SELECTED QUESTIONS in LABOR LAW

LABOR STANDARDS
1. Differentiate labor standards law from labor relations law. Are the two mutually
exclusive?
Labor standards law is that labor law which prescribes terms and conditions of
employment like Book III, Book IV, Title I and Book VI of the Labor Code. These books of the
Labor Code deal with working conditions, wages, working conditions for women, minors,
house helpers and home-workers, medical and dental services, occupational health and
safety, termination and retirement.
On the other hand, labor relations law is that labor law which regulates the relations
between employers and workers like Book V of the Labor Code which deals with labor
organizations, collective bargaining, unfair labor practices and strikes and lockouts.
Labor standards laws and labor relations laws are not mutually exclusive; they
complement to each other. Thus the law on strikes and lockouts which is and example of
labor relations law includes some provisions on the security of tenure of workers who go on
strike or who are locked out. These provisions are clear examples of labor law relations.
2.What is the Constitutional basis of Articles 7-11 regarding emancipation of tenants?
The State shall, by law, undertake an agrarian reform program founded on the right
of farmers and regular farmworkers, who are landless, to own directly or collectively the
lands they till or, in the case of other farmworkers, to receive a just share of the fruits
thereof. To this end, the State shall encourage and undertake the just distribution of all
agricultural lands, subject to such priorities and reasonable retention limits as the Congress
may prescribe, taking into account ecological, developmental, or equity considerations, and
subject to the payment of just compensation. In determining retention limits, the State shall
respect the rights of small landowners. The State shall further provide incentives for
voluntary land-sharing. (Article XIII, Section 4, 1987 Constitution)
3. Is a corporation, of which seventy percent (70%) of the authorized and voting
capital is owned and controlled by Filipino citizens, allowed to engage in the
recruitment and placement of workers, locally or overseas? Explain briefly.
NO. Art. 27 of the Labor Code explicitly requires that in order to qualify for
participation in the overseas employment program, the corporation must at least possess
seventy-five percent (75%) of the authorized and voting capital stock of which is owned and
controlled by Filipino citizens.
4. Can a recruiter be convicted of violating a POEA Circular which was implemented
without prior publication?
NO. The POEA MEMO Circular no. 2, series of 1983 was void. Where the
administrative circular in question is one of those issuances which should be published for
its effectivity, since its purpose is to enforce and implement an existing law pursuant to a
valid delegation. Considering that POEA Administrative Circular No. 2, Series of 1983 has
not as yet been published or filed with the National Administrative Register, the same is
ineffective and ma not be enforced (Philsa International Placement and Services Corp.
vs. Secretary of DOLE, G.R. No. 103144, April 4, 2001).

Malao, Mike

5. Is the absence of an employment a valid defense in a case of illegal recruitment?

Explain.
NO. the law is clear on the matter. Private respondents further argue that they cannot
be held liable by petitioner because no employment contract between him and Step-Up
Agency had been approved by the POEA. They also claim that the absence of a Special
Power of Attorney and an Affidavit of Responsibility, as required under Sections 1 and 2,
Rule 1, Book III of the POEA Rules and Regulations only proves that they did not deploy
petitioner to Singapore.
Their argument is far from persuasive. Surely, they cannot expect us to utilize their noncompliance with the POEA Rules and Regulations as a basis in absolving them. To do so
would be tantamount to giving premium to acts done in violation of established rules. At
most, private respondents act of deploying petitioner to Singapore without complying with
the POEA requirements only made them susceptible to cancellation or suspension of license
as provided by Section 2, Rule I, Book VI of POEA Rules and Regulations. (Hornales v.
NLRC, G.R. No. 118943, September 10, 2001).
6. Is there a requirement that a physician must be accredited by the POEA before he
can attend to a sick seaman?
This Court also finds no basis on (sic) the petitioners contention that the companydesignated [physician] must also be accredited with the POEA before he can engage in the
medical treatment of a sick seaman. There is nothing in the Standard Employment Contract
that provides this accreditation requirement, and even if there is, this would be absurd and
contrary to public policy as its effect will deny and deprive the ailing seaman of his basic
right to seek immediate medical attention from any competent physician. The lack of POEA
accreditation of a physician who actually treated the ailing seaman does not render the
findings of such physician (declaring the seaman permanently disabled) less authoritative or
credible. To our mind, it is the competence of the attending physician, not the POEA
accreditation, that determines the true health status of the patient-seaman, which in this
instant case, is [sic] the attending physicians from the Manila Doctors Hospital (German
Marine Agencies, Inc. v. NLRC, G.R. No. 142049, January 30, 2001).
7. Martina is a clerk typist in Hospicio de San Jose, a charitable institution dependent
for its existence on contributions and donations from well wishers. She renders work
eleven (11) hours a day but has not been given overtime pay since her place of work is
a charitable institution. Is Socorro entitled to overtime pay? Explain briefly.
YES. Martina is entitled to overtime compensation. She does not fall under any of the
exceptions enumerated under Art. 82 of the Labor Code. Said provision equivocally states
that Title I, Book III of the Labor Code dealing with hours of work, weekly rest periods,
holidays, service incentive leaves and service charges, covers all employees in all
establishments, whether for profit or not, except the following employees:
a. Government employees
b. Managerial employees
c. Officers and members of the managerial staff
d. Field personnel
e. Members of the family of the employer who and dependent on him for support
f. Domestic helpers
g. Persons in the personal service of another
h. Workers paid by results.
A covered employee who works beyond eight (8) hours is entitled to overtime
compensation.
Malao, Mike

8. Krishna earns P7.00 for every manicure she does in the barbershop of a friend
which has nineteen (19) employees. At times, she takes home P175.00 a day and at
other times she earns nothing. She now claims holiday pay. Is Krishna entitled to
this benefit?
NO. Nemia is not entitled to holiday pay. Art. 82 of the Labor Code provide that
workers who are paid by results are, among others, not entitled to holiday pay. Nemia is a
worker who is paid by results. She earns P7.00 for every manicure she does.
9. As a tireman in a gasoline station, which is open twenty four (24) hours a day with
only five (5) employees, Joewa worked from 10:00 p.m. until 7:00 A.M. of the following
day. He claims to be entitled to night shift differential. Is he correct?
NO. In the Omnibus Rules Implementing the Labor Code (Book III, Rule II, dealing
with night shift differential) it is provided that its provisions on night shift differential shall
NOT apply to employees of retail and service establishments regularly employing not more
that five (5) workers. Because of this provision, Joewa is not entitled to night shift
differential because the gasoline station where he works (being a service establishment) has
only five employees.
10. A manufacturing firm with 500 employees schedules Sunday as the latters rest
day. Fifty workers who were seventh-day adventists and 200 workers who belong to
the Iglesia ni Kristo object and propose that their rest days be scheduled on Saturdays
and Thursdays, respectively. The company claims that the proposed schedule will
seriously prejudice or obstruct its manufacturing operations and refuses to reschedule the rest day as requested.
a. Do the seventh day adventists and members of the Iglesia ni Kristo have any right
to choose their own rest days?
YES. The employer, under the law, is required to respect the preference of the
employee if the same is based on religious grounds. The employee shall make known his
preference to the employer in writing at least (7) days before the desired effectivity of the
initial rest day preffered (Sec.4, Rule III, Book I, Implementing Rules and Regulations).
b. Assuming that the claim of the employer is well-founded, can it legally refuse to reschedule the rest day of the employees involved?
YES. If the employer cannot resort to other remedial measures, it may schedule the
rest days of the employees involved on the days of their choice for at least 2 days in a month
(Sec.4, Rule III, Book III, Implementing Rule and Regulations).
11. This year, National Heroes Day (August 25) falls on a Sunday. Sunday is the rest
day of Bonifacio whose daily rate is P500.00.
a. If Bonifacio is required by his employer to work on that day for eight (8) hours, how
much should he be paid for his work? Explain.
For working on his scheduled rest day, according to Art. 93(a), Bonifacio should be
paid P500.00 (his daily rate) plus P150.00 (30% of his daily rate = P650.00. This amount
P650.00 should be multiplied by 2 = P1,300.00. this is the amount that Bonifacio as
employee working on his scheduled rest day which is also a regular holiday should receive.
Malao, Mike

Art. 94(c) of the Labor Code provides that an employee shall be paid a compensation
equivalent to twice his regular rate for working on any regular holiday. The regular rate of
Bonifacio on May 1,2002 with an additional thirty percent because the day is also his
scheduled rest day.
Formula:
(a) To get rest day pay
Step 1: Get hourly wage rate
Daily Basic Wage
Number of hours worked

special holiday wage rate

e.g. (P500 / 8 hrs) x 130% = P81.25 (rest day wage rate)

Step 2: Compute wage between 8:00pm 5:00 pm using rest day wage rate
Number of hours worked

e.g.

8hrs

special holiday wage rate

P81.25 = P650

(b) To get regular holiday pay

Rest day Wage rate X

e.g.

Regular holiday

P650

200%

= P1300

b. If he works for ten (10) hours on that day, how much should he receive for his
work? Explain.
P1,300.00 which is the amount that Bonifacio is to receive for working on May 1, 2002
should be divided by 8 to determine his hourly rate of P162.5. This hourly rate should be
multiplied by 2 (the number of hours he worked overtime). Thus, the amount that Bonifacio
is entitled to receive for his overtime work per hour on May 1, 2002 is P325.00.
Holiday wage rate + 30% of holiday rate (200%)
Step 1: Get hourly wage rate
Daily Basic Wage
Number of hours worked

e.g.

special holiday wage rate

(P1300 / 8 hrs.) x 200%

= P325

Step 2: Compute OT Premium Pay between 5:00 pm 10pm

[(30% X Wage Per Hour) + Wage Per Hour]

No. of OT Hours = OT Premium Pay

e.g. (30 % x P325) + P325 = P422.50

no. of OT hours (5pm 10pm)
=
2hrs
-----------Malao, Mike

P845.00
Step 3: COMPUTATION
8am-5pm
2 hours

8hrs x P200.00
2hrs x P260.00

Total Take Home Pay

P1300
845
-----------P2,145

12. Sia, the employer, admits that Damascos work starts at 8:30 in the morning and
ends up at 6:30 in the evening daily, except holidays and Sundays. However, Sia
claims that Damascos basic salary of P140.00 a day is more than enough to cover the
one hour excess work which is the compensation they allegedly agreed upon. What
other evidences are required to warrant the award of overtime pay?
Judicial admissions made by parties in the pleadings, or in the course of the trial or
other proceedings in the same case are conclusive, no further evidence being required to
prove the same, and cannot be contradicted unless previously shown to have been made
through palpable mistake or that no such admission was made. In view of Sias formal
admission that Damasco worked beyond eight hours daily, the latter is entitled to overtime
compensation. No further proof is required. Sia already admitted she worked an extra hour
daily. Thus, public respondent gravely erred in deleting the award of overtime pay to
Damasco on the pretext that the claim has no factual basis.
Still, even assuming that Damasco received a wage which is higher than the minimum
provided by law, it does not follow that any additional compensation due her can be offset by
her pay in excess of the minimum, in the absence of an express agreement to that effect.
Moreover, such arrangement, if there be any, must appear in the manner required by law on
how overtime compensation must be determined. For it is necessary to have a clear and
definite delineation between an employees regular and overtime compensation to thwart
violation of the labor standards provision of the Labor Code (Damasco vs. NLRC, G.R. No.
115755, December 4, 2000).
13. May a Company adopt working hours beyond 8 hours a day? If the workers do not
question such an arrangement, would that scheme be considered valid?
YES. In Interphil Laboratories Employees Union FFW v. Interphil (G.R. No.
142824, December 19, 2001) it was held by the Court that:
Section 1. Regular Working Hours A normal workday shall consist of not more
than eight (8) hours. The regular working hours for the Company shall be from 7:30
A.M. to 4:30 P.M. The schedule of shift work shall be maintained; however the
company may change the prevailing work time at its discretion, should such change
be necessary in the operations of the Company. All employees shall observe such rules
as have been laid down by the company for the purpose of effecting control over
working hours.
It is evident from the foregoing provision that the working hours may be changed, at
the discretion of the company, should such change be necessary for its operations, and that
the employees shall observe such rules as have been laid down by the company. In the case
before us, Labor Arbiter Caday found that respondent company had to adopt a continuous
24-hour work daily schedule by reason of the nature of its business and the demands of its
clients. It was established that the employees adhered to the said work schedule since 1988.
The employees are deemed to have waived the eight-hour schedule since they followed,
Malao, Mike

without any question or complaint, the two-shift schedule while their CBA was still in force
and even prior thereto. The two-shift schedule effectively changed the working hours
stipulated in the CBA. As the employees assented by practice to this arrangement, they
cannot now be heard to claim that the overtime boycott is justified because they were not
obliged to work beyond eight hours.
14. Explain the principle of A FAIRS DAY WAGE FOR A FAIRS DAYS LABOR
The age-old rule governing the relation between labor and capital, or management and
employee of a "fair day's wage for a fair day's labor" remains as the basic factor in
determining employees' wages. If there is no work performed by the employee there can be
no wage or pay unless, of course, the laborer was able, willing and ready to work but was
illegally locked out, suspended or dismissed, or otherwise illegally prevented from working
(Caltex Refinery Employees Association (CREA) vs. Brillantes, 279 SCRA 218), a
situation which we find is not present in the instant case. It would neither be fair nor just to
allow private respondents to recover something they have not earned and could not have
earned because they did not render services at the Kalibo office during the stated period
(Aklan Electric Cooperative Incorporated v. NLRC, G.R. No. 121439, January 25,
2000).
15. A Co., a tobacco manufacturing firm, is owned by Mr. X who also owned B Security
Agency (BSA). When the employees of B formed a union, As management
preterminated the security contract between A and B firms. When the guards filed a
case of illegal dismissal and ULP against both A and B, the counsel of A filed a Motion
to Dismiss, alleging that that there was no employer-employee relationship between A
and the guards.
a. Should the MOTION be granted? Explain.
NO. The Motion should not be granted. The facts indicate a concerted effort on the
part of respondents to remove petitioners from the company and thus abate the growth of
the union and block its actions to enforce their demands in accordance with the Labor
Standards laws. The Court held in Insular Life Assurance Co., Ltd., Employees
Association-NATU vs. Insular Life Assurance Co., Ltd.,37 SCRA 244 (1971), that the
test of whether an employer has interfered with and coerced employees within the meaning
of section (a) (1) is whether the employer has engaged in conduct which it may reasonably be
said tends to interfere with the free exercise of employees' rights under section 3 of the Act,
and 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 selforganization and collective bargaining.
b. Is the doctrine of piercing the veil of corporate fiction applicable hereto?
It is a fundamental principle in corporation law that a corporation is an entity
separate and distinct from its stockholders and from other corporations to which it is
connected. However, when the concept of separate legal entity is used to defeat public
convenience, justify wrong, protect fraud or defend crime, the law will regard the corporation
as an association of persons, or in case of two corporations, merge them into one. The
separate juridical personality of a corporation may also be disregarded when such
corporation is a mere alter ego or business conduit of another person.

Malao, Mike

In the case at bar, it was shown that BSA was a mere adjunct of A Company. BSA, by
virtue of a contract for security services, provided A Co. with security guards to safeguard its
premises. However, records show that BSA and A Co. have the same owners and business
address, and BSA provided security services only to A Co. and other companies belonging to
its owners. The purported sale of the shares of the former stockholders to a new set of
stockholders who changed the name of the corporation appears to be part of a scheme to
terminate the services of BSAs security guards posted at the premises of A Co. and bust
their newly-organized union which was then beginning to become active in demanding the
company's compliance with Labor Standards laws. Under these circumstances, the Court
cannot allow A Co. to use its separate corporate personality to shield itself from liability for
illegal acts committed against its employees. (De Leon vs. NLRC, G.R. No. 112661, May
30, 2001)
16. Discuss the doctrine on the economic reality of the relations of parties test
with respect to the existence of employer-employee relationship.
The relationship of employer-employee, which determines the liability for employment
taxes under the Social Security Act was not to be determined solely by the idea of control
which an alleged employer may or could exercise over the details of the service tendered to
his business by the worker or workers. Control is characteristically associated with the
employer -employee relationship, but in the application of social legislation, employees are
those who as a matter of economic reality are dependent upon the business to which they
render service, taking into account permanency of the relations, the skills required and the
investments in the facilities for work and opportunities for profit or loss from activities. It is
the total situation that controls. (Investment Planning Corp. vs. SSS, 21 SCRA 924).
The concept of independent contractor is interminably linked with the economic
reality test when we consider the fact that such person is one who carries on a distinct and
independent business and undertakes to perform the job to do a piece of work on his own
account and under his own responsibility, according to his own manner and methods and
free from the control and direction of his principal, except as to the result of the work.
Among the factors to be considered are whether the contractor is carrying on an
independent business; whether the work is part of the employer's general business; the
nature and extent of the work; the skill required; the term and duration of the relationship;
the right to assign the performance of the work to another; the power to terminate the
relationship; the existence of a contract for the performance of a specified piece of work; the
control and supervision of the work; the employer's powers and duties with respect to the
hiring, firing, and payment of the contractor's servants-, the control of the premises; the
duty to supply the premises, tools, appliances, material and labor; and the mode, manner,
and terms of payment. (MAFINCO Corporation v. Ople, 70 SCRA 139)
17. Pandoy was an electrician who worked within the premises of Ushio's car
accessory shop, in Banawe Street, Quezon City. He filed a complaint for illegal
dismissal, non-payment of overtime pay, holiday pay, and other benefits against
Ushio, which moved to dismiss the complaint claiming that Pandoy was not an
employee but a free lance operator who waited on the shop's customers should the
latter require his services. Ushio argues that in fine, the shop owner and the free lance
operator, as an independent contractor, were partners in trade, "both benefiting from
the proceeds of their joint efforts. It further claimed that it was a recognized and
accepted trade practice peculiar to the auto spare parts shop industry operating along
the stretch of Banawe Street that shop owners would collect the service fees from its
customers and disburse the same to the independent contractor at the end of a week.
Malao, Mike

Moreover, Pandoy was free to position himself near other car accessory shops to offer
his services to customers of said shops. On the other hand, Pandoy insists that he is
entitled to the benefits because he was loyal to Ushio, as he did not perform work for
anyone else. Is he correct?
NO. In stark contrast to the Companys regular employees, there are independent,
freelance operators who are permitted by the Company to position themselves proximate to
the company premises. These independent operators are allowed by the Company to wait on
Company customers who would be requiring their services. In exchange for the privileges of
favorable recommendation by the Company and immediate access to the customers in need
of their services, these independent operators allow the Company to collect their service fee
from the customer and this fee is given back to the independent operator at the end of the
week. In effect, they do not earn fixed wages from the Company as they earn their variable
fees from the customers of the Company. The Company has no control over and does not
restrict the methodology or the means and manner by which these operators perform their
work. These operators are not supervised by any employee of the Company since the results
of their work is controlled by the customers who hire them. Likewise, the Company has no
control as an employer over these operators. They are not subject to regular hours and days
of work and may come and go as they wish. They are not subject to any disciplinary
measures from the Company, save merely for the inherent rules of general behavior and
good conduct [Ushio Marketing v. NLRC, 294 SCRA 673 (1998)].
18. In the employment of workers, is there a difference between an ordinary
employer-employee relationship and independent job contracting/ subcontracting?
YES. In an ordinary employer-employee relationship, there are only two parties
involved - the employer and the employee. This relationship is established through a fourfold test, under which the employer:
a. Directly exercises control and supervision over the employee not only as to the
results of the work but also as to the means employed to attain this result;
b. Has the power to select and hire the employee;
c. Has the obligation to pay the employees his or her wages and other benefits.
d. Has the power to transfer and dismiss or discharge employees.
The power of control is the most important factor in determining the existence of an
employer-employee relationship. The employer need not actually exercise this power. It is
enough that the employer retains the right to exercise this power, as it may deem necessary
or appropriate.
In job contracting / subcontracting, there are three parties involved:
a. The principal who decides to farm out a job or service to a subcontractor;
b. The job contractor or subcontractor which has the capacity to independently
undertake the performance of the job or service; and
c. The employees engaged by the job contractor or subcontractor to accomplish the
job or service.
In job contracting or subcontracting, the four-fold test of employer-employee
relationship should be satisfied by the contractor or subcontractor in relation to the
employee it engages to accomplish the contracted or subcontracted job or service. In such
cases, the contractor or subcontractor is also referred to as an independent contractor.

