 88210, Jal. 23, 1991, 193 SCRA 223.
3 Mria Diarood Hael Eflllloyees'Unioo v.lJ., GR No.140518, Doc. 16, 2004.
~ Conrulling Opilioo of M'. Justice Ar1emio Panganixrl i1 Pt1imoo Dlusfles, Inc. v. Brillantes, G.R No. 120751, Math 17,
1999, 304 SCRA 747.
CHAPTER VII 631
lABOR RElATIONS
when in the exercise of such right, national interests will be affected The rights
limitation to ensure that they are not exercised arbitrarily. The interests of both the
I employers and employees are intended to be protected and not one of them is given
undue preference. 1
r
I 7. DISCRETIONARY POWER, SUBJECT TO LIMITATION.
When the DOLE Secretary exercises the power bestowed on him under
Article 278(g) [263(g)], he is, indeed, granted great breadth of discretion. 2 However,
the application of this power is not without limitation, lest he would be above the
law. Thus, the wide latitude of discretion given to the DOLE Secretary under this
article should and must be within the sphere of the law.3 Notably, the Supreme Court
stressed in the Free Telephone4 case, that the power of the DOLE Secretary to
assume jurisdiction over a labor dispute is limited to strikes or lockouts adversely
affecting the national interest.
I
<i
8. ASSUMPTION OF LABOR DISPUTE IN AN INDUSTRY WIDCH IS
NOT "INDISPENSABLE TO THE NATIONAL INTEREST" AMOUNTS
TO GRAVE ABUSF: OF DISCRETION.
Indeed, that an industry is "indispensable to the national interest' is the
standard set by the legislature. To uphold the action of the DOLE Secretary to
assume jurisdiction over a labor dispute not indispensable to the national interest -
done with grave abuse of discretion amounting to lack or excess of jurisdiction -
would be stretching too far his power as every case of a strike or lockout where there
are inconveniences in the community, or work disruptions in an industry, though not
indispensable to the national interest, would then come within his power. It would be
practically allowing the DOLE Secretary to intervene in any labor dispute at his
pleasure. This is precisely why the law sets and defines the standard that even in the
exercise of his power of compulsory arbitration under said article, the DOLE
Secretary must follow the law. For when an overzealous official bypasses the law on
Phillread Workels lklioo {P1VI\J) v. Corlleocf, supa.
'Discretion' is deli1ed as the act a the lilerty b deckle, ~ to lle priqJies d jJstire en! one's ileas d I'Aiat is rVrt
illd pqlEr lllder the citumslalces,IWhoul v.1llfukless a- f<Mlr. 'Mlere 111Y1i¥J is left to a person to be done accoillng Ill
his discrelioo, 11e li:wi illends lhat it roost be dooe v.il a SOlJ1d disaetioo il1d acoordil;! to iaw. The d'ISCilltion oonlerred
upon ~ by li:wi is not a~a- atlhy disaelioo, but an if1llltial disaelioo guided and IXJl1nlled il is exercise
by fixed legal p!i'qlles. tt is not a mental discretial to be exerciSed ex gratia, txt a legal discretion to be exeldsed il
coofomity wilh lle spilit of the law, en! il amamer to subsetve and not to if4lOOe a defeat the ends d substantial justice.
From the fa-egcbJ, it is quite ~that no matiEr ha.¥ broad the exettise of disa"etion is, the scme roost be v.ilhil the
confines aile law. (PlDTv. tvmggagawa ng Komuni<asyon sa Pif4lilas, G.R No.162783, July 14, 2005).
3 PLDTv. Marw.!gagawang Kommkasyon sa Pilipinas, Ibid.
4 Free Telephooe Waters Unioo v. Hon. Moister d Labor and EJr4!1oymert, G.R No. L-58184, Oct 30, 1981, 108 SCRA
757.
-. -- ·- -·---'--~'"~- ........-.............. -"·- ~--~---~-----"" ...
UJ"' Dl\t\ 1\LVU:Yll:l\.\.11'1: UU)Ul\. U\YY
the pretext of retaining a laudable objective, the intendment or purpose of the law
will lose its meaning as the law itself is disregarded. 1
For instance, it was declared that a match factory, like the petitioner in
Phimco Industries/ though of value, can scarcely be considered as an industry
"indispensable to the national interest' as it cannot be in the same category as
"generation or distribution of energy, or those undertaken by banks, hospitals,
and export-oriented industries." Thus, it was declared here that the DOLE
Secretary acted with grave abuse of discretion in assuming jurisdiction over the labor
dispute in this case without any showing that the petitioner was engaged in an
industry indispensable to the national interest.
Likewise, in GTE Directories,3 the Supreme Court declared the DOLE
Secretary to be without jurisdiction to take over a labor dispute invo!ving a company
that produced telephone directories since the production and publication of
telephone directories, which is the principal activity of petitioner GTE, can scarcely
be described as an industry affecting the national interest GTE is a publishing firm
chiefly dependent on the marketing and sale of advertising space for its not
inconsiderable revenues. Its services, while of value, cannot be deemed to be in the
same category of such essential activities as "the generation or distribution of
energy'' or those undertaken by ''banks, hospitals, and export-oriented industries." It
cannot be regarded as playing as vital a role in communication as other mass media.
The small number cf employees involved in the dispute, the employer's payment of
"PlO million in income tax alone to the Philippine Govcrnrnen~" and the fact that the
''top officers of the union were dismissed during the conciliation process," obviously
do not suffice to make the dispute in the case at bar one "adversely affecting the
national interest"
9. 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. 4
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
1 P11inco lnduslries, he. v.Brillles,
G.R No.120751,
March 17, 1999, 304 SCRA 747.
2 ld.
3 GTEDimiesQxpcralblV.~GR.No.76219,tlay27, 1991, 197SCRA452,470-471.
4 Miele 278(g) {263(g)l Lalor Co:le; Fir Eastern UWersKy-Or. Nk:m' Reyes Medi:al FoondaOOn [FlliNfM] v. FElJ.
NRMF Ert1lfajees Associalm-AIIm of Fiipino WOike!s !faJ.NRM'EA-AFW], GR No. 168362, Oct 12, 2006.
LHAPTERVll
lABOR RElATIONS
633
adequate protection of the life and health of its patients, most especially
emergency cases, for the duration of the strike or lockout. 1
The DOLE Secretary may immediately assume, within twenty four (24)
hours from knowledge of the occurrence of such a strike or lockoyt, jurisdiction
'I over the same or certify it to the NLRC for compulsory arbitration. 2
10. 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.3
• When the DOLE Secretary exercises the powers under Article 278(g)
[263(g)], he is granted "great breadth of discretion" in order to find a
4
solution to a labor dispute. It necessarily includes and extends to all
questions and controversies that may have arisen from the labor dispute
over which he assumed jurisdiction, including those cases falling under the
criginal and exclusive jw·isrliction of Labor Arbiters. 5 It also includes
matters incidental to the labor dispute, i.e., issues that ~e necessarily
involved in the dispute itself, not just to those ascribed in the notice of strike
or otherwise submitted to him for resolution. 6
~ 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.
11. RETURN-TO-WORK ORDER.
a. It is always part of assumption/certification order even if not
expressly stated therein.
The moment the DOLE Secretary assumes jurisdiction over a labor
dispute involving national interest or certifies it to the NLRC for compulsory
arbitration, such assumption or certification has the effect of automatically
enjoining the intended or impending strike or, if one has already been
commenced, of automatically prohibiting its continuation. The mere issuance of
an assumption or certification order automatically carries with it a return-to-
work order, even if the directive to return to work is not expressly stated
1 ld.; See 11eN Sectioo 16, Rule XXII, Book V, Rules Ill ~ lhe Lalor Co:le, as iiTief1ded by DOlE Depment Order
No. 40--Gm, Series of2010, issued by DOLE Secretary Mariooitl Roque on Mardl29, 2010.
2 tid.
3 Capilol Medical Center, Inc. v. Trajim, GR. No. 155690, June 30, 2005.
4
l'l1iloo11 En1Jioyees Unkln v. Ph~ne Gklbal Ccnm.micalms, GR. No. 144315, Ju~ 17, 2000.
5 St. Scholastica's College v. Torres, G.R No. 100158, June 29, 1992,210 SCRA 585,570.
6
Unkln of Fq,ro ~loyee&fuig, Fool a-d .AJ6ed lrxlusmes UnkJns.KiusMg Mayo Uno ll.fE.OFM<MJ] v. Nestle
Phiippines.lnc., G.R No.158930-31,Aug.22, 2006; Seeaso klternalional ~.Inc. v.lleSecrelayofl..abcr,
sup!a; Cftek Employees labor UnionfFWv. Ci1ek Eleclronics, Inc., G.R No. 190515, Nov.15, 2010.
634 BAR REVIEWER UN IA~UillAVV
1
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 278(g) [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. 2
b. Nature of return-to-work order.
Return-to-work order is compulsory in character. It is not offensive to the
constitutional provision against involuntary servitude.' It must be discharged as
a duty even against the worker's will. The worker must return to his job together
with his co-workers so that the operation of the company can be resumed and it
can continue serving the public and promoting its interest. It is executory in
character and 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 dete1mination is being made. 4
c. Some prindples on returil-to-work order.
• The issue of legality of strike is immaterial in enforcing the return-to-
5
work order.
• Return-to-work order is a limitation on employer's exercise of
management prerogatives.6
• 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 actua~ peaceful and uncontested
7
. status that preceded the actual controversy.
• Retrenched or redundant employees whose termination brought
8 waiver of their original demands. Such act of returning to work only
about the labor dispute are included in the return-to-work order.
1 Steel Colporation of lhe PhDippiles v. SCP Employees Union - National FOOe!ation of tabor Unions, G.R Nos.
169829-30, April16, 2008; calamba Med"K:al Center, Inc. v. NLRC, -G.R. No. 176484, Nov. 25, 2008.
2 ld.
3 ~ RefiniYJ Coo1JMY Wodrels' Unioo vs. PhiWile Refili"g ~. GR No. L-1668, Mtrch 29, 1948, 80 Phil.
533; l<aisOOM ng rnga Mifggagawa sa Kaley sa Pifi!Mnas v. GoliJrol &Mmil, GR No. L-1573, March 29, 1948, 80 PhD.
521.
4 Mcltc(lper l.ti1g ('.(xpQa!ion v. Brbltes, GR No. 119381, March 11, 1996; Unioo cl Fipilo Err!Jbyees v. Nestle
l'hi~WiJes, Inc., G.R No. 8871().13, Dec. 19, 1990, cEd il No. 033, Riner on Srle, Picketilg 31d Loc:koli; No. 23,
Gu'delines GcNemilg Lalor Relatioos; Soonienfo v. Tuioo, GR Nos. 75271-73, .kJ'le 27, 1988, 162 SCRA 676.
Union offilipro Employees v. Nestle Phmppines, Inc., G.R. No. 8871().13, Dec. 19, 1990.
YSS Efr¥Jioyees Unbn - PhiJWne Transpat ood Gene!al WOOiels ~ v. YSS l..abor.lbies, Inc., G.R. No.
155125, Dec. 4, 2009.
7 <NelseasWOOiet"S'WelfaeAdminisbalionv. Chavez,G.R No.169802,June8, 2007.
8 PLOT v. Manggagawa ng Komunikasyon sa Pilipinas, G.R. No. 11)2783, July 14,2005.
CHAPTER VII
lABOR RELATIONS
635
• 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.
Examples:
1
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 frrst semester of th~ academic year. The Supreme
Court affirmed the validity of the payroll reinstatement order of the
2
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.
University of Immaculate Concepcion, Inc. v. The Honorable
Secretary of Labor.3 where, by virtue of the special circumstances
in this case involving the fmal decision of the panel of arbitrators as
to the confidential nature of the positions of the twelve (12) private
respondents, the employees' actual and physical reinstatement was
rendenid impracticable and more likely to exacerbate the
situation. The payroll reinstatement in lieu of actual reinstatement,
therefore, appears justified as an exception to the rule until the
validity of their termination is fmally resolved.
• Non-waiver of demands upon voluntary return to work. The act of
the strikers in voluntarily returning to work does not result in the
means that they desisted from the strike which desistance is a
personal act of the strikers and cannot be used against the union and
interpreted as a waiver by it of its original demands for which the
strike was adopted as a weapon. 4
• Filing of a motion for reconsideration does not affect the
enforcement of a return-to-work order which is immediately
executory.5
1
G.R. No. 89920, Oct 18, 1900, 190 SCRA 758.
This case was subsequen11y certified to the NLRC by the DOLE Secrelary.
GRNo.151379,Jan.14,2005.
4
Bisayal.ald Transportation Co., Inc. v. CIR, G.R. No. L-10114, Nov. 26, 1957, 102 Phi.438.
s Telefunken Semiconductors Employees Union-FFW v. Secretaty of Labor and Employmen~ G.R. Nos. 122743 and
127215, Dec.12, 1997,283 SCRA 145.
636 liAR REviEWER ON lABOR lAW
• The extension of the return-to-work order and the admission of all
striking workers by the company, cannot in any way be considered a
waiver that the union officers can use to negate liability for their
illegal actions of defying .the first return-to-work order and for
1
commission of illegal acts in the course of the strike.
b.
EFFECTS OF ASSUMPTION OF JURISDICTI.QN
1. EFFECTS ON STRIKE OR LOCKOUT.
The assumption of jurisdiction or certification to the NLRC of a labor
dispute has the following effects:
(1) On intended or impending strike or lockout - Upon
assumption/certification, the intended or impending strike or lockout is automatically
enjoined, notwithstw.1.ding the filing of any motion for reconsideration of the
assumption/certification order or the non-resolution of any such motion which may
2
have been duly st:bmitted to the Office of the DOLE Secretary.
(2) On actual strike or lockout - If a work stoppage has already taken
place at the time of the assumption/certification, all striking or locked-out employees
shall immediately return to work and 'the empioyer shall immediately resume
operations and readmit all workers under the same tenns and conditions prevailing
before the strike or lockout3
(3) On cases already filed or may be filed. - All cases between the same
parties, except where the assumption/certification order specifies otherwise,
including 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, are considered
4
subsumed or absorbed by the assumed/certified case.
(4)0n other pending cases.- The parties to an assumed/certified case,
under pain of contempt, are required to infonn their counsels and the DOLE
Secretary/NLRC Division concerned, as the case may be, of all pending cases that
5
are related or incident to the assumed/certified case before it
1 Bapg P<r:11taktisa ng Mi11ggagcrNa ng T!Ul1>h kWlmaliooal v. Seaetay d f1e 1)epirtnent ri L.axr Clld ~
G.R Nos.167401 Clld 167407,Jttt5,2010.
2 Adqlted tan Sedion 3(a), Rule VIH, 2011 NlRC Ruleso f'roaldlre; See also No. 31, NCMB Pli:ner oo Stile, PK:keting
and lockout, 2nd Edti:ln, Oecen'Oer 1995.
3 See Sedion 3[a), Rule VIII, 2011 NLRC RIJes d Procedute.
1~ pcrlfJfllllh, SecOOn 3 ~].~VIII, llid.; Pli!JPile Federatioo ct Pclrolm WolY.ers tpFl¥1] v. CIR, 37 SCRA 711;
ln\ernablal ~. klc. v. Secretly d Lalor a1d Associ<Ed L.axr l.klion ~Lq, GR No. 92981.a3, Jill. 9,
1992; St. Scholastk:a's Colege v. Torres, GR No.100158, June 29, 1992.
5 The 2'11~ of Sdx13 [b1 Ride VIII of 1he 2011 NIRC Rules ofProcecU'e prMles: ""Mlen 1he Secrela!y ct L.axr
and ~ has assumed )Jrisd'ICOOn over a slite or klckoot or certifallle srne title Coomission, Ole paties ~
sud1 dispule sha1 irrnedi1*l¥ ilfonn ft1e Seaelily or the Conwnission, as Oleia!e may be, d al cases diredfy related to
CHAI'TIR VII
lABOR RElATIONS
637
2. EFFECTS OF DEFIANCE OF THE ORDER.
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. 1
The following are the justifications:
I. A strike that is undertaken after the issuance by the DOLE
Secretary of an assumption or certification order becomes a
prohibited activity and thus illegal. The defiant striking union
officers and members, as a result, are deemed to have lost their
employment status for having knowingly participated in an
illegal strike.
2. From the moment a worker defies a return-to-work order, he is
deemed to have abandoned his job. 2
3. By so defying, the workers have forfeited their right to be
readmitted to work. 3
3. ALL DEFW~T STRIKERS, REGARDLESS OF WHETHER THEY
ARE OFFICERS OR ORDINARY MEMBERS OF THE STRIKING
UNION, 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 regardless of whether the defiant worker is an officer or ordinary member
of the union4
• Examples of cases where aU defiant strikers composed of both union
officers and ordinary union members were deemed to have lost their
employment status.
lie displ.de between them pencilJ before t1rJ Regiooal Alblra!ion Brlrldl, Md 1he I.JtJa" AlbiBs lla1dhJ t1e srne d
Sldl assoo.,oon a cerftalkll.lhe Lalor Aiater camned shal bWlld v.tit tt.o (2) days fnm nak:e 1he enlie reaxds
a
ct 1he case kllle Carnissil1 a tile Secretly L.axr, as 1he case may be, for~ dilposticll.' (See aso ~
8ayal Corpoialion Realy k1vestxs Clld IJewtlpels v. Ope, G.R No. 73334, Dec. 8, 1986). .
1
~ ~kakaisa ng ~ ng TriJrrclh ~ v. Secreay ctlhe Depmertctl.tb:r ll1d ~
G.R Nos. 167401 Clld 167407, .kif 5, 2010.
2
Miele 278(g) [263(g)], L.axr Code; Secticn 5, R!OO XXJI, Book V, RlJes kl ~ the L.axr Code, as M1ellded by
Depment Order No. 40-00, Series d 2003, [Feb. 17, 2003], Clld as flrlher anended by Oepmert Order No. 40M3
[MiHI:h12, 2003]; Phil'ippile Ames, klc. v. Brilantes, G.R No.119360, Oct 10, 1997, 280 SCRA515.
3
Steel Corporation of lhe Phifippines v. SCP Employees Unioo - National Federation. of Labor Unions, G.R. Nos.
169829-30, April16, 2008.
4
Mria Holelfrrclklyees Associiful v. Mrlila Holel Cap., G.R No. 154591, Mcrth 5, 'Jf.'IJ7, !D'9Q!Ildl3oi.llevad Hotel
v. GlO'MiRAIN, G.R No. 153664, Jutj 18, 2003, 406 SC~ 688, 710; Telefunken Semk:onduclas fn1lklyees Union-
FFWv. CA, G.R Nos.14301l-14, Dec. 18,2000,348 SCRA565, 582; FFWv. roong, G.R No. 49983, Apli 20,1982,208
SCRA 157, 165.

638 BAR REVIEWER ON lABOR lAW
There is a long chain of cases where not only the union officers but the
ordinary union members who defied the assumption/certification order and/or
retmn-to-work order were considered as having lost their employment status.
As an example, all the 44 defiant workers in the leading case of SarmientO
v. Tuico,l were declared to have lost their employment status. While the employer,
Asian Transmission Corporation (ATC), has manifested its willingness to accept
most of the workers, and has in fact already done so, it has balked at the demand of
the remaining workers to be also allowed to return to work. Its reason is that these
persons, instead of complying with the retmn-to-work order, as most of the workers
have done, insisted on staging the restrained strike and defiantly picketed the
company premises to prevent the resumption of operations. By so doing, ATC
submits, these strikers have forfeited their right to be readmitted, having abandoned
their positions, and so could be validly replaced. The Court agreed with this position
of ATC and thus held:
"The records show that the reltJID-to-work order was first issued
on June 3, 1986, and was reiterated on Jtu1e 13, 1986. The strike was
declared thereafter, if we go by the criminal complaints in G.R. Nos.
75271-73, where the alleged acts are claimed to have been done on June
9, 1986, and July 15, 1986.
"These dates are not denied. In fact, the petitioners argue in
their pleadings that they were engaged only in peaceful picketing, which
would signify that they had not, on those dates, returned to work as
required and had decided instead to ignore 1he said order. By their own
acts, they are deemed ta have abandoned their employment and
cannot now demand the right to return thereto by Virtue of the very
' 2
order they have defied."
Other significant cases which declared all defiant strikers - both union
officers and ordinary members alike- as having lost their employment status are as
1 caarno N. S!rmiEnD llld 71 Ol1er SH<iYJ W<Mkels d Asicrl TIII1SIIisskn tap. v. The Hoo. Judge Odilldo R lli:Xl,
GRNos. 75271-73&L-n567,.krle27, 1988.
~suppled. The~ holdiYJ was reallimed ilflle ~ Courfs'ResokDln dated Febnay 22, 1989 vR:h
resd.oed, i1l!!r • t.e ID.1!ion b" ~ filed by l1e YOkel's areca! {G.R Nos. 75271-73). The Resdutioo
stessOO llal 'tiJie NlRC had l1e d1att to i;sue te rellJn.bd ader, Slqed: il sa1CiXls b" ~
llerewlh. The Court 131 ~sud! sancb1s. Those sbites W1o defied 1he.ader 111<1 refused b rebm to V«llk as
reqlied camat oow allf4llai1 f V1ey n deemed mMle bfeled t.ei" ~ as a ~ d Ulei"
~- .: ~. t.e- of the begoi1g d"missald l1e 44 slrlers lila defied l1e retJ.m.b.oM:xk order
was~ aMned illle sepmlle 1989 case rJ. Asicrl TrmsrrissiXI Cap. v. NLRC, G.R No. 88725, Nov. 22, 1989. This
case was brought aboot by the NLRC's erroneous er.ecuOOn of the dedsiJns i1 f1e 2 prior cases rJ GR. Nos. 75271-73,
riled "Catailo N. smerrto ood 71 OU1er S100lg Walkers of Aslil1 TICI1Siilissioo.corporation v. Hoo. JlXlge 0!1ll1do R
Tli:o, etc.,« al.,' llld G.R No. 77ffJ7 riled 'Asicrl TllllSITissionQxporatioo {ATC) v. Nl.RC,' supra. Thus, l was held
hereil, 1D wit 'VIH:REFORE. lle NLRC Resolution d June 13,1989 is ANNUI.lfD 111<1 SET .ASIIlE. Execution rJ.Ihis
Coots decision il G.R Nos. 75271-73 111<1 77fi37 kl eflect or axr.,et rei ISfalement by fle petitioner rille trty.four
V«X1<ersdeclared v.;thou!IYJhttllereto II said decision, is perpetllatf resllailed. Cost ~Ble IM'l resp<llldenl;."
V;)';l
lABOR RElATIONS
follows: (1) Union of Filipro Employees v. Nesde Philippines, Inc.,.t (2) St.
2
Scholastica's College v. Torres; (3) Federation of Free Workers v.Inciong; 3 (4) .
AUied Banking Corporation v. NLRC; 4 (5) ·National Federation of Labor v.
5
NLRC; (6) De Ocampo v. NLRC; 6 (7) Toyota Motor Phils. Corp. Workers
1
G.R. Nos. 8871~ 13, Dec.19, 1990. This assumed case ilvOOtes peliOOner Union of Fipro EmpkJyees and 70 Li1kJn oflicerS
and a member. tt was held il thS case lhat 'a stri<e 1hat is LUldertaken despite file issuml by the Secrelaiy rJ Labor of an
assumptioo or cel1ffication ooler becomes a prOODJiled adMty and thus ilegal, ptJ'SUa1l kl lhe second paagraph of Al1ide
l79 [264j of the labor COOe, as arended. The uniln officels and members, as a result, ere deemed kl have lost their
erf4lloymentstatus forha<q ~~ ~ il an ilegal act' ttwas held here: "Tills, the NI.RCCOillldlyupheld the
ile;Jaity rJ. the sllies ood 11e QlleSpCIId"oJ disrrissal of lie ildiv'.dual oomplailanfs becaJse of lhei" 'brazen disregard of
sua:essMllawful orders rJ lien Labor tMislers Bias F. Ople, Auguslo Sand1ez llld Labor Seaetry Frrilil Dnbn dated
December 11, 1985, JCI1\BY 30, 198611ld Febnay 4, 1986, respecWely, and the cawier treatment of the provisioos of lhe
Labor Code il1d t.e rellJn.b.wa1( ordes rJ the ~Mister (110N Secreta!y) of Labor tVId En1Jio'Jmenl, or Artides 264 em 265
(110N renumbered Ms. 278 !2631 il1d 2791264l) x:n..'
2
GR. No. 100158, June 29, 1992, 210 SCRA. 565. AI the defiant stlikers, bdh Li1kJn ollicers il1d oomy union members,
were al declcred to have lost lheir ef11lklyment status under the folov.ing ra!iocilation:
'Wlie they clain that al'.Er receM1g copy of the Order of 9 November 1990 lliliaWes were irrnedia!ety unde!tlken to
fashion wt a retiJm.loJMll1c agreement Yri'j) manageme;.t stilt, the unrebutted eVdence remai1s lhat the sbikilg uniln
officers and members tried ID return kll'tiJII( oot( eteveo (11) days after the coodtiation rr.eeiD;Js ended i1 failure, or twenty
(20) days after they receNeda:jly of the first~ Older on 5 NcNerrbef 1990.
'The S)'IT'!l:]1hy of the Crutv.fli:h, as d rule, is on the side of !he labofir¥J classes (Reliance Surety &Insurance Co., Inc. v.
NLRC, G.R. Nos. 86917·18, Jill. 25, 1991; 193 SCRA 365), cannot be extended kl theslrblg uniJn officers and members
nthe ilsta1t petiOOn. There was 1\iful disOOedience not ontt mone but 1v«> retum-IIJ.wcxk orders. Consideri1g lhat the
UNION consisted mai1ly ci m:ller.;, lila are supposed to be wefl.letlered and~~. lhe Coort cannot MOOok the
p00 ffiOQ<n:e il1d p00e \tspl:l'fOO by lhe UNION II V1is lctlcr dispL'i!. Despi1!; OO"tlailil;J ~lffiat of discipiray action
ag<insl sorre m ati::ers ~ rnermers v.OO actively pa1qlated 11 t.e me, file 1e11er dated 91-«Jventer 1990 sent by
the COllEGE enjoi1rg file m cbs and men"bers ID rebJm mV«llk on 12 ~ 1990 presented 11e V«llkers <r~
oppa1l.:nily 1D re!um to w:xk Lnlerte scme terms llld conciOOns pOOr tlthe sllie. Yet, lhe UNION deckled to gnore lhe
sane. The COLLEGE,~~. had fMIY r%Jhlto Emi1ale lhe seNices of those r.t10 chose 1o !lsregard the rebJITI-
bv.ok orders issued by respoodent SECRETARY i1 order b protect the i1teresls dIs stJdenls lila bm pat rJ.flle yooVJ
of the lilld.
XXI.
'klme, responden: SECRETARY gravetj cblsed his disaeOOn \\!1en he ordered file reilstalement tt sUli1g unkxl
rnermers v.no refused kl repat back tl V«llk aner he issued ~v«> (2) reli.Jm.b.y,uk orders, Yttii1 n ilsef is ~~
~ i1 <r1 illega act The Onleril ~is, teltailly, IXX1tray 1D eximJ law em~·
3 GR No. L-49983, Apri 20, 1992. The Sl.qxmle-crut, citi1g lhe sane nq i1 Union d ~. dedcred a! deliart V«llkes
as haii1g kJst l1eir ~ strus. 'llnrebuti!d eVdence shows that lhe ildM:lual petitiooers dJely ~ ilflle
legal sllie staged.'
4
G.RNos.116128& 116461,.klf12, 1996,2588\:RA 724.Qlt.ebasisdllerutgsillleSaniertl,lm'lrJ.APo,St.
Sdlaastica's il1d Federaixl d flee wakers cases, t.e m oftk:ers 111<1 rnenters v.tlo hcNe ~ i1 t.e said
legal d.litf, were al deemed tl have kJst lhei" ~ strus, as a resUt d llei" defa1ce d 11e ~ or
certificalioo order.
s G.R No. 113466, Dec. 15, 1997, 283 SCRA 275. kwas aleged by pelb1ers lh.t 11e disrrissal d l1e 141 Y«llkeiS is based
solely on a p!ina facie filli"g 11at l"ef Cllf1'ded vcmus unlav.ful ads Yttlie slagi1g !lei" sllie, as ceRfied by file City
Prosecutor's Olfice.ln ~ lle~dlle disrrissalof allle 141l'tlll1(es, I was hekl that !his allegation is not rue.
The disnissal is~ basa:l Ill lhei" refusal Ill rebJn kl V«llk after the Secre!ay d Lalor had assumed jJisdction rM!l
file case oo Mild111, 1993. il faa. despite the etltx1s d PNP persoonel flroug1 the llislltt ConvTmder tl persua:le file
Y«llkes il coow with file RebJrn.bWait Order, l1e s1rte c:on1hJed IIlli Mardi 29, 1993 m file mes (ismcr1lled
their pickets. (See also Plqlle's ~ llld Comnercial ~ and Worllers Orgcnzaoon (FFW) v. People's
Industrial and Coomertia1 Capaaion, G.R. No. L·37687, March 15, 1982, 112 SCRA 440).
6 G.R No. 101539, Sepl4, 1992. Tit is a CEitified case ID te NLRC. The kltal ntl1ter of union ol!icefs and rnermers
ordered disnissed illhis case is 26. The Supreme Coort, i1 aftirmilg lhe NLRC's ruD:Jilat 11e slrie staged m February 6,
1990 was ile;Jal, havi1g been CCIIIdudEd II defmce of the certification order and~. nB1g that 'the union
oflicers/members vmo pa1qla!ed i1 said sl!ike cormitled prohilited ads [il1d lhereli:re]n deemed to have lost lhei'
640 BAR REVIEWER ON lABOR lAW
CHArTER VI!
lABOR RElATIONS 641
Association {TMPCWAJ v. NLRC/ (8) ManDa Hotel Employees Association v.
Manila Hotel Corp.; 2 and (9) Phikom Employees Union v. Philippine Global 5. DEFIANCE OF ASSUMPTION ORDER VS. PARTICIPATION IN
Communications. 3 ILLEGAL STRIKE OR COMMISSION OF ILLEGAL ACTS IN THE
COURSE OF THE STRIKE.
4. PERIOD OF DEFIANCE OF THE RETURN-TO-WORK ORDER, NOT
MATERIAL. The foregoing consequence of: (I) defiance of assumption/certification
order should be distinguished from (2) the liability for participating in an illegal
The length of time within which the return-to-work order was defied by strike or commission of illegal acts in the course of the strike. In the former, all
the strikers is not significant in determining their liability for the legal defiant strikers, regardless of being union officer or ordinary member, are
consequences thereof. The following cases are illustrative of this rule: deemed to have lost their employment status. In the latter, only union officers
(a) University of San Agustin Employees' Union-FFW v. The CA. 4 can be dismissed for participating in an illegal strike but not ordinary members
- The period of defiance was less than nine (9) hours from 8:45 who can only be dismissed if they commit illegal acts in the course of the strike.
a.m. to 5:25p.m. on September 19, 2003. 6. SOME PRINCIPLES ON DEFIANCE OF THE
ASSUMPTION/CERTIFICATION ORDER.
(b) Federation of Free Workers v. Incion!.!/- The period of defiance
was only nine (9) days.
I
i
• The assumption/certification order may be served at any time of the day. 2
1
(c) Sarmiento v. Tuico. - The period of defiance was for five (5) • No practice of giving 24 hours to strikers within which to return to
months. I
•' 1
work. There is no Ia w or jurisprudence recognizing this practice. 3
The defiant workers, besides being dismissed, may be subject of criminal
'
prosecution as well. 4
status of ~r cited the above QUOIEd holdl1Q i1 the said case of Union of Rlipro, and furtt1er proooonced that 1
lJ)lrebutied ev'.dence sha.vs 111at the oorroual petitiooer; defied the retu~ ooier of 11e Seaelay ot l2bor issued The defiant strikers could be validly replaced. 5
1
oo Februay 15, 1990. As a matter d fact, ft was CXlly oo Febrully 23, 1990 ¥Alen the tmi:ades v.ec retWied Clld iile The refusal to acknowledge receipt of the assumption/certification
mail gate of f1e ~was ~. Hence, the tenmali:ln of the serW:es of the iJdNk!ua pe!ibiels is jJStilied oo this
QIW1d alooe.' I orders and other processes is an apparent attempt to frustrate the ends of
1 G.R Nos. 158786 &158789 and 15879&-99, Oct 19,2007. The~Court, usi"g as basis, pidJJres shaMng the illegal justice, hence, invalid. The union cannot be allowed to thwart the efficacy
a axmitled by the s!IiEIS, declared as vac1 the cisrrissal of 92 oomy lllkxi menters ....oo pMqlaled i1 the May 23

I
of the said orders issued in the national interest through the simple
!l1d 28, 2001 paet> Clld coocerfed actioos i1 dE!ooce a the cril:alion order. 'These wne.s· a i1 jlili'IQ 1¥\d
~ i1 the May 23 Cl1d 28, 2001 Ja'lies a paels were pEnt vi:JiaOOns of lle Apfi 10, 2001 assurr¢ln of expediency of refusing to acknowledge receipt thereof. 6
)Jisdk:ti:xllcertifi oroer issued by tJe OOLE Secretly, v.llill JliO!DbOO f1e COO'Il1isslxl d a flat mght lead t1 the
'wcisenllg of ill already deleOOrated sm.Jatioo.' Ait 278(g) 1263(g)J is cleM lhat stibs v.OO vi:ll* the
~ oroer may su1!er dismissal !rom 't'«KK.llis was 11e silualion illle May 23 Cl1d 28, 2001 pickets Cl1d
IXJ1Celi!d actions XXX.'
2 GR No.154591, Man:h 5, 2007. The rule was reiea\ed here, hls: 'llef'mre oflle ~<Xderaa retumtl 'MXII
ader by asWig.~. W1eiier aookxl ofti::er a a rnerm, is ill legal a:t Clld, lleR!be. avail ground for klss of
~ sbllus.'·Coosequenlij, l1is case was disposed by l1e li'Jh Coort by ~ lle rA dedsioo 'dedai'V lle
!ike IXI1dla!d by fpetitionefJ !MEA oo 10 Februay 1999 as legal hi, llus, resuttllg i1 toe loss It~ s1a1us of
teooi:ln dbrs Clld menters....OO~ illlesaid~'
3 GR No. 144315, Jlt[ 17, 21XXi. l1is 6 ii18SSlllled case. The~ CM Mad IIrt llefij,re d petitioner PEU's
tfm's Clld merrbefs tl ccrrctt irrned"Iale!y will the IXll.E Secrelily's ~ORiels daled 19 NcNenter llld 28
Noventer 1997 rant be coodoned. Dem:e of l1e ~ adels d. the SecnBy anti!s a VIii gllllBld klr
lisrrissal. lbNever, because l1e identities of the lllioo dfms hllllelrilels were rd: ~the dspositNe pat of the
deem~ sla81 "1hat lle Secretaiy d Uilor is diecled tl deEmile Yot10 !I110I'Q the Alloom En1Jbtees IXion dire!S
Pilticflaled illhe ilega strite, il1d v.ro 8r7mJ t1e uniln menters ccrmiled ilegal a a defied 11e ~ ordeiS 1
d 19 Noventer 1997 and 28 Na.ooober 1997.' The recools d lis case sllCNI tlat oo 22 tbeTter 1997, Phtom G.R. No. 75271-73, Jooe 27, 1988.
2
pJjshed illle PhiWiJe Dait)' Inquirer a notice t1 sW1Q ~ tl R!Un t1 V«llk. These eil'(lkl'tees did rd: report Telefunken SemiaJnductors Employees Union.fFW v. Secretary of Labor illd Employment G.R Nos. 122743 and
back t1 vm but tOOlilued lleir mass actOO. kl fact, tet filEd hei' ~ li1es rrif oo 22 Decertter 1997. PhictJm 3
127215, Dec. 12, 1997,283 SCRA 145.
bmaltt notified IWk:e IIese ~ees kl explai1 i1 Ytli1i1g Yk'lf l1ey stm1 not be disnissed fa' defJVI9 lie ~ University of San Agustin Employees' Union-FFW v. The CA, G.R. No. 169632, March 28, 2006.
Sill Juill de ~ Educational Founda1ion Eir!lloyees Union - AFW v. San Juan de Dios Educa!ional Foondation, Inc.
4
ader. A1blm held ll'iTi1islraWe hm1gs 00 these disqlilaly cases. Thereall!r, Pllilam <isnissed these ect'flklyees for
ltla1doomen1 d w:x1l i1 de!iax:e d.lle ~ order. 5
lHospitalj, GR No. 143341, May 28, 2004.
l G.R No. 169632, March 28, 2006. Marcopper Mining Corporation v. Brillantes, G.R. No. 119381, March 11, 1996, 254 SCRA 595; Al6ed Banking
5 G.R. No. L-49983, April20, 1992. Corporation v. NLRC,G.R. No. 119381, Malth 11,1996,258 SCRA 724.
6
Navalev. CA. G.R No. 109957, Feb. 20, 1996, 253 SCRA 705.
:&

642
CHAPTER EIGHT
JURISDICTION AND REMEDIES
TOPICS PER SYLLABUS
VIII.
JURISDICTION AND REMEDIES
A. Labor Arbiter
1. Jurisdiction
a. Versus Regional Director
2. Requirements to Perfect Appeal to NLRC
3. Reinstatement Pending Appeal
B. National Labor Relations Commission (NLRC)
1. Jurisdiction
C. Court of Appeals·
l. Appeal Via Rule 65, Rules of Court
D. Supreme Court
l. Rule 45, Rules of Court
E. Bureau of Labor Relations (BLR)
1. Jurisdiction
F. National Conciliation and Mediation Board
1. C.mciUation vs. Mediation
2. Preventive Mediation
G. DOLE Regional Directors
l. Recovery/Adjudicatory Power
H. DOLE Secretary
l. Visitori~l and Enforcement Powers
2. Power to Suspend Effects of Termination
3. Remedies
L Voluntary Arbitrator
1. Jurisdiction
2.Remedies
J. Prescription of Actions
1. Money Claims
2. lllegal Dismissal
3. Unfair Labor Practice
4. Offenses Under the Labor Code
5. lllegal Recruitment
------------------------
V't,>
JURISDICTION AND REMEDIES
PRELIMINARY CONSIDERATIONS
ON JURISDICTION AND REMEDIES
1. EXISTENCE OF EMPLOYER-EMPLOYEE RELATIONSHIP.
The existence of employer-employee relationship between t'te parties-
litigants, or a reasonable causal connection to such relationship1 is a
jurisdictional pre-requisite for the exercise of jurisdiction over a labor dispute
by the Labor Arbiters 2 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-
i employee relationship, Labor Arbiters have no jurisdiction thereover.3 This is so
because not every dispute between an employer and employee involves matters
that only labor tribunals like the Labor Arbiters and the NLRC can resolve in the
I.. exercise of their adjudicatory or quasi-judicial power. Actions between
employers and employees where the employer-employee relationship is merely
incidental are within the exclusive originaljlirisdiction of the regular courts. 4
3. REASONABLE CAUSAL CONNECTION RULE- THE RULE IN
CASE OF CONFLICT OF JURISDICTION BETWEEN LABOR
COURT AND REGULAR COURT.
The "Reasonable Causal Connection Rule" is a rule to determine
jurisdiction between labor courts and regular courts. Under this rule, if there is a
r reasonable causal connection between the claim asserted and the em~loyer­
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.6
4. THE POWER TO DETERMINE EXISTENCE OF EMPLOYMENT
RELATIONSHIP.
Under labor laws, it is not only the Labor Arbiters and the NLRC who
are vested with the power to determine the existence of employer-employee
relationship.
1 Known as 'Reasonable Causal Connection Rule.'
2 Ally. h1drea Vi v. &reno, G.R No. 159119, Mildl14, 2006; Ah1iez v. kl1i1ile Loop TedlrlobJy cap., G.R ~. 162401,
.lal. 31' 2006.
3 Poodocv. NLRC, G. R No. 116347, Oct 3, 1996, 262 SCRA 632.
4 Vdlcrnclia,Jr.v.CA,G.R.No.165881,Aprl19,2006,dtilg£vdav.CA,455Pit 118, 12912003~
5 DaHGili Eleclronics Manufacturing Corporation v. Villarama, Jr. G.R. No. 112940, Nov. 21, 1994, 238 SCRA 267,
271.
6 San M!Juel Corporation v. ElcWal1, G. R No. 127639, Dec. 3, 1999.
644 BAR REVIEW£R ON lABOR lAW
The DOLE Secretary and the DOLE Regional Directors are
possessed of similar power as held in the 2012 en bane Resolution in People's
Broadcasting Service (Bombo Radyo Phils., Inc.) v. The Secretary of the
Department of Labor and Employment 1 In fact, it was held here that the
detennination by the DOLE Regional Director and the DOLE Secretary of the ·
existence of employer-employee relationship in the exercise of their visitorial
and enforcement power under Article 128(b) of the Labor Code is to the
exclusion ofthe Labor Arbiter and the NLRC.
The Med-Arbiter has also the same power. M. Y. San Biscuits, Inc. v.
Lae;uesma,1 pronounced that the Med-Arbiter has the authority to detennine the
employer-employee relationship because it is necessary and indispensable in the
exercise of his jurisdiction. It is absurd to suggest that the Med-Arbiter and
Secretary of Labor cannot make their own independent finding as to the
existence of such relationship and must have to rely and wait for such a
detennination by the Labor Arbiter or NLRC in a separate proceeding. For then,
given a situation where there is no separate complaint filed with the Labor
Arbiter, the Med-Arbiter and/or the Secretary of Labor can never decide a
certification election case or any labor-management dispute properly brought
before them as they have no authority to determine the existence of an
employer-employee relationship. Such a proposition is, to say the least,
anomalous.
The Social Security Commission (SSC) has also this power. In
Republic of the Philippines v. Asiapro Cooperative,3 involving the issue of
coverage of owners-members of respondent Cooperative under t1.e Social
Security System (SSS), it was held that it is not only the Labor Arbiter or the
NLRC who/which has the exclusive jurisdiction to determine the existence of
the employer-employee relationship. The Social Security Commission (SSC)
has also that power.
5. IN CASES FILED BY OFWs, LABOR ARBITERS MAY EXERCISE
JURISDICTION EVEN ABSENT THE EMPLOYMENT
·RELATIONSHIP.
In Santiago v. CF Sharp Crew Management, Inc.,4 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
I G.R No. 179652, Math 6, 2012.
2 G.R No. 95011,Aplil22, 1991.
3 G.R.No.1n101,Nov.23,2007.
4 G.R No. 162419, July 10, 2007.
.._. •• ,.....I Ln. "fill
045
l )URISOICTION AND REMEDIES
(Migrant Workers and Overseas Filipinos Act of 1995), as amended, 1 the Labor
!
Arbiter may exercise jurisdiction over the clainis of OFWs arising out of an "'
employer-employee relationship or by virtue of any law or contract involving
Filipino workers for overseas deploymen~ including claims for actua~ moral,
I exemplary and other forms of damage.
Santiago was cited in the 2012 case of Bright Maritime Corporation
v. Fantonial/ where it was ruled that while respondent seafarer cannot be
deemed as having been illegally dismissed considering that the employer-
employee relationship has not yet commenced, nevertheless, petitioners' act of
preventing respondent from leaving and complying with his contract of
employmene constitutes breach of contract for which petitioner company is
liable for actual damages to respondent for the loss of one-year salary as
4
provided in the contract. Additionally, respondent was awarded moral damages
5
in the amount of P30,000.00, exemplary damages of P50,000.006 and 10% of
all recoverable amounts as attorney's fees. 7
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. 8 As
heirs, the wife and son of Juliano Roslinda, the deceased OFW, have the
personality to tlle the claim for death compensation, reimbursement of medical
expenses, damages and attorney's fees before the Labor Arbiter ofthe 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. Requiring conciliation of labor disputes before the barangay courts
would defeat the very salutary purposes of the law. Instead of simplifying labor
As lately amended by Section 7 of RA No. 10022{Maltll8, 2010). But even before 1his al!1ei1Clmal~ this provision
1
Is already embodied il Section 10 of RA No. 8042.
2
G.RNo.165935,Feb.8,2012.
3
il this case, llere~adl ~ amctbeiWeen petilixle!Saldrespondent
The 11'101111tjsalay ~.it tlecoobattis US$670, ilcUWeof all:7irclloo.
Based oo Is txi1g that 11e b!eldtd o:ma:t was tarrted Mil bOO fa"ttt, cmsideri1g that respondeot's M!li:al Crilcate
sla!ed lh<tre was fit Ill ¥«llt on 11e day d his scheduled depakre, yet he was oot alowed 1D leave afegectj b" medical
reasons.
6
This was ~ by WZf of~ or axrecfiJn b" l1e publ'te goo! il view of petiible(s act d piM'81g respondent
fronl beilg depq'ed on lle grtlllld 1h<t he was no1 yet dedared ft ID WOik on tie dale of his dep,nne, despie e.idence Ill
the ccrtay. 5ldl act. f llllerafed, IMllil ~the ef11lbymert ~ d 001' seafcm v.11o Ire~ to be
depklyed, but prewnled tl do so by a mcmi1g 1rJef1CY tlr urjiSflied A!i!SOOS. Exet11llay ~ tre i1llosed not to
eM:h ooe ptrty or iqJoverish lllOiher, but In serve as a detelrenl1r}ailsl or as a negative i'lcellWe maJb social~
deleiEmJs dxls.
This. <111m! is~ on t1e fact flatmuse d petiOOners' faille ., deploy respondent based oo m ~ ground,
7
respoodent was fomed Ill file lhis case.
8
G.R. No. 168715, Sept15, 2010.
646 liAR REVIEWER ON LABOR lAW

CHAPTER VIII
proceedings designed at expeditious settlement or referral to the proper courts or jURISDICTION AND REMEDIES 647
offices to decide them finally, the conciliation of the issues before the Barangay
2. EXCEPTIONS TO THE ORIGINAL AND EXCLUSIVE
Lupong Tagapayapa would only duplicate the conciliation proceedings and
JURISDICTION OF LABOR ARBITERS.
unduly delay the disposition oflabor cases. 1
The following are the exceptions:
A.
LABOR ARBITER I. When the DOLE Secretary or the President exercises his power
under Article 278(g) [263(g)] of the Labor Code to assume
l. THE LABOR ARBITER. jurisdiction over national interest cases and decide them himself.
The Labor Arbiter is an official in the Arbitration Branch of the 2. When the NLRC exercises its power of compulsory arbitration over
National Labor Relations Commission (NLRC) who hears and decides cases similar national interest cases that are certified to it by the DOLE
falling under his original and exclusive jurisdiction as provided by law. Secretary pursuant to the exercise by the latter of his certification
2. VARlOUS POWERS OF THE LABOR ARBITERS. power under the same Article 278(g) {263(g)].
Besides their adjudicatory power to hear and decide cases over which 3. When cases arise from the interpretation or implementation of
they have jurisdiction, the Labor Arbiters have (1) contempt power;2 and (2) collective bargaining agreements and from the interpretation or
power to conduct ocular inspection? Previously, they are also possessed of enforcement of company personnel policies which shall be disposed
in.junctive power. 4 This grant of injunctive power, however, was del~tcd in of by the Labor Arbiter by referring the same to the grievance
recent NLRC Rules. 5 The Labor Arbiter thus has no more injunctive power. 6 machinery and voluntary arbitration, as may be provided in said
Only th~ Commission (NLRC) has that power. 7 agreements. 1

l. 4. When the parties agree to submit the case to voluntary arbitration

JURISDICTION before a Voluntary Arbitrator or panel of Voluntary Arbitrators
who, under Articles 274 [261] and 275 [262] of the Labor Code, are
1. NATURE OF JURISDICTION OF LABOR ARBITERS, ORIGINAL also possessed of original and exclusive jurisdiction to hear and
AND EXCLUSIVE. decide cases mutually submitted to them by the parties for
arbitration and adjudication.
The jurisdiction conferred by Article 224 [217] upon the Labor Arbiters
is both original and exclusive, meaning, no other officers or tribunals can take The Labor Arbiters do not have jurisdiction over the cases mentioned
cogPizance of, or hear and decide, any of the cases therein enumerated. above which are taken cognizance of by said other labor officials or tribunals
under specific provisions of the Labor Code.
3. LAWS CONFERRING JURISDICTION ON LABOR ARBITERS.
Mm(av. Escayo, G.R Nos. 82211·12. Mnt121, 1989, 171 SCRA442.
Mi:le 218{d), asMM!ed h'fRA til.6715, Mlth 21, 1989; SecOOn 1, RUe IX. 2011 NL.RCIU!solflrocedlle; Sectioo The following provisions of laws grant original and exclusive
1, RlJie XXII~ Book V, rues ~ irr1llemert lle Lalor Code, as lll1ended h'f 0epcnnent Onler til. 40-03, Series d 2003, jurisdiction to the Labor Arbiters:
(Feb. 17, 2003}. .
3 Miele 219 of l1e Labor Code. Under the Labor Code:
4 Under the 1990 New RlJes d ProcedJre d lle NIRC, Lalor Albilels n expll!SStf grDd lhe paNer t>lssue ijJrdiln il
atrray cases. {See Sedkln 1, ~ Xllhered}. l) Article 224 [217]; 2
5 The S<i1 pw.tbl il t1e 1990 NlRC rues is no 1a1ger bJnd ills 2002. 2005 ood 2011 Ye!Sklns. It is qJi1ed lhallhis 2) Article 124;3
.deleOOn is cmect si1ce Mcle 218 d lle Labor Code QIMt i1jmi.'e porM!I" IJtf ~ f1e "Camissioo' 'Mli:h obWlusly 3) Article 128(b);4
. lefels to the NL.RC's Ytrilus <WisiJns Md ~ " lhe Uixr Artlilas. The receptial of evilence i1 ijJ1dkxl proceedilgs
may, hotiever, be delegated b the 1Jixr Artlilels v.llo shal cooduct SL>dlheaiYJs il such places ao; h&'si1e may detefrnile 4) Article 233 [2271;
lo be aa:essille to lle parties and their llffnesses, ood shalllherealler Sliinit hisA1er report l'lld recoornendation to the
ConrTissioo ~ fifteen (15) days froot such delegafioo. {See A!1ide 218(e), Labor Code ll1d Sedkx1 4, Rule X. 2011
NlRC Rufes d Procedure). 1
6 /lscoofrmed ill.livn Ill v. Mrja", A.C. No. 7430,Feb. 15, 2012. See paag!aflli !cJ, Mi:1e 224 {217].laborCcde; Section 1, Rule V, 2011 NLRC flules d Proce<Ue.
AsirlleiKiedbyRANo.~715JM<nn21, 1989].
2
1 UnderA!tide218(e),laborCode.
fisMielldedbyRA No.6727{June9, 1989), ~ -<llsbtioocasesn UllOP,lanized estlilisllrnent.
3

/Is amended byRA No. 7730 [June2, 19941, i'JvoMngoontesEdcases under the ex~ clause therein.
4

BAR REVIEWER ON lABOR lAW
648
1
5) Article 276 [262-A]; and
Under other law: 3
6) Section 10 ofR.A. No. 8042,2 as amended by R.A. No. 10022.
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 224 [2171 ofthe Labor Code:
(a) Unfair labor practice cases;
(b) Tennination disputes;
(c) If accompanied with a claim for reinstatement, those cases that
workers may file involving wages, rates of pay, hours of work
and other terms and conditions of employment;
(d) Claims for actual, moral, exempiary and other fonns of damages
arising from employer-employee relations;
(e) Cases arising from any violation of Article 279 [264] ofrhe Labor
Code, as amended, including questions involving the legality of
strikes and lockouts;
(f) Except claims for employees compensation, social security,
PhilHealth (Medicare) and maternity benefits, all other claims
arising from employer-employee relations, including those of
persons in domestic or household service, involving an amount
exceeding Five Thousand Pesos (PS,OOO.OO), whether or not
accompanied with a claim for reinstatement.
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
4 may be committed by labor organizations;
pursuant to RA. 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 l28(b) of the
Labor Code.
1 As ilcorpaafed by Seclioo 26, RA. No. 6715 [Marcll21, 1989].
2 Othelwise kncrMl as "The ~rantWOO<e!S and Overseas Fiipms M. rJ.1995.'
3 Mclttl8, 2010.
4 The W!YJe RationalizaOOn M
CHAPTER VIII 649
JURISDICTION AND REMEDIES
4. Under Article 233 [2271 ofthe Labor Code:
• Enforcement of compromise agreements· when there is non-
compliance by any of the parties thereto, pursuant to Article 233
[227] of the Labor Code.
5. Under Article 276 [262-AI 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. 1
6. Under Section 10 of R.A. No. 8042, as amended by R.A. No.
10022:
• Money claims arising out of employer-employee relationship or by
virtue of any law or contract, involving Filipino workers for
overseas deployment, including claims for death and disability
benefits and fur actual, mora~ exemplary and other forms of
damages as provided by RA. No. 8042, as araended. 2
7. Other cases as may be provided by law.3
All the foregoing shali be discussed hereunder seriatim.
I.
JURISDICTION OVER UNFAIR LABOR PRACTICE CASES
1. VARIOUS ARTICLES OF THE LABOR CODE ON ULP.
Under the Labor Code, there are only five (5) provisions related to
unfair labor practices, viz.:
(l) Article 258 [247] which describes the concept of unfair labor
practice acts and prescribes the procedure for their prosecution;
(2) Artitle 259 [248] which enumerates the unfair labor practices that
may be committed by employers;
(3) Article 260 [249) which enumerates the unfair labor practices that
1 The last p<r.IQ~ ct Mde 276 [262-AJ ct lhe l..m'Code erdiled "Pml~Ues' .pRNkles: ~ IroliJn ct 8ll'f i'1Eresled
pa\y, the V~ fllilibatorocpooel rJ.VokJlllMy Albilratlrsortfle LmMliterillhe regia; YlflerellEHTIOYMtresiles, i1
case ct the iilsence or ix:apacily of f1e Vokmtay Aibircllor or pooel ct Voklntly Alllitlabs, fa" 8ll'f IeaSCO, may issue a
lid d exeMOI1 ~ eilher he sheriff ct lhe Olmrissm or reg!D'-ax.m or 8ll'f pubic atial M1om lhe pns may
desi:Jnale nthe subiTissbl ~ t1 execuE hi finat decisioo, oo1er or awad.'
2 Sec00n 10ofRA No.8042,ascrnendedbyRA No.10022.
3 See Sec6oo 1, Rille V, 2011 NlRC Rules of ProceOOre.
 CHAPTER VIII 651 ·
jURISDICTION AND REMEDIES
BAR REVIEWER ON lABOR lAW
6so 2. SOME PRINCIPLES ON JURISDICTION OVER TERMINATION
(4) Article 274 [261] which considers violations of the CBA as no CASES.
longer unfair labor practices unless the same are gross in character • The validity of the exercise of jurisdiction by Labor Arbiters over
which means flagrant and/or malicious refusal to comply with the illegal dismissal cases is not dependent on the kind or nature of the
economic provisions thereof. ground cited in support of the dismissal; hence, whether the dismissal
(5) A1iicle 278(c) [263(c)] which refers to union-busting involving the is for just cause or authorized cause, it is of no consequence. 1
dismissal from employment of union officers duly elected in • In case of conflict of jurisdiction between Labor Arbiter and the
accordance with the union constitution and by-laws, where the Voluntary Arbitrator over termination cases, the former's
existence of the union is threatened thereby. jurisdiction shall prevail for the following reasons:
{l) Termination of employment is not a grievable issue that must be
2. SOME PRINCIPLES ON JURISDICTION OVER ULPs.
submitted to the grievance machinery or voluntary arbitration for
• The Labor Arbiter has jurisdiction over all ULPs whether committed by the adjudication. 1 The jurisdiction thereover remains within the
1
employers 1 or the labor organizations. original and exclusive ambit of the Labor Arbiter and not of the
• The law gives utmost priority in the resolution of unfair labor practice Voluntary Arbitrator?
cases? (2) Even if the CBA provides that termination disputes are
• The Labor Arbiter has jurisdiction only over the civil4
aspect of ULP, the gricvable, the same is merely discretionary on the part of the
criminal aspect being lodged with the regular courts. . t:hereto. 4
parttes
(3) Once there is actual termination, jurisdiction is conferred upon
H. Labor Arbiters by operation of law. 5
JURISDICTION OVER ILLEGAL DISMISSAL CASES (4) Interpretation of CBA and enforcement of company personnel
policies are merely corollary to an illegal dismissal case. 6
1. LABOR OFFICIALS WHO MAY TAKE COGNIZANCE OF
(5) Article 224 [217] is deemed written into the CBA being an
TERMINATION DISPUTES.
intrinsic part thereof.'
An examination of the Labor Code shows that the following officials
have the power to take cognizance of termination disputes in the exercise of (6) Article 292(b) [277(b)] grants the right to the dismissed
employee to contest his termination with the Labor Arbiter.
their respective original and exclusive jurisdictions:
5 (7) Estoppel confers jurisdiction on Labor Arbiters.8
1) Labor Arbiters; 6
2) Voluntary Arbitrators or panel ofVoluntary Arbitrators; (8) The phrase "all other labor disputes" in Article 275 [262] does
3) The DOLE Secretary, in the exercise of his assumption power in not automatically confer jurisdiction on Voluntary Arbitrators~'
7
national interest cases; or (9) The State policy of promoting voluntary arbitration does not
4) The NLRC, in national interest cases certified to it for compulsory foreclose filing of termination case with Labor Arbiter. 10
8
arbitration by the DOLE Secretary.
1 C.Abrlaa &Sons, 1oc. v. CA, G.R Nos.155109, 155135 &179220, Sept 29, 2010.
2 Ncwaro HI v. Damasco, G.R No.101875, Jlif 14,1995.
3 Maneja v. NLRC, GR No. 124013, June 5, 1998, 200 SCRA603.
1 UndefA!\De259[248J,Ibi:l.
2 Under Alticle 260 [2491. Ibid.
4 Scrll.i;luel Colpolation v. NLRC, G.R No. 108001, Mardl15, 1996.
5 AHasFMilS, Inc. v. NLRC, GR No. 142244, Nov.18, 2002.
J Mi::le 258 [247], t.alOr Code, asanended bySecfa\19, Re;l!Ji::AtttG.6715.
6 Maneja v. NLRC, sup1a.
4 Mi::le 258 [247],1bid.
5 Under p;.ragraph [a)(2) of Article 224 [217].
1
L£mtex lndusllies v. CA, GR. No. 15027~. Aug. 9, 2007; Scrl "tuel Coqxlra!ion v. NLRC,St¥<1
6 \lndef Articles 274 (2611 a'1d 275 [262]. a ~ lndus!iesv.CA, ~
7
\lndef p;.ragraph 191 of Article 278 [2631 he l11!rf tale oo.Jnizance of temmiOO dispUteS 111at ere i1duded a Sl.4lS\Illed il 9
V~v. CA,GR. No.138938, Oct 24,200l,344SCRA268,281.
lhe easels CNef-Mlidl he has assumed )JrisdiciOO.
10
NMrro Ill v. ~. sup!a.
ld.; SUch cenified cases may ilc!udeorsullsurne lhe issue oftenrinatkln derr(Jklymentlhe legaity of vmidllhe NLRC may
8

