I.

Employment Relationship & Kinds of Employment Substantial evidence, which is the quantum of proof required in labor cases, is
“that amount of relevant evidence which a reasonable mind might accept as
7 Constitutional Rights of Labor (WHOSE-CD) adequate to justify a conclusion.”
1. Right to receive a living Wage
 No particular form of evidence is required to prove the existence of such EER.
2. Right to work under Humane conditions
 Any competent and relevant evidence to prove EER may be admitted. Hence,
3. Right to Organize themselves
 while no particular form of evidence is required, a finding that such relationship
4. Right to enjoy Security of tenure
 exists must still rest on some substantial evidence. Moreover, the substantiality
5. Right to Engage in peaceful concerted activities, including to strike in of the evidence depends on its quantitative as well as its qualitative aspects.
accordance with law

6. Right to conduct Collective bargaining and negotiate with Evidence in Illegal Dismissal Cases
management
 While in cases of illegal dismissal, the employer bears the burden of proving
7. Right to participate in policy Decision making processes affecting their that the dismissal is for a valid or authorized cause, the employee must first
rights and benefits as may be provided by law establish by substantial evidence the fact of dismissal.

A. EER – FOUR-FOLD TEST CLASS DISCUSSION ON EVIDENTIARY REQUIREMENTS FOR EER

Four-Fold Test
1. Power to engage or select;
2. Power to dismiss;
3. Payment of wages; &
4. Power to control the means and method of performing the work, not
only the end result.
In the four-fold test, the power of control has to be fully stated.
Two-tiered Test
1. Four-Fold Test: In particular, determine the existence of CONTROL
2. Economic Dependency Test: used when the existence of the EER cannot
be determined using the Four-Fold Test
⁃ Seven indicators used for the economic dependency test
(Francisco v. NLRC): [PD2C-SInvIni] (PDC-Sinvini) *MEMORIZE
1) Extent to which the Services performed by the worker are
an integral part of the ER’s business
2) Extent of the worker’s Investment in equipment & facilities
3) Nature & degree of Control exercised by the ER
4) Worker’s opportunity for Profit & loss
5) The amount of Initiative, skill, judgment, or foresight
required
6) Permanency & Duration of the relationship between the
worker & the ER
7) Degree of Dependency of the worker upon the ER for his
continued employment in that line of business
Substantial Evidence Needed
Q: Who has the burden of proving EER?
A: The EE.
Q: What kind of evidence is needed?
A: Substantial evidence
Q: T/F. The moment that you how company ID bearing your name that alone
will lead the courts to conclude you are the employee of the ER.
A: F. The four elements of the four-fold test is not necessarily shown.
Q: T/F. In all labor cases, the ER has the burden of proof.
A: F.
Valencia v. Classique Vinyl
Facts: Valencia filed a case for underpayment of wages against Classique Vinyl
(CV), which turned into an illegal dismissal case when he was scolded for filing
the complaint. CV argued, however, that it was CMS that was the ER of
Valencia, & that CMS only sent Valencia to CV to do some work in certain years,
like in 2005, 2007, etc., limited to 3-4 months each year. It argued that CMS
paid Valencia’s wages as well. CMS, on the other hand, argued that CV was the
ER, & that the latter exercised full control on Valencia. Who is Valencia’s ER?
Held: CMS. Applying the four-fold test –
 Wages – CMS paid Valencia’s wages & gave CMS non-monetary benefits
as well
 Hiring – Valencia himself admitted that it was CMS that hired him
 Control – Valencia’s contract with CMS states that he must observe all
rules & regulations of the company; they made statements that they
would not take Valencia’s tardiness against him
 Dismissal – CMS could fire him if his work fell below standards
Further, the argument that CMS is a LOC is not tenable, since it was proven,
through registration with DTI, etc. that CMS is a legitimate company, a private
recruitment & placement agency (PRPA). This fact of registration prevents the

1
presumption that CMS is a LOC from arising.
Note: The presumption is that a contractor is a LOC unless such contractor
overcomes the burden of proving that it has substantial capital, investment,
tools, & the like.
FLJ: Note that DO 174-17 provides that legitimate contractors cannot
simultaneously engage in recruitment activities. Hence, the presumption in this
case from the fact that CMS is a registered recruitment agency may be
“trumped” by DO 174-17.
Diamond Farms v. Southern Philippines
Facts: DFI’s 800-hectare banana plantation was turned over to qualified
agrarian beneficiaries, the same farmers who were working in the original
plantation who subsequently organized themselves into a multi-purpose
cooperative named DARBMUPCO. DARBMUPCO entered into a banana
production & purchase agreement (BPPA) with DFI where DFI took care of the
labor costs. Since DARBMUPCO was hampered by lack of manpower, DFI
engaged the services of Southern Philippine Federation of Labor who in turn
recruited the workers. Southern filed a petition for certification election on
behalf of 400 workers working in the plantation.
Both DARBMUPCO and DFI denied that they were the ERs. Southern later filed
a case for underpayment of wages and DFI was later held as the statutory ER
of the workers.
Held: Southern Philippines is a LOC and thus, DFI shall be considered the
principal employer. There is no evidence showing that respondent-
contractors are independent contractors. The respondent-contractors, DFI,
and DARBMUPCO did not offer any proof that respondent-contractors were not
engaged in LOC. To support its argument that respondent-contractors are the
ERs of respondent-workers, and not merely a LOC, DFI should have presented
proof showing that respondent-contractors carry on an independent business
and have sufficient capitalization. Respondents-contractors again admitted
that they are a LOC commissioned and contracted by DFI to recruit farm
workers. All farm tools were supplied by petitioner and respondents had no
adequate capital to acquire such tools. Respondents were also directly
supervised, controlled and managed by petitioner DFI farm managers and
supervisors, specifically on work assignments and performance targets. DFI
managers and supervisors, at their sole discretion and prerogative, could
directly hire and terminate any or all.
The records show that DFI hired the respondent contractors, who in turn hired
their own men to work in the land of DARBMUPCO as well as in the managed
area of the plantation.
That DARBMUPCO owns the awarded plantation where the respondent-
contractors and respondent-workers were working is immaterial. This does not
change the situation of the parties.
CLASS DISCUSSION BASED ON THIS PART OF THE RULING: “A finding that a contractor is a
LOC is equivalent to a declaration that there is an EER between the principal, &
the workers of the LOC; the LOC is deemed only the agent of the principal.
Thus, in this case, respondent-contractors are the LOCs and either DFI or
DARBMUPCO is their principal.”
Q: When a case is filed, there is a presumption regarding contracting
arrangements. What is it?
A: Contracting arrangement: The presumption is that the contract arrangement
is that it is illegitimate (hence, that the contractor is a LOC) according to
Valencia v. Classique Vinyl.
Q: What is the consequence of being a LOC because of failure to rebut the
presumption? Does this already make the principal the ER of the alleged EEs of
the LOC?
A: It is possible to say this, based on the ruling in Diamond Farms v. Southern
Philippines. The LOC thus becomes the agent of the principal. However, you
may answer in this way: (1) state the LOC presumption; and then, (2) apply the
four-fold test to validate the EER between the principal & the EEs. This is the
best way to attack the question.
Note that SC has always held that the presumption of LOC will arise whether
the LOC is such by reason of lack of substantial capital or control.
Note further that if there are various, various facts about EER, then use the
facts to determine who the true ER is, because anyway, the presumption of
LOC will only apply.
Bombo Radyo v. DOLE Secretary
Facts: Juezan filed a complaint against Bombo Radyo, claiming underpayment
of benefits. DOLE conducted an inspection pursuant to its power to investigate
violations of the Labor Code. Bombo Radyo denied the existence of EER,
arguing that Juezan was hired on a per project basis, & was actually a drama
talent, who was paid & supervised by directors & not Bombo Radyo. DOLE
Regional Director ruled that Juezan was an EE, & was entitled to the benefits
unpaid. DOLE Secretary affirmed. Before SC, Before this Court, Bombo Radyo
argued that the NLRC, and not the DOLE Secretary, has jurisdiction over
Juezan’s claim, in view of Arts. 217 & 1281 of the Labor Code. Does DOLE have
the power to determine the existence of EER?
1 Art. 128 (b). Notwithstanding the provisions of Articles 129 and 217 of this Code to the
contrary, and in cases where the EER 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
representative 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
2
Held: Yes, but only in a limited way. DOLE’s power does not apply in two
instances, namely: (a) where the EER has ceased (e.g., illegal dismissal cases);
and (b) where EER never existed (e.g., where an EE alleges the existence of
EER, but ER denies it). BUT DOLE in the exercise of its visitorial and
enforcement power somehow has to make a determination of the existence of
an EER. Such determination, however, cannot be coextensive with the visitorial
and enforcement power itself. It is merely preliminary & incidental to the
DOLE’s primary function of enforcing labor standards provisions. The
determination of the existence of EER is still primarily lodged with the NLRC.
Thus, before the DOLE may exercise its powers under Article 128, two
important questions must be resolved: (1) Does the EER still exist, or
alternatively, was there ever an EER to speak of; and (2) Are there violations of
the Labor Code or of any labor law? If yes to both, DOLE would have
jurisdiction, incidentally because of its enforcement powers. The existence of
an EER is a statutory prerequisite to and a limitation on the power of the
Secretary of Labor.
THUS: A mere assertion of absence of EER does not deprive the DOLE of
jurisdiction over the claim under Article 128 of the Labor Code. At least a prima
facie showing of such absence of relationship, as in this case, is needed to
preclude the DOLE from the exercise of its power.
[CHECK FOR THE REVERSAL OF THIS CASE – ask Tin]
CLASS DISCUSSION ON NLRC V. DOLE JURISDICTION
Q: When will the NLRC have jurisdiction over a case filed by an EE?
A: There must be two things proven in relation to jurisdiction (1) there is an
EER, and (2) the issue is in relation to said EER. When it comes to the issue of
NLRC jurisdiction, all you have to say is that even if there is a casual connection
between EER relationship and the issue at hand, & the case is closely
intertwined.
Q: Does DOLE have jurisdiction to determine the existence of EER?
A: Yes. The power to determine the existence of an EER is ancillary to the power
to inspect, which is granted by DOLE. DOLE can rule on matters related to its
powers of inspection. However, DOLE cannot immediately take up a quasi-
judicial matter. DOLE must first begin with its primary jurisdiction (e.g., its
executive power) and then determine the EER in relation to that.
CONCLUSION ON DOLE’S AUTHORITY TO DETERMINE EER BASED ON BOMBO RADYO
The DOLE, through its Regional Directors, has the power to determine EER. This
power is not only reserved to Labor Arbiters.
DOLE’s power to determine EER will be lost if the EER has already been
terminated (e.g., EE has already be dismissed, in which case, only the NLRC
the labor employment and enforcement officer and raises issues supported by
documentary proofs which were not considered in the course of inspection.
would have jurisdiction). DOLE only has jurisdiction if the EER is still alive.
Grandteq Industrial Steel Products v. Edna Margallo
Facts: Margallo was a salesman for Grandteq, & was granted by the latter a car
loan program. Later, she was reprimanded following allegations of
moonlighting, among others, & resigned. She filed a case before the labor
arbiter seeking payments, & a reimbursement for car loan payments she
already made. This was denied by the arbiter, because the loan stipulated that
all payments made to the ER, following resignation of an EE, would be forfeited
in favor of the ER. CA reversed, & found that Margallo had a right to be
reimbursed her car loan payments, & the terms of the car loan agreement
should not be applied for being highly prejudicial to the EE’s interest. Was the
CA correct?
Held: Yes. SC held that the provisions in Margallo’s contract providing that there
would be a forfeiture of all payments made to the ER upon resignation,
including those for the car loan, was void for being contrary to justice &
fairness.
Domondon v. NLRC
Facts: Domondon used a car from his company, VMPI. He eventually fell into
bad relations with the new management, & filed a complaint for illegal
dismissal before the NLRC. Aside from the issues on illegal dismissal, VPMI
filed a counterclaim, also with the labor arbiter, & argued that that as per
agreement, Domondon should have paid for the car. Does NLRC have
jurisdiction over the counterclaim?
Held: Yes. The records show that the initial agreement of the parties was that
petitioner would be extended financial assistance in the amount of P300,000
on top of his accrued benefits at the time of the effectivity of his resignation.
However, Domondon requested that he be allowed to keep the car assigned to
him in lieu of the financial assistance. However, company policy prohibits
transfer of ownership of property without valuable consideration. Thus, the
parties agreed that petitioner shall still be extended the P300,000 financial
support, which he shall use to pay for the subject car. VMPI deposited the
agreed amount in petitioner’s account. Despite having registered the car in his
name and repeated demands from private respondents, petitioner failed to pay
for it as agreed upon. Petitioner did not also return the car. Without doubt, the
transfer of the ownership of the company car to petitioner is connected with his
resignation and arose out of the parties’ EER. Accordingly, VMPI’s claim for
damages falls within the jurisdiction of the Labor Arbiter.
Cosare v. Broadcom Asia, Inc.
Facts: Cosare was an EE of Broadcom who was there from the start of the
company, & was even an incorporator & shareholder. However, he was
eventually sent a show-cause notice stating that he would have to explain some
accusations levied against him within 48 hours. He tried to do so but was
3
barred entry from the premises of the company. He thus filed a case for
constructive dismissal. Broadcom argued that (1) jurisdiction was with regular
courts because what was involved was an intra-corporate controversy, (2)
Cosare had resigned & was not dismissed. Are the company’s contentions
tenable?
Held: No. (1) When a dispute involves a charge of illegal dismissal, the action
may fall under the jurisdiction of the LAs upon whose jurisdiction, as a rule,
falls termination disputes and claims for damages arising from EER as
provided in Art. 217. The mere fact that Cosare was a stockholder and an
officer of Broadcom at the time the subject controversy developed failed to
necessarily make the case an intra-corporate dispute. One must distinguish
between a “regular employee” & a “corporate officer” for purposes of
establishing the true nature of a complaint for illegal dismissal and
determining which body has jurisdiction over it. In the case of the regular
employee, the LA has jurisdiction; otherwise, the RTC exercises the legal
authority to adjudicate.
In this case, the LA had the original jurisdiction over the complaint for illegal
dismissal because Cosare, although an officer of Broadcom for being its AVP
for Sales, was not a “corporate officer.”
There are two circumstances which must concur for an individual to be
considered a corporate officer, as against an ordinary EE or officer, namely: (1)
the creation of the position is under the corporation’s charter or by-laws; & (2)
the election of the officer is by the directors or stockholders. It is only when the
officer claiming to have been illegally dismissed is classified as such corporate
officer that the issue is deemed an intra-corporate dispute which falls within
the jurisdiction of the trial courts.
ALSO: An enabling clause in a corporation’s by-laws empowering its board of
directors to create additional officers, even with the subsequent passage of a
board resolution to that effect, cannot make such position a corporate office.
The board has no power to create other corporate offices without first
amending the corporate by-laws so as to include therein the newly created
corporate office.
ALSO: In determining the existence of an intra-corporate dispute, the (a) status
or relationship of the parties and (b) the nature of the question that is the
subject of the controversy must be taken into account. Considering that the
pending dispute particularly relates to Cosare’s rights and obligations as a
regular officer of Broadcom, instead of as a stockholder of the corporation, the
controversy cannot be deemed intra-corporate.
(2) Cosare was constructively & illegally dismissed. The test of constructive
dismissal is whether a reasonable person in the EE’s position would have felt
compelled to give up his position under the circumstances. It is an act
amounting to dismissal but is made to appear as if it were not. Constructive
dismissal is therefore a dismissal in disguise.
*NOTE: The first written notice to be should contain –
1. The specific causes or grounds for termination against the
 The notice should contain a detailed narration of the facts &
circumstances that will serve as basis for the charge against the
EEs. A general description of the charge will not suffice
 The notice should specifically mention which company rules, if
any, are violated &/or which among the grounds under Art. 282 is
being charged
2. A directive that the EEs are given the opportunity to submit their written
explanation within a reasonable period.
 “Reasonable opportunity” - every kind of assistance that
management must accord to the EEs to enable them to prepare
adequately for their defense.
 A period of at least 5 calendar days from receipt of the notice to
give the EEs an opportunity to study the accusation against them,
consult a union official or lawyer, gather data and evidence, and
decide on the defenses they will raise against the complaint
B. KINDS OF EMPLOYEES
Regular EE
 Two Types:
o By nature - whereby the EE has been engaged to perform
activities which are usually necessary or desirable in the
usual business or trade of the ER
 First, ask: Necessary or desirable?
 Second, ask: Is it usual trade or business?
o By length of time - casual employment arrangement when
the casual EE's engagement has lasted for at least 1 year,
regardless of the engagement's continuity; EE is considered
regular with respect to the activity in which he is employed &
his employment shall continue while such activity exists (this
is called “casual regular” employment)
 Regular EEs are entitled to indefinite security of tenure and all the
benefits of a regular EE
o Can only be dismissed for just cause or authorized cause.
o Entitled to 2 notices before dismissal: The first gives him
reasonable time to explain himself, etc. before termination,
& the second notice is of actual termination
FLJ: Never apply the test for regular employment before first determining the
existence of EER. This is fatal. Apply tests first for determining existence of
EER, & then ask about the nature of the employment.
FLJ: Janitorial services provided by an EE are usually regular EEs. It is just that
janitorial services may be validly contracted.
4