Malao, Mike

If the four-fold test is satisfied not by the job contractor or subcontractor but by the
principal, the principal then becomes the employer of the employees engaged to accomplish
the job or service. What exists is not job contracting or subcontracting but a direct
employer-employee relationship between the principal and the employees and the job
contractor becomes merely the agent of the principal or the subcontractor, the agent of his
contractor, as the case may be.
19. Is there a difference between a job contractor or subcontractor and a private
recruitment and placement agency (PRPA)?
YES. A job contractor or subcontractor directly undertakes a specific job or service for
a principal, and for this purpose employs its own workers. A PRPA cannot be a
subcontractor. It simply recruits workers for the purpose of placing them with another
employer so that the workers recruited will not become the PRPA's employees.
A job contractor or subcontractor is governed primarily by Articles 106-109 of the
Labor Code. A private recruitment and placement agency is governed by Articles 25 to 39 of
the Labor Code and the rules implementing these articles.
A job contractor or subcontractor does not need authority from the Department of
Labor and Employment (DOLE) to undertake a subcontracted job or service. A PRPA needs
an authority or license from DOLE to legally undertake recruitment and placement
activities.
20. What law or rules govern job contracting or subcontracting?
The basic law governing job contracting or subcontracting is the Labor Code,
particularly Articles 106 to 109 thereof. These provisions prescribe the conditions for the
regulation of job contracting or subcontracting and the rights and obligations of parties to
this arrangement. Department Order No. 3, which took effect on 29 May 2001 was the latest
set of rules released by the DOLE implementing Articles 106 to 109.
The following laws and rules also apply in addition to Articles 106 to 109 of the Labor
Code:
a. Article 248 (c) of the Labor Code, which disallows contracting out of services or
functions being performed by union members when such will interfere with, restrain or
coerce employees in the exercise of their right to self-organization;
b. Article 280, Labor Code, which classifies employees into regular, project or seasonal
employees;
c. Article 2180 of the Civil Code, under which the principal, in a civil suit for damages
instituted by an injured person, can be held liable for any negligent acts of the employees of
a labor-only contractor;
d. Republic Act No. 5487, which regulates the operation of security agencies, and its
implementing rules;
e. Jurisprudence interpreting the foregoing laws;
f. D.O. No. 19, Series of 1993, for subcontracting arrangements in the construction
industry; and
h. Contractual stipulations provided these are not in conflict with Labor Code provisions,
jurisprudence, and D.O. Nos. 3 and 19.

Malao, Mike

21. What are the important features of D.O. No. 3?

The following are the important features of D.O. No. 3:
a. It revoked Department Order No. 10, Series of 1997, which was then the implementing
rules on Articles 106 to 109;
b. It prohibits labor-only contracting;
c. It recognizes the continuing validity of contracts entered into when D.O. No. 10 was
still in force;
d. It is a temporary measure;
e. It sets the process and mechanism, which is through consultations through the
Tripartite Industrial Peace Council, by which a new set of rules shall be formulated.
22. Is job contracting or subcontracting illegal?
NO, provided the requirements for legitimate job contracting or subcontracting are
satisfied and the prohibition against labor-only contracting or subcontracting is observed. In
two recent cases decided by the Supreme Court, Vinoy v. NLRC, G.R. No. 126586,
February 02,2000, and Lim v. NLRC, G.R. No. 124630, February 19, 1999, the
definition of legitimate subcontracting is as follows:
Contracting or subcontracting shall be legitimate if the following conditions concur:
a. The contractor or subcontractor carries on a distinct and independent business and
undertakes to perform the job, work or service on its own account and under its own
responsibility, according to its own manner and method, and free from the control and
direction of the principal in all matters connected with the performance of the work except
as to the results thereof;
b. The contractor or subcontractor has substantial capital or investment;
c. The agreement between the principal and the contractor or subcontractor assures the
contractual employees entitlement to all occupational safety and health standards, free
exercise of the right to self organization, security of tenure, and social and welfare benefits.
23. What is substantial capital? Is substantial capital sufficient to establish legitimate
subcontracting?
Substantial capital refers to such investment, whether it is in the form of money,
facilities, tools, equipment, machineries, work premises, or subscribed capital stock that
would indicate the subcontractor's capacity to undertake the contracted or subcontracted
work or service independently. For example, a contractor or subcontractor with a capital
stock of P1 Million which is fully subscribed and paid for has been deemed by the Supreme
Court to be a highly capitalized venture which satisfies the requirement of substantial
capital.
Where a job contractor or subcontractor is highly capitalized, the Supreme Court has
held that it need not show evidence that it has investment in the form of tools, equipment,
machineries, work premises, among others, to be considered legitimate. However, it is still
necessary for it to show that it has the capacity to be an independent contractor. That is, it
can undertake the performance of the contract according to its own manner and method,
free from the supervision of the principal in all matters except as to the results of the work.

Malao, Mike

24. What is the basis of the State in prohibiting labor-only contracting? What is the
objective and the prohibition?
The basis of the State in prohibiting labor-only contracting are:
a. The Constitution, which provides that the State shall protect labor and promote its
welfare, and shall guarantee basic labor rights including just and humane terms and
conditions of employment and the right to self-organization.
b. Article 106 of the Labor Code, which allows the Secretary of Labor to distinguish
between labor-only contracting and job contracting to prevent any violation or
circumvention of the Labor Code.
The objective of the State in prohibiting labor-only contracting is to ensure that labor
laws are followed and to prevent the exploitation of workers. A labor-only contractor is one
who presents itself as an employer even if it does not have capital to run a business or
capacity to ensure that its workers are paid their wages and other benefits as prescribed by
law. As such, it cannot independently undertake to perform a contracted or subcontracted
job or service. To allow a labor-only contractor to operate is to give it an opportunity to
circumvent the law and to exploit workers.
25. If you are the counsel of an agency which is being charged of LABOR-ONLY
CONTRACTING, what evidence will you present to refute the charge? Explain.
I would present the same documents shown in the case of Escario vs. NLRC, G.R.
No. 124055, June 8, 2000, to wit:
D.L. Admark is a legitimate independent contractor. Among the circumstances which
tend to establish the status of D.L. Admark as a legitimate job contractor are:
a. The SEC registration certificate of D.L. Admark states that it is a firm engaged in
promotional, advertising, marketing and merchandising activities.
b. The service contract between CMC and D.L. Admark clearly provides that the
agreement is for the supply of sales promoting merchandising services rather than one of
manpower placement.
c. D.L. Admark was actually engaged in several activities such as advertising,
publication, promotions, marketing and merchandising. It had several merchandising
contracts with companies like Purefoods, Corona supply, Nabisco Biscuits and Licron. It
was likewise engaged in the publication business, as evidenced by its magazine, the
Phenomenon.
d. It had its own capital assets to carry out its promotion business. It then had current
assets amounting to P6 million and is therefore a highly capitalized venture. It had an
authorized capital stocks of P500,000. It owned several motor vehicles and other tools,
materials and equipment to service its clients. It paid rentals of P30,020 for the office space
it occupied.

26. What are the effects of a labor-only contracting arrangement?

The following are the effects:
a. The contractor or subcontractor will be treated as the agent of the principal. Since the
act of an agent is the act of the principal, representations made by the contractor or
subcontractor to the employees will bind the principal.

Malao, Mike

b. The principal will become the employer as if it directly employed the workers engaged
to undertake the contracted or subcontracted job or service. It will be responsible to them
for all their entitlements and benefits under the labor laws.
c. The principal and the contractor or subcontractor will be solidarily treated as the
employer.
d. The employees will become employees of the principal, subject to the classifications of
employees under Article 28 of the Labor Code.
If the labor-only contracting activity is undertaken by a legitimate labor organization,
a petition for cancellation of union registration may be filed against it, pursuant to Article
239 (e).
27. If a legitimate independent job contractor or subcontractor cannot pay the wages
of the employees it engages to perform the job or service, will the principal
automatically become the employer of such employees?
NO. Under Article 106, a principal has two types of liability in relation to the
employees of the contractor or subcontractor. The first type of liability is limited, and is
governed by the first two paragraphs of Article 106. Thus, mere inability of the contractor or
subcontractor to pay wages will not automatically make the principal the direct employer. It
will only make the principal jointly and severally liable with the contractor or subcontractor
for payment of the employees' wages to the extent of the work performed under the contract.
The second type of liability, which arises from the third and fourth paragraphs of
Article 106, is absolute and direct. This liability arises when there is labor-only contracting
as defined in D.O. No. 3. In such cases, the principal shall be held responsible to the
workers in the same manner and extent as if it directly employed these workers.
28. Which employer should be held liable for the wages of security guards, the
PRINCIPAL EMPLOYER or the AGENCY? Explain.
There existed a contractual agreement between PTSI and EAGLE, wherein the former
availed of the security services provided by the latter. In return, the security agency collects
from its client payment for its security services. This payment covers the wages for the
security guards and also expenses for their supervision and training, the guards bonds,
firearms with ammunitions, uniforms and other equipments [sic], accessories, tools,
materials and supplies necessary for the maintenance of a security force.
Premises considered, the security guards immediate recourse for the payment of the
increases is with their direct employer, EAGLE. However, in order for the security agency to
comply with the new wage and allowance rates it has to pay the security guards, the Wage
Orders made specific provision to amend existing contracts for security services by allowing
the adjustment of the consideration paid by the principal to the security agency concerned.
What the Wage Orders require, therefore, is the amendment of the contract as to the
consideration to cover the service contractors payment of the increase mandated. In the end
therefore, the ultimate liability for the payment of the increases rests with the principal
(Security and Credit Investigation Inc. v. NLRC, G.R. No. 114316, January 26, 2001).

Malao, Mike

29. When is an insurance agent deemed an independent contractor of an insurance

company?
As held in Insular Life Insurance Company, Ltd. vs. NLRC, G.R. No. 84484, Nov.
15, 1989, There is no employer-employee relationship between a commission agent and an
investment company. The former is an independent contractor where said agent and others
similarly placed are:
a. paid compensation in the form of commissions based on percentages of their sales,
any balance of commissions earned being payable to their legal representatives in the event
of death or resignation;
b. required to put up performance bond;
c. subject to a set of rules and regulations governing the performance of their duties
under the agreement with the company and termination of the services for certain causes;
d. not required to report for work at any time, nor to devote their time exclusively to
working for the company nor to submit a record of their activities, and who finally
shouldered their own selling and transportation expenses.
Logically, the line should be drawn between rules that merely serve as guidelines
toward the achievement of the mutually desired result without dictating the means or
methods to be employed in attaining it, and those that control or fix the methodology and
bind or restrict the party hired to the use of such means. The first, which aims only to
promote the result, create no employer-employee relationship unlike the second, which
addresses both the result and the means used to achieve it. The distinction acquires
particular relevance in the case of an enterprise affected with public interest, as in the
business of insurance, which on that account, is subject to regulations by the State with
respect, not only to the relations between insurer and insured, but also to the internal
affairs of the insurance company.
30. When are salesmen considered independent contractors rather than regular
employees of a business establishment?
In, MAFINCO Trading Corporation v. Ople, GR No. L-37790, March 25, 1976, it
was held where, as in the case at bar, a peddler formally entered into a peddling contract
with petitioner for the purchase and sale of Cosmos softdrinks, indicating the manner of
selling the goods, whereby the petitioner provides the peddler with delivery truck and bears
the cost of gasoline and maintenance of' the truck; while on the other hand the peddler
employs the driver and helpers and take care of the latter's compensation and social
security contributions, the peddlers are independent contractors and not employees of
petitioner.
31. Is the joint and several liability of the principal and the job contractor under
Articles 107 and 109, in relation to Article 106 of the Labor Code, dependent upon the
insolvency or unwillingness to pay on the part of the contractor or direct employees?
NO. Nothing in Article 106 indicates that insolvency or unwillingness to pay by the
contractor or direct employer is a prerequisite for the joint and several liability of the
principal or indirect employer. This joint and several liability facilitates, if not guarantees,
payment of the workers performance of any work, task, job or project, thus giving the
workers ample protection as mandated by the 1987 Constitution (Development Bank of
the Philippines vs. NLRC, June 17, 1994).

Malao, Mike

32. A taxicab company required its taxi drivers to make deposits to defray any
deficiency which the latter may incur in the remittance of their boundary and to
cover car wash payments. Is this requirement authorized under Article 114 of the
Labor Code? Explain.
The requirement for deposit to defray any deficiency in the remittance of drivers
boundary is not lawful. Article 114, which provides the rule on deposits for loss or damage
to tools, materials or equipment supplied by the employer, does not apply to or permit such
kind of deposit.
But the requirement for deposit for car wash payments is lawful. There is no dispute
that as a matter of practice in the taxi industry, after a tour of duty, it is incumbent upon
the driver to restore the unit he has driven to the same clean condition when he took it out.
Furthermore, the amounts doled out were paid directly to the persons who washed the
units. Finally, it will be noted that there was nothing to prevent the drivers from cleaning
the taxi units themselves, if they wanted their car wash payments (Five J Taxi vs. NLRC,
August 22, 1994).
33. Do disparity in wages between employees holding similar positions but located in
different regions of the country constitute wage distortion as contemplated by law?
Explain.
NO. Varying in each region of the country are controlling facts, such as the cost of
living, supply and demand of basic goods, services and necessities; and the purchasing
power of the peso. The wages in different regions are not uniform. And the fact that a person
is receiving more in one region does not necessarily mean that he or she is better off than a
person receiving less in another region.
Wage distortion presupposes an increase in the compensation of the lower ranks in an
office hierarchy without a corresponding raise for higher-tiered employees in the same
region of the country, resulting in the elimination or the severe dimunition of the distinction
between the two groups (Prudential Bank Association vs. Prudential Bank and Trust
Co., January 25, 1999).
34. Does a wage increase granted pursuant to a collective bargaining agreement
constitute compliance with a subsequently issued wage order?
NO. A collective bargaining agreement is a contractual obligation. It is distinct from an
obligation imposed by law. The terms and conditions of a collective bargaining contract
constitute the law between the parties. Beneficiaries thereof are therefore, by right, entitled
to the fulfillment of the obligation prescribed therein. Moreover, compliance with a collective
bargaining agreement is mandated by the expressed policy to give protection to labor. Unless
otherwise provided by law, said policy should be given paramount consideration.
Increments to the laborers' financial gratification, be they in the form of salary increases or
changes in the salary scale are aimed at one thing - improvement of the economic
predicament of the laborers. As such, they should be viewed in the light of the State's
avowed policy to protect labor. Thus, having entered into an agreement with its employees,
an employer may not be allowed to renege on its obligation under a collective bargaining
agreement should, at the same time, the law grant the employees the same or better terms
and conditions of employment. Employee benefits derived from law are exclusive of benefits
arrived at through negotiation and agreement unless otherwise provided by the agreement
itself or by law. (Meycauayan College vs. Drilon, G.R. No. 81144, May 7, 1990).
Malao, Mike

35. Can a woman be employed in any kind of occupation or undertaking?

YES, she can be employed in any occupation or undertaking allowable by law,
provided it is not deleterious to her health and safety. She should not be discriminated
against in employment by reason of her age, marital status and pregnancy.
36. What are considered as acts of discrimination against women?
The following are considered acts of discrimination:
a. Payment of a lesser compensation, including wage, salary and fringe benefits, to a
female employee as against a male employee, for work of equal value;
b. Favoring a male employee over a female employee with respect to promotion, training
opportunities, study and scholarship grants solely on account of their sexes.
37. How much maternity leave benefit will a pregnant woman receive? Who will pay
the maternity leave benefits?
The member shall receive a maternity benefit equivalent to 100% of her average daily
salary credit multiplied by 60 days for normal delivery; or by 78 days in cases of caesarian
section delivery.
The employer advances the maternity leave benefit to the qualified employee in full or
in two equal installments, the first to be made upon receipt of maternity leave application
and the second not later than 30-days after payment of the first installment. Upon receipt of
satisfactory proof of such payment, the SSS will reimburse the employer after the
contingency for the amount of maternity benefit legally advanced to the employee.