~¥deddellPOO·

BAR REVIEWER ON lABOR lAW
652
(lO)Failure of the employer to activate grievance machinery confers
jurisdiction on Labor Arbiters.'
• 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
2
acquire jurisdiction over termination cases. This was the holding of3
the Supreme Court in the cases ofNegros Metal Corp. v. Lamayo,
5
Landtex Industries v. CA14 Atlas Farms, Inc. v. NLRC, and§!.!!
Miguel Corporation v. NLRC.6 In all these cases, the Supreme
Court has categorically declared that termination cases fall under the
original and exclusive jurisdiction of Labor Arbiters and not of
7 jurisdiction over money claims "arising from the interpretation or
Voluntary Arbitrators.
• The express agreement must be stated in the CBA or there must be
enough evidence on record unmistakabiy showing that the parties
8
have agreed to resort to voluntary arbitration.
m.
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, accompanied with a claim
for reinstatement; or
2) Any money claim, regardless of whether accompanied with a claim
for reinstatement, exceeding the amount of five thousand pesos
(PS,OOO.OO) per claimant.
The money claim in No. 1 above presupposes that it proceeds from a
termination case, it being accompanied with a claim for reinstatement. Hence, it
falls within the jurisdiction of the Labor Arbiter since it is principally a
termination dispute.
1 Alias Fams. k1c. v. NI.RC, wpl8.
Mil\eia v. NI.RC, Sllllfa; PantMCO North ExpresS, Inc. v. NLRC, G.R. No. 95940. Julf 24, 1996.
2 SlarSecuritt andDetedHeAgencyv. Secretly film, G.R No.82607,J[Jo/ 12,1900,187 SCAA358.
3 G.R No.186557,Aug. 25,2010.
.~ G.R No.150278,Aug. 9, 2007.
s G.R. No. 142244, Nov. 18, 2002.
6 <l.R No.108001,tJatl115, 1996,255 SCM 133.
7 \J~We~Slyollhe lnll\OCU~Cooceptionv. NLRCand TeodaaAxaian, G.R No.181146, JM.26, 2011.
8 ld.
CHAPTER VIII 653
jURISDICTION AND REMEDIES
The money claim in No.2 above does not necessarily arise from or
involve a termination case but because the amount exceeds P5,000.00, it falls
Within the jurisdiction of the Labor Arbiter. If the amount does not exceed
PS,OOO.OO, it is, under Article 129, the Regional Director of the Department of
Labor and Employment or his duly authorized hearing officers who have
jurisdiction to take cognizance thereof. 1
2. DISTINCTION BETWEEN THE JURISDICTION OF VOLUNTARY
ARBITRATORS AND LABOR ARBITERS OVER CASES FOR
MONEY CLAIMS.
The original and exclusive jurisdiction of the Labor Arbiters under
Article 224(c) {217(c)], over cases for money claims is limited only to those
arising from statutes or contracts other than a CBA. The Voluntary Arbitrators
or panel of Voluntary Arbitrators will thus have original and exclusive
implementation of the CBA and, those aris!ng from the interpretation or
enfor~ement of company personnel policies," under Article 274 {261 ].
San Jose v. NLRC/ ruled that it was correct for the NLRC to hold that
the Labor Arbiter has no jurisdiction to hear and decide the employee's money
claims (underpayment of retirement benefits), as the controversy between the
pa.'1ies involved an issue "arising from the interpretation or implementation" of
a provision of the CBA. The Voluntary Arbitrator or panel of Voluntary
Arbitrators has original and exclusive jurisdiction over this controversy under
Article 274 [261] of the Labor Code, and not the Labor Arbiter.
Citing San Jose on the distinction between the jurisdiction of the Labor
Arbiters and the Voluntary Arbitrators, the Supreme Court, in Del Monte
Philippines, Inc. v. Saldivar/ ruled that the Labor Arbiter in the instant case
could not properly pass judgment on the money claim cited as cross-claim by
petitioner against the union (Association Labor Union [ALU]) since it is a
money claim arising from the CBA, hence, the Voluntary Arbitrator has
jurisdiction to resolve the same.
3. SOME PRINCIPLES ON JURISDICTION OVER MONEY CLAIMS.
4
• Money claims must arise out of emfloyer-employee relationship. If not,
jurisdiction is with the regular courts.
1
Alti::le 129, tm COOe; 8riad Agro DeYeklpmenl ~ v. de Ia Serna. G.R No. 82005, Nov. 9, 1989, 179 SCRA
269;&t«enshire MlmOOal Hospial, lnc. v. Wslliroflaba'illd ErrcJioymeol, G.R No. 74621, Feb. 7,1990, 182 SCRA5;
2
Sa!Josev.NLRC,G.RNo.121227,Aug.17, 1998.
3
G.R. No. 158620, Oct 11,2006.
~ Sal MiJue1 capamtioo v. NLRC, 161 SCRA 719.
5
lllpMday AgricUb.rral DevekJpment Corporation v. CA. GR No. 112139, Jan. 31,2000.
65<4 BAR REviEWER ON lABOR lAW
• Award of statutory benefits even if not prayed for is valid.'
• The money claims lodged by an employee are not to be properly offset by
his unpaid subscription of stocks.2
• Claim for notarial fees by a lawyer employed by a company is within the
jurisdiction of the Labor Arbiter. 3 .·
a.
JURISDICTION OF LABOR ARBITER
VERSUS REGIONAL DIRECTOR
1. LABOR ARBITERS HAVE NO JURISDICTION OVER SMALL
MONEY CLAIMS LODGED UNDER ARTICLE 129.
Under Article 129 of the Labor Code, DOLE Regional Directors or the
duly authorized hearing officers, are empowered, in a summary proceeding, to
hear and decide claims for recovery of wages and other monetary claims and
benefits, includir.g legal interest, 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
PS,D00.00. 4
The first requisite is indispensable as labor authorities may only take
cognizance of cases arising from employer-employee relationship or when the
cause of action has a reasonable causal connection to such relationship under the
"reasonable causal connection rule. "
The second requisite means that the remedy of reinstatement should not
accompany the monetary claim because if this is the case, the principal cause of
action would be for illegal dismissal and not for monetary claim. Necessarily, an
action for illegal dismissal falls within the jurisdiction of the Labor Arbiter as
provided under Article 224 [217] of the Labor Code. Needlessly, in an illegal
dismissal case, the amount of any monetary claim asserted therein - whether
below or in excess the threshold amount ofP5,000.00- is immaterial.
The third requisite simply refers to the determination of whether the
total amount being claimed is at least PS,OOO.OO or below, in which case, the
jurisdiction is lodged with the DOLE Regional Director. If it exceeds PS,OOO.OO,
there is no doubt that the Labor Arbiter has jurisdiction thereover.
must be discussed in connection with the jurisdiction of the Labor Arbiters. The
1 ~Academyv.OOLE,G.RNos.83257-68,Dec.21, 1990, 192SCRA612.
1
2 ApOOacav. NLRC, G.R No. 80039, Ap!i118, 1989, 172SCRA 442.
3 Ai' Ma1eria1 vq Savilgs and Loan Associatioo, Inc. v. NLRC, GR No. 111870, June 30, 1994.
2
4
MPanirez lndusiries v. ~ rJ.l.abor and~ GR No. 89894, Joo. 3,1997, 266 SCRA 111, 128; Ubay
3
hTas1re and~ Selvices, Inc. v. Trajlno, G.R No.106813, NCN. 25, 1993,228 SCRA 189.
CHAPTER Vlll
jURISDICTION AND REMEDIES 6ss
To recapitulate, absent any of the requisites mentioned above will
divest the DOLE Regional Directors of their authority to hear and decide said
money claims. Consequently, the jurisdiction over the same is vested upon the
Labor Arbiters. 1
In Oreshoot Mining Company v. ArellanQ:2 the DOLE Regional
Director Office No. IV issued an order in three (3) separate but consolidated
cases, directing the reinstatement of private respondents and the payment to
them ofbackwages and certain other benefits. The Supreme Court ruled that the
petitioner is correct as regards its claim of lack of competence on the part of the
Regional Director over the cases. The Regional Director has no jurisdiction to
try and decide claims of workers arising from their illegal dismissal from
employment and for their reinstatement and recovery of monetary and other
benefits. It is the Labor Arbiter who has jurisdiction over said issues.
Consequently, the questioned order was nullified and the case was referred to
the Labor Arbiter for proper adjudication.
2. JURISDICTION OVER CONTESTED CASES UNDER THE
EXCEPTION CLAUSE IN ARTICLE 128(b) OF THE LABOR CODE
INVOLVING THE DOLE SECRETARY'S VISITORIAL Arm
ENFORCEMENT POWERS (INSPECTION OF ESTABLISHMENTS).
a. Requisites.
For the valid exercise by the DOLE Secretazy 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:
(l) The employer-employee relationship should still exist;
(2) The findings in ~uestion 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 224 [217].
b. Relation of paragraph (b) of Article 128 to the jurisdiction of
Labor Arbiters.
Paragraph (b) of Article 128 is a very controversial provision which
Altide 224(a){6) (217(aX6)J, lalla Code; soon MJm;ts En~ v. Tosoc, GR No. 87449, .laT. 23, 1990, 181 SCRA
386.
G.R.Nas.L-7574648,Dec.14, 1987, 156SCRA498.
Refi!nrg ., lhe lcb:r ~ lVId enfoo:ement oflicets or i1dusUial safety E!I'IJioeers v.f1o are lasked mi1sped 11e
estabfishments ll1der Article 128 rJ.Ile labor Code.

BAR REVIEWER ON lABOR lAW
656
provision itself expressly acknowledges the conflict of jurisdiction. Thus, the
opening sentence of the first paragraph of Article 128(b), after its amendment by
R.A. No. 7730 [June 2, 1994], pertinently states:
"(b) Notwithstanding the provisions of Articles 129 and
224 [2171 of this Code to the contrarv. and in cases where the
relationship of employer-employee still exists, the Secretary of Labor
and Employment or his duly authorized representatives shall have the
power to issue compliance orders to give effect to the labor standards
provisions of this Code and other labor legislation based on the
findings of labor employment and enforcement officers or industrial
safety engineers made in the course of inspection. 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 em lo er contests the findin of the labor
em.lo ent and enforcement officer and raises issues su orted b
;\Qcumentary proofs which were not considered in the course of
1 (3) elements must concur to divest the Regional Directors or their
insoection."
c. Jurisdictional conflict.
A survey of the cases involving Article 12S(b) shows that the following
jurisdictional issues have been raised:
(1) Whether the DOLE Secretary or the Regional Directors have
jurisdiction when the total amount of monetary claims exceeds
PS,OOO.OO per claimant;
(2) Whether the Labor Arbiters have jurisdiction over the contested
cases mentioned in the exception clause in Article l28{b); and
(3) Whether the factual fmdings of the DOLE Secretary or the
Regional Directors are binding on Labor Arbiters and the NLRC
under the doctrine of res judicata.
On No. 1 above:
The DOLE Secretary or the Regional Directors have jurisdiction
regardless of whether the amount exceeds P5,000.00 or not.
In Ex-Bataan Veterans Securi A enc Inc. v. The Secreta of
Labor Laguesma,1 it was held that the Regional Dir«:tor validly assumed
jurisdiction over the money claims of private respondents even if the claims
exceeded PS,OOO because such jurisdiction was exercised in accordance with
Article 128{b) of the Labor Code and the case does not fall under the exception
clause.
t ~suppled.
2 GRNo.152396,tb/.20,2007.
CHAPTER VIII 657
JURISDICTION AND REMEDIES
The en bane Resolution in People's Broadcasting ServiCe (Bombo
Radyo Phils., Inc.) v. The Secretary of the Department of Labor and .
Employment,J clarified that the expanded jurisdiction of the DOLE
Secretary or Regional Directors is not affected whether the case is the result
of regular inspection under Article 128(b) or it originates from a complaint
under either Article 129 or Article 224 [217].
On No. 2 above:
The Labor Arbiters have jurisdiction over contested cases under the
exception clause in Article 128{b), which states: ''xxx The Secretary or his duly
authorized representatives shall issue writs of execution to the appropriate
authority for the enforcement of their orders, except in cases where the
employer contests the findings of the labor employment and enforcement officer
and raises issues supported by documentary proofs which were not considered in
the course of inspection."2
In interpreting the afore-quoted provision of the exception clause, three
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.3
Resultantly, if the said elements are present and therefore the labor
standards case is covered by said exception clause, then the Regional Director
will have to endorse the case to the appropriate Labor Arbiters of the Arbitration
Branch ofthe NLRC as held in said case ofEx-Bataan Veterans.4 ·
The case of Meteoro v. Creative Creatures, Inc..S 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
GR No. 179652, Mill:h 6, 2012. This ResOOtim rncxiied its ear1ier May 8, 2009 decism foood i1587 SCRA n4, 738.
~s.wied.
3 See Ex-Balaa'l Ve!elals Seariy ~. klc. v. The Seaelay ri Lm J.aJuesma, G.R No. 152396, Na/. 20, 2007; SSK
Pills~ v. C'anas, G.R Noo. 85934-36, .lal. 30, 1990, 181 SCRA 675, 678; Baloog BuhiftGad t.bs, Inc. v.
Sec. !lela Serna, G.R No. 86963, kg. 6, 1999, 370 Phil 872; BayhaYen, klc. v. AlluM, G.R No. 160859, JUy 30, 2008;
Section 1 Ja1 rue 111 ct 11e Rues on lhe ~ ct labcJ SlaOOMis Cases illhe Ragiora Olfl:es [Seplmter 16,
1987].
G.R No. 152396, Nov. 20, 2007.
GRNo.171275,Jitf13,2009.
658 BAR REVIEWER ON lABOR lAW

CHAPTER VIII
]URISDICTION AND REMEDIES
between petitioners and respondent company. The labor inspector, in fact, noted 659
in his report that "respondent alleged that petitioners were contractual workers v.
and/or independent and talent workers without control or supervision and also lURISDICTION OVER
supplied with tools and apparatus pertaining to their job." In its position paper,
LEGALITY OF STIUKEs AND LOCKOUTS
respondent again insisted that petitioners were not its employees. It then
questioned the Regional Director's jurisdiction to entertain the matter before it, 1. JURISDICTION OVER LEGALITY OF STRIKEs AND LOCKOUTS
primarily because of the absence of an employer-employee relationship. NOT AFFECTING NATIONAL INTEREST.
Finally, it raised the same arguments before the Secretary of Labor and the
In general, the Labor Arbiter has the power to determine questions
appellate court. It is, therefore, clear that respondent contested and continues to involving the legality or illegality of a strike or lockout upon the filing of a
contest the findings and conclusions of the labor inspector. To resolve the issue proper complaint and after due proceedings. 1
raised by respondent, that is, the existence of an employer-employee
relationship, there is a need to examine evidentiary matters. The employer, in case of a strike, or the union, in case of a lockout,
may file the proper petition with the Labor Arbiter to seek a declaration of the
On No. 3 above: illegality thereof. It shall be the duty of the Labor Arbiter concerned to act on
The factual findings of the DOLE Secretary or the Regional Directors the caseprocess.
of due immediately
2 and dispose of the same, subject only to the requirements
made i.'l the exercise of their visitcrial and enforcement powers under Article
128 are binding on Labor Arbiters and the NLRC based on the doctrine of res 2. JURISDICTION OVER STRIKES AND LOCKOUTS AFFECTING
judicata.' INDUSTRIES INDISPENSABLE TO THE NATIONAL INTEREST.
IV. The jurisdiction over labor disputes affecting industries indispensable
to the national interest is lodged with either the DOLE Secretary, in case he
JURISDICTION OVER CLAirdS FOR DAMAGES assumes jurisdiction thereover, or with the NLRC, in case the DOLE Secretary
certifies it thereto.
1. LABOR ARBITERS HAVE JURISDICTION OVER CLAIMS FOR
DAMAGES. Under either situation, all cases between the same parties shall be
It is now well-settled that claims for damages as well as attorney's fees considered subsumed to, or absorbed by, the assumed or certified case, as the
in labor cases are cognizable by the Labor Arbiters, to the exclusion of all other case may be, and shall be decided accordingly by the DOLE SecretarY or by the
courts. Rulings to the contrary are deemed abandoned or modified accordingly2 appropriate Division of the Commission. 4 The exception to this rule is when the
assumption or certification order specifies otherwise.
No matter bow designated, for as long as the action primarily involves an
employer-employee relationship, the labor court has jurisdiction over any Consequent to this, the 20 II NLRC Rules ofProcedure 5 prescribe that:
damage claims. 3 "When the Secretruy of Labor and Employment has
assumed jurisdiction over a strike or lockout or certified the same to
2. CLAIMS FOR DAMAGES OF OVERSEAS FILIPINO WORKERS
the Commission, the parties to such dispute shall immediately inform
(OFWs). the Secretary or the Commission, as the case may be, of all cases
Claims for actual, moral, exemplary and other forms of damages that directly related to the dispute between them pending before any
may be lodged by overseas Filipino workers are cognizable by the Labor Regional Arbitration Branch, and the Labor Arbiters handling the
Arbiters. 4 same of such assumption or certification. The Labor Arbiter
concerned shall fonvard within two (2) days from notice the entire
records of the case to the Commission or to the Secretruy of Labor,
as the case may be, for proper disposition."
1 Natds Tradilg QxporaOOn v. &lenavista, G.R No. 182018, Oct 10, :~112.
2 Prioorov.lnlemlellaleAppelale Coot, G.R No. L-72644, Dec. 14, 1987, 156 SCRA 435.
3 !.Jci.i:lliEfedn:xlksflautaoomg Cap. v. Watana,Jr.,oG.R No.112940,tb'.21, 1994,238SCRA267, 211 [1994];San
No. 22, NCt.fl f'rineron Sfite, ~and lockout.2ndEdOOn, Decetrber1995.
1
~uel Colpomtion v. Ettuban, G.R 1-b. 127639, Dec. 3, 1999; ROOI'guez, Jr. v. foguiar, Sr., G.R 1-b. 159482. ~- 30,
No.25,Guklefines~LOOa-RelaOOns.
2
2005.
In assumed~.
3
4 Sectioo 10, ReptJllic f>D. No. 8042; SecOOn 58, Rules and Regula!Xlns ~ Ble Migllrlt Waters and Olerseas
~.;
4
Fipinos Act of 1995. 5
lncertfied SeeMX:Ie278(g){263(g)J, laxrCode; See alsoSecOOo 31b), Rule VIII, 201\ NlRCRufesofPmcedure.
See 2"1 P<ll<lJtap/1 of Section 4of Rule IV llereof.

BAR REVIEWER ON lABOR lAW
660
Thus, the parties to an assumed or certified case, under pain of
contempt, shall inform their coWlSels and the DOLE Secretary or the NLRC
Division concerned, of all cases pending with the Regional Arbitration Branches
and the Voluntary Arbitrators relative or incident to the assumed or certified
case.1
Further, in cases certified to the NLRC which involve business entities
with several workplaces located in different regions, the NLRC 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.
1 lockout with the Labor Arbiter or Voluntary Arbitrator or panel of
3. JURISDICTION OVER CRIMINAL CASES ARISING FROM
STRIKES OR LOCKOUTS.
The Labor Arbiter cannot adjudicate issues involving any crimes
committed, whetht'\r related to a stdke or lockout or not. Prosecution of crimes
or felonies falls within the jurisdiction of the regular courts of justice.
V-A.
JUIUSDICTIONAL INTERPLAY
IN STRIKE OR LOCKOUT CASES
1. NECESSITY TO DESCRIBE INTERPLAY OF JURISDICTION.
At the outset, there is a need to discuss and explain the jurisdictional
issues involved in strike or lockout situations because of their seeming
complexity. As distinguished from other labor cases, a labor dispute involving a
strike or lockout is unique as it involves an interplay of jurisdiction of several
labor officials or tribunals. Confusion usually arises as to when the Sa.id labor
officials or tribunals can properly take cognizance of strike-related or lockout-
related issues.
2. A STRIKE OR LOCKOUT IS CROSs-JURISDICTIONAL IN
NATURE.
Based on the pertinent provisions of the Labor Code, there is really no
overlap or conflict in the exercise of jurisdiction of the labor officials and
tribunals concerned. Below is an outline of the interplay in jurisdiction among
them.
l. Filing of a notice of strike or lockout with NCMB. • A union
which intends to stage a strike or an employe• mhi.-h rlesires to mount a lockout
1 Section ~1. Rule VIII, 2011 NLRC Rules of Procedure. Thisruleshollldiite'M;e app~by analogy to assumed cases.
2 Sedioo 3~}. Rule VIII, 2011 Nl.RC Rules of ProcedUre.
CHAPTER VIII 661
jURISDICTION AND REMEDIES
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/ 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 confmed 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
Voluntary Arbitrator. - In case a party wants to have the strike or lockout
declared illegal, a complaint should be filed either with the Labor Arbiter under
Article 224(a)(5) [217(a)(5)] of the Labor Code or, upon mutual agreement of
the parties, with the Voluntary Arbitrator or panel of Voluntary Arbitrators
under Article 275 [262] of the same Code. The issue of illegality of the strike or
lo:::kout cannot be resolved by the Conciliators-Mediators of the NC~ffi as
earlier pointed out and discussed.
3. Filing of an injunction petition with the Commission (NLRC). -
b case illegal acts violative of Article 279 [264] are committed in the course of
the strike or lockou~ a party may file a petition for injunction directly with the
Commission (NLRC) under Article 225(e) [218(e)] of the Labor Code for
purposes of securing a temporary restraining order (TRO) and injunction. The
Labor Arbiters or Voluntary Arbitrators are not possessed of any injunctive
power under the Labor Code. In other words, the aggrieved party, despite the
pendency of the case for the declaration of the illegality of the strike or lockout
with the Labor Arbiter or Voluntary Arbitrator, as the case may be, may directly
go to the Commission to secure the injunctive relief.
4. Assumption of jurisdiction bv the DOLE Secretary. - Under
Article 278(g) [263(g)] of the Labor Code, the DOLE Secretary has the power to
assume jurisdiction over labor disputes which, in his opinion, may cause or
likely to cause a strike or lockout in industries indispensable to the national
interest (so-called "national interest" cases). Once he makes the assumption, he
shall decide all the issues related to the labor dispute himself, to the exclusion of
all other labor authorities.
5. Certification of the labor dispute to the NLRC.- Under the same
provision of Article 278(g) [263(g)] of the Labor Code, the DOLE Secretary has
the option of not assuming jurisdiction over the labor dispute in national interest
1
G.R. No. 183335, Dec. 23, 2009; See also Hotel En'jlloyees Unioo-NFL v. Wa!eifront maar Hotel -D<Nao, GR. Nos.
17404()..41, Sepl22, 2010.
662 BAR REVIEWER 0~ lABOR lAW
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 278(g) [263(g)] by assuming jurisdiction
over the same for purposes of settling or terminating it.
7. Submission of a national interest case to voluntary arbitratior.. -
Despite the pendency of the assumed or certified national interest case, the
parties are allowed to submit any issues raised therein to volunta.ry arbitration at
any stage of the proceeding, by virtue of Article 278(g) [263(g)] 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 278(g) [263(g)] makes
specific reference to the President of the Philippines, the Secretary of Labor and
Employment, the Commission (NLRC) or the Voluntary Arbitrator in
connection with the law on strike, lockout and picketing embodied in Article
278 [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
224(aX5) [217(aXS)J as above discussed.
VI.
JURISDICTION OVER CASES INVOLVJNG
LEGISLATED WAGE INCREASES AND WAGE DISTORTION
1. CASES IN ORGANIZED ESTABLISHMENTS.
In estabiishments where there are existing collective bargaining
agreements or recognized bargaining unions, R.A. No. 6727,1 vests upon the
Voluntary Arbitrator or panel of Voluntary Arbitrators, the jurisdiction to hear
• ReflublicActNo. 67ll; Sedioo 1, Rule VII, Rulesofflm:erueoo Mni'rumWage F'~ issued by~ Natiooa!Wagesllld
1 OlherMse 1a1o1m as !he 'Wage Ralionalizalioo Act'
CHAPTeR VIII 663
]URISOICTION AND REMEDIES
and decide wage distortion cases, after the grievance procedure in the CBA
failed to settle the same. 1
2. CASES IN UNORGANIZED ESTABLISHMENTS.
In establishments where there are no certified collective bargaining
unions or existing collective bargaining agreements, the Labor Arbiters have
jurisdiction to hear and decide wage distortion cases after the parties and the
National 2Conciliation and Mediation Board (NCMB) failed to correct the
distortion.
3. DISPUTES OVER LEGISLATED WAGE INCREASES AND WAGE
DISTORTION MADE SUBJECT OF NOTICE OF STRIKE OR
LOCKOUT.
Wage distortion is not a proper ground to be invoked in support of a
strike or lockout. Disputes arising from wage distortion resulting from wage
orders issued by the Regional Tripartite Wages and Productivity Board
I (RTWPR) which are alleged in the notice of strike or notice of lockout, should
i
be referred to the Labor Arbiter if not settied withiu ten (I 0) caler..dar days of
conciliation by the NCMB. 3
vn.
JURISDICTION OVER ENFORCEMENT OR ~MENT
OF COMPROMISE AGREEMENTS
1. LEGAL BASIS.
Article 233 [227] clearly embodies the following provisions on
compromise agreements:
"Article 233 f227J. 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 excel!! in -case of non-compliance thereof
or if there is priltlll facie evidence that the settlement was
obtained through fraud, misrepresentation, or coercion."4
Clear from the foregoing provision that, although the compromise
agreement may have been entered into by the parties before the Bureau of Labor
~II, I~ ~Jes
1
Atti::1e 124, labor Code, as amended by Sedioo 3, RepOOi:: kJ. No. 6727; Sec00n 7,
of
2
ProoociMty Corm!iss.OO 00 04 JUlie 1990.
ld.
3
Section 6JcJ, Rule v, NCMB Manual ofPmcooures for Conciaoon ald Prevenwe Medam Cases.
~supplied.

BAR REVIEWER ON lABOR lAW
664
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.
2. PROVISION IN THE NLRC RULES.
A similar provision is found in the 2011 NLRC Rules of Procedure/
where the jurisdiction of the Labor Arbiters is recognized over the enforcement
of compromise agreements when there is non-compliance by any of the parties
thereto pursuant to Article 233 [227] of the Labor Code.
3. LABOR ARBITER'S JURISDICTION OVER COMPROMISE
AGREEMENTS EXECUTED BEFORE THE NCMB.
Although Article 233 [227] refers only to compromise agreements
entered into before the BLR and DOLE Regional Directors, the same rule
vesting jurisdiction to Labor Arbiters also applies to any compromise settlement,
including those involvin.g labor standard laws, voluntarily agreed upon by the
parties with the assistance of the Nationai Conciliation and Mediation Board
(NCMB) and its regional branches. Thus, as provided in the Rules to Implement
the Labor Code, 1 the NLRC 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.
Upon motion of any interested party, the Labor Arbiter in the region
where the agreement was reached may issue a writ of execution requiring3 a
Sheriff of the Commission or the courts to enforce the terms of the agreement.
VIII.
JURISDICTION OVER EXECUTION AND ENFORCEMENT
OF DECISIONS OF VOLUNTARY ARBITRATORS
1. DECISIONS OF VOLUNTARY ARBITRATORS.
Article 276 [262-A] of the Labor Code prescribes the procedures that
Voluntary Arbitrators should follow in adjudicating cases filed before them.
1
2
v
Section 4, Rule XXII, Book V, Rules to Implement the Labor Code, as amended by ~Older No. 40-m, Series of
See Sectln 1(h) ofRIJe 111ere0f.
2003, [February 17' 2003].
3 kl.
CHAPTER Vlll 66$
)URISDKTION AND REMEDIES
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 who rendered it, addressed to and requiring certain public
officers 1 to execute the final decision, order or award.
2. LABOR ARBITERS MAY ISSUE THE WRIT OF EXECUTION.
In situations, however, where the Voluntary Arbitrator who rendered
the decision is absent or incapacitated for any reason, Article 276 [262-A] of the
Labor Code 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 fmal decision,
order or award of the Voluntary Arbitrator.
IX.
JURISDICTION OVER CASES
OF OVERSEAS FILIPINO WORKERS (OFWs)
1. LABOR ARBITERS HAVE JURISDICTION OVER ALL MONEY
CLAIMS OF OFWs.
R.A. No. 8042/ conferred original and exclusive jurisdiction upon
Labor Arbiters, to. hear and decide all claims arising from employer-employee
relationship or by virtue of any law or contract involving Filipino workers for
overseas deployment, inciuding claims for actual, moral, exemplary and other
forms of damages. R.A. No. 8042, specifically Section 10 thereof, was
undisturbed by the latest amendatory law, R.A. No. 10022.3
2. VOLUNTARY ARBITRATORSHAVEJURISDICTIONOVER
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.
In at least two (2) decisions of the Supreme Court, the jurisdiction of
Labor Arbiters over monetary claims of OFWs was distinguished from that of
the Voluntary Arbitrators or panel of Voluntary Arbitrators, to wit:
1 &lch as (1) the SieiU! of 11e ~ (NI.RC); (2) a du~ deputized ofti:er, (3) a Speda Slerit!; (4) 11e Slerilf of lhe
mJula" cam; cr (5) 1n1 ptbiK: ollidal v.t1an lhe pares may desfJna!e illhe subrrissioo BJreement kl execute fie mal
decision, order cr aNCII'd. .
2 ·Bltilled 'AA hJ. to k1sti1u1e lhe Pdicies of Ovenleas ~!and Estallish a Hghef Standcrd rt Proleclkln Md
PromoOOn rt lie Welfare of ~rc11t W<rters, Thei" Famiies and CNerseas Fqlinos i1 ~. and fa" Other PurposeS.'
See Seclioo 10 ct RA No. 8042, OlherMse kr1!1Ml as the 'MgiCill WO!kers and CNerseas Fipinos Ad. rt 1995' (ApproVed
on June 7, 1995),
3 SeeSecliln 7ofRA No.10022 (Approved on Mi!rdl8, 2010).
,_.._...,.,., __ ~ ......
666 BAR REviEWER ON lABOR lAW

I
VVf
)URISDICflON AND REM'EDIES
(1) Ace Navigation Co., Inc. v. Fernandez/ involving the disability (c) Priests and ministers;
Claim of respondent; and !I. (d) Domestic workers or kasambahay;·
(2)Estate of Dulay v. Aboitiz Jebsen Maritime, Inc. and General ~I
(e) Employe-es of cooperatives;
Chart~rers Inc} involving claim for death benefits of petitioner. l i (f) Counter-claims of employers against employees.
In summary, it was ruled in these cases that in case there is a CBA ~
i All the foregoing are discussed below seriatim.
between the employer and the bargaining union to which the complaining OFW [

belongs, the original and exclusive jurisdiction over his monetary claims
belongs to the Voluntary Arbitrator and oot to the Labor Arbiters. I JURISDICTION OVER CASES INVOLVING EMPLOYEES
X-A.

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 frmn workers and
violation of the conditions for the issuance of license to recruit
workers. 3
(b) Disciplinary action cases and other special cases which are
administrative in character, involving employers, principals,
contracting partners and Filipino migrant work-ers. 4
No. 1 above covers recruitment violations or violations of conditions of
license; while No.2 above involves (a) disciplinary action cases against foreign
principals or employers, and (a) disciplinary action cases against land-based
OFWs and seafarers.
X.
OTHER ISSUES OVER WHICH LABOR ARBITERS HAVE
JURISDICTION
1. JURISDICTION AS RECOGNIZED 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;
(b) Alien parties;
OF GOVERNMENT-OWNED AND/OR CONTROLLED
CORPORATIONS
! 1. PREYAILING RULE.
i
The hiring and firing of employees of government owned and/or
J
controlled corporations without original charters are covered by the Labor Code
l and, therefore, the Labor Arbiters have jurisdiction over illegal dismissal and
other cases that may be filed under this law; while those with original charters
I are basically governed by the Civil Service Law, rules and regulations and,
ti therefore, jurisdiction on any of the cases that may be initiated under this law is
vested in the Civil Service Commission (CSC) 1
X-B.
JURISDICTION OVER DISPUTES
INVOLVING ALIEN PARTIES
1. CHOICE OF LAW BY PARTffiS.
A basic policy of contract is to protect the expectations of the parties.2
Such party expectations are protected by giving effect to the parties' own choice
3
ofthe applicable law. The choice of laW must, however, bear some relationship
to the parties or their transaction. 4 A manning agency, for instance, cannot be
faulted for complying with the applicable foreign law. By so complying, it has
discharged its monetary obligation to the employe-e.5
2. WHEN PHILIPPINE LAW PREYAILS.
Pakistan International Airlines Comoration v. Ople,6 is in point. In
this case, two contracts of employment were executed in Manila between
Pakistan International Airlines Corporation and two Filipino flight attendants.
Paragraph 10 of the contracts embodies the stipulation, among others, that the

~ CJtWaler lAs1ri:tv. Bual, G.R No. 104389, May 27, 1994.

1

, G.R. No. 197309,-0ct. 10, 2012 2

Reese, CilOO!oflaw in Tat and Cont!cts, 16 CoiiJ1ilia Joomal ofT~ law, 1, 2111977].
2 GR. No. 172642, Jllle 13, 2012. 3
FrK:kev.lstmlten Co., r.c.. 151 f. &Jpp. 465, 46711957].
3 Sedicx11, Rille I, !'tit Vlt2002 POEA RUes fa' t.mBased Ovelseas Wo!Kefs; SOOion 1, Rule II, Pat V, 2003 POEA
Scdes ll1d Hayes, Cooflict of law, 044-647 {1982~ Asia tnenatiooa1 Buider CofporaOOn v. Mlndeja', G.R No. 105029-32,
4
RUes fa' Seafae's; SOOion 28, CllmbJs Rules llldRegu1arons ~lilg MgrantWa:kem and <Nerneas Filipinos Act Dec. 05, 1994.
of 1995 daled Feb. 29, 1996. 5
Ollri kltemational ~DevebpmentCoqxxalioo v. NlRC,G.R No.1~339, Dec. 22, 1998,300 SCRA 455.
• 11Jij,; ld.; ld. 6
G.RNo.61594,Sept.28, 1991
668 BAR REVIEWER ON lABOR lAW
terms thereof shall be construed and governed by the laws of Pakistan and only
the courts of Karachi, Pakistan shall have jurisdiction to consider any matter
arising out of or under the agreement. Prior to the expiration of the contracts, the
services of the two Filipino flight attendants were terminated. They jointly filed
a complaint for illegal dismissal. One of the issues raised is which law should
apply and which court has jurisdiction over the dispute.
The Supreme Court, in holding that the Philippine law should apply
and that the Philippine court has jurisdiction, declared that petitioner PIA cannot
take refuge in paragraph I0 of its employment agreement which, firstly,
specifies the law of Pakistan as the applicable law of the agreement and,
secondly, lays the venue for settlement of any dispute arising out of or in
connection with the agreement "only [in] courts of Karachi, Pakistan." The first
clause of paragraph 10 cannot be invoked to prevent the application of
Philippine labor laws and regulations to the subject matter of this case, i.e., the
employer-employee relationship between petitioner PIA and private
respondents. The relationship is much affected with public interest and that the
otherwise applicable Philippine Jaws and regulations cannot be rer.dered illu3ory
by the parties agreeing upon some other law to govern their relationship. Neither
may petitioner invoke the second clause of paragraph 10, specifying the Karachi
courts as the sole wnue for the settlement of disputes between the contracting
parties. Even a cursory scrutiny of the relevant circumstances of this case will
show the multiple and substantive contacts between law and Philippine courts,
on the one hand, and the relationship between the parties, upon the other. The
contract was not only executed in the Philippines, it was also performed here, at
least partially. Private respondents are Philippine citizens and residents, while
petitioner, although a foreign corporation, is licensed to do business (and is
actually doing bUsiness in the Philippines) and hence, is a resident in the
Philippines. Lastly, private respondents were based in the Philippines in between
their assigned flights to the Middle East and Europe. All the above contracts
point to the Philippine courts and administrative agencies as the proper forum
for the resolution of the contractual disputes between the parties. Under these
circumstances, paragraph 10 of the employment agreement cannot be given
effect so as to oust Philippine agencies and courts of the jurisdiction vested upon
them by Philippine law.
X-C.
JURISDICTION OVER LABOR CASES
INVOLVING PRIESTS AND MINISTERS
1. WHEN LABOR ARBITERS HAVE JURISDICTION•
.The fact that a case involves as parties thereto the church and its
religious minister does not ipso facto give the case a religious significance. If
what is involved is a labor case, say illegal dismissal, the relationship of the
I
CHAI'TER V!ll
)URISOICTION AND REMEDIES
669
church, as employer, and the priest or minister, as employee is a purely secular
matter not related to the practice of faith, worship or doctrines of the church.
I Hence, Labor Arbiters may validly exercise jurisdiction over said labor case.
~ Austria v. Hon. NLRC and Cebu City Central Philippines Union
Mission Corporation of the Seventh Day Adventist. 1 - The minister here was
not excommunicated or expelled from the membership of the church but was
terminated from employment based on the just causes provided in Article 297
[282] of the Labor Code. Indeed, the matter of terminating an employee which
is purely secular in nature is different from the ecclesiastical act of expelling a
member from the religious congregation. As such, the State, through the Labor
Arbiter and the NLRC, has the right to take cognizance of the case to determine
whether the church, as employer, rightfully exercised its management
prerogative to dismiss the religious minister as its employee.
2. ECCLESIASTICAL AFFAIR, MEANING.
An "ecclesiastical affair" is one that concerns doctrine, creed, or form
of worship of the church, or the adoption and enforcement within a religious
'
I
association of needful laws and regulations for the government of its
membership, and the power of excluding from such association those deemed
1
I unworthy of membership. Based on this definition, an ecclesiastical affair
involves the relationship between <he church and its members and relates to
matters of faith, religious doctrines, worship and governance of the
I
congregation. To be concrete, examples of these so-called ecclesiastical affairs
~ to which the State cannot meddle, are proceedings for excommunication,
ordination of religious ministers, administration of sacraments and other
activities with attached religious significance.3
X-D.
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 perfmms domestic
1 GR No. 124382, Aug. 16, 1999.
2 Iliaci's Law Dicliooaly, s~ Ed., [19791 p. 460.
3 ld.
 . CHAPTER VIII . 071
b70 BAR REviEWER ON lABOR lAW JURISDICTION AND REMEDIES

work. Under R.A. No. 10361/ "domestic servant" or "househelper" should
·now be referred to as "domestic worker" or "kasambahay. "2
X-E.
JURISDICTION OVER CASES OF
EMWLOYEESOFCOOPERATWES
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 membershlp of members thereof. Cooperatives organized under
R.A. No. 6938,3 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. 4 - 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. The Supreme Court ruled that there is no
evidence that private respondents are members of petitioner cooperative and
even if they are, the dispute i~ about payment of wages, overtime pay, rest day
and termination of employment. Under Article 224 [217] of the Labor Code,
these disputes are within the original and exclusive jurisdiction of the Labor
Arbiters.
1n San Miuuel Corp. v. Semillano,6 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 withln 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
1 Ott1erwise knoM1 as "!mestic Wmers ht cr '8atas Kambahay' IWlD1 was ~ by Presidellt Bengno s. Aquila
Ill on Jmua;y 18, 2013.
2 Sectiln4 [d), Artide I, RA. No.10361.
J OlheMise knoM1 as 'The Cooperative Code of lhe Phil~."
G.R. No. 121948, Oct. 8, 2001.
PD. No. 175 [law StreriJiheni1g lhe Cooperative M:Nernentj was repealed by express p!O'Iision of Artide 127 r1 RA. No.
6938 {The~ Code of lle PhifWi1esl m was then lhe law i1 forte it lhe tine lhe <XXf4llai1l illhis case was
filed Mill lhe DOLE.
6 GR No. 164257,July 5, 2010.
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.
X-F.
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.
Banez v. Hoo. Valdevilla.: -The jurisdiction ofLabor 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 224
[217] should apply with equal force to the claim of an employer for actual
damages against its dismissed employee, where the basis for the claim arises
from or is necessarily connected with the fact of termination, and should be
entered as a counter-claim in the illegal dismissal case. This is in accord with
paragraph 6 of Article 224(a) [217(a)], which covers "all other claims, arising
2
from employer-employee relations."
XI.
ISSUES AND CASES OVER WHICH
LABOR ARBITERS HAVE NO JURISDICTION
l. 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;
1 G.R No.128024,Mey9,Z000,331 SCRA584.
2 See also Domondon v. NLRC. GR No. 154376, Sept 30,2005, 471 SCRA 559.
 UIU\,.[\.[.VJt:YVtK.UN LAHURlAW JURISDICfiON AND REMEDIES

ascribed to Labor Arbiters and the NLRC and the rationale 1

for granting
(c)
(d)
(e)
Dismissal of corporate officers and their monetary claims;
Cases involving entities immune from suit;
Cases falling under the doctrine offorum non conveniens;
I
~
jurisdiction over such claims to these agencies disappears."
The following loans may be cited:
(f) Quasi-delict or tort cases; I a. Cash loans/advances are in the nature of simple collection of a sum
of money brought by the employer, as creditor, against the
(g) Criminal and civil liabilities arising from violations of certam
provisions of the Labor Code; employee, as debtor. The fact that they were employer and
(h) Constitutionality of CBA provisions. employee at the time of the transaction does not negate the civil
AU the foregoing issues or cases are discussed below seriatim. \ 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

CLAIMS FORDAMAGES ARISING FROM BREACH OF NON-

XI-A. I laws on obligation and contract.
2

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
COMPETE CLAUSE AND OTHER POST-EMPLOYMENT payment of the employees' amortizations on their car loans, or, in
PROIDBITIONS 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
1. .JURISDICTION IS LODGED WITH THE REGULAR COURTS. 3
employee-employer relations.
In case of violation of the non-compete clause and similar post- c. Appliance loans concern the enforcement of a loan agreement
employment bans or prohibitions, the employer can assert his claim for damages involving debtor-creditor relations fou..nded on contract and do not
against the erring employee with the regular courts and not with the labor courts, in any way concern employee relations. As such it should be
such breach being civil in nature. 1 enforced through a separate civil action in the regular courts and not
4
befoitl the Labor Arbiter.
XI-B. d. Loans from retirement fund also involve the same principle as
EMPLOYER'S CLAIMS FOR CASH ADVANCES, CAR, above; hence, collection \herefor may only be made through the
APPLIANCE AND OTHER PERSONAL LOANS OF regular courts and not through the Labor Arbiters or any labor
EMPLOYEES tribunals.5
XI-C.
l. LABOR ARBITERS HAVE NO JURISDICTION.
DISMISSAL OF DIRECTORS AND CORPORATE OFFICERS
With respect to resolving issues involving loans availed of by
employees from their employers, it has been the consistent ruling of the l. LABOR ARBITERS HAVE NO JURISDICTION.
Supreme Court that the Labor Arbiters have no jurisdiction thereover but the The dismissal of a director or corporate officer is an intra-corporate
regular courts. 6
dispute cognizable by the Regional Trial Court and not by the Labor Arbiter.
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
~Mguel~vs.NlRC, 161 SCRA719(1988).
bargaining agreement but by the general civil law, the jurisdiction over the z Georg ~GMlH &Co. v. Hon.lsna'li !11dRonmaR l.<Wlilebre. GR No.109272,h.Q ..10, 1994,235 SCRA216,
1

dispute belongs to the regular courts ofjustice and not to the Labor Arbiter and
221.
Nesli! PhilippileS, lni:. v. NlRC, GR No. 85197, M:ld\18, 1991, 195 seRA 340; See aso L.ocsilll v. Mekeri Food
the NLRC. In such situations, resolutions of the dispute requires expertise, not in 3
capctatioo, G.R No. 192105, Dec. 00, 2013; Manese v. Jollilee Fcods CotpcxatiOO. GR No. 170454. Oct. 11, 2012;
labor management relations nor in wage structures and other terms and
JUlrua'l v. Hi-Rjerfood, h:., G.R No. 187887, Sept 7, 2011.
conditions of employment, but rather in the application of the general civil law. Hoo;Jkong !l1d ~ Booki19 Corp., Ltd. StaiiReliremenl?ian v. SpooseS Broqueza. G.R No.178610, Nov. 17,2010.
4
Clearly, such claims fall outside the area of competence or expertise ordinarily
Under SOOiOO 5 [52.] ct RA. No. 8799 lhe ~ d d1e SeaJiblS !l1d Exchange QmrisSD1 (SEC) oo al cases
5 Ibid.
enumeraled undel P.O. No. W2-A. has been iai1SfeiTed to d1e COUI1S diJenetal)nisadi:xl or the approp<iale ~iJnal
t Qai.Chi Elecbooics lvlat1u!acllmg Corpcxatbn v. Hon. Vil\afama, G.R n:>. 112940. Nov. 21, 1994; Patikl v. Rudolf l.ielz, TliaiCM(RTC).
Inc., G.R No. 196539, Oct 10, 2012.
674 BAR REviEWER ON lABOR lAW
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;z_ Employees are not.
(4) The Corporation Code3 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 the power of the Board of Directors to create a corporate office
cannot be delc!!ated. Therefore, the tenn "corporate officers" should only
refer to the above and to no other. A different interpretation can easily leave the
way open for the Board of Directors to circumvent the constitutionally
guaranteed security of tenure of the employee by the expedient inclusion in the
By-Laws of an enabling clause on the creation of just any corporate officer
position.
(6) Distinction between a corporate officer and an employee. - An
"office" is created by the charter of the corporation and the "corporate.officer"
is elected by the directors or stockholders. On the other hand, an "employee"
occupies no office and generally is employed not by the action of the directors
or stockholders but by the managing officer of the corporation who also
determines the compensation to be paid to such employee.
(7) Because of the Matling doctrine, the rulings in Tabang'- and
NacpU,Z are no longer controlling because they are ''too sweeping and do not
accord with reason, justice, and fair play."
1 ElulciiEd illle 2010 case of Malilg kldusbial !rld Commeldal Cap. v. Riccrdo R Coros, GR ~- 157802, Oct. 13,
2010. This case is m ~via petiOOn b" re.iew ml:9tiorai. The petitkx1ers chalenge the decism of the CA 1\fli::h
stJStai1ed the nA1g ct the N..RC tl.lle eirect 1hat the L.axr AI1Jiler had jJiisdictkln because l1e respoodeo!, Is Vte
Presileltb" Frmce 8I1d Mni1isbalioo, was not acaporale olli::er of petitioner Matlilg.
2 P.O.~. 902-A; ISba v.l..i::eo de~ l.JnNersity, G.R No. 193857, Nov. 28, 2012; Gomez v. PNOC IJeveqlment
aoo Mm:}ement Co!por1!tioo (PDMC), G.R No. 174044, Nov. 27, 2009, 606 SCRA 187, 194,
3 See Section 25, Balas Pmtmsa Big. 69, oU1erwise kn<Mn as B1e 'Corporation Code of the Philippines.'
)UR!SO!O"!ON AND REMEDIES
(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. (J:j_ature o(Controversv Test).
The better policy in determining which body has jurisdiction over a case
would be to consider not only the status or relationship of the parties but also the
nature of the question that is the subject of their controversy.
In the absence of any one of these factors, the RTC will not have
jurisdiction.
(10) The criteria do not depend on the services performed but on
the manner of cre2tion of the office.
Matling prescribes that the criteria for distinguishing between corporate
officers who may be ousted from office at will, on one hand, and ordinary
corporate employees who may only be terminated for just cause, on the other
hand, do not depend on the nature of the services performed, but on the manner
of creation of the office. 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.
1 f'llifiaKiXI G. Tikg v. NL.RC, GR No. 121143, Jm. 21, 1997, 266 SCRA 462, ~- For a loo.l tine,lle rulilg i11h6
case has been l1e oord"Q dodrile.l was ellllCia81 therei111al '(a) axpm!E cfm's lislriss3 is • acapaate
ad. or m ~ c;atcNersy, md lle niLre is maSed by lle reasa1 or \W;dom vdlv.tli::h the Board d
[i8CbS may hiHe il W'Q sudl actiorl. ~. m~ CCI"Ib1lWISY is Ol"le IWli::h Irises betNeal a stld<hctler
ll1d lle axpo!l!OOn. Thlle is no distildixl. Qlllli3b1, nor trrY exerfCllion ~-The pltNisiorl is I:MIIIld aM!IS
al ki1ds of contwersilS be\weell ~ md axpaalklnS.' ~ l1il case, lle petilklniJ'S 008 positicl1s s lhe tine ci
her lismissal, l1al ci Med"K:al OiedDr ll1d Hosplal ~ of pr;me respondent Pana1a Gc*len Ca"e MeOCal
Crill" i1 calmta,lllflla, are expressly prtNkled under l1e ey.t.a.r.ll.
Nacpiv. ~ BroOOcasU1g COipooltkln. GR No.144767, t.'adl21, 2002. In lliscase, petitialerwasdedaed
a axpoolle dfl::er desple l1e In 11at toe By-t.ar.s d respa1dent IBC di:ln<t mention tis posilkXl ci ~ md
2
Asslslmt Mmc~Jer. The reasoo ci'ed is 1hat Mil assuring U1al he was i1 !il1 i!pllOiNld by the Gene!a t.'alaJef, sudl
~tmentwas Slbsequen11y approved byl1e BoMI ofQi"ecb"Sdrespondoot I!C.lha.11e position ofCoo¢dler is not
expres5tf mentioned 11001YJ l1e ofticels ofiBC i1 Is By-l.altt> is of no rnorrent becaUSe the IBC's Boald ci DiecllllS is
~ lflder Sedoo 25 ci the Colpaatioo COOe md under the caporcBx1's byM t> ~ sudl olher aliceiS as
ft may deem necessay. tonsequenltf, si1Ge petitionel's appciniDlelll as ~ ~ lhe app!tNal md !oonal
acliln ci respondert IBC's Bo!rd of QiredDIS tl beoone vai:t, lis clea" 1herelore V1at petitiiXlef is a~ olficen~oose
disiJissal is i11he nature ct M iltJa.CaPCllale amYefSY.
 CHAI'TER VIII b77
)URISDICflON AND REMEDIES

Obviously enough, the respondent was not appointed as Vice President (4) The Nature of the Controversy Test: The mere fact that a person
for Finance and Administration because of his being a stockholder or Director of was a stockholder at the time ofthe filing of the illegal dismissal
Matling. He had started working for Matting on September 8, 1966, and had case does not make the action an intra-corporate dispute.
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 b. Other cases;
1
Vice President for Finance and Administration had been gradual but steady. 1 (1) Barba v. Liceo de Cagayan University (2012);
Even though he might have become a stockholder of Matling in 1992, his
(2) Marc II Marketing, Inc. and Lucila V. Joson v. Alfredo M.
promotion to the position of Vice President for Finance and Administration in
Joson (20 11 );2
1987 was by virtue of the length of quality service he had rendered as an
3
employee of Matling. His subsequent acquisition of the status of (3) Real v. Sangu Philippines, Inc. (2011).
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.
2 XI-D.
LABOR CASES INVOLVING ENTITIES IMMUNE FROM SUIT
3. SIGNIFICANT CASES DECIDED BASED ON THE MATLING
DOCTRINE. 1. IMMUNE ENTITIES CANNOT BE SUED FOR LABOR LAW
VIOLATIONS.
a. Cosare v. Broadcom Asia, Inc./
In this jurisdiction, the generally accepted principles of international
In this 2014 case, the Supreme Court ruled that the Labor Arbiter, not 4
law are recognized and adopted as part of the law of the land. Immunity of a
the regular courts, has original jurisdiction over the illegal dismissal case filed State and international organizations from suit is one of these universally
by petitioner Cosare who was an incorpora~or4 of respondent Broadcom and was recognized principles. It is on this basis that Labor Arbiters or other labor
holding the position of Assistant Vice President for Sales (AVP for Sales) and tribunals have no jurisdiction over immune entities.
5

Head of the Technical Coordination at the time of his termination. The

following justifications were cited in support of this ruling:
(l) 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.
2. ILLUSTRATIVE CASES.
There are quite a number of cases that may be cited but the following
would be the most ideal examples:
6
In Department of Foreign Affairs v. NLRC, involving an illegal
dismissal case filed against the Asian Development Bank (ADB), it was ruled
that said entity enjoys immunity from legal process of every form and therefore
the suit 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

1 G.R. No.193857, Nt7J. 28, 2012.

The i:Jiov«rj is .fle sequence fl respcnlent Coros's rlsilg froollle Iris: 1966-l!lnkeeper; 196S-Semr Acaxmrt;
I
1969 -thief Acaxrltrd; 19n-afk:e ~ 1973-Assistrt Treas~rer, 1978-Special Astistri tr r~; 1980-
Asslsat ~ 1983-Frm:e IJld Adni1istJ'aM! Mil1aJer, 1985-kst. 'Ia! Presi:fent tr Frm:e Md
Adrtilistratm; 1987 b April17, 2(ID.Ifl:e Presmrtfa"F~ Clld Mli1islmtkn
2 rnajcriystocl:ll<*lerrJ.BledeMictMllt Mrte!i¥;1. klc. Responden!Airedo M. Jpsan(M"e<kl), oo lheot.erh!lld, was tie
See also PMential &r1k Md Trust CarpMy v. Reyes, G.R. No. 141093, Feb. 20,2001,352 SCRA 316,327. This case
· also iMWes an ell1Jioyee M1o rose tan the Iris unli she re.D1ed lhe poslion ci ~ ~ atlhe lined
herlemilalion.
2 G.R. No.171993, Dec. 12.2011,662 SCAA 35. PelitionerMalt II~.~ (pellblerCO!pOOibl), isac:apoodion
prirailf engaged i1 bu)11g, nme&YJ, seli1g and disbtlutiY:I i1 relii <r ~ tr export cr i11Jat hcllsetJdd
~ Md produas and a11er ilems.l bd rNfitile btmi1ess ~~~ M<rc ~.Inc. v.tlk:h was made roo-
~ ~ b ilCOiporatia1 Md regisratian v.il1 B1e Seculities lnl Exd1a1ge Qxm1isskln (SEC). Petitioner Lucia
V. Josoo (l.ucila) is tie President !lld majority sbihokler of pelitiooer axpaabl. 5tle was also l1e mner Presitenl and
Genelal Mmger, ilcXXpolab", diredDr !lld ~er ct petitiooer c.oqxxa~Dl.
3 G.R. No.168757,Jan.19, 2011,640 SCAA67.