Seasonal EE
 Elements:
1. EE must be performing work or services that are seasonal in
nature; &
2. He had been employed for the duration of the season
 Involves work or service that is seasonal in nature or lasting for the
duration of the season
 NOTE: There is such a thing as a “regular” seasonal EE - when the
"seasonal" workers are continuously & repeatedly hired to perform
the same tasks or activities for several seasons
o Elements:
i. The seasonal EE should perform work or services that
are seasonal in nature; &
ii. They must have also been employed for more than 1
season (FLJ: Hence, EE must be hired at least twice to
become a regular seasonal EE)
FLJ: This is not just agricultural work; it can also be, for example, “seasons” in a
mall.
Project EE
 Elements:
1. Designation of a specific project or undertaking for which the
EE is hired
o Specific project – should not be a continuing affair or
project
2. Clear determination of the completion or termination of the
project at the time of the EE's engagement
o FLJ: Notice of termination should be sent to the field
office of the DOLE; failure to notify gives rise to the
presumption that the EE is regular, & not a project EE
 Their services are legally & automatically terminated upon the
completion of the project, as the EE's services are coterminous with
the project
 Length of time is not controlling – but this may be a badge that the EE
is actually regular
FLJ: Note that project EEs can perform work that is usually necessary or
desirable to the usual trade or business of the ER. Hence, the strict
requirements of the law must be complied with.
FLJ: There is no such thing as a regular project EE. If there is a work pool from
which an ER repeatedly hires a set of EEs in between projects, the EE is just a
regular EE. In between projects, the ER has the right to give the EE a “floating
status” in which the EE may seek employment elsewhere, but the ER may
require the EE to be employed under him as soon as a project comes up.
BUT: If the floating status lasts more than 6 months, then that is past the
period required by law & ER must pay separation pay to the EE already.
Casual EE
 Employment that is not considered regular, project, or seasonal
 Incidental
FLJ: Note that the distinction between regular and casual EEs does not really
modify the entitlement of an EE to benefits under labor standard laws. It only
generally affects the question of TERMINATION.
Fixed-Term EE
 Governed by the Civil Code, rather than the Labor Code
 Usually involves directors, employers, etc.
 In one case, a chicken dresser was considered a fixed-term EE
o FLJ: They probably had a bad lawyer though.
 Applicable when:
1. The fixed period of employment was agreed upon knowingly &
voluntarily by the parties, absent any circumstances vitiating
EE’s consent; &
2. The facts satisfactorily show that the EE & ER dealt with each
other on more or less equal terms (i.e., same bargaining
position).
Probationary EE
 Requisites for validity:
1. EE should be informed that he is probationary
2. EE should be informed of the reasonable standards that need
to be met for regularization; these standards must have be
given at the time that EE was hired
o Exceptions to standards from jurisprudence:
a) Abbott Laboratories case: If the work is self-
descriptive, there is no need for the ER to give the
reasonable standards from day one
 Note the peculiarity of this case,
because the case did provide the
“standards” for employment; despite
this, this is still the doctrinal
pronouncement in Abbott
 Ex. of self-descriptive jobs: driver, maid,
cook, lawyer, doctor, journalist
5
 b) Carvajal v. DBP case: If the standard is something
obvious & expected (i.e., common knowledge) of
every EE (e.g., punctuality)
3. The probationary period must be stated in the contract & can
last only 6 months (FLJ: This means 180 days based on
Mitsubishi Motors v. Chysler PH Labor Union)
o Exceptions to 6-month period from jurisprudence:
a) EE & ER agree on a longer period to give EE
another chance (e.g., in an apprenticeship
agreement)
b) When the nature of the work of the EE requires a
longer period (e.g., with sales representatives of
ads in annual directories, because it is only after 1
year that the performance of the EE can be
evaluated)
CLASS DISCUSSION ON BEGINNING OF EER FOR PURPOSES OF SHOWING STANDARDS FOR
REGULARIZATION
Q: When does EER begin?
A: There are two views: (1) when the contract is signed; or (2) when the EE
actually starts working. You may decide on your own.
New Case: A&C Global Services Case (Conditional Employment)
 SC allowed conditional employment, or employment with a suspensive
condition
 Facts: X applied for work with Z. X had to submit an application form; in
the “previous employment” section of said form, he was required to state
the name of his former ER & his reason for leaving. X wrote that he
resigned for personal reasons. In the same employment contract’s terms
& conditions, the new employment was subject to a condition that the
background check clears. After a background check by Z, however, it was
discovered that X was terminated for just cause by the former ER. Z
called X & said the offer was terminated. X filed a case against Z saying
that employment was not terminated with just cause. Z argued that
conditional employment will be allowed. Is there such a thing as
conditional employment?
 Held: Yes. There is such a thing in conditional employment, & there was
failure to meet the condition, in special circumstances.
 FLJ: I think conditional employment was only allowed in this case
because X had yet to start working in Z. If X already started working
there, I don’t think the argument of “conditional employment” would
work. At most, there would be just cause to terminate.
Universal Robina Sugar Milling Corporation, et al., v. Acibo
Facts: URSUMCO is engaged in the sugar cane milling business. At the start of
their respective engagements, Acibo, et al., signed employment contracts for a
period of 1 month or for a given season. They are repeatedly hired and for every
engagement, URSUMCO required the EEs to sign new employment contracts for
the same duration. The EEs thus filed a complaint for regularization. What is
their status?
Held: They are regular seasonal EEs. They were made to perform various tasks
that did not at all pertain to any specific phase of strict milling operations that
would ultimately cease upon completion of a particular phase. They were
regularly and repeatedly hired to perform the same tasks year after year they
did not seek employment elsewhere. When called to work from time to time
and are only temporarily laid off during the off-season, the law does not
consider them separated from the service during the off-season period. the
plantation workers or the mill employees do not work continuously for one
whole year but only for the duration of the growing of the sugarcane or the
milling season. Their seasonal work, however, does not detract from
considering them in regular employment since in a litany of cases, this Court
has already settled that seasonal workers who are called to work from time to
time and are temporarily laid off during the off-season are not separated from
the service in said period, but are merely considered on leave until re-
employment.
Be this as it may, regular seasonal EEs should not be confused with the regular
employees of the sugar mill such as the administrative or office personnel who
perform their tasks for the entire year regardless of the season. The EEs herein
are hired to perform various tasks during the milling season only, & hence are
not employed year-round. It is thus wrong to declare the respondents regular
EEs of URSUMCO without qualification and that they were entitled to the
benefits granted, under the CBA, to URSUMCO'S regular EEs.
Mentioned within Case: Mercado v. NLRC
In Mercado, the workers were hired to perform phases of the agricultural work
in their employer's farm for a definite period of time; afterwards, they were free
to offer their services to any other farm owner. The workers were not hired
regularly and repeatedly for the same phase(s) of agricultural work, but only
intermittently for any single phase. And, more importantly, the employer in
Mercado sufficiently proved these factual circumstances. In the case of
URSUMCO, however, there was no showing that the respondents were free to
work elsewhere during the off-season, which prevents reliance on Mercado for
this case.
FLJ: Note that they got to work for others because the hacienda is so small.
Hence they were just considered seasonal EEs.
C. CONTRACTING ARRANGEMENTS
Legitimate Contracting
6
  Arrangement whereby a principal agrees to put out or farm out with a
contractor or subcontractor the performance or completion of a
specific job, work or service within a definite or predetermined period,
regardless of whether such job, work or service is to be performed or
completed within or outside the premises of the principal.
 It involves a trilateral relationship among the principal, the contractor
or subcontractor, & the workers engaged by the contractor or
subcontractor.
Labor-Only Contracting (LOC)
 Essential element: The contractor is merely supplying workers
 Either of the two confirming elements must also be present:
o (1) The contractor does not have substantial capital or
investment in the form of tools, equipment, machinery, etc.
which relates to the job, work or service to be performed & (2)
the EEs recruited, supplied or placed by such contractor or
subcontractor are performing activities which are directly
related to the main business of the principal; OR
 FLJ: Note, if the contractor has substantial capital,
it is already legitimate, even if the work performed
is directly related to the business of the principal. If
the contractor is performing something incidental,
even without substantial capital, there is already a
legitimate contracting arrangement. There is only
LOC if there is BOTH (1) no substantial capital & (2)
the work performed by the contractor is directly
related to the business of the principal.
o The contractor does not exercise the right to control over the
performance of the work of the contractual EE.
FLJ: Note that in Sec. 8, all elements must concur. This results in some
confusion between Sec. 5 & Sec. 8. If the question in the bar is, “Is the
contractor engaged in LOC?” you may use Sec. 5. If the question is “Is the
contractor engaged in PERMISSIBLE job contracting?” use Sec. 8.
FLJ: You must memorize Sec. 6. Look at Sec. 6 (f), this is new. Regular EEs
cannot be employed side by side with the subcontractor’s EEs. That is
prohibited.
CLASS DISCUSSION ON PROHIBITED ACTIVITIES
Q: Can regular EEs be removed & replaced with subcontracted EEs the next
day?
A: It is not allowed. Note that the previous heading allowed as defense good
faith & justifiable business reasons. This is not allowed anymore. So even if
there is good business reason to, that would not be allowed.
But note that this is different from a situation where there was a factory
burning, the EEs were dismissed & then later rehired when the company’s
business rose again. This is allowed.
Substantial capital is now P5 million.
In Legitimate Contracting, When is Principal Solidarily Liable with Contractor?
(Rosewood Case)
1. When the contractor fails to pay the wages of the EEs, the principal
becomes liable to pay
2. Monetary claims arising from the issuance of a wage order for future
wage increases
3. Monetary claims that are not punitive in nature – service incentive
leave, overtime pay, holiday pay can be paid by the principal
o If the claim is punitive in nature (e.g., backwages, moral
damages, & exemplary damages), the EE must prove that
the principal in the legitimate contracting arrangement took
part in the commission of the wrongful act. Otherwise, only
the contractor will be liable.
In LOC, What is the Liability of the Principal?
It is as if the principal is the ER, & the principal is wholly liable for everything
awarded to the EE.
WON the principal has an agreement with the contractor as to liabilities arising
from employment, that is for the principal & contractor to resolve – the EE can
go directly to the principal.
When is the Principal Deemed the ER?
 The principal shall be deemed the employer of the contractual
employee in any of the ff. cases as declared by a competent authority:
1. Where there is LOC; or
2. Where the contracting arrangement falls within the
prohibitions provided in DO 174-17
DO 174-17 does not apply in contractual arrangements that are bilateral.
CLASS DISCUSSION
Q: Is there a presumption of legitimate job contracting if there is a registration
certificate?
A: No presumption of a valid contracting arrangement arises. The certificate
just prevents the presumption of LOC from arising. The person alleging must
then prove that the contractor is a LOC.
Who pays separation pay to a contractor’s EEs? (Sec. 13)
If terminated prior to The contractor, but subject to the rules on solidary
7
service agreement for just liability in between the principal & the contractor
& authorized cause
If terminated prior to The one who is primarily at fault will be the one
service agreement, not for who is liable if the principal is at fault, the
just & authorized cause principal will be liable without prejudice of the
solidary liability of the parties under the law
If the termination is The employment relationship between the
because of the expiration contractor & EE is severed.
of the service agreement The EE has a choice to resign, or within 3 months,
the contractor will find the EE a job – if the
contractor cannot find the EE a job, the contractor
has to pay the EE separation pay.
*NOTE: In contracting arrangements (not work
pools), the period is 3 months & not 6 months.
The floating status is only 3 months when it
comes to contracting arrangements.
FLJ: In authorized causes, you can actually say, “Please stop working tomorrow;
I will give you pay for the 30-day period, but I don’t require your services
anymore.” What is not required is that they are dismissed prior to the 30-day
period and not paid for the 30-day period.
Manila Memorial Park Cemetery, Inc. v. Lluz
Facts: Manila Memorial (MM) hired Ward Trading to aid it in performing
exhuming services. Alleged EEs of Ward Trading requested to be part of the
union of MM’s EEs. MM, however, claimed that Ward Trading was the ER, & it
merely contracted the latter. Is their contention valid?
Held: No, given the facts in this case indicating that Ward Trading was in fact a
LOC –
 The Contract of Services between MM & Ward Trading shows MM would
supposedly sell to Ward Trading the equipment needed to do the job,
but no contract of sale showed consummation of this transaction
 MM would provide the space for all equipment & for Ward Trading to do
the work
 MM had the power of control: Though based on the contract, Ward is still
subject to MM’s control as it specifically provides that although Ward
shall be in charge of the supervision over individual EEs, the exercise of
its supervisory function is heavily dependent upon the needs of MM (it
required Ward’s supervisor to do weekly checks on set dates, to provide
more manpower during off peak season, etc.)
 Ward failed to register. Failure to register raises a presumption that one
is engaged in LOC unless the contractor overcomes the burden of
proving that it has substantial capital, investment, tools and the like.
In this case, MM failed to adduce evidence to prove that Ward had any
substantial capital, investment or assets to perform the work contracted for.
Thus, the presumption that Ward Trading is a LOC stands.
Nelson v. Begino
Facts: Petitioners were cameramen, reporters, & editors for TV broadcasting,
hired by a regional branch of ABS-CBN through talent contracts which stipulate
there is no EER between ABS-CBN & petitioners. What kind of EEs are
petitioners?
Held: Notwithstanding the nomenclature of their Talent Contracts &/or Project
Assignment Forms and the terms & condition embodied therein, petitioners are
regular EEs of ABS-CBN. The test to determine whether employment is regular
or not is the reasonable connection between the activity performed by the EE in
relation to the business or trade of the ER. As cameramen/editors and
reporters, petitioners were undoubtedly performing functions necessary and
essential to ABS-CBN’s business of broadcasting television and radio content. It
matters little that petitioners’ services were engaged for specified periods for
TV Patrol Bicol and that they were paid according to the budget allocated
therefor. Aside from the fact that said program is a regular weekday fare of the
ABS-CBN’s Regional Network Group in Naga City, the record shows that, from
their initial engagement in the aforesaid capacities, petitioners were
continuously rehired by respondents over the years. To the mind of the Court,
respondents’ repeated hiring of petitioners for its long- running news program
positively indicates that the latter were ABS-CBN’s regular employees.
If the employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the
repeated or continuing performance as sufficient evidence of the necessity, if
not indispensability of that activity in the business. Indeed, an employment
stops being coterminous with specific projects where the employee is
continuously rehired due to the demands of the ER’s business. When
circumstances show, moreover, that contractually stipulated periods of
employment have been imposed to preclude the acquisition of tenurial security
by the employee, this Court has not hesitated in striking down such
arrangements as contrary to public policy, morals, good customs or public
order.
Further, parallels cannot be drawn between this case & that of Sonza, which
involved a well-known television and radio personality who was legitimately
considered a talent and amply compensated as such. While possessed of skills
for which they were modestly recompensed by respondents, petitioners lay no
claim to fame and/or unique talents for which talents like actors and
personalities are hired and generally compensated in the broadcast industry.
The following distinguish an employee from an independent contractor such as
Sonza –
First. In the selection and engagement of respondents, no peculiar or unique
skill, talent or celebrity status was required from petitioners because they were
merely hired through the personnel department just like any ordinary
8
employee.
Second. The so-called “talent fees” correspond to wages given as a result of an
EER. Respondents did not have the power to bargain for huge talent fees, a
circumstance negating independent contractual relationship.
Third. Petitioner could always discharge respondents should it find their work
unsatisfactory, and respondents are highly dependent on the petitioner for
continued work.
Fourth. The degree of control and supervision exercised by petitioner over
respondents through its supervisors negates the allegation that respondents
are independent contractors.
The presumption is that when the work done is an integral part of the regular
business of the employer and when the worker, relative to the employer, does
not furnish an independent business or professional service, such work is a
regular employment of such employee and not an independent contractor. The
Court will peruse beyond any such agreement to examine the facts that typify
the parties’ actual relationship.
Gallego v. Bayer Phils.
Facts: Gallego used to be employed by Bayer; he later left the company but was
eventually hired by Product Images. Product Images hired him to do the exact
same tasks he previously did for Bayer, which was, to promote & market
Bayer’s products. Following some issues, Gallego filed a case of illegal
dismissal against Bayer, alleging that it was actually Bayer that was his ER.
Bayye denied the existence of an EER, explaining that Gallego’s work at Bayer
was simply occasioned by the Contract of Promotional Services that Bayer had
executed with Product Image whereby Product Image was to promote and
market Bayer products on Product Image own account and in its own manner
and method. They added that as an independent contractor, Product Image
retained the exclusive power of control over petitioner as it assigned full-time
supervisors to exercise control and supervision over its employees assigned at
Bayer. Given these facts, is Product Image a LOC?
Held: No, it is a legitimate contractor. Product Image was registered with DOLE.
The DOLE certificate having been issued by a public officer, it carries with it the
presumption that it was issued in the regular performance of official duty.
Gallego’s bare assertions fail to rebut this presumption. Further, since the DOLE
is the agency primarily responsible for regulating the business of independent
job contractors, the Court can presume, in the absence of evidence to the
contrary, that it had thoroughly evaluated the requirements submitted prior to
issuing the certificate of registration.
Independently of the DOLE’s certificate, among the circumstances that
establish the status of Product Image as a legitimate job contractor are: (1)
Product Image had, during the period in question, a contract with Bayer for the
promotion and marketing of the latter’s products; (2) Product Image has an
independent business and provides services nationwide to big companies such
as Ajinomoto Philippines and Procter and Gamble Corporation; and (3) Product
Image’s total assets from 1998 to 2000 amounted to P405,639, P559,897,
and P644,728, respectively. Product Image also posted a bond in the amount
of P100,000 to answer for any claim of its employees for unpaid wages and
other benefits that may arise out of the implementation of its contract with
Bayer. Product Image cannot thus be considered a LOC.
the only control measure retained by Bayer over petitioner was to act as his de
facto supervisor in certifying to the veracity of the accomplishment reports he
submitted to Product Image. This is by no means the kind of control that
establishes an EER as it pertains only to the results and not the manner and
method of doing the work. It would be a rare contract of service that gives
untrammelled freedom to the party hired and eschews any intervention
whatsoever in his performance of the engagement. Surely, it would be
foolhardy for any company to completely give the reins and totally ignore the
operations it has contracted out.
Coca-cola Bottlers v. Agito
Facts: Agito, etc. (respondents) filed a complaint against Coca-Cola Bottlers,
Interserve, Peerless, etc. for reinstatement, regularization, backwages, etc.
Respondents alleged themselves to be salesmen assigned at the Lagro Sales
Office of petitioner. They had been in the employ of petitioner for years, but
were not regularized. Their employment was terminated on 8 April 2002
without just cause and due process. Petitioner denied being the ER, arguing
that Interserve, a legitimate job contractor, was ER of respondents. To prove
the status of Interserve, petitioner presented: (1) the Articles of Incorporation of
Interserve; (2) the Certificate of Registration & ITR of Interserve with the BIR; &
(3) the Certificate of Registration of Interserve as an independent job
contractor, issued by the DOLE. NLRC held that Interserve was a legitimate
contractor, but CA reversed. The appellate court found that Interserve had
insufficient capital for the services which it was contracted to perform. With
only P510,000invested in its service vehicles and P200,000in its machineries
and equipment, Interserve would be hard-pressed to meet the demands of
daily soft drink deliveries of petitioner in the Lagro area. CA concluded that the
respondents used the equipment, tools, and facilities of petitioner in the day-to-
day sales operations. Furthermore, CA found that control was actually
exercised by petitioner, as evidenced by the Daily Sales Monitoring Report, the
Conventional Route System Proposed Set-up, and the memoranda issued by
the supervisor of petitioner addressed to workers, who, like respondents, were
supposedly supplied by contractors. The appellate court deemed that the
respondents, who were tasked to deliver, distribute, and sell Coca-Cola
products, carried out functions directly related and necessary to the main
business of petitioner. The appellate court finally noted that certain provisions
of the Contract of Service between petitioner and Interserve suggested that the
latter’s undertaking did not involve a specific job, but rather the supply of
manpower. Is Interserve a LOC?
Held: Yes. Coca-Cola Bottlers is the real ER. Respondents worked for petitioner
9
as salesmen, with the exception of respondent Gil Francisco whose job was
designated as leadman. In the Delivery Agreement between petitioner and
TRMD Incorporated, it is stated that petitioner is engaged in the manufacture,
distribution and sale of soft drinks 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. The repeated re-hiring of
some of the respondents supports this finding.33 Petitioner also does not
contradict respondents’ allegations that the former has Sales Departments and
Sales Offices in its various offices, plants, and warehouses; and that petitioner
hires Regional Sales Supervisors and District Sales Supervisors who supervise
and control the salesmen and sales route helpers. These are all indicators of
control.
As to the supposed substantial capital and investment required of an
independent job contractor, the Court clarifies that although Interserve has an
authorized capital stock amounting to P2,000,000.00, only P625,000.00
thereof was paid up as of 31 December 2001. The Court does not set an
absolute figure for what it considers substantial capital for an independent job
contractor, but it measures the same against the type of work which the
contractor is obligated to perform for the principal.
The contractor, not the EE, has the burden of proof that it has the substantial
capital, investment, and tool to engage in job contracting. Although not the
contractor itself (since Interserve no longer appealed the judgment against it by
the Labor Arbiter), said burden of proof herein falls upon petitioner who is
invoking the supposed status of Interserve as an independent job contractor.
Nevertheless, despite their not having appealed, SC declared Interserve to be
LOC.
Paragraph 3 of the Contract specified that the personnel of contractor
Interserve, which included the respondents, would comply with CLIENT as well
as “CLIENT’s policies, rules and regulations.” It even required Interserve
personnel to subject themselves to on-the-spot searches by petitioner or its
duly authorized guards or security men on duty every time the said personnel
entered and left the premises of petitioner. Said paragraph explicitly
established the control of petitioner over the conduct of respondents. Although
under paragraph 4 of the same Contract, Interserve warranted that it would
exercise the necessary and due supervision of the work of its personnel, there
is a dearth of evidence to demonstrate the extent or degree of supervision
exercised by Interserve over respondents or the manner in which it was actually
exercised. There is even no showing that Interserve had representatives who
supervised respondents’ work while they were in the premises of petitioner.
Paragraph 4 of the same Contract, in which Interserve warranted to petitioner
that the former would provide relievers and replacements in case of absences
of its personnel, raises another red flag. An independent job contractor, who is
answerable to the principal only for the results of a certain work, job, or service
need not guarantee to said principal the daily attendance of the workers
assigned to the latter. An independent job contractor would surely have the
discretion over the pace at which the work is performed, the number of
employees required to complete the same, and the work schedule which its
employees need to follow.
Fuji Television Network Inc. v. Espiritu
Facts: Arlene Espiritu was engaged by Fuji as a news
correspondent/producer tasked to report Philippine news to Fuji through its
Manila Bureau field office. The employment contract was originally for 1 year
but renewed yearly with a salary adjustment upon renewal. The contract was
renewed year after year, for 5 years. Arlene was then diagnosed with lung
cancer, and upon informing Fuji, she was told the company would have trouble
renewing the contract since it would be difficult for her to perform her job. The
day after, she filed a complaint for illegal dismissal and attorney’s fees with the
NLRC, saying that she was only forced to sign because Fuji withheld her
salaries and other benefits. Fuji argued that Arlene was not an EE, but an
independent contractor. Fuji pointed out that Arlene was hired as a stringer,
and it informed her that she would remain one. She was hired as an
independent contractor as defined in Sonza. Fuji had no control over her work.
The employment contracts were executed and renewed annually upon Arlene’s
insistence to which Fuji relented because she had skills that distinguished her
from ordinary EEs. Arlene and Fuji dealt on equal terms when they negotiated
and entered into the employment contracts. There was no illegal dismissal
because she freely agreed not to renew her fixed-term contract as evidenced by
her e-mail correspondences with Fuji. In fact, the signing of the non-renewal
contract was not necessary to terminate her employment since "such
employment terminated upon expiration of her contract." Finally, Fuji had dealt
with Arlene in good faith, thus, she should not have been awarded damages.
Fuji alleged that it did not need a permanent reporter since the news reported
by Arlene could easily be secured from other entities or from the internet. Fuji
"never controlled the manner by which she performed her functions." It was
Arlene who insisted that Fuji execute yearly fixed-term contracts so that she
could negotiate for annual increases in her pay. Is Arlene an EE, rather than an
independent contractor?
Held: Yes. There are two kinds of contractors: the first type is where there is a
trilateral relationship between principal, contractor, & EE. The second type is
involves individuals with unique skills and talents that set them apart from
ordinary employees. There is no trilateral relationship in this case because the
independent contractor himself or herself performs the work for the principal.
In other words, the relationship is bilateral. Hence, there are different kinds of
independent contractors: those engaged in legitimate job contracting and
those who have unique skills and talents that set them apart from ordinary
employees.
No EER exists between independent contractors and their principals; their
contracts are thus governed by the Civil Code provisions on contracts and other
applicable laws. It is the burden of the ER to prove that a person whose
10
services it pays for is an independent contractor rather than a regular EE with
or without a fixed term.
If the circumstances show that Arlene’s work was necessary and desirable to
Fuji, then she is presumed to be a regular employee. The burden of proving that
she was an independent contractor lies with Fuji.
The test for determining regular employment is whether there is a reasonable
connection between the employee’s activities and the usual business of the
employer. Fuji is engaged in the business of broadcasting, including news
programming. Arlene’s designation was "News Talent/Reporter/Producer", and
as such had to do all activities related to news gathering. She reported for work
in Fuji’s office from Mondays-Fridays and used its equipment. The successive
renewals of Arlene’s contract indicated the necessity and desirability of her
work in the usual course of Fuji’s business. Because of this, Arlene had become
a regular employee with the right to security of tenure.
Fuji’s Argument As Regards Fixed Employment of Arlene
1. Versus independent contractor: Fuji’s argument that Arlene was an
independent contractor under a fixed-term contract is contradictory. Employees
under fixed-term contracts cannot be independent contractors because in fixed-
term contracts, an EER exists. The test in this kind of contract is not the
necessity and desirability of the EE’s activities, "but the day certain agreed
upon by the parties for the commencement and termination of the EER.” For
regular EEs, the necessity and desirability of their work in the usual course of
the ER’s business are the determining factors. On the other hand, independent
contractors do not have EER with their principals. Hence, before the status of
employment can be determined, the existence of an EER must be established.
2. Versus regular EE: With regard to Fuji’s argument that Arlene’s contract was
for a fixed term, the CA cited Philips Semiconductors, Inc. v. Fadriquela, and
held that where an employee’s contract "had been continuously extended or
renewed to the same position, with the same duties and remained in the
employ without any interruption," then such employee is a regular employee.
The continuous renewal is a scheme to prevent regularization. The employment
status of a person is defined and prescribed by law and not by what the parties
say it should be. Equally important to consider is that a contract of employment
is impressed with public interest such that labor contracts must yield to the
common good. Thus, provisions of applicable statutes are deemed written into
the contract, and the parties are not at liberty to insulate themselves and their
relationships from the impact of labor laws and regulations by simply
contracting with each other.
Arlene’s contract indicating a fixed term did not automatically mean that she
could never be a regular employee. This is precisely what Article 280 seeks to
avoid. The ruling in Brent remains as the exception rather than the general rule.
Further, an employee can be a regular employee with a fixed-term contract. The
law does not preclude the possibility that a regular employee may opt to have a
fixed-term contract for valid reasons. This was recognized in Brent: For as long
as it was the employee who requested, or bargained, that the contract have a
"definite date of termination," or that the fixed-term contract be freely entered
into by the employer and the employee, then the validity of the fixed-term
contract will be upheld.
FLJ: It said there was regular fixed, but that’s malabo. But SC seemed to mean
that, because there was valid fixed term employment, but the EE was
consistently rehired, there may be basis for separation pay because separation
pay itself as a concept is a question of number of years.
CLASS DISCUSSION
Q: When is a person considered an independent contractor?
A: The person must have unique skills & talent to be considered an
independent contractor. For example, in Fuji, she was not a celebrity so she
was not considered an independent contractor.
Neri v. NLRC
Facts: Two EEs sued FEBTC for wage differentials & argued that BCC, its
supposed ER, was only a LOC. BCC had capital of P1 million fully subscribed
and used this to prove it was engaged in legitimate job contracting. Is that
sufficient?
Held: Yes. Respondent BCC need not prove that it made investments in the
form of tools, equipment, machineries, work premises, among others, because
it has established that it has sufficient capitalization. The Labor Arbiter and the
NLRC both determined that BCC had a capital stock of P1 million fully
subscribed and paid for. BCC is therefore a highly capitalized venture and
cannot be deemed engaged in "labor-only" contracting.
It is well-settled that there is "labor-only" contracting where: (a) the person
supplying workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work premises,
among others; and, (b) the workers recruited and placed by such person are
performing activities which are directly related to the principal business of the
employer.
Even assuming that petitioners were performing activities directly related to the
principal business of the bank, under the "right of control" test they must still
be considered employees of BCC. In the case of petitioner Neri, it is admitted
that FEBTC issued a job description which detailed her functions as a
radio/telex operator. However, a cursory reading of the job description shows
that what was sought to be controlled by FEBTC was actually the end-result of
the task, e.g., that the daily incoming and outgoing telegraphic transfer of
funds received and relayed by her, respectively, tallies with that of the register.
The guidelines were laid down merely to ensure that the desired end-result was
achieved. It did not, however, tell Neri how the radio/telex machine should be
operated.
11
Neri started the “OR.”
Aliviado v. P&G
The records also show that Promm-Gem supplied its complainant-workers with
the relevant materials, such as markers, tapes, liners and cutters, necessary for
them to perform their work. Promm-Gem also issued uniforms to them. It is
also relevant to mention that Promm-Gem already considered the
complainants working under it as its regular, not merely contractual or project,
employees. This circumstance negates the existence of element (ii) as stated in
Section 5 of DOLE Department Order No. 18-02, which speaks of contractual
employees. This, furthermore, negates on the part of Promm-Gem bad faith
and intent to circumvent labor laws which factors have often been tipping
points that lead the Court to strike down the employment practice or
agreement concerned as contrary to public policy, morals, good customs or
public order. Under the circumstances, Promm-Gem cannot be considered as a
labor-only contractor. We find that it is a legitimate independent contractor.
On the other hand, the Articles of Incorporation of SAPS shows that it has a
paid-in capital of only P31,250.00. There is no other evidence presented to
show how much its working capital and assets are. Furthermore, there is no
showing of substantial investment in tools, equipment or other assets.
Substantial capital refers to capitalization used in the performance or
completion of the job, work or service contracted out. In the present case, SAPS
has failed to show substantial capital.
FLJ: The word “core function” was used here. Even if the EEs perform what are
so-called “core functions” there can still be legitimate job contracting.
Q: For the second type of LOC, is it enough to show that there was control by
the principal, or must there be a confirmation of the full four-fold test on the
part of the principal?
A: If the relationship is bilateral, use the four-fold test. But if there is a trilateral
relationship and we look at the second type of LOC, just look at the issue of
CONTROL. It was intentional that only control was used. If the drafters use the
full four-fold test, it would be easy to circumvent the second type of LOC. In a
trilateral relationship, if control is with the principal, state that the four-fold test
is still complied with because the contractor merely acted as the agent of the
principal. Thus, at the end of the day, the four-fold test is still complied with.
D. RIGHT TO SELF-ORGANIZATION
Bargaining Unit
A group of employees of a given employer, comprised of all or less than all of
the entire body of employees, which the collective interest of all the employees,
consistent with equity to the employer, indicate to be the best suited to serve
the reciprocal rights and duties of the parties under the collective bargaining
provisions of the law.
Components of the Right to SO (Art. 256)
1. The right to form, join, or assist labor organizations
2. The right to engage in lawful concerted activities
Q: Is the right of SO a constitutional right?
A: Yes.
Q: So do all EEs have that right of SO?
A: No. For example, managers cannot join ANY organization.
SUMMARY OF RULES
GR: All EEs in whatever kind of enterprise have the right to self-organize (with
respect to forming, joining, or assisting labor organizations for the purpose of
collective bargaining).
EXC: Those that the law provides cannot form, join, or assist a LO for the
purpose of CB
1. Ambulant, intermittent, & itinerant workers, self-employed people,
rural workers & those without definite ERs – they have a right to form
labor organizations but only have a right to do so for MUTUAL AID &
PROTECTION & NOT for collective bargaining
2. Managerial EEs – power to make decisions & execute policies; power
to layoff, transfer, dismiss other EEs
 Note that in LABOR STANDARDS LAW, the rules are different
for managerial EEs & the definition in labor standards & labor
relations law is not the same
 ABSOLUTELY prohibited from forming, joining, or assisting a LO
for purposes of COLLECTIVE BARGAINING
3. Supervisory EEs – those who have the power to recommend, based on
independent judgment; the manager must listen to recommendations
(i.e., power to recommend must be effective)
 Qualified prohibition – they may form a union & collectively
bargain but not in the same with rank & file EE (NO
COMMINGLING ALLOWED!)
 What happens if supervisory & rank-&-file EE are in the same
labor organization? They will just be excluded from LO
(automatically deemed removed from membership in said
union).
4. EEs of International Organizations (IO)
 Because of immunity from suit (even if it is NOT a suit against the IO)
because the power to negotiate with the IO may, at some point in
time, lead to a case being filed against the IO contrary to international
law
12
  ABSOLUTELY PROHIBITED from joining (ex. IRRI & ICMC; these
institutions may waive immunity, but it’s their choice)
5. Member-owners of cooperatives who are also EEs
 ABSOLUTELY PROHIBITED (because certainly a co-owner cannot
bargain with himself)
 EEs of the cooperative who are not member-owners can form unions
 Also, they can form an association for mutual aid & protection, just
not for collective bargaining
 FLJ Q: What if each EE has just one share in the member cooperative?
What is the effect of this? Is it correct to say there would be no union
in that cooperative? YES. SC did not distinguish. The fact of
ownership, regardless of control or management of cooperative.
6. Stockholders – has a right to self-organize; BUT check if the person is a
manager, supervisor, etc.
 FLJ Q: There are 1,000 shares in the corporation. EE has 1 share.
Does this mean that EE can no longer form part of the union? No,
because the corporation has a separate juridical personality. You are
then talking to the entity, not to yourself. What will limit you is the
power of control you may have, as when you are not a nominal
shareholder & you have a lot of leverage.
7. Confidential EEs – absolutely prohibited if you fall under the definition
(doctrine of necessary implication – because managerial EEs are
disqualified, by necessary implication, confidential EEs are also
disqualified (NATU-Republic Planters Bank Supervisors Chapter v. Torres))
 EEs who: (1) are holding positions of trust & acting in a confidential
capacity, (2) and those who knowledge, & who help formulate,
determine, & effectuate labor relations policies of management (both
requisites must be met for EE to be considered confidential)
 Ex. HR person who holds the payroll
 Note the difference between this & loss of confidence as a ground for
termination; with the latter, the “labor relations” requisite is not there.
8. Members of religious organizations (e.g., Iglesia ni Kristo) – SPECIAL RULE:
Technically, they are not prohibited from joining LOs by law; however, they
cannot be compelled to form if they do not want to. BUT if they choose to
join an LO, they may do so even if there are repercussions in their religious
sect which the law is not to interfere with.
9. Government employees
 Local government employees have a right to form organizations
for purposes of collectively bargaining BUT they cannot negotiate
the non-negotiables based on the law (e.g., salary)
 Government employees in GOCCs without original charter (i.e.,
organized under the Corp. Code) – are allowed to organize & to
bargain collectively with their respective ERs (Art. 253, Labor
Code). They also have the right to strike.
 GR: All government EEs have the right to form & join associations
& EE organizations & to negotiate, but they can only bargain &
negotiate terms & conditions that are NOT fixed by law (note that
they are given the right to form organizations “for the purposes of
their collective interests” & the words “collective bargaining are
not used in regulations covering them)
o Ex. of non-negotiable matters because the law has
already fixed: appropriation of funds (e.g., increase in
salaries, car plans, special hospitalization, medical
services, increase in retirement benefits, signing bonus
of SSS EEs) & those that involve the exercise of
management prerogatives (such as appointment,
promotion, assignment, detail)
o Ex. of matters that may still be negotiated: schedule of
assigned leaves, work assignments of pregnant women)
 EXC: Absolutely prohibited from joining LOs & unions
o AFP, police, firemen, jail guards
o High-level government EEs (essentially, those whose
jobs are policy-determining, managerial, or highly
confidential in nature)
 And of course: All government EEs CANNOT STRIKE!!!!! (BUT: EEs
of GOCCs without original charters can strike)
10. Foreign workers – qualified; they are allowed to unionize, but they must
have (1) valid work permits in the Philippines, (2) there must be reciprocity
(they must be nationals of a country that grants the same or similar rights
to Filipino workers)
11. Security guard – they are allowed under law to unionize (R.A. 6715)
Trade Union Center
 Federation – at least 10 exclusive bargaining representatives
o CURRENT RULE: A supervisory & rank-&-file union may be in
the same federation
FLJ: “Striking” during breaks is not yet tantamount to illegal strike, so some
government EEs, during their free time are allowed to strike during those
breaks.
Benguet Electric Cooperative v. Ferrer
Facts: Under Article 256 of the Labor Code [Pres. Decree 442] to have a valid
certification election, “at least a majority of all eligible voters in the unit must
have cast their votes. The labor union receiving the majority of the valid votes
cast shall be certified as the exclusive bargaining agent of all workers in the
unit.” Petitioner BENECO asserts that the certification election held on October
1, 1986 was void since members-employees of petitioner cooperative who are
not eligible to form and join a labor union for purposes of collective bargaining
13
were allowed to vote therein.
 Is the contention of BENECO valid?
Held: Yes, the certification election was void since member-EEs of the
cooperative took part in voting. SC stated that the right to collective bargaining
is not available to an employee of a cooperative who at the same time is a
member and co- owner thereof. With respect, however, to employees who are
neither members nor co-owners of the cooperative they are entitled to exercise
the rights to self-organization, collective bargaining and negotiation as
mandated by the 1987 Constitution and applicable statutes.
Private respondent BELU argues that to stop members who are also EEs of
cooperatives would violate the right to SO of said member-EEs. Further, it
argues that since membership in petitioner cooperative is only nominal, the
rank and file employees who are members thereof should not be deprived of
their right to self- organization.
SC, however, held: “Contrary to respondents’ claim, the fact that the members-
employees of petitioner do not participate in the actual management of the
cooperative does not make them eligible to form, assist or join a labor
organization for the purpose of collective bargaining with petitioner. The Court’s
ruling in the Davao City case that members of cooperative cannot join a labor
union for purposes of collective bargaining was based on the fact that as
members of the cooperative they are co- owners thereof. As such, they cannot
invoke the right to collective bargaining for „certainly an owner cannot bargain
with himself or his co-owners.‰ [Cooperative Rural Bank of Davao City, Inc. v.
Ferrer-Calleja, et al., supra]. 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. Thus, irrespective of
the degree of their participation in the actual management of the cooperative,
all members thereof cannot form, assist or join a labor organization for the
purpose of collective bargaining.
Republic v. Asiapro
Facts: Asiapro is a cooperative made up of member-owners. SSS sent a letter
to Asiapro telling Asiapro to register for compulsory coverage of its EEs. Asiapro
argues that the Social Security Commission (SSC) has no jurisdiction to
determine the existence of EER. Further, that members of a cooperative cannot
simultaneously be EEs. Are Asiapro’s arguments tenable?
Held: No. As to jurisdiction: The question on the existence of an EER for the
purpose of determining the coverage of the Social Security System is explicitly
excluded from the jurisdiction of the NLRC and falls within the jurisdiction of
the SSC which is primarily charged with the duty of settling disputes arising
under the Social Security Law of 1997. Any issue regarding the compulsory
coverage of the SSS is well within the exclusive domain of the SSC. It is
important to note, though, that the mandatory coverage under the SSS Law is
premised on the existence of an EER except in cases of compulsory coverage of
the self-employed.
As to whether a member can also be an EE: The declaration made by the Court
in its previous cases – that members of cooperatives cannot simultaneously be
EEs or else they will not have the power to collectively bargain – was involved a
different situation. Obviously, an owner-member cannot bargain collectively
with the cooperative of which he is also the owner because an owner cannot
bargain with himself. In the instant case, there is no issue regarding an owner-
member’s right to bargain collectively with the cooperative. The question
involved here is whether an EER can exist between the cooperative and an
owner-member. In fact, even in those previous cases, like in Rural Bank of
Davao, it was acknowledged that a member may, at the same time, be an EE,
especially for purposes of determining coverage for social security purposes.
Payroll reinstatement – no MR in LA decision; there is immediate execution of
reinstatement. This applies in a situation where the ER hates the fired EE & the
LA orders the ER to rehire the EE. This ER has two options (1) actually allow the
EE to work, or (2) do payroll reinstatement.
Sim v. NLRC
Held: (1) It was wrong for the Labor Arbiter to rule that “labor relations system
in the Philippines has no extra-territorial jurisdiction.” The Labor Arbiters of the
NLRC has the original and exclusive jurisdiction to hear and decide all claims
arising out of employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment including claims for
actual, moral, exemplary and other forms of damages, subject to the rules and
procedures of the NLRC.
Under these provisions, it is clear that labor arbiters have original and exclusive
jurisdiction over claims arising from EER, including termination disputes
involving all workers, among whom are overseas Filipino workers.
(2) A manager may be dismissed for loss of trust or confidence.
Philips Industrial Dev. Incorporated (PIDI) v. NLRC
Facts: Are Service Engineers, Sales Force, division secretaries, all Staff of
General Management, Personnel and Industrial Relations Department,
Secretaries of Audit, EDP and Financial Systems of PIDI qualified to be included
in the existing bargaining unit for the rank and file EEs of PIDI?
Held: (1) All Staff of General Management, Personnel and Industrial Relations
Department, Secretaries of Audit, EDP and Financial Systems are NOT
qualified, because they are confidential EEs. By the very nature of their
functions, they assist and act in a confidential capacity to, or have access to
confidential matters of, persons who exercise managerial functions in the field
of labor relations. As such, the rationale behind the ineligibility of managerial
employees to form, assist or join a labor union equally applies to them.
(2) As for the Service Engineers & Sales Force, SC didn’t rule on their
entitlement to join the bargaining unit per se because the NLRC held they were
qualified to be part of the union itself in dispute. SC instead said: “As regards
the service engineers and the sales representatives, two (2) points which
14
respondent NLRC likewise arbitrarily and erroneously ruled upon, need to be
discussed. Firstly, in holding that they are included in the bargaining unit for the
rank and file employees of PIDI, the NLRC practically forced them to become
members of PEO-FFW or to be subject to its sphere of influence, it being the
certified bargaining agent for the subject bargaining unit. This violates,
obstructs, impairs and impedes the service engineers’ & the sales
representatives’ constitutional right to form unions or associations and to self-
organization.”
Note from case: Security guards are eligible for membership in any labor
organization.
Golden Farms v. DOLE Sec.
Facts: Progressive Federation of Labor (PFL) filed a petition before the Med-
Arbiter praying for the holding of a certification election among the monthly
paid office and technical rank-and-file employees of petitioner Golden Farms.
Golden Farms, ER, opposed, arguing that there was already an existing
collective bargaining agreement between the rank-and-file employees
represented by the National Federation of Labor (NFL) and petitioner. Further,
the employees represented by PFL had allegedly been disqualified by this Court
from bargaining with management in a previous Golden Farms case. Are the
contentions of Golden Farms valid?
Held: No. (1) In the case at bench, the evidence established that the
monthly paid rank-and-file employees of petitioner primarily perform
administrative or clerical work. In contradistinction, the petitioner’s daily paid
rank-and-file employees mainly work in the cultivation of bananas in the fields.
It is crystal clear the monthly paid rank-and-file employees of petitioner have
very little in common with its daily paid rank-and-file employees in terms of
duties and obligations, working conditions, salary rates, and skills. To be sure,
the said monthly paid rank-and-file employees have even been excluded from
the bargaining unit of the daily paid rank-and-file employees. This dissimilarity
of interests warrants the formation of a separate and distinct bargaining unit
for the monthly paid rank-and-file employees of the petitioner. To rule
otherwise would deny this distinct class of employees the right to self-
organization for purposes of collective bargaining. Without the shield of an
organization, it will also expose them to the exploitations of management.
(2) Petitioner next contends that these monthly paid office and technical
employees are managerial employees. They allegedly include those in the
accounting and personnel department, cashier, and other employees holding
positions with access to classified information. BUT SC held that the monthly
paid office and technical employees, accountants, and cashiers of the
petitioner are not managerial employees for they do not participate in policy-
making but are given cut out policies to execute and standard practices to
observe. In the main, the discharge of their duties does not involve the use of
independent judgment. The decision in Golden Farms, Inc. vs. Honorable Pura
Ferrer-Calleja, does not pose any obstacle in holding a certification election
among petitioner’s monthly paid rank-and-file employees. The issue brought to
fore in that case was totally different, i.e., whether or not petitioner’s
confidential employees, considering the nature of their work, should be
included in the bargaining unit of the daily paid rank-and-file employees. In the
case at bench, the monthly paid rank-and-file employees of petitioner are being
separated as a bargaining unit from its daily paid rank-and-file employees, on
the ground that they have different interest to protect. The principle of res
judicata is, therefore, inapplicable.
Note: As a GR, an employer has no standing to question a certification election
since this is the sole concern of the workers.
Managerial v. Supervisory EE
A managerial employee is one who is vested with power or prerogatives to lay
down and execute management policies and/or to hire, transfer, suspend, lay-
off, recall, discharge, assign or discipline employees. Supervisory employees
are those who, in the interest of the employer, effectively recommend such
managerial actions if the exercise of such authority is not merely routinary or
clerical in nature but requires the use of independent judgment. All employees
not falling within any of the above definitions are considered rank-and-file
employees for purposes of this Book.
Sugbuanon Rural Bank, Inc. (SRBI) vs. Laguesma
Facts: SRBI filed a motion to dismiss the union’s petition. It sought to prevent
the holding of a certification election on two grounds: First, that the members
of APSOTEU-TUCP were in fact managerial or confidential employees. Thus,
following the doctrine in Philips Industrial Development Corporation v. National
Labor Relations Commission, they were disqualified from forming, joining, or
assisting any labor organization. Petitioner attached the job descriptions of the
employees concerned to its motion. Second, the Association of Labor Unions-
Trade Unions Congress of the Philippines or ALU-TUCP was representing the
union. Are petitioners managerial or confidential EEs?
Held: No. In Tabacalera, SC sustained the classification of a credit and
collection supervisor by management as a managerial/supervisory personnel.
But in that case, the credit and collection supervisor “had the power to
recommend the hiring and appointment of his subordinates, as well as the
power to recommend any promotion and/or increase.”
For this reason he was deemed to be a managerial employee. In the present
case, however, petitioner failed to show that the employees in question were
vested with similar powers. At best they only had recommendatory powers
subject to evaluation, review, and final decision by the bank’s management.
The job description forms submitted by petitioner clearly show that the union
members in question may not transfer, suspend, lay-off, recall, discharge,
15
assign, or discipline employees. Moreover, the forms also do not show that the
Cashiers, Accountants, and Acting Chiefs of the Loans Department formulate
and execute management policies which are normally expected of
management officers.
Petitioner’s explanation, however, does not state who among the employees
has access to information specifically relating to its labor relations policies.
Even Cashier Patricia Maluya, who serve as the secretary of the bank’s Board of
Directors may not be so classified. 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, Patricia Maluya serves the bank’s management, but
could not be deemed to have access to confidential information specifically
relating to SRBI’s labor relations policies, absent a clear showing on this
matter. Thus, while petitioner’s explanation confirms the regular duties of the
concerned employees, it shows nothing about any duties specifically connected
to labor relations.
Confidential employees are those who (1) assist or act in a confidential
capacity, in regard (2) to persons who formulate, determine, and effectuate
management policies [specifically in the field of labor relations. The two criteria
are cumulative, and both must be met if an employee is to be considered a
confidential employee.
Article 245 of the Labor Code does not directly prohibit confidential employees
from engaging in union activities. However, under the doctrine of necessary
implication, the disqualification of managerial employees equally applies to
confidential employees.
DLSU v. DLSU-EA
Facts: University argues that computer operators & discipline officers are
confidential employees and that the Union has already recognized the
confidential nature of their functions when the latter agreed in the parties’
1986 collective bargaining agreement to exclude the said employees from the
bargaining unit of rank-and-file employees.
As to the computer operators, it was argued that they were confidential EEs
because they “process data needed by management for strategic planning and
evaluation of systems. The Department also houses the University’s
confidential records and information [e.g. student records, faculty records,
faculty and staff payroll data, and budget allocation and expenditure related
data] which are contained in computer files and computer-generated reports.
Moreover, the Computer Operators are in fact the repository of the University’s
confidential information and data, including those involving and/or pertinent to
labor relations.”
As to the discipline officers, “Discipline Officers are clearly alter egos of
management as they perform tasks which are inherent in management [e.g.
enforce discipline, act as peace officers, secure peace and safety of the
students inside the campus, conduct investigations on violations of University
regulations, or of existing criminal laws, committed within the University or by
University employees”
(1) Are (a) computer operators assigned at the University/s Computer Services
Center & (b) the University’s discipline officers considered confidential
employees & (3) can the staff of CSB be part of the bargaining unit of DLSU’s?
Held: (1) No. The Court agrees with the Solicitor General that the express
exclusion of the computer operators and discipline officers from the bargaining
unit of rank-and-file employees in the 1986 collective bargaining agreement
does not bar any renegotiation for the future inclusion of the said employees in
the bargaining unit. During the freedom period, the parties may not only renew
the existing collective bargaining agreement but may also propose and discuss
modifications or amendments thereto. With regard to the alleged confidential
nature of the said employees’ functions, after a careful consideration of the
pleadings filed before this Court, we rule that the said computer operators and
discipline officers are not confidential employees. As carefully examined by the
Solicitor General, the service record of a computer operator reveals that his
duties are basically clerical and non-confidential in nature. As to the discipline
officers, we agree with the voluntary arbitrator that based on the nature of their
duties, they are not confidential employees and should therefore be included in
the bargaining unit of rank-and-file employees.
The Court also affirms the findings of the voluntary arbitrator that the
employees of the College of St. Benilde should be excluded from the bargaining
unit of the rank-and-file employees of Dela Salle University, because the two
educational institutions have their own separate juridical personality and no
sufficient evidence was shown to justify piercing the veil of corporate fiction.
San Miguel Supervisors Co. Union v. Laguema
Facts: SMC wants to have supervisors 3 & 4 in its organizational chart blocked
from having the right to join unions. The job of these EEs are:
⁃ To undertake decisions to discontinue/temporarily stop shift operations
when situations require. 

⁃ To effectively oversee the quality control function at the processing lines
in the storage of chicken and other products. 

⁃ To administer efficient system of evaluation of products in the outlets.


⁃ To be directly responsible for the recall, holding and rejection of direct
manufacturing materials. 

⁃ To recommend and initiate actions in the maintenance of sanitation and
hygiene throughout 
 the plant. 

From the foregoing functions, it can be gleaned
that the confidential information said employees have
access to concern the employer’s internal business operations. As held in
Westing-house Electric Corporation v. National Labor Relations Board, „an
employee may not be excluded from appropriate bargaining unit merely
16
because he has access to confidential information concerning employer’s
internal business operations and which is not related to the field of labor
relations.
Held: The exclusion from bargaining units of employees who, in the normal
course of their duties, become aware of management policies relating to labor
relations is a principal objective sought to be accomplished by the “confidential
employee rule.” The broad rationale behind this rule is that employees should
not be placed in a position involving a potential conflict of interests.
It is the contention of respondent corporation that Supervisory employees 3
and 4 and the exempt employees come within the meaning of the term
“confidential employees” primarily because they answered in the affirmative
when asked “Do you handle confidential data or documents?” in the Position
Questionnaires submitted by the Union. In the same questionnaire, however, it
was also stated that the confidential information handled by questioned
employees relate to product formulation, product standards and product
specification which by no means relate to “labor relations.”
 Granting
arguendo that an employee has access to confidential labor relations
information but such is merely incidental to his duties and knowledge thereof is
not necessary in the performance of such duties, said access does not render
the employee a confidential employee. “If access to confidential labor relations
information is to be a factor in the determination of an employee’s confidential
status, such information must relate to the employer’s labor relations policies.
Thus, an employee of a labor union, or of a management association, must
have access to confidential labor relations information with respect to his
employer, the union, or the
association, to be regarded a confidential employee, and
knowledge of labor relations information pertaining to the
companies with which the union deals, or which the
association represents, will not cause an employee to be
excluded from the bargaining unit representing employees of the union or
association.”
Just because an EE
 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.”
EEs from 3 different plants can form one & the same bargaining unit as long as
there is “community of interests” between them.
although they belong to three different
plants, they perform work of the same nature, receive the
same wages and compensation, and most importantly,
share a common stake in concerted activities. In light of
these considerations, the Solicitor General has opined that
separate bargaining units in the three different plants of
the division will fragmentize the employees of the said
division, thus greatly diminishing their bargaining
leverage. Any concerted activity held against the private
respondent for a labor grievance in one bargaining unit
will, in all probability, not create much impact on the
operations of the private respondent. The two other plants
still in operation can well step up their production and
make up for the slack caused by the bargaining unit
engaged in the concerted activity. This situation will clearly
frustrate the provisions of the Labor Code and the mandate of the Constitution.
GTZ v. CA
Facts: Germany & the Philippines jointly agreed on a project called “SHINE” –
Social Health Insurance: Networking & Empowerment. For this project, both
governments created separate teams that could work together. Germany’s
project team was GTZ. Nicolay, the Belgian project manager of GTZ, had
disagreements with the previously assigned respondents. Following the fallout,
the disgruntled EEs of GTZ filed a case before the Labor Arbiter. Does the Labor
Arbiter have jurisdiction over GTZ?
Held: Yes, in the absence of evidence presented by the GTZ that they are in fact
immune from suit. The SHINE project was implemented pursuant to the
bilateral agreements between the Philippine and German governments. GTZ
was tasked, under the 1991 agreement, with the implementation of the
contributions of the German government. The activities performed by GTZ
pertaining to the SHINE project are governmental in nature, related as they are
to the promotion of health insurance in the Philippines. The fact that GTZ
entered into employment contracts with the private respondents did not
disqualify it from invoking immunity from suit.
Counsel for GTZ characterizes GTZ as “the implementing agency of the
Government of the Federal Republic of Germany,” a depiction similarly adopted
by the OSG. Assuming that characterization is correct, it does not automatically
invest GTZ with the ability to invoke State immunity from suit. The distinction
lies in whether the agency is incorporated or unincorporated.
GTZ consistently has been unable to establish with satisfaction that it enjoys
the immunity from suit generally enjoyed by its parent country, the Federal
Republic of Germany. Consequently, both the Labor Arbiter and the Court of
Appeals acted within proper bounds when they refused to acknowledge that
GTZ is so immune by dismissing the complaint against it.
II. Representation and Certification and Election
A. BARGAINING UNIT (BU)
BU Defined
17
A group of EEs sharing mutual interests within a given ER unit, comprised of all
or less than all of the entire body of EEs in the employer unit or any specific
occupational or geographical grouping within such ER unit.
FLJ: The policy in the law & the best case scenario is one bargaining unit (BU)
per ER, although in real life this is rarely followed. In reality, there are multiple
bargaining units.
Factors in determining BU:
 Geographical proximity – location is not necessarily a barrier; there can
be one BU for one ER (like UP) where EEs of the multiple branches of
one ER (UP v. Calleja-Ferrer)
o In the case, all non-academic rank & file EEs of UP from its
different campuses were allowed to participate in one
certification election. Geographical proximity is thus a factor, but
distance is not a barrier. Neither are regional differences likely to
impede the operations of an EBR.
 Similarity in the scale & manner of determining earnings
 Similarity in employment benefits, hours of work, & other terms &
conditions of employment
 Similarity in kinds of work performed
 Similarity in qualifications, skills, & training of EEs
 Frequency of contact or interchange among EEs
 Continuity of integration production processes
 Common supervision & determination of labor-relations policy
 Desires of the affected EEs
 History of collective bargaining
 Extent of union organization
Tests for Determining BU:
1) Globe doctrine (from Globe Machine & Stamping Co.) – what the EEs
want; you determine what the will of the EEs are through referendum
 In the case, there were 3 different BUs traditionally, with 3
different unions, but the 3 unions wanted to combine & make
one BU. The Board found that there were equal merits to
having them as 1 BU or as 3 BUs. So it allowed the EEs to
decide for themselves by referendum if they preferred to be in
1 unit or 3.
2) Substantial interest or community of interest – favorite test in
determining the BU
 FLJ: Note that in the real world, unions themselves do not have
the same definition of what constitutes a BU; it can happen
that Union 1 says that X & Y EEs have the same interests, while
Union 2 says that only Y EEs have the same interest.
3) Prior bargaining history – how the EEs previously bargained with the ER
& how BUs were previously divided
4) Employment status – similar rank, similar type of employment
Why are BUs important?
1. This determines eligibility to vote in certification election
2. Who are represented by the EBR
3. In CBA ratification, the voters are the whole BU
 Contrast with: Strike voting, where only the union members will vote
Inclusion based on Type of EE
 Temporary – NOT included because of no community of interest
 Regular part-time – included, even if they are students or work less than
20 hours a week or are regularly employed elsewhere
 Full-time seasonal EEs – included
 Part-time seasonal EEs – NOT included
 Casual EEs – GR: NOT included; EXC: Casual EEs who work for an ER
who operates a referral system for unskilled labor
 Probationary EEs - included
B. BARGAINING AGENT; CERTIFICATION ELECTION PROCEEDINGS
How to Register to Become a LLO for Independent Unions
Submit to the Regional Office where applicant seeks to operate –
1. P50 registration fee
2. Names of officers, their addresses, principal address of the LO, minutes of
the organizational meetings, list of the workers who participated in such
meetings
3. In case the applicant is an independent union, the names of all its members
comprising at least 20% of all EEs in the BU where it wants to operate
4. If the applicant union has been in existence for one or more years, copies of
its annual financial reports
5. 4 copies of its CBL, minutes of adoption or ratification, and the list of
members who participated in it
6. All documents certified under oath by the secretary or treasurer of the
chapter & attested by the President
20% Retained
Note that 20% must be maintained up to the time the submission of
documents for application are submitted; any EE excluding himself from the
union will be deemed to have done so voluntarily. If after the submission of
documents, the EE count drops from the initial 20%, this will be considered
involuntary and will not prejudice the union’s registration.
No Collateral Attack of Union Registration
18
ER seeking to question a union’s certificate have to file a petition for
cancellation.
Registration Requirements for Chapters
Federations make local chapters by issuing a charter certificate; the chapter
has legal personality but only for filing a PCE.
The chapter can only attain all other rights & privileges of a LLO by submitting
documents in addition to its charter certificate -
1. Names of chapter’s officers, addresses of officers, & the principal office of
the chapter
2. Chapter’s CBL
3. All documents certified under oath by the secretary or treasurer of the
chapter & attested by the President
Q: How does a federation create a charter?
A: This is an internal matter between the federation and charter. The federation
will decide whether or not to take in the charter. The second mode was created
precisely to speed up the process of making legitimate labor organizations.
Q: When you have a charter, what kind of legal personality do you have?
A: You have legal personality to file a petition for CE. If you choose the mode of
independent registration, you will have full legal personality. But if you choose
the way of the charter, you will have only limited personality to file a petition for
CE.
FLJ: Charter – UPON SUBMISSION OF THE DOCUMENTS (NO NEED FOR THE
CHARTER; THE MOMENT YOU HAVE SUBMITTED THE DOCUMENTS, THEY WILL
HAVE COMPLETE PERSONALITY AS IF THEY ARE INDEPENDENT UNIONS)
As long as you submit these two documents, you become like a legitimate
labor union. But if you disaffiliate before you submit the documents, then you
do not become a legitimate labor union.
Q: If you are a chapter, how will you become an entity with full legal
personality?
A: Art. 241. Independent registration – you become independent union upon
issuance of the certificate.
Registration Requirements for Federations
1. Proof of affiliation of at least 10 locals or chapters, each of which is a duly
recognized CBA in the establishment in which it operates
2. Names & addresses of the company where the locals or chapters operate &
the list of all the members in each company involved
Three Grounds to Cancel Union Registration
1. Misrepresentation, false statements, or fraud in connection with the
adoption or ratification of the constitution and by-laws (CBL) or amendments
thereto, the minutes of ratification, & the list of members who took part in the
ratification
2. Misrepresentation, false statements, or fraud in connection with the election
of officers & list of voters
3. Voluntary dissolution (voted by at least 2/3 of the members by secret
balloting, in a meeting duly called for that purpose; application to cancel will
then be submitted by the board, with attestation by the president)
FLJ: FRAUD OR MISREPRESENTATION must be SERIOUS.
If, for example, a union says it has 500 members, but in reality it has only 495
EEs. Although this is misrepresentation, this is not serious enough to render the
registration of the union cancelled.
Though you must memorize the grounds, take note that the cancellation of the
registration must involve SERIOUSNESS.
Affiliation
It involves –
1. An independent registered union, called an affiliate, that enters into an
agreement of affiliation with a federation or national union.
2. It also refers to a chartered local which applies for & is granted an
independent registration but does not disaffiliate from its mother federation or
national union.
*To disaffiliate, it must be done either (1) within the freedom period prior to the
expiration of the CBA, or (2) even before the freedom period, by a vote of the
majority of the total membership of the union.
Note: In PCEs, only legitimate labor organizations (LLOs) are allowed to
participate. To be a LLO, you must be registered.
Two Modes to Participate in the PCE
1. Independent union - When will you become an independent union? Upon
approval (certificate of registration is issued)
2. Chapter/charter
C. MODES OF COLLECTIVE BARGAINING
Organized establishment – an enterprise where there exists a recognized SEBA
(Art. 268 applies)
Unorganized establishment – where no union has yet been duly recognized as
the SEBA (Art. 269 applies)
Three Modes of Determining SEBA:
1. SEBA Certification
2. Certification election, with or without run-off
3. Consent election
19