38. Can a maternity leave benefit be extended beyond the allowable PERIOD?
YES, a maternity leave may be extended beyond 60 days upon request of the woman
employee. Such request must be due to illness medically certified to arise out of her
pregnancy, delivery, complete abortion or miscarriage which renders her unfit to work. The
extended leave benefit shall be a hindrance to recover sickness benefit for the same period of
60 days for the same childbirth, abortion or miscarriage.
39. What is the status of a woman permitted or suffered to work in any night club, bar,
or other similar establishment under the Labor Code?
Any woman who is permitted or suffered to work with or without compensation in any
night club, cocktail lounge, massage clinic, bar, or similar establishment shall be considered
as an employee of such establishment for purposes of labor and social legislation.
40. What other statutory benefits and services shall an employer provide the woman
employee?
The employer shall provide the following:
a. Free family planning services to employees and their spouses, if the establishment
regularly employ more than 200 workers;

Malao, Mike

b. Holiday pay during the period that the woman employee is receiving maternity or
disability benefits, equivalent to the same percentage as the benefit granted by SSS;
c. Flexible work schedule to any solo parent as defined in Republic Act No. 8972;
d. Parental leave of not more than seven days every year to the solo parent who has
rendered at least one-year service.
e. facilities for women such as seats, separate toilet rooms and nursery in the work
place.
f. to determine the appropriate minimum age and other standards for retirement in
special occupations for women.
41. Who are considered young workers and working children?
Young workers are in different categories, namely:
a. The working youth who are between 15 and 30 years of age (Republic Act No. 8044);
b. Employed minors who are from 15 to below 18 years of age (Labor Code);
c. Working children who are below 15 years of age, subject to the exceptions specified by
Republic Act No. 7658;
d. Those engaged in Child Labor, which is prohibited by law.
42. What is the minimum employable age for young workers?
The minimum employable age for young workers is 18 years old. However, any person
between 15 and 18 years of age may be employed in undertakings not hazardous or
deleterious in nature.
43. What is a non-hazardous undertaking?
It refers to any kind of work or activity, in which the employee is not exposed to any
risk that constitutes an imminent danger to his or her life and limb, safety and health.
44. What are the hazardous work and activities to persons below 18 years of age?
Hazardous work and activities to persons below 18 years age include:
a. Work which exposes children to physical; psychological or sexual abuse;
b. Work under ground, under water, at dangerous heights or at unguarded heights of
two meters and above, or in confined spaces;
c. Work with hazardous machinery, equipment and tools, or which involves manual
handling or transport of heavy loads;
d. Work in an unhealthy environment which may expose children to hazardous
processes, to temperatures, noise levels or vibrations damaging to their health, to toxic,
corrosive, poisonous, noxious, explosive, flammable and combustible substances or
composites, to harmful biological agents, or to other dangerous chemicals including
pharmaceuticals.
e. Work under particularly difficult conditions such as work for long hours or during the
night, or work where the child is unreasonably confined to the premises of the employer.
45. Can a child below 15 years of age be employed or made to work?
A child below 15 years old is NOT permitted to work in any public or private
establishment EXCEPT in these two situations:
Malao, Mike

1. When the child works directly under the sole responsibility of his or her parents or
guardians or legal guardian and where only members of the employers family are employed,
on the following conditions:
a. The employment does not endanger the childs life, safety and health and morals;
b. The employment does not impair the childs moral development
c. The employer parent or legal guardian provides the child with primary and / or
secondary education prescribed by the Department of Education, Culture and
Sports (DECS).
2. Where the childs employment or participation in public entertainment or information
through cinema, theater, radio or television is essential, provided that:
a. The employment does not involve advertisement or commercials promoting
alcoholic beverages, intoxicating drinks, tobacco and its by-products or exhibiting
violence;
b. There is a written contract approved by the DOLE;
c. The employment does not endanger the childs life, safety, health and morals;
d. The employment does not interfere with his or her schooling.
46. Once a firm validly employs a young person, is he or she entitled to the same
terms and conditions of employment accorded to an employee of legal age?
YES. An employer is prohibited by the Labor Code to discriminate against any young
person with respect to terms and conditions of employment on account of his or her being a
minor.
47. Can a person between 15 and 18 years of age be allowed to engage in domestic
service?
A minor, whether male or female, may be employed as a domestic servant to render
service in and about the employers home, which services are usually necessary or desirable
for the maintenance and enjoyment thereof, such as ministering to the personal comfort and
enjoyment of the employers family.
48. Can a young worker be a member of the Social Security System (SSS) and avail of
the social security (SS) and Employees Compensation (EC) benefits?
YES. The Social Security Law provides that coverage in the SSS is compulsory upon
all employees not over 60 years of age. This law defines an employee as any person who
performs services for an employer and who receives compensation for such services, where
there is an employer-employee relationship. Self-employed young persons can also be SSS
members.
49. Who are considered child laborers?
Child laborers are persons aged below 15, or from 15 to below 18 years, performing
work or service that is hazardous or deleterious in nature, or exploitative, or unsupervised
by the childs parent or guardian, or that interferes with normal development, or deprives
that childs right to health and education.
However, not all children who work are engaged in child labor. Work performed by any
person below 15 years of age is not considered child labor if it falls under allowable
situations under Republic Act No. 7658. Light work that is occasional, legal and respects the
childs right to health and education is not child labor.
Malao, Mike

50. You were asked by a paint manufacturing company about the possible employment
as a mixer of a person, aged seventeen (17), who shall be directly under the care of the
section supervisor. What advice would you give? Explain briefly.
I will advise the paint manufacturing company that it cannot hire a person aged
seventeen (17). Art. 139 (c) of the Labor Code provides that a person below eighteen (18)
years of age shall not be allowed to work in an undertaking which is hazardous or
deleterious in nature as determined by the Secretary of Labor. The Secretary of Labor has
classified paint manufacturing as hazardous work.
51. What are the benefits provided by law to young and deserving students who want
to work?
Republic Act No. 7323 provides for employment assistance to students who are at
least 15 but not more than 25 years of age enrolled or intending to be enrolled in any
secondary, tertiary, vocational or technological institutions. The qualified and deserving
youth can be employed during the summer and /or Christmas vacation as aid to the pursuit
of their education.
As incentives for employers, they shall pay the students only 60% of the basic wage
and the remaining 40% in the form of educational vouchers payable by the government. An
employer, under this law, can be a national or local government office or a private
establishment or undertaking.
52. Are SSS benefits considered property earned by the member during his lifetime?
Do they form part of his estate? Explain.
The benefits receivable under the SSS law are in the nature of a special privilege or an
arrangement secured by the law pursuant to the policy of the State to provide social security
to the workingman. Such benefits cannot be considered as property earned by the member
during his lifetime. His contributions to the fund, it may be noted, constitute only an
insignificant portion thereof. Thus, the benefits are specifically declared not transferable and
exempt from tax legal processes and liens. Furthermore, in the settlement of claims, the
procedure to be observed is governed not by the general provisions of law, but by rules and
regulations promulgated by the Social Security Commission. And it is not the probate or
regular court but the Commission that determines the persons to whom the benefits are
payable (Social Security System vs. Davac, G.R. No. L-21642, July 30, 1966).
53. Does the delay on the part of the victim of sexual harassment to complain said act
impair his cause of action against his/her employer?
NO. The gravamen of the offense in sexual harassment is not the violation of the
employees sexuality but the abuse of power by the employer. Any employee, male or female,
may rightfully cry foul provided the claim is well substantiated. Strictly speaking there is not
time period within which he or she is expected to complain through the proper channels.
The time to do so may vary depending upon the needs, circumstances, and more
importantly, the emotional threshold of the employee (Philippine Aeolus Automotive
United Corp. vs. NLRC, G.R. No. 124617, April 28, 2000).
54. The owners of FALCON Factory, a company engaged in the assembling of
automotive components, decided to have their building renovated. Fifty (50) persons,
Malao, Mike

composed of engineers, architects and other construction workers, were hired by the
company for this purpose. The work is estimated to be completed in three (3) years.
The employees contended that since the work would be completed after more than
one (1) year, they should be subject to compulsory coverage under the Social Security
Law. Is their contention correct?
NO. Under Section 8 (j) of RA 1161, as amended, employment of purely casual
employees, not for the purpose of the occupation or business of the employer are excepted
from compulsory coverage.
An employment is purely casual if it is not for the purpose of occupation or business
of the employer.
In the problem given, Falcon Factory is a company engaged in the assembling of
automotive components. The fifty (50) persons (engineers, architects and construction
workers) were hired by Falcon Factory to renovate its building. The work to be performed by
these fifty (50) people is not in connection with the purpose of the business of the factory.
Hence, the employment of these fifty (50) persons is purely casual. They are therefore
excepted from the compulsory coverage of the SSS law.
LABOR RELATIONS
55. PICOP's main thesis is that the positions Section Heads and Supervisors, who have
been designated as Section Managers and Unit Managers, as the case may be, were
converted to managerial employees under the decentralization and reorganization
program it implemented in 1989. Being managerial employees, with alleged authority
to hire and fire employees, they are ineligible for union membership under Article 245
of the Labor Code. Furthermore, PICOP contends that no malice should be imputed
against it for implementing its decentralization program only after the petition for
certification election was filed inasmuch as the same is a valid exercise of its
management prerogative, and that said program has long been in the drawing boards
of the company, which was realized only in 1989 and fully implemented in 1991.
PICOP emphatically stresses that it could not have conceptualized the
decentralization program only for the purpose of "thwarting the right of the concerned
employees to self-organization." Is PICOPs contention tenable?
NO. The petition not being meritorious, must fail and the same should be as it is
hereby dismissed. In United Pepsi-Cola Supervisory Union (UPSU) v. Laguesma, we had
occasion to elucidate on the term "managerial employees." Managerial employees are ranked
as Top Managers, Middle Managers and First Line Managers. Top and Middle Managers
have the authority to devise, implement and control strategic and operational policies while
the task of First-Line Managers is simply to ensure that such policies are carried out by the
rank-and- file employees of an organization. Under this distinction, "managerial employees"
therefore fall in two (2) categories, namely, the "managers" per se composed of Top and
Middle Managers, and the "supervisors" composed of First-Line Managers. Thus, the mere
fact that an employee is designated manager" does not ipso facto make him one. Designation
should be reconciled with the actual job description of the employee, for it is the job
description that determines the nature of employment (PICOP vs. Laguesma, G.R. No.
101738, April 12, 2000).

Malao, Mike

56. Do labor arbiters have jurisdiction over illegal dismissal cases that may be filed
against priests and ministers?
YES. The fact that a case involves the church and its religious minister does not ipso
facto give the case a religious significance. Simply stated, what is involved in an illegal
dismissal case is the relationship of the church as an employer and the minister as an
employeea purely secular matter not related to the practice of faith, worship, or doctrines
of the church (Austria vs. NLRC, G.R. No. 124382, August 16, 1999).
57. Do Labor Arbiters or the NLRC have jurisdiction over criminal cases involving
violations of the penal provisions of labor laws? Explain.
Labor Arbiters or the NLRC are not invested with the judicial power; they merely
exercise quasi-judicial functions. In the hearing and disposition of cases brought before
them, they do not adhere strictly to the technical rules of evidence. This is required in
criminal cases where the guilt of the accused must be established beyond reasonable doubt.
The regular courts have jurisdiction over criminal cases involving violations of the labor
laws.
58. Explain the doctrine of forum non-conveniens. May this doctrine be invoked
against the exercise of jurisdiction by the labor arbiter?
Under the rule of forum non conveniens, a Philippine court or agency MAY assume
jurisdiction over the case if it chooses to do so, PROVIDED:
a. that the Philippine court is one to which the parties may conveniently resort to;
b. that the Philippine court is in a position to make an intelligent decision as to the law
and the facts; and
c. that the Philippine court has or is likely to have power to enforce its decision.
This doctrine may be invoked against the exercise of jurisdiction of the labor arbiters
as held in the case of Manila Hotel Corporation and Manila Hotel International limited
vs. NLRC and Marcelo Santos which ruled that the NLRC was a seriously inconvenient
forum on the following grounds:
a. The NLRC is an inconvenient forum given that all the incidents of the case- from the
time of recruitment, to employment, and to dismissal occurred outside the Philippines. The
inconvenience is compounded by the fact that the proper defendants the Palace Hotel and
MHICL are not nationals of the Philippines. Neither are they doing business in the
Philippines. Likewise, the main witnesses are non-residents of the Philippines.
b. Neither can an intelligent decision be made as to the law governing the employment
contract as such was perfected in foreign soil. This calls for the application of the principle
of lex loci contractus (the law of the place where the contract was made).
c. Even assuming that the proper decision could be reached by the NLRC, such would
not have any binding effect against the employer, the Palace Hotel. The Palace hotel is a
corporation incorporated under the laws of China and was not even served with summons,
hence jurisdictions over its person was not acquired.

Malao, Mike

59. Does the principle of Jurisdiction by Estoppel apply in labor cases?

YES, the principle of Jurisdiction by Estoppel applies to labor cases as was held by
the Supreme Court in the case of Prudential Bank and Trust Company vs. Reyes, G.Rr
No. 141093, Feb. 20, 2001.
Under this principle, a party to a labor case is estopped from raising the issue of
jurisdiction of the labor arbiter when he has participated in the proceedings from start to
finish. In this case the petitioner bank actively participated in the proceedings before the
Labor Arbiter, NLRC and Court of Appeals. It was only when the Court of Appeals made an
adverse decision did it raise the issue of jurisdiction. The Supreme Court held that it was
already too late to raise the issue of jurisdiction as the petitioner was already in estoppel.
While it is true that jurisdiction over the subject matter of a case may be raised at any time
of the proceedings, this rule presupposes that laches or estoppel has not supervened.
60. Does the Labor Arbiter have jurisdiction over disputes involving the wages and
terms and conditions of employment of COOPERATIVE employees? Explain.
YES. In the case of Perpetual Help Credit Coop Inc. vs. Faburada, G.R. No.
121498, October 8, 2001 it was clarified that:
ART. 121. Settlement of Disputes. Disputes among members, officers,
directors, and committee members, and intra-cooperative disputes shall, as far as
practicable, be settled amicably in accordance with the conciliation or mediation
mechanisms embodied in the by-laws of the cooperative, and in applicable laws.
Should such a conciliation/mediation proceeding fail, the matter shall be settled in a
court of competent jurisdiction."
Complementing this Article is Section 8 of R.A. No. 6939 (Cooperative Development
Authority Law) which reads:
SEC. 8
Mediation and Conciliation. Upon request of either or both parties,
the Authority shall mediate and conciliate disputes within a cooperative or between
cooperatives: Provided, That if no mediation or conciliation succeeds within three (3)
months from request thereof, a certificate of non-resolution shall be issued by the
Commission prior to the filing of appropriate action before the proper courts.
The above provisions apply to members, officers and directors of the cooperative
involved in disputes within a cooperative or between cooperatives.
There is no evidence that private respondents are members of petitioner PHCCI and
even if they are, the dispute is about payment of wages, overtime pay, rest day and
termination of employment. Under Art. 217 of the Labor Code, these disputes are within the
original and exclusive jurisdiction of the Labor Arbiter.
61. May an execution be stopped merely because of a third party claim?
NO. The Labor Code grants the National Labor Relations Commission (NLRC)
sufficient authority and power to execute final judgments and awards. Thus, a third-party
claim of ownership on a levied property should not necessarily prevent execution,
particularly where as in the present case the surrounding circumstances point to a
fraudulent claim. In fact, the disputed contract of sale here is not merely rescissible; it is
simulated or fictitious and, hence, void ab initio (Tanongon v. Samson, G.R. No. 140089,
May 9, 2002).
Malao, Mike

62. May a temporary restraining order in a labor dispute be issued ex parte?

YES. The issuance of an ex parte TRO in a labor dispute is not per se prohibited. Its
issuance, however should be characterized by care and caution for the law requires that it
be clearly justified by considerations of extreme necessity, as when the commission of
unlawful acts is causing substantial irreparable injury to company properties and the
company is, for the moment, bereft of an adequate remedy at law (Bisig ng Manggagawa
sa Concrete Aggregates, Inc. vs. NLRC, September 16, 1993).
63. In cases involving monetary award, why does the law require an employer to post
a cash or surety bond as an indispensable condition for the perfection of an appeal?
An appeal stays the execution of an award. Such decision could be in the form of a
monetary award in favor of an employee. Thus, an appeal will mean that a monetary award
will not be executed. To ensure that an appealed monetary award is affirmed and has
become final and executory, Art. 223 requires that as an indispensable condition for the
perfection of an appeal by an employer, he must post a cash or surety bond issued by a
reputable bonding company duly accredited by the NLRC in the amount equivalent to the
monetary award in the judgment appealed from.
64. What is the remedy in case the Regional Office or BLR verbally denies or refuses to
act on an application for registration for a considerable amount of time?
Secure a notice of denial in order to avail of the remedy of appeal. After all, the
decision of the Regional Office or the Bureau denying the application for registration shall be
in writing, stating in clear terms the reasons for such a denial. A copy of the notice of denial
should be furnished to the applicant union.
65. What is the effect of the filing/pendency of inter/intra union and other related
labor disputes to the relationship of the party litigants?
The rights, relationships and obligations of the parties-litigants against each other
and other parties-in-interest prior to the institution of the petition shall continue to remain
during the pendency of the petition and until the date of finality of the decision rendered
therein. Thereafter, the rights, relationships and obligations of the parties-litigants against
each other and other parties-in-interest shall be governed by the decision so ordered.
The filing or pendency of any inter/intra-union dispute and other related labor
relations dispute is not a prejudicial question to any petition for certification election and
shall not be a ground for the dismissal of petition for certification election or suspension of
proceedings for certification election (Sections 3 and 4, RULE XI Book V, IRR 2003).
66. Can there be several unions in one enterprise?
YES. There can be several bargaining units in one employer unit, and at least one
legitimate labor organization per bargaining unit. Also, there can be several unions within
one bargaining unit, since there is no law precluding such a situation. But there can only be
one bargaining agent [to the exclusion of others] which shall be designated either by
certification or consent election, or by voluntary recognition as the case may be.

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67. Can all rank and file employees join, assist, or form a labor union?
NO. Confidential employees who are ALSO rank and file employees cannot form, join,
or assist unions if they assist in a confidential capacity or have access to the confidential
matters of persons who exercise managerial functions in the field of labor relations
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 for the ineligibility of managerial employees to
form, assist or join a labor union equally applies to them.
In Bulletin Publishing Co., Inc. vs. Hon. Augusta Sanchez,144 SCRA 628 [1986]
the Court elaborated on the rationale for such inhibition in that, if the managerial
employees would belong to, or be affiliated with a Union, the latter might not be assured of
their loyalty to the Union in view of evident conflict of interests. The Union can also become
company-dominated with the presence of managerial employees in Union membership."
This also holds true for confidential employees such as accounting personnel, radio
and telegraph operators, who having access to confidential information, may become the
source of undue advantage. Said employee(s) may act as a spy (ies) of either party to a
collective bargaining agreement. This is especially true in the present case where the
petitioning Union is already the bargaining agent of the rank-and-file employees in the
establishment. To allow confidential employees to join the existing Union of the rank-and file
would be in violation of the terms of the Collective Bargaining Agreement wherein this kind
of employees by the nature of their functions/positions are expressly excluded. (Philips vs.
NLRC, G.R. No. 88957, June 25, 1992).
68. In what forms is company domination of a labor union made manifest?
a. Initiation of the company union idea, which may occur in three styles:
(1) Outright formation by the employer or his representative\
(2) Employee formation or outright demand or influence of the employer
(3) Managerially motivated formation by employees.
b. Financial support to the union
An employer commits unfair labor practice if he defrays the union expenses or pays
the fees of the attorney who drafted the unions constitution and by-laws.
c. Employer encouragement and assistance
Immediately granting the union exclusive recognition as a bargaining agent without
determining whether the union represents the majority of employees is an illegal form of
assistance amounting to unfair labor practice.
d. Supervisory assistance
This takes the form of soliciting membership, permitting union activities during
working time or coercing employees to join the union by threats of dismissal or demotion
(Philippine American Cigar & Cigarette Factory Workers Union vs. Philippine
American Cigar & Cigarette Mfg. Co. Inc., G.R. No. L-18364 February 28, 1963).