3 G.R. No. 201298, Feb. 5, 2014. 4 SecOOn 2, Article U, t987 CalstibJ1kln.

5 Sou1heastAsianflsheriesOevelopmentCenterv.Accstl, G:R. Nos. 97~70. Sept 2.1993,226 SCAA49.
4 PetiOOnEr RaU C. Coscre, lilloogh asalesman~ dJlfiva'a respondent Dam~. was !lanliMI an i1capaatJx
6 GRNo.113191,Sept 18, 1996,262SCRA39,43-44.
rJ. hrMkJ's Bmadcom. havi"g been assi;lned 100 staes rJ. six:k v.ilh parvakle of P1.00 pershcre.
678 BAR REviEWER ON lABOR lAW
immunities and privileges to the ADB are treaty covenants and commitments
voluntarily assumed by the Philippine government which must be respected.
In Lasco v. United Nations Revolving Fund for Natural Resources
Exploration [UNRFNREJ,1 involving an illegal dismissal case ftled against the
respondent which is a specialized agency of the United Nations, the said
immunity rule was asserted and reiterated by the Supreme Court. In dismissing
the case, the High Court said that being a member of the United Nations and a·
party to the Convention on the Privileges and Immunities of the Specialized
Agencies of the United Nations, the Philippine government adheres to the
doctrine of immunity granted to the United Nations and its specialized agencies.
Both treaties have the force and effect oflaw. 1
The same doctrine was earlier applied in Jusmag Philippines v.
NLRC/ a case involving illegal dismissal of a Filipino employee of the Joint
United States Military Assistance Group to the Republic of the Philippines
(JUSMAG-Philippines). In upholding the Labor Arbiter's dismissal of the case,
the High Court enunciated that since the employment contract was entered into
by JUSMAG in the discharge of its governmental functions, JUSMAG being an
entity petforming a governmental function on behalf of the United States
Government pursuant to the Military Assistance Agreement dated March 21,
1947, the illegal dismissal suit is one against the latter, albeit it was not
impleaded in the complaint. Considering that the United States has not waived
or consented to the suit, the complaint against JUSMAG cannot prosper.
JUSMAG is beyond the jurisdiction of Philippine courts.
In Larkins v. NLRC,4 involving the dismissal of workers who worked
in the maintenance·of dormitories at the former US Clark Air Base in Pampanga,
the Supreme Court, in dismissing the case, invoked, among other reasons, lack
of jurisdiction in the light of the fact that their suit was against the United States
Government which, by right of sovereign power, operated and maintained the
dmmitories at Clark Air Base for members of the U.S. Air Force.
3. EXCEPTION TO THE RULE.
There is an exception to the immunity rule as exemplified by the case
of United States v. Hon. Rodrigo/ where it 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
1 GR.Nos.1Q9095.109107,Feb.23, 1995.
2 see~ WOOd Heallh Orgcrlizationv.Aquilo, G.R. No. L-35131, Nov. 29,1972,48 SCRA242.
3 GR. No. 108813, Dec. 15, 1994:
4 GR. No. 92432, Feb. 23, 1995.
5 G.R No. 79470, Feb. 26, 1990, 182 SCRA 644, 660.
CHArTER Vlll fJ79
)UtUSD!CTION AND REMEDIES
for profit and not in its governmental capacity, the case for illegal dismissal filed
by a Filipino cook working therein is well within the jurisdiction of Philippine
courts. The reason is that by entering into the employment contract with the
cook in the discharge of its proprietary functions, it impliedly divested itself of
its sovereign immunity from suit. ·
4. ESTOPPEL DOES NOT CONFER JURISDICTION OVER AN
IMMUNE ENTITY.
An entity immune from suit cannot be estopped from claiming such
diplomatic immunity since estoppel does not operate to confer jurisdiction to a
tribunal that has none over a cause of action. 1
XI-E.
DOCTRINE OF FORUM NON CONVENIENS
1. REQUISITES.
I 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
r its decision?
2. APPLICATION TO LABOR CASES.
I a. Case where doctrine was rejected.
I
I
I Petitioners' invocation of this principle was rejected in Pacific
3
I
Consultants International Asia, Inc. v. Scbonfeld. Petitioners' insistence was
based on the fact that respondent is a Canadian citizen and was a repatriate. In so
rejecting petitioners' contention, the Supreme Court cited the following reasons
that do not warrant the application of the said principle: (1) the Labor Code does
not include forum non conveniens as a ground for the dismissal of the
complaint;4 and (2) the propriety of dismissing a case based on this principle
requires a factual determination; hence, it is properly considered as a defense.
1 Ebrolllv. N.RC,G.R No.110187,SEpt4, 1996,261 SCRA399.
2 Accxxlilg t Sri. of Ame!ica, NT&SA, Ba1k of America lntematiooal, Lil. v. CA, G.R No. 120135, March 31, 2003, 448
Phil. 181, 196, Mel~~ Md Desi'Jn, Inc. v. CA, GR No.102223,hlg. 22, 1996, 260 SCRA 673, 695.
~ G.R. No. 166920, Feb. 19, 'lJJJ7.
~ ' ' """"-""'--•.<1\0Rih ~--19. 1997,Y4SCRA101.
 BAR REVIEWER ON lABOR lAW
680
b. Case where doctrine was applied.
This doctrine was applied in the case ofThe Manila Hotel Corp. and
Manila Hotel International Limited v. NLRC/ where private respondent
Marcelo Santos was an overseas worker employed as a printer in a printing press
in the Sultanate of Oman when he was directly hired by the Palace Hotel,
Beijing, People's Republic of China to work in its print shop. This hotel was
being managed by the Manila Hotel International Ltd., a foreign entity
registered under 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 eiements. 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
:my 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 m~t 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 detennine whether the Tiananmen
, G.R. No.1200n. Oct 13,2000.
. CHAPTER VI II 681
jURISDICTION AND REMEDIES
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. 1
XI-F.
QUASI-DELICT OR TORT CASES
1. LABOR ARBITERS HAVE NO JURISDICTION OVER QUASI-
DELICT OR TORT CASES.
Damages arising from quasi-delict or tort are often confused with
damages that may be claimed under labor laws and labor agreements.
Consequently, quasi-delict or tort damages are asserted, though erroneously, in
labor cases filed with the Labor Arbiters. As earlier emphasized, however, Labor
Arbiters and the NLRC have no power or authority to grant reliefs in claims that
do not arise from employer-employee relationship such as those emanating from
quasi-delict or tort cases per Article 2176 of the Civil Code that have no
reasonable causal connection to any of the claims provided in the Labor Code,
other labor statutes, or collective bargaining agreements.
2. THE TOLOSA CASE.
The best example to cite on this point is the case of Evelvn Tolosa v.
NLRC.1 Because of the death of her husband, Captain Virgilio Tolosa, a
complaint for damages was lodged with the Labor Arbiter by the surviving wife
but the Supreme Court ruled that the Labor Arbiter has no jurisdiction over the
case because it was established that the same was in the nature of an action
based on quasi-delict or tort, it being evident that the issue presented therein
involved the alleged gross negligence of Captain Tolosa's shipmates, Pedro
Garate and Mario Asis, with whom Captain Tolosa had no employer-employee
relationship. Hence, this case does not involve the adjudication of a labor
dispute, but the recovery of damages based on quasi-delict. Notably, the
1 ld.
2
G.R. No. 149578, Ap!il10, 2003.
b!l2 DI\.1\.1'-LYI"'''Lo~'-""''"' ...,.,~~----··
jurisdiction of labor tribunals is limited to disputes arising from employer-
employee relations.
XI-G.
CRIMINAL AND CIVIL ACTIONS ARISING FROM
VIOLATIONS OF THE PENAL PROVISIONS OF THE
LABOR CODE
1. REGULAR COURTS HAVE JURISDICTION.
The Labor Code has expressly conferred jurisdiction over criminal and
civil cases arising from violations of the Labor Code with the regular courts. The
relevant provisions are as follows:
1. Article 250 [241] - which provides that criminal and civil liabilities
arising from violations of rights and conditions of union
membership provided for thereunder shall continue to be under the
jurisdiction of ordinary courts.
2. Article 258 [247) - while the jurisdiction to hear and decide the
administrative and civil aspects of unfair labor practices is lodged
with the Labor Arbiters, the jurisdiction over the criminal aspect
thereof is vested in the regular courts.
3. Article 287 [272] - Although this article' does not mention
expressly that the jurisdiction over the criminal violation of its
provision is vested in the regular court, it, however, mentions the ·
word "courf' in paragraph [a] thereoL obviously referring to the
regular court. Further, in the Rules to Implement the Labor Code, as
amended,1 it is provided that the regular courts shall have
jurisdiction over any criminal action under Article 287 {272] of the
Labor Code, as amended, but subject to the required clearance from
the DOLE on cases arising out of or related to a labor dispute
pursuant to the Ministry of Justice3 Circular No. 15, Series of 1982,
·and Circular No. 9, Series of1986.4
4. Article 303 {288] -It is provided therein that any provision of law
to the contrary notwithstanding, any criminal offense punished in
the Labor Code· shall be under the concurrent jurisdiction of the
t Entilled~·
2 As Mlllllded, by Oepcrtnent Onler No. 40-03, Series of 2003, Cl1d btler tfllended by Oepa1moot Onler No. 40-Gm,
Series of 2010 [Mard129, 2010],
3 NaN Dep!l1ment of Justke.
4 Sedb119 [bmelfy Sedb115], Rule XXII, BooK V, Rules tl ~lle L.alor<iode, as M'lellded byllep!r1meat Order
No. 40-G@, Series of 2010, [Mardl19, 2010], prnvklustf anmled by{)epaUnentQder No. 4M3, Series of 2003, [Feb.
17,2003].
CHAI'TER VIII
jURISDICTION AND REMEDIES 683
Municipal or City Courts and the Courts of First Instance (now
RTC). 1
XI-H.
CONSTITUTIONALITY.
OF LABOR CONTRACT STIPULATIONS
1. THE HALAGUENA DOCTRINE.
In Halaguena "·Philippine Airlines, Inc. 22 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 II, 2001 CBA between PAL and
FASAP provides that the compulsor; retirement for female flight attendants is
fifty-five (55) and sixty (60) for their IItale 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) ofMakati City.
In ruiing that the RTC has jurisdiction, the Supreme Court cited the
following reasons:
(I) The case is an ordinary civil action, hence, beyond the jurisdiction
of labor tribunals.
{2) The said issue cannot be resolved solely by applying the Labor
Code. Rather, it requires the application of the Constitution, labor
statutes, law on contracts and the Convention on the Elimination
of All Forms of Discrimination Against Women {CEDAW). The
power to apply and interpret the constitution and CEDAW is
within the jurisdiction of trial courts, a court of general
jurisdiction.
(3) Not every controversy or money claim by an employee against the
employer or vice-versa is within the exclusive jurisdiction of the
Labor Arbiter. Actions between employees and employer where
the employer-employee relationship is merely incidental and the
cause of action proceeds from a different source of obligation are
within the exclusive jurisdiction of the regular courts. Here, the
employer-employee relationship between the parties is merely
1
2
Nat/ Regiooal Trial Cotm.
GR No. 172013, Oct. 2, 2009.
 BAR REVIEWER ON lABOR lAW
684
incidental and the cause of action ultimately arose from different
sources of obligation, i.e., the Constitution and CEDAW.
2.
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 1vested with
original jurisdiction, undertaken by filing a memorandum of appeal.
2. SOME PRLIII!CIPLES ON APPEAL.
• Appeals under Article 229 [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, ord~rs or awards of the NLRC.
Clearly, therefore, Article 229 [223] of the Labor Code is not the proper
basis for elevating the case to the Court of Appeals or to the Supreme
Court. 2 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 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.
3 decision of the Labor Arbiter except execution for reinstatement pending
• 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
4
appeal to the NLRC. 5
• A ''Petition for Relief' should be treated as appeal.
1 Section 1 [b), Rule I, Book V, Rules to Implement the Labor COOe, as !mended by Depal1ment Order No. ~3.
Series of 2003,lfeb. 17' 2003).
2 Tanas ClaudXl t.'emOOal{',d\ege, Inc. v. CA. G.R No. 152568, Feb. 16, 2004; Uni'Bd F!ekl Sea Watr.lrlm and Checke!S
Hp'CfV. Req~,{3.R No.143527,0eC.6, 2006.
3 Phi\ux, Inc. v. NLRC, G.R. No. 151854, Sept 3, 2008.
4 Millennl!m Erectors Coqloration v. Magallanes, G:R. No. 184362, November 15, 2010; Reyesv. Maxin's Tea House,
G.R No.140853, Feb. 27, 2003;Cclyena v. NLRC, G.R. No. 76137, Feb.18, 1991.
s New Pacific fmber &Supply Co., Inc. v. NLRC, G.R. No. 124224, Marcl117, 2000.
CHArTERVIll
6Ss
jURISDICTION AND REMEDIES
• Mfirmative 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. 1
3. GROUNDS FOR APPEAL TO THE COMMISSION (NLRC).
The appeal to the NLRC may be entertained only on any of the
following grounds:
a. If there is a prima facie evidence of abuse of discretion on the part
of the Labor Arbiter;
b. If the decision, order or award was secured through fraud or
coercion, including graft and corruption;
c. If made purely on questions of law; and/or
d. If serious errors in the fmdings of fact are raised which, if not
corrected, would cause grave or irreparable damage or injury to the
appellant.1
• NLRC has certiorari pcwer.
The frrst 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.
Ort~/ expressly recognized this certiorari power of the NLRC. 4 Clearly,
according to Auza, Jr. v. MOL Philippines, Inc} the NLRC is possessed of
I the power to rectify any abuse of discretion committed by the Labor Arbiter.
r 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
appeal.6
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
1 Rad'IO't\le8th Fnance ~ v. Del Roscrio, G.R No. 138739, July 6, 2COO, 335 SCRA 288; See also Ca'ledo v.
Kat1lilan Searity inlllel!d.<e Np;q, Inc., GR No. 179326, .kit 31, 2013; DaOOay v. Coc&Ccla BoU1e!S Phis., Inc.,
G.R. No. 199890, Aug.19, 2013.
2 Articles 129 and 229 [223), l.alxrCode; Sedioo 2, Rule VI, 2011 NLRC Rules aPnx:edtle.
3 G.R. No. 160871, Feb. 6, 2000.
4 See also Metro l:ln.I;J !lsbiJution, Inc. v. Metro l:ln.I;J Caporation 8nployees AssodalinfFW, G.R No. 142666, Sept 26,
2005.
5 G.R No.175481; Nov.21,2012.
s Section 3, Rule XI, 2011 NLRC Rules of Procedure.
 BAR REVIEWER ON lABOR lAW CHAffiRVIII 687
686 )URISDICfiON AND REMEDIES

and has the effect of rendering the judgment final and executory, hence, 2. EXCEPTIONS TO THE lO*CALENDAR DAY OR S*CALENDAR DAY
1 REGLEMENTARY PERIOD RULE.
unappealable.
3. REQUISITES. Certain procedural lapses may be disregarded where there is an
acceptable reason to excuse tardiness in the taking of the appeal. 1 It is always
The requisites for perfection of appeal to the NLRC are as follows: within the power of the court to suspend its own rules or to except a particular
(1) Observance of the reglementary period; case from its operation, whenever the purposes of justice require it. 2 Thus,
(2) Payment of appeal and legal research fee; procedural rules may be waived, dispensed with or relaxed in the interest of
(3) Filing of a Memorandum of Appeal; substantial justice. The Court may deign to veer away from the general rule if,
(4) Proof of service to the other party; and on its face, the appeal appears to be absolutely meritorious. 3
(5) Posting of cash, property or surety bond, in case of monetary The following are the specific instances where the rules on the
awards. reckoning of the reglementary period have not been strictly observed:
The foregoing are discussed below. I) lOth day (or 5th day) falling on a Saturday,4 Sunday or holiday, 5 in
which case, the appeal may be filed the next working day.
Ill. 2) Reliance on erroneous notice of decision6 as when the notice
REGLEMENTARY PERIOD expressly states "working days" and r.ot "calendar days."
3) Appeal from decisions of Labor Arbilers in direct contempt cases-
1. THREE (3) REGLEMENTARY PERIODS.
five (5) calendar days.·'
The reglementary period depends on where the appeal to the NLRC 4) Filing of petition for extraordinary remedies from orders or
emanates, viz.: resolutions of Labor Arbiters cr on third part-; elaims - ten (1 0)
1) Ten (10) calendar !lays- in the case of appeals from decisions of the calendar days. 8
Labor Arbiters under Article 229 [223]; 5) When NLRC exercises its power to "correct, amend, or waive any
error, defect or irregularity whether in substance or form" in the
2) Five (5) calendar days - in the case of appeals in contempt cases exercise of its appellate jurisdiction. as provided under Article
2
decided by Labor Arbiters; and 218(c) of the Labor Code,9 in which case, the late filing of the
appeal is excused.
3) Five (5} calendar days - in the case of appeals from decisions of the
DOLE Regional Director under Article 129
3
(stnall money claims ofPS,OOO.OO or less).
4
The periods provided above are all calendar days and not worldng days.
Consequently, Saturdays, Sundays and legal holidays are included in , flhiiWile Aiiles, klc. v. M.RC, G.R. No. 120506, Oct 28, 1996, 263 SCRA 638; ~ Guan TraciYJ v. NI..RC, G.R. No.
5 81471,,6¢126,1989, 172SCRA831.
reckoning and computing the reglementary period. 2 Ovoricte Securi1es capcxaoon v. NLRC, G.R. No. 157007, Nov. 25, 2004; EquitaJie PCI Bat v. Rosi1a Ku, G.R. No.
142950,26 Mrth 2001.
3 fiJI!I' Coos1nK:tkxi Md ~ Colpocabl v. ~. G.R. No. 164141, Feb. 26, 2010; ~ill Cement Corp. v.
liASCOR ~ Md WorketS Ulioo - Sou1hem ~ FederaOOn of 1m (BW-SPFI.), G.R. No. 158956,
~ 24, 2009, 586 seRA 449, 461; Ruiz v. Delos Salkls, G.R. No. 166386, JM. 27, 2009, OTT SCRA 29,481
1 Opilaklo v. Ravila, GR No. 196573, Od. 16, 2013; 8unagll1 v. Sen1M Watmm &ProleciMl AIJ«q, klc., G.R No. 4 Judy Phil'~ klc. v. NLRC, G.R. No. 111934, Ajxil29, 1998, 289 SCRA 755; 352 Phl. 593.
144376, Sept 13;2.00i; 533 Phi.283,200-291; Kalhy-OeneprisesV. NLRC,GRNo.117610, Mrth 2,1998,286 SCRA 5 PhilWileGeolhemlal,klc. v. NLRC,G.R. No.106370,Sept.8, 1994.
729.
6 Frestlne rre Md RIJJber Cal1mY li fle Phiippi'les v.l.absa, GR No. L-70479, Feb. 27, 1987.
1 Mk:te218(d), a!ill!lel1ded iJVRA No. 6715, Mrth21, 1989; Sedioo 1, Rule IX, 2011 Nl.RC RUes !I Procedure.
2 SedD11, RJJ1e IX, 2011 N..RC RUesofPrtx:eOOre; See also Mi:kl225(d){218(d)L as Miellded byRA No. 6715, Mrth
21, 1989; Section 1, Rule XXIII,-BookV, Rules to lmplemenllhe Lm Code, as illlended by Department Order No. m3, 8 Under lhe rurrent 2011 NL.RC Rules of Procedure, the dedsb1 of the Labor Altliler oo aBlid pa1y claim is not ~le
Series of 2003, {Feb. 17' 2003]. but may be elevated ID the Coorrission and resWed in ax:ordM::e v.ith Rule XII [Exmtf11ay Remedes] of lhe 2011
3 SedD11, Rule VI, lbid:;SeealsoBrisloiM}els Squilbtpllis.], Inc. v. Vbia;G.R No.1481$, Sept 27,2004. NlRC Rl.1es of ProceO.Ie. (SEcOOn 11 fd], Rule Xllhereof). ConsequenUy, such elevafDl b the Comrisskln may my be
4 RJL Mrilez FIShi'lg Co!paa1ion v. tlRC, GR Nos. L-63550-51, Joo. 31, 1984. initialed byway offirg of apetitiiJ1 forexlraort!ilay remedy not latEr than len (10) calenda'days from receipt oflhe order«
5 Juc.tt ~. Inc. v. NLRC, GR. No. 111934, April29, 1998, 289 SCRA 755; 352 Phi. 593; SM I>Qfi and Genelal resol.rtion oflhe l..alxr AlbEr, tnnishilg acopylhefeo!ID lhe adverse party.( Sec1ion 3, Rule XII, l!id.).
9 New Pacific Tmber &&ipply Co., Inc. v. NLRC, G. R No.124224, Marth 17, 2000,328 SCRA 404.
MadlilelieS v. NLRC, G.R No. 74806, Jan. 9, 1989.
 liAR REVIEWER ON lABOR lAW
688
1
6) When technical rules are disregarded under Article 227 [221 ].
7) 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.
(1) The reglementary period is mandatory and not a "mere
technicality."3
(2) The failure to appeal within the reglementary period renders the
4 5
judgment appealed from final and executory by operation oflaw. 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
5
the remedy of mandamus.
(3) 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 ihe counsel or
6
representative of record.
(4) Miscomputation of the reglementary period will not forestall the
finality of the judgment. It is in the interest of everyone that the date when
7 reasonable time from the time of the default;
judgment:s become final and executory should remain fiXed and ascertainable.
(5) Date of mailing by registered mail of the appeal memorandum
is the date of its flling.
8 (6) A cause not entirely attributable to the fault or negligence of the
9 party favored by the suspension of the rules;
(6) Motion for extension of time to perfect an appeal is not allowed.
10
This kind of motion is a prohibited pleading.
(7) Motion for extension of time to file the memorandum of appeal is
not allowed. 1
1 New~ rrmer &&Wf Co., rev. NLRC, ~CRy Fai'Corpaabw. N..RC, {3R Net ~11, ~ 21, 1995, 243
SCRA~
2 &lrina v. N..RC, GR No. 121147, .1111e 26, 1998: Vak1em111a v. NLRC, G.R No. 98239, Aprl25, 1996: fqJga v. NlRC,
G.R Nos. ~1 •.1tr1.22, ml, 181 seRA 266.
3 ~v. NLRC,-G.R No. 166411, Aug. 3, 2010, <m.1 ~ len<ivJtoqxxalioo v. CA. G.R No. 165580, Feb. 20,
200l, 482 SCRA 705, 714-715; Qlevas v. Bais SW C<xpcxab1, S!V3-
4 Vtisehell.alorl)lionv. Nl.RC, llil~ See also Orort:le SalriieS Caporation v. NLRC, G.R No. 1~7. NcN. 25, 2004;
lJrled FEkl Sea Wa!!:hnm Md Clmels ~v. ~. GRt«l. 143527, Dec. 6, 2006; M1ajav. Nl.RC, GR No.
157371, .1\tf 15,2005.
s llliq C!1e ~ Secutf & lnvesli;jalion hpq v. M/1fla Maaraeg, G.R No. 198357, Dec. 10, 2012;
Henry Ctjde Mild v. Nl.RC, GR No. L-65173, Oct 27, 1986, 145 seRA 206.
6 Sedlxl4[b],R!Je Ul2011 Nl.RC ROO;d Procelbe; FExo~. Cap. v. Nl.RC, G.R No. L-55971,fEb. 28,1985, 135
SCRA 145; Lynx lrdJsm; Con1rlm", ~ v. Tala, G.R No. ffi4333, h.lg. 24, 2007.
1 V<*sdlell.alorUlioov. Nl.RC, G. R No. L-39686,J\Ile25, 191!0,98 SCRA314.
a Associated~ Tobcm>Co!poration v. NLRC,{;.R No.125602, ~ 29, 1999, 306 seRA 380.
9 Sedlxl1, Rule VI, 2011 NI.RC Rules r:l Procedure.
1o Bristll Mfe!SSqLilb [Pilis.], Inc. v. Wo!ia, G.R No.148156, Sept 27,2004.
CHAPTER Vlll
689
)URISDICfiON AND REMEDIES
(8) Motion for extension of time to file appeal bond is not allowed. 2
N.
1 APPEAL FEE AND LEGAL RESEARCH FEE
1. PAYMENT OF APPEAL FEE AND LEGAL RESEARCH FEE,
r MANDATORY AND JURISDICTIONAL.
The payment by the appellant of the prevailing appeal fee and legal
research fee is both mandatory andjurisdictional. 3 An appeal is perfected only
when there is proof of payment of the appeal fee. 4 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. 6
2. EXCEPTIONS TO THE RULE ON PAYMENT OF APPELLATE
COURT DOCKET FEES.
The following are the recognized exceptions to the strict observance of
the rule on appeal fee:
(1) Most persuasive and weighty reasons;
(?.) To relieve a litigant from an injustice not commensurate with his
failure to comply with the prescribed procedure;
(3) Gooo faith of the defaulting party by immediately paying within a
(4) The existence of special or compelling circumstances;
(5) The merits of the case;
(7) A lack of any showing that the review sought is merely frivolous
and dilatory;
(8) The other party will not be unjustly prejudiced thereby;
(9) Fraud, accident, mistake or excusable negligence without the
appellant's fault;
(10) Peculiar, legal and equitable circumstances attendant to each case;
(11) In the name of substantial justice and fair play;
(12) Importance of the issues involved; and
(13) Exercise of sound discretion by the judge, guided by all the
attendant circumstances.
Thus, there should be an effort, on the part of the party invoking
liberality, to advance a reasonable or meritorious explanation for his failure to
1 BunagCII v. SentileiWal!:hnal &~Agency, Inc., G.R No. 144376, Sepl13, 2COO.
2 l..al1zoo v. NlRC, GR No. 113600, May 28, 1999, 307 SCRA 005; 367 Phi. 169, 1n.
3 Scint l.Olis lkWerSly, Inc: v. CobcrruiJias, GR No. 187104, h.lg. 3, 2010.
4 WOO<ersr:IAnlk!oo EledltCoopelali.'e, R:. v. NLRC, GR No.120062,June8,2000.
5 Acdav.Mnmr:llabor,G.RNo.L·51607,Dec.15, 1982, 119SCRA326.
6 l1Jlav.Nl.RC,G.RNo.116404, Maa:h20, 1997,270SCRA227,231.
690 BAR REVIEWER ON lABOR lAW
comply with the rules.' Consequently, in instances where the appeal fee was
paid belatedly, it was held that the broader interest of justice and the desired
objective of deciding the case on the merits demand that the appeal be given due
course. 2
v.
MEMORANDUM OF APPEAL
1. REQUISITES.
The requisites for a valid Memorandum of Appeal are as follows:
1) The Memorandum of Appeal should be verified by the appellant
himself in accordance with the Rules ofCourt, as amended;3
2) It should be presented in three (3) legibly typewritten or printed
copies;
3) It shall state the grounds relied upon and the arguments in support
thereof, including the relief prayed for;
4) It shall contain a statement of the date the appellant received the
appealed decision, award or order; and
5) It shall be accompanied by:
(i) proof of payment of the required appeal fee and legal research
fee;
(ii) posting of a cash or surety bond (in case of monetary awards);
and
(iii) proof of service upon the other party. 4
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. 5 But it must be emphasized that per Navarro v.
NLRC/ the perfection of an appeal includes the filing, within the prescribed
period, of the Memorandum of Appeal containing, among others, the assignment
of error/s, arguments in support thereof, the relief sought and, in appropriate
cases, posting of the appeal bond.
1 Saint Louis U!Wer.;itj, Inc. v. Cdmubias, G.R No. 187104, hlg. 3, 2010, tm.!lill v. Oebl SMtos; G.R No. 172574,
Jutt 31, 2009, 594 SCRA 607, 61~17; Villena v. ~. G.R No. 167620, ~ 3, '1007, 520 SCRA 346, 358-359.
2 P1Dri1e lnsulllce Ot v. E01a Bonlo-Perez, G.R No. 83699, Ft>b. 21, 1989; C. W. Till tJi1. v. NLRC, G. R No. 79596,
Feb. 10, 1989.
3 See SecOOn 4, Rule 7lhereol.
~ SecOOn 4Ia]. Rule VI, 2011 Nl.RC Rules of Proce!kre; Brislll M/eiS Squilb [Phis.], klc. v. Vbia, G.R No. 148156, Sept _.,,jl
27,'1004.
5 Del Mar lmlestic Enterprises v. NLRC, G.R. No.108731 ;Dec. 10, 1997.
6 G.R No. 116464, Mati11, 2000.
~
.~\
LHAl'itK VIII 0\;jl
JURISDICTION AND REMEDIES
3. SOME PRINCIPLES ON MEMORANDUM OF APPEAL.
• Mere notice of appeal without complying with the other requisites afore-
stated shall not stop the running of the period for perfecting an appeal.'
• Memorandum of appeal is not similar to motion for reconsideration. 1
• Lack of verification in a memorandum of appeal is not a fatal defect. It may
easily be corrected by requiring an oath. 3
4
• Supplemental appeal need not be verified. Neither the laws nor the rules
require the verification of the supplemental appeaL 5 Furthermore,
verification is a formal, not a jurisdictional, requirement. It is mainly
intended as an assurance that the matters alleged in the pleading are true
and correct and not of mere speculation. 6
• An appeal will be dismissed if signed only by an unauthorized
repr~sentative. 7
.l.. • 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 affmnative relief other than those granted, if any, in the decision
of the lower tribunaL 8
• Certificate of non-forum shopping is no longer provided in the 2011
~ NLRC Rules of Procedure. It is only required in the initiatory complaint
or petition filed with the Labor Arbiter. 9
VI.
PROOF OF SERVICE TO ADVERSE PARTY
1. FAILURE TO SERVE COPY TO ADVERSE PARTY, NOT FATAL.
, SecOOn 4[b], Rule VI, 2011 NLRCfU!SofProoecbe; BristJIMjels Sqtjlb{Phlls.t h:. v. Vloria, G.R No. 148156, Sejt
27,2004.
2 1.ama1 Tllld"rg, nc. v.l.ea:!crdo. G.R tb. 73245, Sejt 30, 1986.
3 t.lemllmErectasCoporali:xlv.t.'ajBes G.R.No.184362,Nov.15,2010;Ganw.NRC,G.Rtb.L~26.Sept
28, 1984, 132 seRA 402; Del Roscril &Soos IDJgh;J Eneplises, k1c. v. N..RC, G.R No. L-64204, Mrt 31, 1985, 136
SCRA'669.
~ Loonv. PoilerMaster, h:., G.R tb.189404, Dec. 11, 2Q13.
I 5 SedOO 3, !U! 1d the NLRC IUs It Procedure, i1 relation il Sdln4, Rule 7of the RIJes ct Cart.
Cilg PDf Pasos v. Ph~ NciJ1al Coos!nJ:IDI Corpcrakrl, G.R No.192394, Jlt( 3, 2.013; ll1d Mlennilm Erectts
l 6
Coqxxation v. ~cianes. G.R tb. 184362, Nov. 15, 2010, 634 SCRA 708, 713·714, tm.1 PcK:qtilg v. c:oca.caa
f'l1iilpi1es. Inc., G.R. No. 157006, .!at 31, 2008, 543 SCRA 344, 356-357.
See No.4, Admi1istraliJe Older tb. 11-00, Series ct 2012 fNo'ieiTiler 16, 2012]. issued by Hoo. Gellldo c. 1-bJnies,
NLRC Chairmen
a &*Jus-Gap. v. Hon. CA, GR. No.157488, Feb. 6, 'lJJ7.
9 See SecOOn 1' Rule Ill thereof.
. .
.
 l.HAPitK VIII
692 BAR REVIEWER ON lABOR lAW
JURISDIC.TION AND REMEDIES
U';l,)

While it is required that in all cases, the appellant shall furnish a copy
1 1
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. 2
It has long been settled that mere failure to serve a copy of .a
Memorandum of Appeal upon the opposing party does not bar the NLRC from
entertaining an appeal.3 It may even be dispensed with since in appeals in labor
cases, non-service of a copy of appeal memorandum to the adverse party is not a
jurisdictional defect which calls for the dismissal of the appeal. 4
vn.
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 upon t.i.e posting of a bond,
which shall either be in the fonn of:
(1) cash deposit;
(2) surety bond; or
(3) pr(lperty bond. 5
rule is that the filing of a supersedeas bond for the perfection of an appeal is
both mandatory and jurisdictional.
3. SOME PRINCIPLES ON POSTING OF BOND.
· (l) 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.
3
(2) In case the employer failed to post a bond to perfect its appea~ the
remedy of the employee is to file a motion ttl dismiss the appeal and not a
4
petition for mandamus for the issuance of a writ of execution.
(3) Surety bond must be issued by a reputable bonding company duly
5
accredited by the Commission (NLRC) or the Supreme Court.
(4) The bond shall be valid and effective from the date of deposit or
I posting, l!lltil the case is fmally decided, resolved or tenninated, or the award
T
I satisfied.6
!
(5) Posting af a bank guarantee or bank certification is not
sufficient compliance with the bond requirement. It is not equivalent to nor
7
can be considered compliance with the cash, surety or property bond.
i
I 8
l (6) Cooperatives are not exempted from posting bond.
I

The amount of such bond should be equivalent to the monetary award, (7) Government is exempt from posting of bond; government-owned
9
exclusive of damages and attorney's fees. 6 In other words, only monetary and/or controlled corporations, however, are not exempt therefrom.
awards (such as unpaid wages, backwages, separation pay, 13th month pay, etc.) {8) Bond is not required for the NLRC to entertain a motion for
are required to be covered by the bond. Moral and exemplary daniages and reconsideration. 10 An appeal bond is required only for the perfection of an
attorney's fees are excluded. appeal of a Labor Arbiter's decision involving a monetary award.U
2. POSTING OF BOND, MANDATORY AND JURISDICTIONAL.
The provision of Article 229 [223] requiring the posting of a bond is 0\DrilaG v. NLRC, G.R No. 91935, llach 4, 1996, 324 Pit 455; AqliJJ v. NLRC, G.R No. 98108, Sept. 3, 1993, 226
1
self-executory and does not need any rule to implement it. The reason for this SCRA76.
2 Gada v. NLRC, GR No. 109371, Nov. 18, 1999; Lanzon v. tlRC, GR No. 113600, May 28, 1999, 307 5®. 665; 367
' ~ IJ1der MDe 229 12231. Lllbor Code; Stx:bl4 ta1 (S)(m), fllJe VI, 2011 tlRC rues of Procedlle. Plil.169, 177.
3 Srils v. Ve'ade, G.R No. 140753, ,1¢ 30, 2003; Bolja Estale v. Spouses Ballad G.R No. 15251i0,Jire 8, 2005, 459
2 PNCC v. NlRC, G.R No. 103670, Jutf 10, 1998,292 SCRA266; C. W. Tlll ~- v. tlRC, G.R No. 79596, FEb. 10, 1989.
3 Sunrise Mimi'g ~.Inc. v. NI..RC, G.R No. 146703, Nov. 18, 2004; Paglblsalll1 v. tlRC, G.R No. L~701, Jan. SCRA 657, 667.
31,1980,127 SCRA463. 4 !lazv.Naa:G.RNo.89324,0tt 11,1900.
5 MX:Ie 229{2231, Lalor Code; SecOOn 6, Rue VI, 2011 NLRC Rules of Ploaldure.
4 M11errim Erecbs CorpoJam v. ~. G.R No. 184362, Nov. 15, 2010; Remen:o Gamen1s ~ v.
& Sectkxl6, Rule VI, 2011 NI.RC ~les of Prooedlfe. .
t.t1is8 of Lalor nl Elr¢77ment,G.R Nos.L-56176-77, Feb. 28, 1985, 135 SCRA 167. 7 8qjenerk:s~ cn!Reseilth\.orp. v. NLRC,G:R No.122725, Sept. 8, 1999, 313 SCRA 748.
5 AII10UJh Mide 229 [223] expresstt JeqiRs lle postiYJ 'rrlf of a '((ISh rt S1Je1¥ bald' il !Xder kl pelfect lhe appeal, i1
a Balagtas MJi.PufpOSeCoopercDie. nc:. v. CA;G:R No. 159268, Ott 27,2006.
UERMMemx1a1 Medi:al Center~- N..RC, G.R No. 110419, t.lath 3, 1997,269 SCRA 70, 1he postiYJ d leal plqiE!IIy 9 BanmlrNBfoadcasli';J Colponmlv. P<dla, GR No.171673,M!y30,2011.
bond it leu d ((ISh or SIJely bond was hekl sufficient prolection for the ilk!rest oflle ~ sOOuld lleyfnatt prevai.
10 cadail v. Hoo. CA, G.R No. 168923, Nov. 28,2008.
6 Sedioo 6, 1M! VI, 2011 NLRC Rules of Procedum; Roos kldustial Cooslnl:&xt, D;. v. NLRC, G.R No. 172409, FEb. 4,
11 See REst~ ProcediJed toeNLRC, Seres of 1999, RUe VI, Sedion 6, i1 nllaiOO kl Rli! Vll Secliln 14{Section 15 illhe
2008; BOija Esla!e v. Ballad, GR No. 152550, June 8, 2005,459 SCRA 657; OllJ v. CA, G.R No.152494, Sepl22, 2004;
l.a'nzon v. NLRC, G.R No. 113600, llay28, 1999, 307 SCRA665; 367 Phil 169, m. 2011 NLRC IUls of ProcetilreJihereof.
694 BAR REVIEWER ON lABOR lAW
(9) Bond is not required to file a Rule 65 petition for certiorari.'
4. 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
2
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.3
• In case of conflict between the body and the fallo of the decision, the
latter should prevail. 4
5. JUSTIFICATIONS FOR ALLOWANCE OF APPEAL DESPITE
DELAY IN POSTING OF BOND.
The rules on posting of bond have been liberally construed and relaxed
considering the substantial merits of the case and the existence of exceptional
circumsrences justifying the same, such as: 5
(1) Fundamental consideration of substantial justice;
t was misled by the notice of the decision which did not mention that a bond must
(2) Prevention of miscarriage of justice or of unjust enrichment; and
(3) Existence of special circumstances in the case combined with its
legal merits as well as the amount and the issue involved.6
Relevant cases.
Semblante and Pilar v. CA, Gallera de Mandaue,7 where the
respondents' fail lire to post the required appeal bond within the 10-calendar day
reglementary period was excused because the High Court found it compelling to
rule on the issue of whether the petitioners, who worked as masiador and
sentenciador in the cockpit of respondents, were employees of the latter. It thus
declared that ·they were not employees but independent contractors since their
1 ~ v. ~ Kni;!hls [Jeted;,oe n Security~. Inc., G.R No.173189, Feb.13, 2013.
2 ~v.NLRC,G.RNo.122627,Ju!y28, 1999.
3 Qnzmv. The Filh lJMsD1 dlhe HooooiileCOIItd Appeals, G.R No.155207, April29, 2005,457 SCRA 700;T<ilemil
v. NLRC, G.R No. 11774~ Jlt)' 29,1997,276 SCRA 431; 342 Phi. 394, 402-403; Vergcra v. NIRC, G.R No. 117196,
Dec. 5, 1997, 282 SCRA 486.
4 Mlncbza, Jr. v. SM ~uel Foods, Inc., G.R No. 158684, May 16, 2005.
5 Sentlante v. CA, Galen! de Mlldaue, etal., G.R. No. 196426, Au:J. 15, 2011, dti1g Orozco v. CA; Flflh DMsion, supra;
<ka:J v. Nl.RC, G.R No. 81390, Au;J. 29, 1989, 177 SCRA 38, 49; Tillemtt v. NLRC, G.R No. 117742. July 29, 1997,
276 SCRA431, 342 PhH. 394; Star AIY,lel Haxliaatv. NLRC, G.R No.108914, Sept 20, 1994, 236 SCRA 580, 584.
6. f'tiiWe Aii1es, Inc. v. NlRC, GR ~- 120506, Oct 28, 1996, 263 SCRA 638, 658; Manooan v. Saphi C!xpaation,
G.R No. 150915, Aplil11, 2005,455 SCRA 240, citi1g Jcro v. CA; G.R No. 127536, Feb. 19, 2002, 377 SCRA 282;
Rose.woc~Processilg, ltx:. v. NLRC,G.RNos. 116476-M,May21, 1998,290SCRA408;352Pili1.1013.
7
G.R No.196426, Al.g.15, 2011.
)URISD!Cf!ON AND REMEDIES
relationship with ·respondents failed to pass muster the four-fold test of
employment.
Intertranz Container Lines, Inc. v. Bautista,' where relaxation of the
rule was made because it is clear from the records that the petitioners never
intended to evade the posting of an appeal bond. They exerted earnest efforts to
abide by the law and the rules on appeal with a notice of appeal, appeal
memorandum, and an appeal bond for P531,000.00. They also moved to reduce
the appeal bond. The petitioners might or might not have been aware that the
accreditation of the bonding company expired on July 31, 2005 but when the
bond was posted on July 11, 2005, the bonding company's accreditation and the
bond it issued were still valid. Although the petitioners failed to file a
replacement bond within ten ( 10) days from receipt of the NLRC order requiring
them to do so, again, it cannot be said that they intended to ignore the order.
Your Bus Line v. NLRC/ where the Labor Arbiter's decision failed to
state the exact total amount due which would be the basis of the computation of
the bond, the failure of the petitioner to post the bond was excused because it
be filed. The lawyer for petitioner relied on such notice and considering this
circumstance as an excusable mistake, the Supreme Court allowed petitioner to
file the bond and appeal from the decision of the Labor Arbiter.
3
Erectors, Inc. v. NLRC, where the Labor Arbiter erroneously
included moral and exemplary damages in the computation of the appeal bond.
VD-A.
MOTION TO REDUCE APPEAL BOND
l.CONCEPT.
The general rule is that the appeal bond that should be posted should be
4
equivalent to the monetary award of the Labor Arbiter. Its reduction is neither
provided in the Labor Code nor in its implementing rules. In practice, however, the
NLRC has allowed the reduction of the bond upon showing of meritorious grounds.
The validity of this practice has been given judicial imprimatur. It was first
recognized in the case of Star Angel Handicraft v. NLRC,5 where it was observed
that neither the Labor Code nor its implementing rules specifically provide for a
situation where the appellant moves for a reduction of the appeal bond Inasmuch as
1
G.R No. 187693, Jlt)' 13,2010.
2 GR No.93381,Sept28, 1900, 100SCRA 160.
3
G.RNo.93690,0ct.10, 1991,2l2SCRA597.
4 Ramiezv. Hort CA. G.R No.182626, Dec. 4, 2009.
5 G.R No. 108914, Sepl20, 1994.
696 BAR REVIEWER ON lABOR lAW
in practice the NLRC allows the reduction of the appeal bond upon motion of
appellant and on meritorious grounds, it follows that a motion to that effect may be
filed within the reglementary period for appeal. Such motion may be filed in lieu of
a bond which amount is being conteSted. In the meantime, the appeal is not deem~
perfected and the Labor Arbiter retains jurisdiction over the case until the NLRC has
acted on the motion and appellant has filed the bond as fixed by the NLRC. 1
This practice-evolved norm has been enshrined as an established rule in
NLRC Resolution No. 01-02, Series of2002, and carried over to Section 6, Rule VI of
both the 2005 and the current 2011 NLRC Rules ofProcedure.1
2. THEMCBURNIEDOCTRINE: GUIDELINES FOR Fll..ING AND
ACCEPTANCE OF MOTIONS TO REDUCE BOND.
The 2013 en bane decision rendered in the case of Andrew James
Mcburnie v. Eulalia Ganzon, 3 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 Vl of the 20i 1 NLRC Rules ofProcedure:
(a) The filing of a motion to reduce appeal bond shall be entertained by
the NLRC subject to the following conditions: (1) there is meritorious
ground; and (2) a bond in a reasonable amount is posted;
(b) For purposes of compliance with condition no. (2) above, a motion
shall be accompanied by the posting of a provisional cash or surety
bond equivalent to ten percent (10%) of the monetary award subject
of the appea~ 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 detennine 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 (1 0) days from notice of
the NLRC order within which to perfect the appeal by posting the
required appeal bond.
1 See also Cosico, Jr. v. NLRC, G.R No. 118432, May 23, 1997, 2n SCAA 583; BuenaOO!a v. lin Ki1g !m!, G.R No.
150147,JM. 20,2004,420 SCRA 359.
2 tfJCOiv. Fooljoy Industrial Corp., G.R No.159372,Ju~27, 2007.
l G.R Nos.178034, 178117, 186984!Pl186985, Oct 17,2013.
JURISDICTION AND REMEDIES
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, exdusive
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 (l) the reasonable final amOWlt of the bond; and
(2) what constitute "meritorious grOWlds." This determination is important since "in
all cases, the reduction of the appeal bond shall be justified by meritorious grounds
and accompanied by the posting of the required appeal bond in a reasonable
amount" 1
3.
REINSTATEMENT PENDING APPEAL
1. PIONEER TEXTURIZING DOCTRINE: REINSTATEMENT ASPECT
OF LABOR ARBITER'S DECISION, IMMEDIATELY EXECUTORY
EVEN PENDING APPEAL; NO WRIT OF EXECUTION REQUIRED.
Accordmg to the Pioneer Texturizing doctrine/ llll. order of
reinstatement issued by the Labor Arbiter under Article 229 [223]3 of the Labor
Code is self-executory or immediately executory even pending appeal. 4 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. 5
As a consequence of Pioneer Texturizing, the rulings in earlier cases6
that the reinstatement aspect of the Labor Arbiter's decision needs a writ of
execution as it is not self-executory, are deemed abandoned. 7
1 All!rew Janes M:fxrniev. Eufail Ga)zoo, G.R Nos. 178034, 178117, 186984llld 186985, Oct 17, 2013.; See also Saa
ls!~v. Eimilda~. G.R Nos.1B0147-180150, 1B0319llld 180085,.Mie4, 2014.
2 PiooeerTextxm:JCap<xainv.N..RC,G.R No.118651,0ct 16, 1997,280SCRI\606.
3 Miele 229 t223J pMfes i1 pill: 'kl art M1l, t1e deciskln ct the Lm AltJIEr rei1Siailg a d!mssed a sep!IIEd
~. ilSda" as lle RlilslaEmenl aspect is coocemed, shal irmecflillet{ be f!lmJay, even perwiYJ ~ The
lllqlbjee s11a1 eitler be Drilled bed tl Y«rt under the same tenns illd ·imibls JIRlV!IIliYJ prier tl tis a~S~Ti!Si or
sepnm or, at 1te ~ ctlle el1lJk1(er, merelf rei1Sialed illhe payral. The pooilJ ct abald by 1he ~Sial not
<Jai the exoolfb1 b"reilstEmentp1011ded hereit'
• 3rdpaa;c¢ ct Mkle 229fl231dlle umCOOe, as emended by Section 12 ofRA No. 6715, fMidl21, 1989].
5 See Section 3of~le Xl, 21111 NlRCRules ct~.
6 &JCh as the cases ct Mrnw Hotel Resa1 Ccqxxatioo (Cenli.Ry Pale ShelaD1 Millla) v. NLRC, G.R No. 110021,
Novemler 16, 1994, 236 SCRA 100, as reits<ied nAlthles Mnlfaciuilg CorporaOOn v. M.RC, G.R ~- 107225, .kMie
2, 1995, 244 SCRA 7fiJ.
7 klBnational Cartailer Temi1a1 SeM:es, Inc. pCTSI) v. NLRC, supm.
698 BAR REVIEWER ON lABOR lAW

execution since the Labor Arbiter is mandated thereafter to motu proprio issue
2.REINSTATEMENT PENDING APPEAL, APPLICABLE ONLY TO the writ With the new rules in place, there is hardly any difficulty in
THE ORDER ISSUED BY THE LABOR ARBITER; WRIT OF determining the employer's intransigence in immediately complying with the
EXECUTION REQUIRED WHEN REINSTATEMENT IS ORDERED order. 1
BY NLRC ON APPEAL, OR SUBSEQUENTLY BY THE COURT OF
APPEALS OR SUPREME COURT, AS THE CASE MAY BE. 5. LIABILITY OF EMPLOYER FOR DISOBEYING LABOR ARBITER'S
REINSTATEMENT ORDER.
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. Under any of the two (2) circumstances described above, the Labor
This means that if the reinstatement order is issued by the NLRC on appeal, or Arbiter shall immediately issue a writ of execution, even pending appea~
directing the employer to immediately reinstate the dismissed employee either
by the Court of Appeals1 or by the Supreme Court,1 there is a need to secure a
physically or in the payroll. 2
writ of execution from the Labor Arbiter of origin to enforce the reinstatement
of the employee whose dismissal is declared illegal? As a consequence of such disobedience, the employer has the following
liabilities,3 to wit:
3. TWO (2) OPTIONS OF EMPLOYER.
I. He shall be liable to pay the accrued salaries of the reinstated
To implement the reinstatement aspect of a Labor Arbiter's decision,
employee as a consequence of such non-reinstatement in the amount
there are only two (2) options available to the employer, to wit:
specified in the decision; and
I. Actual reinstatement. - The employee should be reinstated to his
2. He may be cited for contemp!, in accordflllce with the 2011 NLRC
position which he occupies prior io his illegal dismissal under the
Rules of Procedure, 4 for his refusal to comply with the writ of
sume tenus and conditions prevailing prior to his dismissal or
execution ordering the rcinstatement. 5 This remedy, however, is
separation or, if no longer available, to a substantially-equivalent
position; or
2. Payroll reinstatement.- The employee should be reinstated in the
r available only after the Sheriff shall have served the writ of
execution upon the employer or any other person required by law to
obey the same. 6
payroll of the company without requiring him to report back to his
work. 4 On No. 1 above, the employer should pay t.ie accrued salaries in case
of disobedience because the employee should not be left without any remedy in
4. DUTY OF EMPLOYER TO NOTIFY EMPWYEE ORDERED case the employer unreasonably delays or refuses reinstatement. The unjustified
REINSTATED. refusal of the employer to reinstate an illegally dismissed employee entitles the
It is required5 that in case the decision of the Labor Arbiter includes an employee to the payment of his salaries.' The entitlement of the dismissed
order of reinstatement, it should contain: · · employee to his salaries occasioned by the unjustified refusal of the employer to
(a) A statement that the reinstatement aspect is immediately reinstate him becomes effective from the time the employer failed to reinstate.
8
executory; and him despite the issuance of a writ of execution.
(b) A directive for the employer to submit a report of compliance On No. 2 above, the remedy available to the employee whose
within ten (10) calendar days from receipt of the said decision.' reinstatement ordered by the Labor Arbiter was not implemented by the
Disobedience of this directive clearly denotes a refusal to
reinstate. The employee need. not file a motion for the issuance of the writ of 1 Glldantunagov.~Aiiles.re,GRNo.164856,Jal.20,2009[1;nlm:l.
2 See 1• ~ d Sedioo 12 (bmerly SecOOn 9), R* XI, 2011 Nl.RC rues dFrocetklre. as Rnll1tered by NLRC En
Bcr1cReslim!No.11-12. Ssiesd2012tNovenM16, 2012). elledMl.IIM)' 11,2013.
1 ~Wiled rue 65 cettiaari petilixl. 3 llid.
2 ~reason dIU! 45 petilixl b' rM!w oo crilrari. ~ The IXXIIer11t ~ sfla'l be nactOPlilla! Mil rue IX {Conflln1lll m11e 2011 NLRC rues mP~ooe:Ue. See 3'1
3 M. camel Cdlege v. Resuena, G.R No. 173076. Oct 10, 2007; See also Plrli.fldlo v.lAP ~. "-· G.R No. paagraph d Secb112 (bmedy Sectioo 9), RUe XI, 2011 tlRC fU!S d Pmldlle, as reruRlen!d by NlRC &!Ban:
161305, Feb. 9, 211Jf. Rescimooth 11-12.88iesof2012~16, 2012), elfecWeJallay11, 2013.
5 See aso QvisbllkraUe Crusade v. tl.RC, G.R No. 79106, .64ri 10. 1989, 171 SCAA 712; ~ v. tbl. CQe.
• M:!e 229 [223], t.axrCode; Zilrixm,}a CiyWc$1rDisbUv. &at. G.R No. 104389, May27,1994, 232 SCRA 587.
s See Section 19 [Con8lts d Decisioos) d 1U! V(ProceediwJs Before Labor MliesJ ci lle 2011 Nl.RC Rules d G.R.No.110087,0ec.15,1993;kl<tls!rialcniTrnp<Xt~klc.v.~.G.RNo.113592,Rl. 15,1998.
l'roce!kre. tt rrust be neEd 11at t1is Sectioo 19 was previoosty lllllilered Sectioo 18 d the ~ilal versioo of 11e 2011 6 See Jl<l~ciSedOO 12~Section9), Rule Xl,2011 NLRCruesdflrocelbe. asrerutteredbyNLRC En
NlRC ROOs d Procedtn'e. twas renmtJered by NlRC En Bcr1c RestMoo No. 11-12. Seres d 2012 {NoYerMer 16, BalcResciD No. 11-12, Seresof2012jNoJEIJilef16, 20~. etlecWeJ~ 11,2013.
2012), effecWe Januay 11, 2013. 7 PklneerTextrizb:l Cotpaafionv. NLRC, G.R No.118651,0ct 16, 1997,280SCRA800.
6 2"1 paagraph, Section 19, Rule Vthereof, as~ by NLRC En Ba:lc Resduiion No. 11-12. Seres of 2012 8 Rtx!uerov.~Ai'Liles,lnc., G.R No.152329,1¢122, 2003.
[NoYentJer 16, 2012], efledNe Jan~ 11, 2013.
700 liAR REVIEWER ON lABOR lAW
employer is to file for contempt against the latter and certainly not the institution
of a separate action in the regular court or with the Labor Arbiter. Such recourse
will violate the well-settled principle of res judicata. It would give rise to
multiplicity of actions which the law abhors and exerts every effort to eschew.1
6. INSTANCES WHEN WRIT OF EXECUTION OF LABOR ARBITER'S
REINSTATEMENT ORDER STILL REQUIRED.
Under the 2011 NLRC Rules ofProcedure, 2 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.:
(I) When the employer disobeys the prescribed directive3 to submit a
report of compliance within ten (1 0) 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 r~instatement. 4
7. SOME PRINCIPLES ON REINSTATEMENT PENDING APPEAL.
(1) Employer has 110 way or staying execution of immediate
reinstatement. He cannot post bond to prevent its execution. 5
(2) Reinstatement pending appeal applies to all kinds of illegal
dismissal cases, regardless of the grounds thereof. 6
(3) Reinstatement pending appeal does not apply when the dismissal is
legal but reinstatement is ordered for some reasons like equity and
compassionate justice.7
(4) 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. 8
1 Mill~. rev. NLRC, G.R No. 73662, Jllle 18, 1987. ·
2 See Sedkrl12 !Exeaful 11 Reilstatemenl Pe~mJ ~ rue XI !Executioo Proa!eciJJs1 11 111e 2011 ti.RC R~res 11
Pnlcedre. It JMt be nded Ulat llis SecOOn 12 was paWstf IUrbeled SecOOn 9 ci lte <ri;lilal versioo ri f1e 2011
NLRC RUes ri f'nx:me. ft was rerMTtlered by NLRC En BMc ResokJOOn No. 11·12. Series ri 2012 [I'«Heemer 16,
20121 elleciNe J~ 11, 2013.
3 nis d'rOONe Is pnMied under the 2'11 paagraph ci Sedb119 ~ Seclioo 18) ri Rule V, 2011 NLRC IUls d
ProoeO.re, as 1BltiTOO'ed by N..RC En &n: ResOOm t-b. 11-12, SeOOs m2012 [tOOiiJer 1s, 20121. ekWe .1a1uay
11,2013. .
4 See 2'11 paag!l!llh ci Seem 12 (famel1y Sedbl9), ~XI of the 2011 NLRC RUes ci Procedure, as renun1Jered by
NI.RC En BMc Resokml No. 11·12. Selies ci 2012 [N<:wrOOer 16, 2012), eflecWe J~ 11, 2013.
5 Ar1i:le 229 [223], llilorCode; Pix!OO'Texturizing Capcxalioov. NI.RC, supm.
6 C.Abllti:la& Sons, Inc. v. CA, G.R Nos.155109, 155135& 179220, Sepl29,2010.
7 I..Mscrgoo v. AntorT~ Phfppiles, Inc., GR ~.177026, Jlll. 30,2009.
8 ~v. CA, G.R.No.147806,NoY.12,2002; SeeasoPfizer, Inc. v. Velasco, G.Rt-b.177467, Mrch9, 2011.
jURlSDICTION AND REMEDIES
(5) When former position is already filled up, the employee ordered
reinstated1 pending appeal should be reinstated to a substantially equivalent
position.
(6) Reinstatement to a position lower in rank is not proper?
(7) In case of two successive dismissals, the order of reinstatement
pending appeal under Article 229 [223] issued in the first case shall apply only to
the frrst case and should not affect the second dismissal. 3
(8) Reinstatement pendin~ appeal is not affected by the reinstated
employee's employment elsewhere.
(9) Effect of grant of achievement award during reinstatement
pending appeal. In Garza v. Coca-Cola Bottlers Philippines, Inc..S 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, 6 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 actequate proof weighing in his
r favor.
(10) The issuance of temporary restraining order (TRO) by the
Court of Appeals or by the Supreme Court, as the case may be, merely suspends
the implementation and enforcement of the reinstatement order but it does not
have the effect of nullifying the rift of the employee to his reinstatement and
to be paid his reinstatement wages.
B.
NATIONAL LABOR RELATIONS COMMISSION <NLRC)
l.
JURISDICTION
1. TWO (2) KINDS OF JURISDICTION.
The NLRC exercises two (2) kinds ofjurisdiction:
1. Exclusive original jurisdiction; and
1
Medilav. CmslllidaledBroadcas6'1J ~(CBS)-Olv\IX, G.R Nos. 99054-56, May28, 1993,222SCPA 707.
2 ~v. CAP Phi~. tiC., G.R No.161305,Feb. 9, 2007.
3
Se.ila v. NLRC.~.R. No. 108878, Sept 20, 1994.
4
Triad Seruily&AIIied Services, Inc. v. Oltega, GR No.160871, Feb.6,2000.
5
GR No. 180972, J111. 20, 2014.
6 fssoo:j by l1e l.aJor Albler flUISUlll( t> Alfi:le 229{223]d the labor Code.
7
Zanlmlga City Wafer Oisfiictv. &a GR. No. 104389, May 27, 1994.
 /U;j
JURISDICTION AND REMEDIES
702 BAR REVIEWER ON LABOR LAW