A. SEBA Certification – a process wherein a union requests the DOLE regional
director to recognize & certify it as the SOLE of the BU it purports to represent
to negotiate a CBE with an ER
When can there be SEBA Certification?
1. Unorganized establishment
2. The requesting union is the only union in the BU
3. BU majority are members of the union
4. Union can be a chapter or an independent union
Required Documents
A request which shall indicate –
1. Name & address of the requesting LLO
2. Name & address of the company where it operates
3. BU sought to be represented
4. Approximate no. of EEs in the BU
5. Statement of the existence or non-existence of other LLOs/CBA
The certificate of registration as duly certified by the president of the
requesting union or certificate of creation of chartered local, as duly certified by
the president of the federation of the local chapter, is required to be attached
to the Request.
Process
1. Within 1 day from submission of the request, the DOLE Regional Director
should –
a) Determine WON the request complies with the documentary
requirements & WON the BU sought to be represented is organized or
not
b) Request a copy of the payroll for purposes of SEBA Certification
2. If there is only 1 LLO in the unorganized establishment, the Director will call
a conference within 5 working days for the submission of –
a) The names of the EEs in the BU who signify their support for SEBA
certification; these EEs should be at least majority of the no. of EEs in
the covered BU
b) Certification under oath by the president of the requesting union or
local that all documents submitted are true & correct based on his
personal knowledge
Unless contested under oath by any member of the BU during the validation
conference, the submission is presumed to be true.
If the Director finds the requirements complete, he will issue a Certification
during the conference that the LO is the SEBA. The SEBA Certification should be
posted for 15 consecutive days in at least 2 conspicuous places in the
establishment or covered BU. The certification year bar rule will then begin to
apply.
If the LO fails to complete the requirements for SEBA Certification during the
conference, the Director will refer the Request to the Election Officer for the
conduct of CE.
3. If there is more than 1 LO in the unorganized establishment, the Director will
refer the same to the Election Officer for the conduct of CE.
4. If there is an existing SEBA, he should refer the issue to the Mediator-Arbiter
to determine the propriety of conducting a CE.
B. Petition for Certification Election – the process of determining through secret
ballot the SEBA of the EEs in an appropriate CBU for purposes of collective
bargaining, conducted by the order of the Med-Arbiter of the BLR.
Two Issues in CEs
1. Proper composition & constituency of the BU
2. Veracity of majority membership claims of the competing unions so as to
identify the one union that will be the EBR
When to File CE
1. If no CBA – any time, except within the 12 months of a previous election (if
any)
2. If with CBA – within the freedom period (the last 60 days of the 5th year of
the CBA
Where
At the Regional Office which issued the petitioning union’s certificate of
registration or certification of creation of chartered local; Med-Arbiter will hear
Form & Contents of Petition
Petition shall be verified under oath by the petitioning LO, & in writing, &
certificate of registration should be attached. If filed by federation, it should
submit verification under oath as to the existence of the local & the charter
certificate.
The following should be stated in the petition:
1. That the BU is unorganized or that there is no registered CBA covering the
EEs in the BU
2. If there exists a duly registered CBA, that the petition is filed within the 60-
day freedom period of such agreement
3. Also in establishment with CBA, the signatures of at least 25% of the EEs in
the BU shall be attached to the petition at the time of its filing
 This 25% support is not needed if there is no CBA
4. If another union has been previously certified in a valid certification, consent,
or run-off election, that the petition is filed outside the 1-year period from date
of recording of such certification or run-off election & that no appeal is pending
thereon
Process in Organized Establishments
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1. A union (or the ER, if so requested to bargain) files a petition for CE
2. Preliminary conference – scheduled within 10 working days from receipt of
the petition; service should be made to ER & incumbent EBR within 3 days
from receipt of the petition
3. Competing unions will be able to file a comment as well as the ER
 ER is a bystander who should not participate; but ER is informed so
that it will submit a list of the EEs within the BU (based on the payroll).
The new rule provides that 3-month old EEs IN THE BU (Note: NOT in
the company) must be in the list.
o ER can also MANIFEST the existence of the bar. This is NOT a
motion. ER can only make manifestations and can make no
prayers for dismissal.
o Ex. X is an EE who used to be in the sales force for 10 years.
Then, X moved to the logistics department & was there for 2
months. Can X vote in the BU? No, because X may have been
employed already for more than 10 years in the company,
BUT he has only been part of the BU for 2 months.
4. Notices will be posted in 2 conspicuous places in the establishment
5. It will be determined if the parties are willing to do a consent election; if they
are not, the Med-Arbiter can conduct as many hearings as needed within 15
days from the preliminary conference.
6. Within 10 days from the last hearing, the Med-Arbiter shall issue a formal
order denying or granting the petition. If the establishment is organized, the
Med-Arbiter will wait until the lapse of the 60-day freedom period to issue its
decision
Grounds to Dismiss a PCE
(1) Non-appearance of petitioner for 2 consecutive scheduled conferences
before the Med-Arbiter despite notice
(2) Unregistered union
 BUT: WON its registration is valid should be heard in another
proceeding – a petition for cancellation of certification election
(3) Illegitimate due to lack of charter
(4) No EER for ALL members of the union
 If SOME are EEs, those non-EEs will just be excluded from the list and
the 25% is recomputed
(5) Failure to hit 25% (lack of support)
 If the LO is able to show 25% of the BU, the Med-Arbiter has no
discretion but to allow the petition for CE; it becomes ministerial on the
part of the Med-Arbiter upon showing this 25% support.
 If it is shown that the union failed to hit 25%, it is discretionary on the
part of the Med-Arbiter whether to grant or dismiss the petition (it’s
possible that the % missing few, like 24%; of course, if it is 5%, the Med-
Arbiter will likely dismiss).
 If EEs withdraw their support for the petition before the filing, the
withdrawal is presumed voluntary & affects the propriety of the petition;
if the withdrawal happens after, it is deemed involuntary & will not lead
to the dismissal of the petition
(6) Certification Year Bar – as of the result of the elections (and NOT the day of
the election itself), there is a 12-month bar. No rival union can file a petition to
challenge the incumbent within this period. If “No Union” wins, there will still be
a certification year bar.
 Collective bargaining should begin within 12 months following the
determination and certification of the EEs’ EBR (i.e., in its certification
year)
 A union certified as the EBR of the EEs enjoys an irrefutable
presumption of majority status for 1 year (the certification year), even if
it turns out not to be the majority representative anymore
 After the 1 year, it enjoys a rebuttable presumption of its representation
of the majority
(7) Negotiation bar – (1) SEBA must start negotiations during the certification
year; it goes on EVEN AFTER the 1-year period of the certification bar. (2) This
negotiation bar can last as long it is SUSTAINED. Also, (3) the negotiation must
be done & sustained in GOOD FAITH.
(8) Deadlock bar – There is a pending deadlock submitted to conciliation or
arbitration or has become the subject of a valid notice of strike or lockout.
 There must be a FILED notice of strike (after which the NCMB will
have an internal deadline to settle the dispute) OR
 The dispute is already subject to arbitration or mediation proceedings
(9) Contract bar (existing CBA) – As long as there is a CBA, there is a bar for the
entire period EXCEPT the last 60 days of the 5-year period of the existence of
the CBA. If you do a PCE before or after that 60-day period, THAT’S NOT
ALLOWED because of the Contract Bar Rule.
 For this bar to apply, the CBA must be REGISTERED & the notice rule
for ratification (posting in 2 conspicuous places) should have been
complied with
Intermission: “Two Different 60-Day Periods”
It is Azucena’s view that there is a 60-day period prior to the 3-year period IN
ADDITION to the 60-day period prior to the 5-year period.
 Azucena’s reasoning: Art. 264 which gives either party the opportunity to
send notice 60 days before the expiration of the CBA for negotiations to
begin refers to the economic provisions. Art. 265 & 268 deal with the
representational aspect. Hence, there are 2 “60-day” periods. (p. 493,
2016 book)
FLJ doesn’t agree and in his view; for him, there is only a 60-day period, and
that’s the one that’s prior to the 5-year period. This means you can actually
start negotiating the economic provisions any time, & you don’t have to wait for
a freedom period.
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  FLJ’s view is supported by: Art. 265, “... all other provisions of the CBA
shall be renegotiated not later than 3 years after its execution,” and
this implies that the negotiations for the economic provisions can
actually begin earlier than 3 years.
FLJ: “If you use the view of Azucena, state what Azucena said, if you use your
own view just use codal to defend yourself. The law implies you can negotiate
within the 3-year period for the non-representative provisions. So as soon as the
CBA is signed even, the economic provisions can already be negotiated as long
as the economic provisions stay for the first 3 years and any new agreements
would be applied after that 3-year period.”
Process in Unorganized Establishments
Med-Arbiter shall, upon receipt of the petition, automatically order the conduct
of a certification election.
Election Proper (Double Majority Rule)
1. To have a valid CE, at least a majority of all eligible voters in the BU should
have cast their votes
2. Majority of the valid votes casts required in order to be SEBA
Election Process
1. Raffle of the case to an Election Officer within 24 hours from finality of
judgment for pre-election conference
 List of voters will be threshed out – all EEs members of the
appropriate BU 3 months prior to the filing of the petition shall be
eligible to vote
 All contested voters are allowed to vote but their votes will be
segregated & sealed
2. Voting – at the date & time agreed upon at pre-election conference
 Secrecy of ballots
 If the vote is too close, the envelopes with contested votes will be
opened and then objections will be counted.
3. Within 24 hours from final canvass of votes, there being a valid election, the
Election Officer shall transmit the records of the case to the Med-Arbiter who
shall issue an order proclaiming the union with the majority of the valid votes
Failure of Election
When the number of votes cast in a certification or consent election is less than
the majority of the number of eligible voters and there are no material
challenged votes.
Failure shall not bar filing of a motion for the immediate holding of another
election or consent election within 6 months from the date of declaration of
failure of election.
Q: When is there a valid election?
A: 50%+1 (majority) of the ELIGIBLE VOTERS in a BU vote.
If in a BU, there are 500 eligible voters, 251 must vote for a valid election. If
less than 251, there is FAILURE OF ELECTION. This will lead to a motion to have
a RE-RUN (without docket fees, etc.) within 6 months.
If in the 6-month period, no one files a motion for a re-run, there must once
more be filed a petition for a CE.
Q: How is the EBR determined?
A: 50% + 1 (majority of the VALID votes cast).
Q: What are these invalid votes?
A: These are the “spoiled” ballots, like when people put teddy bears on their
votes. These votes are invalid, but they are still counted as eligible. Though
their vote is spoiled, there is a valid election already.
NOTE THAT AT THIS POINT, there is a certification year bar. Since there was a
valid election, despite the presence of even 60/260 spoiled ballots, there is
already a bar of 1 year for another certification election. For the certification
year bar to apply, it will apply SO LONG AS THERE IS A VALID ELECTION.
Q: When is there run-off?
A: (1) No winner
(2) There were at least 3 choices (“No Union” is included as a choice, so there
could be two competing unions, and “No Union” is one of the choices).
(3) The total number of votes for all the unions is at least 50% of the votes cast
(AS IN, at least 50% WANTED there to be unions); this will include the SPOILED
BALLOTS.
In an election where 260 votes are cast, everyone who expressed their desire to
have a union will be added up. If “No Union” is an option, remove those who
voted that. The option of “NO UNION” will then be removed. The top two
contending unions will fight it off.
When you do the formula, do it step by step. Always check if there is a valid
election, if there is a winner, and THEN you try the run-off election. Take note of
all the technicalities!!
Re-Run Elections (Run-Off and Re-Run ARE NOT THE SAME!!!!!)
1. When Union X and “no union” both get the same vote, or
2. There is a tie between two unions
The Election Officer will immediately notify the parties of a re-run.
He will cause the posting of the notice of re-run within 5 days from the election.
The re-run will be conducted within 10 days after posting the notice.
The choice receiving the highest votes cast during the re-run will be the winner.
In a run-off election, only the top two unions compete WITHOUT the option to
vote “No Union.”
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But in re-run elections, you are trying to break ties between the two top –
INCLUDING “no union.”
RUN-OFF is in the Labor Code, & re-run is not. For FLJ, run-offs should be
favored over re-runs, because re-runs is only the creation of a department.
Note the requisites for both.
FOR FLJ, in a test, answer both and then say, the RUN-OFF is the favored road.
When doing computations, ROUND UP when there is a decimal point.
FLJ: (A – 65; B – 65; C – 60)
In his POV, A & B will battle it out without C. Azucena, however, thinks all 3 will
compete.
BUT: A – 65; B – 60; C – 60)
A, B, & C will compete.
Union Security Clause – you must be a member of the incumbent union to
continue your employment; if you are expelled from the union, you may be
dismissed by the ER because of the union security clause.
 EXCEPTIONS: (1) Religious people, & (2) at the time the CBA was
signed, you were already a member of a different union
If in the union security clause, all EEs & new EEs have to be members of the
incumbent, how will that union lose, if ever, in a certification election? No one
can even file a petition.
BUT NOTE: The 60-day freedom period right before the end of the 5-year period
is ACTUALLY also an opportunity for EEs to jump ship & determine which union
they want to be part of. Hence, for this period, the union security clause will be
suspended and the EEs will be able to choose which union they want to join. It
is hence not only a freedom period for PCEs, but a freedom period for EEs to
jump ship and join other unions.
C. Petition for Consent Election – parties agree to the consent election with or
without intervention of DOLE; Med-Arbiter, in hearing a petition for certification
election, may ask the parties if they consent. If so, the Med-Arbiter will
immediately forward the records of the petition to the Regional Director to
determine the Election Officer.
Q: What is the difference between petition for consent election and petition for
certification election?
A: Both situations will involve the filing of a petition by a labor union. But in a
consent election, there is NO ISSUE OR CONTROVERSY on the members of the
BU (or other matters).
In a certification election, there will be a part where the Med-Arbiter will
segregate the votes in a BU by determining who truly belongs to the BU and
who does not. There is VOTE SEGREGATION. The vote of all EEs who are
controversially included in the BU, their votes will be excluded.
Thus, in a consent election there is no issue or controversy as to matters
relating to the election.
DLSU v. DLSU Employees Association
Facts: Assailed in these two petitions for certiorari is the Decision of Voluntary
Arbitrator Buenaventura Magsalin, dated Jan. 19, 1993, as having been
rendered with grave abuse of discretion amounting to lack or excess of
jurisdiction.
On the first issue involving the scope of the bargaining unit, the voluntary
arbitrator ruled that the computer operators assigned at the University's
Computer Services Center and the DLSU's discipline of officers are not
confidential EEs. Hence, they should be included in the bargaining unit of rank-
and-file EEs. But DLSU argues that they are confidential employees and that
the Union has already recognized the confidential nature of their functions
when the latter agreed in the parties’ 1986 collective bargaining agreement to
exclude the said EEs from the bargaining unit of rank-and-file EEs. Further,
members of the Computer Services Center had access to a lot of official
records, payrolls, etc. pertaining to all EEs. As for the Disciplinary Officers, DLSU
argued that these Officers are clearly alter egos of management as they
perform tasks which are inherent in management [e.g., enforce discipline, act
as peace officers, secure peace and safety of the students inside the campus,
conduct investigations on violations of DLSU regulations, or of existing criminal
laws, committed within the DLSU or by DLSU employees & said they had
access to confidential information.
Held as to Issue #1: The University's arguments on the first issue fail to impress
us. The Court agrees with the Solicitor General that the express exclusion of the
computer operators and discipline officers from the bargaining unit of rank-
and-file employees in the 1986 collective bargaining agreement does not bar
any re-negotiation for the future inclusion of the said employees in the
bargaining unit. During the freedom period, the parties may not only renew the
existing collective bargaining agreement but may also propose and discuss
modifications or amendments thereto. With regard to the alleged confidential
nature of the said employees’ functions, after a careful consideration of the
pleadings led before this Court, we rule that the said computer operators and
discipline officers are not confidential employees. As carefully examined by the
Solicitor General, the service record of a computer operator reveals that his
duties are basically clerical and non-confidential in nature. As to the discipline
officers, we agree with the voluntary arbitrator that based on the nature of their
duties, they are not confidential employees and should therefore be included in
the bargaining unit of rank-and-file employees.
On the second issue involving union security clause, the voluntary arbitrator
ruled for the inclusion of a union shop provision in addition to the existing
maintenance of membership clause in the collective bargaining agreement.
The University argued that this would be against the right to self-organization.
23
Held as to Issue #2: DLSU’s contention is wrong. The right to join a union
includes the right to abstain from joining any union. The right to refrain from
joining labor organizations recognized by Section 3 of the Industrial Peace Act
is, however, limited. The legal protection granted to such right to refrain from
joining is withdrawn by operation of law, where a labor union and an employer
have agreed on a closed shop, by virtue of which the employer may employ
only members of the collective bargaining union, and the employees must
continue to be members of the union for the duration of the contract in order to
keep their jobs.
On the third issue regarding the Union's proposal for the use of the last-in-first-
out method in case of lay-off, termination due to retrenchment and transfer of
employees, the voluntary arbitrator upheld the right and prerogative of the
management to select and transfer or reassign its employees.
Held as to Issue #3: We agree with the voluntary arbitrator that as an exercise
of management prerogative, the University has the right to adopt valid and
equitable grounds as basis for terminating or transferring employees. “Last-in-
first-out” as a method cannot be required of it.
With respect to employees of the CSB, the voluntary arbitrator found that the
CSB has a personality separate and distinct from the Dela Salle University and
thus, they should be excluded from the bargaining unit of the rank-and-file
employees of the University.
Held as to Issue #4: The EEs of the CSB should be excluded from the bargaining
unit of the rank-and- le employees of Dela Salle University, because the two
educational institutions have their own separate juridical personality and no
sufficient evidence was shown to justify the piercing of the veil of corporate
fiction.
Also: The express exclusion of the computer operators and discipline of cers
from the bargaining unit of rank-and- le employees in the 1986 collective
bargaining agreement does not bar any re-negotiation for the future inclusion
of the said employees in the bargaining unit. During the freedom period, the
parties may not only renew the existing collective bargaining agreement but
may also propose and discuss modifications or amendments thereto.
FLJ: ERs have to prove that there is access to confidential labor relations
information; without proof of this, the EE cannot be excluded. The rule is stricter
now than it previously was, as in the Standard Chartered case.
GR: If companies are separate and distinct entities, the EEs cannot form one
bargaining unit.
EXC: A case where SC said, even if you are registered separately, you can still
form one bargaining unit because there is only 1 management, they are
housed in 1 office, they are following same rules and procedure, and the only
differences between the two are in name.
Note that ER argued that it had no capacity to pay. SC held that there should
have been financial statements audited by the independent auditor to prove
financial capacity to pay.
San Miguel Foods Co. v. San Miguel Corp. Supervisors & Exempt Union
Facts: Respondent union had a certification election. Petitioner & respondent,
however, disagreed as to who should be included or excluded in the list of
voters. The bargaining unit contemplated in the original petition is the Poultry
Division of San Miguel Corporation, now known as San Miguel Foods, Inc.; & it
covered the operations in Calamba, Laguna, Cavite, and Batangas and its
home base.
Issue #1: Petitioner contends that with the Court's ruling in G.R. No. 110399 20
identifying the specific employees who can participate in the certification
election, i.e., the supervisors (levels 1 to 4) and exempt employees of San
Miguel Poultry Products Plants in Cabuyao, San Fernando, and Otis, the CA
erred in expanding the scope of the bargaining unit so as to include employees
who do not belong to or who are not based in its Cabuyao or San Fernando
plants. It also alleges that the employees of the Cabuyao, San Fernando, and
Otis plants of petitioner's predecessor, San Miguel Corporation, as stated in
G.R. No. 110399, were engaged in "dressed" chicken processing, i.e., handling
and packaging of chicken meat, while the new bargaining unit, as defined by
the CA in the present case, includes employees engaged in "live" chicken
operations, i.e., those who breed chicks and grow chickens.
Held #1: Petitioner's contentions are erroneous. In G.R. No. 110399, the Court
explained that the employees of San Miguel Corporation Magnolia Poultry
Products Plants of Cabuyao, San Fernando, and Otis constitute a single
bargaining unit, which is not contrary to the one-company, one-union policy.
The Court affirms the finding of the CA that there should be only one bargaining
unit for the employees in Cabuyao, San Fernando, and Otis 25 of Magnolia
Poultry Products Plant involved in "dressed" chicken processing and Magnolia
Poultry Farms engaged in "live" chicken operations. Certain factors, such as
specific line of work, working conditions, location of work, mode of
compensation, and other relevant conditions do not affect or impede their
commonality of interest [FLJ thinks this line is weird, but that this shows that
just because there is separate line of work, etc. that does not mean that they
do not have commonality of interest. There must be a clear reason to make the
bargaining unit of one set of EEs should be different from the other. But this
case shows that it is more important to support the ONE ER, ONE UNION
POLICY. Here also, the commonality is the business process between them. So
long as there is one commonality, they can already be part of one union.].
Although they seem separate and distinct from each other, the specific tasks of
each division are actually interrelated and there exists mutuality of interests
which warrants the formation of a single bargaining unit.
24