Malao, Mike

69. XYZ Co. was informed that a petition for certification election has been filed by
ABC Union, a legitimate labor organization within XYZ Co beyond the 60-day freedom
period granted to the former. By virtue of said information. XYZ Co. unilaterally
suspended the on-going negotiations for a new CBA with XYZ Co. Employees
Association (XYZEA) and refused to do any further negotiations and bargaining. Was
there unfair labor practice on the part of XYZ Co.?
Yes. The duty to bargain collectively includes the mutual obligation to meet and
convene promptly and expeditiously in good faith for the purpose of negotiating an
agreement. In order to allow the employer to validly suspend the bargaining process, there
must be a valid petition for Certification Election raising a legitimate representation issue.
When a petition is filed OUTSIDE the 60-day freedom period, there is no legitimate
representation issue and the filing of said petition do not constitute a bar to an on-going
negotiation (Colegio de San Juan de Letran v. Association of Employees and Faculty of
Letran, G.R. No. 14147, September 18, 2000).
70. What is the legal justification of a UNION SHOP provision in the CBA? Explain.
The Labor Code, as amended, recognizes the validity of a union shop agreement in
Article 248 thereof, Section (e) provides, to wit:
to discriminate in regard to hire or tenure of employment or any term or condition of
employment in order to encourage or discourage membership in any labor organization.
Nothing in this Code or in any other law shall prevent the parties from requiring
membership in a recognized collective bargaining agent as a condition for employment,
except of those employees who are already members of another union at the time of the
signing of the collective bargaining agreement.
We affirm the ruling of the voluntary arbitrator for the inclusion of a union shop
provision in addition to the existing maintenance of membership clause in the collective
bargaining agreement. As the Solicitor General asserted in his consolidated Comment, the
University's reliance on the case of Victoriano vs. Elizalde Rope Workers' Union is clearly
misplaced. In that case, we ruled that "...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 (DLSU
vs. Laguesma, G.R.No. 109002, 12 April 2000).
71. Union X, a local/chapter of Y Federation moved to disaffiliate from the latter. The
move was supported by almost all of its members. During the pendency of the
disaffiliation proceeding, the company entered into a collective bargaining agreement
with Union X. Y federation filed an action for ULP against the company. Decide.
If the local unions move to disaffiliate is supported by almost all [majority] the
members of said union, and such fact is not disputed by the federation [mother union], the
companys act of entering into a CBA with the local union does not constitute ULP.
As held in the case of Philippine Skylanders vs. NLRC, G.R. No. 127374, January
31, 2002, as PSEA has validly severed itself from PAFLU, there would be no restrictions

Malao, Mike

which could validly hinder it from subsequently affiliating with NCW and entering into a
CBA in behalf of its members.
Applying the principle of agency, the local union being the agent of the real principal
the union members; and the federation being merely the agent of the agent the local
union, the former which has chosen to disaffiliate from the latter as willed by majority of its
members may validly enter into a CBA with the employer without holding the employer
liable for ULP.
72. What is a sweetheart contract?
Article 249 considers it an unfair labor practice for a labor organization to ask for or
accept negotiation of attorneys fees from the employer in settling a bargaining issue or a
dispute. When it happens, the resulting Collective Bargaining Agreement (CBA) will most
likely be a sweetheart contract, a CBA that does not substantially improve the employees
wages and benefits. Under Article 239 (f), one of the grounds for cancellation of union
registration is entering into collective bargaining agreements which provide terms and
conditions of employment below minimum standards established by law.
73. May an electric cooperative be held liable to pay damages for the ULP it has
committed against its employees? How much?
YES, but the amount should be tempered. For this reason, we find it proper in this
case to impose moral and exemplary damages on private respondent. However, the damages
awarded by the labor arbiter, to our mind, are excessive. In determining the amount of
damages recoverable, the business, social and financial position of the offended parties and
the business and financial position of the offender are taken into account. It is our view that
herein private respondents had not fully acted in good faith. However, we are cognizant that
a cooperative promotes the welfare of its own members. The economic benefits filter to the
cooperative members. Either equally or proportionally, they are distributed among members
in correlation with the resources of the association utilized. Cooperatives help promote
economic democracy and support community development.
Under these circumstances, we deem it proper to reduce moral damages to only
P10,000.00 payable by private respondent NEECO I to each individual petitioner. We also
deem it sufficient for private respondent NEECO I to pay each individual petitioner
P5,000.00 to answer for exemplary damages, based on the provisions of Articles 2229 and
2232 of the Civil Code (NEECO I v. NLRC, G.R. No. 116066, January 24, 2000).
74. What is [an] in-house agency?
An in-house agency is where a contractor or subcontractor is engaged in the supply of
labor which is owned, managed, or controlled by the principal and operates solely for the
principal owning, managing, and controlling it. It is prohibited by law.
75. What is the so-called HOLDOVER PRINCIPLE in a CBA?
In the case of New Pacific Timber vs. NLRC, the court had the occasion to rule that
Article 253 and 253-A mandate the parties to keep the status quo and to continue in full
force and effect the terms and conditions of the existing agreement during the 60-day period
prior to the expiration of the old CBHA and/or until a new agreement is reached by the
parties. Consequently, the automatic renewal clause provided by the law, which is deemed
Malao, Mike

incorporated in all CBAs provides the reason why the new CBA can only be given a
prospective effect. Thus, employees hired after the stipulated term of a CBA are entitled to
the benefits provided thereunder. To exclude them would constitute undue discrimination
and deprive them of monetary benefits they would otherwise be entitled to under a new
collective bargaining contract to which they would have been parties.
76. Which is the better barometer of the true financial standing of a company for
purposes of resolving an economic deadlock in collective bargaining, a proposed
budget or an audited financial statement. Explain.
As we ruled in the case of Caltex Refinery Employees Association (CREA) vs. Jose
S. Brillantes, (279 SCRA 218, 1997) [w]e believe that the standard proof of a company's
financial standing is its financial statements duly audited by independent and credible
external auditors." Financial statements audited by independent external auditors
constitute the normal method of proof of profit and loss performance of a company. The
financial capability of a company cannot be based on its proposed budget because a
proposed budget does not reflect the true financial condition of a company, unlike audited
financial statements, and more importantly, the use of a proposed budget as proof of a
company's financial condition would be susceptible to abuse by scheming employers who
might be merely feigning dire financial condition in their business ventures in order to avoid
granting salary increases and fringe benefits to their employees.
77. What is the controlling doctrine on the issue of RETROACTIVITY of CBA benefits?
Explain. May the Secretary of Labor order the retroactivity of a CBA?
Labor laws are silent as to when an arbitral award in a labor dispute where the
Secretary had assumed jurisdiction by virtue of Article 263 (g) of the Labor Code shall
retroact. In general, a CBA negotiated within six months after the expiration of the existing
CBA retroacts to the day immediately following such date and if agreed thereafter, the
effectivity depends on the agreement of the parties. On the other hand, the law is silent as to
the retroactivity of a CBA arbitral award or that granted not by virtue of the mutual
agreement of the parties but by intervention of the government. Despite the silence of the
law, the Court rules herein that CBA arbitral awards granted after six months from the
expiration of the last CBA shall retroact to such time agreed upon by both employer and the
employees or their union. Absent such an agreement as to retroactivity, the award shall
retroact to the first day after the six-month period following the expiration of the last day of
the CBA should there be one. In the absence of a CBA, the Secretary's determination of the
date of retroactivity as part of his discretionary powers over arbitral awards shall control
(MERALCO v. Quisumbing, G.R. No. 127598, February 22, 2000).
78. May the Labor Unions and the Company enter into a CBA that grants a
moratorium of ten years in collective bargaining? Is this not a novation of the unions
right to collective bargaining? Explain.
On the second issue, petitioners contend that the controverted PAL-PALEA agreement
is void because it abrogated the right of workers to self-organization and their right to
collective bargaining. Petitioners claim that the agreement was not meant merely to suspend
the existing PAL-PALEA CBA, which expires on September 30, 2000, but also to foreclose
any renegotiation or any possibility to forge a new CBA for a decade or up to 2008. It violates
the protection to labor policy laid down by the Constitution.
Under Article 253-A of the Labor Code insofar as representation is concerned, a CBA
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has a term of five years, while the other provisions, except for representation, may be
negotiated not later than three years after the execution. Petitioners submit that a 10-year
CBA suspension is inordinately long, way beyond the maximum statutory life of a CBA,
provided for in Article 253-A. By agreeing to a 10-year suspension, PALEA, in effect,
abdicated the workers constitutional right to bargain for another CBA at the mandated
time. We find the argument devoid of merit (Rivera v. Espiritu, G.R. No. 135547, January
23, 2002).
79. Is there a conflict between a CBA that grants a 10-year moratorium on CBA
bargaining on one hand, and Art. 253-A of the Labor Code, on the other? Explain.
The assailed PAL-PALEA agreement was the result of voluntary collective bargaining
negotiations undertaken in the light of the severe financial situation faced by the employer,
with the peculiar and unique intention of not merely promoting industrial peace at PAL, but
preventing the latters closure. We find no conflict between said agreement and Article 253-A
of the Labor Code. Article 253-A has a two-fold purpose. One is to promote industrial
stability and predictability. Inasmuch as the agreement sought to promote industrial peace
at PAL during its rehabilitation, said agreement satisfies the first purpose of Article 253-A.
The other is to assign specific timetables wherein negotiations become a matter of right and
requirement. Nothing in Article 253-A prohibits the parties from waiving or suspending the
mandatory timetables and agreeing on the remedies to enforce the same.
In the instant case, it was PALEA, as the exclusive bargaining agent of PALs ground
employees that voluntarily entered into the CBA with PAL. It was also PALEA that
voluntarily opted for the 10-year suspension of the CBA. Either case was the unions
exercise of its right to collective bargaining. The right to free collective bargaining, after all,
includes the right to suspend it (Rivera v. Espiritu, G.R. No. 135547, January 23, 2002).
80. Distinguish and/or explain the following terms: (1) Direct Certification; (2)
Certification Election; and (3) Consent Election.

Direct
Certification

Certification
Election

Consent
Election

Med-Arbiter certifies that a certain Union is the

exclusive collective bargaining representative of the
employees of an appropriate bargaining unit without
holding of a certification election, but merely on the
basis of evidence presented in support of the Unions
claim that it is the choice of the majority of the
employees. Such evidence may consist of affidavits
made by a clear majority of the employees stating that
they are members of and are supporting the Union
petitioning for direct certification to be their exclusive
collective bargaining representation (Prohibited by law
under E.O. 111)
A certification election is an election ordered by MedArbiter for the purpose of determining the sole and
exclusive bargaining agent of the employees in an
appropriate bargaining unit.
A consent election is an election agreed upon by the
parties to determine the issue of majority
representation of all workers of an appropriate
collective bargaining unit not for the purposes of
Malao, Mike

determining the sole and exclusive bargaining agent of

the employees of the bargaining unit but only for the
purpose of administering the existing CBA in case of
massive disaffiliation of union members.
81. Can the Bureau of Labor Relations certify a union as the exclusive bargaining
representative after showing proof of majority representation through union
membership cards without conducting an election?
NO. The Bureau of Labor Relations cannot certify a union as the exclusive collective
bargaining representative after a showing of proof of majority representation through union
membership cards without conducting a certification election. The Labor Code (in Arts. 256
and 258) provides only for a certification election as the mode for determining exclusive
collective bargaining representative if there is a question on representation in an appropriate
bargaining unit.
82. When is consent election a bar to a petition for certification election? When is it
not a bar?
Where a petition for certification election had been filed and upon the intercession of
the med-arbiter, the parties agree to hold a consent election, the result thereof shall
constitute a bar to the holding of a certification election for one year from the holding of
such consent election. However, where the total number of valid votes cast in a consent
election is less than the majority of all the eligible employees in the bargaining unit, there
shall be a failure of election. Such failure will not bar the filing of a petition for the
immediate holding of a certification election. Where no petition for certification election had
been filed but the parties themselves have agreed to hold a consent election, the result
thereof shall not constitute a bar to another certification election, unless the winning union
had been extended voluntary recognition.
83. Union X, a legitimate labor organization filed a petition for certification election
during the freedom period. Union Y, another union in the same company, moved to
dismiss the same alleging among others that Union X is composed of not only rank
and file employees, but also of supervisory employees, who under the law, may not
join a labor organization composed of rank and file employees. What is the effect of
such allegation upon the petition for certification election?
There is no effect. After a certificate of registration is issued to a union, its legal
personality cannot be subject to a collateral attack. It may be questioned only in an
independent petition for cancellation in accordance with Section 5 of Rule V, Book IV of the
Implementing Rules of the Labor Code (Tagaytay Highlands International Gold Club,
Inc. vs. Tagaytay Highlands Employees Union-PTGWO GR No. 142000 January 22,
2003). Having attained such status, the petition of the union stands unless the registration
of the union is cancelled in accordance with the aforementioned rule.
The infirmity in the membership of the respondent union can be remedied in the preelection conference thru the exclusion-inclusion proceedings.
Furthermore, the status of being a supervisory employee does not by itself disqualify
an employee from joining a labor organization composed of rank and file employee. A
supervisory employee to be disqualified must possess the powers similar to that of a
managerial employee such as the complete discretion to decide on matters without being
under the control of or subject to the review of some other superior.

Malao, Mike

84. May an employee who was improperly laid off be entitled to vote in a certification
election?
YES. The employees who have been improperly laid off but who have a present,
unabandoned right to an expectation of reemployment, are eligible to vote in certification
election. Thus, if the dismissal is under question, whereby a case of illegal dismissal and/ or
ULP was filed, the employees could and should still qualify to vote. (Phil Fruits &
Vegetables Industries, Inc. vs. Torres)
85. Does a decision in a certification election case regarding the existence of an
employer-employee relationship foreclose all further disputes between the parties as
to the existence or non-existence of such relationship?
NO. However final it may become, the decision in a certification election case, by the
very nature of such proceeding, is not such as to foreclose all further dispute as to the
existence, or non-existence of an employer-employee relationship.
It is established doctrine that for res adjudicata to apply, the following requisites must
concur: (1) the former judgment or order must be final; (2) the court which rendered said
judgment or order must have jurisdiction over the subject matter and the parties; (3) said
judgment or order must be on the merits; and (4) there must be between the first and
second actions identity of parties, subject matter and cause of action.
Clearly, implicit in these requisites is that the action or proceedings in which is issued
the prior Judgment that would operate in bar of a subsequent action between the same
parties for the same cause, be adversarial, or contentious, as distinguished from an ex parte
hearing or proceeding of which the party seeking relief has given legal notice to the other
party and afforded the latter an opportunity to contest it, and a certification case is not such
a proceeding.
A certification proceeding is not a litigation in the sense in which this term is
commonly understood, but a mere investigation of a non-adversary, fact-finding character,
in which the investigating agency plays the part of a disinterested investigator seeking
merely to ascertain the desires of the employees as to the matter of their representation. The
court enjoys a wide discretion in determining the procedure necessary to insure the fair and
free choice of bargaining representatives by the employees (Sandoval Shipyards vs. Prisco
Pepito, G.R. No. 143428, June 25, 2001).
86. What is the statutory policy on certification elections? How does the law treat
managements attempts to thwart initiatives to hold certification election?
The fact that PICOP voiced out its objection to the holding of certification election,
despite numerous opportunities to ventilate the same, only after respondent Undersecretary
of Labor affirmed the holding thereof, simply bolstered the public respondents' conclusion
that PICOP raised the issue merely to prevent and thwart the concerned section heads and
supervisory employees from exercising a right granted them by law. Needless to stress, no
obstacle must be placed to the holding of certification elections, for it is a statutory policy
that should not be circumvented (PICOP vs. Laguesma, G.R. No. 101738, April 12,
2000).

Malao, Mike

87. What is the Doctrine of Union Monopoly?

It means that once a union is chosen as the collective bargaining agent of an
appropriate bargaining unit through Certification election, it alone, can collectively bargain
with management to the exclusion of other competing unions.
88. Is there a violation of the CBAs no strike no lockout provision when workers
join a demonstration against police abuses?
NO. The demonstration held by workers would be purely and completely an exercise of
their freedom of expression in general and of their right of assembly and of petition for
redress of grievances in particular before the appropriate government agency. To regard the
demonstration against police officers, not against the employer as evidence of bad faith in
collective bargaining stretches unduly the compass of the collective bargaining agreement
(Phil. Blooming Mills Employees Org. vs. Phil. Blooming Mills Co., Inc. June 5, 1973).
89. What is a union recognition strike?
A union recognition strike is calculated to compel the employer to recognize ones
union and not the other contending group, as the employees bargaining representative
despite the striking unions doubtful majority status to merit voluntary recognition and lack
of formal certification as the exclusive representative in the bargaining unit.
90. Is the pari delicto rule applicable in strikes and lockouts?
YES. When the parties are in pari delicto the employees having staged an illegal
strike and the employer having declared an illegal lockout such situation warrants the
restoration of the status quo ante and bringing back the parties to their respective positions
before the illegal strike and illegal lockout through the reinstatement, without backwages, of
the dismissed employees. (Philippine Inter-Fashion, Inc. vs. NLRC, G.R. No. 59847,
October 18, 1982).
91. Would the Unions failure to submit the STRIKE VOTE RESULTS to the NCMB
cause the illegality of the strike? Explain.
YES. The Supreme Court said so in the case of Samahan ng Manggagawa sa
Moldex v. NLRC, G.R. No. 119467, February 1, 2000. It has been shown that the results
of the strike-vote were never forwarded to the NCMB, as admitted by petitioners themselves
and as attested to by a Certification of Non-Submission of Strike Vote issued by the NCMB.
There is thus no need for additional evidence on the matter, as it would not change the fact
that the results of the strike-vote were not submitted to the NCMB. Without the submission
of the results of the strike-vote, the strike was illegal, pursuant to Article 264 of the Labor
Code
92. What is the legal implication of defying the RETURN TO WORK ORDER in a strike
case which is under assumption of jurisdiction?
In the case of Telefunken Semiconductors Employees Union FFW v. CA, G.R. No.
143013-14, December 18, 2000, the Supreme Court held that the strike of the Union
cannot be viewed as anything but illegal for having been staged in open and knowing
defiance of the assumption and return-to-work orders. The necessary consequence thereof
are also detailed by the Supreme Court in its various rulings. In Marcopper Mining Corp.
v. Brillantes (254 SCRA 595), the High Tribunal stated in no uncertain terms that Malao, Mike

by staging a strike after the assumption of jurisdiction or certification for

arbitration, workers forfeited their right to; be readmitted to work, having abandoned
their employment, and so could be validly replaced.
Viewed in the light of the foregoing, we have no alternative but to confirm the loss of
employment status of all those who participated in the strike in defiance of the assumption
order dated 8 September 1995 and did not report back to work as directed in the Order of
16 September 1995.
93. Define the following:
a. Constructive resignation
Constructive Resignation is otherwise known as abandonment. It is present when the
following requisites concur:
(1) The worker has no intention to return to work, and
(2) The worker has manifested by overt acts such an intention.
b. Constructive retrenchment
An employee whose number of working days was reduced to just two (2) days a week
due to the financial losses suffered by the employers business, and who was rotated in such
a way that the number of working days had been substantially reduced for more than six
months, and considering further that the business was ultimately closed and sold off, the
Supreme Court upheld the ruling of the NLRC that the employee was thereby constructively
dismissed or retrenched from employment (International Hardware, Inc. vs. NLRC, et.
al., G.R. No. 80770, August 10, 1989).
94. Is it within the jurisdiction of the Labor Arbiter or the NLRC to pass judgment on
the soundness of the management decision to declare that a position is no longer
necessary? Why?
Similarly, in Wiltshire File Co., Inc. v. NLRC petitioner company effected some
changes in its organization by abolishing the position of Sales Manager and simply adding
the duties previously discharged by it to the duties of the General Manager to whom the
Sales Manager used to report. In that case, we held that the characterization of private
respondents services as no longer necessary or sustainable, and therefore properly
terminable, was an exercise of business judgment on the part of petitioner company. The
wisdom or soundness of such characterization or decision is not subject to discretionary
review on the part of the Labor Arbiter or of the NLRC so long as no violation of law or
arbitrary and malicious action is indicated (Ismael Santos v. CA, G.R. No. 141947, July
5, 1997).
95. What are the guidelines for the correct interpretation of the DOCTRINE OF LOSS
OF CONFIDENCE? Explain.
The Court, however, is cognizant of the fact that in numerous dismissal cases, loss of
trust and confidence has been indiscriminately used by employers to justify almost every
instance of termination and as a defense against claims of arbitrary dismissal. In the case of
General Bank and Trust Company vs. Court of Appeals, 135 SCRA 569 the Court came
up with the following guidelines for the application of the doctrine of loss of confidence:

Malao, Mike

(a) loss of confidence which should not be simulated;

(b) it should not be used as a subterfuge for causes which are improper, illegal or
unjustified;
(c) it should not be arbitrarily asserted in the face of overwhelming evidence to the
contrary; and
(d) it must be genuine, not a mere afterthought to justify earlier action taken in bad faith.
Hence, while an employer is at liberty to dismiss an employee for loss of trust and
confidence, he cannot use the same to feign what would otherwise be an illegal dismissal
(Concorde Hotel v. Court of Appeals, G.R. No. 144089, August 9, 2001).
96. Is the one-month notice for separation for authorized causes always required?
NO. If an employee consented to his retrenchment or voluntarily applied for
retrenchment with the employer due to the installation of labor saving devices, redundancy,
closure or cessation of operation or to prevent financial losses to the business of the
employer, the required previous notice to the DOLE is not necessary as the employee
thereby acknowledged the existence of a valid cause for termination of his employment
(Ismael V. Santos vs. CA, G.R. No. 141947 July 5, 2001).
97. Is due process required before an employee may be demoted?
YES. Demotions, like dismissals, affect the employment of a worker whose right to
continued employment, under the same terms and conditions, is also protected by law.
Moreover, considering that demotion is, like dismissal, also a punitive action, the employer
being demoted should be given a chance to contest the same (Leonardo v. NLRC GR No.
125303, June 16, 2000).
98. Is MISREPRESENTATION of essential facts enough to vitiate the voluntariness of a
RESIGNATION? Explain.
Respondent company's lack of candor and good faith in informing BARQUIN that he
was being terminated due to a valid retrenchment and not because it sought to avoid
compliance with the mandated wage increases amounted to a deception which led BARQUIN
to the mistaken belief that that there was legal ground for retrenchment and prompted him
to acquiesce to his termination and sign the quitclaim. Petitioners correctly point out that
such an act has been declared by this Court in the case of Trendline Employees
Association-Southern Philippines Federation of Labor vs. NLRC, as tainted with bad
faith and should not be countenanced as being prejudicial and oppressive to labor.] Verily,
had the respondent company not misled BARQUIN into believing that there was a ground to
retrench, it is not difficult to believe that he would have thought twice before signing the
quitclaim inasmuch there was no reason for the termination of his employment.
Contrary to the assumption of both the Court of Appeals and the voluntary arbitrator,
the mere fact that BARQUIN was not physically coerced or intimidated does not necessarily
imply that he freely or voluntarily consented to the terms of the quitclaim. Under Article
1330 of the Civil Code, consent may be vitiated not only through intimidation or violence but
also by mistake, undue influence or fraud (Barquin v. Philippine Carpet Mnufacturing
Corp., G.R. No. 140269, September 14, 2000).