exclusive jurisdiction of the Labor Arbiter, the NLRC cannot have appellate
2. Exclusive appellate jurisdiction.' jurisdiction thereover. 1
2. EXCLUSIVE ORIGINAL JURISDICTION. Under the Labor Code, the authori~ to conduct compulsory arbitration
The NLRC exercises exclusive and original jurisdiction over the is principally vested upon Labor Arbiters. It is only in the exercise by the
following cases: · NLRC of its original jurisdiction that it discharges compulsory arbitration;
hence, the exercise by the NLRC of its appellate jurisdiction is not in the
a. Petition for injunction in ordinary labor disputes to enjoin or , nature of compulsory arbitration. This is so because it is the Labor Arbiter
restrain any actual or threatened commission of any or all prohibited who is clothed with the authority to conduct compulsory arbitration in cases
or unlawful acts or to require the performance of a particular act in involving labor disputes falling under Article 224 [217] of the Labor Code. On
any labor dispute which, if not restrained or performed
2
forthwith, appeal, the NLRC merely reviews the Labor Arbiter's decision; for as an
may cause grave or irreparable damage to any party. appellate body, it is not, generally, a trier of facts. 3 Hence, the exercise by the
b. Petition for injunction in strikes or lockouts under Article 279 NLRC of its appellate jurisdiction cannot be considered as part of the
3
[264] of the Labor'Code. compulsory arbitration process. 4
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
H.
for compulsory arbitration by virtue of Article 278(g) [263(g)] of COURT OF APPEALS
4
J,
the Labor Code. I
1.
d. Petition to annul or modify the order or resolution (including those
issued during execution proceedings) of the Labor Arbiter.
5 I APPEAL VIA RLTLE 65, RULES OF COURT
l. RULE 65 PETITION FOR CERTIORARI, THE ONLY MODE OF
3. EXCLUSIVE APPELLATE JURISDICTION. ELEVATING ALABOR CASE TO THE COURT OF APPEALS.
The NLRC exercises exclusive appellate jurtsdiction over the
following: r 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
6
a) All cases decided by the Labor Arbiters. petition for certiorari.
b) Cases decided by the DOLE Regional Directors or hearing officers (a) the DOLE Secretary;
involving small money claims under Article 129 of the Labor Code. (b) the Commission (NLRC); and
7
c) Contempt cases decided by the Labor Arbiters. (c) the Director of the Bureau of Labor Relations (BLR) in cases
4. SIGNIFICANT DISTINCTIONS BETWEEN JURISDICTION OF decided by him in his appellate jurisdiction (as distinguished from
LABOR ARBITERS AND NLRC. those he decides in his original jurisdiction which are appealable
to the DOLE Secretary).
The Commission (NLRC) does not have original jurisdiction over the
cases enumerated in Article 224 [217] over which Labor Arbiters have original Although the Syllabus5 describes the topic as "Appeal via Rule 65,
and exclusive jurisdiction. Thus, if a claim does not fall within the original and Rules of Court," Rule 65-certiorari petition is not in the nature of an "appeal"
as the remedy of ordinary appeal to the Court of Appeals is not available from
the decisions, orders or awards of labor authorities/tribunals. The reason for this

1
Secm1.~1eVII,2.011 t.a..RCruesdProcedlle. 1 Pallocv.NLRC,G. R No.116347,0ct3, 1996,262SCRA632
2 IW:Ie218(e),laba'Code;Sedion 1, Rule X, 2011 NLRC~ofProcedure. 2 ~Ames, k1c. v. NLRC, G.R No. 55159, Dec. 22, 1989.
3
Section 2, Rule X, 2011 NLRC R!Jies of Piocedure. 3 ~MlrlggCJJ<IWllsaSatjv. Nl.RC, G.RNo.121400,'-'ay5, 1997,272SCRA209, 218;~/IJrines, Inc.
: IW:Ie 278(g) [263(g)l. l.aJor Code; Section 2, Rule VIII, 2011 NI.RC Rules of Proc:e:Ue.
v. NLRC, GR No. 55159, Dec. 22, 1989, 180 SCRA 555.
~XII [Exlrcooilary Remedies!, 2011 NLRC RUes of l'lcaldure.
6
4 ~Ames, Inc. v. NLRC, G.R No. 55159, Dec. 22, 1989.
Article 224(b) fl17(b)J, Labor Code. 5
Refeniv,j ID 1he 2017 ~-
1 Section 1, Rule XXIII, Book V, Rules to in1>lemeflt 1he Labor Code, as amended by Depment Order No. 40-03, Series of

Zl03, Feb.17, 2003.

704 UJ\.1\..I"'.Lo'l'•ll,o•• ...... ..,,, - - - - - - - - ·
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. 1 · perform the duty enjoined or to act at all in contemplation oflaw." z
3. DIRECT RESORT TO THE SUPREME COURT NO LONGER
ALLOWED.
Previous to the ruling in St. Martin Funeral Home v. NLRC,l a labor
case is allowed to be elevated directly to the Supreme Court, without passing
through the Court of Appeals, by way of Rule 65 petition for certiorari. With
the advent of the St. Martin Funeral doctrine, all labor cases should first pass
through the Court of Appeals by way of a Rule 65 petition for certiorari before
they can reach the Supreme Court through a Rule 45 petition for review on
cediorari.
4. RULE 65 CERTIORARI PETITION, AN INDEPENDENT SPECIAL
CMLACTION.
The only grounds that would justify the elevation of labor cases to the
Court of Appeals are when the same were rendered (1) without or in excess of
jurisdiction, or (2) with grave abuse of discretion amounting tc lack or
excess of jurisdiction.
Section 1 of Rule 65 states as follows:
"Section 1. Petition for certiorari. - When any tribunal, board, or
officer exercising judicial functions, has acted without or in eness of its
or his jurisdiction, or with grave abuse of discretion amounting to
Jack or euess of jurisdiction, and there Is no appeal, or any plain,
speedy, and adequate remedy in the ordinary course of Jaw, a person
aggrieved thereby may file a verified .Petition in the proper court, alleging
the facts with certainty and praying that judgment be rendered annulling or
modifying the proceedings of such tribunal, board or officer, and granting
such incidental reliefs as law and justice may require.
"the petition shall be accompanied by a certified true copy of the
judgment, order or resolution subject thereof, copies of all pleadings and
documents relevant and pertinent thereto, and a sworn certification 11f
· non-forum shopping as provided in the third paragraph of Section 3,
Rule46."
1 As held il Luzon Development Sri v. Associalon of Luzon ~Sirt~-G.R No. 131319, Ocfcber6,
1995.
2 GR No.130866, Sept 16,1998, 295SCRA494(Enlm).
jURISDIO'ION AND REMEDIES
The phrase "grave abuse of discretion amounting to lack or excess
of jurisdiction" has been defined as the capricious and whimsical exercise of
judgment amounting to or equivalent to lack· of jurisdiction.• There is grave
abuse of discretion when the power is exercised in an arbitrary or despotic
"I manner by reason of "passion or personal hostility, and must be so patent and so
gross as to amount to an evasion of a positive duty or to a virtual refusal to
The jurisdiction of the Court of Appeals to review a decision of the
labor tribunal in a petition for certiorari does not include the correctness of its
evaluation of the evidence or of its factual findings which are generaUy
accorded not only respect but also finality, but is confmed to issues of
jurisdiction or grave abuse of discretion.3
5. RULE ON PERIOD.
a. Period within which to file certiorari petition is sixty (60) days
from notice of judgment, order or resolution. 4
b. In case a Motion for Reconsideration or Motion fer New Trial is
filed, regardless of whether such motion is required or not, the 60-day
period is reckoned and computed from notice of the denial of said rnotion. 5
c. The 60-day period is reckoned from receipt of the decision !!Y
counsel or representative of record, !!2! by litigant-party.6
d. Rule on extension of the 60-day period. - In IAbao v. Flores/
some of the exceptions to the strict application of the 60-day period rule were
laid down, thus: (1) most persuasive and weighty reasons; (2) to relieve a litigant
from an injustice not commensurate with his failure to comply with the
prescribed procedure; (3) good faith of the defaulting party by immediately
paying within a reasonable time from the time of the default; (4) the existence of
special or compelling circumstances; (5) the merits of the case; (6) a cause not
entirely attributable to the fault or negligence of the party favored by the
suspension of the rules; (7) a lack of any showing that the review sought is
merely :frivolous and dilatory; (8) the other party will not be unjustly prejudiced
thereby; (9) fraud, accident, mistake or excusable negligence without appeUant's
fault; (10) peculiar legal and equitable circumstances attendant to each case;
1
1m Orestes RaruakfezEiedri::Cmp.,lnc. v. NLRC, G.R ~.128389, Nov. 25, 1999., 3n P1i 268,273.
2 llil.
3 Sea P1rM!r ~ Elllelpmes.lnc. v. CA. G.R No. 138270, Jme 28, Zl01, 412 Pli 003; Pelmex,lnc. v. NI.RC, GR
th 125031, Jm. 24, 200l; ~v. CA. G.R No.149404, Sept 15,2000.
4 Opmdov.RaWla,G.RNo.1!16573,0ct 16,2013.
5
TJaZOOa v. CA. G.R No. 169712, r.bdl13, 2008; See Section 4 d PJje 65 il~ 17t AM No. 00.2.ro.5C, fur1her
Mexti'g Seclm 4, Rlre65 dlle 1997 Rules d CNi f'roceOJte (elfed;.oeSeptermer 1,m>).
6
Seclion 4[b), Rule Ill, 2011 NLRC rues of ProceiUe.
7
L.amv. Fkxes, G.R No.187984, Nov.15, 2010.
706 BAR REviEWER ON lABOR lAW
(11) in the name of substantial justice and fair play; (12) importance of the
issues involved; and (13) exercise of sound discretion by the judge guided by all
the attendant circumstances.• Thus, there should be an effort on the part of the
party invoking liberality to advance a reasonable or meritorious explanation for
his/her failure to comply with the rules? .· ··.
3
But Thenamaris Philippines, Inc. v. CA clarified this leniency in the
application of the rules. Presented as the principal issue here is whether theCA
has committed grave abuse of discretion amounting to lack or excess of
jurisdiction when it allowed the extension of the 60-day period when the motion
to extend was filed outside of said period and the petition was ultimately ftled 15
days late. It declared that a petition for certiorari must be filed strictly within 60
days from notice of judgment or from the order denying a motion for
reconsideration. 4
In this case of Thenamaris, counting 60 days from her counsel's receipt
of the June 29, 2009 NLRC Resolution on July 8, 2009, private respondent had
until September 7, 2009 to file her petition or a motion for extension, as
September 6, 2009, the last day for filing such pleading, fell on a Sunday.
However, the motion was filed only on September 8, 2009. It is a fundamental
rule of remedial law that a motion for extension of time must be filed before the
expiration of the period sought to be extended; otherwise, the same is of no
effect since there would no longer be any period to extend, and the assailed
judgment or order will have become final and executory. 5 Additionally, as cited
earlier in Labao, there should be an effort on the part of the litigant invoking
liberality to satisfactorily explain why he or she was unable to abide by the
rules. Here, the reason offered for availing of the motion for extension is the
heavy workload of private respondent's counsel, which is hardly a compelling or
meritorious rea8on as enunciated in Labao. Time and again, it has been held that
the excuse of "[h]eavy workload is relative and often self-serving~ Standing
alone, it is not a sufficient reason to deviate ftom the 60-day rule.'.6 Thus,
private respondent's motion for extension should have been denied outright.
6. RULE ON MATERIAL PORTIONS OF THE RECORD.
According to The Heritage Hotel Manila v. Pinag-isang Gating at
Lakas ng mga Manggagawa sa Heritage Manila (PIGLAS-HERITAGE),7
the Court of Appeals is correct to dismiss a Rule 6S petition for certiorari for
t Lin v. Debs Scmls, G.R. No. 172574, Jlij 31, 2009, 594 SCRA 007, 61~17; Viera v. Rupiscn. G.R. No. 167620, ~
3, 'EXJf, Sal SCRA 346, 358-359.
2 Labao v. Fklres. . .
! G.R No. 191215, Fit~. 3, 2014. See also Re¢btv. St Vi1cent de Pall~ klc, G.R. No. 192008, hlg. 22, 2012,
678SCRA738, 74H&J.
4 k> laid daM1 ill..apla Metis Corpaatioo v. CA, G.R. No. 185220, July 27,axl9, 594 SCRA 139.
5 CDlg Vda. de Varia v. CA. 490 Phi. 210, 221-222.
6 atiJ.!l.a;l!Jla MlllsQxpaationv. CA. G.R No.185220,July27,2009,594SCRA 139.
7 G.R No. 177024, Oct 30, 2009.
CHAPTER Vlll 707
jURISDICTION AND REMEDIES
failure to attach material portions of the record. However, the CA should bend
back a little when the petitioner subsequently attaches the missing materials to
its motion for reconsideration. As a general rule, petitions for certiorari that lack
copies of essential pleadings and portions of the record may be dismissed but
this rule has not been regarded as absolute. The omission may be cured. 1
The CA has three (3) courses of action when the annexes to the petition·
are insufficient. It may (1) dismiss the petition/ (2) require the submission of
the relevant documents, or (3) order the filing of an amended petition with the
required pleadings or documents. A petition lacking in essential pleadings or
portions of the record may still be given due course, or reinstated if earlier
dismissed, upon subsequent submission of the necessary documents or to serve
the higher interest ofjustice.3
7. RULE ON VERIFICATION AND CERTIFICATE OF NON-FORUM
SHOPPING.
a. Rule if co-parties are being sued in their individual e2pacities.
In Petron CorPOration and Peter C. Maligro v. NLRC,4 it was
pointed out that the reliance of the Court of Appeals on the ruling in Loguias v.
Office of the Ombudsman/ when it dismissed the petition is misplaced
because, unlike the instant case, the co-parties therein are being sued in their
individual capacities.6 Thus, the certification on non-forum shopping signed by
only one of two ·or more petitioners is defective, unless he was duly authorized
by his co-petitioners.
b. In case petition is fLied by a corporate entity, a corporate officer
who is a co-petitioner therein need not co-sign the Verification and
Certification on Non-Forum Shopping.
In the same case of Petron, the Court of Appeals dismissed the petition
for certiorari thereat filed by the herein petitioners on the ground that the
Verification and Certification on Non-Forum Shopping was defective because
co-petitioner Peter C. Maligro was not a signatory thereto. Maligro was being
impleaded in the case as the former Visayas Operations Assistant Manager of
Petron's Visayas-Mindanao District Office at Lahug, Cebu City. The Supreme
Court, however, ruled that considering that Maligro derives his standing or
personality in the case from Petron, the certification on non-forum shopping
executed and signed only by the corporation benefited Maligro such that the
1 AifltllWilesColp<xalioov.Zanora,G.R. No. 148247,hlgust7,2006,498 ~59, 69.
2 last parag~ of Rule 46 of he RUes of Coort.
3 Sualv. CA. G.R No.150819,July27,2006,496 SCRA 760,767-768.
4
G.R No. 154532, Oct. 27, 2006.
5 GR.No.139396,Aug.15,2000,338SCRA62.
6 NfAe lhat the petitioners illoquias ae he mayor, vice-mayor, and three members of ft1e ~ board of San Mguel,
ZarboangadeiSur. The said arpatieswere charged ~violationofRA. No. 3019 illheirvarlouscapacilies.
708 BAR REVIEWER ON lABOR lAW
attachment of said certification to the certiorari petition should be deemed
substantial compliance with the rule on certification on non-forum shopping.
c. In a certiorari petition involving a corporation, the Secretary's
Certificate authorizing a representative or agent to sign the
verification and certification ofMn-forum shopping is necessary.
As held in University ofthe East v. Pepanio and Bueno/ as a general
rule, the Board of Directors or Board of Trustees of a corporation must authorize
the person who signs the verification and certification against non-forum
shopping of its petition. But the Court has held in Cagayan V:dley Drug
Corporation v. Commissioner oflnternal Revenue/ that such authorization is ·
not necessary when it is self-evident that the signatory is in a position to verify
the truthfulness and correctness of the allegations in the petition. Here the
verification and certification were signed by petitioner Dean Eleanor Javier who,
based on the given facts of the case, was "in a position to verify the truthfulness
a.'!d correctness of the allegations in the petition."
8. NO BOND REQUIRED IN RULE 65 CERTIORARI PETITION.
Sang-an v. Eguator Knights Detective and Security Agencv, Inc}
instructs that the requirement of a cash or surety bond as provided under Article
229 (223] of the Labor Code only applies to appeals from the orders of the
Labor Arbiter to the NLRC. It does not apply to special civil actions such as a
petition for certiorari under Rule 65 of the Rules of Court. In fact, nowhere
under Rule 65 does it state that a bond is required for the filing of the petition.
9.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 tlie decision
of the DOLE Secretary,4 the NLRC5 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
1 G.R No.193897,Jat 23, :~J13.
2 G.R.No.1&1413,Feb.13,2008,~SCRA 10,18-19.
3 G.R. No. 173189, Feb. 13,2013.
4 The 2014 case d Ptircrlco Sevi::e EnErprises, Inc. v. Phitr<llco WOOm ~ d Genuile t.m
Olga12liions (PMJ-AGI..O), G.R No. 180962, Feb. 26, 2014, rei!aaled the liE M lhe rncnlalJ:xy li"g d a rrotion b'
le001Sidelii:xljxkr tl the i1stmJtkxl d a~le 65 petition b' oeOOai lnm the decisixl d lle DOLE Seaelary.
s As~ i1 Sectia115, Rule VII d 1he 2011 NlRC Rules d Prttedre, fJtf ooe motion b' ~lithe NLRC
decislx1 iom the me pilty shall be entertai1ed.
s Only one (1) motion fer recmsidelaliM d the decision d the BI.R a the Oftice d lle DOLE Seamy illle eKeltised D1eir
appelae ~ shall be abwd. (Sedioo 20 ~ Sectioo 21], RIE XI, B<d V, Rules tl ~ lhe Lm
Qxle, as ll1lended by Depal1ment Oaler No. .w.m. Series d 2003, ]Feb. 17, 2003], !l1d as re-rurilered by llepatrent
0a1er No. 4Q.M3, Senes ot 2008 [Oct. 30, 2008D.
CHAPTER VIII
)URISDicTION AND REMEDIES 709
motion for reconsideration is a pre-requisite for the filing of a special civil
action for certiorari. 1
The reason for this rule is that in labor cases, a motion for
reconsideration is the l!lain and adequate remedy from an adverse decision
of the DOLE Secretary, the NLRC and the BLR Director. It has been long
settled that the filing of a motion for reconsideration is a condition sine qua non
to the institution of a special civil action for certiorari under Rule 65 of the
Rules of Court, subject to well-recognized exceptions (See below for the enumeration
of these e1ceptions). The law intends to afford the tribunal, board or office, an
opportunity to rectify the errors and mistakes it may have lapsed into before
resort to the courts of justice can be had. Certiorari cannot be resorted to as a
shield from the adverse consequences of a party's own omission to ftle the
required motion for reconsideration?
It is a basic tenet in law that when an administrative remedy is provided
by law, relief must be sought by first exhausting such remedy before resort to
i judicial intervention may be had. Failure to exhaust administrative remedies is
... fatal. 3
\
9.1. THE PHILTRANCO DOCTRINE
A motion for reconsideration should be filed even though it is not
required or even prohibited by tile concerned government office. This was
the rule enunciated in Philtranco Service Enterprises, Inc. v. Philtranco
Workers Union~Association of Genuine Labor Organizations (PWU-
4
AGLO). Thus, while a government office5may 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.
1 PQili1o TelephooeCcrpaa&rlv. Nab1a1 T~ Camtsi:xl, G.R No. 138295. kg. 28, 2003,410 SCRA
82, 88; Reptilkv. Express T~ Co., n:., G.R. ~ 141096 &147210, .fat 15,Dl2, 373 SCRA 316, 343;
Belra'dov.Abaos, Sr., G.R No.137266, Dec. 5,2001,371 SCRA459,464.
2 Seagl.G Sh~ en! TlliiSpCX!, n:. v. NLRC, G.R. No. 123619, Jllle 8, 2000; See also Ma1ayinJ ManggirJ<M3
I'd Slayfast A-is, R:. v. tlRC, G.R. No. 155306, kg. 28, 2013; M!l1daJe DiYjxr« 1i1wn Hoose Co., n:. v.
NLRC, G.R No. 161134, Mildl3, 2008; PLDT v. &lla, G.R No. 143688, Aug. 17, 2007; ~ v. NLRC, G.R. No.
116884, Mrd126,1998, 288 SCRA 129.
3 LWralonv. DepatnootdllD:t!lld ~ G.R No. 108951, March 7, 2000.
4
G.R No. 180002, Feb. 26, 2014. Atilough lhis case iWies adedsion d lhe DOLE Seaelay,lle pliqlle enuncialed
herei1 equatt 8!lPies b:l the NLR:.
5
Or pe!SO!l, bixJlal orlxml.
710 BAR REVIEWER ON tABOR I.AW
CHAPTER VIII
711
JURISDICTION AND REMEDIES
10. EXCEPTIONS TO THE RULE ON EXHAUSTION OF
ADMINISTRATIVE REMEDIES (FILING OF MOTION FOR 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
RECONSIDERATION):
decisions are, in contemplation of law, null and void ab initio; hence, they never
It bears to stress that the principle of exhaustion of administrative became final and executory. 3
remedies when a motion for reconsideration is required, is not an iron-clad rule.
This principle may be disregarded under the following circumstances: 2.
(I) When there is a violation of due process; JUDICIAL REVIEW BY CA OF DECISIONS
(2) When the issue involved is purely a legal question; OF VOLUNTARY ARBITRATORS
(3) When the administrative action is patently illegal amounting to
lack or excess of jurisdiction; 1. DECISIONS, FINAL AND EXECUTORY.
(4) When there is estoppel on the part of the administrative agency As a general rule, decisions or awards of Voluntary Arbitrators are
concerned; final, inappealable and executory after ten (10) calendar days from receipt of a
(5) When there is irreparable injury; copy thereof by the parties. 4
(6) When the respondent is a department secretary whose acts as an 2. JUDICIAL REVIEW.
alter ego of the President bear the implied and assumed approval
oft~ latter;
It is well-settled a rule, however, that the fmdings of fact and law made
(7) When to reqllire ~xhaustion of administrative remedies would be by the Voluntary Arbitrator may be reviewed by the court. 5 Judicial review is,
unreasonable; ...!
I
therefore, justified in certain. cases. 6 The Voluntary Arbitrator's decisions or
(8) When it would amount to a nullification of a claim; awards may thus be contested on the following grounds:
(9) When the subject matter is a private land in land case proceedings; (l) Lack or want of jurisdiction;
(10) When the rule does not provide a plain, speedy and adequate (2) Grave abuse of discretion;
remedy; (3) Violation of due process;
(11) When there are circumstances indicating the urgency of judicial (4) Denial of substantive justice; or
intervention; (5) Erroneous interpretation of the law. 7
(12) When no administrative review is provided by law; The Supreme Court, in many cases, has taken cognizance of petitions
(13) Where the rule of qualified political agency applies; and questioning ''final" decisions of certain administrative agencies based on any of
(14) When the issue of non-exhaustion of administrative remedies has the foregoing grounds. 8
been rendered moot.
11. CERTIORARI PETITION MAY BE FILED EVEN IF THE
CM Procedure, even beyood 11e 1Gi:alerxl<r day peOOd piMied i'llhe t.m Code !l1d Is ~ rules txt wl1il
DECIS.ION OF THE DOLE SECRETARY, THE COMMISSION l1e regkmeriay perixf set b' I\Jie65 peiDxls lllder lhe 1997 Rules d CM I'Ioame.
(NLRC), OR THE BLR DIRECTOR HAS ALREADY BECOME , lk1der Al1icle 229 !2231 d l1e Lm Code, lhe decisial d lie NlRC becomes i1al aterlen (10) calen<B' days fiom -
FINAL AND EXECUTORY. lhereof by lie ~· H!Mwer, a pcrty Is not prosaiJed tom tq a petition b' certioori wli1 aperixf of sixty (00) days
nm
tern 1100ce ct 111e denial tt h6 « ss
tr ll!COIISideraOOn ct 11e dedsb1 11e NLRC lllder Secbl1. Rule ct 11e RUes
This rule applies to the decisions rendered by the DOLE Secretary,' the oferut.
2 The decision d lhe llR Oiecb' or lhe Oftk:e d l1e DOLE Seaetaiy (11 cases d ~ tern decisions of l1e BlR
NLRC1 or the BLR Directo? (in cases which he decided in his appellate !:1m) shal beoome i1al Mel exooJay alblr len (10) dcrfs tern receipt 11ereo1 by lle pri!s, Iri!ss anm b' Is
jurisdiction). recoosideratioo is fled by~ paty thereil Mhi1 the me perixf..Orti one (1) l1'dioo b' recmsileialkxl d toe decisial d
lhe BLR or lhe Ollire d l1e DOlE Secrelaiy i11he exertise d f1ei' appellate jJisdicbl shal be a!owed. (Section 20
{bmeltf SecOOn 2111M1 XI, Boc.t V, Rules t ~lie Lm Code, as amended by Depa1mert Onler No. 40-03,
Ssies d2003, fFeb. 17, ~. ll1d asleiUOOered by !lepmertOiderNo. 40-F.@, Seils ct2008 [Oct 30,2008D.
3
TOOliiSCiiufoMenniaiQiege, Inc. v. CA, G.R No.152568, Feb.16, 2004.
4
1 Per Nm1a Federation af laboc [NFL] v. Laguesma, G.R No. 123426, M!rd1 10, 1999, The decisiln af lhe DOlE A11ic1e 276 (262-AJ, Laboc Code; No. 107, NCMB Priner oo Grievcrlce Machi1ery and Voi.Jntay Artliflalion.
5
Se::rel!ly shalbefinal ald executory after ten (10) days tioo1 ~'db!. Yet, ie l1e deciskJns aftle NL.RC 1\ilich, under Article Continental MiJble Caporaliln v. NlRC, G.R. No. L-43825, l.'a/9, 1988.
6
229 [223Jdlle I.SxlrCode, beaxne lila ald execuby after len (10) ~days tern ~flereofbylhepaties, l1e Uri:raft Industries i'ltemamal COiporation v. CA, G.R No. 134003, McRh 26, 2001.
decisioos d lhe DOLE Secretary !Eo become final aid executxy after len(10)talerdar days from~ tl1ered by the
7
Siine DOO!y~as. k1c. v. ~il, G.R No. 90426, Dec. 15, 1989; No. 107, NCM! Prineroo Grievance Madlilefy Cl1d
paties, !l1d rraJ also be bra.ghtkl the Court of Appeals by W<Jfaf a peliioo b'certilrari under Ruk! 65dthe 1997 Rules of VWllary Arbibation.
8
Uliaa1t lndus1ries International Corporntion v. CA, supra; Cootilental Maib1e CorporaOOn v. NLRC, supra

712 BAR REVIEWER ON lABOR lAW
3. ORDINARY APPEAL UNDER RULE 43 OF THE 1997 RULES OF
CML 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. 1-951 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 the Supreme Court.3
In Alcantara, Jr. v. CA,4 it was held that Luzon Development Bank is
still a good law. The introduction of the provisions of Section 2, Rule 42 of the
Revised Rules of Civil Procedure did not alter the ruling in said case. The reason
is that Section 2, Rule 42 is nothing more than a reiteration of the exception to
the exclusive appellate jurisdiction of the Court of Appeals, as provided in
Section 9, Batas Pambansa Big. 129, as amtD.ded.~
4. 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 fmal order or resolution of the Voluntary
Arbitrator. Thus, when petitioner in Mora v. Avesco Marketing Corporation/
filed before the appellate court a petition for certiorari forty-nine (49) days after
receipt of the decision of the Voluntary Arbitrator, the same was already out of
time since the 15-day period to file an appeal had already expired.
5. PAYMENT OF APPEAL DOCKET FEE WITillN PRESCRIBED
PERIOD, BOrn MANDATORY AND JURISDICTIONAL.
Upon the filing of the petition within the 15-day reglementary period
earlier mentioned, it is required under Section 5 of Rule 43 of the Rules of Court
, f'ItmiiJa!OO on May 16, 1995.
2 G.R No.120319,{)ctober6, 1995.
3 La Pella, klc. v. VA Rene Olreneo, G.R No. 117811, Oct. 25, 1995; S1ardad Beltic~ees lml- NAFLU v. Jua1
Bautista, GR No. 106202, Oct 16, 1995.
4 GRNo.143397,Aug.6,2002.
s J1s llneoded by RA No. 7902; See 1$ W l3ectric CooperaWe, klc. v. LEYECO Wfn1lloyees Lmn-ALU, G.R No.
15m5,<WJer19,2007.
6 See Section 1, iuelalion lD Section 4, of Rule 43 there<t.
7 G.R. No. 177414, Nov. 14, 2008.
l
CHAPTE.R VIII
)URISDICfiON AND REMEDIES
713
that the petitioner should pay to the CA clerk of court the docketing and other
lawful fees. Non-compliance with this procedural requirement is considered a
I sufficient ground for the petition's dismissal. Thus, payment in full of docket
fees within the prescribed period is not only mandatory, but also jurisdictional. It
\
is an essential requirement, without which, the decision appealed from would
r become final and executory as if no appeal has been filed.'
D.
SUPREME COURT
1.
RULE 45, RULES OF COURT
I. 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 jurisdi~tion 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 jiJrisdiction), any alleged errors committed by il in the exercise of
its jurisdiction would be errol)i of judgment which are reviewable by means of a
timely appeal to the Supreme Court and not by a special civil action of
certiorari.
t Such appeal from a final disposition of the Court of Appeals is a
petition for review on certiorari under Rule 45, and not a special civil action of
certiorari under Rule 65 of the Rules of Court. Rule 45 is clear that the
decisions, final orders or resolutions of the Court of Appeals in any case, i.e.,
regardless of the nature of the action or proceeding involved, may be appealed to
the Supreme Court by filing a petition for review, which would be but a
continuation of the appellate process over the original case. Under Rule 45, the
reglementary period to appeal is fifteen (15) days from notice of judgment or
denial of the motion for reconsideration.1
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.
1
Saint louis Un~, klc. v. COOcrn.Das, GR No. 187104, Aug. 3, 2010; ROOy Sheller~ and Reaty ~
CoipoiatDl v. Fam!m Ill, G.R No. 175914, Feb. 10, 2009, 578 SCRA 283, m; Ruiz v. Delos Sanms, G.R No. 166386,
Jm.ll, 2009,577 SCRA 29, 43.
2
Asian TilllSII'isslon ColpacDln v. CA, G.R No. 144664, March 15, 2004; See also Trazona v. CA. G.R No. 169712,
Mardl13, 2008; San tliiJuel Co1paatiGn v. CA, G.R No. 146n5, Jan. 30, 2002, 375 SCRA 311, 315.
 714 BAR REVIEWER ON lABOR lAW
A petition for certiorari under Rule 65 cannot be a substitute for a lost
appeal under Rule 45; hence~ it should be dismissed.
1
2. MAY RULE 65 CERTIORARI PETITION BE AVAILED OF FROM
CA DECISION TO THE SUPREME COURT?
This ·poser has been answered both in the affirmative and in the
. negative.
In answering this poser in the affirmative, it was held in Tomas
Claudio Memorial College, Inc. v. CA/ that a Rule 65 certiorari petition may
be filed if in issuing the assailed decision and resolution, the CA acted with
grave abuse of discretion, amounting to excess or lack of jurisdiction and there
is no plain, speedy and adequate remedy in the ordinary course of law. A
remedy is considered plain, speedy and adequate if it will promptly relieve the
petitioner from the injurious effect of the judgment and the acts of the lower
court.3
The aggrieved party is proscribed from filing a petition for certiorari if
appeal is available, for the remedies of appeal and certiorari are mutualiy
exclusive and not alternative or successive. The aggrieved party is likewise
barred from filing a petition for certiorari if the remedy of appeal is lost through
his negligence. 4 A petition for certiorari is an original action and does not
intenupt the course of the principal case unless a temporary restraining order or
a writ of preliminary injunction has been issued against the public respondent
from further proceeding. 5
In Cirtek Employees Labor Union-Federation of Free Workers v.
Cirtek Electronics, Inc.,6 it was conceded that respondent indeed availed of the
wrong remedy of certiorari under Rule 65. Due,· however, to the nature of the
case, involving workers' wages and benefits, and the fact that whether the
petition was filed under Rule 65 or appeal by certiorari under Rule 45, it was
filed within 15 days (the reglementary period under Rule 45) from petitioner's
receipt of the resolution of the Court of Appeals' Resolution denying its motion
for reconsideration, the Court resolved to give it due course. As Almelor v.
1 ~ 1/algg~ 1¥J Stlyfast Phis, klc. v. NtRC, G.R No. 155300, hig. 28, ~13; Malayq Kf4liscmlr¥J
Mcrgg~ sa Assodaled M.Jb hnericM Tcbaa:o COip. }hW<MW4GGAGAWA) v. ftssocialed Pflglo AITlefi31
nc.
Tcbaa:o COip., G.R No. 156613, Feb. 18, axl8; New Ever~. v. CA, G.R. No. 140555, Jt*j 14, 2005, 463
SCRA 284, 293-294; ~~Balk d 11e f'hW1es v. CA. G.R No. 129368, AIJJ. 25, 2003, 456 Phil 755, 787; <n1
Fl$rd0 v. 8aJtisla, G.R tG. 1021m.97, May fll, 1994, 232 SCRA 291, 298.
2 GR No. 152568,feb. 16,2004.
3 Citrg Natiooallrn:Jatioo AdrrilistJalion v. CA, GR No. 129169, Nov. 17, 1999, 318 SCWI255; See also P00i11o v. Ruddf
Lillz, Inc., G.R No. 196539, Oct 10, ~12.
4 ~ Maf¥JgagCM!lii¥J Stayfast Pl!ils, Inc. v. NLRC;SJV<!.
5 Sec!ioo 7, Rule 65, Rules of Cart
6 G.R No.190515,June6.~11,650SCRA656,663.
CHAPTER VII! 715
jURISDICTION AND REMEDIES
RTC of Las Piiias/ restates: "Generally, on appeal taken either to the
Supreme Court or the CA by the wrong or inappropriate mode shall be
dismissed. This is to prevent the party from benefiting from one's neglect and
mistakes. However, like most rules, it carries certain exceptions. After all,
I
'I"' the ultimate purpose of all rules of procedures is to achieve substantial
justice as expeditiously as possible."1
But in New Ever Marketing, Inc. v. CA,l and in the earlier case of
San Miguel Corporation v. The Hon. CA,4 the Supreme Court answered the
same poser in the negative because the Rule 65 petition was not proper since an
appeal was not only available but also a speedy and adequate remedy. Hence,
for failure of petitioner to file a timely appeal, the questioned decision of the
Court of Appeals had already become final and executory. 5
It is thus clear, according to Tirazona v. CA,6 that in case what is filed
is a petition under Rule 65 instead of Rule 45, before the Supreme Court may
treat the petition erroneously filed under Rule 65 as having been filed under
Rule 45, the same must comply with the reglementary period for filing an
..... appeal. This requirement is not only mandatory but also jurisdictional such that
failure to do so renders the assailed decision fmal and executory and deprives
the Supreme Colirt of jurisdiction to alter the fmal judgment, much less to
entertain the appeal.
In Malayang Manggagawa ng Stayfast Phils, Inc. v. NLRC, 7
petitioner, instead of filing a Rule 45 petition for review on certiorari from the
1" decision of theCA, filed a Rule 65 petition for certiorari to the Supreme Court
after 52 days from its receipt of theCA decision. Contrary to petitioner's claim
that there was no appeal or any other plain, speedy and adequate remedy in the
ordinary course of law other than this petition for certiorari, the right recourse
was to appeal to the Court in the form of a Rule 45 petition for review on
certiorari. For purposes of appeal, the decision of the CA was a final judgment
as it denied due course to, and dismissed, the petition. Thus, the decision
disposed of the petition of petitioner in a manner that left nothing more to be
done by the CA in respect to the said case. Petitioner should have filed an appeal
by petition for review on certiorari under Rule 45, not a petition for certiorari
under Rule 65, in the Supreme Court. Where the rules prescribe a particular
remedy for the vindication of rights, such remedy should be availed of.
1 G.R. No.179620,Aug.26,2008.
i 2 See!Bl~v.CA,G.RNo.142001,JUy14,2005.
,;..., 3
G.R No. 1o40555, .JUy 14, 2005.
4 GR. No. 146775, Jat ~. 2002, 375 SCWI3H, 315.
5
See IBl Sea Power ~ EniBplises, klc. v. CA. G.R No. 13827Q, June 28, 2001; Asoodation d klmQraled Sewtt
Foo:eofBisiiJt\ISFBJ-ALU v. Hoo. CA, GR. No.140150,Aug. 22. 2005.
6 <J.R. No. 169712, Meld! 13,2008.
7 G.R No. 155300, Aug. 28, ~13.
716 BAR REVIEWER ON lABOR lAW
3. A PARTY CANNOT FILE A PETITION BOrn UNDER RULE 65 AND
RULE45.
As a general rule, a party cannot file a petition both under Rules 45 and
65 of the Rules of Court because said procedural rules pertain to different
remedies and have distind applications.' In Panganiban Y. Tara Trading
Shipmanagement, Inc./ petitioner denominated his petition as one under Rule
45, but considering the grounds raised, he filed it as both a petition for review
under Rule 45 and a petition for certiorari under Rule 65 of the Rules of
Court. The applicab.le nde is Rule 45, which clearly provides that decisions,
final orders or resolutions of the CA in any case, regardless of the nature of the
action or proceeding lm>Jved, may be appealed to the Supreme Court through a
petition for review. 11ais mnedy is a continuation of the appellate process over
the original case. Recourse ~:nd~r Rule 65 cannot be allowed either as an add-on
or as a substitute for appe; Th.: procedural infirmity notwithstanding, the
Supreme Court treated this petition as one fil~j under Ru!e 45 only and
considered the alleged gra'+'e abuse of discretion on the part of the CA as an
allegation of reversible error?
4. RULE ON VERIFICATION AND CERTIFICATION OF NON-FORUM
SHOPPING IN RULE 45 PETITION.
Under Rule 45 of the Rules of Court, verification and sworn
certification against non-forum are required. Relaxation of these rules is
justified if there is subsequent and substantial compliance therewith. In the 2012
case of Auza, Jr. v. MOL Philippines, Inc., 4 petitioners' subsequent and
substantial compliance with the rules on verification and certification ofnon-
forum shopping was declared sufficient for the relaxation of technical rules.
Respondents here assail the Supreme Court's authority to entertain the instant
petition despite the defective verification and certification of non~forum
shopping attached to it. True, the verification and certification of non-forum
shopping was executed and signed solely by Auza without proof of any
authority from his co-petitioners. Thence, in a Minute Resolution dated
February 26, 2007, the Court required petitioners to submit such proof of
authority. In compliance therewith, petitioners thereafter submitted a
Verification and Certification of Non-Forum Shopping this time executed and
signed by Auza, Otarra and Jeanjaquet. Ample jurisprudence provides that
subsequent and substantial compliance may call for the relaxation of the rules.
t NagklililmJ MamJrooo sa Pi:op Reswtes, lnc.-5oollem Phlippiles Federalon ct l.tixr [NAtNIPRI-SPFI.) v. The
Hon. CA. G.R Nos. 148839-40, Nov. 2, 2006; See also G&S Trcmport Copo!a!b1 v. rA, G.R No. 120287, May 28,
2002, 382 SCRA 262, 273, b" Ill exceptiOO to 1his gereal !We.
z G.R No. 187032, Oct 18, 2010.
3 cq PCJJooa Phiippiles, Inc. v. U!Wersal Ccrving, Inc., G.RNo. 160966, Oct 11,2005,472 SCRA355, 359.
4 GRNo.175481,Nov.21,2.012.
I CHAPTER VIII
I )URISDlCflON AND REMEillES 717
f Indeed, "imperfections of form and technicalities of procedure are to be
I disregarded, except where substantial rights would otherwise be prejudiced."
I Due to petitioners' subsequent and substantial compliance, the rules should thus
be liberally applied in order not to frustrate the ends ofjustice.
"'\"
I
5. THE NEYPES DOCTRINE (FRESH PERIOD RULE}.
The Neypes doctrine, which was enunciated in the en bane ruling in
Neypes v. CA,' has standardized the appeal periods to afford litigants fair
opportunity to appeal their cases. For this purpose, the appellant is allowed a
fresh period of fifteen (15) days within which to file the notice of appeal in the
Regional Trial Court, counted from receipt of the order dismissing a motion for
a new trial or motion for reconsideration. This 'fresh period rule' also applies to
Rule 43 appeals from quasi-judicial agencies to the Court of Appeals and
Rule 45 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. There is no doubt, therefore, that this
c·._
'
rule applies to labor cases.2
E.
BUREAU OF LABOR RELATIONS3
L
j
"'i LABOR OFFICIALS HAVJNG JURISDICTION
OVER ARTICLE 232 [226] CASES
1. LABOR OFFICIALS CONCERNED.
Article 232 {226f of the Labor Code describes the cases falling under the
jurisdiction of the Bureau of Labor Relations (BLR). For purposes of clarifying the
otherwise labyrinthine issue of jurisdiction over cases mentioned in Article 232
[226], there is a need to cite first the following labor officials who exercise such
jurisdiction, to wit
· (l) Mediators-Atbiters(Med-Arbiters);
GR No. 141524, Sepl14, 2005.
EizaJelh Gagui v. Dejero, GR No. 196036, Oct 23, 2013.
3
Relevlllt f'rovism: Al1ide 232 {226), Lalor Code.
4
Mi:le 232 [226). 13urea1 a t..m Relalioos. - The &JreaJ c1 l.tixr Relations llld 111e ~ Retmns CMiklns nlhe
regiooa olbs afle Depa1meot of t.m, shal.hM ugoo llld ex~ d1aiy to act, a1 flei" IM11 ililiaiM! or upon
I~
requestd eilheror bah parties, oo al i'le"-mial Mel i"tcHJnioo CXX"Ifict, in! al.d"ISflU(es, grievlllces orJXdllems arm,
ti"orn or aflecti1g lim~ relaioos i1 a'l ~. v.tJel1er agrillbal or non-agrilmal, except U1ose arm,
mille ~00!1 or ilepretaOOn of collective balgaining agreemellt which shal be the subject d grievcn::e
proceOOre Clldlcr..oontly lllililr.m1.
The Bureau mall hM fifteen (15) 'MXki'I.J dais t> aa oo 100or cases~~ subject t> extensioo by agreement or t1e
J)ilties.
~.