Issue #2: Petitioner asserts that the CA erred in not excluding the position of
Payroll Master in the definition of a confidential employee and, thus, prays that
the said position and all other positions with access to salary and
compensation data be excluded from the bargaining unit.
Held #2: This argument must fail. Confidential employees are defined as those
who (1) assist or act in a confidential capacity, in regard (2) to persons who
formulate, determine, and effectuate management policies in the field of labor
relations. The two criteria are cumulative, and both must be met if an
employee is to be considered a confidential employee
The CA correctly held that the position of Payroll Master does not involve
dealing with confidential labor relations information in the course of the
performance of his functions. Since the nature of his work does not pertain to
company rules and regulations and confidential labor relations, it follows that
he cannot be excluded from the subject bargaining unit.
Issue #3: Are the positions of Human Resource Assistant and Personnel
Assistant confidential?
Held #3: Yes. The CA correctly ruled that the positions of Human Resource
Assistant and Personnel Assistant belong to the category of confidential
employees and, hence, are excluded from the bargaining unit, considering their
respective positions and job descriptions. As Human Resource Assistant, the
scope of one's work necessarily involves labor relations, recruitment and
selection of employees, access to employees' personal files and compensation
package, and human resource management. As regards a Personnel Assistant,
one's work includes the recording of minutes for management during collective
bargaining negotiations, assistance to management during grievance meetings
and administrative investigations, and securing legal advice for labor issues
from the petitioner's team of lawyers, and implementation of company
programs. Therefore, in the discharge of their functions, both gain access to
vital labor relations information which outright disqualifies them from union
membership.
Class Discussion
Q: Are accounting personnel excluded from the bargaining unit?
A: Accounting personnel are actually considered excluded, according to SC,
even if payroll masters are included. It was an obiter in this case, but the court
thus implies that accounting personnel are considered confidential EEs.
FLJ thinks that this is because an accounting personnel has more than just
access to wages. You would have access to financials of the company, how
much it’s really earning versus how much it claims to earn in front of the EEs,
etc. An accounting personnel can use all this information for the undue
advantage of the union.
Hence, if an EE just has access to wages, then that is considered a non-
confidential job. But if it’s more than just wages that an accounting officer has,
then you are a confidential EE which has labor relations knowledge and who
cannot join the union.
Holy Child Catholic School v. HCCS-TELU-PIGLAS
Facts: Petitioner, ER, has two contentions as regards the petition for
certification election filed by respondent Union. It argued that there was a
commingling of supervisory & rank-and-file EEs in the Union; hence, its petition
should be dismissed and registration cancelled. Furthermore, ER argued that
the Union cannot qualify as a LLO because its members do not meet the
mutuality of interests test.
Held: ER is incorrect. The alleged inclusion of supervisory employees in a labor
organization seeking to represent the bargaining unit of rank-and-file
employees does not divest it of its status as a legitimate labor organization.
Further, an ER cannot collaterally attack the legitimacy of a Union by praying
for the dismissal of the petition for certification election. Further, the
determination of whether union membership comprises managerial and/or
supervisory employees is a factual issue that is best left for resolution in the
inclusion-exclusion proceedings, which has not yet happened in this case so
still premature to pass upon. We could only emphasize the rule that factual
findings of labor officials, who are deemed to have acquired expertise in
matters within their jurisdiction, are generally accorded not only with respect
but even finality by the courts when supported by substantial evidence. The
concepts of a union and of a legitimate organization are different from (but
related to) the concept of a bargaining unit.
Labor Organization (Art. 212) - any union or association of employees which
exists in whole or in part for the purpose of collective bargaining or of dealing
with employers concerning terms and conditions of employment.
 Upon compliance with documentary requirements, it shall be issued a
certificate recognizing it as a LLO with legal personality and
consequently having all rights and privileges granted by law.
 In case of alleged inclusion of disqualified employees, the proper
remedy of the ER is to directly file a petition for cancellation of the
union’s certificate due to misrepresentation, false statement or fraud
under the circumstances enumerated in Article 239 of the Labor Code.
Having acquired judicial personality upon issuance of its certificate of
registration, its legitimacy cannot be collaterally attacked.
Bargaining Unit - a "group of employees of a given employer, comprised of all
or less than all of the entire body of employees, indicated to be best suited to
serve reciprocal rights and duties of the
parties under the collective bargaining provisions of the law."
 The test of the grouping is community or mutuality of interest, because
"the basic test of an asserted bargaining unit's acceptability is whether
or not it is fundamentally the combination which will best assure to all
25
 employees the exercise of their collective bargaining rights.”
 As the SOLE correctly observed, petitioner failed to comprehend the
ruling in UP v. Ferrer-Calleja where SC ordered the "non-academic rank-
and-file employees of U.P. to constitute a bargaining unit to the
exclusion of the academic employees of the institution", but did not
order them to organize a separate labor organization.
A bargaining unit is a group of employees sought to be represented by a
petitioning union. Such employees need not be members of a union seeking
the conduct of a certification election. A union certified as an exclusive
bargaining agent represents not only its members but also other employees
who are not union members.
In the case at bar, since the decision of the SC in the U.P. case prohibits us
from commingling teaching and non-teaching personnel in one bargaining unit,
they have to be separated into two separate bargaining units with two separate
certification elections to determine whether the employees in the respective
bargaining units desired to be represented by the UNION. [REREAD THIS CASE;
DOES THIS IMPLY THAT UNION CAN BE COMPOSED OF BOTH EEs from different
bargaining units? Isn’t this not allowed?] – Reread and it kind of says that so it
is so malabo!
The purpose of a certification election is precisely to ascertain the a bargaining
unit’s choice of whether or not to be represented by a labor organization and, if
in the affirmative case, by which one.
ILLUSTRATION TO MAKE IT CLEAR:
1. Bargaining Unit of Non-Teaching Personnel- will vote whether to allow the
UNION to represent them
2. Bargaining Unit of Teaching Personnel - will vote whether or not to allow the
UNION to represent them
Hence, supposing both units vote YES, then both units will be represented by
the UNION.
FLJ: This is the case all pro-union lawyers use, so a pro-union bar examiner will
definitely ask this in the bar. This is due to the difference in definition between
bargaining unit versus union, and the fact that you do not have to be a member
of the union to be included in the bargaining unit and entitled to vote in the
petition for CE.
Pro-union lawyers say that the officer of one union supporting one bargaining
unit can actually support the other bargaining units. There can be thus be one
union with different bargaining units.
Q:What’s the effect of commingling of bargaining units in one union?
A: Even if there is a commingling of supervisory EEs with the rank-and-file EEs,
that is not a ground to dismiss the petition. The requirements to create a
petition does not actually require the names or details of the EEs; this is
particularly true for charter certificates.
It is certain now that if there is a commingling, this cannot be a ground to
dismiss a petition. Those EEs excluded from the bargaining unit will just be
excluded from the list. You just have to make sure that despite the exclusion,
the 25% requirement for filing a petition for CE is still met.
Q: Can a commingling of supervisory and rank-and-file EEs, can this be a
ground for a petition for cancellation of certificate of registration of the union?
A: Per se, no. The grounds for cancellation are strict and highly technical. If the
commingling does not result to one of the grounds, then it cannot be
considered a cause for cancellation.
In bargaining unit, you just need to know the four tests.
NOTE that in the real world, there can be a petition for referendum filed before
the Med-Arbiter where the employees sign and they can ask to be excluded
from the bargaining unit in a particular certificate election.
NOTE: The registration of a union cannot be collaterally attacked. There must
be an independent action for the cancellation of the registration of the union.
Note that this will NOT prevent the filing and holding of the certification
election. These proceedings are separate from each other, and one is not a
condition precedent for the other.
NOTE: If a union is declared the EBR but subsequently the union registration is
cancelled the bar for a certification election will remain because there was a
valid election anyway. There can be no retroactivity of the cancellation of the
union registration of the union.
Republic of the Philippines, represented by DOLE, v. Kawashima Textile Facts:
KFWU led with DOLE Regional Office No. IV, a Petition for Certification Election
to be conducted in the bargaining unit composed of 145 rank-and-file
employees of respondent. Respondent led a Motion to Dismiss the petition on
the ground that KFWU did not acquire any legal personality because its
membership of mixed rank-and-file and supervisory employees violated Article
245 of the Labor Code. SOLE reversed, but CA reinstated the decision. The
petitioner, fed up with all the confusion, filed this petition to finally resolve the
issue of whether a commingling could result in a dismissal of a petition for
certification election.
Held: (1) ERs have no personality to interfere with or thwart a petition for
certification election led by a legitimate labor organization.
(2) Current law on the matter is Art. 245, Labor Code - The inclusion as union
members of employees outside the bargaining unit shall not be a ground for
the cancellation of the registration of the union. Said employees are
automatically deemed removed from the list of membership of said union.
However, the factual milieu in this case occurred in 1999. Despite this, the
26
same rule applies and previous jurisprudence (Toyota & Dunlop) stating that
this would result in the union’s illegitimacy has been overturned by
jurisprudence.
St. James School of Quezon City v. Samahang Manggagawa sa St. James
Facts: Petitioner ER assails the validity of certification election held in DOLE.
According to St. James, the certification election was conducted without
quorum. St. James alleges that it has 179 rank and file employees in its
Quezon City Campus. When the certification election was held, none of these
qualified rank and file employees cast their votes because they were all on duty
in the school premises. The 84 voters who cast their votes are employees of
Architect Bacoy. St. James also alleges that it has 570 rank and file employees
in all its campuses. Even if the 84 voters are its employees, the votes do not
constitute a majority vote of its rank and file employees because the quorum
should be based on its 570 rank and file employees. Are the contentions of ER
valid?
Held: NO. St. James has five campuses — the Philamlife and Scout Alcaraz,
Quezon City campuses which are pre-schools; the Parañaque City and
Calamba, Laguna campuses which offer elementary, secondary and college
education; and the Tandang Sora, Quezon City campus which offers elementary
and secondary education. The members of Samahang Manggagawa are
employees in the Tandang Sora campus. Under its constitution and by-laws,
Samahang Manggagawa seeks to represent the motor pool, construction and
transportation employees of the Tandang Sora campus. 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 St. James' five campuses. Section 2, Rule XII, Book V of the
Omnibus Rules provides: "Section 2. Qualification of voters; inclusion-exclusion
proceedings. — All employees who are members of the appropriate bargaining
unit sought to be represented by the petitioner at the time of the certification or
consent election shall be qualified to vote. A dismissed employee whose
dismissal is being contested in a pending case shall be allowed to vote in the
election. In case of disagreement over the voters' list or over the eligibility of
voters, all contested voters shall be allowed to vote. However, their votes shall
be segregated and sealed in individual envelopes in accordance with Section 9
of these Rules." The motor pool, construction and transportation employees of
the Tandang Sora campus had 149 qualified voters at the time of the
certification election. Hence, the 149 qualified voters should be used to
determine the existence of a quorum. Since a majority or 84 out of the 149
qualified voters cast their votes, a quorum existed in the certification election.
Class Discussion
Q: What if at the time of the decision, there was no decision which definitively
stated that the EEs are actually the EEs of the ER; would your answer be the
same as this case?
A: No. The EER is vital to a petition for CE.
BUT NOTE that if there is any question as to a vote, even the existence of the
EER will just be subject to protest and the vote will just be set aside for later
determination if it is relevant.
But note that the DOLE, for the purposes of determining if a certain EE can vote
in a CE, can decide if the EER exists. This is pursuant to the Bombo Radyo case.
But note that the moment that the EE has been dismissed and now determines
status, DOLE has no jurisdiction; only the NLRC has that. Hence, DOLE can
determine existence of EER only if the EE is still working for the principal or ER.
BUT NOTE IT’S LIKE THREE STEPS:
1. DOLE has the power to determine EER
2. But ONLY pursuant to its power to inspect (but this is subject to
argumentation)
3. AND ONLY if the EE is still working with the same ER
Note that the ER cannot question the composition of the bargaining unit.
DHL Phils. United Rank and File Association v. Buklod ng Manggagawa ng DHL
Phils.
Facts: Petitioner was elected a petition for certification election. Respondent
Buklod ng Manggagawa ng DHL Philippines Corporation (BUKLOD) filed with
the Industrial Relations Division of the Department of Labor and Employment
(DOLE) a Petition for the nullification of the certification election. The officers of
petitioner were charged with committing fraud and deceit in the election
proceedings, particularly by misrepresenting to the voter-employees that it was
an independent union, when it was in fact an affiliate of the Federation of Free
Workers (FFW).
Held: False statements made by union officers before and during a certification
election — that the union is independent and not affiliated with a national
federation — are material facts likely to influence the election results. This
principle finds application in the present case in which the majority of the
employees clearly wanted an independent union to represent them. Thus, after
the members learned of the misrepresentation, and after a majority of them
disaffiliated themselves from the union and formed another one, a new
certification election should be held to enable them to express their true will.
1. The late filing of the Petition for a new election can be excused under the
peculiar facts of this case, considering that the employees concerned did not
sleep on their rights, but promptly acted to protect their prerogatives. Petitioner
should not be permitted to use legal technicalities to perpetrate the betrayal
foisted by its officers upon the majority of the employees. Procedural
technicalities should not be allowed to suppress the welfare of labor.
2. The election officer's authority to certify the results of the election is limited
to situations in which there has been no protest filed; or if there has been any,
it has not been perfected or formalized within five days from the close of the
election proceedings. When a protest has been perfected, only the med-arbiter
27
can proclaim and certify the winner. Clearly, this rule is based on the election
officer's function, which is merely to conduct and supervise certification
elections. It is the med-arbiter who is authorized to hear and decide
representation cases. Consequently, the decision whether to certify the results
of an election or to set them aside due to incidents occurring during the
campaign is within the med-arbiter's discretion.
3. The making of false statements or misrepresentations that interfere with the
free choice of the employees is a valid ground for protest. A certification
election may be set aside for misstatements made during the campaign, where
1) a material fact has been misrepresented in the campaign; 2) an opportunity
for reply has been lacking; and 3) the misrepresentation has had an impact on
the free choice of the employees participating in the election [FLJ: This is the
only enumeration SC ever made for a protest where there is misrepresentation.
Memorize this!]. A misrepresentation is likely to have an impact on their free
choice, if it comes from a party who has special knowledge or is in an
authoritative position to know the true facts. This principle holds true,
especially when the employees are unable to evaluate the truth or the falsity of
the assertions.
The bargaining agent must be truly representative of the employees. At the
time of the filing by respondent of the Petition for nullification, allegiances and
loyalties of the employees were like shifting sands that radically affected their
choice of an appropriate bargaining representative. The polarization of a good
number of them followed their discovery of the fraud committed by the officers
of petitioner. At any rate, the claim that 704 of the employees are affiliated
with respondent is not sufficiently rebutted by any evidence on record.
The purpose of a certification election is precisely to ascertain the majority of
the employees' choice of an appropriate bargaining unit — to be or not to be
represented by a labor organization and, in the affirmative case, by which one.
Once disaffiliation has been demonstrated beyond doubt, a certification
election is the most expeditious way of determining which union should be the
exclusive bargaining representative of the employees.
FLJ: During the election you are required to manifest your objections, which
must be manifested in the minutes of the election. If it is not manifested or not
written in the minutes, you raise that objection already.
Five days after the election, you must submit, within 5 days, a written objection
with your reasons. If you fail to do so, you can no longer question the EE or the
person you were allowed to vote.
This case is just an exception to this general rule – only MISREPRESENTATION
of this level is an exception to the 5-day rule.
Sta. Lucia East Commercial Corporation v. Hon. Secretary Of Labor
Facts: CLUP-SLECCWA registered to represent the rank-and-file EEs of
Petitioner ER; at first, its scope was too wide (& covered sister companies of
Petitioner ER), so its registration was denied. However, subsequently, CLUP-
SLECCWA limited its bargaining unit to Petitioner ER’s EEs; this registration
was granted. The same union filed a petition for certification election.
Petitioner ER filed a MTD, who claimed that previously, by voluntarily
recognition, it recognized SMSLEC as the EBR of its EEs. It argued that the
petition was barred by negotiation bar & certification election bar. SOLE & CA
denied the MTD on the ground that, at the time SMSLEC was voluntarily
recognized, CLUP-SLECCWA already existed as a LLO & hence, the voluntary
recognition was void. Should this decision be reversed?
Held: No. CLUP-SLECC and its Affiliates Workers Union's initial problem was
that they constituted a legitimate labor organization representing a non-
appropriate bargaining unit. However, CLUP-SLECC and its Affiliates Workers
Union subsequently re-registered as CLUP-SLECCWA, limiting its members to
the rank-and- le of SLECC. SLECC cannot ignore that CLUP-SLECC and its
Affiliates Workers Union was a legitimate labor organization at the time of
SLECC's voluntary recognition of SMSLEC. SLECC and SMSLEC cannot, by
themselves, decide whether CLUP-SLECCWA represented an appropriate
bargaining unit.
The inclusion in the union of disqualified employees is not among the grounds
for cancellation of registration, unless such inclusion is due to
misrepresentation, false statement or fraud under the circumstances
enumerated in Sections (a) to (c) of Article 239 of the Labor Code. 10 Thus,
CLUP-SLECC and its Affiliates Workers Union, having been validly issued a
certificate of registration, should be considered as having acquired juridical
personality which may not be attacked collaterally. The proper procedure for
SLECC is to le a petition for cancellation of certificate of registration 11 of
CLUP-SLECC and its Affiliates Workers Union and not to immediately
commence voluntary recognition proceedings with SMSLEC.
The employer may voluntarily recognize the representation status of a union in
unorganized establishments. 12 SLECC was not an unorganized establishment
when it voluntarily recognized SMSLEC as its exclusive bargaining
representative on 20 July 2001. CLUP-SLECC and its Affiliates Workers Union
led a petition for certification election on 27 February 2001 and this petition
remained pending as of 20 July 2001. Thus, SLECC's voluntary recognition of
SMSLEC on 20 July 2001, the subsequent negotiations and resulting
registration of a CBA executed by SLECC and SMSLEC are void and cannot bar
CLUP-SLECCWA's present petition for certification election.
FLJ: In voluntary recognition, the union must be unorganized.
Note that the 20% requirement in the petition for registration of union is really
only a requirement at the time you file the petition. If after that time, you have
lower than the 20% requirement, your union registration will not be cancelled
because of it.
Samahan Ng Mga Manggagawa Sa Samma–Lakas Sa Industriya Ng
Kapatirang Haligi Ng Alyansa (Samma–Likha) v. Samma Corporation
28
Facts #1: Is a CNFS a necessary attachment to a petition for certification
election?
Held #1: No. The requirement for a certi cate of non-forum shopping refers to
complaints, counter-claims, cross-claims, petitions or applications where
contending parties litigate their respective positions regarding the claim for
relief of the complainant, claimant, petitioner or applicant. A certification
proceeding, even though initiated by a "petition", is not a litigation but an
investigation of a non-adversarial and fact-finding character. The same
situation holds true for a petition for certification election. Under the omnibus
rules implementing the Labor Code as amended by D.O. No. 9, 22 it is
supposed to be led in the Regional Office which has jurisdiction over the
principal of ce of the employer or where the bargaining unit is principally
situated. The rules further provide that where two or more petitions involving
the same bargaining unit are led in one Regional Office, the same shall be
automatically consolidated. 24 Hence, the ling of multiple suits and the
possibility of conflicting decisions will rarely happen in this proceeding and, if it
does, will be easy to discover.
Facts #2: Petitioner argues that the erroneous inclusion of one supervisory
employee in the union of rank-and- le employees was not a ground to impugn
its legitimacy as a legitimate labor organization which had the right to le a
petition for certification election. Is petitioner’s contention correct?
Held #2: Yes. LIKHA was granted legal personality as a federation under
certificate of registration no. 92-1015-032-11638-FED-LC. Subsequently,
petitioner as its local chapter was issued its charter certificate no. 2-01. With
certificates of registration issued in their favor, they are clothed with legal
personality as legitimate labor organizations. A local/chapter constituted in
accordance with Section 1 of this Rule shall acquire legal personality from the
date of ling of the complete documents enumerated therein. Upon compliance
with all the documentary requirements, the Regional Office or Bureau of Labor
Relations shall issue in favor of the local/chapter a certificate indicating that it
is included in the roster of legitimate labor organizations.
All of this is true even if a petition for cancellation has already been filed
against petitioner, which petitioner subsequently appealed. It is only when the
registration of petitioner has been revoked with finality that a union or chapter
is no longer a legitimate labor organization with the right to petition for a
certification election.
Class Discussion
Q: Is a petition for certification election quasi-judicial in nature?
A: No.
Q: Can it be subject to a petition for certiorari under Rule 65?
A: Yes, this is regardless of whether or not the proceeding is judicial or quasi-
judicial. For example, a JBC decision is still susceptible to Rule 65.
What’s super important here: the ER is a bystander!
Chris Garments Corporation v. Hon. Patricia A. Sto. Tomas and Chris Garments
Workers Union-PTGWO
Facts: Chris Garments Workers Union-PTGWO, Local Chapter No. 832, led a
petition for certification election with the Med-Arbiter. It was dismissed
because at the time there was a CBA with another union, SMCGC-Super. After
this, it filed a petition a second & third time; at the third time, their petition was
granted & an election conducted. Was this a violation of the rule against res
judicata?
Held: No. There is "bar by prior judgment" when, as between the first case
where the judgment was rendered, and the second case that is sought to be
barred, there is identity of parties, subject matter, and causes of action (PSM-
COA). In this instance, the judgment in the first case constitutes an absolute
bar to the second action. Otherwise put, the judgment or decree of the court of
competent jurisdiction on the merits concludes the litigation between the
parties, as well as their privies, and constitutes a bar to a new action or suit
involving the same cause of action before the same or any other tribunal.
On the other hand, the doctrine of "conclusiveness of judgment" provides that
issues (ISSUES) actually and directly resolved in a former suit cannot again be
raised in any future case between the same parties involving a different cause
of action. Under this doctrine, identity of causes of action is not required but
merely identity of issues. Otherwise stated, conclusiveness of judgment bars
the relitigation of particular facts or issues in another litigation between the
same parties on a different claim or cause of action.
In the instant case, there is no dispute as to the presence of the first three
elements of res judicata. The Resolution dated December 27, 2002 of the
Secretary of Labor and Employment on the first petition for certification
election became final and executory. It was rendered on the merits and the
Secretary of Labor and Employment had jurisdiction over the case. Now, is the
fourth element — identity of parties, subject matter, and causes of action
between the first and third petitions for certification election — present? We
hold in the negative.
The Secretary of Labor and Employment dismissed the first petition as it was
led outside the 60-day freedom period. At that time therefore, the union has no
cause of action since they are not yet legally allowed to challenge openly and
formally the status of SMCGC-SUPER as the exclusive bargaining representative
of the bargaining unit. Such dismissal, however, has no bearing in the instant
case since the third petition for certification election was led well within the 60-
day freedom period. Otherwise stated, there is no identity of causes of action to
speak of since in the first petition, the union has no cause of action while in the
third, a cause of action already exists for the union as they are now legally
allowed to challenge the status of SMCGC-SUPER as exclusive bargaining
representative.
29
National Union Of Workers In Hotels, Restaurants & Allied Industries- Manila
Pavilion Hotel Chapter v. Secretary of Labor
Facts: There was a certification election where the contenders were two unions.
346 people voted, but 22 votes were segregated. In view of the significant
number of segregated votes, contending unions, petitioner, NUHWHRAIN-
MPHC, and respondent Holiday Inn Manila Pavilion Hotel Labor Union
(HIMPHLU), referred the case back to Med-Arbiter Ma. Simonette Calabocal to
decide which among those votes would be opened and tallied. 11 votes were
initially segregated because they were cast by dismissed employees, albeit the
legality of their dismissal was still pending before the Court of Appeals. Six
other votes were segregated because the employees who cast them were
already occupying supervisory positions at the time of the election. Still five
other votes were segregated on the ground that they were cast by probationary
employees and, pursuant to the existing Collective Bargaining Agreement
(CBA), such employees cannot vote. It bears noting early on, however, that the
vote of one Jose Gatbonton (Gatbonton), a probationary employee, was
counted.
Med-Arbiter Calabocal ruled for the opening of 17 out of the 22 segregated
votes, specially those cast by the 11 dismissed employees and those cast by
the six supposedly supervisory employees of the Hotel. The Med-Arbiter
rejected the opening of the ballots of the probationary EEs, on the ground that
those who become probationary EEs after the issuance of the Order for the
conduct of a certification election are no longer qualified to vote since, at the
time of the Order’s issuance, they were not yet even probationary EEs.
The issues before the SC are: (1) WON employees on probationary status at the
time of the certification elections should be allowed to vote, and (2) whether
HIMPHLU was able to obtain the required majority for it to be certified as the
exclusive bargaining agent.
Held: (1) Yes, they should be allowed to vote. The inclusion of Gatbonton (a
probationary EE)'s vote was proper not because it was not questioned but
because probationary employees have the right to vote in a certification
election. The votes of the six other probationary employees should thus also
have been counted. In a certification election, all rank and file employees in the
appropriate bargaining unit, whether probationary or permanent are entitled to
vote. Collective bargaining covers all aspects of the employment relation and
the resultant CBA negotiated by the certified union binds all employees in the
bargaining unit. Hence, all rank and file EEs, probationary or permanent, have a
substantial interest in the selection of the bargaining representative. The Code
makes no distinction as to their employment status as basis for eligibility in
supporting the petition for certification election. The law refers to "all" the
employees in the bargaining unit. All they need to be eligible to support the
petition is to belong to the "bargaining unit".
For purposes of determining who may join a labor organization, any employee,
whether employed for a definite period or not, shall beginning on the first day
of his/her service, be eligible for membership in any labor organization.
Further, the period for reckoning who forms part of the list of EEs who can vote
in a certification election is not the date of the issuance of an order to conduct
an election by the Med-Arbiter. Rather, the period of reckoning in determining
who shall be included in the list of eligible voters is, in cases where a timely
appeal has been filed from the Order of the Med-Arbiter, the date when the
Order of the Secretary of Labor and Employment, whether affirming or denying
the appeal, becomes final and executory.
The filing of an appeal to the SOLE from the Med-Arbiter's Order stays its
execution, in accordance with Sec. 21, and rationally, the Med-Arbiter cannot
direct the employer to furnish him/her with the list of eligible voters pending
the resolution of the appeal.
During the pendency of the appeal, the employer may hire additional
employees. To exclude the employees hired after the issuance of the Med-
Arbiter's Order but before the appeal has been resolved would violate the
guarantee that every employee has the right to be part of a labor organization
from the first day of their service.
In the present case, records show that the probationary employees, including
Gatbonton, were included in the list of employees in the bargaining unit
submitted by the Hotel on May 25, 2006 in compliance with the directive of the
Med-Arbiter after the appeal and subsequent motion for reconsideration have
been denied by the SOLE, rendering the Med- Arbiter's August 22, 2005 Order
final and executory 10 days after the March 22, 2007 Resolution (denying the
motion for reconsideration of the January 22 Order denying the appeal), and
rightly so. Because, for purposes of self-organization, those employees are, in
light of the discussion above, deemed eligible to vote.
But while the Court rules that the votes of all the probationary employees
should be included, under the particular circumstances of this case and the
period of time which it took for the appeal to be decided, the votes of the 6
supervisory employees must be excluded because at the time the certification
elections was conducted, they had ceased to be part of the rank and file, their
promotion having taken effect two months before the election.
(2) As to whether HIMPHLU should be certified as the exclusive bargaining
agent, the Court rules in the negative. It is well-settled that under the so-called
"double majority rule", for there to be a valid certification election, majority of
the bargaining unit must have voted AND the winning union must have
garnered majority of the valid votes cast.
Prescinding from the Court's ruling that all the probationary employees' votes
should be deemed valid votes while that of the supervisory employees should
be excluded, it follows that the number of valid votes cast would increase —
from 321 to 337. Under Art. 256 of the Labor Code, the union obtaining the
majority of the valid votes cast by the eligible voters shall be certified as the
sole and exclusive bargaining agent of all the workers in the appropriate
bargaining unit. This majority is 50% + 1. Hence, 50% of 337 is 168.5 + 1 or at
least 170.
HIMPHLU obtained 169 while petitioner received 151 votes. Clearly, HIMPHLU
30
was not able to obtain a majority vote. The position of both the SOLE and the
appellate court that the opening of the 17 segregated ballots will not materially
affect the outcome of the certification election as for, so they contend, even if
such member were all in favor of petitioner, still, HIMPHLU would win, is thus
untenable.
It bears reiteration that the true importance of ascertaining the number of valid
votes cast is for it to serve as basis for computing the required majority, and
not just to determine which union won the elections. The opening of the
segregated but valid votes has thus become material. To be sure, the conduct
of a certification election has a two-fold objective: to determine the appropriate
bargaining unit and to ascertain the majority representation of the bargaining
representative, if the employees desire to be represented at all by anyone. It is
not simply the determination of who between two or more contending unions
won, but whether it effectively ascertains the will of the members of the
bargaining unit as to whether they want to be represented and which union
they want to represent them.
Having declared that no choice in the certification election conducted obtained
the required majority, it follows that a run-off election must be held to
determine which between HIMPHLU and petitioner should represent the rank-
and-file employees.
IMPORTANT NOTE: There is now a minimum requirement of months before an
EE can vote in a PCE based on the new Rules. The EE must be part of the job for
at least 3 months before they can vote in the certification election. Note
however that an EE can join a union from day one.
Segregated votes are also opened to determine if there is a valid election; it is
not only opened in case there will be a change in who will be the winner.
Eagle Ridge Golf and Country Club v. CA
Facts: Eagle Ridge filed a petition for cancellation of union registration against
Eagle Ridge EEs Union (EREU). It alleged fraud and misrepresentation as
regards its minutes and its list of participants – there were 25 according to the
secretary’s minutes, but 26 signed the final list, showing a discrepancy &
forgery in the files of the union which were required to be submitted for
registration. There are three issues: (1) is the failure to attach a CNFS with
board resolution from Eagle Ridge’s board fatal? (2) Was there fraud on the
part of EREU warranting the cancellation of its registration? (3) WON the
separation of 6 members from the Union can detrimentally affect the
registration of the Union?
Held: (1) Yes. The Rules requires the petitioner, not his counsel, to sign under
oath the requisite certification against non-forum shopping. Such certi cation is
a peculiar personal representation on the part of the principal party, an
assurance to the court that there are no other pending cases involving basically
the same parties, issues, and cause of action.
In the instant case, the sworn veri cation and certi cation of non-forum
shopping in the petition for certiorari of Eagle Ridge led before the CA carried
the signature of its counsel without the requisite authority.
Eagle Ridge tried to address its faux pas by submitting its board secretary's
Certificate 33 dated May 15, 2007, attesting to the issuance on May 10, 2007
of Board Resolution No. ERGCCI 07/III-01 that authorized its counsel of record,
Atty. Luna C. Piezas, to represent it before the appellate court.
The CA, however, rejected Eagle Ridge's virtual plea for the relaxation of the
rules on the signing of the veri cation and certi cation against forum shopping,
observing that the board resolution adverted to was approved after Atty. Piezas
has signed and filed for Eagle Ridge the petition for certiorari.
The appellate court's assailed action is in no way tainted with grave abuse of
discretion, as Eagle Ridge would have this Court believed. Indeed, a certi cation
of non- forum shopping signed by counsel without the proper authorization is
defective and constitutes a valid cause for dismissal of the petition.
The submission of the board secretary's certi cate through a motion for
reconsideration of the CA's decision dismissing the petition for certiorari may
be considered a substantial compliance with the Rules of Court.35 Yet, this rule
presupposes that the authorizing board resolution, the approval of which is
certi ed to by the secretary's certi cation, was passed within the reglementary
period for ling the petition. This particular situation does not, however, obtain
under the premises. The records yield the following material dates and
incidents: Eagle Ridge received the May 7, 2007 resolution of the BLR Director
on March 9, 2007, thus giving it 60 days or up to May 8, 2007 to file a petition
for certiorari, as it in fact led its petition on April 18, 2007 before the CA. The
authorization for its counsel, however, was only issued in a meeting of its board
on May 10, 2007 or a couple of days beyond the 60-day reglementary period
referred to in filing a certiorari action. Thus, there was no substantial
compliance with the Rules.
(2) No. First, EREU’s set of files were complete. Second. The members of the
EREU totaled 30 employees when it applied on December 19, 2005 for
registration. The Union thereby complied with the mandatory minimum 20%
membership requirement under Art. 234 (c). Of note is the undisputed number
of 112 rank-and- le employees in Eagle Ridge, as shown in the Sworn
Statement of the Union president and secretary and con rmed by Eagle Ridge
in its petition for cancellation.
Third. The Union has suf ciently explained the discrepancy between the number
of those who attended the organizational meeting showing 26 employees and
the list of union members showing 30. The difference is due to the additional
four members admitted two days after the organizational meeting as attested
to by their duly accomplished Union Membership forms. Consequently, the total
number of union members, as of December 8, 2005, was 30, which was
truthfully indicated in its application for registration on December 19, 2005. As
aptly found by the BLR Director, the Union already had 30 members when it
applied for registration, for the admission of new members is neither prohibited
31
by law nor was it concealed in its application for registration. Eagle Ridge's
contention is awed when it equated the requirements under Art. 234 (b) and (c)
of the Labor Code. Par. (b) clearly required the submission of the minutes of the
organizational meetings and the list of workers who participated in the
meetings, while par. (c) merely required the list of names of all the union
members comprising at least 20% of the bargaining unit. The fact that EREU
had 30 members when it applied for registration on December 19, 2005 while
only 26 actually participated in the organizational meeting is borne by the
records.
The difference between the number of 26 members, who ratified the Union's
constitution and by-laws, and the 25 members shown in the certification of the
Union secretary as having ratified it, is, as shown by the factual antecedents, a
typographical error. It was an insignificant mistake committed without malice
or prevarication. The list of those who attended the organizational meeting
shows 26 members, as evidenced by the signatures beside their handwritten
names. Thus, the certification's understatement by one member, while not
factual, was clearly an error, but neither a misleading one nor a
misrepresentation of what had actually happened.
In the more meaty issue of the affidavits of retraction executed by six union
members, we hold that the probative value of these af davits cannot overcome
those of the supporting af davits of 12 union members and their counsel as to
the proceedings and the conduct of the organizational meeting on December 6,
2005. The DOLE Regional Director and the BLR OIC Director obviously erred in
giving credence to the af davits of retraction, but not according the same
treatment to the supporting affidavits.
(3) No, it cannot. The fact that six union members, indeed, expressed the desire
to withdraw their membership through their af davits of retraction will not
cause the cancellation of registration on the ground of violation of Art. 234 (c)
of the Labor Code requiring the mandatory minimum 20% membership of
rank-and- le employees in the employees' union.
The six retracting union members clearly severed and withdrew their union
membership. The query is whether such separation from the Union can
detrimentally affect the registration of the Union.
We answer in the negative.
Twenty percent (20%) of 112 rank-and- le employees in Eagle Ridge would
require a union membership of at least 22 employees (112 x 205 = 22.4).
When the EREU led its application for registration on December 19, 2005,
there were clearly 30 union members. Thus, when the certificate of registration
was granted, there is no dispute that the Union complied with the mandatory
20% membership requirement.
Besides, it cannot be argued that the six affidavits of retraction retroact to the
time of the application of registration or even way back to the organizational
meeting. Prior to their withdrawal, the six employees in question were bona de
union members. More so, they never disputed affixing their signatures beside
their handwritten names during the organizational meetings. While they
alleged that they did not know what they were signing, it bears stressing that
their affidavits of retraction were not re-affirmed during the hearings of the
instant case rendering them of little, if any, evidentiary value.
With the withdrawal of six union members, there is still compliance with the
mandatory membership requirement under Art. 234 (c), for the remaining 24
union members constitute more than the 20% membership requirement of 22
employees.
Also, the withdrawal of six member- employees from the Union will affect
neither the Union's registration nor its petition for certification election, as their
affidavits of retraction were executed after the Union's petition for certification
election had been led. The initial five affidavits of retraction were executed on
February 15, 2006; the sixth, on March 15, 2006. Indisputably, all six were
executed way after the ling of the petition for certification election on January
10, 2006.
Where the company seeks the cancellation of a union's registration during the
pendency of a petition for certification election, the same grounds invoked to
cancel should not be used to bar the certification election. A certification
election is the most expeditious and fairest mode of ascertaining the will of a
collective bargaining unit as to its choice of its exclusive representative.
IN SUM: The employees' withdrawal from a labor union made before the filing
of the petition for certification election is presumed voluntary, while withdrawal
after the filing of such petition is considered to be involuntary and does not
affect the same.
PICOP Resources, Inc. v. Tañeca
Facts: In the CBA between PICOP & Union #1, there is a union security clause
prohibiting current members of the union & future EEs from joining any other
union. Later, however, around 40 members of Union #1 [NAMAPRI-SPFL]
signed allegedly campaigned for, supported and signed the Petition for
Certification Election of the Federation of Free Workers Union (FFW) [Union #2]
during the effectivity of the CBA. Officers of Union #1 wrote the company &
called for the termination of said EEs for acts of disloyalty. These EEs retaliated
by filing cases of ULP against the ER & Union #1. Respondent EEs alleged that
none of them ever withdrew their membership from NAMAPRI-SPFL or
submitted to PRI any union dues and check-off dis-authorizations against
NAMAPRI-SPFL. They claimed that they continue to remain on record as bona
fide members of NAMAPRI-SPFL. They pointed out that a patent manifestation
of one's disloyalty would have been the explicit resignation or withdrawal of
membership from the Union accompanied by an advice to management to
discontinue union dues and check-off deductions. They insisted that mere
affixation of signature on such authorization to le a petition for certification
election was not per se an act of disloyalty. They claimed that while it may be
true that they signed the said authorization before the start of the freedom
period, the petition of FFW was only led with the DOLE on May 18, 2000, or 58
days after the start of the freedom period. Was there just cause to terminate
32
these EEs?
Held: No. In terminating the employment of an employee by enforcing the
union security clause, the employer needs to determine and prove that: (1) the
union security clause is applicable; (2) the union is requesting for the
enforcement of the union security provision in the CBA; and (3) there is
sufficient evidence to support the decision of the union to expel the employee
from the union. These requisites constitute just cause for terminating an
employee based on the union security provision of the CBA.
As to the rst requisite, there is no question that the CBA between PRI and
respondents included a union security clause, speci cally, a maintenance of
membership as stipulated in Sections 6 of Article II, Union Security and Check-
Off. Following the same provision, PRI, upon written request from the Union,
can indeed terminate the employment of the employee who failed to maintain
its good standing as a union member.
Secondly, it is likewise undisputed that NAMAPRI-SPFL, in 2 occasions
demanded from PRI, in their letters dated May 16 and 23, 2000, to terminate
the employment of respondents due to their acts of disloyalty to the Union.
However, as to the third requisite, we find that there is no sufficient evidence to
support the decision of PRI to terminate the employment of the respondents.
The mere signing of the authorization in support of the Petition for Certification
Election of FFW on March 19, 20 and 21, or before the "freedom period," is not
sufficient ground to terminate the employment of respondents inasmuch as
the petition itself was actually filed during the freedom period. Nothing in the
records would show that respondents failed to maintain their membership in
good standing in the Union. Respondents did not resign or withdraw their
membership from the Union to which they belong. Respondents continued to
pay their union dues and never joined the FFW.
Significantly, petitioner's act of dismissing respondents stemmed from the
latter's act of signing an authorization letter to le a petition for certification
election as they signed it outside the freedom period. However, we are
constrained to believe that an "authorization letter to le a petition for
certification election" is different from an actual "Petition for Certification
Election." Likewise, as per records, it was clear that the actual Petition for
Certification Election of FFW was filed only on May 18, 2000. Thus, it was
within the ambit of the freedom period which commenced from March 21,
2000 until May 21, 2000. Strictly speaking, what is prohibited is the ling of a
petition for certification election outside the 60-day freedom period. 18 This is
not the situation in this case. If at all, the signing of the authorization to le a
certification election was merely preparatory to the filing of the petition for
certification election, or an exercise of respondents' right to self-organization.
Furthermore, while the Labor Code provides that majority status of the current
EBR must be respected, the law provides a qualificiation. It can be said that
while it is incumbent for the employer to continue to recognize the majority
status of the incumbent bargaining agent even after the expiration of the
freedom period, they could only do so when no petition for certification election
was led. The reason is, with a pending petition for certification, any such
agreement entered into by management with a labor organization is fraught
with the risk that such a labor union may not be chosen thereafter as the
collective bargaining representative. 20 The provision for status quo is
conditioned on the fact that no certification election was led during the
freedom period. Any other view would render nugatory the clear statutory policy
to favor certification election as the means of ascertaining the true expression
of the will of the workers as to which labor organization would represent them.
In the instant case, 4 petitions were led as early as May 12, 2000. In fact, a
petition for certification election was already ordered by the Med-Arbiter of
DOLE Caraga Region on August 23, 2000. 22 Therefore, following Article 256,
at the expiration of the freedom period, PRI's obligation to recognize NAMAPRI-
SPFL as the incumbent bargaining agent does not hold true when petitions for
certification election were led, as in this case.
Moreover, the last sentence of Article 253 which provides for automatic
renewal pertains only to the economic provisions of the CBA, and does not
include representational aspect of the CBA. An existing CBA cannot constitute a
bar to a ling of a petition for certification election. When there is a
representational issue, the status quo provision in so far as the need to await
the creation of a new agreement will not apply. Otherwise, it will create an
absurd situation where the union members will be forced to maintain
membership by virtue of the union security clause existing under the CBA and,
thereafter, support another union when ling a petition for certification election.
If we apply it, there will always be an issue of disloyalty whenever the
employees exercise their right to self-organization. The holding of a certification
election is a statutory policy that should not be circumvented, or compromised.
Class Discussion
1. Preparatory acts such as signing letters of intent to initiate a petition for
certification election shall NOT constitute an act of disloyalty, whether or not it
is filed during the freedom period.
2. The filing of a petition for CE during the freedom period by a union member
is not an act of disloyalty because that is when an EE can precisely jump ship
from one union to another.
Legend International Resorts v. Kilusang Manggagawa ng Legend
Facts: The Med-Arbiter rendered judgment dismissing for lack of merit the
petition for certification election. The Med-Arbiter found that there were several
supervisory employees in KML's membership. Since Article 245 of the Labor
Code expressly prohibits supervisory employees from joining the union of rank
and le employees, the Med-Arbiter concluded that KML is not a LLO. This
dismissal was set aside and a certification election was held. Eventually,
however, in a separate case, the petition for cancellation of the registration of
the union was granted, & attained finality as it was appealed all the way to the
SC, which made the same conclusion. LEGEND now posits that the cancellation
33
of KML's certi cate of registration should retroact to the time of its issuance. It
thus claims that the petition for certi cation election and all of KML's activities
should be nulli ed because it has no legal personality to le the same, much less
demand collective bargaining with LEGEND. 23
Should the cancellation of the union’s registration retroact to the time of its
issuance?
Held: No. Notwithstanding the nality of the Decision canceling the certi cate of
registration of KML, we cannot subscribe to LEGEND's proposition that the
cancellation of KML's certi cate of registration should retroact to the time of its
issuance. LEGEND claims that KML's petition for certi cation election led during
the pendency of the petition for cancellation and its demand to enter into
collective bargaining agreement with LEGEND should be dismissed due to
KML's lack of legal personality.
An order to hold a certi cation election is proper despite the pendency of the
petition for cancellation of the registration certi cate of the respondent union.
The rationale for this is that at the time the respondent union led its petition, it
still had the legal personality to perform such act absent an order directing the
cancellation.
FLJ: Recall that there is no retroactive effect to the petition for cancellation of
union registration.
Samahang Manggagawa Sa Charter Chemical (SMCC-SUPER) v. Charter
Chemical and Coating Corp.
Facts: Samahang Manggagawa sa Charter Chemical Solidarity of Unions in the
Philippines for Empowerment and Reforms (petitioner union) led a petition for
certification election among the regular rank-and-file employees of Charter
Chemical and Coating Corporation (respondent company) with the Mediation
Arbitration Unit of the DOLE, National Capital Region.
On April 14, 1999, respondent company led an Answer with Motion to Dismiss
4 on the ground that petitioner union is not a legitimate labor organization
because of (1) failure to comply with the documentation requirements set by
law, and (2) the inclusion of supervisory employees within petitioner union. The
Med-Arbiter sided with the ER & dismissed the case, Charter Certificate,
"Sama-samang Pahayag ng Pagsapi at Authorization," and "Listahan ng mga
Dumalo sa Pangkalahatang Pulong at mga Sumang-ayon at Nagratipika sa
Saligang Batas" were not executed under oath and certified by the union
secretary and attested to by the union president as required by Section 235 of
the Labor Code. Further, 12 batchman, mill operator, and leadman who
performed supervisory functions were made part of the bargaining unit, which
the Med-Arbiter said made it not a LLO. CA also ruled that petitioner union
failed to comply with the requisite documents for registration under Article 235
of the Labor Code and its implementing rules. It agreed with the Med-Arbiter
that the Charter Certi cate, Sama-samang Pahayag ng Pagsapi at
Authorization, and Listahan ng mga Dumalo sa Pangkalahatang Pulong at mga
Sumang-ayon at Nagratipika sa Saligang Batas were not executed under oath.
Thus, petitioner union cannot be accorded the status of a legitimate labor
organization.
Held: SC found this wrong and held that the charter certificate of a union, for
purposes of registration, need not be certified under oath by the local union's
secretary or treasurer and attested to by its president. At the time, governing
regulation was D.O. No. 9, Series of 1997, and under the auspices of said
regulation, it was held in San Miguel Foods-Cebu B-Meg Feed Plant v. Hon.
Laguesma, that it was not necessary for the charter certificate to be certified
and attested by the local/chapter officers. While this ruling was based on the
interpretation of the previous Implementing Rules provisions which were
supplanted by the 1997 amendments, we believe that the same doctrine
obtains in this case. Considering that the charter certificate is prepared and
issued by the national union and not the local/chapter, it does not make sense
to have the local/chapter's officers certify or attest to a document which they
had no hand in the preparation of.
In accordance with this ruling, petitioner union's charter certificate need not be
executed under oath. Consequently, it validly acquired the status of a
legitimate labor organization upon submission of (1) its charter certificate, (2)
the names of its officers, their addresses, and its principal office, and (3) its
constitution and by-laws — the last two requirements having been executed
under oath by the proper union officials as borne out by the records.
Also, the inclusion of the aforesaid supervisory employees in petitioner union
does not divest it of its status as a legitimate labor organization.
Heritage Hotel v. Secretary
Facts: National Union of Workers in Hotel Restaurant and Allied Industries-
Heritage Hotel Manila Supervisors Chapter (NUWHRAIN-HHMSC) filed a petition
for certification election, seeking to represent all the supervisory employees of
Heritage Hotel Manila. The petitioner led its opposition, but has been denied in
the relevant AAs and lower courts. The petitioner maintains that the ruling in
Tagaytay Highlands International Golf Club, Inc. v. Tagaytay Highlands
Employees Union-PTGWO was inapplicable because it involved the co-mingling
of supervisory and rank-and- le employees in one labor organization, while the
issue here related to the mixture of membership between two employee
groups — one vested with the right to self-organization (i.e., the rank-and- le and
supervisory employees), and the other deprived of such right (i.e., managerial
and con dential employees); that suspension of the certi cation election was
appropriate because a finding of "illegal mixture" of membership during a
petition for the cancellation of union registration determined whether or not the
union had met the 20% representation requirement under Article 234 (c) of the
Labor Code; and that in holding that mixed membership was not a ground for
canceling the union registration, except when such was done through
misrepresentation, false representation or fraud under the circumstances
enumerated in Article 239 (a) and (c) of the Labor Code, the CA completely
34
ignored the 20% requirement under Article 234 (c) of the Labor Code.
The petitioner posits that the grounds for dismissing a petition for the
certification election under Section 11, Rule XI of Department Order No. 9,
Series of 1997, were not exclusive because the other grounds available under
the Rules of Court could be invoked; that in Progressive Development
Corporation v. SOLE, the Court ruled that prudence could justify the suspension
of the certification election proceedings until the issue of the legality of the
union registration could be finally resolved; that the non-submission of the
annual financial statements and the list of members in the period from 1996
to 1999 constituted a serious challenge to NUWHRAIN-HHMSC's right to file its
petition for the certification election; and that from the time of the conduct of
the certification election on June 23, 2000, the composition of NUWHRAIN-
HHMSC had substantially changed, thereby necessitating another certification
election to determine the true will of the bargaining unit.
Held: The petitioner lacked the legal personality to assail the proceedings for
the certification election, and should stand aside as a mere bystander who
could not oppose the petition, or even appeal the Med-Arbiter's orders relative
to the conduct of the certification election. Under the long established rule, too,
the filing of the petition for the cancellation of NUWHRAIN-HHMSC's
registration should not bar the conduct of the certification election. In that
respect, only a final order for the cancellation of the registration would have
prevented NUWHRAIN-HHMSC from continuing to enjoy all the rights conferred
on it as a legitimate labor union, including the right to the petition for the
certification election.
Still, the petitioner assails the failure of NUWHRAIN-HHMSC to submit its
periodic financial reports and updated list of its members pursuant to Article
238 and Article 239 of the Labor Code. We cannot ascribe abuse of discretion
to the Regional Director and the DOLE Secretary in denying the petition for
cancellation of respondent's registration. The union members and, in fact, all
the employees belonging to the appropriate bargaining unit should not be
deprived of a bargaining agent, merely because of the negligence of the union
officers who were responsible for the submission of the documents to the BLR.
It is worth mentioning that the Labor Code's provisions on cancellation of union
registration and on reportorial requirements have been recently amended by
Republic Act (R.A.) No. 9481, & Art. 239 now states that “Failure to comply
with the above requirements [e.g., financial report submission & updated list of
members] shall not be a ground for cancellation of union registration but shall
subject the erring officers or members to suspension, expulsion from
membership, or any appropriate penalty.”
Republic of the Philippines v. Namboku Peak
Facts: Section 17, Rule VIII of Department Order No. 40-03 is unconstitutional
for it unduly restricts the statutory right of the management to appeal the
decision of the Med-Arbiter to the Secretary of Labor in an unorganized
establishment. It created a distinction that does not appear in Article 259 of
the Labor Code that it seeks to implement. SOLE appealed this aspect of the
decision before the SC under Rule 45.
Held: As to the Secretary of Labor, she was impleaded in the Petitions for
Certiorari filed before the CA as a nominal party because one of the issues
involved therein was whether she committed an error of jurisdiction. But that
does not make her a real party- in-interest or vests her with authority to appeal
the Decisions of the CA in case it reverses her ruling. Under Section 1, Rule 45
of the Rules of Court, only real parties-in-interest who participated in the
litigation of the case before the CA can avail of an appeal by certiorari. This
same rule is true for Rule 65 petitions for certiorari.
But is SOLE can’t appeal, then who can? SC says: “However, the government
party that can appeal is not the disciplining authority or tribunal which
previously heard the case and imposed the penalty of demotion or dismissal
from the service. The government party appealing must be one that is
prosecuting the administrative case against the respondent. Otherwise, an
anomalous situation will result where the disciplining authority or tribunal
hearing the case, instead of being impartial and detached, becomes an active
participant in prosecuting the respondent.”
Here, both cases emanated from the petitions for certification election filed
with the Med-Arbiter and subsequently appealed to the Secretary of Labor. She
had occasion to hear the parties’ respective contentions and rule thereon. As
the officer who rendered the decision now subject of these cases, the Secretary
of Labor should have remained impartial and detached from the time the cases
reached her until the same were being scrutinized on appeal.
True, the issue of whether Section 17, Rule VIII of DO No. 40-03 is
unconstitutional is a matter of great concern and deserves everyone’s
attention. But this Court cannot pass upon and resolve the same in these
Petitions. Otherwise, it will countenance the objectionable actions of the
Secretary of Labor and run afoul of the above-cited settled decisions.
FLJ: The judge or arbiter cannot be the one who files a case questioning the
authority of a court to annul its ruling.
T&H Shopfitters v. T&H Shopfitters Workers Union
Facts:
Held: Test for ULP - Whether the EE has engaged in conduct which, it may
reasonably be said, tends to interfere with the free exercise of employees'
rights; and that it is not necessary that there be direct evidence that any
employee was in fact intimidated or coerced by statements of threats of the
employer if there is a reasonable inference that anti-union conduct of the
employer does have an adverse effect on self-organization and collective
bargaining. [FLJ: SC in this case said there will be ULP even if there is no
evidence of ACTUAL INTERFERENCE. When you add all things up from all the
acts done or evidence gathered, if ULP is evident, then that will be applied.]
The questioned acts of petitioners, namely: 1) sponsoring a field trip to
35
Zambales for its employees, to the exclusion of union members, 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 subcontractors performing 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, all reek of
interference on the part of petitioners. Indubitably, the 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. The Court is of the considered view that 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. Petitioners had no business
persuading and/or assisting its employees in their legally protected
independent process of selecting their exclusive bargaining representative. The
fact and peculiar timing of the field trip sponsored by petitioners for its
employees not affiliated with THS-GQ Union, although a positive enticement,
was undoubtedly extraneous influence designed to impede respondents in their
quest to be certified. This cannot be countenanced.
Coastal Subic Bay Terminal v. DOLE
Held: (1) Pertinent is Article 235 which provides that applications for
registration shall be acted upon by the Bureau. "Bureau" as defined under the
Labor Code means the BLR and/or the Labor Relations Division in the Regional
Offices of the Department of Labor. The DOLE issued Department Order No. 40-
03, which took effect on March 15, 2003, further amending Book V of the
above implementing rules. The new implementing rules explicitly provide that
applications for registration of labor organizations shall be filed either with the
Regional Office or with the BLR.
Even after the amendments, the rules did not divest the Regional Office and
the BLR of their jurisdiction over applications for registration by labor
organizations. The amendments to the implementing rules merely specified
that when the application was filed with the Regional Office, the application
would be acted upon by the BLR.
The records in this case showed that APSOTEU was registered on March 1,
1991. Accordingly, the law applicable at that time was Section 2, Rule II, Book
V of the Implementing Rules, and not Department Order No. 9 which took
effect only on June 21, 1997. Thus, considering further that APSOTEU's
principal office is located in Diliman, Quezon City, and its registration was filed
with the NCR Regional Office, the certificate of registration is valid.
(2) Are ALU, a rank-and-file union and APSOTEU, a supervisory union one and
the same because of the commonalities between them? Are they
commingled?
The petitioner contends that applying by analogy, the doctrine of piercing the
veil of corporate fiction, APSOTEU and ALU are the same federation. Private
respondents disagree.
First, as earlier discoursed, once a labor union attains the status of a legitimate
labor organization, it continues as such until its certificate of registration is
cancelled or revoked in an independent action for cancellation. 23 In addition,
the legal personality of a labor organization cannot be collaterally attacked. 24
Thus, when the personality of the labor organization is questioned in the same
manner the veil of corporate fiction is pierced, the action partakes the nature of
a collateral attack. Hence, in the absence of any independent action for
cancellation of registration against either APSOTEU or ALU, and unless and
until their registrations are cancelled, each continues to possess a separate
legal personality. The CSBTI-RFU and CSBTI-SU are therefore affiliated with
distinct and separate federations, despite the commonalities of APSOTEU and
ALU.
Under the rules implementing the Labor Code, a chartered local union acquires
legal personality through the charter certificate issued by a duly registered
federation or national union, and reported to the Regional Office in accordance
with the rules implementing the Labor Code. 25 A local union does not owe its
existence to the federation with which it is affiliated. It is a separate and
distinct voluntary association owing its creation to the will of its members.
Mere affiliation does not divest the local union of its own personality, neither
does it give the mother federation the license to act independently of the local
union. It only gives rise to a contract of agency, where the former acts in
representation of the latter. Hence, local unions are considered principals while
the federation is deemed to be merely their agent. As such principals, the
unions are entitled to exercise the rights and privileges of a legitimate labor
organization, including the right to seek certification as the sole and exclusive
bargaining agent in the appropriate employer unit.
[OLD RULE; note that in the current rule, the federation can represent both the
rank-&-file and supervisory EEs]
A word of caution though, under Article 245 of the Labor Code, 28 supervisory
employees are not eligible for membership in a labor union of rank-and-file
employees. The supervisory employees are allowed to form their own union but
they are not allowed to join the rank-and-file union because of potential
conflicts of interest. 29 Further, to avoid a situation where supervisors would
merge with the rank-and-file or where the supervisors' labor union would
represent conflicting interests, a local supervisors' union should not be allowed
to affiliate with the national federation of unions of rank-and-file employees
where that federation actively participates in the union activity within the
company. 30 Thus, the limitation is not confined to a case of supervisors
wanting to join a rank-and-file union. The prohibition extends to a supervisors'
local union applying for membership in a national federation the members of
which include local unions of rank-and-file employees. In De La Salle University
36
Medical Center and College of Medicine v. Laguesma, we reiterated the rule
that for the prohibition to apply, it is not enough that the supervisory union and
the rank-and-file union are affiliated with a single federation. In addition, the
supervisors must have direct authority over the rank-and-file employees.
In the instant case, the national federations that exist as separate entities to
which the rank-and-file and supervisory unions are separately affiliated with, do
have a common set of officers. In addition, APSOTEU, the supervisory
federation, actively participates in the CSBTI-SU while ALU, the rank-and-file
federation, actively participates in the CSBTI-RFU, giving occasion to possible
conflicts of interest among the common officers of the federation of rank-and-
file and the federation of supervisory unions. For as long as they are affiliated
with the APSOTEU and ALU, the supervisory and rank-and-file unions both do
not meet the criteria to attain the status of legitimate labor organizations, and
thus could not separately petition for certification elections.
The purpose of affiliation of the local unions into a common enterprise is to
increase the collective bargaining power in respect of the terms and conditions
of labor. 33 When there is commingling of officers of a rank-and-file union with
a supervisory union, the constitutional policy on labor is circumvented. Labor
organizations should ensure the freedom of employees to organize themselves
for the purpose of leveling the bargaining process but also to ensure the
freedom of workingmen and to keep open the corridor of opportunity to enable
them to do it for themselves.
III. Collective Bargaining
Procedure in Collective Bargaining (Art. 261)
1. When either party desires to negotiate a CBA, it shall serve written notice
upon the other party with a statement of its proposals.
2. The other party has to reply not later than 10 calendar days from receipt of
the notice.
 This reply can just be a simply reply and not an elaborate proposal;
however, the ER must still continue to bargain in good faith
 IF YOU FAIL TO REPLY AT ALL, not even on a tissue paper, then that is
ULP – failure to bargain in good faith; then the courts will treat the
proposal of the union as the CBA itself [Kiok Loy doctrine]
o Requisites to apply the Kiok Loy doctrine:
1. The union is the SEBA
2. It made a definite request to bargain & submitted
collective bargaining proposals
3. The ER made no counter proposal whatsoever
3. Should differences arise, either party may request for a conference which
shall begin not later than 10 calendar days from the date of request.
4. If the dispute is not settled, the NCMB (use the Board) shall intervene upon
request of the parties or at its own initiative & call the parties to conciliation
meetings. The Board can issue subpoenas to require attendance.
5. During conciliation, the parties are prohibited from doing any act which may
disrupt or impede the early settlement of disputes.
6. The Board shall exert all efforts to settle disputes amicably & encourage the
parties to submit their case to a voluntary arbitrator.
*FLJ: Note that something agreed upon by CBA will be preferred over this.
Q: T/F. The proposal in the procedure for CB can be done verbally.
A: F. It must be written.
Q: When can ER be compelled to negotiate?
A: Essential requisites must be met.
Q: Can the ER negotiate with the minority union?
A: No. This is ULP violation. It is ER’s duty to negotiate only with the unit having
majority support.
Jurisdictional Preconditions of Collective Bargaining
1. EER exists