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99.

a. Distinguish between back wages, unpaid wages, and separation pay.

Backwages is the relief given to an employee to compensate him for lost earnings
during the period of his dismissal.
Unpaid Wages are wages earned prior to the illegal dismissal but are not yet paid to
the employee.
Separation Pay is monetary amount intended to provide the employee money during
the period in which he will be looking for another employment.
b.What economic components constitute backwages for a rank and file
employee? Are these components equally applicable to a managerial employee?
The Labor Code (Art. 279) provides that an employee who is unjustly dismissed from
work is entitled to reinstatement and also to his full backwages, inclusive of allowances, and
to his other benefits or their monetary equivalent computed from the time his compensation
was withheld from him up to his actual reinstatement.
An employee is entitled to all the above benefit regardless if he is a rank and file
employee or a managerial employee. However, backwages may also include the 13th month
pay which is paid to rank and file employees, as well as benefits arising from the CBA given
only to the employees in the bargaining unit. Managerial employees cannot be given the
same since they are ineligible to join the labor organization.
100. Does Republic Act No. 7641, the Retirement Law, apply to employees covered
with a valid retirement plan? Can it be given a retroactive effect?
Yes. The said law intends to give the minimum retirement benefits to employees not
entitled thereto under collective bargaining and other agreements. Its coverage applies to
establishments with existing collective bargaining, or other agreements or voluntary
retirement plans whose benefits are less than those prescribed under the proviso in
question.
The said law is a curative social legislation, which, by their nature, may be given
retroactive effect, unless it will impair vested rights. It has a retroactive effect to include in
its coverage the employees services to an employer rendered prior to its effectivity. It applies
to employees in the employee of employers at the time the law took effect and who are
eligible to benefits under that statute (MLQU vs. NLRC, G.R. No. 141673, October 17,
2001).

Malao, Mike

FREQUENTLY ASKED QUESTIONS

TOPIC: LABOR; SOCIAL JUSTICE
May social justice as a guiding principle in labor law be so used by the courts in
sympathy with the working man if it collides with the equal protection clause of the
Constitution? Explain.
Suggested Answer:
Yes. The State is bound under the Constitution to afford full protection to Labor; and
when conflicting interests collide and they are to be weighed on the scales of social justice,
the law should accord more sympathy and compassion to the less privileged working man
(Fuentes v. NLRC, 266 SCRA 24, 1997). However, it should be borne in mind that social
justice ceases to be an effective instrument for the equalization of the social and economic
forces by the State when it is used to shield wrongdoing (Corazan Jamer v. NLRC, 278
SCRA 632, 1997).
Alternative Answer:
No. Social justice as a guiding principle in law may not be used by the courts if it
collides with the equal protection clause of the Constitution. Social justice is not a magic
wand applicable in all circumstances. Not all labor cases may be automatically decided in
favor of the worker. Management also has rights which are entitled to recognition and
protection; justice must be dispensed according to facts and the law; and social justice is
not designed to destroy or oppress the employer.
Another Alternative Answer:
Social justice as a guiding principle in Labor Law can be implemented side by side
with the equal protection clause of the Constitution.
In the implementation of the principle of social justice, the Constitution commands
that the State shall afford full protection to labor. Thus, Labor Law may be pro-labor in the
sense that labor is given certain benefits not given to management. But this is not
necessarily violative of the equal protection clause of the Constitution because said clause
allows reasonable classification.
TOPIC: CONSTITUTIONAL PROVISIONS RELATED TO LABOR LAW
What are the salient features of the protection to labor provision of the Constitution?
The salient features of the protection to labor provisions of the Constitution (Article
XIII, Section 3) are as follows:
Extent of Protection - Full protection to labor;
Coverage of Protection - Local and overseas, organized and unorganized;
Employment Policy - Full employment and equality of employment opportunities for
all.
Guarantees Unionisms and Method of Determination Conditions of Employment - Right
of all workers to self-organization, collective bargaining and negotiations.
Concerted Activities - Right to engage in peaceful concerted activities, including the
right to strike in accordance with law.
Working Conditions - Right to security of tenure, humane conditions of work and a
living wage.
Malao, Mike

Decision Making Processes - Right to participate in policy and decision making process
affecting their rights and benefits as way to provide by law.
Share in Fruits of Production - Recognition of right of labor to its just share in fruits of
production.
ALTERNATIVE ANSWER:
The Constitution in (Article XIII, Section 3) provides that the State shall afford
protection to labor, local and overseas, organized unorganized.
The State shall afford protection to labor by promoting full employment and equality of
employment opportunities for all.
Workers are entitled to security of tenure, humane conditions of work and a living
wage.
The State shall guarantee the right of all workers to self-organization, collective
bargaining and negotiations, and peaceful concerted activities, including the right to strike,
in accordance by law.
Workers shall also participate in policy and decision-making processes affecting their
rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and
employers and the preferential use of voluntary modes in setting labor disputes, including
conciliation, and shall enforce mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers recognizing the
right to its just share in the fruits of production and the right of enterprises to reasonable
returns on investments, and to expansion and growth.
1. LABOR STANDARDS
TOPIC: EMPLOYER-EMPLOYEE RELATIONSHIP
SUMMARY OF THE RULE: What determines employer-employee relationship is the power of
the employer to control the employee regarding the manner of how the work should be done.
Zapato Custom-made make shoes to customer specifications and repaired them. As a
service to customers, a shoe shine stand was operated on its premises. There were 10
shoe shine boys at the stand. They owned their shoe shine boxes with cleaning agent
polish, brushes, and rags. Walk-in customers willing to wait were led by the shoe shine
boys to a seat at the stand where he waited while the boy asked the customer to pay
to the receptionist. Customers not willing to wait left the shoes with the stands
receptionist who gave a receipt with the price for the service and pick-up date and
time indicated. The boys were free to get shoes to be shined for the receptionist when
there were no waiting walk-ins. For each pair shined, the boys got markers
corresponding to the price for their service. ZaCSIs staff did not interfere with, nor
supervise, how the boys went about their tasks. At days end, the markers held by
each boy were tallied and paid for. The boys signed a receipt to acknowledge full
payment for work done.
A labor federation organized ZaCSI and filed a petition for a consent election. The
boys, sympathizing with the workers, joined the union. At the pre-election
conference, the lawyer for ZaCSI moved to exclude the boys as voters.
As Med-Arbiter handling the case, rule on the objection. Would you ruling be different
if in this case, ZaCSI provided the boys with the shoe shine boxes and their contents?
Explain.

Malao, Mike

As Med-arbiter, I will rule that the shoe shine boys should be excluded as voters in
the consent election. The shoe shine boys are not employees of ZaCSI and thus could not be
considered as employees belonging to bargaining unit who will designate or select a
bargaining representative. They are not employees of ZaCSI because according to the given
facts, they are not under the control of ZaCSI which is an essential element for the existence
of employer-employee relationship. In the statement of facts, it is said that ZaCSIs staff did
not interfere with, nor supervise how the boys went about their task.
My ruling will not be different even if ZaCSI provided the boys with the shoe shine
boxes and their contents. ZaCSI, by this act, is not yet exercising control that is
determinative of the existence or non-existence of control over them. It is the existence of
employer-employee relationship.
TOPIC: MANAGEMENT PREROGATIVE
SUMMARY OF THE RULE: The management has the right to use its discretion and
judgment in the determination of policies regarding the aspects of employment. Contracting
out services or functions being performed by union members becomes illegal only when it
interferes with, restrains or coerces employees in the exercise of their right to selforganization.
Harbor View Hotel has an existing Collective Bargaining Agreement (CBA) with the
union of rank-and-file employees consisting, among others, of bartenders, waiters,
roomboys, housemen and stewards. During the lifetime of the CBA, Harbor View Hotel,
for reasons of economy and efficiency, decided to abolish the position of housemen
and stewards who do the cleaning of the hotels public areas. Over the protest of the
Union, the Hotel contracted out the aforementioned job to the City Service Janitorial
Company, a bonafide independent contractor which has a substantial capital in the
form of janitorial tools, equipments, machineries and competent manpower.
Is the action of the Harbor View Hotel legal and valid?
The action of Harbor View Hotel is legal and valid. The valid exercise of management
prerogative, discretion and judgment encompasses all aspects of employment, including the
hiring, work assignments, working methods, time, place and manner of work, tools to be
used, processes to be followed, supervision of workers, working regulations, transfer of
employees, work supervision, lay-off of workers, and discipline, dismissal and recall of
workers, except as provided for, or limited by special laws.
Company policies and regulations are, unless shown to be gross oppressive or
contrary to law, generally binding and valid on the parties and must be complied with until
finally revised or amended unilaterally or preferably through negotiation or by competent
authority (San Miguel Corporation vs. Ubaldo and Cruz, 218 SCRA 293).
ALTERNATIVE ANSWER:
The action of the Harbor View Hotel is legal and valid. Contracting out services or
functions being performed by union members is not illegal per se. In fact, it is the
prerogative of management to adopt cost-saving measures to ensure economy and efficiency.
Contracting out services or functions being performed by union members becomes illegal
only when it interferes with, restrains or coerces employees in the exercise of their right to
self-organizations.
The action of Harbor View Hotel would, at first glance, appear to be an unfair labor
practice under Article 248 (c) e.g. to contract out services or functions being performed by
Malao, Mike

union members if such will interfere with, restrain or coerce employees in the exercises of
their right to self-organization.
Considering, however, that in the case at bar, there is no showing that the hotels
action is a valid exercises of its management prerogatives and the right to make business
judgments in accordance with law.
TOPIC: CONTRACTOR; WAGES
SUMMARY OF THE RULE: A labor-only contract is a contract between an employer and a
person who supplies workers and does not have substantial capital or investment in the
form of tools, equipment, machineries, work premises. The employer who contracts the
services of the labor-only contractor is directly liable to the employees of the labor-only
contractor as if such employees had been directly employed by the employer. In an
independent contract, the employer who contracted out the job is jointly and severally liable
with the contractor only to the extent of the work-performed under the contract.
An award of backwages is given to an employee who is unjustly dismissed. On the
other hand, an award of unpaid wages is given to an employee who has not been paid his
salaries or wages for services actually rendered. The cause of action here is non-payment of
wages or salaries.
(a) What is a labor-only contract?
Labor-only contract is a contract between an employer and a person who supplies
workers and does not have substantial capital or investment in the form of tools,
equipments, machineries, work premises, among others, and the workers recruited and
placed by such person are perfoming activities which are directly related to the principal
business of such employer. (Art. 106, Labor Code)
(b) Distinguish the liabilities of an employer who engages the services of a
bona_fide independent contractor from one who engages a labor-only
contractor?
A person who engages the services of a bona_fide independent contractor for the
performance of any work, task, job or project is the indirect employer of the employees who
have been hired by the independent contractor to perform said work, task, job or project.
In the event that the independent contractor fails to pay the wages of his employees,
an indirect employer, in the same manner and extent that he is liable to employees directly
employed by him, is jointly and severally liable with the independent contractor to the
employees of the latter to the extent of the work performed under the contract.
As for the person who engages the services of a labor only contractor, the latter is
considered merely as an agent of the former who shall be responsible to the workers hired
by the labor only contractor in the same manner and extent as if the directly employed
such workers.
ALTERNATIVE ANSWER:
An employer who engages the services of a bona fide independent contractor is
solidarily liable with his contractor or sub-contractor only for non-payment or underpayment of wages and other labor standards provisions of the Labor Code, whereas an
employer that it normally grants to its regular or direct employees.
An employer who deals with a bona-fide independent contractor shall only be
subsidiary liable, if the contractor or sub-contractor fails to pay the wages to the workers in
accordance with the Labor Code.

Malao, Mike

Upon the other hand, an employer who deals with a labor-only contractor shall be
primarily responsible to the workers in the same manner and extent as if the latter were
directly employed by him. (Art 106-107, Labor Code)
(c) Distinguish between an award for back wages and an award for unpaid wages.
An award for backwages is to compensate an employee who has been illegally
dismissed, for the wages, allowances and other benefits or their monetary equivalent, which
said employee did not receive from the time he was illegally dismissed up to the time of his
actual reinstatement.
On the other hand, an award for unpaid wages is for an employee who has actually
worked but has not been paid the wages he is entitled to receive for such work done. (Arts.
279 and 97 (F), Labor Code).
ALTERNATIVE ANSWER:
An award of backwages is given to an employee who is unjustly dismissed. On the
other hand, an award of unpaid wages is given to an employee who has not been paid his
salaries or wages for services actually rendered. The cause of action here is non-payment of
wages or salaries. (General Baptist Bible College vs. NLRC 219 SCRA 549).
TOPIC: OVERTIME PAY
SUMMARY OF THE RULE: Undertime work on any particular day shall not be offset by
overtime work on any other day.
Danilo Flores applied for the position of driver in the motorpool of Gold Company, a
multinational corporation. Danilo was informed that he would frequently be working
overtime as he would have to drive for the companys executives even beyond the
ordinary eight-hour work day. He was provided with a contract of employment
wherein he would be paid a monthly rate equivalent to 35 times his daily wage,
regular sick and vacation leaves, 5 day-leave with pay every month and time off with
pay when the companys executives using the cars do not need Danilos service for
more than eight hours a day, in lieu of overtime.
Are the above provisions of the contract of employment in conformity with, or
violative of, the law?
Except for the provision that Danilo shall have time off with pay when the companys
executives using the cars do not need Danilos service for more than eight hours a day, in
lieu of overtime, the provisions of the contract of employment of Danilo are not violative of
any labor law because the instead improve upon the present provisions of pertinent labor
laws. Thus, the monthly rate equivalent to 35 times the daily wage may be sufficient to
include overtime pay.
There is no labor law requiring the payment of sick and vacation leaves except for a
five-day service incentive leave in the Labor Code.
The five-day leave with pay every month has no counterpart in Labor Law and is very
generous.
As for the provision in Danilos contract of employment that he shall receive time off
with pay in lieu of overtime, this violates the provision of the Labor Code which states that
undertime work on any particular day shall not be offset by overtime work on any other day.
Permission given to the employer to go on leave on some other day of the week shall not
exempt the employer from paying additional compensation required by the Labor Code.

Malao, Mike

TOPIC: HOUSEHELPERS; WAGES

SUMMARY OF THE RULE: No house helper shall be assigned to work in a commercial,
industrial or agricultural enterprise at a wage or salary rate lower than provided by law for
agricultural or non-agricultural workers. A family driver who drives the family van to fetch
merchandise from suppliers and delivers the same to boutique in a mall owned by the family
for whom he works should be paid the minimum daily wage of a driver in a commercial
establishment.
The weekly work schedule of a driver is as follows:
Monday, Wednesday, and Friday Drive the family car to bring them and fetch the
children to and from school.
Tuesday, Thursday, and Saturday Drive the family van to fetch merchandise from
suppliers and deliver the same to a boutique in a mall owned by the family.
(a) Is the driver a house helper?
The driver is a house helper. A person is a house helper or is engaged in domestic or
household service if he/she renders services in the employers home which are usually
necessary or desirable to the maintenance and enjoyment thereof and which includes
ministering to the personal comfort and convenience of the members of the employers
household including the services of family drivers.
(b) The same driver claims that for work performed on Tuesday, Thursday and
Saturday, he should be paid to the minimum daily wage of a driver of commercial
establishment. Is the claim of the driver valid?
A family driver who drives the family van to fetch merchandise from suppliers and
delivers the same to boutique in a mall owned by the family for whom he works should be
paid the minimum daily wage of a drive in a commercial establishment.
The Labor Code (in Article 143) provides that no house helper shall be assigned to
work in a commercial, industrial or agricultural enterprise at a wage or salary rate lower
than provided by law for agricultural or non-agricultural workers.
TOPIC: REGULAR EMPLOYEES AND PROJECT EMPLOYEES
SUMMARY OF THE RULE: An employment shall be deemed to be regular where the
employee has been engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer, except where the employment has been fixed
for a specific project or undertaking the completion of which has been determined at the
time of the engagement of the employee.
A construction group hired Engineer A as a Project Engineer in 1987. He was
assigned to five (5) Contracts of Employment he signed, specified the name of the
project, its duration and the temporary-project nature of the engagement of his
services. Upon completion of the fifth project in August 1998, his services were
terminated. He worked for a total of ten (10) years (1987-1998) in the five separate
projects.
Six months after his separation, the Group won a bid for a large construction project.
The Group did not engage the services of Engineer A as a Project Engineer for this
new project; instead, it engaged the services of Engineer B. Engineer A claims that
by virtue of the nature of his functions, i.e., Engineer in a Construction Group, and
Malao, Mike

his long years of service he had rendered to the Group, he is a long years of service he
had rendered to the Group, he is a regular employee and not a project engineer at the
time he was first hired. Furthermore, the hiring of Engineer B showed that there is a
continuing need for his services. Is the claim of Engineer A correct?
The claim of Engineer A that he is a regular employee and not a project employee is
not correct. The Labor Code provides:
Art. 280. Regular and casual employment. - An employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except where
the employment has been fixed for a specific project or undertaking the completion of
which has been determined at the time of the engagement of the employee.
In all the five (5) successive contracts of employment of Engineer A the name of the
project, its duration, and the temporary project nature of the engagement of his services are
clearly stated; hence, Engineer A falls within the exemption of Art. 280.
The fact that the petitioners worked for several projects of private respondent
company is no basis to consider them as regular employees. By the very nature of their
employees business, they will always remain project employees regardless of the number of
projects in which they have worked (Manansag v. NLRC, 218 SCRA 722, 1993)
Project employees are not considered regular employees, their services, being needed
only when there are projects to be undertaken. The rationale for this rule is that if a project
has already been completed, it would be unjust to require the employer to maintain them in
the payroll while they are doing absolutely nothing except waiting for another project (De
Ocampo v. NLRC, 186 SCRA 361, 1990).
ALTERNATIVE ANSWER:
The claim of Engineer A is not correct. The fact that he has been working for
Construction Group for a total of ten (10) years does not make him a regular employee when
it is very clear from the Contracts of Employment that he signed that he has always been
engaged as a project employee.
The tenure of project employee is co-terminus with the project in connection with
which his services were engaged. Thus, after the end of the project, the employer-employee
relationship ceases to exist. Such project employee has no legal rights to insist that the
Construction Group for a subsequent project of said Group should employ him.
TOPIC: HOURS WORKED
SUMMARY OF RULE: An employee who is required to remain on call in the employers
premises or so close thereto that he cannot use the time effectively and gainfully for his own
purpose shall be considered as working while on call.
An employee who is not required to leave word at his home or with company officials
where he may be reached is not working while on call.
Lito Kulangkulang and Bong Urongsulong are employed as truck drivers of Line
Movers, Inc. Usually, Lito is required by the personnel manager to just stay at the
head office after office hours because he could be called to drive the trucks. While at
the head office, Lito merely waits in the managers reception room. On the other
hand, Bong is allowed to go home after office hours but is required to keep his cellular
phone on so that he could be contacted whenever his services as driver become
necessary.