718 SAR REVIEWER ON lABOR lAW
(2) DOLE Regional Directors; and
(3) BLR Director.
2. MED-ARBITER.
The term "Med-Arbiter' refers to an officerin the DOLE Regional Office
or in the BLR authorized to hear and decide representation cases, inter-union or
1 DOLE Secretary in the DOLE regional offices. They are in charge of the
intra-union disputes and other related labor relations disputes.
While the Labor Code refers to this official as "Med-Arbiter,"2 it should,
however, be construed to mean "Mediator-Arbiter.'.J Most recent DOLE
issuances4 have specifically changed such reference to "Mediator-Arbiter" in their
provisions. This is but proper since the word "Med"5 obviously is an abbreviation of
the word "Mediator. "
Incidentally, Article 232 [226], which is the only provision of the Labor
Code treating the jurisdiction of the BLR and its Med-Arbiters, never specifically
mentions Med-Artirers in its provision,6 thereby creating the confusion as to which
article of the Code the Med-Arbiters really derive their jurisdictional aufuority from.
It may be implied, however, that the mention in this article of the LRDs, of which
the Med-Arbiters are part, suffices.
7
Indeed, under the law and rules, Med-Arbiters are not merely ordinary
functionaries in the BLR; they are possessed of certain powers not even available to
1 Sed001 !il. ~ I, Book v, Rules Ill ~Iemen! l1e L.m' COOe, as CITII3I'ded by Depatnent Older No. 40-m, Seres ct
2003, JFeb. 17, 2003]. Excepted from the Mld-Aibia's ~ ae cases oo v.tth the Regional DiedDr exertises
!XiJiMIIIld extiJst.oe j:JrisdDkxl sOOI as~ b' unkln regisbalioo. peitOOs b' an:ellalkln of uni:x1 regislralblllld
~ b' exani1alioo ct lri:xls books ct aa:ooots.' Tlis Is per Sed003, ~ R~1. Rules ct Prooodure
00 MediatiooMlibal, v.i1k:h prrMdes: 'SEC. 3. Jtmfdkln of toe Regilnalllim'.· The Regilnal Oiredoc shaR exeldse
aijila ll1d extiJst.oe )lisdctbl tMJ ~ b' lrix1 ~. pelims b' an:elalion ct IJlicn regislralblllld
~ b'exanilatiood IX1ioos books d acaJOOIS.' See also Bales v. Bbli!, G.R No. 120220, .kl1e 16, 1999.
2 The em ~ 1s used n1 cEd nile ~ CJtk:les ct 11e l.I.W Code: ArtJes 230 12241 ~ a
de::isbls, cxdefs or awards), 268 l256J ~ issue i1 agariled Rbistrneuls), 2.69 [257) (Pelbs i1
lllOigaized ~). Z72t2591 (.6weal from certifK:alioo electkln !Jdels), n1292 rzni(Mscellooeoos prM;ms),
pcrag~ (i) thelec:t. ~tt. MedArbiler 1s mrefened t1 atal i1 htle 232123iJ.
ttsM1ere, ha.vewr, i1 Ole L.m' COOe Is l1e !1m 'Mldiab'-Arbilel" used or died.
4 &rch as Depab1lenl Older No. 40-F-03, Serilsd 2008, issued oo Ocilber ~. 2008. This Oepiltnert Order was issued by
11e DOlE Secretly to ~ 111e dlMges i1 the L.m' Code brooght mttrt 11e amerxmems i1!roduced llereil by
RA No. 9481 [Eifedive.klne 14, 2007).Ardlerlssuml is DepcWnertOrderNo.~15, Seres ct2015 [Sepemer07,
2015], entiled 'Flriler Amenlfrlg Depmenl {lrder No. 40, Seres ct 2003, ~ tle ~ RUes ll1d
RegUafilnsdBook Vcttle Labor Ceded the~. as Amended.'
s All!loo;lh Mhai apeOOd lhatY«lllkl siJriff M lis M atdgemert d aYollltl.
6 Althoogh as enr "n
noted, MedMlfter 1s berg re!ened other~ of the t.m eooe.
MY. Sal Biscuis, klc. v.la;juesma, GR No. 95011, April22, 1991, W'e l was slaled: 'Under Alticle 232 [226) ct lhe
L.axr eooe, as llllfl!lded, the Burear r1 Labor Relali:lns (BI..Rl, ct v.Wl the med-abiler Is M dlicef, has the lolloNing
j.ri;tixl xxx. [IJle BlR has the OO;)i1al il1d ~ jllisdk:tion ID, ilB' *.decile al dspules, grievMces or problems
ilisi'g 1rcxn cr alfedi'I;J labor-nmagement relams i1 al wor1qllaces l'i1ell1er ~or ~ri:ulllral. Necessatt. i1
lhe exercised 1hls iJrisdidion over Iebel-management relaOOns, lhe med-abler has l1e amity, cri,Jinalllld exclusive, Ill
delemine f1e existence dan en'4JklYer~~ between lleJfts.'
CHAPTER VIII
jURISDICflON AND REMEDIES
719
Labor Arbiters, such as injunction power. 1 They have the authority to issue writs of
injunction in appropriate cases/ the detennination of which is addressed to their
3
sound discretion. Additionally, they are also granted contempt powers. 4
3. DOLE REGIONAL DIRECTOR
The Regional Directors are the duly authorized representatives of the
administration and enforcement of labor standards within their respective territorial
5
jurisdictions. Although, like the Med-Arbiters, they are not also specifically
mentioned in said article, it is a known procedural rule, however, that in addition to
their jurisdiction over cases falling under Articles 1286 and 1297 of the Labor Code,
they also have jurisdiction over certain specified cases contemplated under Article
232 [226] of the same Code such as disputes concerning union registration and
cancellation of union registration as well as CBA registration or deregistration cases.
4. BLR DIRECTOR.
j The BLR is headed by a Director who hears and decides certain specified
~ cases over which he has either original or appellate jurisdiction. In m<my cases, his
~
name, instead of the BLR, is usually the one impleaded as public respondent in
I
!
certiorari petitions tu the CA or subsequent appeals to the Supreme Court Thus, one
would encounter countless cases ftled against such luminaries like Pura-Ferrer
Calleja, Cresenciano B. Trajano, Benedicto Ernesto R. Bitonio Jr., and Hans Leo J.
Cacdac, among others, who are sued in their capacity as BLR Directors.
IL
CASES PROVIDED UNDER ARTICLE 23212261
The following are the general classifications of the cases mentioned in
Article 232 [226] falling under the jurisdiction of the said officials, to wit:
1 lkldertle 1990 NLRCRUesdProcedlle, L.m' MXasveepeo.brstfplled ijllclvepcM~J.lbvever, llis prrNision
Is no knJer bnl i1 ils 2002, 2005 nl3111 wrsioos. The ~eam behi1d Is deletion IsM ll1lerIG:Ie 225(e) {21B(e)l ct
l1e l.m'Code, ijllcWe pa.wr Is plEd ooly tl tle 'f.aTrriml' v.tlich d:JioSi refers b lle N.RC's vcrilus cNsioos
n1 mt>lhe Labor Albes.
2
Sedia1 5, ~le XVI, BOOt Vd 11e Onrilus RUes ~ lhe L.allor Code: 'Sec 5.lrjnixls. - No 8J'ClORrY
ijJ1dklns or restai1DJ «dee i1 tiTf case~ or !JlMb;l cltd a1m cf!ip(E shal be issued lrf tiTf aut or cOler
ritf. On t1e cOler hald, l1e ab d lhe Presideot, l1e Seaelily d Labor, l1e Conllissirt, lle Lalor MliB or Mld-
MRJ may er10i1 tiTf oral~ iMlMvJ or ClisirYJ lnxn tiTf case pendiY,j before Flff Iisak! cb ordfdals v.ilkil wm
resmled lcx1hlm may cause poe or irepcrable dcr1l8Je b tiTf d toe piJiies ID the case or serbJstf aflect soda! or
lm'ollli: sl!miily.'
3 IAlkl v. J..a,juesma, G.R No. ~75. J111e 9, 1997, 273 SCRA 109. But its issuanoo s1ni1 be illmlltlcrlce \Wit the
!JfMds pn:M!&:I by 1aw il1d 1s deBmi1albllllJSI ben the I1WOef prMied by 1a.v.
4 Sedi:ln4, Rule XVI, Book V, IUlstllrrjllementthel.alorCode.
5 See Alticle 128, labor Code.
6
\4sitmlll1d em:rooment JK1I'I'IliS d lhe DOLE Secrelify il1d tis duly ClltOOzed ~. 11e OOLE Regional
!em.
7 See Alticle 129, L.m' Cede, iMM1g monelafy daRns d PS,OOO or less.
:9-k·~-"
720 BAR REVIEWER ON lABOR lAW
(a) Inter-union disputes;
1 since it would merely require a simple validation process by the DOLE Regional
(b) Intra-union disputes; and
(c) Other related labor relations disputes. z
11-A.
INTER-UNION AND INTRA-UNION DISPUTES
1. INTER-UNION OR REPRESENTATION DISPUTE.
An "inter-union dispute' or "representation dispute" is one occurring or
carried on between or among unions.3 It refers to a case involving a petition for
certification election filed by a duly registered labor organization which is seeking to
be recognized as the sole and exclusive bargaining agent (SEBA) of the rank-and-
file employees or supervisory employees, as the case may be, in the appropriate
bargaining unit of a company, finn or establishment.4 If there are two or more
legitimate unions involved, it also refers to any conflict between and among them
concerning the issue of which of them should be certified as the SEBA for purposes
of collective bargaining with the employer. Broadly, it covers any other conflict or
dispute between legitimate labor unions. 5
Note must be made of the latest innovative amendment of the Labor
Code's Implementing Rules introduced by Department Order No. 40-1-15, Series of
2015,6 which has expressly repealed the entire provision7 on "Voluntary
Recognition" of the Implementing Rules on Book Vand replaced it with the freshly-
minted mode of securing the status of a sole and exclusive bargaining agent through
a "Request for SEBA Certification" or "Request." Voluntary recognition is
therefore no longer allowed and is effectively replaced by the Request mode.
The Request basically is in the nature of an inter-union or representation
dispute. While it may not involve the actual conduct of a certification election when
it is made in an unorganized establishment with only one (1) legitimate union,
1 llikrov.ltn~ G.RNo.168475,Jltf4,2.007;8aJtislav.rA,G.R. 123375, Feb.28, 2005,452SCRA406,420.
2 Sediln 1!BI {bn1ef¥ Sedixl2),1M! XI. Bed v. rues t ~ 11e lila Code, as lll'II!IKBII1f 0epa1me1t Order
ttl.o10f.OO, Seriesd2008 (Oct 30, 2008t Artide 232 \226J,IilaCode; Poi¥ k1sUucfu1s No.6; vmv.
ttl.69188, Se!t 23, 1986; M. Y. SM Biinits, klc. v.Laguesma, G.R. No.90011.~22, 1991.
T•.
G.R.
a lllkrov.ltn~~;BIUislav.rA, . .
4 Sediln 1J91, IUl Ul, Nct.B MinJal d Pmcetkes b' Coociaix1 a1d PJari.'e Mediatioo Cases;~ 2[Delilitioo
d Terms), NCM3 Ptiner on Sd<e, Pi:kelh;lllld Lockoot, 2nd 8iil1, lleceriler 1995; lliOOlo v. Hen. ~ Ilk!.;
BaJtista v. CA,Ilkl.
·5 v.
Soction 1(xl,!Ull, Bed ~ tl ~Iemen! lhe l.rbor eooe.
as anended l1f Depment Order ttl. 40-03, Series of
2003, [Feb. 17, 2.003].
lssuOO on ~07, 2015.
M:uatt Is Rule VII [Vokl1faly Reco:Jnitial], Bed V, ~ 1o 01Jiemenllhe l.rbor Code, as lml!1ded l1f Depa1ment
OrderNo.40.Q3, Series d2003,[Feb. 17, 2003J.lhis pi'CNism has been repealed llld replaced by anew prtMsioo entitled,
'REQUEST FOR SOLE AND EXCLUSIVE BARGAINING AGENT (SEllA) CERilFICATION',Plf'Slml tl lhe ane00ment:
illrtxkK:ed l1t Secbl3, Depment Order 1-b. 4G+15, Series of 2015 (Sepenter 07. 2015]. enlled 'Flllher ArnendivJ
Oepa1ment Order 1-b. 40, Series ct 2003, Amendi1g lhe ~ IU!s llld RegU;Um rl Book vct lhe Lalor Code
ct lhe Ph~iles, as Mlended.'
J CHAPTER VII(
)URISDICfiON AND REMEDIES 721
Director of confinning the majority support of the members of the bargaining unit
for the requesting union and once validated, the requesting union is immediately
certified as the SEBA without conducting a ·certification election, however,
certification election will have to be conducted under any of the following situations:
(I) When the Request is made in an unorganized establishment with only
one (1) legitimate union, and the requesting union or local faill' to complete the
requirements for SEBA certification during the validation conference before the
DOLE Regional Director, such Request should be referred to the Election Officer for
the conduct of certification election, 1 in which case, such certification election
should now be under the jurisdiction of the Mediator-Arbiter.
l (2) When the Request is made in an unorganized establishment with
more than one (1) legitimate labor organization, in which case, the DOLE
Regional Director, before whom Requests are required to be filed, should refer the
I
Request directly to the Election Officer for the conduct of a certification electionz in
accordance with the Rules;3 fuJ.d
(3) When the Request is made in an organized establishment, in which
case, the Regional Director should refer the same to the Mediator-Arbiter for the
I detennination of the propriety of conducting a certification election. 4
It is clear from tie foregoing discussion that there is a jurisdictional
interplay between the DOLE Regional Director and the Med-Arbiter, a subject
which will be discussed further in the sections below dwelling on the jurisdiction of
these labor authorities.
2. INTRA-UNION OR INTERNAL UNION DiSPUTE.
An "intra-union dispute' or "internal union dispute' refers to a conflict
within or inside a labor union.5 It may refer to any conflict between and among
officers and/or members of one particular union, including grievances arising from
any violation of the rights and conditions of membership, violation of or
disagreement over any provision of the union's constitution and by-laws,6 issues
1
Seaion 4, rue VII ctlhe IU!s t ~ lhe labor Code, as cmanded by l:lepmst()der No. 40-1-15, Series of
:Ml15 (Seple!lter07, 2ll15]. TheeledixlShaud be oondJx:ted iHICOOidCilCe IWh Rule IX llererl.
2 Secbl s. rue Vll,llil.
3
Re!enDJ to Rule IXoflhelil<rCode's ~Rules, asMlellded by Depamnen!Onferttl.4Q.I.15, Series d:Ml15
~7.2015].
4
Seaion 6, Rue VI~ lbi:J. it aa:adMce v.ilh Rules Vlllllld IX, lbkl.
5
Dioknov. Hen. cao.l<K:, ~.cili'Q Sautislav. CA, supr.1.
~;
6
SecOOn 1[bbl. Ru'e I, BookV,Il«<.;Mnov. Hen. Caalac, supm; Bautista v. CA. ~ra.
:~
·~ ..
 CHAI'TER VIII 723
SAR REVIEWER ON lABOR lAW
722 )URJSDICfiON AND REMEDIES

n) Such· other disputes or conflicts involving the rights to self-

over contro~ supervision and management of its internal affairs, or disputes arising
1

2 organization, union membership and Collective bargaining -

from chartering or affiliation of a union. .
I) Between and among legitimate labor organizations; or
3. RUNDOWN OF INTER-UNION AND INTRA-UNION CASES. 2) Between and among members of a union or workers' association.
In accordance with the Labor Code's Implementing Rules, as amended irl
D-B.
2015,3 the following is a rundown of all possible inter-union/intra-union disputes:
OTHER RELATED LABOR RELATIONS DISPUTES
a) Cancellation of registration of a labor organization filed by its members
1. MEANING OF "'THER RELATED LABOR RELATIONS DISPUTES."
or by another labor organization;
b) Conduct of election of union and workers' association officers or "Other related labor relations dispute" refers to any conflict between a
nullification of election of union and workers' association officers; labor union and the employer or any individual, entity or group that is not a labor
c) Audit/accounts examination of union or workers' association funds; union or workers' association. 1
d) Deregistration of collective bargaining agreements;
More specifically, it may refer to any of the following:
e) Validity/invalidity of union affiliation or disaffiliation;
f) Validity/invalidity of acceptance/non-acceptance for union (a) Any conflict between:
membership;
g) Validity/invalidity of impeachment/expulsion of union and workers' (l) a labor union and an employer, or
(2) a labor union and a group that is not a labor organization; or
asso.::iation officers and members; 4 t (3) a labor union and an individual who is not a member of such
h) Validity/invalidity of Request for SEBA Certi[tcation (Replacing
"Voluntary Recognition" as a mode of securing sole and exclusive bargaining union;
agent status); (b) Cancellation of registration of unions and workers' associations filed
i) Opposition to application for union and CBA registration; by individuals other than its members, or group that is not a labor
j) Violations of or disagreements ovei any provision in a union or orgailization; and
workers' association constitution and by-laws; (c) A petition for interpleader involving labor relations.1
k) Disagreements over chartering or registration of labor organizations and
2. FIRST SITUATION: Conflict between a labor union and the employer.
collective bargaining agreements;
I) Violations of the rights and conditions of union or workers' association fu addition to the first two kinds of disputes mentioned in Article 232
membership; [226], that is, inter-union and intra-union conflicts, a 3nl set of disputes is provided
m) Violations of the rights of legitimate labor organizations, except therein as falling under the jmisdiction of the BLR, to wit
5
interpretation of collective bargaining agreements; and
"Article 232 {226]. Bureau of Labor Relations. • The Bureau
of Labor Relations and the Labor Relations Divisions in the regional
1 Sedkx11i81. Rule Ill, NCM3 MnJa1 of Procedtres b' Coociicml Clld PreYenWe Medm C8ses; Append"IX 2[Definition offices of 1be Department of Labor, sball have original and exclusive
oiTemsl, tQ1B PlinerCXI Slri<e, Pi::keti"iJ Clld l.ockoot, 2nd 8fO:ln. 0ecenter 1995. authority to act, at their own initiative or upon n:quest of ei1her or both
2 Sedkx11 [bbl. Rule I, Bock V, llil.; DDmo v. Hoo. ~&.,a; BaJista v. CA, SUpia
3 See Sedkx11, Rule XI, Bock vollie~ tl ~ lle taxrCode, as pre'lklustf il1lellded by Depment Older No.
parties, on all inter-union and intra-union conflicts, and aD disputes,
~.00. Seiies of 2008[0d00er 30, 20081 Mlich desi;lnaled lhis seciJn as "Section 1{AT, cl1d as U1her anended by grievances or problems arising from or affecting labor-management
Section 18, Depabnent Order No. >IG-1-15, Seiies ri 2015 [Seplentler07, 2015), riled 'Ftl1her Amend"ng Depa1ment relations in aD workplaces, whether agricultural or non-agricultura~
Oller No. 40, Seiies rJ 2003, AmeOOi1g the ~ Rules illd Regulations ofBoQ( voflle Lalor Code oflhe except those arising from the implementation or interpretation of
Phqlpi1es, as Amended.'
~ Tlis is illhe Mule of an iller-lllioo dispute whk:h may be OCC&'li:lned by the illrockJclixi of anew mode of seamg the
status rJ sde Clld e1dJsNe ~~ilg a]el1l {SEBA). The Laxr Cole's ~ R!Jes, pabllal1y it RlAE VII oo
'VOOniay Recogililion" was ~Ddt repealEd ll1d ~by a~ new p«MskJn entitled 'REQUEST FOR SOLE
AND EXCLUSIVE BARGAtlNG AGENT (SEBA) CERTIFICATION' This was i1lroduced by the crnendatay provisioo of 1
Sedioo 1 [fll, ~I, Book V, Rules 1D ~the 1..8!or Code, as emended~ Depa1men1 Older No. 40.oo, Seres of
Section 3, Deparbl1el1t Order No. 40-~15, Seliesof2015 [SepientEJ07, 2015], lbll. 2003, [Feb. 17, 2003]. .
s llspu\es a-s: the il1erprelaion cr ~of the CBA are consilered as grievable issues oogrJizalle by ll1d shook! 2 Sedioo 1flll"(bmedy SedkJn 2), Rule XI, Book V, Rules 1D ~the Laxr Code, as anended by Depatment Onler
be processed lhrough the gfieYcrlce rra:hi1ely ll1d volunlafy albiralion proWled il the CBA ilsel. (See Al1icles 273 [260] No.4().F.{)3, Selies !i2008{Da. 30, 2008].
!rid 274[261], labor Code).
·;·•:

·.,.......
724 BAR REVIEWER ON lABOR lAW
collective bargaining agreements which shaD be the subject of
1
grievance procedure and/or voluntary arbitration."
The afore-underscored part of this article constitutes the first enumerated
situation of "other related labor relatiom dispute," that is, a conflict between a,
labor union and the employ~ or more broadly, a labor-management relatiom
dispute. It is neither an inter-union or intra-union dispute.
In La Tondefia Workers Union v. Secretary of Labor/ the union
contends that the intra-union dispute mentioned in Article 232 [226] does not
include the examination of accounts of the union because it contemplates "intra-
union conflicts affecting labor-management relations." The Supreme Cow.t
considered this argument untenable. It held that conflicts affecting labor-
management relations are apart from intra-union conflicts, as is apparent from the
text of said article. Such examination of union accounts is an intra-union dispute and
thus does not fall under the other classification of disputes in said article concerning
labor-management relations disputes.
An example of a labor-management relations dispute is the matter of
determining tlte existence of an employer-employee relationship between the
employer and the members of the union/s participating in a certification election case
pending before the Med-Arbiter. This issue certainly does not fall under the class of
either inter-union or intra-union dispute. Since under Article 232 [226], the BLR has
the original and exclusive jurisdiction thereover, necessarily, in the exercise of this
jurisdiction, its Med-Arl>iter has the authority, original and exclusive, to determine
the existence of such relationship. 4 And once there is a determination as to the
existence of such a relationship, the Med-Arbiter can then decide the certification
election case.5
3. SECOND SITUATION: ConOid between a labor union and a group that is
not a labor organization.
Ordinarily, if the conflict is between two or more legitimate labor
organizations, such is to be correctly denominated as an "inter-union" dispute which,
broadly covers any conflict or dispute between legitimate labor unions.'
But what if one of the contending parties is a group which is not a labor
organization, much less, a legitimate one, as this tenn is understood within the
context of the law?1 How should that dispute be legally denominated?
, ERV&~·
2 Mk:1e 232 [226), t.axrCode; Pok.y m1ruc1ions No.6; Vilaav. Trajcllo, G.R No. 69188, Sept 23, 1986.
3 GR No. 96821, Dec. 9, 1994,239 SCRA 117, 124.
4 MY. Sal~. K v.l.aguesrrs,GR No. 95011,J14ri22, 1991.
5 Besav. Traj;m, !Necb'dllleii.R,G.RNo. 72409,Dec.29, 1986, 146SCRA501.
e Sectioo 1[x1 ~ I, Brd V, ~les tl ~ lhe Lm Code, as 5l1l!llded by !Jepa1rrent Older No. <W-03, Series al
2003, [Feb. 17' 2003].
ii;l'
;.~
I
I CHAPTER VIII
jtiRJSDICfiON AND REMEDIES
725
This kind of dispute should be properly termed as "other related labor
relatiom dispute," the second enumerated situation under this classification.
4. miRD SITUATION:·conftict between a-labor union and an individual who
is not a member of such oniOn.
If the dispute concerns a labor organization and any of its officers or
members, it appropriately falls under the ~egorization of "intra-union" dispute.
However, if the individual party is neither an officer nor a member of the labor
union, in no way can it be called an intra-union case. It is proper to be technically
denominated as "other related labor relations dispute, " the third enumerated
situation under this classification.
5. FOURTH SITUATION: CanceUation c( registration of unions and workers'
associations filed by individuals other than its
memben, or group that is not a labor organization.
The controversy may be correctly designated as "intra union" when
ti1e petition to cancel the registration of a labor union or workers' association is
initiated by its officers and/or members and when it is lodged by another labor
t~
.\ union, it may be appropriately denominated as "inter-union" conflict
r However, a petition to cancel a labor mganization's registration can
I neither be designated as "intra-union" nor "inter-union" if it is filed by individuals
~ other than its officers and/or members or by a group that is .not a labor organization.
This kind of conflict should be properly tenned as "other related labor relations
dispute, " the fourth situation under this classification.
tI 6. F/F111SITUATION: A petition for intemleader involving labor relations.
Within the.context of labor relations, the term "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 ftom suits they may
otherwise bring against it2 .
~e. disliv}lished mn o11er ~d agaizabls, a~~ or allicxlls~ tr 11e pmay Jlllll(9td
1
colect.ta bagailirJ.(Micle 219(g).fl1~)1 LaluCode; See also Sd:xll(13}. ~II, toJB M!nJaldPitceckles b"
Conc::iaix1 cn1 ~ Medalkxl cases). On 11e o11er hcnl, a'legitBe ~ agc11izalkrl' rerers t ·tl'tf labor
·aganilaiXln nile piME secb' Ieljslered or~ \\11 lheOepRtmtcnm n1 ~ila:mdm! will
lletmCodecnlls~nEs. lilclJdestl'tfbr.n:horlacalhdd.(SeeAI!De219(h){212(h)],tmCcde;
fqdes II fBJistabl II tm Olgaiizl6nsJ en! rl {PRMsms Camm btle Regisllabl d tm Cligaizalioos ll1d
Wakefs' Associi6lls], il IelaOOn t Sectioo 1(eel rue I, BOOt vd 11e IU!S b ~ fle Labor Code, as anended
by llepartnert Older No. 4().()3, Series d 2003, feb. 17; 2003}; SM "tte! Olp. fnllbyees Uni:Jn.PT&M:> v. San
t.t.Jue(MagrgflRxb:t ~Uixl-fJDM>, G.R tel. 171153, ~ 12.Dl7).
· Sed0'11 (z].!Ull, lbt V; 'Rules t ~ 11e tmQxle. as lll1lnlad by 1Jep1Rret Older No. «J.()3. Series d
2
2003,[Feb.17, 2003],
'~~'-"..",,..
726 BAR REviEWER ON lABOR lAW
ORIGINAL AND EXCLUSIVE JURISDICI'ION
m.
OF MEJ>..ARBITERS, DOLE DIRECTORS AND BLR DmECTOR
Having known the various cases afore-described, a discussion of the
respective jmisdictions of the Med-Arbiters, DOLE Directors and BLR Director
over these cases may now be made with greater clarity.
1. ORIGINAL AND EXCLUSM JURISDICTION OF THE MED-
ARBITERS.
The cases falling under the original and exclusive jurisdiction of the Med-
Arbiters are as follows:
(1) Inter-union disputes (representation or certification election
conflicts), such as:
(a) Request for SEBA certification when made in an unorganized
establishment with only one1 or more than one (1) legitimate
3 The DOLE Regional Directors have original and exclusive jurisdiction
unioP 2 or in an omanized establishment; or
(b) Petition for certification election, consent dection, run-off election
or re-run election;
(2) Intra-union disputes;
(3) <Y.her related labor relations disputes; 4
(4) IP.junction cases;5 and
1 k1 case the~ is na:le il"' U10igOOized esl;j)ljslll8tdl rriJ one {1) legiinale llill, a1d the~ lrix1 cr
b:a1 fails tl CQllllee 11e ~ b' SEBA crii:abl cllilg lhe vaidml crimE befiJe the DOlE Regkllal
llecb", illlttidl event, sud1 Request sllOljj be referred b lle Elettioo Ofticer b' lle anb:t d ceAfl:atioo BecOOn
{Sedioo 4, ~VII It the RUes tl ~tlhe l.aba' Code, as anended by DepmertOrder No. 40-1-15, Series ct
~15 (Separber07, ~15]. The electkrl siW;t be axdJc8l il cmxda1ce Mil RUe IX ~BU.), v.tli:h ~V«lii
meallhal sud1 Cl!llli3iJn electkrl siWd 11CfN be OOIWi!d ll1der lhe ;.riscidil1 d lle Medaa-Amili!r b v.t1om lle
·E!edkxl Officer is dLtfiJoll1d tl repat the ootome d lle eledixl ~- Cerlail~. lle IJ1SIDJ ca1ili:alioo eledkx1
cm:.t be tlllldOOed oo:lerlle <iedNe d lhe DOlE leP4 Dia:trwlhoollle ~ d toe t.lediab"-Aibi!Jv.txl,
IIlier 11e law, is the one possessed ct lhe crij1a n ea:llsM! jlrisdiciDl oa CEIIi:abl eletiln C3ieS. idJdi1g 11e
plldmalkx1 ct ile v.iri1g SEBA. (See Section 21, lUI IX, BOOt V, RJies tl k11J1enBt lie tm Code, as adered
nnrmeredby Sedkln 17, Depannent Order No. 40+15, Series d 2015 tsePBrGer 07, 3115). This section was IP.IilaiJ
IU1tered Sedkln 20, per Oepmert Order No. 40«1, Series d 2003, [Feb. 17, 2003). IU i was ~ re-
!Uitered tl Sedkln 19, perOepmen!OrderNo. o40f.03, Series d2008 [Oct 30, 2.00!D.
2 Secb15, iUl VI~ nrelalkln trues vm lild IX. Depmat Order No. 40-1-15, Series a3115 (Sepbrber07, ~15).
3 Sedkln 6, rue VI~ luelalbl t1 RUes VIII a1d IX, Iii
4 Secb11 (i). ~ ~ I!OOt v, Rules t1 ~the l.aba' Code, as aneOOed by IJepilb8t Order No. 40-m, Series d
2003, [Feb. 17, 2003); Section 4, Rule XI, BOOt v athe rues b ~ 11e l.aba' Code, as anended by 0epmen1
Older No. 40-Rl3, Series ct 2008 [Oclcber 30, 2008). See ., Article 23212261. l.aba' Qxle; Poky k1siruttklls No. 6;
Vluv. Tr<4000, G.R No. 69188, Sepl23, 1986.
s ~1M 11e amty t issue~ IISiiiJ!IIIdels (TROsl a1d n ct ijn:bl il Wt1Xiale cases.
SedXJi 5, ~XVI, I!OOt Vcllhe Ormb.Js RIJes ~ l1e Lm COOe staes: 'SeeS. kJMoos.- No~
~ cr ~ order iliJTf case ~ cr !JifMb:l cit cl a laiKr dispute shal be Issued by IJTf aut or other
ri\y. On lhe lfler hald, lle Ollice ollhe Presilert fie Salay ct Lalor, l1e CamissDt, l1e Lalor ArbiiJ (J ~
ArbiiJ lr6f e!jli'IIJTf or a1 acts iMlMlg or !1isiYJ tom IJTf case ~ befiJe IJTf d sail ofti:es or olfdcis vmi:h i not
~ btrMtttlr6f caJSe grave or lrepaable lliiT8;Ie kl IJTf ct the paties tllhe case or serioosty ailed social cr
eali100i: sllility.'
I CHAI'TER Vlll
juRISDICTION AND REMEDIES
727
' (5) Contempt cases.1
On No. l[a) above, the Mediator-Arbiter will have jurisdiction over a
Request for SEBA Certification if it is made in an organized establishment as
well as in instances where it is made in an unorganized establishment with
more than one (1) legitimate organization. Under this situation, the DOLE
Regional Director, before whom the said Request is filed, is required to refer it to
the Mediator-Arbiter for the determination of the propriety of conducting a
certification election; consequently, the Mediator-Arbiter would now have the
jurisdiction to take cognizance of the certification election?
(NOTE: See further discussion on this topic in the Immediately succeeding
section below, in relation to the original and exclusive jurisdiction of the DOLE
Regional Directors~
2. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE DOLE
REGIONAL DIRECTORS.
over numerous cases.3 But net all of them are relevant to or connected with the three
(3) classes of cases4 expressly mentioned in Article 232 [226]. Only the following
cases cognizable by them are related thereto or connected therewith by vitiUe of laws
and rules:
(l) Visitorial cases under Article 289 i274),5 involving examination of
I books of accounts of independent unions, local chapters/chartered
locals and workers' associations;
r
.! 1
2
Sedioo 4, Rule XVI, Boct V, Rules ID ~the Lalor Code.
Sectioo 6, Rule VII, il relatioo lo Rules VIU a1d IX, !lepal1ment Older No. 40+15, Series cl ~15 [Seplell"00"07, ~15].
3 All the cases rogill3lle by the OOlE Regiooa !iectrs are as bb.s: (a) 'llsbial fllSpE!dion) cases under Article 37; (b)
VISitorial fnspedioo) llld enftra:rnert cases l.l1der Article 128; (c) V!Sibial cases under Article 289 Tl741. ilvoM1g
examaoon ct boc*s c1 ax:oLIIIs c1 nlependent lllioos, b:al ~ 1cca1s and workers' IISSilCimls; (d)
~safely a1d td1 vWioos; (e) Smal rooney dains cases liVg from laiKr Slaldads vDa!ilns i1"' ll11lUI1l
llli exr.eedi1l 115,000.00 llld llli ~ Yilh adain b' l8ilslalem!nt l.l1der Article 129; (f) Cases relaEd t1 prMIIe
reaui1mert llld placement~ (PRPAs) b' b:al ~ sud1 as: (1) ~for lcense or derialllered;
(2) ~ b' suspensioo or l3lCEIIatioo « icense by reasm d I100iistliMl olfenses; (3) ~ for ilegal
recnnnent; a1d (4) Petition tr cbsue c1 agency; (g) Cases Slbrrilled b'vokmy allil!abl il m capadly as Ex.QIIicb
VoU!Iary Albllabs(EVAs) l.llderOepment Order No. 83-07, Seriesd2007; (h) Lmn regislraliaH8aled cases. such
as: 1) ~ tr 111i:ln regislrml d ildependent ll1kx1s, b:al c.llapBs a1d vmers' assoc:iablS; 2) Jlefilioo tr
denial d applk;alix1 for registralkln ct sakllllions; 3) PeliiORs b' lwocatmiJ Cii1Celation d llYjslraliln of saklllli:lns; (i)
Noli:e c1 merger, cmsddali:xl, alliatDI a1d ct~qe cl ncrne d sail lllilns a1d or petilicn b' derialllerett. li)
CBA-re!aled cases, sud1 as: 1) ~ for registltioo ct ~ CBAs or pelitioo fiJ deregistatioo
therect, 2) Peition b' denial of regislratoo of siljlefnterplise CBAs (J derial of dl!egistratioo lherecl; and (k) Request for
SEBA cd;atioo m 11100e il "'trogmed eslablisllnent wilh crit one {1) legilinate uni:ln.
4 These ire (1) i'IIB"-IIli:ln di;puteS; (2) i1lrcHriln dispules; a1d (3) Other relaled IOOOI"relations disputes.
5 'Mide 289 W4]. VISitorial pallel".llle Seaeay of Labor a1d ~crhis IUy aulhorized represenlative is hereby
~ 1o i'q.lre iiiD the frlardal aciMies ct leglimafe laiKr OlgMzaOOns ~ lhe fiVJ d a ~ lJider oath
and ddt supportEd by lhe ~Witten coosent d at least twentt perceli (20%) d lhe blal ~ cllle IOOor orga1izalion
concerned and b examine !heir books d imllllts and otler recads Ill delemi1e COflllicllce cr ~Mil lhe
lim a1d b proseru1e aey ltiolalions of the law and the IJ1ion oonsllu1ion and byw: Pr<Mded, That such ilquiry cr
728 BAR REVIEWER ON lABOR LAW
(2) Union registration-related cases, such as:
a) Applications for union registration of independent unions, local
chapters and workers' associations;1
b) Denial of application for registration2 of said unions; 3
c) Petitions for revocation or cancellation of registration4 of said
unions· 5
(3) Denial of registration of single-enterprisl CBAs or petitions for
deregistration thereoe and
(4) Request for SEDA certification when made in an unorganized
establishment with only one (1) legitimate union.
8 independent unions, local chapters/chartered locals and workers' associations.
On No. 1 above, it is imperative to point out that although by nature, this is
an intra-union dispute, the rules, however, treat this separately from those generally
applicable to intra-union disputes9 and accordingly vest jurisdiction thereover in the
DOLE Regional Directors and not in the Med-Arbiters.
Darles v. Bitonio10 is clear on this point. It was held here11 that while intra-
union conflicts, such as examinatioliS of accolillts are under the jurisdiction of the
exarinatioo shal not !Je cooducled dui'rg the sixty (60~ freedan period noc Whltoe thirty (30) days im1ediately
prece<fing 1he dale ofeledixl of union offrials." (As amended by Section 31, RepJti; Act ttl. 6715, Math 21, 1989).
1 Section 3, Rule 1: of the tled-Arbtation Rules states: 'SEC. 3. JurisdictXxl of the Regixlall:i"ed!r.- The Regional DirettJr
shall exercise o;~ilal a1d exciJsNe iJrisdi;tion <MJ apptalb1 for union reg6talion, petililns fa CCI1Celatb1 rJ. union
regi<;IJatioo 1¥1d ~for exarination rJ. u~ books d account;.' See also Sedioo 1, Rule II, Rules of Procedure oo
lledia!ioli-Art.
a a
2 See Article 243 ~361 11e labor Code l'll1ich prMles: 'M. 243 [236]. Dena regis!Jaioo; awea. a
The decision toe
Labor Relations DMs«ln il f1e regilnal office denyi'g registrabl mat be appecied by lle ~ lriln kllle BlleaJ
Yttil ten (10) days from~ d notk:e tiered.' . does not fail to complete the requirements for SEBA certification during the
3 Referri1g kl ildeperdent lllions, local chaplels llld \'Krl:ers' associcfu\s, as ~llshed from federations, nalional
trials, ilciJsby tllia'ls, tade lllion cenll!ls !lld V1eir klcal chaplers/cll<nllo::as, iliEs In! rnerrber agaizations
Yttlose appica1m fa registration as wei as defial or CII1Cellalion or revocalil1 d regislr.iion Is cognizlille by lle BI.R
Dilicilr il til ~ilallnl exckJsM! )JI'slicioo fllfla).
4 Spedicaly died as exa!plil1 kl Med-Mlie's )Jistiln is cmcelation d lriJn registibl, IMJ' Section 1~. RUe I, B<xi:
v, rues kl ~lle Labor Code, as armded by~Jepam~l~Onler No. 40-03, Series d 2003, feb. 17, 2003!.
s Section 3, Rule Jl rJ. 11e Med-Arblralioo Rules. S~Vc~; See a1so Sedion 4, rue XI, Book vct 111e rues kl ~ 11e
Labor Code, as anerKied l7j OepmentORler No. 40f.03, Saiesd2008 p:tM 31, m).
' ~~from cases tM:lM'g ~CBAs Yttiil fallllderlle01Vi'8Pistiln dllellROim.
1 secuoo 4 ~ Sedbl51. Rule XI, B<D: v,~U~sm~toe t.mCode. as anended b'f{)epalmelt Oller ttl.
40-m, SEries d 2003,lfeb. 17, 2003J, In! as rerurbered b'f Depa1mert QtEr No. «<f..J, SEries d 2008 [Ott 30,
2008J.
a Sedion 4, Rue VII, DepaVnent Older No. 40-1-15, SEries d 2015 ~07. ~5}.lhlertlis sAailn, tile DOLE
Regooa Dmttlr, bebe v.t1om 111e ReQue& fa SEBA Cril::atioo is lied, shcxit '*
11e Request fa SEBA Cerificalion
kltoe Mecfm.MJS.br lle deEm'ilation d lle p!qlrietf d ~ a c:erft:abl eledioo, i1 Wli::lt case. toe
M!dia!or-Arbilernowhas lhe )liscfdiookl decide l1e cri1Catioo election issue.{Sedioo6, ~VII, i119abl b Rules VIII
81d IX. Depment()derNo. 40-1-15, Series ct 2015~07. 2015D. ~ ubenale h:ltm the Request fa
SEBA Cef1ifiadioo Is made n111 unorgaized estmishmenl Mil mcxe f1ll1 me{1) IEI;Illi18e labor Ofglllizakln, 11e Med-
Artn!r taies <MJfnxn the OOI.E Regional Oiectlr il the maller dllea!TQ ll1d rescMYj lle Issued cer!ik:ation election.
9 See Section 3, RUe XIII, Boo:i: V, Rules tl ~fle!AxrCode, as 11111!1ld1K!by0epiltment0Rlerttl.~3. Series
d2003,lfeb. 11. 2003J,Ilus, a~fa excrrilaOOndba<*sd lmlH'il'ljUSUirib Arti:le 289 [2741, iltoemnceof
alegationspef1ailiY;! b avidation ofMi:le 250 !241l,s00uld~be lrealed as 111 iltauloo dispuil.
1o G.R No. 120220, ..lllle 16, 1999.
11 001g l.aToodenaWOO<ersllnionv. Seaelllyoft.m, G.Rttl. 96821,0&::.9,1994,239SCRA 117.
CHAmRVIII
729
JURISOIITION AND REMEDIES
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 procedme for their resolution.
Consequently, original jurisdiction over complaints for examinations of union
accounts is vested not in the Med-Arbiter but in the DOLE Regional Director. This
is apparent from Section 31 thereof.
But there is a need to point out though that the foregoing rule applies only
when the· request for examination of books of accounts concerns only those of
If what is involved are those of federations, national unions, industry unions or
·trade union centers, and their local chapters/chartered locals, affiliates and
member organizations, the jurisdiction thereover is vested with the BLR Director
and not with the DOLE Regional Director.
On No. 2(a] above, as far as workers' associations are concerned, if they
operate in more than one region, the application for registration should be filed with
t1e BLR or the Regioual Offices, but tither way, it should be processed by the
2
BLR. This is so in order to have a unified resolution of the merits of the application
by one, single agency.
On No. 4 above, when the Request for SEBA Certification is made in an
unorganiud establishment with only one (1) legitimate union, it should be filed
with the DOLE Regionai Director who will make an immediate determination on
whether there is majority support by the members of the bargaining unit to the
requesting union. Once the majority support is confirmed and the requesting union
validation conference, the requesting union is immediately certified by the DOLE
Regional Director as the SEBA without conducting a certification election.
As a consequence of this latest change in the Rules, it may be said that the
DOLE Regional Director, in a way, is now empowered · to rule on a
"representation" issue which, technically speaking, fulls under and is covered by the
general class of "inter-union disputes" that falls within the jurisdiction of the
Mediator-Arbiter. In fact, the very Request itself speaks of"SEBA Certification," a
relief that is not the consequence of "Voluntary Recognition"- the original remedy
intended to be replaced by this Request mode.
For it is clear that under the previous repealed rule on voltmtary
recognition, the DOLE Regional Director never issues a "SEBA Certification";
1 Section 3, Rule II of the tled-AIIlir<Dn Rules states: 'SEC. 3. Julisd"dioo of D1e Regional !Am.- The Regiooai!Jiectlr
shal. exerdse ~ Md exWsNe jJisclclion CNer apptaion fa urix1 regisialiccl, pe6lions tr Cii1CEiatioo d union
regisbalion ll1d COfl'Cllainls for exll1i1li:x1 of u~ books of acault.'
2 See ~ ~. Section 1. Rule 10. Rules 1o Implement the 1..00or eooe. as emended b'f 0epnnen1 Older No. 40-03,
Series d 2003, !Feb. 17, 20031; See also Section 1, Rule II, Rules of Procedure oo MedaticnMlllali
 730 BAR REVIEWER ON lABOR lAW
what is done is the mere recordin( of the "Notice of Voluntary Recognition"
jointly submitted by the employer and the union to the DOLE Regional Office
which issued the recognized labor union's certificate of registration or, in the case of
local chapter, where the charter certificate !llld the other documents required under
Article 241 [234-A] were submitted and filed. 2 Since it is crystal clear Wlder existing
laws, rules and jurisprudence that it is the Mediator-Arbiter who has the original and
exclusive jurisdiction to issue a "SEBA Certification" under any of the modes3 of·
selecting a SEBA, it is not surprising if the issue of the validity of the exercise of
similar power to issue the SEBA Certification by the DOLE Regional Director
would be raised in an appropriate proceeding.
But the rule is quite clear that the Mediator-Arbiter would acquire
original jurisdiction over the Request for SEBA Certification under the following
situations:
(1) In case the Request is made in. an unorganized establishment with
only one (1) legitimlite union, and the requesting union or localfliils to complete
the requirements for SEBA certificution during the validation conference bt:fore the
· DOLE Regioncl Directoi", in which event, such Request should be referred to the
Election Officer4 for the conduct of certification election5 which necessarily would
mean that such certification election should now be conducted under the jurisdiction
of the Mediator-Arbiter to whom the Election Officer is duty-bound to report the
outcome of the election proceeding.6 Certainly, the ensuing certification election
1 lklder fie preWlus repeaed povisal, tt is stated Vlat r.t1ere lhe nOOoo d \Witay ~ is sufiDent it bm, nunter
atd SliJstl1ce atd r.t1ere l1ere is no ol1er regisEred 1m' unkJn ~ mt h! bagaililg unl ~ lhe DOLE
Regklnal Ollioo, lluwjllle LlixJ Relatioos DMsioo shal, v.ilhillen (10) ~ iom ~of lhe nOOoo, reaxd the !oct of
Vlillliry ~ it iiS rosk!r c1 legllinale 1a1xr um; atd nolify 11e 11m rir1 cmcemed. {See the repm~ priMsQl
c1 Sedia13, ~VII. Book v, rues ., ~the LlixJ Code, as illlel1dedb'f Depment Order No. 40-03, Series of
2003, !feb. 11, 21.\13D. . referring to them as falling under the jurisdiction of the "BLR"
Wm l1e nOOoo d vttllfay recogriOOn is i1suftkient it bm, flll1tJer cnl SlbUlce, l1e OOI.E Regkxla Ofb shal,
MlilllescrrepeOOd, dy the lm'lllioo oils~ atd acMse Hb coowr.tl h! nooessay ~- W1ere
ne11er the I!ITC'krfer nor 11e 100or m failed to ax11J1e1e the R!QUianenls u \dl1try leCO}likrl wiUlitlitf (30) days
tun ~d l1e aMsory, lie OOI.E Regkxla Olli:e shal reU1l l1e nob II wkmy recognilioo b;jel1er v.il ails
~ d<wnenlsviMKxi preidcetl its~. (Sediln 3, IUl VI, !look V, tid.).
2 Sedia11, rue VI~ 6ook V, Rules tl ~ lle Lax:r Code, as II!Blded by Depment Ortfer No. 40@, Series II
2003,[Feb.17,20031.
3 Besides lis rrole, te ol1er mx1es ci seledi1g oc desiJflali'iJ a SEBA arecerffmkln election, 0011Seft9ecliln, IIIHlll
eledbl, atd laletj, Hll election.
4 "'3eccOn Ollice(" refefs tl M oiiX:er ci lle 81JeaJ d L1ixJ Relalioos CJ f1e l..m'Relalions DMsioo it the RajJnal Oftioo
lllflorimd to cxrdJct rer1licaOOn eiE:cbls, eledioo d lllkln a!icers atd ollerbms d elections atd referenda (Sedioo 1
~. IU! I, atd Se:tioos 2-5, Rule XII, Book V, RUesb lrl1llementthe LmCode, asanended byOepamrtORierNo.
40-03, Series 112003, [Feb. 17, 2003D. I is l1e 8edirl 011k:er v.f1o shall haYe anro1 of the pre-elecOOn IXI1ference Mil
eledbl ~- (Section 1. ~e IX, Book v, lli':l.).
s Sedioo 4, R1E VII d lle Rules lo inlJierrei lhe LlixJ Code, as snendel by Depment Oilier No. 40+15, Series of
2015 tsefllentJer07, 2015j. Theeledkln shoUd beCXX'Idudl!d il aamlanceWil Rule IX thereof.
· 6 lklder the Rlles, v.itli1 24 hoors from 11e li1al C3lVasS d YC!es, there bei1g a v<*l election, 11e Electkx1 Ollk:er shall
tmrit 11e lllOOIIIs of the case., lhe Med-Arbiteri'Alo shal, •it the sare peOOd frool ~ ct lle mWes cn1 result
d elecOOn, iSsue M Older prodairnirtJ the results d the elecOOn Md certifyi'g l1e ookln v.tlich obt:i1ed the ~ d the
vaid VOOl5 cast as the sole <IOd exctJsive bagli'li'g aJEf1l it the su!Jjed balgaiq un~ xxx. (!he prtMsbt entitled
CHAPTER VIII 731
JURISDICTION AND REMEDiES
cannot be conducted under the directive of the DOLE Regional Director without the
participation of the Mediator-Arbiter who, under the law/ is the one possessed of the
original and exclusive jurisdiction over certification election cases, including the
proclamation of the winning SEBA.2
(2) In case the Request is made in an unorganized establishment with
more than one (1) legitimate union, in which event, the DOLE Regional Director
is required to refer the Request directly to the Election Officer for the conduct of a
certification election3 which should be in accordance with the Rules4 that state, in its
Section 2, Rule VIII, that the "(Request) shall be heard and resolved by the
Mediator-Arbiter." Resultantly, it is still the Mediator-Arbiter who should take
cognizance of the Request which, in this case, is the equivalent of the Petition for
I Certification Election over which he exercises original jurisdiction.
I (3) In case the Request is made in an organized establishment, in which
case, the Regional Director should refer the same to the Mediator-Arbiter for the
l
Ii
determination of the propriety of conducting a certification election.5
3. ORIGINAL AND EXCLUSIVE JURISDICTION OF THE BLR
DIRECTOR
At the outset, it must be stressed that reference in the law and pertinent
i' rules to "BLR", as fur as the issue of jurisdiction is concerned, should appropriately
mean "BLR Director." This is as it should be because "BLR" is a generic term that
includes not only the Med-Arbiters and DOLE Regional Directors but the BLR
Director himself. More significantly, there is jurisprudential variance in the cases
cognizable by the BLR Director, in relation to Med-Arbiters and DOLE Regional
Directors, hence, referring to the cases properly falling Wlder the jurisdiction of the
"BLR Director'' as such would be more appropriate and less confusing than simply
'Prtx:lamaliarllld catification d fle resUt d the eleclial' slnJtd nor be denon'ilaEd as Sdln 21, Rue IX, Book V,
RUes.,~ l1e Lax:r Ccxfe, by Wb.Je d h! ~ ORiered by Secloo 17, Depmert Ortfer No. 40+15;
Saiesci 2015 [SepieRtJer 07, 2015). Tlis seclioo was <X\Jila~ llJIIiJen!d Seclial20, perDepmertOrckJ No. 40-03,
Series ct 2003, !feb. 17, 2003J, brt I was~ l&illll'ileled b Seclial19, per Depatnert OrckJ No. 4llf.OO,
Seriesci2008 [Oct. 30, 2008). Tlis ~2015l'&fUI'beltg waselrecal tvrugh said Seclial17Yifi:hsl*s: 'Sedkxls
SlJJsequefttl irsemd new pm'llsi:lns M<Vtr leiUrbered sections ere rerumered ~.').
1 AriX:Ie 23212261. LlixJ Code.
2 See Sedia121, rue IX, 6ook v, Rules ., ~ 11e LlixJ Code, as adefed I8UIDered by Sdln 17, Depcr1ment
OrckJ No. 40+15, Sails 112015 tsePBrter 117, 2015]. This section was <X\Jilally OOililered Sedirl21l, per Depment
OrderNo.40-03,Seiesd2003,feb.17,~1buUwas~llHIJfltemdt!Secion19,perDepmen!Order
No. 40.f.m, Series of 2008 [Oct 30, 2008l
3 Seclial5, Rue VII, Rules b ln'fllemenllle LlixJ Code, as ill1el1ded by llep<menl Oilier 1-h 40+15, Series ci 2015
[September 07, 2015].
4 Referri1g b Rule IX of lhe Rules b 1n1J1emert lhe LlixJ Code, as anended by Dep<l1ment Order No. 40+15, Series of
2015 ~ 07, 2015). Nc.Ce llliSI be made lhall'lflen the Request f<r SEBA Cd:aial is made il O!Qalized
estillistmeut, il v.ii:h case, the feJkxla ll'eclor sholil Ieier 11e sare b VIe Mldiala"-Aibireru 11e cleEmilalkx1 of l1e
propriety d OOilducliYJ acel1ificalioo electiln. (Section 6, Rule VII, lbi:l. it accordance willl rues VIII all IX, lli:l.).
5 Seclioo 6, Rule VII, it re1atioo 1D Rules VIII Md IX, DepatnEJd:Oitler No. 40+15, Series d 2015 [Sepmber07, 2015).
 CHAPTER VIII 733
BAR REviEWER ON lABOR lAW
732 JURISDICTION AND REMEDIES

The BLR Director exercises two (2) kinds ofjurisdiction, namely: original provisions of the federation's constitution and by-laws. It agreed with the following
observation of the BLR (Director):
and appel/Jlte. 1 The following cases fall under the first
"Rule XVI lays down the decentralized intra-union dispute settlement
(1) Complaints and petitions involving the application for registration, mechanism. Section I states that any complaint in this regard 'shall be filed in
revocation or cancellation of registration of federations, national the Regional Office where the union is domiciled.' The concept of domicile in
unions, industry unions, trade union centers and their local labor relations regulation is equivalent to the place where the union seeks to
2
chapters/chartered locals, affiliates and member organizations; operate or has established a geographical presence for purposes of collective
(2) Request for examination of books of ar.counts of said labor bargaining or for dealing with employers concerning terms and conditions of
organizations3 under Article 289 [274] of the Labor Code; employment
4 "Tbe matter of venue becomes problematic when the intra-union
(3) Intra-union disputes involving said labor organizations;
(4) Notice of merger, consolidation, affiliation and change of name of dispute involves a federation, because the geographical presence of a
5 federation may encompass more than one administrative region. Pursuant
said unions and or petition for denial thereof; to its authority under Article 232 [226], this Bureau exercises original
6
(5) Registration of multi-employer CBAs or petitions for deregistration jurisdiction over intra-union disputes involving federations. It is well-
thereof; 7 settled that FFW, havi!lg local unions all over the country, operates in
(6) Contempt cases. more than one administrative region. Therefore, this Bureau maintains
As far as No.3 above is concerned, the 2010 case of Atty. Montano v. Atty. original and exclusive jurisdiction over disputes arising from any
9
Verceles, 8 is relevant Petitione? here claimed that under the Implementing Rules! violation of or disagreement over any provision of its constituti:m and by-
laws."1
it is the DOLE Regional DirectOr and not the BLR (DirectOr} who has jurisdiction
over intra-union disputes involving federations which, in this ~. pertains to the
election protests in connection with the election of officers of the federation
t IV.
APPELLATE JURISDICTION OF THE BL...-q_ DIRE<..'TOR
(Federation of Free Workers [FFW]). In finding no merit in petitioner's contention,
the High Cowt pointed out that Article 232 [226] of the Labor Code clearly provides AS DISTINGUISHED FROM THAT OF THE DOLE SECRETARY
that the BLR (DirectOr} and the Regional Directors of DOLE have concurrent
jurisdiction over inter-union and intra-union disputes. Stich disputes include the 1. NECESSITY FOR JURISDICTIONAL DISTINCTIONS.
conduct or nullification of election of union and workers' association officers. There The distinctions pointed out above between the respective jurisdictions of
is, thus, no doubt as tO the BLR (Direcror)'s jurisdiction over the instant dispute .the Med-Arbiters, DOLE Regional DirectOrs and the BLR DirectOr acquire
involving member-unions of a federation arising from disagreement over the significance in determining which of the cases over which they exercise jurisdiction
may be appealed to the BLR DirectOr and those that may be appealed tO the DOLE
1 The~~ d lhe BlR Dim' is disaJssed i1 i:ldlerseclixl bela«. Secretaiy, both of whom, based on law and jurisprudence, are possessed of exclusive
2 As cisti'glitoed from -petibls b' ccn:elatkln d legislratioo d Rlependent lrilns. b3 ~ 8ld v.ake!S' appellate jurisdiction over certain cases decided by the Med-Arbiters, DOLE
assa:ia1cns, a; proWled i1 Sedm3, RUe Hdlhe Medllrlllr.miRUes ~tal slales: "SEC. 3. Juisdicloo d lhe Reglooal
lhcb'.· The Reglooal {il!Cb' sha'l exen:ise ~.. 8ld exciJsNe )Jicltirl OlfS applcalon b' lriln regisetion,
Regional DirectOrs and BLR Director.
pe0oos u Cll1teiE6xl c1 m regisbatkxt 8ld f.a11llai1ls u exari1liDl aliD\s ~lim d a:an.·See aso Section
4, RUe )Q, BOOt vd lle IUls '>~the Labor Code, a; anended by llepmlent 018 No. 40.f.Q3, Series d
The case of Abbott Laboratories2 is instructive. Accordingly, the
2008 [Octmer30,-2008) 8ld Sedioo 1, ~II, IU!sdProceckre oo ~. appellate jurisdiction of the DOLE Secretaiy is limited only to the review of
3 Refeni'G '> i!deraloos, nabla~ trixls. i1duslry lllklns 8ld 1a1e triln oenes, z ~ished tom ildependent IAlioos, decisions rendered by the BLR Director in the exercise of his exclusive and original
b:a~ lrldv.akas' assocai:lns.
4 ld.
jurisdiction. The DOLE Secretaiy has no jurisdiction over decisions of the BLR
s Sedioo 5, lUI IV, BOO\ V, Rules b ~lheLaborCode,m ll11l!llded byOepcrtirentOrderNo. .mJ, Series d Director rendered in the exercise of his appellate jurisdiction over decisions made by
2003, lfoo.17, 2003) lrldz lH1henrnended by Depa111'eltOtderNo. 40005, Series'OI2005, Sept 13,2005. Med-Arbiters and DOLE Regional Directors in the exercise of their respective
6 As~ tan cases iMMrJ si"gle-enlerpri CBAs ~tal fal \Rierlle j.lisditOOn d.theOO!.E Regiooal Diecb'.
7 Sedioo 4, ~ XI, Boat Vd lle ~ b mpenent lhe Labor COOe, m ii1Blded by Oepment Order No. 40f.Q3,
original and exclusive jurisdictions, the reason being that such decisions are final and
Series d 2008~0ctlbB' 30, 2008]. inappealable.
GR No. 168583, Jutt 26, 2010.
Petitioner was eecel lie Natiooa VK:e Plesidert a! FFW ilthe NalXm CooYerdiln held at SIJJi: kli!maOOnal Hole!
<mJ~ (ly OlfS lhe sftliYJ qJpOSitkxllrld 1Xote5t of respoll(!ootAitf. Emesb c. Veroeles, a delegale '> 11e ~
ll1d presldentaflklivefsily oflhe East En1Jioyees Association (IJEEA-Ff'll)v.tlk:h is 111 aftiliale llliln ofFFW. 1 ~suppled.
2 Abba! l..aborallJies ~. klc. v..Abbolll.alolatlries ~ lkliln, G.R No. 131374,.1111.26, 2000.
1o SeeSedion 6of Rule XV, i1 relm1 mSedion 1a! Rule XIV It Book Va! the Rules'> ~lhe Labor Code.
734 liAR REVIEWER ON lABOR lAW
CHAPTER VIII 735
jURISDICTION AND REMEDIES
2. APPEALS FROM DECISIONS OF MED-ARBITERS.
are appealable directly to the DOLE Secretary by virtue of Article 272 [259] 1 of the .
Decisions in the cases falling under the original and etclusivejurisdiction LaborCode. ·
of the Med-Aibiters are appealable as follows:
b. Variance in the rule on appeal in unorganized and organized
(1) Inter-union disputes (representation or certification election conflicts) establishments.
-to DOLE Secretary1
(a) Request for SEBA certification when made in an unorganized The rule on appeal in certification election cases in unorganized
establishment with only one2 or more than one (1) legitimate establishments is different from that of organized establishments, to wit:
union3 or in an organized establishment- to DOLE Secretary (1) Appeal in unorganized establishments. - The order granting the
(b) Petition for certification election, consent election, run-off election conduct of a certification election in an unorganized establishment is
orre-run election- to DOLE Secretary not subject to appeal. Any issue arising from its conduct or from its
(2) Intra-union disputes4 - to BLR Director results is proper subject of a protest. Appeal may only be made to the
(3) Other related labor relations disputes - to BLR Director DOLE Secretary in case of denial of the petition within ten (10)
(4) Injunction cases- to BLR Director i calendar days from receipt of the decision of denial. 2
(5) Contempt cases- to BLR Director I (2) Appeal in organized establishments. -The order granting the conduct
2.1. DIFFERENT RULE RE APPELLATE JURiSDICTION OVER MEn-
ARBITER'S DECISIONS IN INTER-UNION DISPUTES.
a. Legal basis.
t of a certification election in an organized establishment and the
decision dismissing or denying the petition for certification election
may be appealed to the DOLE Secretary within ten (10) calendar days
from receipt thereoe
While generally, the decisions of the Med-Al"biters are appealable to the
BLR Director, excepted therefrom are their decisions in inter-union disputes5 which 3. APPEALS FROM DECISIONS OF DOLE REGIONAL DIRECTORS.