2. Possession of the status of majority representation of the EEs’
representative in accordance with the means of selection or designation
provided in the Labor Code
3. Proof or majority representation – SEBA has majority support of the
members of the BU established through the modes sanctioned by law (BUT you
must show PROOF that you have support).
4. Lawful demand to bargain – there must be PROPOSALS given by the EE; ER
is not in default respecting the duty to bargain if no request has yet been made
ULP in relation to Collective Bargaining (Last 4 as Listed in Azucena)
1. Bargaining with minority union (ER)
2. Where there exists an issue as to who among several unions is the EBR, to
stage a strike & demand the ER sit down with it for collective bargaining (ULP)
3. Failure or refusal to meet and convene
 Includes negotiation of grievances
4. Evading mandatory subjects of bargaining – no agreement need be reached;
as long as there is bargaining in good faith
 MANDATORY PROVISIONS include:
o Economic provisions of the CBA – there is no specific list of
economic provisions
 Employee workloads
 Wages & other types of compensation
 Working hours & working days
 Transfer
 Seniority
o Grievance machineries
o Voluntary arbitrator
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  Factors for determining mandatory provisions (Solomonic approach)
o Bargaining history of the company
o Trends & amounts of arbitrated & agreed wage awards
o Company’s previous CBAs
o Industry trends
o Code of conduct
5. Bad faith bargaining, including failure or refusal to execute a CBA, if required
– BUT this can no longer be imputed if an actual CBA is executed between the
ER and the union
 Includes failure to furnish the EBR with information
6. Gross violation of CBA – Refers to flagrant and/or malicious refusal to
comply with the economic provisions of the CBA
 Gross violations of CBA – ULP; jurisdiction of LA
 Violations of CBA that are not gross – Voluntary arbitration
 EXC to this rule: When the ER in effect totally disregards the
subsisting CBA, that is also a ULP & a gross violation (this was the
case where the ER negotiated with the splinter union, Bayer)
Duty to Bargain
1. Performance of mutual obligation to meet & convene promptly &
expeditiously in good faith for the purpose of negotiating an agreement as to
wages, terms & conditions of employment, hours of work, etc.
 BUT: It does not compel any party to agree to a proposal or to make any
concessions
2. Neither party shall modify or terminate the agreement at least 60 days
before the date of its expiration
3. Automatic renewal clause: The status quo of the current CBA must continue
in full force & effect during the 60-day period &/or until a new CBA is reached
by the parties
 Case law: If the CBA stipulated annual increases in wages for 5 years, &
no CBA was negotiated after that CBA, those annual increases will
continue
 Case law: New EEs who only became EEs after the CBA’s 5-year term
will benefit from the old CBA since it remains in full force & effect
Steps After CBA is Negotiated
What happens after the CBA is executed?
GR: Ratification
EXC: Ratification is not needed if the CBA is a product of an arbitral award by
an appropriate government agency or voluntary arbitrator; CBA will be posted
for everyone’s information, not ratification
When Must Signing Be?
Before or after ratification is OK!
FLJ: If the union is not confident that the majority of the CBU will ratify the CBA,
they will initial the pages of the CBA and then posted.
The signing can come first before ratification, or ratification before signing,
although there will be issues if the CBU eventually does not agree, and the
union has to refuse to sign.
Note that those who will ratify are not just the members of the union, but also
the members of the bargaining unit.
Steps of Ratification
1. Parties will post in 2 conspicuous places in the workplace for 5 days
 Q: What’s the effect if you post in 1 place only and for 3 days? What
if the BU ratifies nonetheless? Is this a fatal defect?
 A: These requirements are all MANDATORY. If these are not followed,
due to due process, the CBA & the process will be void.
2. There must be ratification by the majority of all workers in the BU.
Q: Can there be implied ratification of a defectively registered CBA through
acceptance of benefits from EEs?
A: If EE has already received benefits, there may be estoppel. But the defect is
not cured (case law; cited in Azucena), and if an EE who did not receive benefits
questions the defective CBA, said EE would still be able to question without
being estopped.
After Ratification – Registration!
1. The CBA must be submitted to the SOLE within 30 days from ratification
2. There must be statement that the CBA was posted in at least 2 conspicuous
places in the establishment concerned for at least 5 days before its ratification
3. A statement that the CBA was ratified by the majority of the EEs in the BU
Must be certified under oath by the representative of the ER & labor union
concerned (Registration is only a formal step; not needed for validity &
enforceability)
Q: Why register, then?
A: CONTRACT BAR RULE is only in effect IF THE CBA IS REGISTERED. While an
unregistered CBA is still enforceable between the ER and the Union, there will
be no contract bar rule.
- The contract bar rule’s effectivity will still commence on the date the
parties agreed to enter into the CBA, & NOT the time of registration,
despite the fact that registration is needed for the contract bar rule to
be effective.
- Recall: The contract bar rule is what bars a petition for certification
election by a contending union
Term of the CBA
5 years from the effectivity of the CBA for the representational aspect
38
  Nobody can question majority status of the EBR nor can there be
petition for certification election except on the last 60 days of the 5-
year period (freedom period)
 FLJ: If during the freedom period, ER is negotiating with EBR, and then
it turns out that a rival union is able to file a PCE within said freedom
period, the ER would be required to stop negotiating lest he run the
risk of ULP.
3 years from the effectivity of the CBA for the economic aspect & all the non-
representational aspects (after which, negotiations may begin in full earnest!)
 But as to this 3 years, the parties can agree to a shorter period or a
longer period.
Q: Can union & ER agree to have a CBA for 6 years?
A: No. The maximum is 5 years, PARTICULARLY THE REPRESENTATIONAL
ASPECT. At most, the economic provisions can be negotiated more liberally, to
last more than 6 years.
 If a new SEBA wins in the certification election, they would have to
respect the economic provisions already agreed upon in the CBA, &
they would hence be akin to ADMINISTRATORS.
Effectivity of the CBA
1. If the CBA is the first, the date of effectivity is the date that the parties agree
on.
2. If the CBA is a renegotiated one following the expiry of the first, follow the 6-
Month Period Rule
 If renegotiation for the new CBA is finished within 6 months from the
expiry of the old CBA – there will be retroactivity; the CBA will take effect
on the date following the expiry date of the old CBA
 If renegotiation is concluded after 6 months – parties can agree whether
there will be retroactivity
FLJ: The CBA will be effective from the date the parties agreed – this is when
they agreed on all the aspects of the CBA, which is not necessarily the date
when they signed. BUT the parties can agree to have a different date be the
date of effectivity. The date they agreed entails it is the date when they had the
meeting of the minds & both sides agreed to the terms & conditions of the
CBA; this agreement may be oral or written.
Q: What if the SOLE was the one who imposed the terms and conditions of the
CBA during the 6 month period or after the 6 month period. Will there be
retroactive effect?
A: The SOLE has power to state in its decision that there will be retroactive
effect. The standard will be reasonable discretion. If SOLE ordered retroactive
effect based on its reasonable discretion, SC will sustain it.
Q: Must the arbitral award be posted like a regular CBA?
A: Not for validity, but for due process and for information of all EEs
Q: Must EEs ratify the arbitral award?
A: No.
Q: Can an individual EE appeal the decision of the arbitral award?
A: NO. If the subject matter affects all EEs, an individual cannot file the appeal.
Only the SEBA can appeal. The only instance when an individual can file when
this affects the individual only – for example, if the 10 EEs have separate
money claims against the ER.
Grievance Machinery
CBA must contain provisions on grievance machinery for the interpretation or
implementation of the CBA.
 All grievances submitted to the machinery which are not resolved
within 7 calendar days from date of submission will automatically be
referred to voluntary arbitration prescribed in the CBA
 Parties will designated a voluntary arbitrator or a panel
 If parties failed to choose who their voluntary arbitrator would be,
NCMB will choose
Union of The Union filed a notice of strike against Nestlé because prior
Filipro EEs v. to CBA negotiations and during mediation proceedings,
Nestlé Nestlé emphasized that it refused to bargain on retirement
plans, unilateral grants, one-time company grants, &
company-initiated policies. Is this bargaining in bad faith?
No. The refusal to bargain on a particular economic provision
is not bargaining in bad faith. There is no exact test for
bargaining in good faith. It is to be determined by the facts
and circumstances of each case. But the mere fact that no
CBA has been reached despite bargaining efforts does not
constitute bad faith on the part of the ER. ER’s inclusion of
other provisions – and not just the provision it refused to
agree with – is a demonstration of its good faith to bargain.
Standard There is no bad faith bargaining when ER’s HR manager
Chartered suggests, during a negotiation, that the union president be
Bank EEs excluded from the negotiating panel, when the union itself
Union v. actually asked the bank’s lawyers to be excluded from the
Confesor panel prior to negotiations. This is just part of normal
relations in negotiations.
Malayan EEs While it is true that the union and its members have been
Assoc. v. granted union leave privileges under the CBA, the grant
Malayan cannot be considered separately from the other provisions of
Insurance Co. the CBA, particularly the provision on management
prerogatives where the CBA reserved for the company the full
and complete authority in managing and running its
39
 business.
FLJ: The entire CBA was taken into consideration. Juxtapose
with the strict interpretation of the CBA in the other case.
San Miguel Violation of grievance machinery provisions in a CBA is not an
Foods v. San economic provision that will result to a gross violation of the
Miguel EEs CBA. Requisites to be a “violation of CBA” are: (1) there is a
Union gross violation of the CBA; (2) violation pertains to an
economic provision of the CBA. Here, it was not an economic
provision.
Capitol The pendency of a petition for cancellation of registration
Medical does not bar the process of collective bargaining. Moreover,
Center v. under the Labor Code, the discretion to assume jurisdiction
Trajano may be exercised by the Secretary of Labor and Employment
without the necessity of prior notice or hearing given to any of
the parties.
FVC v. While the parties may agree to extend the CBA’s original
Manggagawa five-year term together with all other CBA provisions, any
such amendment or term in excess of five years will not carry
with it a change in the union’s exclusive collective bargaining
status. By express provision of the above- quoted Article
253-A, the exclusive bargaining status cannot go beyond five
years and the representation status is a legal matter not for
the workplace parties to agree upon. In other words, despite
an agreement for a CBA with a life of more than five years,
either as an original provision or by amendment, the
bargaining union’s exclusive bargaining status is effective
only for five years and can be challenged within 60 days prior
to the expiration of the CBA’s first five years.
RFM The parties entered into a CBA which provides for payment to
Corporation- all daily employees if December 31 was declared as a holiday
Flour Division by the government. During the first year of the CBA,
and SFI Feeds December 31 fell on a Sunday, a rest day. The SEBAs claimed
Division v. payment but the employer refused to pay. The VA and CA
KAMPI-NAFLU- ruled that provision of the CBA is clear that the employees
KMU and have to be paid. On appeal by the employer, the Supreme
SUMAPI- Court ruled that the daily-paid employees must be paid their
NAFLU-KMU regular salaries on the holidays which are so declared by the
national government regardless of whether they fall on rest
day because the words of the CBA are clear. And in any case,
the Labor Code enjoins that in cases of doubt in the
interpretation of any law or provision affecting labor, it should
be interpreted in favor of labor.
IV. Unfair Labor Practices (ULP)
Requisites for Existence of ULP
1. There is EER
2. Falls under the list of violations
3. Violates right to SO
Where to file?
1. Civil aspect – with LA; he must resolve the case within 30 calendar das from
the time they are submitted to him for decision. A recovery under the Labor
Code will bar recovery under the Civil Code.
2. Criminal aspect – Will be instituted only after a finding that ULP was
committed by the LA; but the final judgment in the administrative proceedings
should not bind the criminal case or be considered evidence of guilt.
*The offense prescribes in 1 year.
Enforceability Against Transferee of CBA
 Purchase of assets
o GR: A bona fide purchaser of assets of an on-going concern does
not need to absorb the EEs of the previous owner of the assets
o EXC: If the transaction is colored in bad faith
 Merger or consolidation – the new corporation or the remaining
corporation is liable to fulfill CBA obligations
o Wiley doctrine – a duty to arbitrate arising from a CBA survives
the ER’s ceasing to do business as a separate entity after its
merger with a larger corporation, so as to bind the larger
corporation, where (1) relevant similarity & (2) continuation of
operations across the change in ownership is evidenced
o BUT: If there is lack of continuity of identity of the business or
corporate structure has changed, no more duty to arbitrate
remains
 Substitutionary doctrine – EEs cannot revoke the validly executed CBA
with their ER by changing their EBR. When the EBR changed during the
duration of a CBA, the new EBR is bound to honor the original CBA up to
its expiration date. The new agent may attempt, however, to bargain to
shorten the period.
o BUT: The new EBR will not be required to uphold a no-strike
stipulation in the original CBA because it was the first EBR that
bound itself not to strike.
Grievance Procedure Mechanism (Default if CBA does not state mechanism)
1. Grievance committee will be created within 10 days from singing the CBA
2. 2 representatives will come from BU and ER, unless otherwise agreed upon
by the parties, unless parties otherwise agree
3. The representatives from among the members of the BU shall be designated
by the union
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4. EE shall prevent grievance orally or in writing to the shop steward; the shop
steward will verify the facts & determine if the grievance is valid
5. Efforts to settle the grievance!
6. If there is no settlement, the grievance will be referred to the grievance
committee, which shall have 10 days to decide
A. ULP OF ER
Article 259. ULP of ERs.
It shall be unlawful for an ER to commit any of the following ULP:
(a) To Interfere with, Restrain or Coerce (IRC) employees in the exercise of their
right to Self-Organization (SO); [IRC-SO]
(b) To require as a condition of employment that a person or an EE shall not
join a labor organization or shall withdraw from one to which he belongs;
[yellow dog contract]
(c) To contract out services or functions being performed by union members
when such will IRC-SO;
(d) To Initiate, Dominate, Assist or Otherwise Interfere (IDA-OI) 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 (WHO) 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 CB agent as a condition for
employment [i.e., a union security clause], except those EEs who are
already members of another union at the time of the signing of the CBA.
 EEs of an appropriate bargaining unit who are not members of the
recognized CB agent may be assessed a reasonable fee equivalent to
the dues and other fees paid by members of the recognized CB agent, if
such non-union members accept the benefits under the CBA: Provided,
that the individual authorization required under Art. 242, par. (o) of this
Code shall not apply to the non-members of the recognized CB agent;
(f) To Dismiss, Discharge, or otherwise Prejudice or Discriminate (DDPD)
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 [NAF] to the union or its officers or
agents as part of the settlement of any issue in CB or any other dispute; or
(i) To violate a CBA.
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 [APAR] ULPs shall be held criminally
liable.
Totality of Conduct Doctrine
The culpability of ER’s remarks are to be evaluated not only on the basis of
their implications, but against the background of and in conjunction with
collateral circumstances.
Expressions of opinion by an ER, though innocent by themselves, can be
culpable when the circumstances under which they are uttered, the history of
the ER’s labor relations or anti-union bias, or because of their connection with
an established collateral plan of coercion or interference.
Runaway Shop
When an industrial plant is removed from one location to a new location to
discriminate against EEs of the old plant because of their union activities.
Kinds of Union Security Agreements
1. Closed-shop – only union members can be hired by the company & they
must remain union members to retain employment in the company
2. Union shop – non-members can be hired, but to retain employment one
must become a union member after a certain period
3. Modified union shop – No EE is compelled to join, but all workers hired
thereafter must join
4. Maintenance of membership – EEs who are not union members need not
join, but those who are must remain members
5. Exclusive bargaining shop – The union is recognized as EBR for all EEs in the
unit, whether or not union members
6. Bargaining for members only – the union is only EBR for its own members
7. Agency shop – EEs must either join the union or pay the union a sum equal
to that paid by union members (maintenance of treasury shop)
Insular Life Under the "totality of conduct doctrine" expressions of
Assurance Co. opinion by an employer which, though innocent in
Ltd. Employees themselves, frequently were held to be culpable because
Association-NATU of the circumstances under which they were uttered, the
et al v. Insular Life history of the particular employer's labor relations or anti-
Assurance Co. union bias or because of their connection with an
Ltd. established collateral plan of coercion or interference.
FLJ: Bad faith is easy to spot because it will entail heavy
narration of facts like in this case, so don’t get confused!!
Mabeza v. NLRC When an EE refuses to sign an affidavit stating that the
ER is fully compliant with labor standards laws, her
subsequent dismissal (being a retaliatory action)
constitutes ULP, & is analogous to Art. 259 (f) (giving
testimony against the ER).
FLJ: Art. 259 (f) also covers all matters under the Labor
41
 Code, & not just wages.
T & H Shopfitters In essence, ULP relates to the commission of acts that
Co. v. T & H transgress the workers’ right to organize. The test is
Shopfitters Co. whether the employer has engaged in conduct which, it
Union may reasonably be said, tends to interfere with the free
exercise of employees’ rights; and that it is not necessary
that there be direct evidence that any employee was in
fact intimidated or coerced, if there is a reasonable
inference that anti-union conduct of the employer does
have an adverse effect on self-organization and collective
bargaining.
Central Azucarera For a charge of unfair labor practice to prosper, it must be
de Bais shown that the employer was motivated by ill will, “bad
Employees Union faith, or fraud, or was oppressive to labor, or done in a
v. Central manner contrary to morals, good customs, or public
Azucarera de Bais policy, and, of course, that social humiliation, wounded
feelings or grave anxiety resulted” in suspending
negotiations with the EBR. In this case, ER suspended
negotiations because it found out another union actually
enjoyed majority support (90%) & not the EBR. Note there
was no CBA that was entered into at this stage (as
opposed to Bayer).
Employees Union The doctrine in Silva v. National Labor Relations
of Bayer v. Bayer Commission, that for an Unfair Labor Practice case to be
Phils. cognizable by the LA, and for the NLRC to exercise
appellate jurisdiction, the allegations in the complaint
must show prima facie the concurrence of two things,
namely—(1) gross violation of the Collective Bargaining
Agreement (CBA); and (2) the violation pertains to the
economic provisions of the CBA—should not be construed
to apply to violations of the CBA which can be considered
as gross violations per se, such as utter disregard of the
very existence of the CBA itself.
When an employer proceeds to negotiate with a splinter
union, despite the existence of its valid CBA with the duly
certified and exclusive bargaining agent, the former
indubitably abandons its recognition of the latter and
terminates the entire CBA.
GR: Violation of the CBA must be (1) gross, and (2) pertain
to an economic provision of the CBA.
EXC: This case!
Q: What if the facts happened during the freedom period,
& Bayer negotiated with the Union because it enjoyed
90% support; would this have been considered ULP?
A: Yes, because there is still a CBA!!!
Manila Mining Co. ER closed because permit to operate was not granted;
Workers Assoc. v. there was no ULP when it dismissed its EEs.
Manila Mining Co.
FLJ: If the permit approval was WITHIN THE CONTROL OF
THE ER & the ER just didn’t try, then the ER could be
made liable for that.
BPI Employees Facts: BPI Davao’s rank and file collective bargaining
Union-Davao v. agent, BPI Employees Union-Davao City-FUBU (Union),
BPI objected to the transfer of the functions and the 12
personnel to BOMC contending that the functions
rightfully belonged to the BPI employees and that the
Union was deprived of membership of former FEBTC
personnel who, by virtue of the merger, would have
formed part of the bargaining unit represented by the
Union pursuant to its union shop provision in the CBA.
Held: 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, SC will not interfere with
the exercise of judgment by an employer and will not
consider the same as ULP.
FLJ: Note that even if there is no ULP, there may be a
violation of DO147-17 and labor-only contracting; it may
be argued that BPI Operations is actually a LOC.
Pepsi-Cola Pepsi implemented a company-wide retrenchment
Products program. A union’s officers and members were affected
Philippines, Inc. v. by the retrenchment. The union went on strike claiming
Molon that the retrenchment was motivated to bust the union,
hence a ULP. In this case, the Court said that there was no
ULP since there was no proof that the retrenchment
program was done to bust the union. Pepsi even sat down
in good faith to negotiate with the union and tried to
settle the matter.
Q: If the retrenchment only occurred in the one plant
instead of a nationwide retrenchment program, would the
ruling be the same or would there be ULP on the part of
the ER?
A: Answer from the ULP perspective and the termination
of employment perspective. You must memorize all the
grounds for termination of employment and all relevant
elements.
42
Royal Plant Coca Cola’s bottlers in its Cebu City branch complained
Workers Union v. because the chairs they were originally given for the
Coca Cola Bottlers performance of their jobs were taken away by Coca Cola,
on the grounds of (1) efficiency and (2) the health and
safety of the workers. In the Court’s view, the term
"benefits" mentioned in the non-diminution rule refers to
monetary benefits or privileges given to the employee
with monetary equivalents.
The CBA between the Union and Coca Cola contains no
provision whatsoever requiring the management to
provide chairs for the operators in the
production/manufacturing line while performing their
duties and responsibilities.
Q: Does non-diminution include only monetary benefits?
What about if what was taken away was a car benefit that
was given to EEs prior?
A: SC was actually saying that the chairs were NOT
benefits under Art. 100 because Art. 100 is about non-
diminution of BENEFITS. So it is not true that Art. 100 is
only about monetary benefits. It’s just that in this case,
the chairs are not actually benefits, but equipment to be
used in the workplace.
Goya v. Goya EEs CBA provides that only “casual, regular, and probationary”
Union employees may be hired, but ER attempted to hire third
party contractors.
Held: The terms are explicit and the language of the CBA
is not susceptible to any other interpretation. Hence, the
literal meaning should prevail. As repeatedly held, the
exercise of management prerogative is not unlimited; it is
subject to the limitations found in law, collective
bargaining agreement or the general principles of fair play
and justice. Evidently, this case has one of the restrictions
— the presence of specific CBA provisions.
FLJ: The reason why this was considered bad faith was
because of the erosion of union membership.
Q: Can a minority union file a ULP case?
A: Yes, but depending on the ground. For example, refusal to bargain is not a
ground that a minority union can use, but other grounds may be used by a
minority union.
*Distinguish from the right of a minority union to strike: a minority union may
only strike when there is no EBR.
B. ULP OF LO
Article 259. ULP of labor organizations.
It shall be ULP for a labor organization, its officers, agents, or representatives:
(a) To Restrain or Coerce (RC) EEs in the exercise of their right to Self-
Organization (SO).
 However, a labor organization shall have the right to prescribe its own
rules with respect to the acquisition or retention of membership;
(b) To Cause or Attempt to Cause an ER [CACER]
 to discriminate against an EE, including discrimination against an EE
with respect to whom membership in such organization has been
denied or
 To terminate an EE on any ground other than the usual terms and
conditions under which membership or continuation of membership is
made available to other members;
(c) To violate the duty, or refuse to bargain collectively with the ER, provided it
is the representative of the EEs;
(d) To CACER to pay or deliver or agree to pay or deliver any money or other
things of value, in the nature of an exaction, for services which are not
performed or not to be performed, including the demand for fee for union
negotiations; [featherbedding arrangement]
(e) To ask for or accept NAF from ERs as part of the settlement of any issue in
CB or any other dispute; or
(f) To violate a CBA.
The provisions of the preceding paragraph notwithstanding, only the officers,
members of governing boards, representatives or agents or members of labor
associations or organizations who have actually APAR ULPs shall be held
criminally liable.
V. Strikes and Lockouts
A. STRIKES
Class Discussion
Q: If there is no labor dispute, can there be a valid strike?
A: NO. A welga ng bayan is an illegal strike.
Q: If the EEs say they joined a welga ng bayan just because they are exercising
their right to freedom of expression, will they not be penalized for being
absent?
A: If EEs during the time of work go out of premises of ER to join a sympathetic
strike, those EEs can be terminated. Note that when freedom of expression
prevails like in Phil. Blooming Mills EEs, there was no animosity or dispute with
the ER.
Q: What if you picket or hold a strike during breaktime, is that allowed?
43
A: Yes.
The majority of the union agreeing to a strike can be increased to 2/3 in the
Union by-laws, but a decrease from the majority requirement would not be
allowed.
STRIKE - PPPMIA
Illegal strike is one which:
1. Is contract to a specific Prohibition of law, such as a strike by EEs performing
government functions
2. Violates specific Procedural requirements of law
3. Is declared for an unlawful Purpose, such as inducing the ER to commit a
ULP against non-union EEs
4. Employs unlawful Means in the pursuit of its objective, such as a widespread
terrorism of non-strikers
5. Is declared in violation of an existing Injunction
6. Is contrary to an existing Agreement, such as a no-strike clause or conclusive
arbitration clause (Toyota Motor Phil. Workers Assoc. v. Toyota Motor Phil.)
Prohibition
 If the group of EEs are prohibited from striking and they still hold a
strike, that is an illegal strike.
 Q: Are there a group of EEs that are prohibited from holding a strike?
 A: Yes, government EEs cannot strike. If they hold strike, they can be
terminated from employment.
Purpose
 Only two grounds are allowed: (1) CB deadlock (economic strike), (2)
ULP (political strike)
 When you write your notice to strike, you must specifically state what
the purpose is and the strike must be based on the two grounds that
are allowed.
 If purpose is illegal, the strike is an illegal strike
 2 Tests to Determine Existence of Valid ULP Strike:
1. Objectively, when the strike is declared in protest of ULP
which is found to have actually been committed
2. Subjectively, when a strike is declared in protest of what
the union believed to be ULP committed by
management, & the circumstances warranted such
belief in good faith, although found subsequently as not
committed
o Hence: It is not necessary that the ER did in fact commit
ULP; it is enough that the strikers believed in good faith
that it was being committed & that was the inducing
factor for staging a strike. However, this belief must have
some rational basis.
Procedure
 Q: T/F – All unions can hold a strike.
 A: Depends on the purpose – if it is a CB deadlock, you must be the
SEBA. For ULP, however, there are some purposes for holding a strike
that can apply even to a non-SEBA LLO.
 STEPS:
1) Notice to strike – must state purpose of the strike, & date,
place, and time of the conduct of the strike vote; the Union must
furnish both the NCMB and the ER this notice
 If bargaining deadlock: notice must state the unresolved
issues in the negotiations, include the written proposals
of the union, the counter-proposals of the ER, & proof of
a request for conference to settle differences
 If ULP: notice must state the acts complained of & the
efforts taken to resolve the dispute amicably
2) 24 hours before the scheduled strike vote, inform the NCMB of
the conduct of the strike vote; whether or not NCMB will go, it is
still valid
3) Conduct of a strike vote – majority of the union should agree to
hold a strike in a meeting called specially for that purpose, by
secret balloting
 Vote: Should be 50% + 1 of the total union membership
(Industrial Timber Co. v. NLRC)
4) Strike vote report submission – submitted to NCMB at least 7
days before the intended date of the strike
5) Observance of cooling off period – 15 days if ULP; 30 days if CB
deadlock; or no period for union busting (note that union busting
is a specific type of ULP with a special rule in this case)! The
count is reckoned from the filing of the notice of strike (#1)
6) Strike vote report - starting from this day there is a 7-day period
where conduct of strike is prohibited, counted from the time of
the RECEIPT of the NCMB of the strike vote report
 7-day period and 15/30/0-day periods are counted
SEPARATELY regardless of when the strike vote
happened (Azucena); although, note that some
authors think this can run simultaneously (Abad –
Abad cites two cases; ask Jimo which these are).
However, Azucena’s opinion is based on the NCMB
Primer on Strike, Picketing and Lockout.
 NOTE: The 0-day union bust should be those who are
reported as officers of the union under the constitution
and by-laws; BUT the one for illegal strike in which the
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 officer is made liable for knowingly participating –
doesn’t have to be the officers in the constitution and
by-laws; it’s the ACTUAL officers and by-laws who are
leaders of the Union
 The practice in real life these days is overlapping but
for purposes of academic discussion, people tack on.
 Union busting (requisites)
a. The union officers are dismissed
b. Those officers are the ones duly elected in
accordance with the union constitution & by-laws
c. The existence of the union is threatened
 Note that in union busting, the notice, strike vote, &
strike vote report with 7-day period requisites must
still be followed; only cooling off period is waived
7) Strike may now be conducted
 Good faith strike – when the Union thought that there
was ULP, but as it turns out, there was no ULP as
declared by authorities, the good faith strike principle
will apply. If the Union honestly believed that the ER
was committing ULP, notwithstanding the subsequent
declaration of authorities that there was no ULP, the
strike will still be validated because the Union was in
good faith. BUT IF YOU MISS STEPS IN THE
PROCEDURE, IT IS NEARLY IMPOSSIBLE TO ARGUE
THAT THE STRIKE CONDUCTED WAS A GOOD FAITH
STRIKE.
Means
 Should be lawful; if the means employed are unlawful, the strike will be
illegal
 Consequence of illegal strike:
o Union officers – knowingly participated in illegal strike =
dismissal; if the union officer commits an illegal act, he may also
be terminated
o Union members – it should be proven that they committed illegal
acts during the legal or illegal strikes; it is not sufficient that they
knowingly participated for them to be dismissed (ex. burning the
building, punching a manager)
o If there is an illegal strike, as a general rule, union members are
not affected
 If the individual commits an illegal act, that is certainly an illegal act
and that person’s employment is affected. How does an illegal act get
converted to an illegal strike? If the illegal act is so widespread that it
affects the majority or all striking members of the union, that illegal act
shall convert the strike to an illegal one. So if an EE burned a building,
that’s an illegal act. But if the EE’s act of burning is with assent and
encouragement of all other EEs so that they shout and cheer “YAY!”
while the building is burning, then the strike itself will become illegal.
 Rules on picketing: No person engaged in picketing shall –
o Commit any act of violence, coercion, intimidation,
o Obstruct free ingress to or egress from the ER’s premises for
lawful purposes, or
o Obstruct public thoroughfares
Injunction
 DOLE Secretary – of national interest, in his opinion
 Two options of DOLE Secretary: (1) assume jurisdiction over subject
matter; (2) certify it to NLRC for compulsory arbitration so that the
NLRC can decide
 In both cases, there would be an injunction – EVEN IF DOLE Secretary
fails to explicitly state that there is injunction and automatic return to
work order (also despite MR)
 Reinstatement:
o GR: Actual reinstatement
o EXC: Payroll reinstatement
 The person is a confidential EE
 It’s the middle of the academic year
 Bald EEs (hotel case)
 Q: Will the refusal of the EEs to return to work transform the act into
illegal strike, or will it become an illegal act?
 A: The defiant EEs will be considered to have committed an ILLEGAL
ACT and you can be terminated from your employment for the
performance of said illegal act.
Agreement
 The Union and ER can agree that there should be no strike and no
lock out, under a no strike and no lockout (NSNL) clause.
o Exception: ULP (Hence, a NSNL clause applies ONLY to
economic strikes for bargaining)
 If the purpose of the strike is CB deadlock & there’s a no strike and no
lockout clause, a strike conducted would be illegal. But if the strike is
conducted because of a ULP, then the strike is valid.
Backwages in Relation to Strikes
Economic strikes Even if the strike is legal, EEs are not entitled to
backwages, under the principle of “a fair day’s wage for a
fair day’s labor.”
ULP strikes GR: Only those who were discriminatorily dismissed &
struck because of this discriminatory dismissal get
backwages (they get backwages from the date of the act of
45
 discrimination). Those who strike because of the ULP of
discrimination committed against other EEs will not get
wages for the days they do not work.
EXC:
1. ER illegally locked out EEs, making them “involuntary
strikers.” The EEs wanted to work but were not allowed to
by the ER; hence it was akin to an illegal dismissal. This
offer to return to work on the part of the EEs, however,
must be unconditional. Furthermore, the strike has to have
been LEGAL. (G&S Transportation v. Infante)
EXC to EXC: When the strikers’ unconditional offer to return
to work was not implemented because SC issued an
injunction, the ER is not obliged to pay backwages.
Illegal Dismissal, Strikes, & Backwages
Illegally dismissed strikers are not entitled to backwages for the period of the
strike. Note that this is only for the period of the strike because they did not
work while they were on strike.
BUT they are entitled to backwages computed from the time their
compensation was illegally withheld from them up to the time of actual
reinstatement, excluding the period they were on strike. (HSBC EEs Union v.
NLRC (2013), cited in 2016 edition of Atty. Azucena’s book)
B. LOCKOUTS
Valid Lockout Scenarios
1. In anticipation of a threatened strike, where motivated by economic
considerations
2. In response to a whipsaw strike
3. In response to unprotected strike or lockout
Unlawful Lockouts
1. To discourage or dissipate membership in a LO
2. To aid a particular union by preventing further organizational work of its rival,
or to coerce the EEs to join the favored union
3. To avoid bargaining
VI. Termination
CLASS DISCUSSION
Q: Does a casual employee get due process?
A: Yes.
Q: What does “other analogous circumstances” mean?
A: It would appear that for this to apply, the circumstances must specifically be
listed or enumerated in the company policy. If the employer failed to
enumerate the act, in the mind of the employee, it would not be a prejudicial
act. This is based on the new issuance, DOLE 147-15.
Q: What is the difference between just and authorized causes?
A: Just causes entails fault on the part of the employee; for the authorized
causes, it is the just the act of the employer.
Q: What are the procedural requirements for just causes?
A: First notice – must be written
 Must be given individually to each individual employee involved
 Allegations against the employee should be contained; these should
be specific
 At least 5 calendar days (based on case law and Omnibus Rules)
Q: Must the first notice actually say, “You may be terminated…” or will it suffice
to say “you may be given disciplinary sanctions”?
A: NO. Before, when giving the EE the first notice, the possible penalty was
needed to be stated as well.
GR: When it comes to “ample opportunity to be heard” after the first notice,
hearing is not required. Actually, no formal hearing is required. See DO 174-15
for the full provision.
Separation pay need not be paid for just causes.
Q: What if there is no ground to dismiss? What is that ground called?
A: Illegal dismissal
Q: Ground for you to be terminated, but due process was not followed: illegal
dismissal?
A: Substantive and procedural due process are mandatory requirements. If you
miss any, that is still illegal dismissal, but the effect if you do not follow due
process but there is a valid cause, is that nominal damages will be paid (50K or
30K).
Q: Can you be reinstated for a completely different position?
A: No, supposedly you get reinstated in the position that you were in before.
Q: Employee was illegally dismissed on the 10th year. He gets back to work 15th
year. Is he considered an employee for the last 5 years and thus entitled to
promotions?
A: Reinstatement without loss of seniority rights means that you are employed
for 15 years already (because you do not lose your seniority rights). BUT you are
46
not entitled to promotions that are not period-based but merit-based, since
anyway you didn’t actually work for that period.
BACKWAGES
1. Backwages cannot be reduced just because you worked elsewhere. The
doctrines that backwages will be reduced for working elsewhere have been
overturned. Thus, it is FULL backwages. You may now earn whatever you earn
where you worked elsewhere, and you may also get full backwages.
2. As for the amount of the backwages, it will be pegged at the time of
dismissal, without adjustments based on inflation or other salary increases.
This is even true if the case has already dragged on for 20 years or whatever.
3. 13th month pay and allowances will be included in your salary at the time
you were dismissed. The amount will also be based on the amount at the time
of illegal dismissal.
4. What allowances are included? Allowances regularly received by the
employee – REGULARLY. If the employee receives transportation allowance
without question every month, that will be included when computing
backwages.
As an ER, if you illegally dismiss someone, as a rule, the penalty is
reinstatement plus backwages. But sometimes, the LA or courts will stay
reinstatement is no longer possible – hence, separation pay will be paid
instead.
It is not the ER’s prerogative to declare there exists strained relations. When
you file a position paper and other pleadings, you are already arguing that the
reinstatement is legal, BUT ALSO, that that there should be no reinstatement.
Types of separation pay: (Taken from AZUCENA)
1. Separation pay based on law (paid for authorized causes)
2. Separation pay in lieu of reinstatement
3. Separation pay based on the CBA
4. Separation pay as financial assistance
Backwages is not immediately executory, but the reinstatement is the only
component of an LA decision is immediately executory.
RKS-5 (Establishment Report) – Tickbox you send to DOLE for notice if you are
dismissing employees due to authorized causes; the employer is also allowed
to have a cover letter, attached to the establishment report
If the ground for authorized causes is labor-saving device
Retrenchment – there must business losses; you must prove you are losing
money
Labor-saving device – doesn’t matter if the company is losing money
What’s the difference between retrenchment and closure?
For closure, you don’t need to prove you lose money; you just need to prove
there is good faith closure
1 month or ½ month for every year of service, whichever is higher (separation
pay)
1. Retrenchment
2. Closure not due to loss of money
3. Disease
1 month or 1 month for every year of service, whichever is higher (separation
pay)
1. Redundancy
2. Labor-saving device
3. Ilegal dismissal where separation pay is paid in lieu of reinstatement
There is one case which states that disease is a just cause, BUT MOST
PRACTITIONERS AND EDUCATORS AGREE THAT IT IS AN AUTHORIZED CAUSE.
DISEASE
 There is currently no law that prohibits any disease
 Certification by a competent public health authority – in court, what is
required is the letterhead of the government clinic; a private doctor IS
NOT ALLOWED. It must be a government doctor that specializes on
the disease; the disease must exist for 6 months.
A. JUST CAUSES
(1) Serious Misconduct
1. There must be misconduct
2. The misconduct must be of grave such grave & aggravated character
3. It must relate to the performance of the EE’s duties
4. There must be a showing that the EE becomes unfit for working for the
ER
(2) Willful Disobedience or Insubordination
1. There must be disobedience or insubordination
2. The disobedience or insubordination must be willful or intentional,
characterized by a wrongful or perverse attitude
3. The order violated must be reasonable, lawful, & made known to the
EE
4. The order must pertain to the duties to which the EE has been engaged
(3) Gross & Habitual Neglect of Duties
47
 1. There must be neglect of duty
2. It must be gross & habitual in character
(4) Fraud or Willful Breach of Trust
1. There must be an Act, Concealment, or Omission [ACO]
2. The ACO involves a breach of legal duty, trust, or confidence reposed in
him
3. It must be committed against an ER or his representative &
4. It must be in connection with the EEs’ work
(5) Loss of Confidence
1. There must be an ACO
2. The ACO justifies the loss of trust & confidence of the ER to the EE
3. The EE must be holding a position of trust & confidence
4. The loss of trust & confidence should not be simulated
5. It should not be used as a subterfuge for causes that are illegal,
improper, or unjustified
6. It must be genuine & not a mere afterthought to justify an earlier
action taken in bad faith
(6) Commission of a Crime
1. There must be an act or omission punishable or prohibited by law
2. The act or omission was committed by the EE against –
a. The person of the ER, OR
b. Any immediate member of his family, OR
c. His duly authorized representative
(7) Analogous Causes
1. There must be an act or omission similar to those specified just causes
2. The act or omission must be voluntary &/or willful on the part of the
EEs
Two Notice Rule
Before the services of an employee can be validly terminated, the employer
must furnish him two written notices: (a) a written notice served on the
employee specifying the ground or grounds for termination, and giving the
employee reasonable opportunity to explain his side; and (b) a written notice of
termination served on the employee indicating that upon due consideration of
all the circumstances, grounds have been established to justify his termination.
The employer must inform the employee of the charges against him and to
hear his defenses. A full adversarial proceeding is not necessary as the parties
may be heard through pleadings, written explanations, position papers,
memorandum or oral argument.
Guidelines for the “Hearing” Requirement for Procedural Due Process
1. "Ample opportunity to be heard" means any meaningful opportunity
(verbal or written) given to the employee to answer the charges against
him and submit evidence in support of his defense, whether in a
hearing, conference or some other fair, just and reasonable way.
2. A formal hearing or conference becomes mandatory only when –
a. Requested by the employee in writing;
b. Substantial evidentiary disputes exist;
c. A company rule or practice requires it; or
d. When similar circumstances justify it.
3. The "ample opportunity to be heard" standard in the Labor Code prevails
over the "hearing or conference" requirement in the implementing rules
and regulations.
Reliefs from Illegal Dismissal
An illegally dismissed employee is entitled to two reliefs: backwages and
reinstatement. The two reliefs provided are separate and distinct. In
instances where reinstatement is no longer feasible because of strained
relations between the employee and the employer, separation pay is granted.
The payment of separation pay is in addition to payment of backwages.
Under the doctrine of strained relations, the payment of separation pay is
considered an acceptable alternative to reinstatement when the latter option is
no longer desirable or viable. On one hand, such payment liberates the
employee from what could be a highly oppressive work environment. On the
other hand, it releases the employer from the grossly unpalatable obligation of
maintaining in its employ a worker it could no longer trust.
Fixing Nominal Damages for Failure to Follow Procedural Due Process
In fixing the amount of nominal damages whose determination is addressed to
our sound discretion, the Court should take into account several factors
surrounding the case, such as: (1) the employer’s financial, medical, and/or
moral assistance to the sick employee; (2) the flexibility and leeway that the
employer allowed the sick employee in performing his duties while attending to
his medical needs; (3) the employer’s grant of other termination benefits in
favor of the employee; and (4) whether there was a bona fide attempt on the
part of the employer to comply with the twin-notice requirement as opposed to
giving no notice at all.
(3) Gross & Habitual Negligence
Neglect of duty, to be a ground for dismissal, must be both gross and habitual.
Gross negligence implies want of care in the performance of one’s duties.
Habitual neglect imparts repeated failure to perform one’s duties for a period
of time, depending on the circumstances.
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(5) Dismissal on the Ground of Loss of Trust and Confidence
The first requisite for dismissal on the ground of loss of trust and confidence is
that the EE concerned must be one holding a position of trust and confidence.
There are 2 classes of positions of trust.
1. The first class consists of managerial employees. They are defined as
those vested with the powers or prerogatives to lay down management
policies and to hire, transfer suspend, lay-off, recall, discharge, assign or
discipline employees or effectively recommend such managerial
actions.
2. The second class consists of cashiers, auditors, property custodians, etc.
They are defined as those who in the normal and routine exercise of
their functions, regularly handle significant amounts of money or
property.
o Ex.: a pharmaceutical company’s district manager employed to
handle pharmaceutical products for distribution, a bank
manager, an employee tasked with purchasing supplies and
equipment, a contract claims assistant tasked with monitoring
enforcement of contracts involving large sums of money.
The second requisite is that there must be an act that would justify the loss of
trust and confidence.
 Loss of trust and confidence to be a valid cause for dismissal must be
based on a willful breach of trust and founded on clearly established
facts. The basis for the dismissal must be clearly and convincingly
established but proof beyond reasonable doubt is not necessary.
Doctrines:
Prudential Junior programmer who has copies of confidential
Guarantee & data, though in the case it was held that the
Assurance Labor programmer’s acts did not constitute breach because
Union v. NLRC of failure to comply with 2nd requisite.
There was no evidence presented to prove fraud in the
manner of securing or obtaining the files found in the
EE’s computer. Aside from the presence of these files
in EE’s hard drive, there was no other evidence to prove
any gross misconduct on his part. There was no proof
either that the presence of such files was part of an
attempt to defraud his ER or to use the files for a
purpose other than for what they were intended.
Cosmos Bottling Theft committed against a co-EE is considered as an
Co. v. Fermin “analogous case” to serious misconduct, for which the
penalty of dismissal may be meted out to the erring EE.
It is analogous because the ground of serious
misconduct should be committed against the ER.
Hence, here, stealing from a fellow EE is analogous to
serious misconduct against the ER.
Sampaguita Auto Reckless driving & getting into a hit-and-run constitutes
Transport v. NLRC a serious misconduct on the part of a bus driver.
Dongon v. Rapid Willfulness must be attended by a wrongful and
Movers perverse mental attitude rendering the employee’s act
inconsistent with proper subordination and it is implied
that in every act of willful disobedience, the erring
employee obtains undue advantage detrimental to the
business interest of the employer. When the EE in this
case lied about having clearance to enter into the
premises of Tanduay to pick up goods for his ER, he
was not being willfully disobedient. He neither
benefited from it, nor thereby prejudiced the business
interest of ER. His explanation that his deed had been
intended to benefit ER was credible. There could be no
wrong or perversity on his part that warranted the
termination of his employment based on willful
disobedience.
Alilem Credit An employer is free to regulate all aspects of
Cooperative v. employment. It may make reasonable rules and
Bandiola regulations for the government of its EEs which
become part of the contract of employment provided
they are made known to the employee. In the event of
a violation, an employee may be validly terminated
from employment on the ground that an employer
cannot rationally be expected to retain the employment
of a person whose lack of morals, respect and loyalty to
his employer, regard for his employer’s rules and
application of the dignity and responsibility, has so
plainly and completely been bared.
While EE’s act of engaging in extra-marital affairs may
be considered personal to him and does not directly
affect the performance of his assigned task as
bookkeeper, aside from the fact that the act was
specifically provided for by ER’s Personnel Policy as
one of the grounds for termination of employment, said
act raised concerns to the ER as the Board received
numerous complaints and petitions from the
cooperative members themselves asking for the
removal of said EE because of his immoral conduct.
Cavite Apparel v. 4 absences in 6 years of service cannot be considered
Marquez gross & habitual neglect of duty, especially so since the
absences were spread out over a 6-month period
Esguerra v. Valle Since EE’s position as Cost Control Superviser involves
Verde the duty to remit to the accounting department the
cash sales proceeds from every transaction she was
49
 assigned to, she belongs to the second class of EEs
who have a position of trust & confidence. Breach of
trust is a valid ground for termination for such EEs. The
act complained of must be related to the performance
of the duties of the dismissed employee and must
show unfitness to continue working for the employer
for violation of the trust. In this case, EE blaming her
daughter (who worked for the same ER as a food
checker) for the lost amount; her failure to report the
missing amount and paying it only after the accounting
department informed her reflects her irresponsibility.
Moreover, it is highly unethical for an EE to bring home
food intended to be sold to customers.
SAMASAH- The grant of separation pay or some other financial
NUWHRAIN v. VA assistance to an employee dismissed for just causes is
Magsalin based on equity. 
 Severance compensation, or
whatever name it is called, on the ground of social
justice shall be allowed only when the cause of the
dismissal is other than serious misconduct or for
causes which reflect adversely on the employee‘s
moral character. Where the reason for the valid
dismissal is, for example, habitual intoxication or an
offense involving moral turpitude, like theft or illicit
sexual relations with a fellow worker, the ER may not
be required to give the dismissed EE separation pay, or
financial assistance, on the ground of social justice. A
contrary rule would have the effect, of rewarding rather
than punishing the erring EE for his offense. In this
case, EE was dismissed for serious disobedience after
having violated, in quick succession, the Code of
Discipline of the ER 5 times. EE does not deserve
financial assistance for humanitarian considerations.
Lopez v. Alturas 1. EE can be terminated on the ground of loss of trust &
Group of confidence for smuggling goods that belong to the ER.
Companies EE, a driver assigned with a specific vehicle, was
entrusted with the transportation of ER’s goods and
property, and consequently with its handling and
protection, hence, even if he did not occupy a
managerial position, he can be said to be holding a
position of responsibility. As to his act of smuggling out
the scrap iron belonging to ER, the same is
undoubtedly work-related.
2. Opportunity to be heard was complied with when EE
was given the chance to submit a written reply to the
charges against him.
Puncia v. Toyota 1. In order to enable the EEs to intelligently prepare
Shaw their explanation and defenses, the notice should
contain a detailed narration of the facts and
circumstances that will serve as basis for the charge
against the EEs. A general description of the charge
will not suffice. Lastly, the notice should specifically
mention which company rules, if any, are violated
and/or which among the grounds under Art. 282 is
being charged against the EEs.
2. After determining that termination of employment is
justified, the ER shall serve the EE a written notice of
termination indicating that: (1) all circumstances
involving the charge against the EEs have been
considered; and (2) grounds have been established to
justify the severance of their employment.
3. Failure to observe prescribed standards of work, or
to fulfill reasonable work assignments due to
inefficiency may constitute just cause for dismissal.
Such inefficiency is understood to mean failure to
attain work goals or work quotas, either by failing to
complete the same within the allotted reasonable
period, or by producing unsatisfactory results.
EE miserably failed in satisfying his monthly sales
quota, only selling a measly 5 vehicles out of the 34 he
was required to sell over the course of 6 months; this is
tantamount to gross inefficiency which is analogous to
gross neglect of duty and therefore a just cause for
termination.
BUT: In violating procedural due process, ER afforded
EE the opportunity to refute the charge of gross
inefficiency against him, however, the latter was
completely deprived of the same when he was
dismissed for gross insubordination for failure to attend
a hearing scheduled to justify his failure to meet quota.
Thus, though there was substantive due process, there
was a violation of procedural due process.
Uniwide v. NLRC With respect to rank-and-file personnel, loss of trust
and confidence as ground for valid dismissal requires
proof of involvement in the alleged events in question,
and that mere uncorroborated assertions and
accusations by the employer will not be sufficient. But,
as regards a managerial employee, mere existence of a
basis for believing that such employee has breached
the trust of his employer would suffice for his
dismissal. In the case of managerial employees, proof
50
 beyond reasonable doubt is not required, it being
sufficient that there is some basis for such loss of
confidence, such as when the employer has reasonable
ground to believe that the employee concerned is
responsible for the purported misconduct, and the
nature of his participation therein renders him
unworthy of trust and confidence demanded by his
position. Hence, in this case, the EE, an assistant
manager, who refused to answer charges against her
as regards the mismanagement of her assigned
inventory & her sale of goods at unreasonable prices,
was validly dismissed for loss of trust & confidence.
Etcuban Jr. v. When the ground is fraud or betrayal of trust, whether
Sulpicio or not the ER was prejudiced was immaterial. What
matters is that the fraudulent scheme constitutes a
clear betrayal of trust and confidence.
B. UNION SECURITY CLAUSE
What’s a Union Shop?
There is union shop when all new regular EEs are required to join the union
within a certain period as a condition for their continued employment.
What’s a Maintenance of Membership Shop?
There is maintenance of membership shop when EEs who are union members
as of the effective date of the agreement, or who thereafter become members,
must maintain union membership as a condition for continued employment
until they are promoted or transferred out of the bargaining unit or the
agreement is terminated.
Closed Shop Provision
An enterprise in which, by agreement between the ER and his EEs or their
representatives, no person may be employed in any or certain agreed
departments of the enterprise unless he or she is, becomes, and, for the
duration of the agreement, remains a member in good standing of a union
entirely comprised of or of which the employees in interest are a part.
Termination based on Union Security Clause
In terminating the employment of an employee by enforcing the union security
clause, the ER needs only to determine and prove that:
1) The union security clause is applicable;
2) The union is requesting for the enforcement of the union security
provision in the CBA; and
3) There is sufficient evidence to support the union’s decision to expel
the EE from the union.
These requisites constitute just cause for terminating an EE based on the CBA’s
union security provision.
Alabang Country If CBA states that, upon written demand of
Club v. NLRC the Union and after observing due process, the ER shall
dismiss a regular EE on any of the given 8 grounds, one
of which is malversation of union funds, then an EE (a
former union officer) who commits malversation of
union funds can be dismissed by ER on that ground.
Inguillo v. First 1. When an EE who is a union member of the SEBA
Philippine Scales resigns to go to another union despite the presence of
a union security clause in the CBA, said EE can validly
be dismissed. However, ER must still comply with two-
notice rule before dismissal, even if the ground is
simply that the EE moved to a different union in
violation of the CBA.
2. For the first notice, general descriptions, which in no
way would enable the EEs to intelligently prepare their
explanation and defenses, will not suffice. In addition, a
notice that does not provide a directive that the EEs are
given opportunity to submit their written explanation
within a reasonable period is also not enough.
3. The second notice must inform the EE that his
service is already terminated; it must state that the ER
has considered all the circumstances which involve the
charge & that the grounds in the first notice have been
established to justify the severance of employment.
General Milling Even if the CBA says that the ER, upon written request
Corp. v. Casio of the Union, due process must still be followed. ER
must show that it looked into the evidence that
supports the expulsion of the EE, fulfilling the third
requisite for termination due to a union security clause.
C. PREGNANCY
Leus v. St. Pre-marital sex between two consenting adults who
Scholastica’s have no impediment to marry each other, and,
College Westgrove consequently, conceiving a child out of wedlock,
gauged from a purely public and secular view of
morality, does not amount to a disgraceful or immoral
conduct. This is true even if the ER is a Catholic private
school, & the EE involved is a teacher.
Capin-Cadiz v. EE was suspended for getting pregnant without
Brent Hospital and marriage & was required to marry to get her job back.
Colleges SC held that getting pregnant outside of marriage is
51
 not unethical or unprofessional behavior justifying
dismissal, despite the fact that the manual of the ER
provided that “immorality” was a ground for dismissal.
SC came to this conclusion using this two-step process:
first, a consideration of the totality of the
circumstances surrounding the conduct; and second,
an assessment of the said circumstances vis-a-vis the
prevailing norms of conduct, i.e., what the society
generally considers moral and respectable.
Inocente v. St. EE had a relationship with a co-worker; subsequently,
Vincent Foundation the ER implemented a non-fraternization policy,
for Children & “strongly discouraging” co-workers from dating. EE got
Aging pregnant from the relationship & was dismissed when
ER found out. SC held this was illegal dismissal.
In determining whether the acts complained of
constitute "disgraceful and immoral" behavior under
our laws, the distinction between public and secular
morality on the one hand, and religious morality, on the
other hand, should be kept in mind. This distinction as
expressed - albeit not exclusively - in the law, on the
one hand, and religious morality, on the other, is
important because the jurisdiction of the SC extends
only to public and secular morality.
Saudi Arabian A policy of an airline that its female flight attendants
Airlines [SAUDIA] v. cannot get pregnant is discriminatory against women.
Rebesencio If a woman is terminated on this ground, such
termination is illegal dismissal for being against public
policy.
D. CRIMINAL CASE
United Tourist EE cursed & shouted at rank-&-file EEs; a case for grave
Promotion v. oral defamation was pending in the Office of the
Kemplin Prosecutor against him. For this, ER terminated him on
the ground of loss of trust & confidence, but failed to
follow the procedural due process requirement of the
first notice clearly apprising said EE of the charges
against him. SC held that an EE’s guilt or innocence in
a criminal case is not determinative of the existence of
a just or authorized cause for his dismissal. The
pendency of a criminal suit against an EE, does not, by
itself, sufficiently establish a ground for an ER to
terminate the former.
St. Luke’s Medical EE was dismissed for pilfering medical stocks in ER’s
Center v. Sanchez hospital, in violation of company rules. The ground used
against her was simple disobedience. It was held that
EE’s dismissal was valid. Conviction in a criminal case
is not necessary to find just cause for termination of
employment. Criminal and labor cases involving an EE
arising from the same infraction are separate and
distinct proceedings which should not arrest any
judgment from one to the other.
E. DISEASE
Due Process for Termination Due to Disease
ER must furnish the EE two written notices in terminations due to disease,
namely: (1) the notice to apprise the employee of the ground for which his
dismissal is sought; and (2) the notice informing the employee of his dismissal,
to be issued after the employee has been given reasonable opportunity to
answer and to be heard on his defense.
Deoferio v. Intel 1. Termination due to disease, when the disease is
Technology schizophrenia, a mental disorder, is valid, especially
since doctor said that his relations with co-EEs & his
care for himself would be affected.
2. For failure to comply with procedural due process
under the ground of termination due to disease,
nominal damages at ₱50,000.00 will be paid, following
the Jaka Food Processing Corp. v. Pacot standard for
damages paid when a dismissal is due to an authorized
cause but ER did not comply with notice requirement.
F. ILLEGAL STRIKE
Separation Pay In Lieu of Reinstatement
For union members who were dismissed for having participated in an illegal
strike, the relief is the payment of separation pay in lieu of reinstatement under
any of the following circumstance:
1. Reinstatement can no longer be effected in view of the passage of a
long period of time or because of realities of situation
2. Reinstatement is inimical to the employer’s interest
3. Reinstatement is no longer feasible
4. Reinstatement does not serve the best interests of the parties
involved
5. The employer is prejudiced by the worker’s continued employment
6. Facts that make execution unjust or inequitable have supervened
7. Strained relations between the employer and employee
Jackbilt Industries The use of unlawful means in the course of a strike
52
v. Jackbilt renders such strike illegal. If there was a finding by the
Employees Union NLRC that the strikers committed illegal acts during
the strike, there is no necessity to file a petition to
declare the strike illegal before the employer may
legally dismiss the striking employees who committed
such illegal acts.
PHIMCO Industries The Labor Code recognizes the right to due process of
v. PHIMCO all workers, without distinction as to the cause of their
Industries Labor termination, even if the cause was their supposed
Association involvement in strike-related violence prohibited by the
Labor Code.
An employee must furnish the employee 2 written
notices: a written notice specifying the grounds for
termination and giving the employee a reasonable
opportunity to explain his side and another written
notice indicating that, upon consideration of all
circumstances, grounds have been established to
justify the decision to dismiss the employee. This rule
still applies even as against union officers who
allegedly participated in an illegal strike. In this case,
despite the strike being illegal, the ER still had to pay
nominal damages.
VCMC v. Yballe Backwages are granted to indemnify a dismissed
employee for his loss of earnings during the whole
period that he is out of his job. However, the principle
of a “fair day’s wage for a fair day’s labor” remains as
the basic factor in determining the award thereof. If
there is no work performed by the employee there can
be no wage or pay. To be entitled to backwages, it is
required that the strike be legal. For union members
who were dismissed for having participated in an illegal
strike, their only relief is the payment of separation pay
in lieu of reinstatement.
G. AUTHORIZED CAUSES
(1) Installation of Labor Saving Devices
1. There is introduction of Machinery, Equipment, or other Devices [MED]
2. The introduction is done in good faith
3. The purpose of the introduction is valid (e.g., saving on cost, efficiency,
& other justifiable economic reasons)
4. There is no other option available for the ER than the introduction of
the MED & the consequent termination of the EEs affected thereby
5. There must be Fair & Equitable Criteria in Selecting EEs to be
Terminated [FEC-SET]
(2) Redundancy
1. There must be superfluous positions or services of EEs
2. The positions or services are in excess of what is reasonably demanded
by the actual requirements of the enterprise to operate in an economic
& efficient manner
3. There must be good faith in abolishing redundant positions
4. There must be FEC-SET
5. There must be adequate proof of redundancy such as but not limited
to, new staffing pattern, feasibility studies on the viability of newly
created positions, approval by management of restructuring, & job
description
(3) Retrenchment or Downsizing
1. It must be reasonable necessary & likely to prevent business losses
2. The losses, if already incurred, are not just de minimis, but substantial,
serious, real, & actual, or if only expected, are reasonably imminent
3. The expected or actual losses must be proven by sufficient &
convincing evidence
4. There must be good faith retrenchment for the advancement of its
interest & not to defeat or circumvent the EE’s right to security of
tenure
5. There must be FEC in ascertaining who would be dismissed & who
would be retained among the EEs, such as status, efficiency, seniority,
physical fitness, age, & financial hardship for certain workers
(4) Closure or Cessation of Operations
1. Management must make a decision to cease or close the enterprise
2. The decision must be in good faith
3. There is no other option available to the ER except to close the
business
(5) Disease
1. EE must be suffering from any disease
2. Continued employment of the EE is prohibited by law or prejudicial to
(1) his health & (2) the health of his co-EEs
 There must be certification by a competent public health authority
that the disease is incurable within a period of 6 months even with
proper medical treatment
Linton Commercial For a valid reduction of workdays, the company has to
v. Hellera prove substantial financial losses. Management
prerogative must be exercised in good faith and with
53
 due regard to rights of labor.
AMA Computer 1. To justify redundancy, ER presented its new table of
College v. Garcia organization and a certification by its Human
Resources Supervisor that the functions and duties of
many rank and file employees are now being
performed by supervisory employees. These, however,
are insufficient. They are grossly inadequate and
mainly self-serving. More compelling evidence would
have been a comparison of the old and new staffing
patterns, a description of the abolished and newly
created positions, and proof of the set business targets
and failure to attain the same which necessitated the
reorganization or streamlining.
2. Among the accepted criteria in implementing a
redundancy are: (a) less preferred status, e.g.,
temporary employee; (b) efficiency; and (c) seniority.
There is no showing that ER in this case applied any of
these criteria in determining that, among its
employees; hence, there was illegal dismissal of the 2
EEs who were terminated allegedly due to redundancy.
GSWU-NAFLU-KMU 1. The Labor Code does not obligate an employer to
v. NLRC pay separation benefits when the closure is due to
serious losses.
2. Service of the written notice for termination due to
serious business losses must be made individually
upon each and every employee of the company.
Nevertheless, the validity of termination of services can
exist independently of the procedural infirmity in the
dismissal. However, the employer should indemnify the
employee, in the form of nominal damages, for the
violation of his right to statutory due process.
Dickinson If a quitclaim was voluntarily entered into and
Philippines v. NLRC represents a reasonable settlement of the claims of the
employee, it is binding on the parties. However, when
the voluntariness of the execution of the quitclaim or
release is put into issue, then the claim of employee
may still be given due course. This rule on the validity
and binding effect of releases and quitclaims apply not
only to rank-and-file workers, but even to top officers
when it concerns the pressure which the employer may
exert upon the free will of the employee.
PT & T v. NLRC 1. While an employer may have a valid ground for
implementing a retrenchment program, it is not
excused from complying with the required written
notice served both to the employee concerned and the
DOLE at least one month prior to the intended date of
retrenchment. Compliance with the one-month notice
rule is mandatory regardless of whether the
retrenchment is temporary or permanent.
2. The employer’s failure to comply with the one-month
notice requirement prior to retrenchment does not
render the termination illegal—it merely renders the
same defective, entitling the dismissed employee to
payment of indemnity in the form of nominal damages.
Oriental Petroleum It is necessary that the employer, in the act of
v. Fuentes retrenchment, show its criteria transparently and in
good faith in selecting which employee should
retrenched.
FASAP v. PAL Old Doctrine
1. “Seniority and other reasons” not proper because it
fails to show the fair and equitable criteria used to
decide who to retrench.
2. Considering the performance of EEs only for 1 year
and not all their years of service is also not fair and
equitable criteria.
3. Before retrenching, resort to other cost-cutting
measures must be shown.
4. Implementing a different retrenchment plan than
what was communicated to the EEs is considered bad
faith.
New Doctrine (March 2018)
1. Financial incapacity need not be proven where the
Union made several judicial admissions (through their
petitions & complaints) that they knew ER was poor
and undergoing rehabilitation. Where there are these
judicial admissions, no financial statement is needed.
2. Even if no substantial business losses were proven, it
is still valid for an ER to retrench EEs to prevent
possible, imminent business losses
3. The rehiring of previously retrenched EEs should not
be construed as bad faith. Also, the implementation of
a different retrenchment plan is not necessarily bad
faith.
4. The resort by PAL to inverse seniority & efficiency
ratings to retrench was fair & equitable criteria.
5. Quitclaims were valid.
GR: Quitclaims in labor cases are valid, but frowned
upon. The validity of the quitclaim must be shown.
54