Malao, Mike

Would the hours that Lito and Bong are on call be considered compensable working
hours?
The hours of Lito and Bong while on call can be considered compensable hours. The
applicable rule is: An employee who is required to remain on call in the employers
premises or so close thereto that he cannot use the time effectively and gainfully for his own
purpose shall be considered as working while on call. An employee who is not required to
leave word at his home or with company officials where he may be reached is not working
while on call. Here Bong is required to stay at the office after office hours so he could be
called to drive the trucks of the Company. As for Bong, he is required to keep his cellular
phone so that he could be contacted whenever his services as driver as needed. Thus, the
waiting time of Lito and Bong should be considered as compensable hours.
Note: It could be argued that in the case of Bong who is not required to stay in
the office but is allowed to go home, if he is not actually asked by cellular phone to
report to the office to drive a car, he can use his time effectively and gainfully to his
own purpose, thus, the time that he is at home may mean that they are not
compensable hours.
TOPIC: JOB CONTRACTING
SUMMARY OF THE RULE: There is job contracting where (1) the contractor carries on an
independent business and undertakes the contract work on his own account, under his own
responsibility according to his own manner and method, free form the control and direction
of his employer or principal in all matters connected with the performance of the work
except as to the results thereof; and (2) the contractor has substantial capital or investment
in the form of tools, equipment, machineries, work premises and other materials which are
necessary in the conduct of the business (Lim v NLRC, 202 SCRA 465,1991).
Sta. Monica Plywood Corporation entered into a contract with Arnold for the milling
of lumber as well as the hauling of waste wood products. The Company provided the
equipment and tools because Arnold had neither tools and equipment nor capital for
the job. Arnold, on the other hand, hired his friends, relatives and neighbors for the
job. Their wages were paid by Sta. Monica Plywood Corporation to Arnold, based on
their production or the number of workers and the time used in certain areas of work.
All work activities and schedules were fixed by the company?
(a) Is Arnold a job contractor? Explain briefly.
No. In two cases decided by the Supreme Court, it was held that there is job
contracting when (1) the contractor carries on an independent business and undertakes the
contract work on his own account, under his own responsibility according to his own
manner and method, free form the control and direction of his employer or principal in all
matters connected with the performance of the work except as to the results thereof; and (2)
the contractor has substantial capital or investment in the form of tools, equipment,
machineries, work premises and other materials which are necessary in the conduct of the
business.
In the problem given, Arnold did not have sufficient capital or investment for one. For
another Arnold was not free from the control and direction of Sta. Monica Plywood
Corporation because all the work activities and schedules were fixed by the company.
Therefore, Arnold is not job contractor He is engaged in labor-only contracting.
Malao, Mike

(b) Who is liable for the claims of the workers hired by Arnold? Explain briefly.
Sta. Monica Plywood Corp. is liable for the claims of the workers hired by Arnold. A
finding that Arnold is a labor only contractor is equivalent to declaring that there exist an
employer-employee relationship between Sta. Monica Plywood Corp. and workers hired by
Arnold. This is so because Arnold is considered a mere agent of Sta. Monica plywood Corp
(Lim v NLRC, 303 SCRA 432, 1999; Baguio et. al. v. NLRC, 202 SCRA 465 1991).
TOPIC: SOCIAL SECURITY ACT OF 1997; COVERAGE
SUMMARY OF THE RULE: Coverage under the SSS is compulsory where employeremployee relations exist. Nevertheless, integration of other benefits is allowed.
The collective bargaining agreement of the Golden Corporation Inc. and the Golden
Corporation Workers Union provides a package of welfare benefits far superior in
comparison with those provided for in the Social Security Act of 1997. The welfare
plan of the company is funded solely by the employer with no contributions from the
employees. Admittedly, it is the best welfare plan in the Philippines. The company
and the union jointly filed a petition with the Social Security System for exemption
from coverage. Will the petition for exemption from coverage prosper?
No, because coverage under the SSS is compulsory where employer-employee exists.
However, if the private plan is superior to that of SSS, the plan may be integrated with the
SSS plan. Still it is integration and not exemption from SSS law. (Philippine Blooming Mills
Co. Inc. v SSS, 17 SCRA 107)
TOPIC: COMPREHENSIVE AGRARIAN REFORM LAW
1.a. What is the foundation of the agrarian reform program under the 1987
Constitution? Who are the direct beneficiaries of the program?
The 1987 Constitution enunciates in Article II as one of the state policies that the
State shall promote comprehensive rural development and agrarian reform.
In Article XII of the Constitution, in dealing with the national economy and patrimony,
it is also stated that the State shall promote industrialization and full employment based on
sound agricultural development and agrarian reform.
Then in Article XIII of the Constitution, in dealing with social justice and human
rights, there is this provision, among others: the state shall, by law, undertake an agrarian
reform program founded on the right of framers and regular farm workers, who are
landless, to own directly or workers, to receive a just share of the fruits thereof. To this end,
the state shall encourage and undertake the just distribution of all agricultural lands,
subject to such priorities and reasonable retention limits as the congress may prescribe,
taking into account ecological, developmental, or equity considerations, and subject to the
payment of just compensation. In determining the retention limits, the state shall respect
the right of small landowners. The state shall further provide incentives for voluntary
landsharing.
Taken together, the above provisions could be considered as the foundation of the
agrarian reform program.
Under the Comprehensive Agrarian Reform Law, the lands covered by the CARP shall
be distributed as much as possible to landless residents of the same barangay, or in the

Malao, Mike

absence thereof, landless residents of the same municipality in the following order of
priority:
1. agricultutral lessees and share tenants;
2. regular farmworkers;
3. seasonal farmworkers;
4. other farmworkers;
5. actual tillers or occupants of public lands;
6. collectives or cooperatives of the above beneficiaries; and
7. others directly working on the land.
The children of landowners, who are qualified to be awardees of not more than three
hectares, shall be given preference in the distribution of the land of their parents. Actual
tenant tillers in the landholding shall not be ejected or removed therefrom.
Beneficiaries under PD 27 who have culpably sold, disposed of or abandoned their
land are disqualified to became beneficiaries under the CARP.
A basic qualification of a beneficiary shall be his willingness aptitude and ability to
cultivate and make the land as productive as possible. The DAR shall adopt a system of
monitoring the record or performance of each beneficiary, so that any beneficiary guilty of
negligence or misuse of the land or any support extended to him shall forfeit his right to
continue as such beneficiary. The DAR shall submit periodic reports on the performance of
the beneficiaries to the CARP.
If, due to the landowners retention rights or to the number o tenants, lessees, or
workers on the land, there is not enough land to accommodate any or some of them, they
may be granted ownership of other lands available for distribution under the CARL, at the
option of the beneficiaries.
Farmers already in place and those not accommodated in the distribution of privately
owned lands will be given preferential rights in the distributions of lands from the public
domain.
1.b. Distinguish just compensation under the CARL of 1988 form just compensation
under the Bill of rights? How it is determined under the former?
In the Bill of Rights it is provided that private property shall not be taken for public
use without just compensation.
In the provisions of the 1987 constitution on agrarian reform, it is provided that in
the just distribution of all agricultural lands, the same shall be subject, among others, to
the payment of just compensation.
The concepts of just compensation in the Bill of Rights and in agrarian reform are
similar in the sense that in both situations, the person who is deprived of his property
should be given the fir and full equivalent value of the property that is taken from him. In
both situations, ultimately, it is the courts, which may determine ultimately just
compensation.
Under the CARL, however, the Land Bank of the Philippines shall compensate the
landowner in such amount as may agreed upon by the landowner and the Department of
Agrarian Reform and the Land Bank of the Philippines.
Also, under the CARL, compensation could be in cash and in government financial
instruments like Land Bank of the Philippines bonds. At the option of the landowner, the
compensation may be in shares of stock in government owned and controlled corporations,
or in tax credits. The CARL provides that in determining just compensation, the cost of
acquisition of the land the current value of like properties, its nature, actual use of income,
the sworn valuation by the owner, the tax declarations, and the assessment made by the
government assessors shall be considered. The social and economic benefits contributed by
the farmers and the farm-owners and by the government to the property as well as the nonMalao, Mike

payment of taxes or loans secured from any government financing institution on the said
land shall be considered as additional factors to determine its valuation.
TOPIC: LABOR STANDARDS; CONDITIONS OF EMPLOYMENT. LABOR RELATIONS;
ILLEGAL DISMISSAL.
SUMMARY OF THE RULE: Any woman who is permitted or suffered to work, with or
without compensation in any nightclub, cocktail lounge, massage clinic, bar or other similar
establishment, under the effective control and supervision of the employer for a substantial
period of time as determined by the Secretary of Labor shall be considered as an employee of
such establishment for purposes of labor and social legislation.
Pregnancy is not a valid cause for dismissal because, as provided under the Code, it shall be
unlawful for an employer to discharge a woman employee on account of her pregnancy.
Club Paris is an entertainment entity that operates a night club along Roxas
Boulevard. The club provides food and drinks which are served by women who are
dressed like Playboy Bunnies. In the employment contract of each woman, the ff.
provisions appear:
Compensation -- All tips, commissions and other forms of payment received
from customers minus 10%
Hours of work 6 pm to 3 am, daily, including Sundays and Holidays
Other conditions Must remain single; marriage or pregnancy is valid cause
for dismissal.
Bituin applied and was hired by the Club. She signed the employment contract,
containing the aforesaid provisions. 6 months later, she asked for a maternity leave
with pay. Instead of granting her maternity leave, the management of the club fired
her. Bituin sued the Club for illegal dismissal, backwages, OT pay, and holiday pay.
Decide.
Bituin is an employee of the Club. Under Art.138, any woman who is permitted or
suffered to work, with or without compensation in any nightclub, cocktail lounge, massage
clinic, bar or other similar establishment, under the effective control and supervision of the
employer for a substantial period of time as determined by the Secretary of Labor shall be
considered as an employee of such establishment for purposes of labor and social legislation.
Bituin was illegally dismissed. Pregnancy is not a valid cause for dismissal because,
as provided under the Code, it shall be unlawful for an employer to discharge a woman
employee on account of her pregnancy.
She is entitled to backwages. The compensation given to Bituin was all tips. These
cant be considered compensation, at most, they could be considered as service charges
which Bituin can keep. She is thus entitled to be paid at least the minimum wage.
Since her working hours are from 6 pm to 3 am, She works 9 hours a day. She is also
entitled to OT pay, and also from 10 pm, to a night differential pay. She is also entitled to
premium pay since she works 7 days a week, and thus, works on her weekly rest day, and
also on regular holidays. For the latter, she should be paid at 200% of her basic rate.

Malao, Mike

2. LABOR RELATIONS
TOPIC: ASSUMPTION ORDER
In a labor dispute, the Secretary of Labor issued an Assumption Order. Give the legal
implications of such an order.
Under Art. 263(g) of the Labor Code, such assumption shall have the effect of
automatically enjoining the intended or impending strike or lockout as specified in the
assumption order. If one had already taken place at the time of assumption, all striking or
lockout employees shall immediately return to work and the employer shall immediately
resume operations and re-admit all workers under the same terms and conditions prevailing
before the strike or lockout. The Secretary of Labor and Employment may seek the
assistance of law enforcement agencies to ensure compliance with this provision as well as
he may issue to enforce the same. The mere issuance of an assumption order by the
Secretary of Labor automatically carries with it a return to work order, even if the directive
to return to work is not expressly stated in the assumption order. Those who violate the
foregoing shall be subject to disciplinary action or even criminal prosecution.
Under Art. 264 of the Labor Code, no strike or lockout shall be declared after the
assumption of jurisdiction by the Secretary.
TOPIC: STRIKE/LOCKOUT; COMPULSORY ARBITRATION
SUMMARY OF THE RULE: The Secretary of Labor may exercise the power of compulsory
arbitration over the labor dispute when such dispute may cause or likely cause a strike or
lockout in an industry indispensable to national interest. (Divine Word University vs.
Secretary of Labor, 213 SCRA 759).
Jenson & Jenson (J&J) is a domestic corporation engaged in the manufacturing of
consumer products. Its rank-and-file workers organized the Jenson Employees Union
(JEU), a duly registered local union affiliated with PAFLU, a national union. After
having been certified as the exclusive bargaining agent of the appropriate bargaining
unit, JEU_PAFLU submitted its proposals for a Collective Bargaining Agreement with
the company.
In the meantime, a power-struggle occurred within the national union PAFLU between
its National President, Manny Pakyao, and its National Secretary General, Gabriel
Miro. The representation issue within PAFLU is pending resolution before the Office of
the Secretary of Labor.
By reason of this intra-union dispute within PAFLU, J&J obstinately and consistently
refused to offer any counter-proposal and to bargain collectively with JEU-PAFLU until
the representation issue within PAFLU shall have been resolved with finality. JEUPAFLU filed a Notice of Strike. The Secretary of Labor subsequently assumed
jurisdiction over the labor dispute.
Can the Secretary of Labor decide the labor dispute by awarding the JEU CBA
Proposals as the Collective Bargaining Agreement of the parties? Explain briefly.
Yes. The Secretary of Labor can decide the labor dispute by awarding the JEU CBA
proposals as the Collective Bargaining Agreement of the parties because when the Secretary
of Labor (Article 263 [g]) assumes jurisdiction over a labor dispute causing or likely to cause
Malao, Mike

a strike or lockout in an industry indispensable to the national interest, the Secretary of

Labor exercises the power of compulsory arbitration over the labor dispute, meaning, that as
an exception to the general rule, the Secretary of Labor now has the power to set or fix
wages, rates of pay, hours of work or terms and conditions of employment by determining
what should be the CBA of the parties (Divine Word University vs. Secretary of Labor, 213
SCRA 759).
ALTERNATIVE ANSWER:
No. What is involved in the case in question is a corporation engaged in the
manufacturing of consumer products. If the consumer products that are being
manufactured are not such that a strike against the company cannot be considered a
strike in an industry indispensable for the national interest, then the assumption of
jurisdiction by the Secretary of Labor is not proper. Therefore, he cannot legally
exercise the powers of compulsory arbitration in the labor dispute.
TOPIC: PROBATIONARY EMPLOYEES; CERTIFICATION ELECTION
SUMMARY OF THE RULE: All rank-and-file employees, probationary or permanent, have
substantial interest in the selection of the bargaining representative. The Code makes no
distinction as to their employment status as bases for eligibility to vote in the petition for
certification election. (Airtime Specialists, Inc. vs. Ferrer-Calleja, 180 SCRA 749).
Are probationary employees entitled to vote in a certification election? Why?
In a certification election, all rank-and-file employees in the appropriate bargaining
unit are entitled to vote. This principle is clearly stated in Article 255 of the Labor Code
which states that the labor organization designated or selected by the majority of the
employees in such unit shall be the exclusive representative of the employees in such unit
for the purpose of collective bargaining. 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 employees, probationary or
permanent, have substantial interest in the selection of the bargaining representative. The
Code makes no distinction as to their employment status as bases for eligibility to vote in
the petition for certification election. The law refers to all the employees in the bargaining
unit. All they need to be eligible to vote is to belong to the bargaining unit. (Airtime
Specialists, Inc. vs. Ferrer-Calleja, 180 SCRA 749).
ALTERNATIVE ANSWER:
Probationary employees may not be entitled to vote in a certification election where
only regular employees belong to a bargaining unit and probationary employees do not
belong to such bargaining unit. It is the belonging to a bargaining unit that entitles an
employee to vote in a certification election.
ANOTHER ALTERNATIVE ANSWER:
Yes. Any employee, whether employed for a definite period or not, shall, beginning on
his first day of service, be considered an employee for purposes of membership in any labor
union. [Article 277 (c)].