1 This is by lli1ue ct Ar1Dl m (2591 ct 111e Lalor COOe.llis lride is en1!led ·~ tom Cerflcalixl Eledix1 Oldels' ll1d 1
I
r
a. Decisions appealable to the BLR Director.
Not all decisions, awards or orders rendered by the DOLE Regional
JlfllWies as ilbrls: 'Ar1Dl m [2591. Appeal tan Cel1ificalkx113ec00ro <Ade!s. - Mj paty b 111 elediln may ;:weal the Directors are appealable to the BLR Director. Only decisions in the followillg cases
Oilier cr red$ ct 1he eledioo as delermiled by lle MedMliEr ltdj b lle Secretaiy ct l.alxr ll1d ~ oo 1he
giOIJ1d 11at 1he rules ll1d repams cr pcm thered esi!W100 by fle Secretay cl Lm ll1d ~ tJr lleo:n!ud
relevant and related to labor relations, are appealable to the BLR Director:
d 1he elediln have been Wllaled. &K:h ~ shal be deciled Ylillil tifi!en (15) c3erdcr days.' POOr b l1e anendmen!
ct Ar1i:ie m 125Q1 byRA No. 6715,1he d9::isioos ctthe MidArtliU i1 c:edifk:aioo etedi:ln cases ae ~ b the (I) Visitorial cases under Article 289 [274], involving examination of
llR Na.¥, lley ae ~ b 1he DOLE Seaellly. (A' Pline Seariy SeM:es, nc. v. Hoo. Secreay cl Lalcr, G.R. books of accounts of independent unions, local chapters/chartered
No. 91987, .u; 17, 1995). I nu;t be er¢asimd llat as tr as~· displals n cooamed, lle decisklns d fle locals and workers' associations;4
Me6A1biers 11ereoo ranci1 appeaable b the BlR (See Sdl11 111 Rule Ul, t£Ml Mmil cl f'roceda'es fer
Ccrdaioo llid Pr8veniMl Midalon Cases). (2) Union registration-related cases, such as:
2 il case lhe ~is made ila~lllCiga'iled eslablisl '! :l:!l lid1'•mll el l'l nh'Vih oott ooe{1) leglinale lri.:rl, ll1d l1e ~ m cr a) Denial of applications1 for union registration of independent
kx:al fais b c:aJ1111* 11e ~ tJr SEBA adi:alix11bi111he Yllli*1 CCI'Ifaena! beb'e fie OOlf Regma unions, local chapters and workers' associations;
lletb', ., wti:h evert, uh ~ sln*:l be Rifenal b l1e Elecbl ()ffioer b' l1e caW:t cl adicatioo eledioo
(Secbl4, lUI VII clfle Rules b krcJ1ement lle Lalor Code. a>llll'lel'lded by {)epcltmert Otler No. 40+15, Series cl
zt15 [Sepmber07, 3l15J.lhe eledioo stnil beCOII!Uild il tmlllllllceMh IU! IXUlered.), l'lf1i11 necessatjw:xij
1111911\at such ISIIi3ixl e1ec1oo shoUd now be c:oocbBIII'Ider 11e )lisdicbl cite Mdalor-Arbie' tl vron t1e
8ectioo Ollicer is clJiy-bru1d tl report 1he outane d lhe eledil1 ~· Celtny, lhe ensui"G crik:alioo elediln 1 SUpra
l3'd"d be cmb:ted l.llilerlhe didoe cllle DOLE Reg«m DiedDr M!loot the~ d te t.'edialor-AibEr W1o, 2 Sedioo 18 ~ Sdoo 171 Rule VIII, Book V, ct lhe RUes tl ~ lle l.alxrCode, as ;mended byOepatment
lllderllelaw, is lle ooe possessed cl1he OO;Jilal Mel erd.Sie ~ !Mlr aiftiication elecbl cases, ilckJdivJ lhe Older No. 40-F-03, Seresd2008 [Odllber30, 2008l
proc:lillQioo cllle Mrilg SEBA. (See Sectkl1 21, IU! DC, Book V, RUes tl ~ l1e Lalcr Code, as cxdered 3 ld.
reruOOered bySedioo 17, Depmoot Order No. 40+15, Seres ct2015 JSeplenter07, 2015). Tlis sectioo was OO;J~ ~ The BLR arm, not 11e oo..E Seaeay, has lhe awe~ate aJI1aiy CMll' decRins rJ 11e DOLE RegilM lillCDs
ruriJered Secb1 3l, pa- Oepment Older No. ~.Seres d 2003, [Feb. 17, 2003], but 1 was~ re- i"MM'g examams m rJ accrurts 8'l prooided under Rule 11 cite Rules ct Procedtre oo ~.
rurllered tl Sedioo 19, pa-Oepa1mentO!derNo.40.f.@, Seriesof2008 (Oct 30, 2008)). issued 00 Apfi 10,1992. '>It 'SEC. 3.Jurisdiclon tithe Regional Diectl:!'.• TheRegionaiiAredcrs!I51 exertise OO;Jilal
3 Secbl5, lUI VII, il rela&ln b Rt*ls VIII Mel IX, Depa1melt0nler No. om15, Series d 2015{Septe!mer 07, 2015].
n-
ooc1 excW~e j.Jisd'm CMJ ~fer m registatkJI, petlioos arv:.ellaiD1 rJ 111m reglslralion ll1d ~
~ Sec00n 1[1], IU! IU, NCMB Mnlalofl'roceOOres fer Ccrdiail!Hild PreveniNe Mediati:ln Cases. fer exani1alioo d Irilns IIooks cl acaxmls. SEC. 4. .klisdk:tion cllhe &!reaL· XXX '(b) The !beau shal exeldse
s Ol1efwise kn<Mn as representalion cr critation electionta'b. appEaate j.Jri:sdicbliNf!l aJ cases OO;Jila!DJ from 1he Regional £Mecu invtM¥J uniln regisllation IX' l3lCelatial of
OOf1ilicales d unkln regislralix1 Mel CO!T'(llaitls fer examination of union IIooks of acallllls.'

liAR REVIEWER ON lABOR lAW
736
b) Revocation or cancellation2 of registration of said unions;
(3) Notice of merger, consolidation, affiliation and change of name of said
unions and or petition for denial thereoe
(4) CBA-related cases, such as:
a) Application for registration of single-enterprisl CBAs or petition
for deregistration thereof; 5
b) Petition for denial of registration of single-enterprise CBAs or
denial of petition deregistration thereof.
As far as No. 1 above is concerned, appellate authority over decisions of
the DOLE Regional Directors involving examinations of union accounts is
expressly conferred on tlle BLR Director tmder the Rules of Procedure on
Mediation-Arbitration, 6 to wit:
"RULE II
MED-ARBI1RATION
"SEC. 3. Jurisdiction of the Regional Director. - The Regional
Director shall exercise original and exclusive jurisdiction over application for
union registration, petitions for cancellation of union registration and
complaints (or examination ofunion books ofaccounts.
SEC. 4. Jurisdiction ofthe Bureau.-
XXX
"(b) The Bureau shall exercise appellate jurisdiction over all cases
originating from the Regional Director involving union registration or
cancellation of certificates of union registration and complaints fOr
1
examination o(union books o(accounts."
The language of the law is categorical Any additional explanation on the
matter is superfluous. It is thus dear then that the DOLE Secretary has no appellate
· jurisdiction over decisions of DOLE Regional Directors involving petitions for
8 2
examinations -of union accounts.
1 See AI1i:le 243 [236] c1 ~~e ~meooe whkn prrNi:les: 'M 243 rl36J. Denial c1 registlailn; owea The decision ct 11e
tm Relm1s [),dsjoo nile regiona ob denyiY;J regisr.iJ1 may be ~ by 11e ~ 111i:xl tllle Bueal
ltilm(10)daysfronu~dnOO<:etleleof.' · Md execubliy lllless ~ tllle Seaelay d Laber Md ~ -
2 Seehi:le 2451238ldlle taxrCodev.t1ich pn:Nides: 'Alt. 24512381- CirlcelcD:rl dregisbcb; ~ Thecertii:aled
Iegisln6:xl d Blrf leglil1aE laloragalzaOOn, v.f1elher nati:xlal«ba, shal be ccR:Iehl by lle &ralllhas Ieasoo tl
beleYe, after due tmilg, that 81e said I!W OlgMizalioo oo • meets ooe « more d 11e K!qlJiemenls hereil
presailed"
3 Sedb15, rue rv. an v, Ru\ls m~ 11e L.aboc rme. as amended by ~Older No. 40-03, Series ct
:mJ, {Feb. 17, 2003)llld asfu11eramended by ~OnlerNo. 400-05, Seriesofm, Sept 13,2005.
• As disliYJuiSf1ed tan cases i'Mlt.b;lf~Uti.en'c>bfer CB.As v.tiD lit IIller lie ~ilal jJistiJn dlle aR Diectlr.
s Sedioo 4[fonnerly Section 5], Rule XI, BOOt v, Rules~ ~Ileum Code, as crneOOed by Depa1ment oroer No.
40-m, Series d 2003, feb. 17, 20031111d as re-I1Uil'tlered byDepment OnlerfolQ. 4Q.f.o3, Series a 2008 [Ocl30,
2008]..
6 Issued (11 ~~~ 10, 1992.
7 ltaics ll1d 111deritilg supplied.
a Bftsv.~.GR.No.120220,June16, 1999.
CIIAmRVIll
)URISDicnON AND REMEDIES
737
b. Cases not appealable to the BLR Director but to some other labor
officials.
For greater clarity in presentation and to avoid any confusion, it is worthy
to mention that the decisions of the DOLE Regional Directors in the following cases
which are not related to labor relations are appealable to the DOLE Secretary and
not to the BLR Director:
(a) Visitorial (inspection) cases under Article 37;1
(b) Visitorial (inspection) and enforcement cases2 under Article 128,
(either routine or initiated through a complaint);3
(c) Occupational safety and health violations;4
(d) Cases related to private recruitment and placement agencies (PRPAs)
for local employmen~ such as:
I) Applications for license or denial thereof;
2) Complaints for suspension or cancellation of license by reason of
administrative offenses;
3) Complaints for illegal recruitment; a.11d
4) Petition for closure of agenC"/
Additionally, their decisions on small money claims cases arising from
labor standards violations in an amount not exceeding P5,000.00 and not
accompanied with a claim for reinstatement under Article 129 are appealable to the
NLRC.
1 'Ar1k:le 37. VSbial Power.- The Secreay d Lim II' his dllf aJhJrized represenla1M!s may, ct atrj line, ilspect lie
prerrises, lxxisd ;mxns Md rerordsd atrJpe!SCII crerlliy covered by lis Tl!, requie I tl Slbritrepats regulcl1y oo
presailed loom, Md a::t oo Wllali:x1 d atrJ prrMsix1s ct t1is Tile.' (Referriv tl Tie I [Re<:niiJnB1I Md PB:ement d
WOO<E!ISL Bod< I, Lim Code).
VJSiiDrial cases IMWe i1spedioo d~ tl deenW1e et:Jl1llcm Ytilllim stnfads; IW1Ie rixtementcases
iwcMl issualoed~ ordefsald rdsrlexeaDil.
3
Based oo 81e ~ ~ d MDe 128(b), Labor Qxle, whidl stales: 'M ooiiJ Issued by lle dllf llllhorized
~!tile Secret:ry dl.abcrald ~llldertlisMi:le maybe~ tithe liiEr.'ll!t(As anended .
by RejxJJic ld. No.mo. .ble 2. 1994). Adcllooctt.l is piMied nSection 1. rue IV, rllie rues oolle llsposilir1 rt
Labor Sla1IBds Cases nile Regi:xlal Olli:es, hs: 'Secli:x11. Appe/i. -The a a 11e Regi:xlalllm:tlr shal be t~a~·
Bl (10) calenda' d¥frLm ~
llerecl.' The tFAilds b'fle ~ 118 ptMied il Section 21lered, his: 'Giorlm b' apped.- The 8Jgrieved paly ITef
appeal b l1e Seaellly Die Older of l1e Regi:xlallliedDr m Blrf d l1e ti:MtQ giWlds: (a) llere Is a pins ftriJ
E'v'iXme d axse d dlmtion oolhe pat d l1e Regblaii:Xrecb; (b) 81e Onler was seam! hooJh fiald, amkln a
graft Md ~(c) the appeal is made ptltitf m ~ d law; ll1d (d) seiiJus entiiS il81e ~ clfca; were
cxxmili!d v.ti:h, if not carected, Y«lUUd we gave inlp!lable clciTaJar ijly tllle ~·(See also Sec&ln 2, il
x.
relation t1 Sedb13(a), rue Book HId the RUes tl ~lie Labor Code). .
4 soom a 6(8) Rue VI [Hea'lh end SlietfCasesl dlte Rules mthe llspostioodl.rW SliJ1datls Cases nile Regiooal
Offices v.ttiil piMJes: Sectioo 6. Review by l1e Seaelily. -{a) The Secretary ct his 0\\11 illialvecr~ lle requestd
the~ R1'll' ~. may r!M3wthe aderd the Regi:xlal Diecb'v.ti:h shal be itmediall!oY filalllld exeJJk:l:y
uness slir{ed by l1e Secret:ry upoo JlOSiil:l by l1e ~ cl a I8ISlMlle cash oc ~ bond as hed lrf lhe
Regi:xlal Dim.' See also the~ parlfOl~ of Arlk:le 128(b), L.abcr Code.
5 Section 62,1Jepa1ment 01ller No. 141-14, Seriesof2014, tm. 20,2014.
738 BAR REviEWER ON lABOR lAW
3.1. EXCEPTION WHEN DOLE SECRETARY MAY ENTERTAIN
APPEAL DIRECTLY FROM THE DOLE REGIONAL DIRECTOR'S
DECISION WITHOUT PASSING THROUGH THE BLR DIRECfOR.
The rule as sllmm above is that jurisdiction to review the decisions of the
DOLE Regional Dirc:dnls: over certain cases lies with the BLR Director. 1 Hence, no
appeal from the l)()LE legional Director's decision can directly be filed with the
DOLE Secretary • lam no appellate jurisdiction thereover.2 However, a unique
deviation was al10a! flmm this rule in The Heritage Hotel Manila/ when the
BLR Director inhitillll himself from taking cognizance of the appeal from the
decision of the :mE Wiegional Director because he was a former counsel of
respondent Unaer this situation, the DOLE Secretary may legally assume
jurisdiction over the wed from the decision of the DOLE Regional Director. The
reason is that in the absenc~ · -~~ BLR Dire.:tor. th.:re is no person more competent
to resolve the appeal flam tiH: lJOLE S.:crewy. Th.: jurisdiction remained with the
BLR despite the BiJUlitector's inhibition. \Vhen the DOLE Secretary resolved the
appeal, she merely ~ into the shoes of the BLR Director and performed a
function that the lm QJilJd not hi:nseif perform. She did so pursuant to her power
of supervision and Ol!llii!IRllf over the BLR.
3.2. VALIDITY OFREFERRAL TO BLR OF AN APPEAL
ERRONEOUSLY FILED WITH DOLE SECRETARY.
Tn Takata.4 the motu proprio referral to the BLR Director by the DOLE
Secretary of an appeal erroneously filed before him from the decision of the DOLE
Regional Director «dering the cancellation of respondent union's registration was
held valid. Consequently, by reasou of such referral, the BLR Director can then
validly act on it .
4. APPEALS FROM DECISIONS OF BLR DIRECTOR RENDERED IN HIS
ORIGINAL JURISDICTION.
Decisions in the cases falling under the original and exclusive jurisdiction
of the BLR Director are all appealable to the DOLE Secretary, to wit:
(a) Complaints and petitions involving the application for registration,
revocation or cancellation of registration of federations, national
unions, industry unions, trade uniQn centers and their local
chapters/chartered locals, affiliates and member organizations;
1
Mltdii.<Mabies~ktc.v.~~~Unoo,G.RNo.131374,Jat2.6,2000.
2 ld.
The Heritage HeEl Mr1la v. National Uriln ofWOikels nile Hotel, ResliuarXand Aled Jndusiies..Heri HoE! Mr1ila
3
&Jper\'isas~(WMiRAIN-HHMSC),G.RNo.178296,Jan.12,2011.
4
Tiiala ~) Colp(raOOn v. B1Jea1 c1 Lm Relations Md Sana1li1Q I..IMs M:rwagawa ng Takala~1).
GR No. 196276, .kme04, 2014.
CHAPTER VIII 739
JUIUSDICTION AND REMEDiES
(b) Request for examination of books of accoUn.ts of said labor
organizations1 tmder Article 289 [274] of the Labor Code;
(c) Intra-union disputes involving said labor organizations;2
(d) Notice of merger, consolidation, affiliation and change of name of said
unions and or petition for denial thereoe
(e) Registration of multi-employer CBAl or petitions for deregistration
thereof; and
(t) Contempt cases.4
v.
REMEDIES FROM DECISIONS OF
BLR DIRECI'ORAND DOLE SECRETARY
RENDERED IN THEIR APPELLATE JURISDICTION
1. APPEALS END WITII BLR DIRECTOR AND DOLE SECRETARY.
Notably, the remedy of appeal involved in the cases contemplated under
Article 232 !226] is available only up to the level of either the BLR Director or the
DOLE Secretary, as the ~ may be. Appeal to the CA from their decisions
rendered in their respective appellate jurisdictions is not available; the only remedy
being the filing of an original special civil action for certiorari under Rule 65 of the
Rules of Court5 In the case of decisions rendered by the BLR Director in his
appeliate jurisdiction, they can no longer be appealed to the DOLE Secretary
because another appeal to the DOLE Secretary is not tenable anymore, the BLR
Director's decisions thereon having already become final and executory.'
2. REMEDY FROM CA DECISIONS TO THE SUPREME COURT.
There is only one mode to elevate labor cases from the CA to the Supreme
Court and that is, through Rule 45 petition for review on certiorari.
VL
ADMINISTRATIVE FUNcriONS OF THE BLR AND LRDs
The BLR and the Labor Relations Divisions (LRDs) in the DOLE
Regional Offices have concurrent jurisdiction over the following administrative
functions:
1 Refeni1g kl8lelalions. naliooa unillS. msy lrirls ll1d 1rade 11100~ as disquished tan Rleperdert llials,
I kx:al ~ ll1d workels' assocams.
2 ld.
3 Sectioo 15, Rule XI, Book v, ~lies b ~the Lalor Code, asanenledby{)epamentOderltl. 40-03, Series m
I 2003, [Feb. 17, 2003lllld as rentJitmd b'fOepmlen!Order No. o10-F-03,0<:tiler 30,2008. See Ni6Jnal Fedelakln m
Laborv. f..aluesma, GR. No.123426, Mildl10, 1999.
+- 4 lhe person 4tdged illhct ~bylle Bl.ROim'may appeal bile DOLE Seae!ay.{See Seciln 1, Rule XXII~
,.
,'i lloa\V, RUes mlmplemenl1he Labor Code, as llll!!lded by DepalnJlrtOrderNo. 40-03, Series !t2003, [Feb.17, 20031).
II 5 Sectioo 23, Rule XI, Book v, Rules t> ~ 11e Labor eooe. as ill8lded by Oepatment Order No. .rom. Series m
2003, [Feb. 17, 2003]; National Fedelabldlabor(Nfll~- tw.~uma. GR. No.12342.6, Maid! 10,1999.
L
s Abbotti.SJorabies Phippiles, Inc. v.Abboi!Lmalories~Unkln.G.R No.131374,.llll, 2.6,2000.
f'fU DAR IUYIEWER ON lABOR lAW
CHAmRVIll 741
JURISDIO'ION AND REMEDIES
1. Registration oflabor unions;
2. Keeping of registry <iflabonmions; "Quasi-judicial function" is a term. which applies to the action,
3. Maintenance and custody of the files of CBAs and other related discretion, etc. of public administrative officers or bodies, who are required to
agreements. investigate facts or ascertain the existence of facts, hold hearings, .and draw
4. Records of settlement oflabor disputes; and conclusions from them as a basis for their official action and to exercise
1
5. Copies of orders and decisions of Voluntary Arbitrators. 1 discretion of a judicial nature.

It must be noted that it is the registration of the labor organization with the 2.NOT BEING A QUASI-JUDICIAL AGENCY, NCMB'S RULINGS
BLR and not with the Securities and Exchange Commission (SEC) which makes it a CANNOT BE ELEVATED TO, AND COGNIZABLE BY, THE COURT
legitimate labor organization with rights and privileges granted under the Labor OF APPEALS.
Code.2 In Tabigue, the NCMB Director did not grant petitioners' request to
submit the case for voluntary arbitration because the bargaining union of which
F. they are members, refused to join them in the preventive mediation case they
NATIONAL CONCILIATION AND MEDIATION BOARD3 filed with the NCMB. The bargaining union, being the party to the CBA, is
required to give its consent to the voluntary arbitration case. Petitioners
1. MANDATE. questioned the NCMB Director's action through a Rule 43 petition with the
The NCMB is an agency attached to the Departmeut of Labor and Court of Appeals. Rule 43 of the Rules of Court, however, applies only to
Employment principally in-charge of the settlement of labor disputes through awards, judgments, final orders or resolutions of or authorized by any quasi-
conciliation, mediatiorr and of the promotion of voluntary approaches to labor judicial agency in the exercise of its quasi-judicial functions. Hence, NCMB's
dispute prevention and settlement. 4
2. CONCILIATOR-MEDIATOR. I decision, not having been rendered by a quasi-judicial body, eannot be elevated
to the Court of Appeals under said rule.

~
A "Conciliator-Mediator" refers to an officer of the NCMB whose 2.
principal function is to assist in the settlement and disposition of labor- . CONCILIATION VS. MEDIATION
management disputes through conciliation and preventive mediation, including
the promotion and encouragement of voluntary approaches to labor disputes 1. JURISDICTION OVER CONCILIATION, MEDIATION AND
prevention and settlement. 5 !
VOLUNTARY ARBITRATION CASES.
1. Originally, conciliation, mediation and voluntary arbitration functions
NATURE OF PROCEEDINGS are vested with the Bureau of Labor Relations (BLR). These functions, however,
2
1. NCMB IS NOT A QUASI-JUDICIAL AGENCY. were all absorbed by the NCMB under the law which created it.

According to Tabigue v. International Copra Export Corporation,'

the NCMB, 7 is not a quasi-judicial agency. 1 Mebopoitlll Bank and Trust Coo1m/. ilc. v. National W~ a1d l'ltxU:tiviy Comisskxl, G.R ttl. 144322, Feb. 6,
2IXJ7, 514 SCRA 346. ~ paMlf has been desailed by tie ~ Ccut iltle b'II:MirJ nmner. 'Quasi-
jJCicial a OOrriliSlraiHe q.d'ICakxy power is l1e power d tie~ ~ tl qxi:ale lle ~ ct persons
1 Mtle237 [23111S!orCode. before l ft is tie power tllm" Md determi1e CJlEIS!kx1S d fed tl v.!th tie legBaiM! polcy is tl !WI 1R1 tl deckle i1
2 Cebu Smell's Associaliln, nc. v. Hoo. PIJa Fener-Calleja, G.R No. 83190. AuJ. 4, 1992; See aso f'hil4llile I.Md:-Sea- ao:xxdcme v.;u, tie sla1d<rds at cbM1 by lle iaN iself i1 enb'cOJ llld aiJiil8ilg l1e sane law. The ~
Ai'IS!orUDI [PLASI..U)v.CIR, G.R Nos. L-5664&L-5698, Sept 17,1953, 93Pit 747. body exeltises ils quasij:ldk:ial power v.t.en it peOOrm5 i1 ajdcial nmner an act Wlich is essritt of an executive a
3 ReleVcrt P!Mms: (1) ExecuiM! Order No. 126, [ReagMizi1g l1e t.i1isby d IS!or Md fn1lloymenl a1d i:Jr Ol1er adrrilisrciive nature,~ t1e power tl act i1 such nmneris ilOOen!al tla ~ neoossaytrtle perfoonance d
Pllposes) {Jmly 30, 1987) llld (2) ExecuWe Order No. 251(Creali'g l1e tOtl] ~ 25, 1987) Bdh Viele issued by tie exeaJ!i.oe or aOOilistra!Ml duly enbUSled til kl C3!Yi19 oot l1ei' quasi1ldicial Mldixls l1e cDrilislralrle afioers«
lxxies are leqlnd tl ilve5lid* facls a astetiaillhe exisfenCe d ra:ts, hokl heari'gs, v.eiJh evklence, Md maw
Presklen!Coraml c. Aqlilo.
SecOOn 1(15], 1U! HI, NCt.13 Manual d ProcedurestrCoociiatKxlllld flreo.riJe Medatioo Cases.
;.. cordJsklns from them ao; basis tr B1ei' oftk:ial action and eKe!tise d disaetioo i1 a)JOOal nam. Sitce riJhl; d spedli:
PeiSOOS ae alfected, it is e1emeot1y 11at i1 the proper exen:ise d ~ power, due proa!SS rrust be obselved i:1
4
5 Sec:tioo 1 [kl RIE I, Book V, ~ tllnlJiemenl the IS!or Code, ao; anended by 0epment Order No. 40-03, Series d
2003, (Feb. 17, 2003). lherorW:tOflheJMOCElEdilgs.' (Seeaso Vi'loyav. Nl.RC, G.R No.1265e6,Feb.~ 2000, 324SCIAA«i9).
6 G.R. No. 183335, Dec. 23, 2009. 2 See Sedkx122 of&e<Uive Older No. 126, lR~ lle t.t1islry rJ l3lor IIlii Em;lbjmenlald tr Olher Purposes]
7 As~ i1 SecOOn 22 d ExecutM! Order No. 126 (The Reo!ganizatioo M.dlhe t.U1Iy d L.abcr Md ~·
~ en Jan. 30, 1987 by President Cola2Dn C. Aquilo, ao; emended by Sectix14 cl ExeaJtive Older No. 251
PfOIIlJIJaled on Ju~ 25, 1987, aeati1g the NCM3.

742 BAR REVIEWER ON lABOR lAW
2. 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 patties for the purpose of reconciling their differences or persuading
them into adjusting or settling their dispute. The Conciliator or Mediator
normally does not make or render any decision, his role being confmed to the
functions afore-described.
3. DISTINCTION BETWEEN CONCILIATION AND MEDIATION.
Generally, there are no marked distinctions between conciliation and
mediation. The reason is that in both cases, a neutral third party (called
Conciliator or Mediator) is tasked to assist two or more opposing parties in
finding appropriate resolution to a dispute.
Philippine law and jurisprudence do not embody any specific
distinctions between these two as in fact, there appears to be no universal
definition of these widely accepted altemative modes of dispute resolution.
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 ma.l<e 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. Thu:s, mediation may be classified into two, namely:
I. 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
CHArTER VIII 743
JURISDICTION AND REMEDIES
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.
4.PRIVILEGED NATURE OF THE INFORMATION IN
CONCILIATION AND MEDIATION PROCEEDINGS.
Any information· and statements made at conciliation proceedings
should be treated as a privileged coinmunication and thus may not be used as an
evidence in any proceedings. They are inadmissible in evidence. Conciliators
and similar officials are not allowed to testify in any court or body regarding any
1
matters taken up at conciliation proceedings conducted by them.
The privileged nature of the communication applies not only in cases of
conciliation and mediation proceedings before the BLR, its Med-Arbiters or any
of its hearing officers but also in similar proceedings conducted by other labor
officials, such as the Conciliators-Mediators of the NC:MB as well as the Labor
Arbiters a.'ld the Commissioners of the ~'LRC.
For instance, in modifying the award of annual salary increases given
by the DOLE Secretary to the employees under the CBA in the case of Nissao
Motors Philippines, Inc. v. Secretary of Labor and Employment/ the
Supreme Court pointed out that it cannot sanction the award made by the public
respondent DOLE Secretary based ostensibly on the revelation of the NCMB
Administrator that was sourced from the confidential position given to him by
petitioner company. The reason for this is simple. Article 239 {233] of the Labor
Code prohibits the use in evidence of any confidential infonnation given during
conciliation proceedings. The NCMB Administrator clearly breached this
provision of law.
3.
PREVENTIVE MEDIATION
1. PREVENTWE 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
3
functions is to provide preventive mediation to disputing parties. It covers
potential labor disputes that are the subject of a formal or informal request for
, Miele 239 {2331 Lalor Code; Sedion 2, Rule XXII, 8ooll V, ~ ID kfcllemenllle Labor Code, as emended by
Depatnert Order Ho. ~. Sermof2003, feb.17, 2003).
2 G.RNos.1581!1G-91,JlJle21,2006.
J Section 22, Execu1Ne{)nlerNo.126
744 BAR REVIEWER ON LI.BOR LI.W
conciliation and mediation assistance sought by either or both parties or upon
the initiative of the NCMB to avoid the occurrence of actual labor disputes and
in order to remedy, contain or prevent its degeneration into a full blown dispute
through amicable settlement. 1
The term "preventive mediation case" refers to the potential or
brewing labor dispute which is the subject of a formal or informal request for
conciliation and mediation assistance sought by either or both parties in order to
remedy, contain or prevent its degeneration into a full blown dispute through
amicable settlement.
2. HOW TO INITIATE PREVENTIVE MEDIATION.
Preventive mediation proceeding may be initiated in two (2) ways:
(l) By fiLing a notice or request of preventive mediation, as
distin~isbed from a notice of strike/lockout; or
(2) By coaversion of the notice of strike/lockout into a preventive
mediation case.
Procedurally, the filing of the notice of preventive suspension is the
first step to submit a case for mediation. It is only after this step that a
submission agreement may be entered into by the parties concerned.2 Moreover,
just ·like in notices of strike or lockout, only certified or duly recognized
bargaining representatives may file a notice or request for preventive mediation
in cases of bargaining deadlocks and unfair labor practices, the only two (2)
grounds that may be invoked in support of a strike or lockout.3
Notice or request for preventive mediation.
As distinguished from a notice of strike/lockout, "notice of preventive
mediation" refers to the notification filed by either an employer or a duly
registered labor union with the NCMB-DOLE informing the latter of its desire
to submit the issues between them for preventive mediation and conciliation.
The issues that may be submitted for preventive mediation may either be
strikeable or non-strikeable.
In cases of strikeable issues, the parties may mutually agree that the
same be treated or converted into a preventive mediation case, in which event,
no strike or lockout may be legally and validly mounted based on the same
issues since their conversion into a preventive mediation case has the effect of
1 Se::tioo 1 [20], ~ Ill, NCMl ~ r1 Pnx:eO.Ies fllr Coociialioo llld Prcven1Ne Mediatioo Cases; See also Sec1ioo 1
~1. Rule I, Book V, Rules to lmplenmt h! Labor Code, as anended by Depa1ment Order No. 4M3, Series r12003,
[February 17, 2003]; Apperdx 2 1EJe1i1itioo rl Tenns], NCWB Prirer on Sliite, Pk:kelilg llld Lockoot, 2nd EdiOOn,
Decerrber 1995.
2 mucr Hok!1 E'n1!klyees Union-NFL v. Willerfrmt lnsUa" HotEl Davao, G.R Nos. 174040-41, SepEniler 22, 2010.
3 ld.; Se::tioo 3, Rule IV of the NCM3 MinJal of Procedure.
CHAPTER VIII 745
)URISDICfiON AND REMEDIES
dismissing the notice of strike or notice of lockout and ~;emoving it from the
docket of notices of strike/lockout.
In cases of non-strikeable issues raised in a notice of strike or notice
of lockout, the NCMB may, motu proprio, convert the same into a preventive
mediation case or, alternatively, refer said issues to voluntary arbitration, if they
are in the nature of unresolved grievances or to the Med-Arbiter, if they involve
representation or inter-union disputes.
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
2sks for tile 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 pa..rties to settle their dispute
amicably and in ·line with the State policy of favoring voluntary modes of
settling labor disputes. 1
The NCMB introduced this concept of preventive mediation service
since 1988. Its distinctive feature lies in the fact that under this mode, disputes
are settled without the pressure of any threat of a strike or lockout. Both parties
therefore could deliberate and adjust their differences in a more Conducive
atmosphere than when there is a pending strike or lockout notice.
4. GUIDELINES IN THE CONVERSION OF THE NOTICE OF
STRIKE/LOCKOUT TO A PREVENTIVE MEDIATION CASE.
In case of conversion of a notice of strike or lockout into a preventive
mediation case, the following guidelines must be followed after such
conversion:
(!)Clearly determine whether the issue/s raised in the notice of
strike/lockout is/are strikeable or not. ·
(2) If conversion is warranted, a written recommendation from the
Conciliator-Mediator handling the case is required, after close
consultation with the Regional Branch Director.
1 No. 11!, NCM3 Plineron Sdr.e, Pk:ketilg Md Lockoot, 2nd Edtion, DecerrtJer 1995.
746 BAR REVIEWER ON lABOR lAW
(3) The written recommendation must be formally endorsed to the
Regional Branch Director ll for approval.
(4) The conversion must be done before the cooling-off period expires
or before the union conducts its strike balloting.
(5) Parties concerned must be formally notified of the action taken by
the Regional Branch Director through a letter signed by the
Conciliator-Mediator handling the case and approved by the
Director U.
(6) The notice should be dropped from the docket of notices of
strike/lockout and to be renumbered as a preventive mediation case
and a conference thereon should be set on specific date/s. 1
S.CONVERSION OF Af\OTICE OF STRIKE OR NOTICE OF
LOCKOUT INTD A PRE\ E'\;TIVE 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
l DOLE REGIONAL DIRECTORS
complied with the requirements of a valid strike and therefore illegal.
2 The DOLE Regional Directors are the duly "authorized
The same rule applies in the case oflockout by an employer?
6. RELEVANT CASES.
A case in point is Philippine Airlines, Inc. v. Secretary of Labor and
Employment,4 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. The Supreme Court reasoned, thus:
"The NCMB had declared the notice of strike as 'appropriate for
preventive mediation.' The effect of that declaration (which PALEA did
not ask to be reconsidered or set aside) was to drop the case from the
docket of notice ofstrikes, as provided in Rule 41 of the NCMB Rules, as
if there was no notice of strike. During the pendency of preventive
mediation proceedings no strike could be legally declared .. The strike
which the union mounted, while preventive mediation proceedings were
ongoing, was aptly described by the petitioner as 'an ambush.",s
1 SecOOn 4, RJJe V, NCMl Mllual of Procedures for Coociiation tlld l'rellel6le Mediation cases.
2 No.18, NCMB Priner on Strte, Pi:kelilg !lid Lockrut, 2nd Edili:xl, Dea!ldJer 1995.
3 lil.
4 G.R No.88210,Ji11.23,1991, 193 SCRA223.
5 Per DOLE we11sae at http:/ftMw.dOO.gov.phlpagesMew/7; Last ca:essed: .b1e 30, 2014.
CHAPTER VIII
JURISDicTION AND REMEDIES
747
It is clear, according to San Miguel Corporation v. NLRC/ that the
moment the NCMB orders the preventive mediation in a strike case, the union
thereupon loses the notice of strike it had filed. Consequently, if it still defiantly
proceeds with the strike while mediation is on-going, the strike is illegal.
In the case of NUWHRAIN v. NLRC,z where the petitioner-union
therein similarly defied a prohibition by the NCMB, the Supreme Court said:
"Petitioners should have complied with the prohibition to strike
ordered by the NCMB when the latter dismissed the notices of strike. after
fmding that the alleged acts of discrimination of the hotel were not ULP
hence not 'strikeable.' The refusal of the petitioners to heed said
proscription of the NCMB is reflective of bad faith."
G.
1. ROLE OF THE DOLE REGIONAL DIRECTORS.
The DOLE has a total of 16 Regional Offices nationwide each one of
them is headed by a Regional Director.
representatives" of the DOLE Secretary referred to in Article 128 of the Labor
Code which grants to them both visitorial and enforcement powers. They are
in charge of the administration and enforcement of labor standards within their
respective territorial jurisdictions.3
1.
JURISDICTION
(Recovery/Adjudicatory Power)
1. ROLE OF THE DOLE REGIONAL DIRECTORS.
The DOLE has a total of 16 Regional Offices nationwide each one of them
is headed by a Regional Director. The OOLE Regional Directors are the duly
"authorized representatives" of the DOLE Secretmy referred to in Article 128 of the
Labor Code which grants to them both visitorial and enforcement powers. They
1 GRNo.119293,Jllle 10,2003.
2 G.RNo.125561,M!d16,1998,287SCRA192. .
3
See Section 3, Rule 1. Rides on 111e Disposition al.liJa Sfandads cases i1 the RegiJnal Oftices [Sept 16, 1987); Alml v.
De laW, <3.R No. 82488, Feb. 28, 1990, 182 SCRA886; Sal Mguel Colporation v. The Hon:CA, G.R. No. 146775, JM.
30,2002.
748 BARREVIEWERON lABOR lAW CHAPTER VIII 749
)URISDIOION AND REMEDIES

are in charge of the administration and enforcement of labor standards within their 4) Petition for closure of agency;'
respective territorial jmisdictions.1 (g) Cases submitted for voluntary arbitration in their capacity as Ex-
2. JURISDICfiON OF THE DOLE REGIONAL DIRECTORS. Officio Voluntary Arbitrators (EVAs) under Department Order No.
83-07, Series o/2007. 2
The DOLE Regional Directors have original and exclusive jurisdiction (h) Union registration-related cases, such as:
over the following cases: l) Applications for union registration of independent unions, local
(a) Visitorial (inspection) cases under Article 372 of the Labor Code chapters and workers' associations;3
referring to the inspection of the premises, books of accounts and 2) Petitions for denial of application for registration4 of said unions;5
records of any person or entity covered by the Title I [Recruitment and 3) Petitions for revocation or cancellation of registration6 of said
unions; 7
Placement of Workers], Book I, Labor Code.
(b) Visitorial (inspection) and enforcement cases3 under Article 128,4 (i) Notice of merger, consolidation, affiliation and change of name of said
(eitherroutine or initiated through a complaint); unions and or petition for denial thereof,8
G) CBA-related cases, such as:
(c) VisitfJlial cases under Article 289 [274J,5 involving examination of
l) Application for registration of single-enterprise9 CBAs or petition
boo'- of accounts of independent unions, local chapters/chartered
for deregistration thereof; 10
locals and workers' associations;
2) Petition for denial of registration of single-enterprise CBAs or

l
(d) Occupational safety and health violations; 6
denial of petition for deregistration thereof; and
(e) Small money claims cases arising from labor standards violations in
(k) Request for SEBA certification when made in an unorganized
an amount not exceeding P5,000.00 and not accompanied with a
establishment with only one (1) legitimate union. u
claim for reinstatement under Article 129;
(t) Cases related to private recruitment and placement agencies (PRPAs)
for local' employment, such as: Sedkrl47, Dep<rtnent Order No. 141-14, Series ci 2014, Ibid.
1) Applications for license or denial thereof;8 Issued lrf brrne!' OOi.E Secretary, 0011 Associa1e .kJsOCe of the Supreme Coort. Mro D. Brioo oo Jllle 8, 2fiJ7.
3 Sedkrl3, Rule II ci the Mld-AibiiJatm Rules siiEs: 'SEC. 3. Jurisdictioo ci Ule ~ionai!Xeckr.· The Regimlllredoc
2) Complaints for suspension or cancellation of license by reason of shal exeltise • Md excllso'Je )Jistiln a.oer ~ for unkx119Jisiafkln, petiOOns b' ccmM:x1 ci l.l1ioo
administrative offenses;9
3) Complaints for illegal recruitment; 10 and
T l9,}isbalion Clld ~ for exMila1bl olllins txm ci ~:See aso SecOOn 1, RUe II, Rules ci l'locelllreoo
MediaOOn-Aibitl.
4 See Miele 24312361 <I lie l.alxr Code v.ti:h pMies: 'M 243 [236].ll1rill ci regi;1rc6Jn; appe;t The deds01 <I fie

1 See Sedkrl3, Rulei,IU!soo the Disposi1Qujt.mSiinlirdscases illle Regiooal Oli:es[Sept. 16,1987]; Atmov.
DelaQuz, G.R No. 82488,Feb.28,1990, 182 SCRA886;&rl M;Jue!Copoaoonv. Thelbi.CA, G.R No. 146n5,Jal.
ll,2002.
z 'Arti:le 37. VISbial PI:M9'. ·The Secreay ci .t.m a his t1tf aJhJrized ~ IIUJ,It IITf line, ilsped the
prenises,txm ci ax:otns Clld recools ci IITf per.m cr riy a:Neial by tis Tile, rape I" Slblirepat regtBtj oo
l.alxr Relalioos [i,;si)n il lie regiooal oflke den)iig regismlti:ln may be ~ by lie ~ 11100 b lle Bu'eau
v.tillen (10)datfsfrom ~ci ncful !mel.'
s ~ to i'depoodent unions, bcal diap8s ll1d aers· associ<D:x1s. as clsti'guished from ~ nalim
llioos, ilduslly lllixis, rc.~e m centers n 11e1 klcal ~ kxas, alfiiales llld Jllllllter agaizatioos
Wlose appi3ion u IBgislratioo as well as deiD a~ or l'eY()(3k)n ci regislration is mgrizalle by lle SLR
Dreclor il his 019Ialll1d exckJsi.oe )risdi::b li'frcil.
6 See Article 245!238Jdllel.alxrCodev.ti:hJliiMies: 'M 2451238~ Cm!lamciregislraion; appe;t The~ ct

pesailed bms, Clld lK:t oo violmi ci IITf plrMsions <I llis life.' (Relenh.l tl Tie I ~ ll1d F\mnenl ci regisr.m1 ct ant leglinale laba agcrizalkrl, .net~er nalkJnal or local, siial be amled by lie EUeau n has reason to
wakelsl. Book I, t.mCode). beieYe, a1er dJ! lmilg, lhlt lie said liixr ag<l'lilalioo oo kJrGer lllllllt CXIe a IOOI'e rl fie mqtianen1s hereil
3 lflsbial cases iMWe ilspedion ci estltistmertl b deBni1e ~ wlh labaslinl!rds; v.f1ile enbr8nent cases presai)ed."
7 Section 3, RE n fllle ~ 1U!s. Sl,..a; See aso Sedkrl4, ftOO XI, 6odt Vd 118 Rules b ~ lle
mwe lssuillce riC001Jia1Caordels n1 n «execution.
4 Ar1i:le 128 is riled 'VisUialnl Enfatement Paover.' Lalor Code, asanended 111 DepaitmertOnfdl.~-00. Seriesof2008p:tblr 30, 2006).
5 Ar1i:le 289[2741 is entitled 'VISbial f'a.oier.' e Section s. IU! N, Book v. Rules m~ lle t..ctxr Code, as llllellded 111 Depatment Onler ttl. ~. Series ct
6 Sedkrl6 ct RUe VI JHeallh n1 Sarety CasesJ c1 11e Rules oo 11e Disposition r1 t.m Sla1dads cases nile Regiln<i 2003,tf'eb. 17, 2fiJ3) ll1d as b1herll'!leOOedbyDepcnnei110!der No. 40Mi, Seriesct2005, Sept 13,2005.
tftes. 9 As a!Sti1gulshed from .cases ~ ~ C8As IMi::h fallllderlle • j.risdiclion <1 fie BIRib:lor.

1 As~ from reauiment ll1d placement ci 'MXkers tJr !M!1SeiiS Eflllloyment v.ti:h fals under the j.Jiisdictioo of
the Ph~ Overseas ErrcJiatment Admi1islraOOn (POEA).
SecOOn 8, Oepa1ment Ord!J No. 141·14. Series ci 2014 (Revised Rules Cl1d RegulatirJs GoYemilg ReauiiJnent Clld
6
Placement tJr local EII1lklyme.11), Nov. 20, 2014; See previxJs piO'visiln oo this matter il Sedioo 36, Rule VII, Rules And
Reg~SDJns ~ PMte RecnitmentM<I Plmnent¥qulocal ~Jooes. 1997. See aso NaOOM
FederlMiolt.mv.Laguesma,G.R No.123426,M<Itil10,1999.
9 SecOOn 54, il relation to SecOOn 51, Depatment Order No. 141-14, Series ci 2014, llil.
10 Sedioo 45, Oepa1ment Ord!J No. 141-14, Series ci 2014,1lid.
=
1o Section 4ttxmertf Sedkrl5), Rule XI, llc:d V,IU!s to t11Jiemeii lie Lm Cole, as anended by l:lepamR Older No.
40-m, Series <t 2Jl03, {Feb. 17, 2003]. and as I&OOITbered by Oepmelt Older No. ~. Series r1 m (Oct 30,
~for
11 t1is si!ua1oo, 11e OOLE Regiooal Diecir, before \\born lhe SEBA Certification is led, s1oi1 Iefer f1e
Request fer SEllA Cel1ifx:atiorl " lie Mlci<U-Mlilel' lor lie dell!mi1abl cllle propriety d conc1Jdi"Q a oerlificabl
elildioo, ill'ltik:hGSe,l1e Medialor-Aibiit ll(M hilstle jJrisdiction b decideflecertifi:alicrleledirl issue. (Secioo 6, Rule
VII, i1 relaliln b 1U!s VlH ald IX, Depa1mert0nler No. 4G+15, Series ci 2015 {Sepleniler 07, 2015D. ttllefiiJS! be
11100e that v.ilen fie Request b' SEBA Cel1i:aiD1 is made il oo lllaQOOillld estabflshment Mh mcxe llan one (1)
 CHAI'TER VI II 751
750 BAR REVIEWER ON lABOR lAW JURISDICfiON AND REMEDIES

4. VISITORIAL POWER OF REGIONAL DIRECTORS UNDER

DISCUSSION OF CERTAIN TOPICS ARTICLE 128(a).

L Pursuant to their visitorial power under Article 128(a), the DOLE

Regional Directors shall have:
LABORSTANDARDSENFORCEMENTCASES
(a) access to employer's records and premises at any time of the day
1. LABOR STANDARDS. or night, whenever work is being undertaken therein; and
"Labor standards" refer to the minimum requirements prescribed by (b) the right:
existing laws, rules and regulations and other issuances relating to wages, hours (1) to copy from said records;
of work, cost of living allowances and other monetary and welfare benefits, (2) to question any employee and investigate any fact, condition
including those set by occupational safety and health standards. 1 or matter which may be necessary to determine violations or
2. SUBJECT OF THE VISITORIAL AND ENFORCEMENT POWERS: which may aid in the enforcement of the Labor Code and of
THE ESTABLISHMENT AND NOT THE EMPLOYEES THEREIN. any labor law, wage order, or rules and regulations issued
pursuant thereto. 1
At the outset, it bears to stress that the subject of the visitorial and
enforcement powers granted to the DOLE Secretary or his duly authorized 5. ENFORCEMENT POWER OF REGIONAL DIRECTORS UNDER
representatives under Article 128 is the establishment which is under ARTICLE 128(b).
inspection and not the employees thereof. The statutory basis of_ the authority of the DOLE Regional Directors to
•
Consequently, according to Maternity Children's Hospital v. administer and enforce labor standards is found in Article 128(b) of the Labor
Secretary of Labor/ any awards granted are not confrned to employees who I Code, as amended. 2
signed the complaint inspection but are equally applicable to all those who were
employed by the establishment concerned at the time the complaint was flied, I Pursuant thereto, the DOLE Regional Director, in cases where the
employer-employee relationship stili exists, shall have the power:
even if they were not signatories thereto. The reason is that the visitorial and
enforcement powers are relevant io, and may be exercised over, a) to issue compliance orders to give effect to the labor standards
establishments, not over individual employees thereof, to determine provisions of the Labor Code and other labor legislations based on
compiiance by such establishments with labor standards laws. Necessarily, the findings of labor employment and enforcement officers or
in case of an award from such violation by the establishment, all its existing industrial safety engineers made in the course of inspection.
employees should be benefited thereby. It must be stressed, however, that such b) to issue writs of execution to the appropriate authority for the
award should not apply to those who resigned, retired or ceased to be employees enforcement of their orders, except in cases where the employer
at the time the complaint was ftled. contests the findings of the labor employment and enforcement
officer and raises issues supported by documentary proofs which
3. ORIGINAL JURISDICTION.
were not considered in the course of inspection,3 in which case. the
The DOLE Regional Directors exercise original jurisdiction over the contested case shall fall under the jurisdiction of the Labor Arbiter
4
following: to whom it should be endorsed by the Regional Director.

(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 1
MK:1e 128{a], tm Code; Section 1, ~ X. Book Ill, PJJies Ill ~ fle Lalor Code, as anended by llepatnent
(Enforcement Power). Order No. 7-A. Series a 1995; Section 4, fUll, RUes oo 81e Dispooi1b1 d tm St:ndanls cases nt.e RegkM 01li:es
[Sept. 16, 1987].
2 Ni anY!Ilded by RA No. 7730 ~liie 2, 1994], Streng1heni1g the V!Sibiai!IKI En1atement PtM9s ollle Secretly of
labor 81d ~ See also SeciKxl 2, Rule I, Rules CX1 fle DisposiOOn of labor Standclds Cases il the Regional
legitnale liixr agillizatkxl, 11e Meci-Aibiter lites a.oer from the DOLE Regiooal Oiecb' In 11e ma!fer a hea1i1g ald Oflk:es.
rescMl;l the issue a certifK:a1ion electioo. · Article 128[b], t.axJCode.
1 Section 7, 1U! I, Rules oolle Disposition of labor Standards Cases i1 the Regional Offms [Sept 16, 1987]. Section 1' Rule Ill, Rules 00 the Disposition of labor Sllr1dMis Cases i1 fle Regional Offices [Sepl16, 1987].
2 G.R No. 78909, .ble 30, 1989.

··--·!l;J·<-.
 BAR REviEW£R ON lABOR lAW CHAPTER VIII 753
752
JURISDICTION AND REMEDIES

c) to order stoppage of work or suspension of operations of any whether employer~employee relationship exists. 1 Such
unit or department of an establishment when non-compliance with determination should be respected in order not to render nugatory
the law or implementing rules and regulations poses grave and the exercise of its visitorial and enforcement power. Such finding
imminent danger to the health and safety of workers in the of existence of employer-employee relationship is to the
workplace. Within 24 hours, a hearing shall be conducted to exclusion of the NLRC. It is subject to judicial review but not
determine whether an order for the stoppage of work or suspension review by the NLRC. 2
of operations shall be lifted or not. ln case the violation is
attributable to the fault of the employer, he shall pay the employees On No. 2 above:
concerned their salaries or wages during the period of such • The jurisdiction of the DOLE, as expanded by the amendatory
stoppage of work or suspension of operation.' R.A. No. 7730, is not affected whether the case is the result of
d) to require employers, by appropriate regulations, to keep and regular inspection under Article 128(b) or it originates from a
. maintain such employment records as may be necessary in aid cif complaint under either Article 129 or Article 224 [217]. The
2
his visitorial and enforcement powers under the Labor Code. DOLE has jurisdiction, despite the amount of the money
6. REQUISITES FOR THE VALID EXERCISE OF THE VISITORIAL claims involved. The initiation of a case through a complaint
AND ENFORCEMENT POWERS BY THE REGIONAL DIRECTORS does not divest the DOLE Regional Director of his jurisdiction
under Article 128(b).
UNDER ARTICLE 128.
I
For the valid exercise of the visitorial and enforcement powers On No.3 above:
provided under Article 128, the following three (3) requisites should concur:
I) The employer-employee relationship still exists at the time of the
initiation ofthe action;
3
i • Once the complaint has already been taken cognizance of by the
DOLE Regionai Director under Article 129, or by the Labor
Arbiter under Article 224 [217], jurisdiction attaches thereto and
2) The fmdings in question were made in the course of inspection, will. not be lost as a result of the findings made in the course of
regardless of whether it was initiated by complaint or routine inspection by the DOLE Regional Director.
4 • The restrictive effect of Articles 129 and 224 [217] no longer

I
inspection; and
3) The employees have not yet initiated any claim or complaint with applies after the amendment of Article 128(b) by R.A. No.
the DOLE Regional Director under Article 129 (Small money 7730. This means that the visitorial and enforcement powers of
. claims not exceeding P5,000.00), or the Labor Arbiter, under Article the DOLE Regional Director to order and enforce compliance
224 [217] (Money claims exceeding P5,000.00). with labor standard laws can be exercised even where the
individual claim exceeds P5,000.3 The rule therefore that the
On No. I above: DOLE Regional Director should stop his proceeding once the
• If at the time of the initiation 'Of the action, the employer- individual claim exceeds PS,OOO no longer ho/ds.4
employee relationship had already ceased to exist, it is not the II.
DOLE Regional Director but the Labor Arbiter who has
5 SMALL MONEY CLAIMS CASES
jurisdiction over the same.
• The DOLE Regional Director, in the exercise of his visitorial and 1. JURISDICTION OVER CLAIMS NOT EXCEEDING PS,OOO.OO
enforcement power, has the power to make a determination on The DOLE Regional Director has original jurisdiction over small
money claims cases arising from labor standards violations in the amount not
1 Arti;le 128 Icl.lbid.;Sedioo 3(a] Md 131 Rule X. Book Ill, Ruk!s tllmplement fle UblrCode.
2 Article 128 ro. UblrM.
3 Rizal Security &Protective Se!vices, Inc. v. Hon. Malaan, G.R No.124915, Feb. 18, 2008. 1 People's Broadcasting Service (Bomba Radyo Phils., Inc.) v. The SecrelaJY of the Department of Labor and
4 See the 2012 En Bane Resolution in People's Broadcasting Se!vice (llontlo Radyo Phils., Inc.) v. The Seaela!y of ~loyment supra.
the Oepartroonl of Labor and Employment, GR No. 179652, Meith 6, 2012, 'Mlich modified its earlier May 8, 2009 2 ld.
decision. 3 Cirtneo Bowling Plaza, Inc. v. Sensilg, G.R No. 146572, Jiri.14, 2005,448 SCRA 175, 186.
s Batoog Buhay Gold Mines, Inc. v. Sec. Dela Serna, G.Rt«l. 86963, Aug.6, 1999, 37{)f'IU72. 4 V.L. Enterprtses v. Hon. CA, G.R No. 167512, Marth 12, 2007.