Requisites of valid quitclaim: 
 4. Moral & exemplary - Award of moral and exemplary
1. Executed voluntarily
 damages for an illegally dismissed employee is proper
2. No fraud or deceit on part of any of the parties
3. Consideration is credible and reasonable – ER must
prove that when the EE signed the quitclaim, it was
supported by valuable consideration; this is a special
rule in quitclaims in labor cases
4. Not contrary to law, public order, public policy,
morals, good customs, or prejudicial to a third person
with a right recognized by law
General Milling The characterization of an employee's services as
Corp. v. Viajar superfluous or no longer necessary and, therefore,
properly terminable, is an exercise of business
judgment on the part of the ER. The soundness of such
characterization is not subject to discretionary review
provided that there is no bad faith or violation of a law.
BUT a company cannot simply declare redundancy
without basis. To exhibit its good faith and that there
was a fair and reasonable criteria in ascertaining
redundant positions, a company claiming to be over
manned must produce adequate proof of such
redundancy to justify dismissal of employees, such as
but not limited to the new staffing pattern, feasibility
studies/proposal, on the viability of the newly created
positions, job description and the approval by the
management of the restructuring.
SPI Technologies v. 1. The presentation of the new table of the organization
Mapua and the certification of the HR Supervisor that the
positions occupied by the retrenched employees are
redundant are inadequate as evidence to support the
college’s redundancy program. More compelling
evidence would have been a comparison of the old and
new staffing patterns, a description of the abolished
and newly created positions, and proof of the set
business targets and failure to attain the same which
necessitated the reorganization or streamlining.
2. Financial audits merely attached to a supplemental
rejoinder, filed 6 months late, can validly be
disregarded by the LA.
3. A position cannot be abolished by a mere change of
job title. In cases of redundancy, the management
should adduce evidence and prove that a position
which was created in place of a previous one should
pertain to functions which are dissimilar and
incongruous to the abolished office.
where the employee had been harassed and arbitrarily
terminated by the employer, because this is an unjust
dismissal tainted in bad faith.
PNCC Skyway Co. 1. The EEs & the DOLE were notified on Dec. 28, 2007
v. SOLE that ER intended to cease operations on Jan. 31, 2008.
The EEs & the DOLE were, therefore, notified 34 days
ahead of the impending closure of the premises of the
ER. That the ER turned over the operation and
management of the Skyway to the new entity and
ceased business operations on Dec. 31, 2007, should
not be taken to mean that the FSC employees
were ipso facto terminated on the same date. The EEs
were notified that despite the cessation of its
operations on Dec. 31, 2007 — which, as a
consequence thereof, would result in the needlessness
of their services — the effective date of their
termination from employment would be on Jan. 31,
2008. In fact, the EEs were kept on the payroll until
Jan. 31, 2008.
2. An ER may opt not to require the dismissed EEs to
report for work during the 30-day notice period.
3. In Smart, the employee received the notice of her
dismissal only 2 weeks before its effectivity date
although it was issued by the ER at least 30 days prior
to the intended date of her dismissal. Given that the EE
was evidently shortchanged of the mandated period of
notice, the Court ruled that actual knowledge could not
replace the formal written notice required by law. Here,
though, the ER complied with the mandated 30-day
notice requirement.
H. CONSTRUCTIVE DISMISSAL/PREVENTIVE SUSPENSION
Constructive Dismissal (ID3)
1. Where there is cessation of work because continued employment is
rendered Impossible, unreasonable, or unlikely;
2. When there is a Demotion in rank or Diminution in pay or both; or
3. When a clear Discrimination, insensibility, or disdain by an ER becomes
unbearable to the EE.
CLASS DISCUSSION
55
Q: What if there is a diminution of commission? Is that considered constructive
dismissal?
A:
Q: If you ask an EE to resign, is that constructive dismissal? What if the ER said,
“I feel that it is in your best interest to resign.” Is that constructive dismissal?
A: Not necessarily; for example, one is allowed to tell an EE, “You’ve committed
an infraction; I offer you now the option to voluntarily resign.”
Q: Can the EE not argue that it appears that the ER was saying, he was to be
terminated anyway?
A: That’s allowed on the part of the ER, but only if the investigation has already
made.
Q: ER makes EE’s life awful everyday. EE is thanking the company on paper but
actually, EE felt really bad. Is this constructive dismissal?
A: Yes.
FLJ: SC decision says that giving EEs a chance to resign is not constructive
dismissal is when it is an act of compassion. It should be at the point where the
due process requirements have been followed and the ER is really going to
dismiss the EE already following the ER’s investigation and there is already a
determination that the EE is going to be terminated, and ER offers to just let EE
resign. This is the only situation where this would not be considered
constructive dismissal.
Q: What is the consequence of finding there is constructive dismissal?
A: Same as illegal dismissal, although in practice it would usually lead to
separation pay in lieu of reinstatement rather than reinstatement. However,
technically speaking, the results should be the same.
Q: If you are an EE and you feel like ER is treating you badly, what happens if
you file the voluntary resignation with 30-day notice? Will your dismissal
become a “valid resignation” rather than constructive dismissal?
A: There is no hard and fast way to determine whether or not there is
constructive dismissal, so in this case, if the bad treatment is truly evident,
then there will still be constructive dismissal despite the voluntary resignation.
FLJ: Backwages in constructive dismissal are computed by counting from the
time you are no longer able to work (from the time of the act of the ER) up to
the time of supposed reinstatement (the time you should have received the
payment, but you did not).
Test for Constructive Dismissal
WON a reasonable person in the employee’s position would have felt
compelled to give up his position under the circumstances. It is an act
amounting to dismissal but made to appear as if it were not. In fact, the EE
who is constructively dismissed may be allowed to keep on coming to work.
Constructive dismissal is therefore a dismissal in disguise.
Maricalum v. 1. Preventive suspension is justified where the EEs
Decorion continued employment poses a serious & imminent
threat to the life or property of the ER or of the EE’s co-
workers. Without this kind of threat, preventive
suspension is not proper. Hence, an EE cannot be
preventively suspended for failure to attend a meeting.
2. Preventive suspension lasting beyond the maximum
period (30 days) allowed by the IRR amounts to
constructive dismissal.
Norkis Trading Co., There is constructive dismissal when an employee's
Inc. v. Gnilo functions, which were originally supervisory in nature,
were reduced; and such reduction is not grounded on
valid grounds such as genuine business necessity. In
this case, while the transfer of EE from Credit and
Collection Manager (managerial) to Marketing
Assistant (clerical) did not result in the reduction of his
salary, there was a reduction in his duties and
responsibilities which amounted to a demotion
tantamount to a constructive dismissal.
University of the The crucial element in constructive dismissal is that the
Immaculate EE was left with no choice but to quit. If after being
Conception v. NLRC suspended, the EE simply continues on with work, there
is no constructive dismissal, since there was no
cessation of the EER.
Robinsons Galleria Due process requirements under the Labor Code are
v. Ranchez mandatory and may not be supplanted by police
investigations or court proceedings. Employers should
not rely solely on the findings of the Prosecutor’s Office.
They are mandated to conduct their own separate
investigation, and to accord the employee every
opportunity to defend himself.
2. The EE was constructively dismissed. She was strip-
searched after she failed to turn over P20,000 to her
supervisor, & criminal charges were filed against her
without administrative investigation. It was
unreasonable for her to be charged with abandonment
for not reporting for work upon her release in jail. Work
had been rendered unreasonable, unlikely, and
impossible, considering the treatment accorded her by
ER.
3. A probationary employee enjoys security of tenure.
Its services may be terminated for any of the following:
(1) just or (2) authorized cause, and (3) when he fails to
qualify as a regular employee in accordance with
56
 reasonable standards prescribed by the employer.
Dreamland Hotel v. If an EE is told to show up to work for months prior to
Johnson the opening of the ER’s resort, but is paid only P8,000
when the contract of employment said his pay would
be P60,000, his subsequent resignation would be
tantamount to constructive dismissal.
INTEC Cebu v. CA 1. When the work hours of an EE are reduced but in his
stead others are hired, & ER fails to show good faith
reduction in order to avoid business losses, there is
effective termination tantamount to constructive
dismissal.
2. To constitute abandonment, there must be clear
proof of deliberate and unjustified intent to sever the
employer-employee relationship.
An employee who takes steps to protest his dismissal
cannot logically be said to have abandoned his work.
The filing of such complaint is proof enough of his
desire to return to work, thus negating any suggestion
of abandonment.
Q: T/F – all constructive dismissals are illegal or invalid.
A:
Promotions need the consent of the EE. If you fail to obtain the consent of the
EE, it may look like constructive dismissal.
As a general rule, lateral movements would usually be considered a valid
dismissal.
A valid demotion is a demotion where you demote instead of terminate, and
had you terminated, it would have been a valid termination.
I. TEMPORARY SUSPENSION OF OPERATIONS/”FLOATING STATUS”
+ Add DO 174-17 (3 month floating status for contracting arrangements)
It is WITHIN 6 MONTHS = Still valid
If it is 6 months and 1 day already = no longer valid
Floating Status is only allowed for cessation of operations.
In all cases, the ER shall reinstate the EE to his former position without loss of
seniority rights if he indicates his desire to resume his work not later than 1
month from the resumption of operations of his ER or from his relief from
military or civic duty.
Q: Can floating status be validly extended past 6 months?
A: No final answer on this one.
Nippon House v. 1. “Off-detailing” (being on floating status) is not
Leynes equivalent to dismissal, so long as such status does not
continue beyond a reasonable time. It is only when
such “floating status” lasts more than 6 months that
the EE constructively dismissed. In this case, following
a misunderstanding with a fellow EE in a project, EE
was placed on floating status until ER could find her
another project. That is not constructive dismissal.
2. A complaint for illegal dismissal filed prior to the
lapse of 6-month and/or the actual dismissal of the EE
is generally considered as prematurely filed.
Q: What if suspension is based on chronic tardiness or
habitual absence? Is the suspension valid in that case?
A: Yes (ask Hannah).
FLJ: First 30 days is without pay; but after the 30 days
there must already be pay if the suspension continues.
Q: If it is found after 30 days that there is ground to
dismiss, must the EE refund?
A: No.
Q: What if it was found in the 30-day period that the
ground to dismiss did not exist, must the EE now be
paid?
A: No, because it is management prerogative to
suspend if there is valid reason to (Ask Hannah).
SKM Art Craft Employment will not be deemed terminated if the bona
Corporation v. fide suspension of operations does not exceed 6
Bauca months. But if the suspension of operations exceeds 6
months, the employment will be considered
terminated. In this case, EEs’ employment was initially
validly suspended due to the fire that razed ER’s
establishment; but EEs were illegally dismissed since
they were not recalled after 6 months, after the
suspension of ER’s operations. ER’s manifestation 1
year later that it was willing to let EEs get back to work
was too late.
Exocet Security v. DO 14-01, entitled "Guidelines Governing the
Serrano Employment and Working Conditions of Security
Guards and Similar Personnel in the Private Security
Industry," Sec. 6.5, in relation to Sec. 9.3, of which
57
 states that the lack of service assignment for a
continuous period of 6 months is an authorized cause
for the termination of the employee, who is then
entitled to a separation pay equivalent to ½ month pay
for every year of service.
In this case, ER did not illegally dismiss EE, because in
fact, it offered EE a job within the 6 months in a
general security service post but EE refused, since
previously he was assigned as a VIP security guard. In
fact, EE’s refusal can be considered serious
disobedience, though the ER’s failure to assert this
means the ER waives this as a ground for dismissal. SC
thus directed EE to report back to work for
reassignment.
J. SUSPENSION
IRR: The employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat
to the life or property of the employer or of his co‐ workers.
No preventive suspension shall last longer than 30 days.
 After that period, the employer shall reinstate the worker or the
employer may extend the period of suspension, provided that during the
period of suspension, he pays the wages and other benefits due to the
worker. In such case, the worker shall not be bound to reimburse the
amount paid to him during the extension if the employer decides, after
completion of the hearing to dismiss the worker.
BUT: For project and non-project employees in the construction industry, the
preventive suspension cannot be longer than 15 days.
Montinola v. PAL Due process in an employer’s suspension of an
employee is absent where although notice and hearing
are conducted, the employer does not clarify the
factual basis of alleged violation of the Company rules
resulting in the administrative charge.
K. CONSEQUENCES OF DISMISSAL
Q: Who has the burden of proving valid termination of the EE?
A: With the ER.
Q: What is the rule with constructive dismissal? Who has the burden?
A:
Q: How about the EE who submitted the resignation letter? Who has the burden
to show that the dismissal was legal?
A: The EE, for FLJ. If there is a resignation letter that is filed, the EE has the
burden to show that the dismissal was valid.
FLJ: Note that while the burden of evidence shifts, the burden of proof to prove
valid dismissal rests always on the ER in labor cases.
Par. 3 of Art. 223 of the Labor Code, which reads: “In any event, the decision of
the LA reinstating a dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be executory, pending
appeal. The employee shall either be admitted back to work under the same
terms and conditions prevailing prior to his dismissal or separation or, at the
option of the employer, merely reinstated in the payroll. The posting of a bond
by the employer shall not stay the execution for reinstatement provided
herein.”
Q: Financial assistance in the form of separation pay – when is it given?
A: Social justice (discretionary) AND it can only happen in LEGAL DISMISSAL.
Q: If you grant backwages, should you still give financial assistance in the form
of separation pay?
A: No.
FLJ: ER gets to choose between reinstatement and payroll reinstatement.
Sagum v. CA 1. To protect labor’s security of tenure, the doctrine of
strained relations should be strictly applied so as not to
deprive an illegally dismissed employee of his right to
reinstatement. Every labor dispute almost always
results in strained relations, and the phrase cannot be
given an overarching interpretation, otherwise, an
unjustly dismissed employee can never be reinstated.
The mere persistence of the employer in saying that
there was already a loss of trust and confidence does
not amount to proof.
2. The existence of strained relations is a factual
finding and should be initially raised, argued and
proven before the LA. In this case, however, the ER first
raised the issue in their Comment to the EE’s Motion
for Partial Reconsideration before CA. Hence, there was
no basis on the records for the CA to hold that
reinstatement is no longer possible due to strained
relations.
Agabon v. NLRC If the dismissal was for cause, but procedural due
process was not complied with, the dismissal is not
58
 deemed illegal. However, the employer should
indemnify the employee for violation of due process
rights in the form of nominal damages. This is pursuant
to the Wenphil doctrine.
JAKA Food 1. If the dismissal is based on a just cause but the
Processing employer failed to comply with the notice requirement,
Corporation v. the sanction to be imposed upon him should be
Pacot tampered because the dismissal was initiated by an
act imputable to the employee (indemnity of P30k).
2. If the dismissal is based on an authorized cause but
the employer failed to comply with the notice
requirement, the sanction should be stiffer because the
dismissal process was initiated by the employer’s
exercise of his management prerogative (indemnity of
P50k).
3. The rule is that in all cases of business closure or
cessation of operation or undertaking of the employer,
the affected employee is entitled to separation pay.
The exception is when the closure of business of
cessation of operations is due to serious business
losses or financial reverses; duly proved, in which case,
the right of affected employees to separation pay is
lost for obvious reasons.
Sangwoo Phil. v. If closure is due to serious business losses, the ER need
Sangwoo Phils. not pay separation pay. However, the ER may still be
Employees Union compelled to pay nominal damages for failure to follow
the notice rule. However, as regards said nominal
damages, in instances where the payment of damages
becomes impossible, unjust, or too burdensome, SC
may reduce the amount of awarded to employees from
P50,000 to P10,000 since the authorized cause of
termination was the ER's closure due to serious
business losses or cessation of business which was
done in good faith and due to circumstances beyond
the ER's control.
Equitable Banking 1. In the computation of the full backwages to be paid
v. Sadac an illegally dismissed EE, prospective salary increases
that the EE could have gotten cannot be included.
2. Backwages to an illegally dismissed employee,
should not, as a general rule, be diminished or reduced
by the earnings derived by him elsewhere during the
period of his illegal dismissal.
Carlos v. CA 1. Generally, if there is illegal dismissal there should be
reinstatement, backwages, and other benefits which
were lost during the time employee was illegally
dismissed. Here, the SC modified it to separation pay
(since reinstatement was no longer possible due to
strained relationships), backwages (from dismissal up
to FINALITY of judgment), and other benefits.
2. Under the NLRC Rules of Procedure, Sec 10: “Effect
of Petition for Certiorari on Execution. A petition for
certiorari with the CA or the SC shall not stay the
execution of the assailed decision unless a restraining
order is issued by said courts.”
Tomas Claudio 1. The payment of backwages is generally granted on
Memorial College the ground of equity. It is a form of relief that restores
v. CA the income that was lost by reason of the unlawful
dismissal; the grant thereof is intended to restore the
earnings that would have accrued to the dismissed
employee during the period of dismissal until it is
determined that the termination of employment is for a
just cause. It is not private compensation or damages
but is awarded in furtherance and effectuation of the
public objective of the Labor Code.
2. The award of backwages is not conditioned on the
employee’s ability or inability to, in the interim, earn
any income. Hence, backwages will include the time an
EE spends in jail or confinement.
Chronicle An ER found guilty of unfair labor practice in dismissing
Securities v. NLRC his employee may not be ordered so to pay backwages
beyond the date of closure of business where such
closure was due to legitimate business reasons and not
merely an attempt to defeat the order of
reinstatement.
Intercontinental 1. When a judgment involving monetary award is
Broadcasting v. appealed by the ER, the appeal is perfected only upon
Benedicto the posting of a cash or surety bond issued by a
reputable bonding company duly accredited by the
NLRC in an amount equivalent to the monetary award
in the judgment. Nevertheless, such amount of the
bond may be reduced by the NLRC in meritorious
cases, on motion of the appellant. Also, even if filed
beyond the reglementary period, appeals may be
entertained in the interest of justice. In this case, ER
filed a motion for re-computation which was not acted
upon by the NLRC thus validating its non-payment of its
appeal bond; it also had meritorious grounds to
question the bond (the backwages were computed past
the retirement age of the EE).
2. Illegally dismissed employees are entitled to
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 backwages and commissions only up to the time of
compulsory retirement (till they turn 65).
Velasco v. NLRC Since piece-rate workers are paid by the piece, there is
a need to determine the varying degrees of production
and days worked by each worker in order to determine
the proper amount of backwages for an illegally
dismissed piece-rate worker. SC thus remanded this
case for a factual determination of the proper
backwages for the EEs.
PCIB v. Abad An employee dismissed for just cause under Article
282 of the Labor Code may still be awarded separation
pay as a measure of social justice. Such financial
assistance, however, is NOT given when the employee
has been validly dismissed for serious misconduct, or
for cause that reflect on moral character or personal
integrity. In this case, EE was a managerial EE
dismissed on the ground of loss of trust & confidence
because EE accepted an irregular check. SC ruled that
while EE violated the rules and regulations, there was
no indication that his actions were perpetrated for his
self-interest or for an unlawful purpose. In fact, his
actions was actually motivated by his desire to
accommodate a valued client of the bank. Hence, he
may be awarded separation pay as financial
assistance.
Panuncillo v. CAP Unlike the order for reinstatement of a LA, which is self-
Phils. executory, that of the NLRC is not. There is still a need
for the issuance of a writ of execution.
On appeal, however, the appellate tribunal concerned
may enjoin or suspend the reinstatement order in the
exercise of its sound discretion.
In this case, when the NLRC reversed the finding of
valid dismissal of the LA, its order was not immediately
executory; under the Rules, the NLRC decision
becomes final & executory after the lapse of 10
calendar days from receipt thereof by the parties, & in
the meantime, the losing party may further appeal.
Hence, in this case, EE is not entitled to collect any
backwages from the time the NLRC decision became
final and executory up to the time the CA reversed said
decision, since it was ultimately held that the dismissal
was legal.
Garcia v. PAL GR: Even if the order of reinstatement of the LA is
reversed on appeal, it is obligatory on the part of the
employer to reinstate and pay the wages of the
dismissed employee during the period of appeal until
reversal by the higher court. The LA’s order of
reinstatement is immediately executory and the
employer has to either re-admit them to work under
the same terms and conditions prevailing prior to their
dismissal, or to reinstate them in the payroll, and that
failing to exercise the options in the alternative,
employer must pay the employees salaries. This rule on
reinstatement or paying wages applies REGARDLESS
of whether the writ of execution was issued before or
after the reversal of the LA’s decision by appellate
tribunals.
BUT: After the LA’s decision is reversed by a higher
tribunal, the employee may be barred from collecting
the accrued wages, if it is shown that the delay in
enforcing the reinstatement pending appeal was
without fault on the part of the employer.
 The test is two-fold: (1) there must be actual delay
or the fact that the order of reinstatement
pending appeal was not executed prior to its
reversal; and (2) the delay must not be due to the
employer’s unjustified act or omission.
Hence, while reinstatement pending appeal aims to
avert the continuing danger to the survival or even the
life of the dismissed employee and his family, it does
not contemplate the period when the employer-
corporation itself is similarly in a judicially monitored
state of being resuscitated in order to survive. In this
case, since the ER was undergoing corporate
rehabilitation even before the issue of illegal dismissal
was resolved by the LA (in favor of the EE, later
reversed by CA), it was held that EE could not demand
accrued wages.
Islriz Trading v. ER must pay backwages to EE if LA rules there was no
Capada illegal dismissal, even if this is later reversed by the
NLRC. The backwages to be paid should be computed
as from the time the ER receives notice of the LA
decision, up to the time the NLRC Resolution is issued
reversing the LA.
Lansangan v. Art. 223 (which allows for immediate reinstatement of
Amkor Technology EE until reversal by higher tribunal) concerns itself with
Philippines an interim relief, granted to a dismissed or separated
employee while the case for illegal dismissal is pending
appeal. It does not apply where there is no finding of
illegal dismissal. In this case, LA held that the
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 dismissal was legal, but ordered reinstatement out of
compassion; it was ER that appealed. CA then held that
despite this finding, backwages should be paid to the
EEs. SC found CA’s position erroneous. SC held EEs
were not entitled to backwages, as backwages are only
given to those unjustly dismissed.
C. Alcantara & 1. LA’s power to order reinstatement in case of illegal
Sons, Inc. v. CA dismissal applies to dismissals that are by virtue of a
“No Strike-No Lockout” clause in a CBA. In this case,
EEs dismissed for striking due to the CBA clause are
entitled to backwages from the time the LA ruled in
their favor until the reversal of this by a higher tribunal.
2. Separation pay in the form of financial assistance
can be awarded to EEs validly dismissed pursuant to a
“No Strike-No Lockout” clause in a CBA, even if they are
not entitled to separation pay as a general rule, if they
have a good record with the ER (but still discretionary,
not as a matter of right). At the MR for this case, the
grant of separation pay was reversed because of the
EEs’ doing of prohibited acts during the strike.
Robinsons Galleria Art. 279 provides that an employee who is unjustly
v. Ranchez dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges, to
full backwages, inclusive of allowances, and to other
benefits or their monetary equivalent computed from
the time his compensation as withheld from him up to
the time of his actual reinstatement. However, due to
the strained relations of the parties, the payment of
separation pay has been considered acceptable
alternative to reinstatement, when the latter is no
longer desirable or viable.
A dismissed employee is entitled to: 1) reinstatement,
if viable, or separation pay, if reinstatement is no
longer viable; and 2) backwages. These 2 reliefs are
separate and distinct from each other and are awarded
conjunctively.
In this case, EE was a probationary employee at the
time she was constructively dismissed by the ER; she is
thus entitled to separation pay and backwages.
Reinstatement of EE is no longer viable considering the
circumstances (she was accused of theft & sent
immediately to jail). The backwages that should be
awarded to EE shall be reckoned from the time of her
constructive dismissal until the date of the termination
of her employment.
Pfizer v. Velasco 1. Reinstatement pending appeal necessitates that it
must be immediately self-executory without need for a
writ of execution during the pendency of the appeal, if
the law is to serve its noble purpose, and any attempt
on the part of the employer to evade or delay its
execution should not be allowed. An order for
reinstatement entitles an employee to receive his
accrued backwages from the moment the
reinstatement order was issued up to the date when
the same was reversed by a higher court without fear
of refunding what he had received.
2. When a person is illegally dismissed, he is entitled to
reinstatement without loss of seniority rights and other
privileges and to his full backwages. In the event,
however, that reinstatement is no longer feasible, or if
the employee decides not be reinstated, the employer
shall pay him separation pay in lieu of reinstatement.
Luna v. Allado Only ER appealed the decision of the LA, which held the
Construction dismissal was valid, but awarded separation pay as a
form of financial assistance. NLRC reversed the whole
ruling, & found there was illegal dismissal. SC held
NLRC’s action was invalid. NLRC may not rely on Article
218(c) of the Labor Code as basis for its act of
reviewing an entire case above and beyond the sole
legal question raised. SC held that the NLRC cannot,
under the pretext of correcting serious errors of the
Labor Arbiter in the interest of justice, expand its power
of review beyond the issues elevated by an appellant.
The NLRC Rules of Procedure limit appeal matters only
to those issues raised. While there was jurisprudence
which allowed the NLRC to rule on issues not raised,
these were factually dissimilar to the case at bar. Here,
on the NLRC level, EE did not appeal, thus NLRC should
have ruled only on the issue raised by ER (Financial
Assistance). However, in the spirit of social justice, the
SC held that financial assistance may be granted,
considering EE served ER for a long time without any
serious infractions.
Villaruel v. Yeo Han An employee who voluntarily resigns from employment,
Guan even if due to disease, is not entitled to separation pay,
except when it is stipulated in the employment contract
or CBA, or it is sanctioned by established employer
practice or policy. However, EE was still awarded
separation pay for his many years of good service (as
financial assistance).
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Nacar V. Gallery A recomputation (or an original computation, if no
Frames previous computation has been made) is a part of the
law – specifically, Art. 279 of the Labor Code and the
established jurisprudence on this provision – that is
read into the decision. By the nature of an illegal
dismissal case, the reliefs continue to add up until full
satisfaction, as expressed under Art. 279 of the Labor
Code. The recomputation of the consequences of illegal
dismissal upon execution of the decision does not
constitute an alteration or amendment of the final
decision being implemented. The illegal dismissal
ruling stands; only the computation of monetary
consequences of this dismissal is affected, and this is
not a violation of the principle of immutability of final
judgments. Hence, in this case, computation will be
from the time EE was illegally dismissed to the
promulgation of a decision by the SC, which made the
ruling final & executory, & not just until the
promulgation of the LA’s decision.
Integrated There are some instances where, although the guilt of
Microelectronics v. the employee was substantially established,
Pionilla nevertheless, the order of reinstating an EE without
backwages is proper instead of dismissal which may be
too drastic. Denial of backwages would sufficiently
penalize him for his infractions. The good faith of the
employer, when clear under the circumstances, may
preclude or diminish recovery of backwages. This was
SC’s ruling in this case, where the EE lent his extra
company ID to a relative so the latter could get a free
bus ride.
United Tourist Even fixed-term EEs are entitled to the twin-notice rule,
Promotion v. if after the expiration of their contract, they were
Kemplin allowed to continue working.
University of 1. In computing awards for illegal dismissal cases,
Pangasinan v. legal interest is imposable upon the total unpaid
Fernandez judgment amount, from the time the decision (on the
merits in the original case) became final. The rate is at
6% p.a., from the date of entry of judgment up to date
of payment, beginning July 1, 2013 (prior to this date,
the rate was 12% p.a.).
If a part of the decision occurred prior to July 1, 2013,
as in this case, the total adjudged award would get an
interest of 12% p.a. for the period ending June 30,
2013. After that date, the interest would then be
placed at 6% p.a.
2. In computing the total award, inclusion of 13th
month pay is proper even if not mentioned in the
dispositive portion, since it is the law that grants 13th
month pay.
4. ER also contended that the EEs were already at the
optional retirement age of 60 according to the
company retirement plan; hence, the computation
should stop on the day they turned 60. SC held that
since the date is optional, & no proof was submitted
that EEs of the ER really retire at 60, then the amount
of claims cannot be stopped on the date they turned
60.
Wenphil 1. LA held that the EEs in this case were illegally
Corporation v. dismissed. Pending appeal to the NLRC, the ER & EEs
Abing entered into a compromise agreement providing for
payroll reinstatement with a proviso that ER would stop
paying their salaries if the LA’s decision would be
“modified, amended or reversed.” NLRC did not
reverse; instead, it held that instead of reinstatement,
ER would pay separation pay. SC held that the NLRC’s
ruling could not be counted as a reversal as
contemplated by the compromise agreement; hence,
EEs were still entitled to be paid their salaries up until
CA completely reversed & held the dismissal was legal.
2. It was grievous error amounting to grave abuse of
discretion on the part of the NLRC to have considered
an award of separation pay as equivalent to the
aggregate relief constituted by reinstatement plus
payment of backwages under Article 280 of the Labor
Code. The grant of separation pay was a proper
substitute only for reinstatement; it could not be an
adequate substitute both for reinstatement and for
backwages. In effect, the NLRC in its assailed decision
failed to give to petitioner the full relief to which she
was entitled under the statute.
3. Had ER really wanted to put a stop to the running of
the period for the payment of the respondents’
backwages, then it should have immediately complied
with the NLRC’s order to award the employees their
separation pay in lieu of reinstatement. This action
would have immediately severed the employer-
employee relationship. However, the records are bereft
of any evidence that ER actually paid the respondents’
separation pay. Thus, the employer-employee
relationship between ER and the respondents never
62
 ceased and the employment status remained pending
and uncertain until the CA actually rendered its
decision that the respondents had not been illegally
dismissed. In the context of the parties’ agreement, it
was only at this point that the payment of backwages
should have stopped.
L. APPEAL BOND
McBurnie v. The filing of a motion to reduce bond, coupled with
Ganzon, EGI- compliance with the two conditions: (1) a meritorious
Managers, Inc. ground, and (2) posting of a bond in a reasonable
amount, shall suffice to suspend the running of the
period to perfect an appeal from the labor arbiter
decision to the NLRC. To require the full amount of the
bond within the 10-day reglementary period would only
render nugatory the legal provisions which allow an
appellant to seek a reduction of the bond.
The bond requirement in appeals involving monetary
awards has been and may be relaxed in meritorious
cases, including instances in which (1) there was
substantial compliance with the Rules, (2) surrounding
facts and circumstances constitute meritorious
grounds to reduce the bond, (3) a liberal interpretation
of the requirement of an appeal bond would serve the
desired objective of resolving controversies on the
merits, or (4) the appellants, at the very least, exhibited
their willingness and/or good faith by posting a partial
bond during the reglementary period. All motions to
reduce bond that are to be filed with the NLRC shall be
accompanied by the posting of a cash or surety bond
equivalent to 10% of the monetary award that is
subject of the appeal, which shall provisionally be
deemed the reasonable amount of the bond in the
meantime that an appellant’s motion is pending
resolution by the NLRC. In conformity with the NLRC
Rules, the monetary award, for the purpose of
computing the necessary appeal bond, shall exclude
damages and attorney fees. Only after the posting of a
bond in the required percentage shall the period to
perfect an appeal under the NLRC Rules be deemed
suspended.
In this case, though the ER gave only a P100K bond for
a P6M award, the SC considered the period to perfect
an appeal suspended.
Sara Lee v. 1. The requisites for perfection of appeal as embodied
Macatlang in Art. 223, are: (1) payment of appeal fees; (2) filing of
the memorandum of appeal; and (3) payment of the
required cash or surety bond. Based on a long line of
cases, the NLRC may dispense of the posting of the
bond when the judgment award is: (1) not stated (e.g.,
there is no monetary award granted) or (2) based on a
patently erroneous computation. Sans these two (2)
instances, the appellant is generally required to post a
bond to perfect his appeal.
2. The NLRC Interim Rules on Appeals specifically
provides that damages shall be excluded in the
determination of the appeal bond. As a matter of fact,
no bond is required if an appeal raises no question
other than as regards the award of moral and/or
exemplary damages.
3. “Meritorious grounds” as a requisite for the reduction
of the bond pertain to an appellant’s lack of financial
capability to pay the full amount of the bond, the
merits of the main appeal such as when there is a valid
claim that there was no illegal dismissal to justify the
award, the absence of an EER, prescription of claims,
and other similarly valid issues that are raised in the
appeal.
M. ABANDONMENT
Abandonment
For a valid finding of abandonment, these two factors should be present:
(1) the failure to report for work or absence without valid or justifiable reason;
&
(2) a clear intention to sever EER.
N. TERMINATION BY EE
Two types of termination:
(1) Resignation without cause – send notice 30 days before the date you
intend to stop working; if it’s the case of kasambahay, the ER can
withhold the remaining salary of the maid
(2) Resignation with just cause
CLASS DISCUSSION
Q: Can ER waive the 30-day notice, or can the EE insist on working for the 30
days?
A: The ER can shorten the period up to 0 if ER wants.
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Q: Can EE, instead of rendering the 30-day notice, would the EE be allowed to
just pay the damages? Can ER compel him to stay or else ER will threaten that
the EE is said to have abandoned his job?
A: No real answer to this; it is subject to argument. But for sure, you cannot
force the EE to work because that would be involuntary servitude.
FLJ: Note that the count for the 30-day notice is at the time of giving of notice,
not at the time the ER accepts.
Q: Why is acceptance important?
A: You can only withdraw your resignation prior to ER’s acceptance. BUT if ER
has already accepted, then you cannot withdraw your resignation without the
consent of the ER.
FLJ: Non-complete clause: limited by time and place; 3 years for time is
possibly the maximum, but the consideration is so high that the EE can actually
live for the next 3 years. It also cannot be a global non-compete; only in the
Philippines, for example, or Southeast Asia.
O. PRESCRIPTIVE PERIODS
He asked about all the periods.
Q. RETIREMENT
FLJ: If the retirement policy of the company precludes ER from receiving both
separation pay and retirement pay, that is considered a valid stipulation. The
general rule, however, will remain that you can both separation pay and
retirement pay. BUT the policy must say, “You can only get one, WHICHEVER IS
HIGHER.”
FLJ: If you don’t want to follow the law, your plan must be an improvement of
what the law provides. So for FLJ, you cannot make the period more than 5
years to qualify for retirement pay. It should be 5 unless you can show another
number would be more beneficial.
POST-MIDTERMS
O. JURISDICTION AND REMEDIES
1. Intra-Union and Inter-Union Disputes
What’s covered by Rule XI, DO 40-I-3?
There are, in essence, two categories:
A. Intra- or inter-union disputes, which –
1. Involve the right to SO, Union Membership, & Collective Bargaining (SO…
UM… CB?)
2. The dispute is –
a) Between & among LLOs
b) Between & among members of a union or workers association
B. Disputes that are not under Art. 217 (jurisdiction of LA) that involve –
1. A conflict between –
a) A labor union & the ER
b) A labor union & a group that is not a LO
c) A labor union & a person who is not a member of the union
2. Cancellation of union registration & workers associations OTHER THAN
its members, or a group that is not a LO
3. Petition for interpleader involving labor relations
Who May File
Those under (A) are filed by LLOs or members; those under (B) are filed by any
party-in-interest.
BUT: If the issue involves the entire membership of a union, at least 30% of the
members of said union must support the petition
Where to File
A. General Rule
Regional Office which issued its certificate of registration – if independent
union, chartered local, workers association
BLR – if federation, national union, industry union
B. [SPECIAL RULE] IF Petition for (1) Cancellation of Registration of Union or (2)
Deregistration of CBA
Regional Director – if independent union, chartered local, workers association
 NOTE: The RD may appoint a Hearing Officer from the Labor Relations
Division to hear the complaint in these two cases
BLR – if federation, national union, industry union
C. OTHER intra- or inter-related labor relations disputes
Med-Arbiter in the Regional Office – if independent union, chartered local,
workers association
BLR – if federation, national union, industry union
What are effects of pendency of inter- or intra-union disputes?
The rights & status of all parties prior to the dispute remain
The filing of the dispute is not a prejudicial question to any other petition, like
petition for cancellation of registration
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T/F. All inter- & intra-union disputes involve those between union members and
unions.
T/F. One member of the union may file a case under these rules.
What issues are an example of affecting the entire membership?
Cancellation of union registration
RD -> BLR -> R65 with CA
BLR -> SOLE -> R65 with CA
Q: If you were one of the members of a legitimate union which is incidentally
an EBR, and you want to impeach an officer, but the rest of the officers are not
acting on your complaint, do you have a COA to file a case under these rules?
A: Though even a member alone can file a complaint, it is submitted that this is
one of the instances which affects the entire membership of the LO that must
be supported by at least 30% of its members.
Q: When do you not need the 30%?
A: When for example, I am the one who is expelled and I want to question my
removal from the union.
Q: How about if you try to expel an officer?
A: The 30% depends on the circumstances – if it’s just the kalokohan of that
officer and does not really do much about union membership, then the 30%
will not be needed.
What is the conduct of proceedings for BLR?
1. File a verified petition under oath with the Regional Office where the
certificate of registration of the union is found
2. Raffling to the appropriate Med-Arbiter
3. Respondent files answer
4. Notice of preliminary conference
5. There may or may not be hearings if the Med-Arbiter decides
6. Med-Arbiter issues the decision
7. MR (Sec. 19) -> needed for R65
8. R65 (CA)
9. R45 (SC)
Intra-union or inter-union dispute – YOU MUST KNOW THE ENUMERATION;
otherwise, you are lost.
GR: BLR has appellate jurisdiction over Med-Arbiter
EXC: If the issue is certification election, you go to the SOLE
DLSU v. DLSU Disputes about who should be elected as officers are an intra-
Employees union matter; the ER cannot use this as an excuse to refuse to
Association recognize & bargain with the SEBA. It is also wrong for the ER
to place union funds in escrow following the prompting of a
rival faction of union leadership in the SEBA.
Q: If you are the ER, who do you deal with when there is an
inter- or intra-union dispute?
A: SEBA (status quo)
2. Labor Arbiter
Coverage
1. ULP
2. Termination disputes
3. Terms & conditions of employment, if accompanied by claims for
reinstatement
4. Claims for damages (actual, moral, etc.) arising from EER
5. Violation of Art. 279 (prohibitions in strikes or lockouts), including issue on
legality of strikes & lockouts
 Injunctions – NLRC division, not LA
 Concerns of third parties in relation to strikes – regular courts
 National interest cases – SOLE or President will assume jurisdiction or
refer the case to NLRC
6. Other money claims workers or household help (kasambahay) may have
against ER (e.g., nonpayment or underpayment of wages, overtime
compensation, separation pay and other benefits provided by law or
appropriate agreement)
 EXC: Claims for EEs’ compensation, social security, medi-care, &
maternity benefits
 EXC: If the money claim arises from the implementation of the CBA,
that should be under the VA
 BUT: LA only has jurisdiction where the amount exceeds P5,000,
regardless of whether accompanied with claim for reinstatement
7. Money claims of OFWs arising out of EER or by virtue of any law or contract,
including claims for damages, & termination of OFWs
 Q: Must there be a money claim before the LA has jurisdiction over an
OFW case?
 A: Yes.
8. Wage distortion disputes in UNORGANIZED establishments not voluntarily
settled by the parties through NCMB
 Note that the parties must go through the NCMB first before referring
the dispute to the appropriate branch of the NLRC
9. Enforcement of compromise agreement when there is non-compliance by
parties
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10. When there is prima facie evidence that the compromise agreement or
settlement was obtained through fraud, misrepresentation, or coercion
11. Other cases provided by law
 LA can hold party in direct or indirect contempt – its decision to hold a
party in direct contempt is appealable to the NLRC & execution will be
suspended until NLRC makes a decision
*Note: If the parties explicitly agree in the CBA, any of the above can be under
the jurisdiction of the VA rather than directly to LA
Double Indemnity Rule
LA has jurisdiction over disputes over increases resulting from wage orders. In
these cases, ERs that do not pay the increases are liable to pay the equivalent
of double the unpaid benefits owing to the EE by virtue of the wage order that
increases or adjusts the wage rate. (pp. 463-464, Book I of Azucena states that
legislated wage increases are in the Regional Director’s jurisdiction. He also
says both have jurisdiction.)
Q: Can the ER file a case in the LA?
A: Yes. For example, in illegal strike cases.
San Miguel To fall under the jurisdiction of the NLRC & the LA, EER must
Corp. v. NLRC be involved. If the case actually requires the application of the
general civil law, & not labor law, the case should be filed with
regular courts. In this case, the ER hosted a contest among
EEs to see who could come up with a new innovation to be
used in the products. The EE filed suit before the RAB alleging
that the ER really did use his recipe, though the ER denied it.
SC held that this case would involve the general civil law, not
labor law.
Sanyo Phil. 1. LA has jurisdiction if EEs who are non-union members are
Workers fired pursuant to a CBA union security clause (hence, at the
Union – behest or both union & the ER). This is because, for the
PSSLU v. grievance machinery requirement to set in, the dispute must
Canizares be between the union & the ER – in this case, the union & ER
were united against the fired EEs.
2. A claim for damages under Arts. 19, 20, 21 of the Civil Code
would not suffice to keep the case within the jurisdictional
boundaries of regular courts. That claim for damages is
interwoven with a labor dispute existing between the parties
and would have to be ventilated before the administrative
machinery established for the expeditious settlement of those
disputes. To allow the action filed below to prosper would bring
about "split jurisdiction" which is obnoxious to the orderly
administration of justice.
3. A "labor dispute" as defined in Article 212 (1) of the Labor
Code includes "any controversy or matter concerning terms
and conditions of employment or the association or
representation of persons in negotiating, fixing, maintaining,
changing, or arranging the terms and conditions of
employment, regardless of whether the disputants stand in the
proximate relation of employer and employee."
FLJ: In this case, the grievance machinery is not an option
because the grievance machinery is invoked in disputes
between the union and the ER. In fact here, the union & the ER
were one in saying that they wanted the EE fired. Hence, the
LA had jurisdiction.
FLJ: Note the difference here – it’s about WON there is EER as
a preliminary concern.
Contra: ER has a money claim against the EE who continues to work
Molave Motor for the ER. ER filed the case before the LA. EE filed an answer
Sales, Inc. v. with a ground to dismiss – that labor courts did not have
Judge Laron jurisdiction since this did not involve a labor dispute. SC held
that regular courts had jurisdiction. The cause of action arose
from a debt under the Civil Code (loan). Even if he was still an
employee, he can be held liable for such amounts.
In this case, the ER sued EE for money loaned to him for the
cost of repair jobs made on his personal cars and for the
purchase price of vehicles and parts sold to him. These do not
have any relation to the Labor Code.
Before the enactment of BP 227 (June 1, 1982): the Labor
Code stated that “the Labor Code had jurisdiction over all other
cases arising from EER, unless expressly excluded by this
Code.” But jurisprudence has clarified that this rule does not
apply if the controversy does not involve the Labor Code.
Q: What if the loan is part of the EE’s benefits? Would it now
be a labor dispute?
A: Yes.
Medina v. The Labor Code does not have application in a case where the
Castro- EEs sued the President of the Corporation for oral defamation
Bartolome under the Civil Code (as a tort). The President had cursed at
them while working. SC held that regular courts had
jurisdiction over the issue. It is obvious from the complaint that
the EEs have not alleged ULP. Theirs is a simple action for
damages for tortious acts allegedly committed by the ER. Such
being the case, the governing statute is the Civil Code and not
the Labor Code. It results that the orders under review are
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 based on a wrong premise.
Q: Isn’t this really a labor dispute since technically the EEs
were fired?
A: It really depends on the allegation of the defendant. In the
case, the main contention of the EEs was the harsh words
used against them.
3. NLRC
FLJ: Unlike LA, there is only one NLRC.
Q: Does NLRC decide labor cases en banc?
A: No.
Q: How many divisions of en banc are there?
A: 8.
Coverage
1. Exclusive appellate jurisdiction over cases from LA
 Includes appellate jurisdiction over direct contempt cases from LA; in
these cases, implementation of LA’s decision will be suspended
pending appeal
2. Power to issue injunctions in labor cases
 Reception of evidence may be delegated by the NLRC to the LA
 There must be a labor dispute already – e.g., a case filed before the
LA
3. Direct or indirect contempt
 Judgment of NLRC in direct contempt cases is immediately executory
& unappealable
4. Exclusive appellate jurisdiction over cases decided by DOLE Regional
Director under Art. 129 (claims for recovery of wages and benefits of EEs and
household helpers, not accompanied by reinstatement, where the claim does
not exceed P5,000)
 Appealable to NLRC within 5 days from receipt of copy of decision
 NLRC must resolve appeal within 10 days from submission of the last
pleading required under its rules
*Note: If the decision is issued by a VA, BLR, or SOLE, then jurisdiction for
further remedies is with the CA, not the NLRC.
Prohibited Pleadings
Include MTD, except –
 Lack of jurisdiction over SM
 Improper venue
 Prescription
 Res judicata
 Forum shopping
4. Procedure in LA & NLRC
Pre-LA
1. EE will file a complaint (he may fill this up on the spot)
2. There will be a raffle
3. Only then will it be with a specific LA
List here (who can appear) – NLRC ROP 2011 (Rule III, Sec. 6)
LA
1. LA will hold mandatory conciliation & mediation conference (MCMC)
2. LA will try to have parties enter into a compromise agreement; that
agreement is valid if –
a) Reduced into writing & signed by the parties & their counsel or the
parties’ authorized representative, if any
 If counsel is signing the compromise agreement on behalf of
his client, he has to have a SPA authorizing him to enter into
a compromise agreement
b) Approved by LA, after he explains to the parties the terms, conditions,
& consequences, & after LA is satisfied that they understand the
agreement, that it was voluntarily entered into, & not contrary to law,
morals, & public policy
3. MCMC will be terminated within 30 calendar days from the date of the first
conference
4. When MCMC terminates, parties will submit positions papers (submission
will be simultaneous; this NEEDS to be VERIFIED); there can be Replies. These
Replies need not be verified. Then there can be a rejoinder, then a
memorandum. LA shall motu propio determine WON there is a need for a
hearing or clarificatory conference
5. LA will render decision within 30 days, without extension, after submission of
the case by the parties for decision, even in the absence of stenographic notes
 EXC: OFW cases: 90 calendar days
Grounds for LA to Inhibit
1. Relationship within the 4th civil degree of AC with adverse party or counsel
2. Partiality
3. Other justifiable grounds
Grounds to Appeal to NLRC (within 10 calendar days from receipt of decision):
1. Prima facie evidence of abuse of discretion on LA’s part
2. Decision was secured through fraud or coercion, including graft & corruption
3. Purely questions of law
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4. Serious errors in findings of fact are raised which cause grave or irreparable
damage or injury to the appellant
*If the appeal is made by appellant-ER, ER must post a cash or surety bond
issued by a reputable bonding company duly accredited by the NLRC in an
amount equivalent to the monetary award in the judgment appealed from
**Reinstatement aspect is immediately executory – even if ER posts bond
***If decision is from Regional Director in a money claim case not exceeding
P5,000, period to appeal to NLRC is 5 days from receipt of decision
NLRC has 20 days to decide case
Decision of NLRC becomes final & executory after 10 days
Soliman An appeal to the NLRC is perfected once an appellant (1) files
Security the memorandum of appeal, (2) pays the required appeal fee
Services v. and, (3) where an employer appeals and a monetary award is
CA involved, the latter posts an appeal bond or submits a surety
bond issued by a reputable bonding company. In line with the
objective of labor laws to have controversies promptly resolved
on their merits, the requirements for perfecting appeals are
given liberal interpretation and construction. In this case, the
company that issued the bond failed to give, within the 10-day
appeal period, a statement under oath to the effect that the
surety bond it had posted was genuine and confirmed it to be in
effect until the final termination of the case. SC held that this
was not enough to consider the appeal filed out of time where
the other requisites were met.
Q: If the decision says, “1M as separation pay,” “1M as
backwages,” “2M in damages,” what should the bond be?
A: 2M, since it should be the award, minus damages.
Navarro v. While ER filed their memorandum of appeal on time, they
NLRC posted surety bond only on April 30, 1992, which is beyond the
10-day reglementary period, a procedural lapse admitted by
ER. ER’s failure to post the required appeal bond within the
prescribed period is inexcusable. Worse, the appeal bond was
bogus having been issued by an officer no longer connected for
a long time with the bonding company. They cannot avoid
responsibility by disavowing any knowledge of its fictitiousness
for they were required to secure bond only from reputable
companies. Hence, the appeal of the ER was not filed on time.
Mindanao To comply with the cash bond requirement of appeals, ER gave
Times v. passbook which shows money deposited in an account. This is
Confesor not the cash or surety bond contemplated by law.
Del Rosario v. Revocation of permit of a surety in cases of an appeal bond is
Phil. prospective in character and should not prejudice a party who
Journalists, relied on such bond when issued by a previously authorized
Inc. surety.
McBurnie v. The filing of a motion to reduce bond, coupled with compliance
Ganzon, EGI- with the two conditions: (1) a meritorious ground, and (2)
Managers, posting of a bond in a reasonable amount, shall suffice to
Inc. suspend the running of the period to perfect an appeal from the
labor arbiter decision to the NLRC. To require the full amount of
the bond within the 10-day reglementary period would only
render nugatory the legal provisions which allow an appellant
to seek a reduction of the bond.
The bond requirement in appeals involving monetary awards
has been and may be relaxed in meritorious cases, including
instances in which (1) there was substantial compliance with
the Rules, (2) surrounding facts and circumstances constitute
meritorious grounds to reduce the bond, (3) a liberal
interpretation of the requirement of an appeal bond would
serve the desired objective of resolving controversies on the
merits, or (4) the appellants, at the very least, exhibited their
willingness and/or good faith by posting a partial bond during
the reglementary period. All motions to reduce bond that are to
be filed with the NLRC shall be accompanied by the posting of
a cash or surety bond equivalent to 10% of the monetary award
that is subject of the appeal, which shall provisionally be
deemed the reasonable amount of the bond in the meantime
that an appellant’s motion is pending resolution by the NLRC. In
conformity with the NLRC Rules, the monetary award, for the
purpose of computing the necessary appeal bond, shall exclude
damages and attorney fees. Only after the posting of a bond in
the required percentage shall the period to perfect an appeal
under the NLRC Rules be deemed suspended.
In this case, though the ER gave only a P100K bond for a P6M
award, the SC considered the period to perfect an appeal
suspended.
Sara Lee v. 1. The requisites for perfection of appeal as embodied in Art.
Macatlang 223, are: (1) payment of appeal fees; (2) filing of the
memorandum of appeal; and (3) payment of the required cash
or surety bond. Based on a long line of cases, the NLRC may
dispense with the posting of the bond when the judgment
award is:
(1) not stated (e.g., there is no monetary award granted) or
(2) based on a patently erroneous computation.
Sans these 2 instances, the appellant is generally required to
post a bond to perfect his appeal.
2. The NLRC Interim Rules on Appeals specifically provides that
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 damages shall be excluded in the determination of the appeal
bond. As a matter of fact, no bond is required if an appeal
raises no question other than as regards the award of moral
and/or exemplary damages.
3. “Meritorious grounds” as a requisite for the reduction of the
bond pertain to an appellant’s lack of financial capability to pay
the full amount of the bond, the merits of the main appeal such
as when there is a valid claim that there was no illegal
dismissal to justify the award, the absence of an EER,
prescription of claims, and other similarly valid issues that are
raised in the appeal.
Q: If you lose the NLRC, where do you go?
A: R65 with CA.
Q: Is there MR in the NLRC?
A: Yes, it’s 10 days.
Q: Where do you appeal decisions of the DOLE Secretary?
A: Rule 65, CA
PHIMCO 1. A match factory, though of value, can scarcely be
Industries v. considered as an industry “indispensable to the national
DOLE interest” as it cannot be in the same category as “generation
Secretary or distribution of energy, or those undertaken by banks,
hospitals, and export-oriented industries.” ER did not even
make any effort to touch on the indispensability of the match
factory to the national interest.
2. The Secretary’s assumption of jurisdiction grounded on the
alleged “obtaining circumstances” and not on a determination
that the industry involved in the labor dispute is one
indispensable to the “national interest,” the standard set by
the legislature, constitutes grave abuse of discretion
amounting to lack of or excess of jurisdiction.