Malao, Mike

TOPIC: STRIKES
SUMMARY OF THE RULE: For a strike to be legal, it should either be an economic strike,
i.e., caused by a bargaining deadlock or an unfair labor practice strike, i.e., caused by the
commission of an unfair labor practice by an employer.
On May 24, 1989, the UKM urged its member-unions to join a Welga ng Bayan in
support of its efforts to pressure Congress to increase the daily minimum wage. Union
X is a member of the UKM and represents all the rank and the file employees of the
Puritan Mining Company. Following the call for a nationwide strike, Union X staged
a strike and put a picket the following day. As a result, the companys operations were
paralyzed although company officials and supervisory employees were allowed ingress
and egress to and from the company premises. The picket was likewise peaceful. On
May 28, 1989, the UKM leadership announced the end of the Welga ng Bayan. Union
X immediately company sought your legal advice on the legality of the strike and
the liability, if any, of the union officers and the participating members. What is your
opinion? Explain.
The strike was illegal. For a strike to be legal, it should either be an economic strike,
i.e., caused by a bargaining deadlock or an unfair labor practice strike, i.e., caused by the
commission of an unfair labor practice by an employer.
The strike by Union X was neither an economic strike or an unfair strike. Thus, it
was an illegal strike.
Because it was an illegal strike, any union officer who knowingly participated in it
may be declared to have lost his employment status, meaning such union officer could be
legally terminated.
As for the union members who participated in the strike, the facts show that no illegal
acts were committed. They allowed ingress and egress to and from the company premises.
The picket was peaceful. The mere participation of the union members, without their
committing illegal acts, does not constitute sufficient ground for the termination of their
employment.
ALTERNATIVE ANSWER:
The strike is legal and the union officers and participating union members incur no
liability for calling and participating in the strike respectively. Applying the rule in Philippine
Blooming Mills to the effect that the workers only personally assembled to influence the
decision making process of the government which is a constitutionally guaranteed right.
Note: Credit should be given to answer that focus on the procedural
requirement for a strike to be legal, i.e. strike vote, notice, cooling off period.
Porfirio, Estela, Crisostomo, Marita, and Jose Ramirez were brothers and sisters. All
were stockholders, directors and officers of the Pagaspas Marketing Co., Inc. (PMCI).
PMCI sold office machines and supplies. It employed 20 sales persons, 10 delivery
men, 20 service personnel, and 10 administrative employees. On December 10, 1987,
45 rank and file workers of the company formed and registered a labor union. They
sent a letter to Pagaspas demanding recognition as bargaining agent of all workers,
enclosing check-off authorization forms of the union members, and a set of economic
demands. PMCI refused to recognize the union. The union president went to you, as
labor adviser of the federation which they were planning to affiliate with.
He wants your opinion on what the union may lawfully do to compel management to
come to the bargaining table at that point. What will your advice be?
Malao, Mike

The union president tells you that they prefer to go on strike. He wants to know the
legal requirements that the union must comply with so the strike will be legal. What
advice will you give?
I will advice the union president to file a petition for certification so that after being
certified as the collective bargaining representative, the union could go back to PMCI and
ask it to bargain collectively with the Union. If PMCI persists in its refusal to bargain
collectively, I will advice the Union to file a case of unfair labor practice against PMCI since a
refusal to bargain collectively is a ULP.
I will tell the union president that these are the requisites that should be complied
with if a strike is to be legal: The union should file a notice of strike with the Bureau of
Labor Relations (assuming PMCI is in Metro Manila). A copy of the notice should also be
served upon PMCI. The union should not actually go on strike until after 30 days (if the
strike is because of the ULP committed by PMCI, i.e., its refusal to bargain collectively) after
filing a notice of strike.
There should be a strike vote, either at a meeting or through a referendum. A majority of the
union members on the bargaining unit should approve the declaration of strike. The union
should furnish the Bureau of Labor Relations of the Notice of meeting where a strike vote
will be taken. The union should also inform the Bureau about the result of the voting at
least seven (7) days before the intended strike.
TOPIC: CONDITIONS FOR A VALID RETRENCHMENT
What conditions must prevail and what requirements, if any, must an employer
comply with to justify / effect a valid retrenchment program?
In the case of Asian Alcohol Corporation vs. NLRC, G.R. No. 131108, March 25, 1999,
The SC stated that the requirements for a valid retrenchment must be proved by clear and
convincing evidence:
(1) that the retrenchment is reasonably necessary and likely to prevent business losses
which, if already incurred, are not merely de minimis, but substantial, serious, actual and
real or if only expected, re reasonably imminent as perceived by objectively and in good faith
by the employer;
(2) that the employer served written notice both to the employees and to the Department
of Labor and Employment at least one month prior to the intended date of retrenchment;
(3) that the employer pays the retrenched employees separation pay equivalent to one
month pay or at least one month pay for every year of service, whichever is higher;
(4) that the employer exercises his prerogative to retrench employees in good faith for the
advancement of its interest and not to defeat or circumvent the employees right of security
of tenure; and
(5) that the employer used fair and reasonable criteria in ascertaining who would be
dismissed and who would be retained among the employees, such as status (i.e., whether
they are temporary, casual, regular, or managerial employees), efficiency, seniority, physical
fitness, age, and financial hardship for certain workers.

Malao, Mike

TOPIC: ILLEGAL DISMISSAL; DUE PROCESS REQUIREMENTS.

SUMMARY OF THE RULE: To meet the requirements of due process, the law requires that
an employer must furnish the workers sought to be dismissed with two written notices
before termination of employment can be legally effected, that is, (1) a notice which apprises
the employee of the particular acts or omissions for which his dismissal is sought; and (2)
subsequent notice, after due hearing, which informs the employee of the employers decision
to dismiss him.
Assuming the existence of valid grounds for dismissal, what are the requirements
before an employer can terminate the services of an employee?
The employer should give the employee being terminated due process. For termination
of employment based on any of the just causes for termination, the requirement of due
process that the employer must comply with are:
(1) A written notice should be served on the employer specifying the ground or grounds
for termination and giving to say employee reasonable opportunity within which to
explain his side.
(2) A hearing or conference should be held during which the employee concerned, with
the assistance or counsel if the employee so desires, is given opportunity to respond to the
charge, present his evidence and present the evidence presented against him.
(3) A written notice of termination, if termination is the decision of the employer, should
be served on the employee indicating that upon due consideration of all the circumstances,
grounds have been established to justify his termination.
For termination of employment based on authorized causes, the requirements of due
process shall be deemed complied with upon service of a written notice to the Department of
Labor and Employment at least thirty (30) days before the affectivity of the termination
specifying the ground or grounds for termination.
ALTERNATIVE ANSWER:
Assuming that there is a valid ground to terminate employment, the employer must
comply with the requirement of procedural due process: written notice of intent to terminate
stating the cause of termination; hearing; and notice of termination. Art. 277 of the Labor
Code reads:
xxx The employer shall furnish the worker whose employment is sought to be
terminated a written notice containing a statement of the causes for termination and
shall afford the latter ample opportunity to be heard and to defend himself with the
assistance of his representative if he so desires.
Not only must the dismissal be for a valid or unauthorized cause as provided by law
but the rudimentary requirements of due process notice and hearing must also be
observed before an employee must be dismissed (Salaw v. NLRC, 202 SCRA 7). To meet the
requirements of due process, the law requires that an employer must furnish the workers
sought to be dismissed with two written notices before termination of employment can be
legally effected, that is, (1) a notice which apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) subsequent notice, after due hearing,
which informs the employee of the employers decision to dismiss him (Tanala v. NLRC, 252
SCRA 314).

Malao, Mike

TOPIC: JURISDICTION
SUMMARY OF THE RULE: Regular courts have jurisdiction over cases arising from
slanderous language uttered against an employee by an employer. This is a simple action for
damages for tortious acts allegedly committed by defendant-employer (Medina vs. CastroBartolome, 116 SCRA 597).
Mariet Demetrio was a clerk-typist in the Office of the President of a multinational
corporation. One day she was berated by the President of the company, the latter
shouting invectives at her in the presence of employees and visitors for a minor
infraction she committed. Mariet was reduced to tears out of shame and felt so bitter
about the incident that she filed a civil case for damages against the company
president before the regular courts. Soon thereafter, Mariet received a memorandum
transferring her to the Office of the General Manager without demotion in rank or
diminution in pay. Mariet refused to transfer.
However, with respect to the civil suit for damages, the company lawyer filed a Motion
to Dismiss for lack of jurisdiction considering the existence of an employer-employee
relationship and therefore, it is claimed that the case should have been filed before
the Labor Arbiter.
Rule on the Motion to Dismiss. Should it be granted or denied. Explain briefly.
The Motion to Dismiss should be denied. It is a regular court and not a Labor Arbiter
that has jurisdiction on the suit for damages. The damages did not arise from the employeremployee relations which would not have placed the suit under the jurisdiction of a Labor
Arbiter. The suit arises from the fact that the President of the company shouted invectives at
Mariet Demetrio in the presence of employees and visitors. Her complaint for damages is
against an officer of the Company based on slanderous language alleged made by the latter.
This falls under the jurisdiction of the ordinary courts. There is here a simple action for
damages for tortious acts allegedly committed by the defendant. Such being the case, the
governing statue is the Civil Code and not the Labor Code. (Medina vs. Castro-Bartolome,
116 SCRA 597)
ALTERNATIVE ANSWER:
The Motion to dismiss should be granted. According to the Labor Code (Article 217
(a)4), the Labor Arbiter has original and exclusive jurisdiction to hear and decide, among
others, claims for actual, moral and exemplary and other forms of damages arising from the
employer-employee relations. The claim for damages in the case in question arose from the
fact that the President of the Company shouted invectives at Mariet Demetrio in the
presence of employees and visitors for a minor infraction she committed. If the infraction
has something to do with her work, then, the claim for damages could be considered as
arising from employer-employee relations. Thus, the claim is under the exclusive jurisdiction
of the Labor Arbiter.
TOPIC: JURISDICTION
SUMMARY OF THE RULE: Article 223 of the Labor Code provides that: Decisions, awards,
or orders of the Labor Arbiter are final and executory unless appealed to the Commission by
any or both parties within 10 calendar days from the receipt of such decisions, awards, or
orders.
The affected members of the rank-and-file employees elevated the Labor Arbiters
decision to the NLRC via a petition for review filed after the lapse of the 10-day
Malao, Mike

reglementary period for perfecting an appeal. Should the NLRC dismiss the petition
outright or may the NLRC take cognizance thereof?
The NLRC should dismiss the appeal outright because the same was filed beyond the
reglementary period of appeal. Article 223 of the Labor Code reads: Decisions, awards, or
orders of the Labor Arbiter are final and executory unless appealed to the Commission by
any or both parties within 10 calendar days from the receipt of such decisions, awards, or
orders.
ALTERNATIVE ANSWER:
The NLRC could dismiss outright the appeal for being filed out of time. But if there are
good reasons that may justifiably explain why there was a delay in the filing of the appeal,
substantial justice may be the basis for the NLRC to take cognizance of the appeal.
3. SELECTED 2004 BAR QUESTIONS AND ANSWERS
A. RS, a security guard, filed a complaint for illegal dismissal against Star
Security Agency. He alleged he was constructively dismissed after ten years of service
to the agency. Having been placed on off-detail and floating status for 6 months
already, he claimed the Agency just really wanted to get rid of him because it required
him to take a neuro-psychiatric evaluation test by Mahusay Medical Center. RS said
he already submitted the result of his evaluation test by Brent Medical Clinic as
precondition to a new assignment, but the report was rejected by the Agency. RS
added that Mahusay Medical Center had close ties with Stars president. It could
manipulate tests to favor oThnly guards whom the Agency wanted to retain. Star
defended its policy of reliance on Mahusay Medical Center because it has been duly
accredited by the Philippine National Police. It is not one of those dubious testing
centers issuing ready-made reports. Star cited its sad experience last year when a
guard ran amuck and shot an employee of a client-bank. Star claimed management
prerogative in assigning its guards, and prayed that RS complaint be dismissed.
What are the issues? Identify and resolve them.
SUGGESTED ANSWER:
The facts in the question raise these issues:
1. When RS was placed on off detail or floating status for more than 6 months, can RS claim
that he was terminated?
2. Is there a valid reason for the termination of RS?
On the first issue, RS can be considered as terminated because he has been placed on
off detail or floating status for a period which is more than 6 months.
On the second issue, it is true that disease is a ground for termination. But the
neuro-psychiatric evaluation test by Mahusay Medical Center is not the certification
required for disease to be a ground for termination.
The Rules and Regulations
implementing the Labor Code require a certification by a public health authority that the
disease is of such nature or at such a stage that it cannot be cured within a period of 6
months even with proper medical treatment.

Malao, Mike

ANOTHER SUGGESTED ANSWER:

The issues involved are as follows:
1. Is there constructive dismissal?
2. Is there a valid exercise of management prerogative?
On the first issue, there is constructive dismissal. RS cannot be placed on off detail
or floating status indefinitely. If it lasts for more than 6 months, RS shall be deemed to
have been constructively dismissed thus entitling him to separation benefits. (Superstar
Security Agency vs. NLRC, 184 SCRA 74)
On the second issue, there is no valid exercise of management prerogative. Stars
claim of management prerogative in assigning its guards cannot be exercised to defeat or
circumvent RS right to security of tenure.
B. A spinster school teacher took pity on one of her pupils, a robust and precocious
12-year old boy whose poor family could barely afford the cost of his schooling. She
lives alone at her house near the school after her housemaid left. In the afternoon,
she lets the boy do various chores as cleaning, fetching water and all kinds of errands
after school hours. She gives him rice and P30.00 before the boy goes home at 7:00
every night. The school principal learned about it and charged her with violating the
law which prohibits the employment of children below 15 years of age. In her defense,
the teacher stated that the work performed by her pupil is not hazardous, and she
invoked the exception provided in the D.O. of DOLE for the engagement of persons in
domestic and household service.
Is her defense tenable? Reason.
SUGGESTED ANSWER:
No. Her defense is not tenable. Under Art. 19 of the Labor Code on minimum
employable age, no child below 15 years of age shall be employed except when he works
directly under the sole responsibility of his parents or guardian, the provisions of the alleged
D. O. of DOLE to the contrary notwithstanding. A mere Department Order cannot prevail
over the express prohibitory provisions of the Labor Code.
[N.B. Sec. 3, RA 9231 allows a child below 15 years of age to work for not more than
20 hours a week; provided that the work shall not be more than 4 hours at any given day;
provided further, that he does not work between 8PM and 6AM of the following day; and
provided, finally, that the work is not hazardous or deleterious to his health or morals. This
is a law approved only on July 28, 2003, which is beyond the cut-off period of the then 2004
Bar Examinations.]
C. Which of the following may be considered among industries most vital to national
interest as to be subject of immediate assumption of jurisdiction by the Secretary of
Labor or certification for compulsory arbitration in case of strike or work stoppage
arising from a labor dispute?
1.
2.
3.
4.
5.

Bulletin daily newspaper publishing company

Local franchise of Jolibee and Starbucks
Shipping and port services in Cebu and Manila
Enchanted Kingdom, Elephant Island and Boracay Resort
LBC, DHL and FedEX centers
Malao, Mike

Justify your answer or choice.

SUGGESTED ANSWER:
Certification of labor dispute for immediate assumption of jurisdiction by the
Secretary refers to industries indispensable to national interest:
1. Bulletin Daily Newspaper, since access to information is a requirement for an
informed citizenry.
2. Shipping and port services, since the country needs domestic sea transport
due to our topography and for the smooth flow of business and government operations.
3. LBC, DHL and FedEX centers, since couriers are essential to foreign and
domestic business and government operations.
D. Employees of ABC declared a strike after filing a Notice of Strike with the DOLE.
They barricaded company gates and damaged vehicles entering company premises.
On the second day after the strike, ABC filed a petition with the DOLE Secretary to
intervene through the issuance of an assumption of jurisdiction order that the
Secretary may issue when a strike or lockout will adversely affect national interest.
ABC furnished the Secretary with evidence to show that company vehicles had been
damaged; that electric power had been cut off; and equipment and materials were
damaged because electric power was not immediately restored. ABC forecast that the
countrys supply of chlorine for water treatment (which the company produces) would
be affected adversely if ABCs operations were closed down by the strikers.
Could the DOLE Secretary intervene, assume jurisdiction and issue a TRO?
Briefly justify your answer.

SUGGESTED ANSWER:
Yes, the Secreatry can assume jurisdiction over the
considered as an industry indispensable to the national
countrys supply of chlorine for water treatment.
The assumption of jurisdiction by the Secretary has
The strikers will be subject to Return to Work Order by the
of jurisdiction.

dispute because ABC could be

interest since it produces the
the effect of ending the strike.
Secretary upon his assumption

E. Because of alleged unfair labor practices by the management of GFI system, a

government-owned and controlled financial corporation, its employees walked out
from their jobs and refused to return to work until the management would grant their
union official recognition and start negotiations with them.
The leaders of the walk-out were dismissed, and the other participants were
suspended for 6o days. In arguing their case before the Civil Service Commission,
they cited the principle of social justice of workers and the right to self-organization
and collective action, including the right to strike.
They claimed that the
Constitution shielded them from any penalty because their walk-out was a concerted
action pursuant to their rights guaranteed by basic law.

Malao, Mike

Is the position taken by the walk-out leaders and participants legally correct?
Reason briefly.
SUGGESTED ANSWER:
No. They are government employees, and as such, they do not have the right to
strike. Sec 3 of Art XIII of the Constitution states, The State shall guarantee the rights of
all workers to self-organization, collective bargaining and negotiations, and peaceful
concerted activities including the right to strike in accordance with law.
The last clause is very clear; the right to strike is not constitutional. It is statutory
because the right should be in accordance with law. And there is as yet no law giving
government employees the right to strike.
ANOTHER SUGGESTED ANSWER:
No.
Assuming that what we have is a originally chartered GOCC, they cannot, under Eo
180 and related jurisprudence, stage such walk-out which is basically a case of strike.
Even if GFI was organized under the Corporation Code, still no such walk-out is
allowed without complying with the requirements of a valid strike, among which is that said
strike should be validly grounded on a (a) deadlock in collective bargaining, or (b) ULP.

Malao, Mike

CASE DOCTRINES
BOOK ONE
POEA; POWERS AND FUNCTIONS.
APPROVAL OF OVERSEAS CONTRACTS
An agreement that changes the employees pay and benefits to make them lesser than
those contained in a POEA-approved contract is void, unless such subsequent agreement is
approved by the POEA (Chavez vs. Bonto-Perez).
REIMBURSEMENT OF OVERPAID FEES
POEA has the power to order refund or reimbursement of fees fraudulently or illegally
collected, or in excess of what is legally allowed. (Eastern Assurance & Surety Corporation vs.
Secretary of Labor).
ISSUANCE OF SEARCH AND SEIZURE ORDERS
Under the Constitution, only a judge may issue warrants of search and arrest. The
labor authorities must go through the judicial process. The Secretary of Labor, not being a
judge, may no longer issue search or arrest warrants. To that extent, Article 38, paragraph
(c), of the Labor Code, is declared of no force and effect (Salazar vs. Achacoso and Marquez).
ILLEGAL RECRUITMENT; CONCEPT.
ILLEGAL RECRUITMENT vis--vis ESTAFA
A person convicted for illegal recruitment under the Labor Code can be convicted for
violation of the Revised Penal Code provisions on estafa provided the elements of the crime
are present (People vs. Calonzo).
BOOK TWO
APPRENTICESHIP AGREEMENTS: CONCEPT.
CONCEPT
An apprenticeship program needs prior approval by the Department of Labor and
Employment. If employed without a pre-approved apprenticeship program, the apprentice is
not an apprentice but a regular employee (Nitto Enterprises v. NLRC).
APPRENTICESHIP vis--vis EMPLOYER-EMPLOYEE RELATIONSHIP
There is no employer-employee relationship between students on one hand, and
schools, colleges or universities, on the other, where there is written agreement between
them under which the former agree to work for the latter in exchange for the privilege to
study free of charge, provided, the students are given real opportunities, including such
facilities as may be reasonable and necessary to finish their chosen courses under such
agreement." (Implementing Rules of Book III, Rule X, Sec. 14)

Malao, Mike

If the student referred to in Art. 72 of the Labor Code, in the course of doing a task in
behalf of the school, causes injury to a third person, the school can be held liable. The
Implementing Rules provision that there is no employer-employee relation between the
school and the student pertains to observance of labor regulations, such as payrolls to be
kept, working conditions or rest periods. It is not the decisive law in a civil suit for damages
instituted by an injured third person. The applicable law is Article 2180 of the Civil Code
(Filamer Christian Institute v. CA).
BOOK THREE
MANAGEMENT PREROGATIVE, DEFINED.
Except as limited by special laws, an employer is free to regulate, according to his own
discretion and judgment, all aspects of employment, including hiring, work assignments,
working methods time, place and manner of work, tools to be used, processes to be followed,
supervision of workers, working regulations, transfer of employees, work supervision, layoff
of workers and the discipline, dismissal and recall of workers (San Miguel Brewery Sales vs.
Ople).
CONDITIONS OF EMPLOYMENT; COVERAGE
INSURANCE AGENTS
An insurance company may have two classes of agents who sell its insurance policies:
(1) salaried employees who keep definite hours and work under the control and supervision
of the company; and (2) registered representatives who work on commission basis. The
agents who belong to the first category are regular employees. Those who belong to the
second category are not regular employees for they do not have to devote their time
exclusively to or work solely for the company since the time and the effort they spend in
their work depend entirely upon their own will and initiative (Great Pacific Life Insurance
Corporation vs. Judico).
TEACHERS
College teachers are regular employees. The principal consideration in determining
whether a workman is an employee or an independent contractor is the right to control the
manner of doing the work, and it is not the actual exercise of the right by interfering with
the work, but the right to control, which constitutes the test (Feati University vs. Hon. Jose
S. Bautista, and Feati University Faculty Club).
JEEPNEY DRIVERS UNDER BOUNDARY SYSTEM
Employer-employee relationship exists between the owner of the jeepneys and the
drivers even if the latter work under the boundary system. Not having any interest in the
business because they did not participate in the management thereof, their service as
drivers of the jeeps being their only contribution to the business, relationship of lessor and
lessee cannot be sustained (Citizens League of Free Workers, et al. vs. Abbas, GR No. L21212).