..........
"""'
754 BAR REVIEWER ON lABOR lAW
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, I 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. . jurisdiction thereover necessarily falls under the Labor Arbiter by
The following requisites must all concur, to wit:
(l) The claim is presented by an employee or domestic worker or
kasambahay; 2
(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 P5,000.00.3
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, PhiiHealth and maternity benefits. 4
On No. I above:
• Article 129 does not limit the persons who may initiate the action
to domestic workers or kasambahay. It also includes "employees"
as may be clearly deduced from the phrase "owing to an employee
xxx arisingfr<Jm employer-employee relations xxx."
On No. 2 above:
• Employment relationship should no longer exist at the time of
the initiation of the complaint for monetary claim under Article
129.
• If the employment relationship still exists at the time of the filing
of the complaint, the case necessarily falls under the coverage of
Article 128 where it is a pre-requisite that such relationship
should still exist at the time of the initiation of the complaint.
1
2
This i; naN the propEJ aid leg8 Wllf d ~ a"peeson l!fl1lk7ied i1 ~ llousellad servioe IX' househelpel" per
RA No. 10361, oll1erMse 1ula.wl as '!loolestk:Worke:s Pd <r"Batts~.· ~on .!nay 18, 2013.
ld.
3 Albay I 8eclric Cooperative, Inc. v. Martinez, Sr., {JR No. 95559, Nat. 9, 1993, 'l)] SCRA tm; Brol<ensh~e
Memorial Hospital, Inc. vs. t.tnister of labor and Employment, GR. No.l.s9741 klg. 19, 1986.
4 See aso Section 1(al, ~ XI, l3oli Rl, ~les il ~the Lm Code; RajOO Hlmctlon Hotel, klc. v. Trajcvlo, GR
No. 100455, Sept 17, 1993, 226 SCRA 394.
CHArTER Vlll
}URISDicrtON AND REMEDIES
755
• If the employment relationship no longer exists, the complaint
falls under Article 129 for as long as the terminated employee
does not raise the issue of legality of his dismissal or asserts any
I.. claim for reinstatement and merely confines his complaint only
on his monetary claims which should not exceed P5,000.00 .
l • Once the employer-employee relationship has already ceased and
the legality of the dismissal is raised and reinstatement is sought,
virtue of Article 224 [217] of the Labor Code. And such
jurisdiction covers the recovery of monetary and other benefits
I consequent to such dismissal.'
On No. 3 above:
• Jurisdiction when total monetary claims exceeds P5,000.00 is
lodged with the Labor Arbiter. 2 This is regardless of whether
accompanied with a claim for reinstat~ment 3
• The monetary claims may include unpaid wages, saiary
.i.. differentials, 13th month pay, and other benefits. 4 ·
I
~
• When claim does not exceed PS,OOO.OO but employee prays for
reinstatement, the case falls within the original and exclusive
jurisdiction of the Labor Arbiter. 5
t • An action which carries with it a claim for reinstatement is
principally an illegal dismissal case and not one for monetary
claims. Consequently, since it is an illegal dismissal case, the
rI
I
amount of any accompanying monetary claims is inconsequential.
3. ARTICLE 128 VS. ARTICLE 129.
There is a whale of difference between Articles 128 and 129 of the
Labor Code.
While Article 128 speaks of the visitorial and enforcement powers of
the DOLE Secretary or his duly authorized representatives (referring to the
DOLE Regional Directors), Article 129 refers to the adjudication power of the
Regional Directors or any duly authorized hearing officers of DOLE.
The nature and subject of the proceedings under Article 128 speak of
inspection of establishments and the issuance of orders to compel compliance
with labor standards, wage orders and other labor laws and regulations; thus, the
1 1 OreslloiXMring Ccrpaationv.lbi.Arelalo,G.R Nos. 757o$.48,Dec.14,1987.
2 Section 1[cj, ~XI, Book II~ rues tl ~lle laba'Code.
3 CilderelaMalkerogCorpalilllv.N.RC,G.RNo.112535,.kme22, 1998. _
4 Pkj I Eledlk: ~.he. v. Mrilez, Sr., R No. 95559, tb.l. 9, 1993,221 SCRA 606.
5 MRMirez ln<kJslries v. Secrelaly d laba', G.R No. 89894, Jan. 3, 1997, 266 SCRA 111.
756 BAR REVIEWER ON lABOR lAW

presence of employer-employee relationship is a condition sine qua non. On the

I i
!
CHAITER VIII
)URISDicnON AND REMEDIES

adjudicatory power by said labor officers but to the exercise of their visitorial
757

other hand, Article 129 confers upon the DOLE Regional Directors adjudicative
power, that is, the power to hear and decide any claim for recovery of wages, I and enforcement powers under Article 128.

simple (small) money claims, and other benefits. The said provision deals with
small money claims of employees or persons employed in domestic or
household service arising from severed employer-employee relations. 1
4. DOLE REGIONAL DIRECTORS WEAR TWO (2) HATS: ONE, FOR
ARTICLE 128 AND ANOTHER, FOR ARTICLE 129.
It is obvious from a reading of Articles 128 and 129 that the DOLE
Regional Directors wear two (2) hats thereby giving rise to the confusion as to
when they exercise their adjudicatory power under Article 129 and when they
exercise their twin visitorial and enforcement powers under Article 128 as the
duly authorized representatives of the DOLE Secretary.
This confusion is undersc;ored in the matter of where to elevate a case
on appeal from the decision of the DOLE Regional Director. If the decision of
the DOLE Regional Director is issued pursuant to Article 128 which basically
involves a..1. inspection case, the appeal should be made to the DOLE Secretary.
But if the decision of the DOLE Regional Director is made in accordance with
Article 129 which does not involve an inspection case, the appeal should be
made to the NLRC.
Illustrative of this point is a case decided by the Court of Appeals
entitled Storck Product Manufacturing Corporation v. Hon. Secretary of
Labor and Employment2 Petitioner in this case contends that although the
issues raised stemmed from an inspection case, the appeal should be made to the
NLRC and not to the DOLE Secretary because the appeal itself specifically
stated that it is being elevated to the NLRC. Finding this contention untenable,
the Court of Appeals declared that the order of the Regional Director, being an
offshoot of an inspection complaint, is appealable to the office of public
respondent DOLE Secretary. The provisions of Article 129 of the Labor Code
find no application in the present case considering that the instant case stemmed
from an inspection complaint duly filed with the DOLE Regional Office for
alleged violations of labor standards. Article 129, as amended, refers to the
adjudicatory power of the DOLE Regional Directors or any duly authorized
hearing officers of DOLE so much so that any decision/~rder of said
representatives, in the exercise of their adjudicatory power, should be appealed
l OCCUPATIONAL SAFETY AND HEALTH VIOLATIONS
m.
1. JURISDICTION OF DOLE REGIONAL DIRECTORS.
The DOLE Regional Director has original jurisdiction to issue the
following:
( 1) Order ofstoppage of work; and
(2) Order to suspend operation of any unit or department or the
establishment if there exists in the workplace a condition that poses
grave and imminent danger to the healthand safety of the workers
which cannot be voluntarily corrected by the employer within a
reasonable period. 1
l
t:
2. IIV~IINENT DANGER CASES.
a. Definiiion.
ir
An "imminent dagger" is a condition or practice that could reasonably
r
be expected to cause death or serious physical harm before abatement under the
enforcement procedures can be accomplished. 2
b. Correction in imminent danger cases.
f Where the employer is willing to make the necessary rectification, the
I same may be effected at the plant-level within twenty-four (24) hours in cases
~ where the conditions obtaining in the workplace pose grave and imminent
I danger to the lives and health of the workers and/or property of the employer,
e.g., boiler tube leakage; defective safety valves; pressure gauges and water
column; weak machinery foundations; and other analogous circumstances.3
3. NON-IMMINENT DANGER CASES.
Where the conditions are not of the types falling under "imminent
danger" as descnbed above, e.g., poor ventilation, housekeeping, inadequate
personnel protective equipment and other analogous circumstances, a reasonable
I period shall be given to the employer to comply, which period shall be

to the NLRC. But the instant case does not pertain to the exercise of
l
' Section 4(b), il relatioo iJ Seclkxls 2and 3, Rule VI (Heath and Safety Cases), RlEs on toe llsposiOOn a1 lltJor Stand<l'ds
' lliti<enshi'e Memxia Hospital, klc. ~.The Hon. Mrilslerd lalxr cn!En1Jioymeni.-G.R. No. 74621, Feb. 7, 1990, 182 cases ilBle ReJklna~Offols [Sept 16, 1987).
SCRA 5; See also Sbck Product~ Colpoolbl v. tioo. Secrelily« Lalxrand ~ CA-G.R SP No. 2 Rule 10.12.02, Occupational f'd1 and Safely Sla1daTJs, as amended
92164,hlg.31, 2006. 3 Section 2, ~ VI (Hd and Safely Cases), Rules on lle Disposlion of Labor SliniMls Cases il the Regional O!lices
2 CAGR.SPNo.92164,kiQ.31,2003. [Sept 16, 1987].
 CHAPTER VIII 759
758 BAR REVIEWER ON LAIIOR lAW )URISDIGION AND REMEDIES

expeditious and non-litigious mode of settling labor disputes, and in order to

dependent on the gravity of the hazards needing corrections or the period needed
to come into compliance safety and health standards.
1
.
I
I
give workplace parties real and practical alternatives in the voluntary arbitration
of disputes.
!
ry, 2. JURISDICTION.
COMPLAINTS AGAINST PRIVATE RECRUITMENT
1
AND PLACEMENT AGENCIES (PRPAsl FOR LOCAL
EMPLOYMENT
l
f
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
1 theCBA;
1. JURISDICTION OF DOLE REGIONAL DIRECTORS. f
r (b) All grievances arising from the interpretation or enforcement of
The DOLE Regional Directors have original jurisdiction over company personnel policies which remain unresolved after
complaints against a licensee and/or its authorized representative/s which are exhaustion of the grievance procedure;
filed in writing and Ull.der oath with the Regional/District/Provincial Office (c) Cases referred to them by the DOLE Secretary under the DOLE's
having jurisdictiom over the place (1) where the Private Recruitment and Administrative Intervention for Dispute Avoidance (AIDA)
Placement Agencies (PF.\,)Br:~nch Office is located, or (2) where the initiative (provided under DOLE Circular No. 1, Series of2006);1
prohibited act was committed, or (3) at complainant's place ofresidence, at the and
option of the complainam; provided, that the Regional Office which frrst i
(d) Upon agreement of the parties, any other labor dispute may be
acquires jurisdiction over the case shall do so to the exclusion of the others. • ~ submitted to the EVAs for voluntary arbitration.
:
It must be emphasized that this jurisdiction of the DOLE Regional 3. HOW INITIATED.
Directors covers only complaints against PRPAs engaged in local recruitment.
Complaints against PRPAs engaged in overseas employment fall under the Where a grievance remains unresolved despite bipartite efforts, either
I or both parties may voluntarily bring the grievance to an EVA who has
jurisdiction ofthe POEA.
jurisdiction over the region where the parties operate or work, through a written
v. I request indicating the following:
CASES SUBMITTED TO REGIONAL DIRECTORS
AND ASSISTANT REGIONAL DIRECTORS FOR
VOLUNTARY ARBITRATION IN THEIR CAPACITY
r
!
(a) Issue or issues to be arbitrated;
(b) The names and addresses of the parties involved; and
(c) Such other information that the parties deem vital in the
AS EX-OFFICIO VOLUNTARY ARBITRATORS lEVAs) immediate resolution of the dispute.
1. LACK OF APPLICABLE PROVISION IN THE LABOR CODE. 4. POWER TO HOLD HEARINGS, RECEIVE EVIDENCE AND ISSUE·
DOLE Regional Directors and Assistant Regional Directors are neither WRIT OF EXECUTION.
expressly authorized to act as Voluntary Arbitrators under the Labor Code nor The EVA shall have the power to hold hearings, receive evidence and
explicitly prohibited from acting as such. This is a void in the law which was take the necessary actions to resolve the dispute. The EVA may conciliate or
appropriately addressed by Department Order No. 83-07, Series of 2007, 3 mediate to obtain a voluntary settlement of the dispute.
designating all DOLE Regional Directors and Assistant Regional Directors as
Ex-Officio Voluntary Arbitrators (EVAs). Its issuance was made in line with the The decision or award of the EVA shall be final and executory after ten
Constitutional principle on the preferential use of voluntary modes in settling (10) calendar days from the parties' receipt of the copy of the decision or award.
. disputes and the mandate of the DOLE to promote voluntary arbitration as an A motion for reconsideration may be filed before the decision/award lapses to
finality and shall stop the running of the 10-day period for finality. No second
motion for reconsideration shall be allowed. A motion for reconsideration shall
1 rue
Sedi:J'I3, VI {Heat! and Safety CaSes), Ibid.
2 rue
Sedi:J'I36, VII, RUesMd RegtJaOOns ~ F'iWak! P.eauitmentllld Placementf¥dency fa' local~
.hJle 5, 1997. This was mentioned illle enumem6ood llevabls appeals ~tle DOLE Se::felay made by lhe Supreme 1 Issued oo August 11, 2006 by bmer DOLE Seaetry, now Associafe Justice ct lhe ~Court. Arluro D. BOOn. This is
Crutillhe 1999casectNaiOOal Federcmutlala'v. LaJuesma, G.R No.123426,Mith 10,1999. discussed und€r the topk of DOLE Secrelary's jiJisdidion, illia.
3 Issued by DOlE Secret!ly ArMo D. B1ion oo June 8, 2007.
fVU 01\t~ IU:YICnCK. Vl'\l I.AOU.K. U\W
be resolved within fifteen (15) days after the adverse party files its comment or
opposition thereto.
The EVA shall issue a writ of execution requiring the Sheriff of the
Regional Office or any duly-authorized regional personnel to execute the final
decision, order or award.
DOLE SECRETARY
H.
(NOTE: The Syllabus1 mentions only the following topics:
1. Visitorial and enforcement powers
2. Power to suspend effects of termination
3.Remedles
Discussion hereunder will, therefore, focus only on these topics).
1.
VISITORIAL AND ENFORCEMENT POWERS
1. THREE (3) KINDS OF POWER UNDER ARTICLE 128.
2
Article 128 of the Labor Code, as amended, basically enunciates the
three (3) kinds of power which the DOLE Secretary and/or the Regional
1
2
~ 1D the 2017 Sytb.ls.
Article 128. 1flsirxial Md Enmemeit PtJNer. - (a) The Seaellfy ct L.ax:t ll1d En~ment or his <Ltt aJfuiZEd
~. ilctldilg Lm regula:ioo t$ice(s, shal M.oe mtsS 10 efl1lloyer's 1axxt1s ll1d prerrises at iDf tine of hl
daf or night l'lt!eneYir wok is belrYJ !Rieltten llereil, ll1d lle rJjlt tJ avt lllerefiool, tJ quesbl iDf ~ 101
~ 9/rf fact, coodim cr matter v.flidl rmy be neoessmy tJ de!emi1e Wi6J1s or v.tii1 may akl i1 hl
enbam!rt ct tis Co:le 101 ct B1rf I<Dlr1aw, ~ader or lUes ll1d ~ issuedptJSUMt h!rekl.
{b) ~ lhe pMilns d Att:les 129 ll1d 2241217) ct llis Co:le illhe am.y, ll1d i1 cases v.t1ere hl
~ ct llflllk¥!r~ stil • l1e Seaeay ct L.ax:t ll1d ~ cr his rutj aJth002Ild
a
repesenlatM!s shal M.oe te pcMI!I" to issue CXXI1llm! orders 10 gt.e erea mlhe 100or slll1da'ds prrNisOls lis
Code ll1d cMler lcDlr legislatill based on lhe fn:qs ct lcDlr ~ Md enb"oemenl·ofbls cr ~
SliftoJ qileefs made illhe OOise r1 ilspedion. The Seaelay cr his ~ aJI1orV2d ~ Slal issue
Mils r1 exeaJioo 10 lhe ~ ilJthoriy b' l1e erDament d lhei" crdels. exaifi1 i1 cases Y.tlere lhe ool*¥J
contest; t.e DfiY,IS rille lcDlr ~ ll1d rimmert oftb1r ll1d llli>es issues SI.W<*d by dotunently
prtdsVIIlk:h wem notamilered illhe ame rl i1specioo.
hl<Xllerissued byllecll¥ aJihorized ~ctlle Seaelay ctl.m ll1d ~lllderllls Article IIVf
be appealed tJ lle laller. kl case S!lkl ordlr iMMs arooneliry IIWCIII.Iil. by 11e l!ll{lloyer rmy be perilcBI
~ 141001le ~ d a cash or suety bond issued by a ~ boodiQ cxxqmy iUt 8IDellled by l1e
Seaelaydl.ax:tlrld ~ illhe 1110111~tlllenmelaryamlillleader IQl8llled tan.
(c) The SeaeBy ct Lalor ll1d ~ rncrt t.ev.ise CRier stwage II 1\Gk 1r suspn;m d.opsabls d Blrf IIi!
or depment ol111 esttJislment v.f1en ~ dl the law cr ~ nJes ll1d regulimlS pa;es
poe ll1d imilertcBiger 10 lhe hdlllld safety dv.at.en; illhe ~- wm ~heirs, a heimJ
WI be corWdsd bdeEnlile r.t1e1t1er 111 crder b' l1e stwage d\\Gk orsuspn;kln II ClpEJlltions shal be lEd cr
not. kl case llevillatn is~ b llef!ddtle ~,heshal payfle ~concemed llei'soms
« ww:res ctm:llhe paiod ct such sqJpa!Je ct 1\Gk crSJSpenSioo cloperalial.
"(d) It shall be IDcrNNI b' 9/rf petSon cr entity il OOsM, il1lede. delay-or <M1eMte render i1eKedM! t.e ordels d lhe
Seaetay ct t.ax:t inl ~or his GJiy ~ representat;les issued JQSU«ttllle aJthaily Qflr1Ed
lllder llS Artk:le, ll1d no ilfeOOr aut cr erdiy shal issue ErT1lOOIY or pemment ijJndion or ~ crder cr
ot1efWise as&.rne jrisdiction C1Jef' w:rJ case i1l'cM1g lleenfatanenl ordelsissued il mrdancev.ilh llis Mi:kl.
CHAPTER VIII 761
jURISDICTION ANO REMEDIES
Directors, his duly authorized representatives, 1 may exercis~ 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. 2
The three (3) kinds of power are as follows:
I 1) Visitorial power;3
2) Enforcement power; 4 and
! 3) Appellate power or power of review. 5
II 2. WHO EXERCISES THE POWERS?
i 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 on "G. DOLE REGIONAL DIRECTORS, supra. Hence. the same will no
longer be touched in the discussion below.
The appellate power in No. 3 above may only be exercised by the
i
l
DOLE Secretary in respect to any decision, order or award issued by the DOLE
Regional Directors. -
~
3. NATURE OF THE VISITORIAL AND ENFORCEMENT POWERS.
t The visitorial and enforcement powers granted to the DOLE Secretary
I and the DOLE Regional Directors who are his duly authorized representatives,
are quasi-judicial in nature. 6
r 4. SUBJECT OF THE VISITORIAL AND ENFORCEMENT POWERS.
What is being inspected in the exercise of the visitorial and
enforcement powers granted to the DOLE Secretary or the DOLE Regional
Directors under Article 128 is the employer-establishment and not the
employees thereof. Consequently, in case of a finding of violation of the labor
standards, the awards granted in the inspection case are not confined to
(e) Mt perrment ~ blld py of vQation ct, cr muse ct alflcriV, lllder tis Article H.* !ippi'C4lriale
~ ilvestigalkln, beS!Jljec!ID s.mraylisrrissaltanflesel'li:e.
(f) The SecreBy d L.ax:t ll1d ~may, by 8AJIOilliale ragUabls,. ~ il keep In! maillai1
such~ recads as rn<rfbeneteSSaiY il ad of his visi!OOalllld erlorcementpaMliS IJldertris Code.
1 The OOl.E Regionalllied!xs ae 11e tiJ "aJhxizzO ~ d fle DOLE Seaetry refen8l il il Article 128 C'l
t.e Lalor Code. They ae il dage d l1e adn'inist<\tion ll1d enfo!tement d liDlr slllldMis IMI1illleir respectt.oe
Bri1Ixial jlisdicOOns. Under !he amendaDy prrM;ionsdRA No. 6715,1hevisiblalllld enlort:Emintpa.~US of the DOlE
Re'JioM Diecbs were retained. (See SecOOn 3, rue I,!Uls on lhe Disposiion ct t.ax:t S1a1dcrtls Cases illle Regional
011ices !Sept 16, 1987); Atilano v. De Ia Cruz, G.R No. 82488, Feb. 28, 1900, 182 SCRA 886; Sall.tjuel Colpolation v.
The lbl. CA. G.R No. 146n5, .fat 30, 2002).
2 SeepnJraph [aJilereof.
3 This is entxxled n~(a) tlereOI.
4 This Is treated il pngraphs (b) ll1d (c) llereof.
5 N; ll11ellded by Section 31, R.A. No. 6715, March 21, 1989.
6 This is bmd nthe 2"1 paragraph o1 Arti::le 128(bl thereof.
762 BAR REVIEWER ON lABOR lAW
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!
5. GRANT OF ANOTHER VISITORIAL POWER UNDER ARTICLES 37
AND 289 [274].
a. Separateness of the grant of visitorial power.
Besides the visitorial power granted under Article 128, another
visitorial power is granted to the DOLE Secretary and the DOLE Regional
Directors under Articles 37 and 289 [274] of the Labor Code, to wit:
"Article 37. Visitorial Power. - The Secretary of Labor or his duly
authorized representatives may, at any time, inspect the premises, books
of accounts and records of any person or entity covered by this Title, 2
require it to submit reports regularly on prescribed forms, and act on
violation ofany provisions of this Title.,J
"Article 289 [274]. Visitorial power. - The Secretary of Labor and
Employment or his duly authorized representative is hereby empowereJ
to inquire into the financial activities of legitimate labor organizations
11pon the filing of a complaint under oath and duly supported by the
written consent of at least twenty percent {20%) of the total membership
of the labor organimtiun concerned and to examine their books of
accounts and other records to determine compliance or non-compliance
with the law and to prosecute any violations of the law and the union
constitution and by-laws: Provided, That such inquiry or examination
shall not be conducted during the sixty (60)-day freedom period nor within
the thirty (30) days immediately preceding the date. of election of union
officials.'.'4
b. Distinctions.
Article 128 should not be confused with Articles 37 and 289 [274] of
the Labor Code because the purpose and object of the DOLE Secretary's
exercise of his visitorial power provided thereunder are completely distinct from
each other.
While Article 128 dwells on the visitorial and enforcement power of
the DOLE Secretary to inquire into the employer's compliance with labor
standards prescribed under labor laws and social legislations, the purposes of the
other articles are different, thus:
Maternity Children's Hospital v. Secretary af Labor, GR No. 78909, JliiE! 30, 1989.
Referring lo fi!e I[Reauilmentand PlacementofWmers),Sook I, labor Code.
3 ~ . 2
4 Asanended by SecOOn 31, RA. No. 6715, Marth 21, 1989.
.~~.
3 CHAPTER VIII
JURISDICfiON AND REMEDIES
763
f (a) Article 37 treats of the visitorial power of the DOLE Secretary and
~
~
the DOLE Regional Directors in relation to recruitment and
~
placement of workers for both local and overseas employment.
(b) Article 289 [274] treats of the visitorial power of the DOLE
! Secretary and the DOLE Regional Directors to inquire into the
I fmancial activities of legitimate labor organizations.
6. ENFORCEMENT POWER UNDER ARTICLE 128(b).
G
As _earlier stressed, the enforcement power is exercised pursuant to the
original jurisdiction of the DOLE Regional Directors. More particularly, this
involves the power:
a) To issue compliance orders to give effect to the labor standards
provisions of the Labor Code and other labor legislations;
b) To issue writs of execution to the appropriate authority for the
enforcement of their orders, except in contested cases/
c) To order stoppage of work or suspension of operations of any unit
....
or department of an establishment when non-compliance with t.1e
law or implementing rules and regulations poses grave and
imminent danger to the health and safety of workers in the
workplace. 2
d) To require employers to keep and maintain such employment
records as may be necessary in aid of his visitorial and enforcement
"" powers under the Labor Code.3
(NOTE: For more discussion on this topic, please refer to the comments
under the topic of "G. DOLE REGIONAL DIRECTORS," supra).
7. IT IS THE REGIONAL DIRECTORS, AND NOT THE DOLE
SECRETARY, WHO HAVE ORIGINAL JURISDICTION TO
EXERCISE THE VISITORIAL AND ENFORCEMENT POWERS
UNDER ARTICLES 37, 128 AND 289 [274).
In the instances contemplated under Articles 37, 128 and 289 {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.
t
1
Ar1i:le 128 [b), l.OOor Code.
Ar1i:1e 128ic11lid.; Sedioo 3[a] and [b), Rule X. Book Ill, Rules \J ~ t1e Llilor Code.
3 Ar1i:le 1281fl, LlilorCode.
J
 CHAPTER VIII · 765
764 BAR REVIEWER ON lABOR lAW I JURISDICI'ION AND REMEDIES

~ 4. REINSTATEMENT DURING PENDENCY OF THE ILLEGAL

8. 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
Il
!
DISMISSAL CASE.
Suspension of the effects of tennination will necessarily result in the ·
immediate rein&tatement of the terminated employees. An order of reinstatement
pending resolution of the case may thus be issued by the DOLE Secretary
the exercise of the visitorial and enforcement powers belongs to the DOLE T pursuant to this power. 1
Regional Directors, as the duly authorized representatives of the DOLE
Secretary. The role of the DOLE Secretary is confined to the exercise of his 5. THE TERMINATION NEED NOT BE RELATED TO UNIONISM.
appellate jurisdiction over the decisions, orders and awards of the DOLE The tennination contemplated under Article 292(b) [277(b)] need not
Regional Directors in cases brought before them for adjudication under Articles be related to the exercise of the right to self-organization by the employees so
128 and 289 [274]. (See the discussion on the appellate jurisdiction of the DOLE terminated. Hence, the employees need not be officers or members of a union in
Secretary, infra, which includes this topic). order to invoke or apply this power to suspend the effects of termination of the
(NOTE: The discussion on the DOLE Ragional Directors' original DOLE Secretary. It is not a pre-requisite to the valid exercise of this power that
jurisdiction is made and presented under the topic of "E. DOLE the employees so terminated should be officers or members of a union or that
Regional Directors, 1. Jurisdiction," supra). the cause of their tennination be related to the exercise of their right to self-
organization. For as long as there is a prima facie finding by the appropriate
2. official of the DOLE before whom the termination dispute is pending that it may
POWER TO SUSPEND EFFECTS OF TERMINATION cause a serious labor dispute or is in implementation of a mass lay-off, the

l. LEGAL BASIS.
One of the extraordinary powers granted to the DOLE Secretary is his
power under Article 292(b) [277(b)] of the Labor Code to suspend the effects of
termination of employment which he may exercise even pending resolution of
the legality or validity thereof in an appropriate proceeding.
2.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
1 would mean the immediate reinstatement of the terminated employees pending
2) the termination is in implementation of a mass lay-off.
3. 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.
T DOLE Secretary may validly suspend the effects of such termination by
ordering the immediate reinstatement of the termbated employees pending
l resolution of the legality or illegality thereof.
I 6. "APPROPRIATE OFFICIALS", MEANING.
i The Labor Arbiters and the Voluntary Arbitrators or panel of Voluntary
Arbitrators, as the case may be, are the "appropriate officials" referred to in
Article 292(b) {277(b)] who may make the preliminary detennination of the
existence of a prima facie evidence that the termination will cause a serious
labor dispute or is being made in implementation of a mass lay-off. Such prima
facie finding will then become the basis for the issuance by the DOLE Secretary
of his order suspending the effects of termination which, as earlier emphasized,
the final resolution of their termination case.
7. DISTINGUISHED FROM DOLE SECRETARY'S ASSUMPTION
POWER IN NATIONAL INTEREST CASES.
a. Different power of the DOLE Secretary.
This power of the DOLE Secretary granted under Article 292(b)
[277(b)] should be distinguished from his power to assume or certify labor
l disputes involving industries indispensable to the national interest under Article
278(g) {263(g)]. The following distinctions may be cited:

1 Article 292(b} !277(b)J, labor Code, as MlE!Ilded by Section 33, RA. No. 6715; No. 30, NCMl Pliner on Sl!ike, l'tketing 1 No. 12. Brie1iYJ Paper on RA 6715.
ir1d l..ockool, 2nd Edition, Dec. 1995.
766 BAR REVIEWER ON lABOR lAW
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 caus!!
strikes or lockouts in industries indispensable to the national interest.
Second, the former requires the conduct of preliminary determination
of the existence of prima facie evidence that the termination may cause a serious
labor dispute or is in implementation of a mass lay-off to be conducted by the
appropriate official of the DOLE before whom the termination dispute is
pending; while the latter does not require such preliminary prima facie
determination. In fact, prior notice and hearing are not required before the
DOLE Secretary may issue an assumption or certification order as held in
Capitol Medical Center, Inc. v. Trajano.1
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
292(b) [277{b)] exists, irrespective of the nature of the business ofthe employer;
while the latter may only be exercised in industries indispensable to ti.e 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.
b. Case where DOLE Secretary ordered both the suspension of the
effects of termination and the return to work of employees
pursuant to a certification order.
In the case of University of Sto. Tomas v. NLRC and UST Faculty
Union/ all the sixteen (16) officers and directors of the faculty union were
terminated on the grounds of grave misconduct, serious disrespect to a superior
and conduct unbecoming a faculty member. As a result of said dismissal, some
faculty members staged mass leaves of absence for several days, disrupting
classes in all levels at the university. The faculty union filed a complaint for
illegal dismissal and unfair labor practice with the Labor Arbiter who, on a
1 G.R. No. 155690, June 30, 2005.
2 G.R No. 89920, Oct 18, 1990.
CHAmR VII! 767
jURJSDICf!ON AND REMEDIES
prima facie showing that the termination was causing a serious labor dispute,
certified the matter to the DOLE Secretary for a possible suspension of the
effects of termination. On this basis, DOLE Secretary Franklin Drilon issued an
order suspending the effects of the termination of the union officers and
directors and directing the university «to accept them back to work under the
same terms and conditions prevailing prior to their dismissal." Later, on the
basis of a petition for assumption or certification filed by the university,
Secretary Drilon modified said order by certifying the labor dispute to the
NLRC for compulsory arbitration pursuant to Article 278(g) {263(g)] of the
Labor Code. He accordingly ordered the university to readmit all its faculty
members, including the 16 union officers and directors, under the same terms
and conditions prevailing prior to the dispute.
Based on the foregoing, it may be said that suspension of the effects of
termination has the same effect as assumption or certification as far as the
reinstatement of the affected employees is concerned.
8. PRELIMINARY DETERMINATION OF PRIMA-FACIE EVIDENCE.
The determination of whether a prima facie evidence exists tha: the
termination may cause a serious labor dispute or is L'l implementation of a mass
lay-off as would justify the suspension of the effects of termination should be
made at the inception of the labor proceedings. Thus, evidence on this particular
point may be presented prior to the presentation of evidence in the main case.
The only purpose of such presentation is to ascertain and establish whether the
termination may caiJSe a serious labor dispute or is in implementation of a mass
lay-off. Once evidence is presented upon which the appropriate official before
whom the termination dispute is pending may reasonably and sufficiently make
out a prima facie finding of such fact, a recommendation to the DOLE Secretary
for the suspension of the effects of termination may then be properly made.
3.
REMEDIES
i.
JURISDICTION
1. TWO (2) KINDS OF JURISDICfiON
The DOLE Secretary has the following jurisdiction:
(q) Original and exclusive jurisdiction; and
(2) Appellate jurisdiction.
i-1.
ORIGINAL JURISDICTION
The DOLE Secretary has original jurisdiction over the following cases:
768 liAR REVIEWER ON lABOR lAW
CHAPTER VI [[
769
JURISDIO"lON AND REMEDIES
(1) Petition to assume jurisdiction over labor disputes affecting industries
indispensable to the national interest (national interest cases); 1 preventive mediation, or to the intervention of a regional or local tripartite peace
council for the same purpose. 1
(2) Petition to certify national interest cases to the NLRC for compulsory
arbitration ·2 · 3. PARTIES WHO MAY REQUEST FOR DOLE SECRETARY'S
(3) Petition to'suspend effects oftennination;3 INTERVENTION.
(4) Administrative Intervention for Dispute Avoidance (AIDA) cases;4
(5) Voluntary arbitration cases;5 and Either or both the employer and the certified collective bargaining
(6) Contempt cases.6 agent (or the representative of the employees where there is no certified
bargaining agent) may voluntarily bring to the Office of the DOLE Secretary,
Nos. 1, 2 and 3 above have been discussed earlier. Nos. 4 and 5 through a Request for Intervention, any potential or ongoing dispute defined
will be discussed below. below. 2
i-1-A. 4. POTENTIAL OR ON-GOING DISPUTE.
ADMINISTRATIVE INTERVENTION
FOR DISPUTE AVOIDANCE (AIDA) A potential or on-going dispute refers to:
(a) a live and active dispute;
1. NEW RULE ON VOLUNTARY ARBITRATION BY THE DOLE
(b) that may lead to a strike or lockout or to massive labor ur.rest; and
SECRETARY.
(c) is not the subject of ar..y complaint or notice of strike or lockout at
A new form of dispute settlement by the DOLE Secretary was the time a Request for Intervention is made. 3
introduced by DOLE Circular No. I, Series of 2006. 7 Called Administrative
5. PROCEDURE.
Intervention for Dispute Avoidance (AIDA), this is a new administrative
procedure for the volunta.ry settlement of labor disputes in line with the Ail Requests for Intervention should be in writing and filed with the
objectives of R.A. No. 9285,8 Executive Order No. 523 9 and the mandate of the Office ofthe DOLE Secretary. A Request for Intervention shall state:
DOLE to promote industrial peace.
(a) The name and address of the employer;
1. NATURE OF ADMINISTRATIVE INTERVENTION BY DOLE (b) The name of the certified bargaining agent, or the employee
SECRETARY. representative duly designated in writing by a majority of the
This recourse is separate from the established dispute resolution modes employees where there is no collective bargaining agent;
of mediation, conciliation and arbitration under the Labor Code, imd is an . (c) The number of employees affected by the potential or ongoing
alternative to other voluntary modes of dispute resolution such as the voluntary dispute; and
submission of a dispute to the Regional Director for mediation, to the NCMB for (d) A briefdescription of the potential or ongoing dispute.4
Upon receipt of the Request, the Office of the DOLE· Secretary $hould
1 See Jln.lfi¢ (g) of Artie 278 [263L l.allor eooe. forthwith notify the parties and invite them for conference. The conference for
2 ld. Requests coming from the National Capital Region, Regions Ill, IV-A or IV-B
3 See~ (b) of Artie 292 [2n), l.allorCode.
4 Th6 Is a new foon cllispu!e selllemert i1troduoed by the DOlE Secrelay U1der DOlE Ciair No. 1, Series cl2006, shall be held at the Office of the DOLE Secretary unless the Secretary otherwise
Issued oo August 11, ZXl611f bmer OOlE Secretay MLJro D. Blbl, naN ad"ISIT9lished l1lE!lter cl the Hghest Coli!. directs. The conference for Requests coming from the other. regions shall be
Th6 was Issued illile l1ilh the OOjecWes d RA No. 9285, olherMse knat.n as the 'AiemaiM! llspille RisiJb1 NJ. c1 conducted by the appropriate Regional Directors for and on behalfofthe DOLE
2004' (approved 00 Ap112, 20041 ExeaJWe Qder No. 523 daEd Apt 07' 2006 Md the I1'I<JidcE cllle OOlE tl pnmote
i'ldustial peace. Secretary. 5
s As nmdaEd under OOLE Cim No.1, Seriesd2006, lbkl.
. 6 As pro.tled ll1der Altide 231 [2251 M1itl states: Altide 231 [2251. Coolefr4ll pcwe!S cllhe Seaelay d labor. In lhe
exercise d his pcMeiS tnier ills Code, the Secrelaly of lldlor may hold !rTf pernoo il di"ect or i1direct oonlenllt Md No.1, OOlECi"allarNo.1, Seriesof2006.
i'11X9! the~ penaties llerefor. ld.
7 Issued oo August 11, 2006 by bmer OOlE Secretly ArtJro D. BOOn, now adlstn]uistled merrber cl the Hi;lhest Court. 3 ld.
e Olhelwise kro.Nn as the 'AiemaWe Dispute Resolution Ad. ci 2004' (apprtNed oo Apri12, 2004J. ~ No.2,1bid.
9 DaledApril07, 2006. 5 No.3,1bid.
 liAR REVIEWER ON lABOR lAW
770
6. PRE-REQUISITE TO INTERVENTION BY DOLE SECRETARY.
The Office of the Secretary or the Regional Director, in the proper case,
shall proceed to intervene after the parties shall have manifested that:
(1) They voluntarily submit their pote!'ltial or ongoing dispute to
interventio11 by the Office of the DOLE Secretary;
(2) There is no pending notice of strike or lockout or any related
complaint in relation to their potential or ongoing dispute;
(3) They shall refrain from any strike or lockout or any form of work
stoppage or from filing any related complaint while the Secretary's
intervention is in effect; and
(4) They shall abide by the agreement reached, whose terms may be
enforced through the appropriate writs issued by the DOLE
Secretary.
All agreements settling the dispute should be in writing and signed by
1
the parties as weli as the official who mediated the dispute. .
7. PROHIBITION ON DISCLOSlJRE OF INFORMATION.
The parties and the officials or empioyees of the Department of Labor
and Employment who took part in the intervention proceedings are not allowed
to testify in any court or body regarding the disclosures, submissions or
positions made by the parties therein?
i-1-B.
VOLUNTARY ARBITRATION BY DOLE SECRETARY
l. VOLUNTARY ARBITRATION AFTER AIDA.
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
3
sixty (60) days from the parties' submission of the dispute for resolution.
1 No.4,1Hd.
2 No.5, 1*!.
3 No.6, llid.
CHAI'TERVIII 771
JURiSDICTION AND REMEDIES
2. DOES THE DOLE SECRETARY ASSUME THE ROLE OF
VOLUNTARY ARBITRATOR ONCE HE ASSUMES JURISDICTION
OVER A LABOR DISPUTE?
In Philtranco Service Enterprises, Inc. v. Philtranco Workers
Union-Association of Genuine Labor Organizations <PWU-AGL0), 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 case2 was resolved by
the Acting DOLE Secretarf in favor of respondent union. 4 A motion for
reconsideration was filed by petitioner company. The DOLE Secretary,
however, declined to rule on the motion citing a DOLE regulation, 5 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. Tne 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 ofVoluntary Arbitrators. 6 ·
Before the Supreme Court, petitioner asserted that, contrary to the CA' s
ruling, the case7 is not a simple volunta..ry 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
1 GR. No. 1m962, Feb. 26, 2014. AllixxiJh llis case i'l\d.6 ailedsion d lhe DOLE Seaelay, the pliqlle eiUicialed
heleil eq!Btf ~bile N..RC. .
2 Thecasewascb:fleBI as NCMB-NCR CASE No. NS02;Q28.{)7.
3 Adi1g DOLE &mtay Drio P. Cnrz.
4 The Adi1g DOLE Seaelay's dedsKx1 ooJered the reiiSiatamtd 17 reRndled ~ pkls~ olher
relefs.
s See Sedix17 fmey d Aw<rd4Jecisi:Jn), ~XIX (GIWcn;e Madlilely a"MI Vokmy Mli1ratioo1 Depmelt Order No.
40-03, Se!iesd~issued m~ 17,3Xl3 bybmer"OOLE Secrelayl'a!OOaA Sto. Tomas. kp!Mies:"Section
7. Fllaity of Awani>Uedsbl. · The dedsiln, mler, resWti:ln a awa"d d lhe vWltaly afili!aiir a pcroel d volntlly
llllirabs sha1 be li1al iV1d exeamry aiEr Ell (10) calenda" days from ~ d l1e copy d the iJolllld a decisi:ln by the
paties 11111 lshalnotbe suQiedd aIOOiim tr~.·
s Fa 1his reasoo, accorci'9 tllhe {A, toe petitioo is dismissble plJ!SUOO! tl Supreme Coli! CiltulcJ No. 2-90, entitled
"GGideines Ill be{)bserved i1 Appeals Ill the CCIII d Appeals IIlii to lle ~ Crut, v.tich pn:Nides th<i: '4.Erroneous
a
Appeals. -Ni appeal taken ~lhe ~Coolta"lle Court .Aweals by lhe M1ll"g a~ mOOe shal be
disrrissed. "IIi:
7 Rde!ri1g 1D the case docke!ed as NCM3-0CR CAS£ No. NS-02..()28-07.

772 BAR REviEWER ON lABOR lAW
1 (4) Those rendered by DOLE Regional Directors in simple or small money
coverage of Article 277 [262]/ and instead placed it under Article 278 [263], of
the Labor Code. For its part, respondent union argued that the DOLE Secretary
decided the assumed case in his capacity as Voluntary Arbitrator; thus, his
decision, being that of a Voluntary Arbitrator, is only assailable via a petition for
review under Rule 43.
The Supreme Court, however, pronounced that:
"It cannot be said that in taking cognizance of NCMB-NCR CASE
No. NS-02-028-07, the Secretary of Labor did so in a limited capacity, i.e.,
as a voluntary arbitrator. The fact is undeniable that by referring the case
to the Secretary of Labor, Conciliator-Mediator Aglibut conceded that the
case fell within the coverage of Article 278 [263] of the Labor Code; the
impending strike in Philtranr.o, 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 1over the case, the: provisions of Article 278 [263] became
applicable, lilY representation to the ~ontrary or that he is deciding the
case in his C1J13City as a voluntary arbitrator notwithstanding."
Conseque!ltiy, 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."
i-2.
APPELLATE JURISDICTION OF THE DOLE SECRETARY
l. DECISIONS NOT APPEALABLE TO THE DOLE SECRETARY.
At the outset, it is important to emphasize the decisions, awards or orders
that are not appealable to the Office of the DOLE Secretary, to wit:
(l) Those rendered by Labor Arbiters that are appealable to the
Commission (NLRC) which has exclusive appellate jurisdiction
thereover,3
(2) Those rendered by the Commission (NLRC) since they can be elevated
directly to the CA by way of a Rule 65 certiorari petition;
(3) Those rendered by the BLR Director in the exercise of his appellate
jmisdiction since they can be brought directly to the CA under Rule 65
certiorari petition;
1 Arli:le 275 [262). Jurisdi:lion wer olher labor cispufl!s. • The VoUlfaly Albitralor or pMel d. Vcilntay Arblrators, upon
cr;Jreemen! of the parties, shal also hea' all decile al ~labor displies ilckxivJ lllfai' labor JXactices and b8gainilg
deadock.
2 Arli:le Zl61263J is entitled 'Siri<es, Piie&lg and llx:kouS.'
3 Per Arli:le 224(b) [217 (b)), il relaliln 1D Altide 229 [223] d. the Lalor Code. Arli:le 224(b) [217 (b)) prMies: 1he
camissiJn shal have exOOsi.'e ~ ~risdm wer a1 cases decided by LIW Albill3!s.'
CHAPTER Vlll
jURISDIUION AND REMEDIES
713
1
claims under Article 129 of the Labor Code since they are appealable
totheNLRC;
(5) Those issued by DOLE Regional Directors in their capacity· as Ex-
Officio Voluntary Arbitrators (EVAs) since they can be brought
directly to theCA 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?
l.l. APPEAL FROM NLRC TO DOLE SECRETARY AND FROM DOLE
SECRETARY TO THE PRESIDENT, ELIMINATED.
The original rendering of the Labor Code3 provided that the decisions of
the NLRC are appealable to the DOLE Secretary on specified grounds.4 And the
decisions of the DOLE Secretary rendered in his appellate jurisdiction may be
appealed to the President of the Philippines subject to such conditions or limitations
5
as the president may direct. These modes of appeal, however, have been completely
eliminated. Heoc.e, there is no more appeal from the NLRC to the DOLE Secretary
and subsequently to the Office of the President. The current rule is that there is no
appeal from the NLRC's decisions. The only way to elevate the decisions of the
NLRC to the CA is to initiate an original special civil action of certiorari under Rule
65 of the Revised Rules of Court.
2. PRESENT-DAY RULES ON APPEALS TO THE DOLE SECRETARY.
Though appeals from the NLRC to the DOLE Secretary were eliminated,
presently, there are several instances in the Labor Code and its implementing and
related rules where appeals to, and exercise of appellate jurisdiction by, the Office of
the DOLE Secretary are allowed.6 Unfortunately, there is no single provision in the
Labor Code or piece of jurisprudence' which consolidates or comprehensively
embodies the rules on appeals to the DOLE Secretary. These appellate rules are
1 Enlille:l 'Reoowly d wages, si11J1e nmey dins and olher benefits.' ft proWies: 'Mt dedsiln or resclltioo fllhe
Rsgicnalllettr orhea'i"g cf'ter ptiSlB1l t>lhis proW;«ln may be appealed oo the scme~ pro'liBI i1 Arfde 229
{223) d.lhis Code, wiltl f.te (5) c3endcr days tan ~ d a copy rJ. sail detism or ll!Sdulixl, t> lhe Ni6x1al Labor
RBaiDls eoomssm Mlk:h s11a1 ~eSCWe lhe awea Mho len (10) caleOOa'days ttm the Slbrissiln aile lastpleactlg
reqli'ed or abellnler ils rules.'
2 nacallltn:e v.ill RE 43 rJ. the Rev$!d Alles rJ. Coot. as l!fllllCialed il L.uzoo Oeveqlmert Sri v. Asrocialioo d
L.uzoo~BriEmpbyees,G.RNo. 120319,0ct6,1995.
3 See Artk:te 228 12221 flereof.
4 lis prMied IJ1d« Arli:le 229 {2231: 'Arli:le 229 {223). xxx. {a) Wlhere is aprim facie Mlenre d OOliSe ddisaelixl; (b) H
made pueiy111 q.dxlsd law; and (c) Hllere is a~ that lhe nalkmlsecurily or soda! and earoric siOOiity is
threciened.
5 NaOOnalfederaiXnoflm'v. laguesma, GR. No. 123426, Ml!dl10, 1999.
~ ld.
1 M I!I1UIIleliDxld lhe Wlioos appeas ID lheOOl£ Secre!ay was made illle 1999 cased National Fedelalkln ci labor v.
L.aJuesma, ~ HaNeYer, 1his l1l!1doY.Il needs ID be updated il the lgh! rllhe lalest ameodmenls ID lhe Lrt.or Code as
well as pronan:ementd the Supreme-coort il anumber of decisions prorrulgaled il recent cases.
 liAR REVIEWER ON lABOR lAW
774
scattered in various provisions of the Labor Code, its implementing rules and a
number of other rules of procedure as well.
Below is a detailed discussion of the various appeals that may be instituted
to and filed with the Office of the DOLE Secretary in the exercise of its appellate
jurisdiction.
3. OFFICES FROM,WHICH APPEALS TO DOLE SECRETARY
ORIGINATE.
Appeals to the DOLE Secretary may originate from any of the following
offices:
(l) DOLE Regional Directors;
(2) Med-Arbiters;
(3) BLR Director; and
(4) Philippine Overseas Employment Administration (POEA).
i-2-A.
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. Among the cases emunerated
earlier as fulling under the DOLE Regional Directors' jurisdiction, only decisions
rendered in the following cases are so appealable:
1 iTepcrOOie dal'laJeai:liJ!ytofle~'(See
(a) Visitorial (inspection) cases under Article 37;
(b) Vi~itorial (inspection) and enforcement cases under Article 128,
2 , SecOOn 6(a) of rue
3 OlfK:es v.flk:h piOiides: Section 6. RM!w by fie Seaetry. - (a) The Secretay at his a.w~ iltiaM! ex~ l1e JeqUeSt of
(either routine or initiated through a eomplaint);
, 'Miele 37. VISibial Potoe". - The Seaetay d l..rbJ ex h6 dutf dlaizm ~ may, at fl'tJ lire, ilspect l1e
prerrises, boc*s d OCCiliJlls lr1d lecxrds d. fl'tJ pi5SOO a enlily IXM!red by lisT~ requie l to Slbri repcxt regtDtj oo
presailed bms, lr1d a:t oo vkllalioo d. fl'tJ piMsin; of IUs Tille~ (Refl!lliwJ ~ Tie I ~ 11111 Plinlment d.
WOOr.ers), Bodd, L!iJcrCode).
2 ·'llsibia cases iMWe ilspection d. estallislrnelil ~ delemile ~ .t!IOOor slaldtlds; v.flile enbtemelt cases
BdYe~d~orderslrldYrisdexecukn
3 Based oo f1e ~ pcllV3Ilh d. Al1ide 12B(b), L!iJcr Qxle, villi\ stae: 'M mler issued by l1e clkf dlaizm
represertiWe dlle Seaellry d.l..tblr 5111 ~ lnler tlis Micle l1la'J be~ kllhe *·In cac;e sakl ader
ilVOM!s amonet:ly awad, M ~ by l1e ef11Jk7ter may be ~ oott ~ f1e pos1D;j d acash ex 5\Jiely bond
issued by a repulimle llolm;IOOIT1lfl'tJ cktf s:aediiEd by lle Seaelay d. l..tblr lr1d ~ illle aTXXJ1I
~ ~ 11e nme~ay awcr11 nlhe m1er ~from.' ~ anended by Reptii: AJ:J. No. n~. Jooe 2, 1994).
Addiiooatf, ft is proWled il Section 1, RUe IV, d !he R1Jes oo f1e Disposi:ll d l..tblr SfMdMis Cases illhe Regional
Oflices, ltAJs: 'Sedm 1. ~ -The ader d lie Regblal Di"ecilr shal be ilal and exooJay ll1less ~ kllle
Secretay rt I.!W !l1d ~ wilhin ten (10) caSxkr daysfitm ~ llereof." The gi'OOlds iJr 1he appeal ae
prtMded i1 Sectkxl21lerect, llus: 'Grooods tx lflll8<i- The CJRieve<i pall' may~ to 1he SecreBy 111e Order of lle
~Dim on fl'tJ ctlle tlbWlg groords: (a) 11ere is a(rina me Mlence ct m;e ct <lscre&xl oo the pat ollhe
RegiooallliecU; (b) lle<lrderwas seaJred 1tmJgh !laud, ooeJtiln agrmlln1 ~;(c) lhe appea is nate purelf
oo quesOOrls ct law; !l1d (d) serilus EII01S illhe ildi1gs d. fads were CDllriiEd v.tlich, if rKt arreded, MJUkl cause grave
CHAI'TIR VIII
775
)URISOICflON AND.REMEOIES
· (c) Occupational safety and health violations;1
(d) Cases related to private recruitment and placement agencies (PRPAs)
for local employment, such as:
1) Applications for license or denial thereof;
2) Complaints for suspension or cancellation of license by reason of
administrative offenses;
3) Complaints for illegal recruitment; and
4) Petition for closure of agency. 2
2. CASES NOT APPEALABLE TO DOLE SECRETARY.
The decisions of the OOLE Regional Directors in the following cases are
not appealable to the DOLE Secretary but to the labor office or labor official
indicated opposite each one of them:
(a) Visitorial cases under Article 289 [274], involving examination of
books of accounts of independent unions, local chapters/chartered
locals and workers' associations-· to BLR Directo?
(b) Small money claims cases arising from labor standards violations in
a.'l ammmt not exceeding P5,00.0.00 and not accompanied with a Claim
for reinstatement under Article 129- to NLRC4 ·
(c) Cases submitted for voluntary -arbitration in their capacity as Ex-
Officio Voluntary Arbitrators (EVAs) under Depa;tment Order No.
83-07, Series of2007- to Court of Appeals5
aso x.
Section 2, il re1am tl SecOOn 3(a), Rule Book IU dfle Rules to
kTY,llement l1e Lm COOe}.
vttHealh ll1d saety cases) d 11e Rules oo 1he Disposi:ll ct t.m smJads cases n11e Regiooai
111e ef1"!lklyer illdlcfqklyee, may retewfle mlerdlle Regiooai~Aec~Ir-Mtk:h s~a~ be imledia!elyma 101 exeaJb)'
unless stayed by l1e Seaellry upon posi"g by lle ~ of a reasonOOie cash ex pelfanM:e bond as ixed by lhe
Regiooal Dim~ See also lle 2'1 ~d Ali:le 128(b), l..tblr COOe.
2 Seem 62, llepabnent Older No. 141-14, Series c( 2014, Nov. 20, 2014.
3 The BLR Diredi:r, not 11e OOLE Seae!ay, has lle ~ CllUlority <Her decisiJns of !he DOlE Regkrlallleclas
iMMlg exaTi1aOOns d lriln a::carE as pRMied IJ1der RE Uct lle Rules d Procedle oo ~.
issued ooAid 10,1992, bv.t'SEC. 3.•hrisci:ticrullle Regiooal Oiecb".- The RegiooalllrectrshalexsrciseOiillilal
and exc.tJsWe Pisdk:tioo (M!I" appi3iln tr m regisiabl, pelilixls u I3IC8IaOOn of m legisbmlllld ~
iJr exari1alioo ct lrilns bids ct lmlDs. SEC. 4. .bisdicliln ct l1e !beau.- XXX '(b) The 8Ral shal ecett:ise
appela!e j.l'isdk:lon IM!r Ill cases ~ tan 11e Regional Dim iMMlg m regisltatioo a cm!latioo of
cerilicatesof lriln registlation 1r1<1 ~ ra- exatilaOOi! o1 m txDs ct CIXXXIlt.'
4 Micle 129 rille t.m Code prcM:Ies: 'M{dedsm ex resotJOOn rille Regixlal Diectlr ex hem,! ~ JUU"t ~ lhis
provisioo may be appealed oo the meglllRis pnMied i1 Miele 229 (223] d. !lis Code, v.i1lil fi.1e (5) caleOO<rdays fian
~d. a~ d saki cle!:isbl ex resOObl, tl fie Natiooal Uixr Rel<mons Cormission whi::h shal resotJe lhe ~
Yoilhilten (10) caleOO<rdays from the Slbmlndlhe lastp~ requied oralowed lllderils rUes.'
5 namt1a1a M!h ~ 43 of lhe Revised IM!s ct Court, as S1llldafed ill.uzoo Dewqlment llri v. AsscxiiOOn of
Luzon~ BMk Empklyees, G.R No. 120319, Oct 6, 1995.1111lS! be noled lhat Depa1ment Onler No. 83-07,
Series of 'l!YJ7, does rKtmen1iJn l1e proa!Cbed elevating the decisioos of111e Blf.s b a hi;lherbixllal. Certany, ~
ro 111e OOLE Seael!ry is not proper silce lhe DOlE Regional Diecklrs se I!Dlg ~ ct 11e cac;e nlhei" capacity
as B/f.s. Flltiler, lis ~ed'illle said Depment Older lhat lheir designation as 'e/As is '{tjo C001Jiemenl the
existing roster d. qualified and Accrediflld Vokmtly Albi1ra1Dis (AVf.s) xxx.·
776 BAR. REVIEWER ON lABOR. lAW
(d) Union registration-related cases, such as:
I) Denial of application for registration1 of said unions -to BLR
Director
3) Decision on petition for revocation or cancellation of registration
of said unions- to BLR Director
(e) Notice of merger, consolidation, affiliation and change of name of said
unions - to BLR Director
(f) CBA-related cases-
1) Application for registration of sing/e-enterprisi CBAs or petition
for deregistration thereof- to BLR Director
2) Petition for denial of registration of single-enterprise CBAs or
denial of petition for deregistration thereof- to BLR Director
Note must be made as regards Request for SEBA Certification when
made in an unorganized establishment with only one (1) legitimate union,3 over
which the DOLE Regional Director has original jurisdiction to issue the SEBA
Certification being requested. The rule, however, becomes different once thll
requesting union fails to complete the requirements for SEBA certification during the
validation conference before the DOLE Regional Direc.tor, in which event, such
Request should be referred to the Election Officer4 for the conduct of certification
e!ection5 which necessarily would mean that such certification election should now
be conducted under the jurisdiction of the Mediator-Arbiter to whom the Election
Officer is duty-bound to report the outcome of the election proceeding.6 Certainly,
1 See Artk:1e 243 [236] ct lhe l.liXJ COOe v.llk:h pn:M:les: 'M 243 [236). De!D d registraiKin; ~· The dedskln ct the
t.aJor Relatioos Oiviskx1 illle reg(m office denyiY,J regislraiWxl may be ~ by the ~ unkln to lhe BlmJ
v.ithil m{10) daysfllxn~li rm theroof.'
2 As$fgLislled tom cases i:MM"g ~ CBAs Ytflich fa!llllderlle oii:Jilal jJrisddiJn d l1e BlR DieciDr.
3 U\der llis slua1kxl, 11e DOLE Regiala Oi'ec\a", before v.tlom lhe RepSbr SEa-\ CeltifK:alion is &led, sllotil refer lhe
Re<JJeSt roc SEaa. Celtifta1ion ID the M!dattr-Albiter b' lhe detenrilaloo d 11e prtlXiely ct ~ a cs1ificatioo
eledbl, il vilich case,lle MediafDr-Arti:r OOit' has the jJis!ifuliD decile l1e cdicalion elec&xl issue. (Sectioo 6, Rule
VI~ i1 relalixlto FU!s VIII a1d IX. Depatnent Order No. ~15, Saiesd2015 [Seperller 07, 2015]). Note lllJSI be
nale ta when 11e Request br SEBA Certi!ication is 11a1e il Cllllogailed esiOOiishmenl vidh more 1m ooe (1)
le]linaE Iaber agillizalion, lhe MedMliler t<tes CNfJ' tan lhe IXX.E ~ Dim il the male" ct hem,! a1d
~ tle Issue of cel1ification eledin
4 "EEedkln Ofti:el" refelsto ill ~ ri l1e Bueal d. Labor Relalioos cr l1e tmRI!Iations1JMsial illhe Regkxlal Oflile
cUhOOllld t1 OXld.lct cer10:a1oo elecbls, elediln arm dlim !I'd cmtxrm d. elediJns !I'd refelenda. {Sedkxl1
pj, rue I, llld Sections 2-5, lUI XII, 8ooll V, ~ to 1fl1>lemErt the t.m"Code, as anended by [)epatnlrt Order No.
40-03, Series ct zm. ar
[Feb. 11. 2.003D. • is t.e 8edion 01rter v.11o ma1 11M amo~ 11e pre-e1ectioo ~ llld
eledkx1 proceedPJs. (Sedkln 1, Rule IX, 8ooll V, llil.).
s Sediln 4, rue VII ri lhe ~ tJ h1)lernent lhe Labor Code, as atmiOO by Oep<r1mert<lnler No~ ~15, Series ct
2015 [SepErmer07, 2015]. Theeection sl"ooldbec:ondJded il !Kmdin:el'ill~le IX lhemol.
6 lh:ler tte rues, vidhil 24 hoiJs lroollle Ina ca1V8SS ct votes, l1ere beiJJ a vakl eledm, the Eldin Ofticer sha'1
iillsni1therecools of lhecase tllle Med-Aibi!erv.tlo shal, YttillleSillll!iiiJiod fllmreceiptd.llenn.tes llld resulls
ct eledm. issue ill cxder proclairiVJ the restJt aile m
electioo !I'd arifti'g 11e Yot1ich OOiailed lie lmjxity of 11e
vaid \des cast as tle sole illd exd.tsive bafgailirg !rJen1 illle $~.qed lagai1i1g 111ft. xxx. {The pOIIistJn entitled
'Procllmlli:ln em certifcation alhe re5IJ1 a the election' shoold ·no« be denorTilated as Sectioo 21, rue IX. Bool< v,
FU!s tJ ~ lhe l.liXJ Code, by m d.lhe feilUI1llelhJ Oldeled by Secbl17. 0epmen1 Order No. ~15,
Saies d 2015 [Sepmber 07, 2015). Tils section was Ol'giJal¥ ~Section 20, perOepatnent Order No. 40-03,
Seres a! 2003, [Feb. 17, 2003], but l was subseqlJe!ltti ftHllll'bered to Secbl19, per Depa1ment Order No. .m:.()J,
LHAPTER. Vlll
795
)URISDICflON AND REMEDIES
disposition, the Tripartite Voluntary Arbitration Advisory Coimcil (TVAAC)
passed several Resolutions1 on expedited procedures in voluntary arbitration
proceedings. The procedures apply to all voluntary arbitration cases handled by
a voluntary arbitrator involving simple issue/s where hearings, reception of
evidence, submission of post hearing briefs/position papers, if necessary, and
promulgation of decision can be completed within twenty (20) calendar days
from submission of the case to the arbitrator. However, this procedure does not
apply to cases falling under the Free Legal Aid and Voluntary Arbitration
Services (FLAVAS) program.
6. CONTROL OF ARBITRATION PROCEEDINGS.
It is generally accepted that the conduct of arbitration proceedings is
under the jurisdiction and control of the arbitrator subject to such rules of
procedures that the parties may jointly prescnbe or those which appropriate
agencies like the NCMB may legally require. 2
7. RELIEFS AND REMEDIES THAT MAY BE GRANTED BY
VOLUNTARY ARBITRATORS.
Besides the procedural remedies discussed above, the Voluntary
Arbitrator or panei of Voluntary Arbitrators may grant the same reliefs and
remedies granted by Labor Arbiters under Article 294 [279] of the Labor Code,
such as reinstatement; separation pay in lieu of reinstatement, in case
reinstatement becomes impossible, non-feasible or impractical; full backwages;
monetary awards, damages and attorney's fees.
J.
PRESCRIPTION OF ACTIONS3
1. MONEY CLAIMS CASES.
a. Prescriptive period is three (3) years under Article 306 [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. 1
1
Sudl as ResautXxl No. 1, Seriesct 1995 f!\liJus! 11. 1995] ~ lhe Expedited Plocedlles fn-Voklntly Arbmaoon
ct tm Oispu1es. This was lak!r ~ byfEsOO&oo No. 1, Series a! 1997 pansy 00, 1997] illd subsequenttj, by
Resokltiln No.2, Seriesd1999~ 15, 1999.).
2 No. 53,-NCMl Prineron{300vcm t-khi1ety illd Voklrtay Arbi!aOOn.
3
Nole fllJSt be made d lhe fact 1ha il bo«llle 2011 arx1 2012 syiOOi fill' Ialor lcr.v, on~ lhe presa¢.'e periods of l1e
lllbbJ Cle specifK:ally f191tioned: 'a. Mxley dains; b. Htegal dismissal; c. Unf<ir labor prd;e; d. Olfenses penaf!Zed by
lheuwCode a1d IRR issued pusuootlhereiD.'In the 2013 illd 2014 sylabi, lhere is no sirTir enwneration. Henoo, 31e
Presa¢.'e periods in ol1er cases ae ciled i1111e ilsmtdisaJssi:ln.
{';IV
b. AU other money claims {)f workers prescribe in 3 years.
Article 306 [291] contemplates all money claims arising from
employer-employee relationship, including:
l) Money claims arising from the CBA. 2
2) Increme~tal proceeds from tuition increases.3
3) Money claims of Overseas Filipino Workers (OFWs). 4
Note must be made that in Southeastern Shipping v. Navarra, Jr..S the
1-year prescriptive period in Section 28 of POEA-SEC was declared null
and void. The reason is that Article 306 [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 306 (291] of the Labor Code but Article
1146 of the Civil Code.
The 3-year prescriptive period in Article 306 [29It solely applies to
money claims but not to illeg<~l dismissal cases which are not in the nature of
money claims. The prescriptive period of illegal dismissal cases is four (4)
years under Article 1146 of the Civil Code. 7
3. UNFAIR LAlOR PRACTICE (ULP) CASES.
a. Prescriptive period ofULP cases is one (1) year.
The prescriptive period for all complaints involving unfair labor
practices is one (1) year from the time the acts complained of were committed;
otherwise, they shall be forever barred.8
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 afmal judgment finding that an unfair labor practice act was committed
1 Sedbi1,1UlU,Boc*VII, Rulestl ~thelaborCOOe;E.Gamxl, re v.NLRC, G.R No.123769.~22. 1999;
Sutnav.NlRC, G.RNo.121147,JIIle26, 1998.
2 cooarn v. POEA. G.R. Nos.104776, 104911-14 and 105019-32. Dec. os. 1994.
s UWersily d Pqasi'al v. Cmfescr, G. R t«l. 109977, Sept 5, 1997; Cebu ~ d Tedlnoi:Jgy v. Ople, G.R No. L-
58870, Ajri 15, 1988, 160 SCRA 503.
• Oegano v. A~crde ~ Corp., G.R No. 154460, Nov. 22, 2005; ScxJtheaslem S1W1Y:1 v. NiM¥Ta, .k, G.R No.
167678, .k.lle22, 2010; Md1e MimJemen1, Inc. v. Ros&1da, GR No. 168715, Sept. 15, 2010.
5 G.R. No.167678, m 22. 2010.
6 M::le 306 12911. MJney Clains.- AI rroney dains aisi1g from ~.qloyee reiOOons IKX:IUi'g 001bJ the elfedMiy
d lhis Qx!e WI be fled wialn 1ree (3) yeas fltm t1e 1me 11e wed cdal a:aued; o11e1vtte Dley shal be beYer
bared.
7 Crl.rllav. Ctrnation Phiqlpi1es, G.R No. 70615, Feb. 29, 1986; SeealsoPLDTv. Pi'IJol, G.R No.182622, Sept. 8, 2010;
f1JIJs MintadlriYJ, Inc. v. NLRC, GR No. 117963, Feb. 11, 1999; Prerriere l:leveqment BCilk v. NLRC, G.R No.
114695, J14' 23, 1998; Ha;jonoy Rural Balk, Inc. v. NLRC, GR No. 122075, Jan. 28, 1998, 285 SCRA 297.
8 P~ 2, Article 305 !290], labor Qx!e; Section 2, Rue II, Book VII, Rues 1D ill'jlm.ent the lb Code.
CHAmRVIII 779
)URISDitriON AND REMEDIES
(b) Disciplinary action cases against land-based OFWs and seafarers and .
principals/employers that are administrative in character, excluding
money claims. 1
2. PERIOD TO APPEAL
The party aggrieved by a decision of the POEA Administration may appeal
the same to the Office of the DOLE Secretary within fifteen (15) calendar days from
receipt of a copy of the decision. Failure of the aggrieved party to perfect the appeal
within the reglementary period shall render the decision of the POEA
Administration final and executory. The Docket and Enforcement Division shall not
accept an appeal that is filed beyond the reglementaiy period of appeal.2 The period
is ten (1 0) days in case of appeal to the DOLE Secretary of the Order of the POEA
Administrator denying the Motion to Lift a Closure Order or Motion to Re-open.
Any motion filed on the denial of a motion to lift shall be treated as an appeae
3. POEA CEASED TO HAVE JURISDICTION OVER MONEY CLAIMS
CASES.
It must be noted that the POEA ceased tu 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 actua~ mora~ exemplary and other fonns of damages. The
jurisdiction over these claims was transferred to the Labor Arbiters of ihe NLRC by
virtue of Section 10 of RA. No. 8042, as amended.4 Consequently, appeals from
decisions of ihe Labor Arbiter may be instituted to the Commission (NLRC).
I.
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 thlrd person who is tasked to decide on the merits of the case and
whose decision is final and executory.5 It is a third-party settlement of a labor
1 11*1.; ld.; ld.; ld.
2 Secful186, IUl VII, PlrtVI, RlMsed POEA Rue; and Regi&Dxls Gaiemi1g theRecruinenllllf~ofLMd­
Based Overseas ~ W<xkers of 2016 and SecOOn 170, ROO IX, P1rt V, the 2016 Re.oised POEA rues and Regt.datioos
Galemi"g the Reauilmentlni ~of Seafaels.
3 Sedioo 92, IUl XI, Part II, Re.ted POEA IUls and Regutmls ~ lle Recnilnetlllf ~ d Lm
Based Overseas Fqii1o WoXefs ct 2016 and Secful88, RUe X. PM II, l1e 2016 RMed POEA PJJes and Regulatioos
Governing K1e Reaui1ment Clld ~of Seafarers.
4 k; !mlllded lalely by RA. No. 10022 [Milt:h 8, 2010~
5 Secful1[dj, Rule II, NCM3 RlMsed ProcedJral Guiderre; il the Conduct of VoUltay Albilrairl Pitx:eEdYdS [Oct. 15,
2004].
/'80 BAR REVIEWER ON lABOR lAW
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 aVoluntary 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) orne appointed by the NCMB in case either of the parties to the
OBA refuses to submit to voluntary arbitration.
This ierm includes a panel ofVoluntazy Arbitrators. 2
b. Two(2) kinds of Voluntary Arbitrators.
Based on the above defmition, Voluntary Arbitrators may be classified
into two (2) kinds, namely:
(1) "Permanent Arbitrator" referring to the Voluntary Arbitrator
specifically named or designated in the CBA by the parties as their
Voluntary Arbitrator; and
(2) "Ad-Hoc Arbitrator" referring to the Voluntary Arbitrator chosen
by the parties in accordance with the established procedure in the
CBA or the one appointed by the NCMB in case there is failure in
the selection or in case either of the parties to the CBA refuses to
submit to voluntary arbitration.3
c. Is Voluntary Arbitrator an employee of government?
A Voluntary Arbitrator is not an employee, functionary -or part of the
government or of the Department of Labor and Employment; he may be a
• ~ 2[Defilim riTenm], NCt.e Pliner oo Strke, ~ il1d l..o:koot, 2nd Edli:J1, Deoorrlle' 1995.
2 Sec&rl1 teL Rule I, NCt.tl Revised fllocedl'a QJileliles illle Condud r1 Vokrllay MlitlD:xl Proceecfllgs (Oct 15,
2004t See alsoMi:fe 212(n), Labor Code; Section 1, Rule~ Book V, Rilles tlln1JiernertlleliilorCode, asanended by
Depmert Older No.~. SerEs d 2003, !feb. 17, 2003t Section 1 t27J, ~le IH, NCMl Mcrlual dPnx:ecbes b'
Cad:IOOn ill! PJwerf.oe tle:iamtases. . jJJisdiction of wtmy IIIJilralion Ill ilclude a1 lmSOived dispules, grievances cr other rnauers !lisi'g floo1 l1e
3 Sedion 1{e]. Rule H, NCM3 Revised PRx:ediJal Gukieiles illle Condoct d Vokrday A1bir.Dx1 Proaledi1gs {OdOOer
15,2004).
CHAPTER VIII
jURISDICfiOIII AND REMEDIES
/'81
private individual· but authorized to render arbitration services provided under
labor laws. 1
1.
JURISDICTION
1. ORIGINAL AND EXCLUSM JURISDICTION.
a. In generaL
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have
exclusive and original jurisdiction over the following cases:
(I) Unresolved grievances arising from the interpretation or
implementation of the collective bargaining agreement (CBA). 2
(2) Unresolved grievances arising from the interpretation or
enforcement of company personnel policies.3
(3) Violations of the CBA which are not gross in character. 4
(4) Other labor disputes, including unfair labor practices and
bargaining deadlocks, upon agreement of the parties. 5
(5) National interest cases.6
(6) Wage distortion issues arising from the application of any wage
orders in organized establishments. 7
(7) Unresolved grievances arising from the interpretation and
implementation of the Productivity Incentive Programs under R.A.
No. 6971.8
• ludo &Luym Colpaalion v. Saomklo, G.R No. 140960, J;n 20, 2003.
2 ~ prtMdOO i1 Al&:le274£261J, liilorCode; No. 44, NCMI Prineroo GrievlllCe Mlclilely il1d VWntay Artftcmt
3 ld.; ld.
4
Per Article 274 £261llle em ~· \iolation rllhe CBA me<llS 1'9;illlll oocYor l11itiXJs refusal t> carc*f v.«ht.e
eoononic prrMsms It llerecl.
5 See Article 275 £2621, Lab« Code. Ulder lhis p«Msson, al other labor cisplmls. idJdilg ll'iai' labor pnm;es ill!
~ dealkldts, may a1so be Slbrilled mvoUBy aiJi1lation upoo agreernentdlle paties.
6 Article 27~) ]263(11)] leMse allows lhe paties ~ ~ Ill sulxrit e.ten lhe so-caled "nakr1aa i1!elesl rJ!fli!t b
\dJnfay llbitalkxl, bebe cr 'rtf stage ct the ~ asblratOO process prior b lhe Sltlnissbl d toe rescUin See
also No. 44, NCMl Plineron Grievalce Mactmy illdVoUlllly Arbilratioo. .
1 RA. No. No. fif27 era::at 00 Jltf 7, 1989 also expMded 1he j:Aisd'di:Jn ct voUlflKy abitration kl ilclude all~YeSdv'ed
W<rije.d'ISioltioo ccre; as aresulrllhe appbloo ct~ !Xdels issued by tHfoJ Regiooal T~ Wages il1d ProOOdMly
Boan:l il Slblisl'm~uts M1ere l1ele is OOieclive bargail~ agreement cr reoo.Jrized labor lriln. See also No. 44, NCM3
Primer on Grieva1ce Mdlilely and VOOntary Albitralion. .
s Ol1erMse kroM1 as l1e 'Produdivily Incentives M ct 1990' enaded on November 22, 1990. Ttds law eJCpCI1ded lhe
i1felprela1ion and iT1lfernenlatio ct a productMty ilcenliies prog!Mli'Alm remans unre&Wed v.«hil twenty (20) ~
~ from 1he line ci lhe subn1ssion lo labor-management COI1llil1ee. See also No. 44, NCMB Primer oo GrieYcr1ce
Madlinery and Voluntary Arbillation.