5. Secretary of Labor
Art. 128 (Visitorial and enforcement powers)
1. Jurisdiction over inspections & investigations (can also be exercised by the
RD)
2. Jurisdiction, alongside his duly authorized representative, to issue
compliance orders to give labor standards effect, so long as the EER still exists
& writs of execution for the enforcement of these orders
 EXC: If ER contests the findings of the labor employment & enforcement
officer & raises issues supported by documentary proofs which were not
considered in the course of inspection (then the case will be with LA)
 NOTE: This power is often exercised through RD (see RD cases)
 FLJ: There is no ceiling for the amount in this case.
3. Jurisdiction over work stoppage orders when non-compliance with the law or
IRRs poses grave & imminent danger to health & safety or workers in the
workplace
 Within 24 hours: Hearing to decide if suspension order should be lifted
 If violation is ER’s fault: ER will pay wages during stoppage period
Automatic assumption of jurisdiction – SOLE
 Q: Can SOLE say, "I will grant to other persons (like Undersecretary of
DOLE) power to do this (assume jurisdiction over issues of national
interest)”? In this situation, he’s well, he’s in the Philippines, etc.
NFL
 A: [Question is parked for Finals]
Laguesma
 Q: What if SOLE is outside the Philippines, is unwell, or there’s a
reason why he can’t do it.
 A: Then the Undersecretary can definitely exercise the power to
assume jurisdiction over cases of national interest.
Q: What if SOLE says, “Ordinarily, this would not be of national
interest, but because of the circumstances, this is now a
national interest case, so I’m assuming jurisdiction.” Is this
allowed?
A: Yes, as long as SOLE did not gravely abuse its discretion.
FLJ: Note there is a list of industries that are considered of
national interest, but this list is NOT exclusive.
Q: If SOLE wrongly assumes jurisdiction, what’s the remedy?
A: Rule 65 to SC
Q: Can SOLE only assume jurisdiction if a petition is filed?
A: No, he can motu propio assume jurisdiction.
Q: What if it is very clear that the dispute is clearly one of
national interest, but SOLE refuses to assume? What is the
remedy?
A: In FLJ’s opinion, this should be a petition for mandamus
under Rule 65 to the CA, but only to compel SOLE to issue an
official statement that the dispute is or is not dispensible to
national interest.
v. In this case, the SOLE ruled over the issue of WON a union’s
registration requirements for its petition for registration as a
union were validly complied with. The union was arguing that
the SOLE incorrectly assumed jurisdiction over the case. SC
held that the remedy for this is to file a Rule 65 petition with
the CA.

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6. Regional Director
Jurisdiction
1. Art. 128 (a) – Inspection powers
2. Art. 128 (b) – Compliance orders for labor standards, where EER still exists
3. Art. 129 – Money claims with an amount below P5,000 (FLJ: Even if no EER
exists anymore)
4. Petition for certification election [in syllabus; doublecheck]
5. Petition for cancellation of union’s certificate of registration
 Appeal: BLR; after this, the decision of the BLR should be appealed to
the CA (Rule 65), not to the SOLE
Maternity A Regional Director exercises both visitorial and enforcement
Children's power over labor standards cases, and is therefore empowered
Hospital v. to adjudicate money claims, provided there still exists an EER,
Secretary of and the findings of the regional office are not contested by the
Labor employer concerned. a complaining employee who was denied
his rights and benefits due him under labor standards law
need not litigate. The Regional Director, by virtue of his
enforcement power, assured "expeditious delivery to him of his
rights and benefits free of charge", provided of course, he was
still in the employ of the firm.
Given this, RD has jurisdiction over complaints filed by EEs
against its ER, a hospital, for underpayment of wages. It was
also proper for the RD to award even those EEs who did not
sign the complaint. However, it was wrong for the RD to award
also EEs who were no longer EEs of the ER at the time the
complaint was filed. These latter EEs should just file their
complaint with the LA.
Q: Can RD just knock on your door and say we will conduct
inspection now, even if there is no complaint?
A: Yes, this is within the powers of RD.
Q: Does RD have jurisdiction over wage distortion disputes?
A: For FLJ, only if RD chances upon wage distortion during
inspections or if, upon reading a complaint, RD conducts an
inspection and discovers wage distortion. But I do not think
that RD would have jurisdiction over a petition filed by laborers
as to wage distortion since this is really under the jurisdiction
of LA.
Odin Security At first, the EEs in this case filed a complaint with the RD for
Agency v. De violation of labor standards. Later, the same EEs were
la Serna constructively dismissed. They thus prayed for backwages for
constructive dismissal against the ER, still before the RD. SC
held that this is valid, even though there is that rule that the
RD only has jurisdiction over EEs who are still employed by the
ER. Since jurisdiction already vested with the EEs’ filing of the
complaint when they were still employed by the ER, that
jurisdiction continued until the entire controversy was decided.
Q: What if in this case, ER said, “These are not EEs.” Would this
remove jurisdiction for the RD?
A: No, this is the Bombo Radyo case. RD can determine
existence of EER for the purposes of exercising its jurisdiction.
Q: Where RD’s decision is wrong, where do you go?
A: NLRC.
SSK Parts Co. Under the exception clause in Art. 128 (b) of the Labor Code,
v. Camas the Regional Director may not be divested of his jurisdiction
over these claims, unless 3 elements concur, namely:
(a) That the ER contests the findings of the labor regulation
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.
Q: Should there always be an inspection before a compliance
order is issued for the RD to have jurisdiction?
A:
7. Bureau of Labor Relations
BLR Director
 Registration of national unions, trade unions
 Multi-employer CBAs, etc.
Med-Arbiter
BLR (original) -> DOLE Secretary -> CA
BLR (appellate) -> CA
1. From the Med-Arbiter
Pepsi Cola Ex. of case in jurisdiction of the Med-Arbiter of the BLR: A case
Sales & where an ex-union member (an ex-EE of an ER) was dismissed
Advertising and is now seeking benefits accrued from the Mutual Aid Plan
Union v. SOLE of the union. The union plan was 1 peso per year of service
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 multiplied by the number of members in the union.
Abbott The Implementing Rules provide for two situations in
Laboratories accordance with the jurisdiction of the BLR:
v. Abbott (1) The first situation involves a petition for cancellation of
Employees union registration which is filed with a Regional Office. A
Union decision of a Regional Office cancelling a union's certificate of
registration may be appealed to the BLR whose decision on
the matter shall be final and not appealable.
(2) The second situation involves a petition for cancellation of
certificate of union registration which is filed directly with
the BLR. A decision of the BLR cancelling a union's certificate
of registration may be appealed to the Secretary of
Labor whose decision on the matter shall be final and not
appealable.
Hence, if the petition for cancellation is filed with the Regional
Office of the BLR, & there is an appeal to the BLR, the BLR’s
decision on the matter will be final and unappealable. It would
be wrong to appeal the matter further to SOLE.
8. Voluntary Arbitrator
Jurisdiction
1. Organized and there is wage distortion concern
 If unorganized, go to LA
2. Issues regarding company personnel policies in relation to productivity
incentives
3.
Q: T/F. All labor disputes may be under VA.
A: T. Art. 275.
Appeal
Ordinary mode of appeal from VA – Rule 43 to CA
Ludo & Luym The VA has the authority to investigate and to make an award
Co. v. binding on all parties. The VA can assume that it has the
Saordino necessary power to make a final settlement since it is the final
resort for adjudication. Hence, if the issue submitted before
the VA is when the EEs were regularized, VA also has the
jurisdiction to grant an award of benefits in favor of the EEs, &
to declare that the ER was actually a LOC.
GR: VA can only rule on what is submitted to arbitration
(among the agreements the parties make is the scope of the
dispute).
EXC: When it comes to intertwined or inter-related issues, then
the VA can also decide on the issue (i.e., there are peripheral
issues that are also intertwined with the main issue).
FLJ: Hence, the doctrines in Ludo & in Goya are actually
examples of the exception rather than the general rule.
Vivero v. CA The CBA must state in unequivocal language to submit
termination disputes and ULP to voluntary arbitration. It is not
enough to merely say in the CBA that parties agree that “all
disputes” should first be submitted to the VA. Without express
stipulation, jurisdiction of VA is limited to disputes about
contract interpretation, contract implementation, or
interpretation or enforcement of company personnel policies.
J. Tabigue v. The right of any EE or group of EEs to, at any time, present
INTERCO grievances to the ER does not imply the right to submit the
same to voluntary arbitration. In this case, the CBA provided
that it is the Union & the ER which can submit matters to the
VA, not the individual EEs. Hence, an individual EE with
grievances cannot submit the matter to the VA because the
CBA provides that only the Union & the ER may submit
disputes to the VA.
FLJ: If it is a quasi-judicial agency, the CA has jurisdiction to
review decisions.
Goya Inc. v. The VA is expected to decide only those questions expressly
Goya EEs delineated and limited by the submission agreement.
Union-FFW Nevertheless, the VA can assume that he has the necessary
power to make a final settlement since arbitration is the final
resort for the adjudication of disputes. Hence, if the issue
brought before the VA is ULP, it has jurisdiction to hold that
while there is no ULP, contracting out of labor is not in line with
the CBA’s provisions.
Baronda v. Art. 223 applies to VAs in terms of granting automatic
CA reinstatement pending appeal, even if there is a Rule 65
petition for certiorari pending in appellate courts.
PHILEC v. CA Since the office of a VA or a panel of Voluntary Arbitrators is
considered a quasi-judicial agency, this court concluded that a
decision or award rendered by a Voluntary Arbitrator is
appealable before the CA through Rule 43.
Q: If the VA issued an erroneous decision, where do you go up?
A: Rule 43, CA.
Q: How many days to go up?
A: 10 days to go up under the Labor Code.
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9. Grievance Machinery
GR: Parties can stipulate as to the procedure.
EXC: If the parties fail to stipulate, the default rules under the Labor Code are
as follows –
1. EE will go directly to the shop steward
2. Shop steward will study whether the concern is subject to grievance
machinery
3. If it is subject to grievance machinery, the shop steward will go to the
supervisor or higher manager
4. If nothing happens, then the grievance machinery is formed and it will
normally have 10 days to make its decision
5. The grievance machinery will then have 7 days to forward the case to the
voluntary arbitrator
Master Iron A grievance procedure is part of the continuous process of
Labor Union collective bargaining. It is intended to promote a friendly
v. NLRC dialogue between labor and management as a means of
maintaining industrial peace. The refusal to heed a request to
undergo the grievance procedure clearly demonstrated its lack
of intent to abide by the terms of the CBA. Hence, refusal by
the ER to undergo grievance procedure in the CBA is a valid
ground to strike.
San Miguel The main purpose of the parties in adopting a procedure in the
Corp. v. NLRC settlement of their disputes is to prevent a strike. This
procedure must be followed in its entirety if it is to achieve its
objective. Strikes held in violation of the terms contained in
the CBA are illegal, specially when they provide for conclusive
arbitration clauses. All steps in the grievance machinery have
to be exhausted for a strike based on bargaining deadlock to
be valid.
10. NCMB
It is not quasi-judicial in nature; it is just a body which will attempt to mediate
or prevent disputes between the EEs and the ER. The NCMB is merely asked to
settle a brewing dispute between the parties.
NCMB does NOT have the power to actually make rulings.
NCMB handles:
1. Wage distortion disputes
2. Preventive mediation to stop a strike in case of bargaining deadlock
11. Court of Appeals
BLR, DOLE Secretary, NLRC Commissioner - Rule 65 (original)
 60 days from notice of denial of MR
 There must always be a MR first; there is a 10-day period to file the MR
 Allege GADALEJ
VA – Rule 43 (appellate)
St. Martin The law provides that decisions of the NLRC are unappealable.
Funeral However, the Court still has the power to exercise judicial
Home v. review for questions of law and jurisdiction. Thus, the decision
NLRC of the NLRC may be the subject of a petition for certiorari, but
it should first be filed with the CA.
Veloso v. Certiorari will lie only if there is no appeal or any other plain,
China Airlines speedy and adequate remedy in the ordinary course of law
against acts of public respondent. In this case, the plain and
adequate remedy expressly provided by law is a MR of the
impugned resolution, to be made under oath and filed within
10 days from receipt of the questioned resolution of the NLRC,
a procedure which is jurisdictional.
12. Supreme Court
Go up to SC via Rule 45 – 15 days from notice of judgment to go up to SC
 There can be a request for extension (30 days) if the petitioner is able
to show meritorious circumstances and docket fees must have been
paid already
13. Liability of the Transferee of an Enterprise
Sundowner The rule is that unless expressly assumed, labor contracts such
Dev. Co. v. as employment contracts and collective bargaining
Drilon agreements are not enforceable against a transferee of an
enterprise, labor contracts being in personam, thus binding
only between the parties. A labor contract merely creates an
action in personam and does not create any real right which
should be respected by third parties. This conclusion draws its
force from the right of an employer to select his employees
and to decide when to engage them as protected under our
Constitution, and the same can only be restricted by law
through the exercise of the police power.
As a general rule, there is no law requiring a bona fide
purchaser of assets of an on-going concern to absorb in its
employ the employees of the latter. However, although the
purchaser of the assets or enterprise is not legally bound to
absorb in its employ the employers of the seller of such assets
or enterprise, the parties are liable to the employees if the
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 transaction between the parties is colored or clothed with bad
faith. In the case at bar, contrary to the claim of the public
respondent that the transaction between petitioner and
Mabuhay was attended with bad faith, the court finds no
cogent basis for such contention. Thus, the absorption of the
employees of Mabuhay may not be imposed on petitioner.
[Note: This was just a transfer of assets.]
Filipinas Port Filport being a mere alter ego of the different merging
Services v. companies has at the very least, the obligation not only to
NLRC absorb into its employ workers of the dissolved companies,
but also to absorb the length of service earned by the
absorbed employees from their former employers. As a
successor entity, it is answerable to the lawful obligations of
the predecessor employers, herein integrees.
Filport is deemed a survivor entity because it continued in an
essentially unchanged manner the business operators of the
predecessor arrastre and port service operators, hiring
substantially the same workers, including herein appellee, of
the integree predecessors, using substantially the same
facilities, with similar working conditions and line of business,
and employing the same corporate control, although under a
new management and corporate personality.
[Note: This was a full-on merger.]
14. May employer offset costs of employee’s training from retirement benefits?
Elegir v. PAL Employer may offset costs of employee’s training from
retirement benefits pursuant to a CBA.
15. Workers’ preference of credit v. lien on unpaid wages, Art. 110 LC
(Preference for Worker’s Unpaid Wages & Other Monetary Claims in Case of
Bankruptcy)
Manuel D. A preference applies only to claims which do not attach to
Yngson, Jr., specific properties. A lien creates a charge on a particular
(in his property. The right of first preference as regards unpaid wages
capacity as recognized by Article 110 of the Labor Code, does not
the constitute a lien on the property of the insolvent debtor in
Liquidator of favor of workers. It is but a preference of credit in their favor, a
ARCAM & preference in application. It is a method adopted to determine
Co., Inc.) v. and specify the order in which credits should be paid in the
PNB final distribution of the proceeds of the insolvent's assets. It is
a right to a first preference in the discharge of the funds of the
judgment debtor. When it comes to a mortgage, therefore,
which is a specific lien in favor of a mortgagee, these will not
be set aside because of the existence of unpaid wages, which
enjoy a preference.
16. Prescriptive period in Labor Code prevails over Civil Code in termination
cases
Laureano v. If the action is a money claim against the ER, the prescription
CA (2000) period at 3 years and which governs under this jurisdiction,
not 10 years based on the prescriptive period in the Civil
Code for written contracts.
Victory Liner v. In illegal dismissal cases, the employee concerned is given a
Race (2007) period of four years from the time of his dismissal within
which to institute a complaint. The four-year prescriptive
period shall commence to run only upon the accrual of a
cause of action of the worker. In illegal dismissal cases, the
cause of action accrues from the time the employment of the
worker was unjustly terminated.
Intercontinent Although the commencement of a civil action stops the
al running of the statute of prescription or limitations, its
Broadcasting dismissal or voluntary abandonment by plaintiff leaves the
v. Panganiban parties in exactly the same position as though no action had
been commenced at all (hence, the prescriptive period would
never have been suspended).
LABOR STANDARDS
Q: Who are the EEs under Art. 82?
A:
Q: Government employees?
A:
Q: Who are we talking about when we speak of managerial EEs?
A: There are top, middle, and line managers. Top and middle managers are
managerial EEs. Line managers are managerial staff. In labor standards law,
both are excluded from coverage under Art. 82.
In labor relations law, however, line managers (managerial staff) are allowed to
form their own unions.
Q: Are field personnel who work in the premises of the ER and are unsupervised
considered field personnel excluded from the coverage of labor standards?
A: NO.
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(1) Field personnel works outside premises of ER – if the field personnel is
working INSIDE the premises of the ER, there is presumption of CONTROL, and
hence, it is more likely considered that they are supervised and thus under the
coverage of Art. 82 (and not excluded).
(2) Hours of work cannot be determined with reasonable certainty
Q: Are seamen in the vessel field personnel?
A: No, because there are actually supervisors who look at the things that the
seaman does so there is still supervision. Look also at the bus example. Though
the bus drives outside the premises of the ER, there are people who guard the
route along the way and hence there is supervision.
Q: X is the son of the CEO of the company, but he is a rank-and-file EE. Is he
automatically excluded under Art. 82?
A: It depends if X is dependent on the CEO father for support. If he is not, then
he is not excluded from the benefits. The member of the family must still be
dependent on the parent for support. If he is no longer dependent, he will be
considered as a normal EE.
Q: Who are the persons in personal service of another?
A: Personal assistants, for example.
Q: Are drivers included as those excluded under Art. 82?
A: The IRR excludes drivers from the kasambahay law. But there is no definitive
answer as to their exclusion from labor standards benefits – it is arguable that
they are still included in actuality, since exclusion from the kasambahay law
will not necessarily lead to their exclusion under Art. 82 as being persons in
service of another. But there is no final SC decision on this.
FURTHERMORE, distinguish between company drivers and family drivers.
Company drivers are not in a personal service of another, so that person would
be entitled to labor standards. It is with family drivers that there is a dearth.
Q: What is an example of a person paid by result?
A: Pakyaw workers are workers paid by result.
Q: If you are a half-time EE (4 hours a day), what will happen if you work 5
hours, will you be entitled to pay of 25% more of OT pay?
A: DOLE Special Bulletin for part-time workers provides that OT pay will be
given only if the part-time EE has worked past 8 hours.
Q: EE is a super fast worker who actually ends work at 2PM though his work
time ends at 5PM. Is EE entitled to be compensated if he spends 2PM-5PM
browsing FB?
A: Yes.
If it’s required by ER, all time spent doing preliminary activities will be
considered OT because the ER required you to be there. But if you are there by
your own bibo-ness, then you won’t be compensated for that.
If waiting time is integral part of the work, it is paid.
If you are just waiting to be engaged, you are not paid.
For example, you are a driver. You are paid to wait because the boss is at the
mall & can call you at any time for you to be picked up.
An example of one time when you are waiting to be engaged is you are just at
home & you are free to go wherever you want.
If you are required to work while eating, even if you are given a 61 hour meal
break, is considered compensable because you will be considered to be doing
work while eating.
Rules on sleeping time – depends if the job is one where you are required to be
on call while asleep; hence, it is dependent on the nature of the job. For
example, a firefighter may be asleep while he is on-call for 8 hours (because it
is at nighttime) and is called and summoned when there is an actual fire. The
firefighter would be paid for this time he spent asleep. It is thus dependent on
his line of business or work.
If this were a security guard, this would definitely not be allowed.
Q: Is travel time to and from the office compensable?
A: To the office (at the start of the day) is not paid, except if there is an
emergency call.
To the house from the office (at the end of the day) is also, as a general rule,
not compensable.
But if you travel within the 8 hours and you were required to do so by work, that
would be considered compensable.
Q: If there are grievance meetings, would those hours be compensable? Are
CBA negotiations compensable?
A: This is compensable because this is considered the normal work of a union
member.
Q: Is lunch break for 59 minutes compensable?
A: Yes, the general rule is that it is compensable if less than 60 minutes.
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Note that any period shorter than 20 minutes is TOTALLY PROHIBITED,
although the laborer who is made to work for less than 20 minutes would also
be paid, but the ER suffers a possible additional penalty.
Q: When can ER lessen lunch period without compensation?
A: If the EE requests for the shortening so they can leave and go home early
(this is called the Kodak rule)
Chart out all percentages and summarizing ALL
Rest day 30% from hour 1
10% from
OT pay 25%
Is OT pay a management prerogative?
No. To become management prerogative, it must be under the emergency
situations under Art. 89.
If management wants you to work overtime, can require you to do it?
As a general rule, no, the EE cannot be compelled.
Is there an exception?
Yes, if there is reason for emergency OT pay (Art. 89 – this provision is always
asked in the bar exams; an ER asks an EE to render OT & the ER tries to
suspend the EE; is the action valid or not? Look at Art. 89 to be able to answer
this question. There are only particular circumstances when the EE may be
forced to do OT work.)
Who are entitled to SIL?
1. EEs who have rendered service for at least 1 year.
2. Establishment in which EE is regularly employed has at least 10 EEs or more.
3.
Why is SIL a special animal?
They are convertible and cumulative.
The general prescriptive period for money claims is 3 years.
But for SIL, it is a special kind of animal because you count the 3-year period
from the time you resign or are terminated OR from the time the EE makes a
demand from the ER. SIL is thus special because it carries over year after year
(unlike a salary; in salaries it accrues and prescribes 3 years after it is owed to
you).
15% is to the MANAGEMENT, not to the managers. It is thus NOT FOR
MANAGERS, it is for management and could be used to answer for:
1. Losses or breakage
2. Given to the managers
3. Given to the staff
Management can decide what to do with the whole 15%
The basic answer if the management decides to terminate service charges is
that the management will shoulder paying the amounts to the EEs.
What is the compressed work week?
Etc. etc. NOTICE; it is not approval, but notice.
Who has the burden of proving OT work?
The EE who must prove he rendered OT. After that, if EE establishes he
rendered overtime, the burden shifts to the ER to produce evidence that he has
actually already paid OT.
Q: Can the ER ask the EE to sign an agreement that EE can never claim OT?
A: No. OT is mandatory. Waiver of OT pay is against public policy.
Q: Is there an exception?
A: If you stipulate that OT is deemed paid in a contract, then –
1. The contract says OT is deemed paid and the payment made shows that the
amount received by the EE is way more than the amount that the EE should get
2. There is a way for OT to be set off later (ER will pay excess owed to EE if it is
eventually shown that ER did not pay for certain OT hours)
Q: What if contract says, “I pay you P24,000 per month (even if you should
really just be paid minimum wage) instead of having to pay you OT.” Can this
be allowed?
A: No. OT is mandatory. Waiver of OT pay is against public policy.
Q: Are commissions included in the basic pay?
A: Yes, sales commissions WHEN REGULARLY RECEIVED are considered part of
the basic wage.
Q: Non-diminution of benefits rule – what is that?
A:
Q: In our employment contract, ER said to EE, I’ll give you 13 months worth of
benefits. But later, ER said, never mind, I won’t give you 13 months, I’ll just give
you 6 months. Is the argument put forward by EE to be based on non-
diminution of benefits?
A: No need, bbecause there is a written agreement. The non-diminution of
benefits rule in its purest form wi
WAGES
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Q: Facilities v. supplements – what can the ER use to include in statutory
minimum wage?
A: Facilities can be deducted from statutory minimum wage.
Q: But can you deduct 100%?
A: There must be fair & reasonable value. And then depending on the type of
facility, then there may be a ceiling as to the extent by which deductions may
be made. For food, for example, ER can only deduct the maximum of 70%.
Q: How about for transportation or housing?
A: [Place here]
Q: X gets the statutory minimum wage. ER wants to deduct meal (P200) &
housing (P1,000) because ER is paying way more than he actually owes to X.
Assuming all proper ceilings are made, is it possible for X to receive absolutely
P0 from the ER because of the facilities being integrated into the salary owed
to X?
A: There is no legal limit so there is no actual percentage to limit; hence
theoretically from a legal perspective you can fully pay P0 to the EE and instead
give facilities. But in the real world it is not something you could practically
consider because facilities are more expensive than cash as a general rule.

Q: Facilities v. Supplements.
A: Facilities are to benefit the EE primarily; while supplements benefit the ER
primarily. Facilities can thus be deducted from the salary of the EE or are at
least considered included in the salary of the EE.

Q: If EE is dead, who should you pay?

A: ER should pay the heirs, but through SOLE or his representative. But SOLE
represents every ER to be his representative in this regard. So now it is through
the ER acting as the representative of the SOLE.

Prohibitions regarding wages:

1. Interference with disposal of wages
2. Wage deduction
3. Requirement to make deposits for loss or damage
4. Withholding of wages
5. Deduction to ensure employment
6. Retaliatory measures
7. False reporting
8. Keeping EEs’ records in a place other than the workplace
9. Garnishment or execution

Procedure for wage-fixing

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