782 BAR REVIEWER ON lABOR lAW
I.
JURISDICTION OVER UNRESOLVED GRIEVANCES
1. UNRESOLVED GJUEVANCES.
As to what is meant by the term "unresolved" grievance, both Articles
273 [260) and 274 [261] ar·~ ~dent on thls point. They do not require that a
"decision" or "resoltdiQfl .. be made or rendered or an action be taken on the
grievance before it may be considered as "unresolved. " The grievance that
would necessitate it!; devation to a Voluntary Arbitrator or panel of Voluntary
Arbitrators for ,adjlllllimion and resolution may be treated as "unresolved" in
either of two (2) SeB!W'&,namely:
(1) A decisilm 10r resolurion was rendered thereon through the various
stepsof1heg::·. tn-:~ n: :.:·::~~r> ;md either or both parties is/ar~ not
satisfied theK· .' . •. •r
(2) No acliorl at aU was taken tr,ereon within the period of seven (7)
days Jium. its submission for resolution to the last step of the
grievacc.e machinery;
Within said ~en (7) days, the law 1 requires that the grievance be
"automatically reftmd to voluntary arbitration." It is thus clear that the said
period should be reckoned not from the date of the issuance of any decision or
resolution on the grievance, or more accUilttely, from the receipt of a copy of the
decision or resolution by the parties to the grievance but from the date the
grievance is submitted for resolution to the last step of the grievance machinery.
No other conclusion can be drawn from the clear provision of Article 273 [260]
except that whether or not a decision or resolution is issued therein, the said
period starts to run from the date of submission for resolution of the grievance to
the last step of the grievance machinery prescribed in the CBA and not from the
date a decision or resolution is rendered by and through the grievance
machinery.
Supposing no action or decision is made by the grievance machinery
within said period, what is there to elevate to voluntary arbitration? Under thls
circumstance, what is brought before the Voluntary Arbitrator or panel of
Voluntary Arbitrators is not a decision or resolution rendered through the
grievance machinery but the very raw issues presented as grievance before the
grievance machinery - unacted upon and sans any ruling thereon by the
grievance machinery. Thls explains the use of the generic term "unresolved" in
Article 274 {261].
1 Allicle 273 {2601, labor Code.
LHAmRVIII
JURISDJCilON AND REMEDIES
783
2.0NCE BROUGHT TO VOLUNTARY ARBITRATION; ADDITIONAL
ISSUES OTHER THAN THE GRIEVANCEITSELF MAY BE RAISED
OR RESOLVED THEREIN.
Since labor policy encourages the settlement or resolution of all issues
or irritants in the labor-management relationship as a means of promoting
industrial stability, parties to a voluntary arbitration case should be allowed to
add issues other than the grievance which is the subject thereo~ provided it does
not give undue advantage to one and cause prejudice to the other. The party
wishing to add other issues must inform the other party and seek his conformity.
The other situation which would allow an issue to be added is when
after the grievance has been presented, it is discovered that it is linked or
interrelated to another issue not previously resolved and the resolution of the
latter is necessary to the final determination of the grievance. 1
3. ELEVATION OF GRIEVANCE DIRECTLY TO VOLUNTARY
ARBITRATION WITHOUT PASSING THROUGH GRIEVANCE
MACHINERY.
The eievation of a grievable issue directly to voluntary arbitration
without coursing it through the grievance machinery appears to be proscribed by
the Labor Code which directs the parties to a CBA to establish a grievance
machinery for the adjustment and resolution of grievances prior to their
elevation to voluntary arbitration which is considered th.;, last step in the
grievance procedure. In view, however, of the State policy to encourage
voluntary arbitration of labor-management disputes, it is submitted that a
grievance may be brought directly to voluntary arbitration without passing
through the grievance machinery, especially when the latter has been proved to
be ineffective in the past, or when the parties inadvertently failed to include a
grievance machinery provision in their CBA. 2
The foregoing is exemplified by the case of Central Pangasinan
Electric Cooperative, Inc. v. Macarae2/ where the parties voluntarily agreed
to submit the issue of illegal dismissal for voluntary arbitration without passing
through the grievance machinery. The Supreme Court found nothing untenable
to such submission. The parties' active participation in the voluntary arbitration
proceedings, and their failure to insist that the case be remanded to the grievance
machinery, shows a clear intention on their part to have the issue of respondents'
illegal dismissal directly resolved by the Voluntary Arbitrator. Said the Court:
"We therefore find it unnecessary to rule on the matter in light of their
1 No. 48, NCiv'B Plinlroo Griev!r1ce Macllilery illd Voluntaly Albitratioo.
2 No.47, llid.
3 GR No.145800, Jal. 22, 2003.

784 BAR REVIEWER ON lABOR lAW
preference to bring the illegal dismissal dispute to voluntary arbitration without
1 the matter, it will decide the same correctly.
passing through the grievance machinery."
4. INTERRELATIONSHIP BETWEEN GRIEVANCE PROCEDURE
AND VOLUNTARY ARBITRATION.
It is of vital importance that the interrelationship of the two procedures
- grievance and arbitration - be borne in mind by those who study and practice
arbitration. A grievance procedure in which few disputes are settled inevitably
overloads arbitral machinery. Arbitration procedures and awards that undermine
the grievance machinery by pennitting serious disregard of its prescribed
procedures can invite more arbitration and fewer settlements by negotiation.
Arbitration that encourages overemphasis on technical procedural requirements
will thwart settlemmt on the merits so that pressure builds for resort to self-help.
Obviously the balance to be struck requires judgment, preeminently on the part
of the representatives of v· :,ms and management, who have initial and primary
responsibility. How !hey discharge their functions may be affected by what
arbitrators do. Arbitration is a powerfu! tool that can, on occasion, send
reverberations tluough the larger organism, the grievance procedure and shop
office relatior:s. 2
S.A PARTY IS NOT ALLOWED TO GO DIRECTLY TO COURT IN
DISREGARD OF VOLUNTARY ARBITRATION AFTER DECISION
IS RENDERED BY GRIEVANCE COMMITTEE.
It is settled that when parties have validly agreed on a procedure for
resolving grievances and to submit a dispute to voluntary arbitration then that
procedure should be strictly observed.3
Before· a party is allowed to seek .the intervention of the (;Ourt, 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." 4 Indeed, the underlying principle of the rule on
exhaustion of administrative remedies rests on the presumption that when the
1 See also Philinare Sh~ &Equ~ &Jpply, ~ v. NIRC, GR No. 126764, Dec. 23, 1999.
2 No. 11, NCM3 Priner oo Grievcr1ce Macti1ely omVokmlaly Mlifratkxl.
3 VMm v. CA. GR No. 138938, Oct. 24,aoo. 344 OCRA 268,281.
4 DOmo. v. Cacdoc, GR No. 168475, July 4, 2007, 526 SCRA 440, 458; ME!tl Dug Oistrbution, Inc. v. t1e1ro
Corpoortioo ~Associalion-FFW, GR No. 142666, Sept. 26, 2005, 508 Phi. 47, 60.
CHAffiRVIil
JURISDICTION AND REMEDIES
785
administrative body, or grievance machine?', is afforded a chance to pass upon
The case of Octavio1 presents the classic example of an employee who
brought a grievable issue for adjudication by the Grievance Committee but who,
instead of submitting the issue. for voluntary arbitration after the Grievance
Committee resolved it against him, filed a case raising the same issue with the
Labor Arbiter. Petitioner here raised before respondent's Union-Management
Grievance Committee the determination of his salary increases as provided in
the CBAs. Thus, his case involves the proper interpretation and implementation
of the pertinent provisions of the CBAs. And in accordance with the procedure
prescribed therein, the said committee made up of representatives of both the
union and the management convened. Unfortunately, it failed to reach an
agreement. Petitioner's recourse pursuant· to the CBA was to elevate his
grievance to the Board of Arbitrators for fmal decision. Instead, nine (9) months
later, he filed a complaint before the Labor Arbiter. Holding that petitioner
Octavio's recourse to the labor tribunals (Labor Arbiter and NLRC) below as
well as to the CA, and, fmally, to the Supreme Court, must fail, the High Court
pronounced as follows:
"By failing to question the Committee Resolution through the proper
procedure prescribed in t.ie CBA, that is, by raising the same before a
Board of Arbitrators, Octavio is deemed to have waived his right to
question the same. Clearly, he departed from the grievance procedure
mandated in the CBA and denied the Board of Arbitrators the opportunity
to pass upon a matter over which it has jurisdiction. Hence, and as correctly
held by the CA, Octavio's failure to assail the validity and enforceability of
the Committee Resolution makes the same binding upon him. On this score
alone, Octavio's recourse to the labor tribunals below, as well as to theCA,
and, fmally, to this Court, must therefore fail."
n.
JURISDICTION OVER VIOLATION OF CBA
Article 259(i) [248(i)] of the Labor Code mentions violation of a CBA
by the employer as a form of ULP. Similarly, Article 260(f) [249(t)] thereof:
considers violation of a CBA by the labor organization as ULP. These
provisions have been qualified by Article 274 [26lt in that "violations of a
Collective Bargaining Agreement, except those which are gross in. character,
shall no longer be treated as unfair labor practice and shall be resolved as
grievances under the CBA. For purposes of this article, "gross violation" of
1 Rizal Seo.riy & ProiEctNe Se!vices, Ire. v. M<ra<rl, G. R No. 124915, Feb. 18, 2008, 546 SCRA 23, 40; PltMnce of
2'art!oqaDel NOI1ev. CA. G.R No.109853, Oct. 11,2.00l, 396Phi. 709, 72fJ.
DrUJ 2 OctiMo v. Philppi'le Long Dis!Mce Telephone Corr4>MY, G.R No.175492, Feb. 27, 2fJ13.
3 Jurisdiclioo d Vduntary Ar1>ilra1Drs or Pa1el d Vduntary Albitralols.
~b BAR REVIEWER ON lABOR lAW
CBA shall mean flagrant and/or malicious refusal to comply with the economic
provisions of such agreement." · Voluntary Arbitrator who is mandated to resolve the dispute. His decision
In other words, (1) ordinary violation of a CBA which involves non-
economic provisions thereof; and (2) violation of its economic provisions
which is dot gross in character, are no longer treated as ULP. Consequently,
they should be resolved as ordinary grievances or grievable issues properly
cognizable under the grievance machinery and voluntary arbitration provisions
ofaCBA.
Only gross violation of a CBA as defined in Article 274 [261] is
considered ULP, in which case, the jurisdiction thereover belongs tQ the Labor
Arbiter under Article 224(a) [217(a)] of the Labor Code. lfnot gross in nature,
the same shall be treated as a grievable issue properly to be adjudicated under
the Grievance Machinery' and, if unresolved, through the process of voluntary
arbitration. 2
m.
JURISDICTION OVER OTHER LABOR DISPUTES
Under Article 275 [262] of the Labor Code, upon agreement of the
parties, the Voluntary Arbitrator or panel of Voluntary Arbitrators may also hear
and decide all other labor dispute$, 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. 3
IV.
JURISDICTION OVER NATIONAL INTEREST CASES
Article 278(g) {263(g)] of the Labor Code which involves the DOLE
Secretary's power of assumption of jurisdiction or certification to the NLRC of
labor disputes affecting industries indispensable to the national interest, also
provides that "[b]efore or at any stage of the compulsory arbitration process,
the parties may opt to submit their dispute to voluntary arbitration."
This means that even if the case has already been assumed by the
DOLE Secretary or certified to the NLRC for compulsory arbitration, or even
during its pendency therewith, the parties thereto may still withdraw the case
from the DOLE Secretary or NLRC, as the case may be, and submit it to a
Voluntary Arbitrator for voluntary arbitration purposes.
1 Under Article 273 [260], Labor Code.
2 UnderAI1icle274 !2fi11, Ilk!.
3 See iiso Seclioo 4, ~le XIX, Bcxt V, Rules mft1Jiement the l.aba" Code, as mnded by DepDneni<lR!er No. o~Q.m,
Series d 2003, ]Feb. 17, 20031; Section 2, Rule r-J, NCMl Revised l'roaidr.ll Gileiles illhe Cooduct d VokJltaly
AlbMation Fmedi1gs [Oct 15, 2004].
CHAPTER VIII 787
JURlSDICTION AND REMEDIES
Consequently, once submitted for voluntary arbitration, it is the
rendered therein shall be final and executory ten: (10) calendar days after receipt
·thereof by the parties.'
v.
JURISDICTION OVER WAGE DISTORTION CASES
1. 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. 2
In unorganized establishments, where there are no CBAs or
recognized or certified collective bargaining unions, the employer and the
workers should endeavor tc correct such distortion among themselves. It is
required that any dispute arising therefrom should be settled through the
NCMB and if it remains unresolved after ten (I 0) calendar days of conciliation,
it should be referred to a Labor Arbiter in the appropriate branch of the :t-.TLRC.
It is mandatory for the Labor Arbiter to conduct continuous hearings and decide
the dispute withiii twenty (20) calendar days from the time said dispute is
submitted to him for compulsory arbitration. 3
VI.
JURISDICTION OVER DISPUTES INVOLVING
THE PRODUCITVITY INCENTIVES PROGRAM
Disputes and grievances arising from · the interpretation or
implementation of the productivity incentives program under R.A. No. 6971 4
should first be submitted to the Labor-Management Committee for resolution. If
they remain unresolved within twenty (20} calendar days from the time of their
submission to said Committee, the same should be submitted for voluntary
arbitration in line with the pertinent provisions of the Labor Code. Under this
law, the productivity incentives program is required 1o designate and include the
1 M:le 278(gJ [263(g)L Labor Code.
2 M:le 124, l.!ixr Code, as anended lly Section 3, RA. No. fil27; SecOOn 7, Chapter II, 1111llemenlilg R!Aes of RA. No.
fil27; Section 1, Rule VII, Rules ciProl:edtJe-oo Mnil1Um Wlfll F~ Ssued by lie Natklna Wages and f'rodudMty
Con11issi:lnoo{)4 Jllle 1990. ·
3 llid.;ld.;kl.; ld.
4 Olherwise knaMI as lhe 'PrOOucMy lncri.oes Pd. d 1900.' ttwas ~ oo NoYenDer 22, 1990.
788 BAR REviEWER 0111 LABOR LAW CHAPTER VIII 789
jURISOICfiON AND REMEDIES

names of the Voluntary Arbitrators or panel of Voluntary Arbitrators who were to abide by and comply with the resolution that may be rendered therein,
previously chosen and agreed upon by the Labor-Management Committee. 1 including the cost of arbitration. 1

2. The Submission Agreement should contain, among others, the

REMEDIES
1. HOW VOLUNTARY ARBITRATOR ACQUIRES JURISDICTION.
The Voluntary Arbitrator or panel of Voluntary Arbitrators shall
exercise jurisdiction over a specific case only under the following:
(1) Upon receipt of a Submission Agreement duly signed by both
parties;
(2) Upon receipt of a Notice to Arbitrate when there is refusal to
arbitrate by one party;
(3) Upon receipt of an appointment or designation as Voluntary
Arbitrator by the NCMB (Board) in either of the following
circumstances:
(3.1.) In the event that the parties failed to select a Voluntary
Arbitrator; or
(3.2.) In the absence of a named Voluntary Arbitrator in the CBA
and the party upon whom the Notice to Arbitrate is served
does not favorably reply within seven (7) days from receipt
of such notice. 2
2. HOW INITIATED.
Based on the foregoing discussion, an arbitration may be initiated either
byway 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.3
3. SUBMISSION AGREEMENT.
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
following stipulations:
(1) An agreement to submit the case to arbitration;
(2) The specific issue/s to be arbitr-ated;
(3) The name/s of the Voluntary Arbitrator or panel of Voluntary
Arbitrators;
(4) The names, addresses and contact numbers of the parties;
(5) The agreement to perform or abide by the decision that may be
rendered therein by the Voluntary Arbitrator or panel of Voluntary
Arbitrators.1
4. NOTICE TO ARBITRATE.
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
If after exhausting the grievance procedure, the grievance remains
unresolved and one party refuses to submit the same to voluntary arbitration,
the following procedure should be observed:
(1) A Notice to Arbitrate should be served upon the refusing or
unwilling party, copy furnished the permanent Voluntary
Arbitrator, if one is named in the CBA, and the NCMB Regional
Branch having jurisdiction over the workplace;
(2) After the lapse of the 7-day period within which to respond to the
Notice to Arbitrate, the permanent Voluntary Arbitrator shall
immediately -commence the arbitration proceedings;
(3) In the absence of a pennanent Voluntary Arbitrator named in the
CBA, the NCMB shall appoint a Voluntary Arbitrator who shall
immediately commence the arbitration proceedings upon receipt of
such appointment. 4
The Notice to Arl>itrate should contain, among others, the following:

, Sedkx11tiJ, RUe II, t«:MB Re'lised Proc:ed!l'a GtliielireS it tre Cooduct of VoiJllily Alllhm Proaled~ [Oct 15,
2004).
1 Sedioo 4[bJ aid 9, RA. No. 6971; Sedioo 3[oJ, Rule I, !l1d SecOOn 3(eJ, Rule rl, Rules ~lementirg RA No. 6971. 2 Sectioo~. RuleiV, lbil.
2· Sedioo 4, ~ rl, NCM3 Revised Prtx:edural Gukleliles il U1e CooOJct r1 Voi.JnBy AlbircDxl Proceedi1gs [Oct 15, 3 Sedkxl1m, Rule II, NCMl ReWed Procedural Guk!e!i1es it lte CoOOucl-d VWtly M1i1rm ProaledDJ$ [Oct 15,
2004]. 2.004j.
3 No. 54, Ncr.B Priner on Grievance Macllile!y Mel Volun1ary Albilraldt 4 Sectioo 6, Rule IV, lbil.

l
790 BAR REVIEWER ON lABOR lAW
(I) The names, addresses and contact numbers of the party upon
whom the notice is made;
(2) The arbitration clause of the CBA;
(3} The specific issue/s or dispute/s to be arbitrated;
(4) The relief sought; and
(5) The name, address and contact numbers of the party initiating or
requesting the arbitration. 1
5. SUBMISSION AGREEMENT VS. NOTICE TO ARBITRATE.
"Submission Agreement' is sometimes called a "stipulation" or an
"agreement to arbitrate." It is used where there is no previous agreement to
arbitrate. The submission agreement which must be signed by both parties,
describes an· existing dispute. It often names the arbitrator, prescribes the
procedure in the hearing and sometimes contains considerable details of the
arbitrator's authority and other matters which the parties wish to control.
However, a "Demand" or a "Notice of Intent to Arbitrate" or simply a
"Notice to Arbitrate, " is used more in instances where there is an arbitration
clause in the CBA which, under the law, is required to provide for a grievance
procedure and a voluntary arbitration clause with respect tc disputes arising
from the application or interpretation of the CBA or the interpretation or
enforcement of company personnel policies. Thus, it is perfectly valid to
stipulate in the CBA on an "agreement io arbitrate" future disputes that may
arise under and during the term thereof. If a dispute is covered by such an
arbitration clause, arbitration may be initiated unilaterally by one party by
serving upon the other a written demand or notice of intent to arbitrate. 2
Sometimes, both the Submission Agreement and the Notice to Arbitrate
are used interchangeably.3 Parties to a case may still choose to execute a
submission agreement even if there is already an arbitration clause in the CBA. 4
6. SOME PRINCIPLES ON JURISDICTION OF VOLUNTARY
ARBITRATORS.
l) Resort to voluntary arbitration from grievance machinery is in the
nature of appeal. - Article 274 [261] describes the nature of the
jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators
as "original and exclusive" when they exercise their power to hear and
decide "unresolved" grievances which are elevated to them after the
process of the grievance machinery proved unsuccessful. In reality, the
1 Sectkxl7, Rule IV, Ibid.
2 No. 55, Ilk!.
3 No.54,W.
~ Shoe Co., 21 LA 550, 55().551, Roder, 1953; E.K Porter Co. ~- lk1iled S!r.v, Fie lnl S1eel Produc!ioo
4
WO!ker.;,406F 2d 643and Dis1rictCooncilvs.Anderson, 104 LRRM2188,2189.
l.
CHAPTER Vll! 791
)URISDIOlON AND REMEDIES
exercise of such power vested upon them is appellate in nature as may
· be clearly gleaned from the provisions of Article 273 (260], in relation
to Article 274 [261], that all grievances which are not ~ettled or
resolved within seven (7) calendar days from the date of their
submission for resolution to the last step of the grievance machinecy
shall automatically be referred to voluntary arbitration prescribed in
the CBA. 1
2) Note must be made that only grievances that are "unresolved" by the
grievance machinery fall under the "original and exclusive"
jurisdiction of the Voluntary Arbitrators or panel of Voluntary
Arbitrators. If a grievance therefore has not been submitted at the first
instance to the grievance machinery, the Voluntary Arbitrators or panel
of Voluntary Arbitrators do not have jurisdiction to hear and decide it.
Being mandated by law2 to hear and decide grievances at the first
instance, it is the grievance machinery which is in actuality, exercising
"original and exclusive" jurisdiction over the same and not the
Voluntary Arbitrators or panel of Voluntary Arbitrators who may only
validly acquire jurisdiction over them if they are "not settled or
resolved within seven (7) calendar days from the date of the submission
for resolution to the last step of the grievqnce machinery." Prior tc the
completion of the grievance procedure or grievance machinery, the
grievance cannot "automatically be referred to voluntary arbitration
prescribed in the CBA."
3) Cases cognizable by Voluntary Arbitrators in their original
jurisdiction but filed with Labor Arbiters,3 DOLE Regional
Offices4 or NCMB 5 should be disposed of by referring them to the
1 See Mi1e 273 [260), lltJor Code; Sedion 4, Rule XIX, Book V, Rules tJ tf1llement 11e taxr Code, as aneilded by
DepmentOrderNo.~. Seriesof2003, lfeb.17, 2003t Sedix11, Rule IV, NCMl Relisedl'rociDiaiGuklehsil
fleConductdVokmy Altlibabl Proce~Dlgsp;t. t5, 2004].
2~m~~taxr~ . .
3 ~ 2, Ari:le 274(261JdlletalorCode, asanended byRA No. ~71511ld i1lJiemenll!dlrf0epmertOrderNo.
~; See aso Sedirt 1, Rule rv. NGI.t! Re.ised Plocecbal Guileiles n11e ca1b:t a Vokmly Alblalln
Proceedi1gs {Ott 15, 2004J. TNs procedlle d reqli1lg f1e refem1l d lle issue tllle grkMI1oe rra:li1ery llld voUtly.
llblralbl is 8so elll1liEd llldEr lle last ~ d Ari:le 224 [217] M1k:h slaEs Ia '{c)ases •~~ish.! flan lie
i"iilprelaioo or il'fllelle 1tallln d colledive ~ ~ ll1d 11ose crisi1g tom lie iEqxelabl orenbr.enEnl
d ~ pers<me1 poldes sha'l be disposed d byte Latxr Mlier by refeniJJ f1e me tllle grievMce mmey
llld vok!ntry ~as may be proWled il saki a,eement;.'
4 Paagl1!Pl2. Al1i:le 274(261], Lalor Code; Sec&x14, Rule XIX, Book v, RlJies m~te Lalor Cede, as aneilded
by DepMnent<lrder No.~. Series of 2003, feb. 17, 2003J. The Reglooa IJim"s d f1e llepatnlrt of lltJor Md
Bqlla,ment ae net liMed tl enlel1ai1 disputes, griiNMces or maters falfrg under f1e erdusMl Md at,Ji"lal j.Jiiilicbl
oflle VoMtJy AdiabsorpcllelaVokmlay Mlilrators llld Iiley ae ~ bimlediaW)'~ n rererdlescme
kllle apprqlliale giMlce mi1ely or mtay llbllalioo piOYided il 11e CBA.
s See Sedi:liJs 4and 6 jaJ &[b], Rule V, NCM3 M:H1ual ci ProcediJes for CoocilialiJn and PlwerM tlediation Cases. In
cases v.m l.llleSOMld gri6Yailces ere raised il nom ct stnres em lclcl«xb bei'g hadld by~ of
tte NCMB, 1he sam stmd il'mediafett be referred kl aVdunt:ry AI1Jib"atlr IOObJal~ accepled by lle prils from f1e list
of NCM3 Aa:rediled Voluntlly Albit!a1ors for~ acli:Jn.
792 BAR REviEWER ON lABOR lAW
Voluntary Arbitrators or panel of Voluntary Arbitrators mutually
chosen by the parties. 1
4) Cases cognizable by Voluntary Arbitrators but filed with regular
courts should be dismissed. - The case of Union of Nestle Workers .
Cagayan de Oro Factory v. Nestle Philippines, Inc} presents a
unique situation where the union filed an injunction case (with prayer
for the issuance of a temporary restraining order) with the Regional
Trial Court (RIC) against the employer to prohibit the implementation
of the "Drug Abuse Policy" which requires the conduct of
simultaneous drug tests on all employees from different factories and
plants in keeping with the government's thrust to eradicate the
proliferation of drug abuse. The company asserts that it has the right:
(a) to ensure that its employees are of sound physical and mental
health, and (b) to terminate the services of an employee who refuses to
undergo the drug test. The union challenged the validity of the
implementation of the said policy and branded it as a mere subterfuge
to defeat the employees' constitutional rights. In affinning the ruling of
the RIC and Court of Appeals dismissing the complaint, the Supreme
Court ruled ihat said policy is in the nature of a "company personnel
policy" and therefore any issue pertaining thereto falls under the
jurisdiction of the Voluntary Arbitrators or panel of Voluntary
Arbitrators, not the RIC, under Article 274 [261] of the Labor Code.
5) 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.3 Pursuant to Article 273 (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
1 See paagraph 2, Miele 274 [261) d 11e Lalxr Code, as anerded by RA No. 6715 and ~ by Depa1ment
QderNo.40-03; See also Section 1, Rule IV, NCMB Revised Procedural GuideiJes illle CooWctofVoklnlary Arbitration
flroceed'rGs [Oct 15, 2004].
2 G.R. No.148303, Oct 17,2002.
3 G.R. No. 183335, Dec. 23, 2009.
CHAmRVlll
793
)URISDICTION AND REMEDIES
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."
The prominence of this rule is highlighted in termination disputes
where the bargaining union is not named a party to the illegal dismissal
suit either because it failed to object to the dismissal of the employee or
the suit was initiated by the employee alone, without the assistance of
his union. Thus, in a number of cases, 1 the Voluntary Arbitrator was
held not to have any jurisdiction thereover because the union did not
come into the picture, not having objected or voiced any dissent to the
dismissal of the employees. It is obvious that arbitration, without the
union's active participation on behalf of the dismissed employees,
would be pointless or even prejudicial to their cause.
2-A.
PROCEDURE
l. PROCEDUil.ES AS PRESCRIBED JN THE LAW,
Article 276 [262-A] of the Labor Code prescribes the following
procedures:
"Article 276 [262-A]. Procedures. - Tne Voluntary Arbitrator or
panel of Voluntary Arbitrators shall have the power to hold hearings,
receive evidences 110d take whatever action is necessary to resolve the
issue or issues subject of the dispute, including efforts to effect a voluntary
settlement between parties.
"All parties to the dispute shall be entitled to attend the arbitration
proceedings. The attendance of any third party or the exclusion of any
witness from the proceedings shall be determined by the Voluntary
Arbitrator or panel of Voluntary Arbitrators. Hearing may be adjourned
for cause« upon agreement by the parties.
"Uoless the parties agree otherwise, it shall be mandatory for the
Voluntary Arbitrator or panel of Voluntary Arbitrators to render an award
or decision within twenty (20) calendar days fi:om the date of submission
of the dispute to voluntary arbitration.
"The award or decision of the Voluntary Arbitmtor or panel of
Voluntary Arbitrators shall contain the facts and the law on which it is
based. It shall be final and executory after ten (10) calendar days from
receipt of the copy of the awar11 or decision by the parties.
1
Such as 1he cases dr.tneja v. NLRC, GR No. 124013, Jllle 5, 1998, 290 SCRA 603; Pa1lrillc:o t-bt1 Express, Inc. v.
NI.RC, G.R No. 95940,.lJiy 24, 1996; ll1d AlasFcrms, Inc. v. Nl.RC, G.R No. 142244, N<w.18, 2002.

794 llAR REVIEWER ON lABOR lAW
"Upon motion of any interested party, tb.e Voluntary Arbitrator or
panel of Voluntary Arbitrators ortb.e Labor Arbiter in tb.e region where tb.e
movant resides, in case of tb.e absence or incapacity of tb.e Voluntary
Arbitrator or panel of Voluntary Arbitrators, for any reason, may issue a
writ of execution requiring eitb.er tb.e sheriff of the Commission or regular
courts or any public official wb.om tb.e parties may designate in the
1
submission agreement to execute tb.e final decision, order or award."
2. NATURE OF PROCEEDINGS.
The proceedings before a Voluntary Arbitrator are non-litigious in
nature. They are not governed by technical rules applicable to court or judicial
proceedings but they must, at all times, comply with the requirements of due
process. 2
3. ARBITRATION PROCEDURES.
As a general rule, the rules governing the proceedings before a
Voluntary Arbitrator or panel of Voluntary Arbitrators are subject to legal
requirements, 3 agreement amoag tl-te parties 4 to a labor dispute a.•1d their chosen
Arbitrator. In the absence of any agreement on any of the various aspects of the
voluntary arbitration proceedings, the pertinent provisions of the 2004 NCMB
Revised Procedural Guidelines in the Conduct of Voluntary Arbitration
Proceedings5 and the Revised Rules of Court shall apply by analogy or in a
directory or suppletory character and effect.
6 chapters/chartered locals, affiliates and member arganizations;5
4. LffiERA.L CONSTRUCTION OF PROCEDURAL RULES.
the said Guidelines should be liberally construed to carry out the
objectives of the Labor Code, to promote voluntary arbitration as a preferred
mode of labor or industrial dispute settlement and as an integral component of
7
the collective bargaining process.
5. REVISED EXPEDITED PROCEDURES FOR VOLUNTARY
ARBITRATION OF LABOR-MANAGEMENT DISPUTES.
In accordance with the State policy of promoting the expeditious
settlement of labor disputes and as a r-eSponse to concern5 over delays in case
t As ilcorpOrlEd by Section 26, RA. No. 6715, Milt:h 21, 1969.
2 Section 1, Rule Vl,llil.
3 SOOl as lxlse presalle:hrderRA. No. 6715 Clld ils ~rues.
• SOOl as lle CBA Clld oilier l!!lev.rt agreements.
5 The NCM3 Revised ProcedlJal Guideliles il the QnU:t d VW!tay Aitlm6x1 Proceedllgs was ~ llld
prtmj;Ja!ed on OciOOer 15, 2C04, J)ulsuMt tlthe ll'lil1dale d the NCMB under ExecutMl Onler No. 126, as emended by
ExecuWe Older. No. 251, and It ooler to ~ Artides 273 \2601 to 277 J262-11] d lhe Latxr Code, as ilnended by
RA No. 6715 as wei as its~~ nJes v.tlich v.ere fll1her IKT1EI1ded by Depment Order No. 40-00; See also No.
52, Net£ P!iner on GrieVc11ce M!dlilery Clld Vol\rilaiy Mlitralm.
6 Sedion 3, Rule I, NCM3 ReviSed ProceWa1 Goidd"r.es illle Conduct d Voi.Jntay AIIlitatixl Proceed"llQS [Oct 15, 2004].
1 Section 2, Rule l,lbkl.
CHAI'TER VIII 777
jUIUSDICTION AND REMEDIES
the ensuing certification election cannot be conducted UJider the directive of the
DOLE Regional Director without the participation ofthe Mediator-Arbiter who, .
under the law, 1 is the one possessed of the original and exclusive jurisdiction over
certification election cases, including the proclamation of the winning SEBA.2
i-2-B.
APPEALS FROM MED-ARBITERS
Among the cases cognizable by the Med-Arbiters in their original and
exclusive jurisdiction, only decisions in inter-union disputes (representation or
certification election conflicts) are appealable to the DOLE Secretary by virtue of
Article 272 [259]3 of the Labor Code. All the others are appealable to the BLR
Director.4
i-2-C.
APPEALS FROM BLR DIRECTOR
The decisions of the BLR Director rendered in his original jurisdiction are
all appealable to the DOLE Secretary, thus:
(l) Complaints and petitions involvi.11g the application for registration,
revocation or cancellation of registration of federations, national
unions, industry unions, trade union centers and their local
(2) Request for examination of books of accounts of said labor
organizations6 under Article 289 [274] of the Labor Code;
(3) Intra-union disputes involving said labor organizations;'
Series d 20011 [Oct ~. 2008l ThG latest 2015 reMteri1g was effecEd trourj1 said Sectioo 171\ti::h states: "Sedions
St.bsequent b ilseiEd new p!tNisilns cni'orA!IlJTilered secb1s are renrrbenld a:cordilgly.l
t Mk:le 232 [2261. Latxr Code.
2 See Section 21,1U!IX, Book V, IUls tl h1Jienlllnllle Latxr Code, as onlered rerumered by Sedb117, Depa1ment
0n1er No. 40+15, Series cl2015 [SepERDI"07, 2015). This section was oR.Jilaly!UOOered Sedion 20, per Depment
Order No. 40-03, Series cl2003, feb. 17, 2003). bull was~ le-lllmered mSection 19, perOepmentOnler
No. 40f.()3, Series cl2008 [Oct~. 2008].
3 ~-
4 The oilier cases fcfo;j under lle oR.Jm aod exdlsM! jlrisdici:n but we~ tllhe BIR Di"ecb" we as blkMs: (a)
hlnrmkxulistxe;(b)Oiherrelaed ~Em" mlablsdisputes; (c) ~cases; llld (d) tawcases.
5 As disti1gtJSled fitm pe(1km lbr amlalkJl d registration d ildependent lllixls, klcal ~ and worke!S'
859Xiams,as prcNiled il Section 3, IU! I dlle Jkd.Arblr.6ln RulesM101 slales: 'SEC. 3. Jurisd"ICii:rl dthe Regional
IJRttr.· The Rsgklnal Di"eckr shal exar.ise oR.Jilal Md excklsNe j.lisdiclixl ever appicabl b" lriln registation,
u u
petitioos I:CIUialion d • registraiioo Clld CIJI1llailts exarilafioo d unm; books aacams: See SecOOn aso
4, Rule XI, lbi Vrl1he Rules to ~ the Latxr Code, as ilnended by Depa1ment Onler No. 40-F-03, Series r:l
2008 {OctM~. 2008] ood Section 1, RUe I~ Rules ofPmced~~eon ~
6 Refenilg tlledelalons, na00nal111ions, i1<lJSby ll1i:X1S iJ1d tide urion cenlels, as d~ulshed m OOependent lllilns,
klcal dJapiBs and \W!ke!S' associations.
1 ld.
778 BAR REVIEWER ON lABOR lAW
(4) Notice of merger, consolidation, affiliation and change of name of said
unions and or petition for denial thereof; 1
(5) Registration of multi-employe? CBAs or petitions for their
deregistration;3 and
4
(6) Contempt cases.
i-2-D.
APPEALS FROM POEA
1. APPEALABLE CASES.
Under the two (2) distinct 2016 Revised POEA Rules for land-based
OFWs5 and seafurers5 and the Omnibus Rules,' the Office of the DOLE Secretary
has exclusive jurisdiction to act on appeals from the Orders of the Administration
(POEA), in the following cases ov:!r which it has original and exclusive jurisdiction:
(a) All cases whi..:r, ;;r~ administrative in character, ir.volving or arising
out ohiolalions of rec:-uinnent rules and regulations, including refund
of fees collected from land-based OFWs and seafarers and any
violation of the conditions for the issuance of the license to recruit
OFWs.1
1 SedXln 5, Rule rl, Book V, Rules Ill ~ t1e Labor Code, as emended by Depment Older No. 46m, Series rJ
2003, [Feb. 17, 2003]1rd asbUler amended by Depa1mentO!der No. 46-0-05, Seriesof2005, Sept.13, 2005.
2 1G dis1il;luished from casesiMMlg silgle-ilnlefplise CBAs vmm fall underlle iJisdicOOn rlthe DOLE Reg~ llieda.
SedXln 15, Rule XI, Book. V, Rules Ill ~the Labor Code, as emended by 0epment Older No. 46m, Series-of
2003, [Feb. 11, 2003]101 as reoontered by Oepatnen!Oider No. 40-F.OO, oam 30,2008. See NaticJocj Fedefa!i::rl of
l!torv. LaJuesma, G.R No.123426, Mcrtll10, 1999.
3 SecOOn 4, RIJe XI, Book vor Ble Rules Ill ~ Ble Labor Code, as M1Mded by Oepameni OHler No. 40.f.OO,
Series d 20081Qctlber 30, 2008).
4 The pesoo ~ n di"ect~by 11e BI.R Diecb'may -1o Ble OOCE Selrelily. (See Sectioo 1, Rule XXIII,
Book V, IUls to ~lie Labor Code, as cmnled by0epa1ment Onler No. «>-03, Series d 2003, feb. 17, 2003D.
5 Sectioo 185, IU!VH, PaJt IJI, Revised POEA Rules !lid Regula!ilns Governi'g lle Recnilnent and ~of laJd.
Based CNelseas~ VQtssol2016. .
s Sedioo 169, 1U! IX, Pelt V, B1e 2016 Revised POEA RJes 101 Regutatms GoYelriYollle Recruh!nt all Efr4llcrjment
d Sealaers Issued oo Febnay 26, 2016.
7 Sectkxl11, RUe X, Olmilus Rulesnl Regulai:r1s ~ling lheMgrcrltWakelsali-Overseas ~00;Attol1995,
as .A.!re1ded by RepOOi: Att No. 10022 issued oo J~ 8, 2010; See also{)nllilus Rules Cl1d Regulations~
t.tycr1t WaXers aliOI'elseas Apinos Att d 1995dc*ld Feb. 29, 1996.
a Sectioo 138, ~I (J~Ritix!), Part VI (Recruilne1t Vdations iJ1d ~ kbl Cases), Revised POEA ~les all
RegliD:Xls ~ t1e Reauilrnent 101 EJrclklymenl of l..mtH!ased Ovelseas Rpm WO!keJS of 2016; Section 118,
~ I(Jl.lisdi:tOO il1d Venue), Part V(Recruilmert VDalix1s all Disciplnay AdD1 Cases), 2016 ReWed POEA Rules
101 RegWtioos Govemi1g 111e Reauilment all ElT1Jicrtment ~ Seafarefs; Section e. rue x(Role of DOL£), OnllixiS
Rules !Ill Reguatms ~~!he MJ!Dil!Wakels !Ill <Nelseas Fqli1os Attc:l 1995, as Amended by Repubi:Act
No. 10022 issued 00 Jlij 8; 2010; See also Seclioo 28, Omnilus Rules and RegWtions lmplemenfing t.'iJilll1l WOO<ers
and <Nerseas fiipilos Ad of 1995 daled Feb. 29, 1996.
CHAPTER Vlll 797
jURISDICTION AND REMEDIES
by the respondent should first be secured or obtained in the iabor case initiated ·
before the Labor Arbiter or the Voluntary Arbitrator, as the case may be. 1 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 fmal and' executory. If an appeal is made, then the final judgment
rendered by the last tribuna~ 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.2
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 seccred in the labor proceeding fmding
that an unfair labor practice act was i11 fact committed by the respondent.3
4. OFFENSES PENALIZED UNDER THE LABOR CODE.
a. Prescriptive period is 3 years.
The prescriptive period of all criminal offenses penalized under the
Labor Code and its Implementing Rules is three (3) years from the time of
commission thereof. 4
b. Consequence of non-compliance with prescriptive period.
Failure to initiate or file the criminal action or complaint within the
5
prescriptive period shall forever bar such action. .
c. Illegal dismissal is not an "offense."
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 the
Labor Code.6
~G proYkled under Alticle 258i247J c1 llel.abor eooe.
ld.
ld.
Article 305 j290]. Offenses. - otlenses penaflled under this Code and the rules and regulations issued pursuant
thereto shan prescribe in three (3) )lm.
All unfair labor practices arising from Book V shall be filed with lhe appropriate agency >Mthin one (1) year from
accrual j!f such unfair labor praclice; Olhelwise, they shall be forever barred.
5 See Artide 305 {290], labor Code.
See Article 305 [290] thereof; Ccinav. CamaOOn f'hi1Wnes, Inc., G.R No. 70615, Feb. 29,1986.
798 BAR REVIEWER ON lABOR lAW

5. ILLEGAL RECRUITMENT CASES.

a. Simple illegal recruitment cases.
The prescriptive period is five (5) years. 1
b. Illegal recruitment cases involving economic sabotage.
The prescriptive period is twenty (20) years?

---oOo----

1
Section 12, RA No. 8042; See also S8:tion 7, ~ IV, Omnilus Rules Md Regulations ~&";J 11e t/igra1t
WorkelsMd Oietseas Fiipilos Act of 1995, as Amended by R A. No. 10022{Mith 08, 2010).
2 ld.; ld.