Malao, Mike

PIECE-RATE WORKERS
Piece-rate workers who work inside the company premises under the close supervision
and control of their employers are regular employees (Labor Congress of the Philippines vs.
NLRC).
Piece-rate workers who work outside the company premises and are unsupervised or
whose time spent in their work cannot be reasonably ascertained are NOT regular employees
(Makati Haberdashery, Inc. vs. NLRC).
FISHERMEN
Fishermen who work not under the orders of the boat-owners as regards their
employment; that they go out to sea not upon directions of the boat-owners, but upon their
own volition as to when, how long, and where to go fishing; that the boat-owners do not in
any way control the crew members with whom the former have no relationship whatsoever;
that they simply join the trip for which the pilots allow them, without any reference to the
owners of the vessel; and that they only share in their own catch produced by their own
efforts are NOT regular employees (Pajarillo vs. SSS).
Fishermen who conduct fishing operations under the control and supervision of the
boat-owners operations manager are regular employees. Matters dealing on the fixing of the
schedule of the fishing trip and the time to return to the fishing port were the prerogative of
the boat-owner (Ruga, et al. vs. NLRC).
CONDITIONS OF EMPLOYMENT; HOURS OF WORK
WAITING TIME
Waiting spent by an employee shall be considered as working time if waiting is
considered an integral part of his work or if the employee is required or engaged by an
employer to wait (Zapanta v. National Alliance of Teachers and Office Workers Assoc, Sept. 5,
1980).
MEAL TIME
Meal time is NOT working time if the employee is completely freed from duties during
his meal period even though he remains in the workplace (Pan American World Airways
System [Phil.] vs. Pan American Employment Association).
Where work is continuous for several shifts, the mealtime breaks should be counted
as working time for purposes of overtime compensation (National Devt Company vs. CIR and
the National Textile Workers Union).
WORKING WHILE SLEEPING
Sleeping time may be considered working time if it subject to serious interruption or
takes place under conditions substantially less desirable than would be likely to exist at the
employees home (Skidmore vs. Swift and Co.).

Malao, Mike

ON CALL
An employee who is required to remain on call on the employers premises or so close
thereto that he cannot use the time effectively for his own purposes is working while on
call. The time he stays in the place of work is considered hours worked (National Labor
Union vs. Gotamco Lumber Co. vs. CIR).
NIGHT SHIFT DIFFERENTIAL
Additional compensation for nighttime work is founded on public policy, hence the
same cannot be waived. It is argued that that laborer can rest during the day after having
worked the whole night. But can the repose by day produce to the human body the same
complete recuperative effects which only the natural rest at night can give him? It is believed
that since time immemorial the universal rule is that a man works at night due to some
driving necessity rather than for reasons of convenience (Mercury Drug co., Inc. vs. Nardo
Dayao, et al.).
OVERTIME PAY
The right to overtime pay cannot be waived. The right is intended for the benefit of the
laborers and employees. Any stipulation in the contract that the laborer shall work beyond
the regular 8 hours without additional compensation for the extra hours is contrary to law
and null and void (Cruz vs. Yee Sing).
WAIVER OF OVERTIME PAY
Waiver may be permitted when it is in consideration of benefits and privileges which
may be more than what will accrue to the employee in overtime pay (Meralco Workers Union
vs. Manila Electric Company, et al.).
NIGHT SHIFT DIFFERENTIAL AND OVERTIME PAY
The receipt of overtime pay will not preclude the right to night differential pay. The
latter is payment for work done during the night while the other is payment for the excess of
the regular eight-hour work (Naric vs. Naric Workers Union).
OVERTIME PAY BASED ON BASIC PAY
In the computation of overtime pay, premium pay for work done on Sundays, holidays
and at night and other fringe benefits which are occasionally, not regularly, received and not
by all employees, should not be added to the basic pay.
CONDITIONS OF EMPLOYMENT; HOLIDAY PAY AND SERVICE INCENTIVE LEAVES
ENTITLEMENT OF MONTHLY-PAID EMPLOYEES TO HOLIDAY PAY
Monthly-paid employees are not excluded from the benefits of holiday pay. The Labor
Code clearly states that every worker shall be paid his or her regular holiday pay (Insular
Bank of Asia and America Employees Union vs. Hon. Amado Inciong and Insular Bank of Asia
and America).

Malao, Mike

ENTITLEMENT OF PART-TIME OR CONTRACTUAL WORKERS

TO SERVICE INCENTIVE LEAVE
Bureau of Working Conditions, Advisory Opinion to Philippine Integrated Exporters,
Inc. on the query about Conditions of Employment of Part-time Workers
Part-time workers are entitled to the full benefit of the yearly 5 days service incentive
leave with pay. The reason is that the provisions of Article 95 of the Labor Code and its
implementing rules, speak of the number of months in a year for entitlement to said benefit.
Consequently, part-time employees are also entitled to the full five days service incentive
leave benefit and not on a pro-rata basis.
CONDITIONS OF EMPLOYMENT; WAGES
SALARY EXCLUDES ALLOWANCES
Existing laws exclude allowances from the basic salary or wage in the computation of
the amount of retirement and other benefits payable to an employee. The Supreme Court
will not adopt a different meaning of the terms salaries or wages to mean the opposite, that
is to include allowances in the concept of salaries or wages (Cebu Institute of Technology vs.
Ople).
BASIC WAGE AND COMMISSIONS
If the commissions are in a wage-or sales- percentage type, they may properly be
considered part of the basic salary. These commissions are not overtime payments, nor
profit-sharing payments nor any other fringe benefit. Thus, the salesmans commissions,
comprising a pre-determined percent of the selling price of the goods sold by each salesman,
were properly included in the term basic salary for purposes of computing their 13th month
pay (Philippine Duplicators, Inc. vs. NLRC and Philippine Duplicators Employees Union).
In remunerative schemes consisting of a fixed or guaranteed wage plus commission,
the fixed or guaranteed wage is patently the basic salary for this is what the employee
receives for a standard work period. Commissions are given for extra efforts exerted in
consummating sales or other related transactions. They are, as such, additional pay, which
the Court has made clear do not form part of the basic salary (Boie-Takeda Chemicals, Inc.
vs. Dionisio Dela Serna).

PROPORTIONATE 13th MONTH PAY

An employee who has resigned or whose services were terminated at anytime before
the time of payment of the 13th month pay is entitled to 13th month pay in proportion to the
length of time he worked during the year, reckoned from the time he started working during
the calendar year up to the time of his resignation or termination from the service
(International School of Speech vs. NLRC and MC Mamuyac).

Malao, Mike

WAGES; PAYMENT OF WAGES

NON-LAWYERS NOT ENTITLED TO ATTORNEYS FEES
Although the law allows, under certain circumstances, non-lawyers to appear before
the National Labor Relations Commission or any Labor Arbiter, however, this does not mean
that they are entitled to attorneys fees. Their act of representing, appearing or defending a
party litigant in a labor case does not, by itself, confer upon them legal right to claim for
attorneys fees. Entitlement to attorneys fees presupposes the existence of attorney-client
relationship. This relationship cannot exist unless the clients representative is a lawyer
(Five J Taxi, et al. vs. NLRC).
WAGES; PROHIBITION REGARDING WAGES
WAGE DEDUCTIONS: SETTING OFF OF MONEY CLAIM OF EMPLOYEE AGAINST
NONPAYMENT OF STOCK SUBSCRIPTIONS
Article 113 of the Labor Code allows such a deduction from the wages of the
employees by the employer, only in three instances, to wit: (a) in cases where the worker is
insured with his consent by the employer, and the deduction is to recompense the employer
for the amount paid by him as premium on the insurance; (b) for union dues, in cases where
the right of the workers or his union to check-off has been recognized by the employer or
authorized in writing by the individual worker concerned; and (c) in cases where the
employer is authorized by law or regulations issued by the Secretary of Labor (Apodaca vs.
NLRC, et a.).
WAGE DISTORTION
The Court summarizes the principles relating to wage distortion, namely:
(a) The concept of wage distortion assumes an existing grouping or classification of
employees which establishes distinctions among such employees on some relevant or
legitimate basis. This classification is reflected in a differing wage rate for each of the
existing classes of employees.
(b) Wage distortions have often been the result of government-decreed increases in
minimum wages. There are, however, other causes of wage distortions, like the merger of
two companies (with differing classifications of employees and different wage rates) where
the surviving company absorbs all the employees of the dissolved corporation.
(c) Should a wage distortion exist, there is no legal requirement that, in the
rectification of that distortion by readjustment of the wage rates of the differing classes of
employees, the gap which had previously or historically existed be restored in precisely the
same amount. In other words, correction of a wage distortion may be done by reestablishing
a substantial or significant gap (as distinguished from the historical gap) between the wage
rates of the differing classes of employees.
(d) The reestablishment of a significant difference in wage rates may be the result of
resort to grievance procedures or collective negotiations (National Federation of Labor vs.
NLRC).

Malao, Mike

WORKING CONDITIONS; SPECIAL GROUP OF EMPLOYEES

STIPULATION AGAINST MARRIAGE (Article 136)
Article 136 is not intended to apply only to women employed in ordinary occupations,
or it should have categorically expressed so. The sweeping intendment of the law, be it on
special or ordinary occupations, is reflected in the whole text and supported by Article 135
that speaks of nondiscrimination on the employment of women (Claudine de Castro Zialcita,
et al. vs. PAL).
HOUSEHELPER
The criterion is the personal comfort and enjoyment of the family of the employer in
the home of said employer. While the nature of work of a househelper, domestic servant or
laundry woman in a home or in a company staff house may be similar in nature, the
difference in their circumstances is that in the former instance they are actually serving the
family while in the latter case, whether it is a corporation or a single proprietorship engaged
in business or industry or any other agricultural or similar pursuit, service is being
rendered in the staff houses or within the premises of the business of the employer. In such
instances, they are employees of the company or employer in the business concerned
entitled to the privileges of a regular employee (Apex Mining Co., Inc. vs. NLRC).
BOOK FIVE
POWERS AND
COMMISSION

DUTIES;

JURISDICTION

OF

THE

LABOR

ARBITERS

AND

THE

MEANING OF COMPULSORY ARBITRATION

In its broad sense, arbitration is the reference of a dispute to an impartial third
person, chosen by the parties or appointed by statutory authority to hear and decide the
case in controversy. When the consent of one of the parties is enforced by statutory
provisions, the proceeding is referred to as compulsory arbitration. In labor cases,
compulsory arbitration is the process of settlement of labor disputes by a government
agency which has the authority to investigate and to make an award which is binding on all
parties (Philippine Airlines, Inc. vs. NLRC).
POWERS AND DUTIES; POWERS OF THE COMMISSION
CONTEMPT POWER
The commission has the power to hold any person in contempt directly or indirectly.
The procedures and penalties thereof are provided under paragraph (d) of Art. 218. Section
2, Rule X of the New Rules of Procedure of the NLRC provides that the Commissioner or any
labor arbiter may cite any person for indirect contempt upon grounds and in the manner
prescribed under Sec. 3(b), Rule 71 of the 1997 Rules of Civil Procedure. The said section
provides that Indirect contempt is to be punished after charge and hearing for any xxx
disobedience of or resistence to a lawful writ, process, order, or judgment of a court xxx
(Industrial and transport Equipment, Inc., et al. vs. NLRC).
COMPROMISE AGREEMENTS AND RES JUDICATA
It is true that a compromise agreement once approved by the court has the effect of
res judicata between the parties and should not be disturbed except for vices of consent and
Malao, Mike

forgery. However, The NLRC may disregard technical rules of procedure in order to give life
to the constitutional mandate affording protection to labor and to conform to the need of
protecting the working class whose inferiority against the employer has always been
earmarked by disadvantage (Principe vs. Philippine-Singapore Transport Services, Inc.,).
POWERS AND DUTIES; APPEARANCES AND FEES
APPEARANCE OF NON-LAWYERS
Non-lawyers may appear before the commission or labor arbiter only: (a) if they
represent themselves; (b) if they represent their organization or members thereof; or (c) if he
is a duly-accredited member of the legal aid office duly recognized by the department of
justice or integrated bar of the Philippines in case referred thereto by the latter.
The appearance of labor federations and local unions as counsel in labor proceedings
has been given legal sanction and we need only to cite Art. 222 of the Labor Code allowing
non-lawyers to represent their organization or members thereof (Radio Communication of the
Philippines, Inc. vs. The Secretary of Labor Employment).
ATTORNEYS FEES
There are only two kinds of cases where attorneys fees may be assessed: (1) cases
arising from unlawful withholding of wages and (2) cases arising from collective bargaining
negotiations (Reahs Corporation vs. NLRC).
PROHIBITION OF PAYMENT OF ATTORNEYS FEES
Art. 222 of the Labor Code prohibits the payment of attorneys fees only when it is
effected through forced contributions from the workers from their own funds as
distinguished from the union funds. The purpose of the provision is to prevent imposition on
the workers of the duty to individually contribute their respective shares in the fee to be paid
the attorney for his services on behalf of the union in its negotiations with the management.
The obligation to pay the attorneys fees belongs to the union and cannot be shunted to the
workers as their responsibility (Bank of the Philippine Islands vs. NLRC, et al.).
ATTORNEYS FEES ARISING FROM RECOVERY OF WAGES AND OTHER BENEFITS
Art 111 of the Labor Code regulates the amount recoverable as attorneys fees in the
nature of damages sustained by and awarded to the prevailing party. It may not be used
therefore, as the lone standard in fixing the exact amount payable to the lawyer by his client
for the legal services he rendered. Moreover, while it provides for the maximum allowable
amount of attorneys fees, it does not direct the instantaneous and automatic award of
attorneys fees in such maximum limit (Traders Royal Bank Employees Union-Independent
vs. NLRC).
FEES FOR SERVICES RENDERED BY UNION OFFICERS
Art. 222(b) prohibits attorneys fees, negotiation fees and similar charges arising out of
the conclusion of a bargaining agreement from being imposed on any individual union
member. The collection of the special assessment partly for the payment services rendered
by union officers, consultants and other may not be in the category of attorneys fees or
negotiations fees. But there is no question that it is an exaction which falls within the
category of a similar charge and therefore, within the coverage of the prohibition in the
aforementioned article (Palacol vs. Ferrer-Calleja)

Malao, Mike

APPEAL; EXECUTION OF DECISIONS, ORDERS AND AWARDS

FAILURE TO COMPLY WITH A WRIT OF EXECUTION
If the employer fails or is unable to comply with a final and executory judgment for the
reinstatement of an employee, the plain and obvious remedy is simply the compulsion of the
employer by writ of execution to effect the mandated reinstatement and pay the amounts
decreed in the judgment, and disregard or overrule the employers claim of inability to
reinstate the employee. If there be valid and unsuperable cause for such inability to
reinstate, this factor must be taken into account in the process of directing and effectuating
the award of relief to the employee consistent with the judgment. The remedy is certainly not
the institution of a separate action, whether in the regular courts or the labor arbiters
branch. Such recourse would violate the well-settled principle of res judicata. It would give
rise to multiplicity of actions which the law abhors and exerts every effort to eschew (MAI
Philippines Inc. vs. NLRC et al.).
The remedy for refusal of the employer to reinstate employee despite several writs of
execution is not the grant of additional backwages to serve as damages but to cite the
employer in contempt (Christian Literature Crusade v. NLRC).
EXECUTION OVER PROPERTY OWNED ONLY BY THE JUDGMENT DEBTOR
If the property under levy does not belong to the judgment debtor in the NLRC case, it
could not be validly levied upon by the sheriff for the satisfaction of the judgment therein.
Even upon a prima facie showing of the ownership by the third-party claimant, if the thirdparty claim does not involve nor grows out of, a labor dispute, a separate action for
injunctive relief against such levy may be maintained in court (Penalosa v. Villanueva).
NOTIFICATION
In labor cases, both the party and its counsel must be duly served their separate
copies of the order, decision, or resolution, unlike in ordinary judicial proceeding where
notice to counsel is deemed notice to the party (PNOC Dockyard and Engineering Corp. vs.
NLRC).
BUREAU OF LABOR RELATIONS; JURISDICTION
KATARUNGANG PAMBARANGAY AND THE LABOR CODE
Art 226 of the Labor Code grants original and exclusive jurisdiction over the
conciliation and mediation of disputes, grievances or problems in the regional offices of the
Department of Labor and Employment. It is the aid bureau and its divisions and not the
barangay lupong tagapayapa which are vested by law with original and exclusive authority
to conduct conciliation and mediation proceedings on labor controversies before their
endorsement to the appropriate labor arbiter adjudication (Montoya vs. Escayo).
BUREAU OF LABOR RELATIONS; COMPROMISE AGREEMENTS
OPTIONS WHEN COMPROMISE AGREEMENT IS VIOLATED
Under article 2041 of the civil code, should the party fail or refuse to comply with the
terms of a compromise agreement or amicable settlement, the other party could either: (1)
Malao, Mike

enforce the compromise by a writ of execution, or (2) regard it as rescinded and so insist
upon his original demand (Morales et al. vs. NLRC).
LABOR ORGANIZATIONS; RIGHTS AND CONDITIONS OF MEMBERSHIP
NATURE OF RELATIONSHIP BETWEEN UNION AND ITS MEMBERS
The union has been evolved as an organization of collective strength for the protection
of labor against the unjust exactions of capital, but equally important is the requirement of
fair dealing between the union and its members, which is fiduciary in nature, and arises out
of two factors: one is the degree of dependence of the individual employee on the union
organization; and the other, a corollary of the first, is the comprehensive power vested in the
union with respect to the individual. The union to be considered but the agent for the
purpose of securing for them fair and just wages and good working conditions and is subject
to the obligation of giving the members as its principals all information relevant to union
and labor matters entrusted (Heirs of Teodoro Cruz vs. Court of Industrial Relations).
RELIEF WITHIN THE UNION
Generally, redress must first be sought within the union itself in accordance with its
constitution and by-laws (Kapisanan ng mga Mangagawa sa MRR vs. Hernandez).
CHECK-OFF
Attorneys fees may not be checked-off or deducted from any amount due to an
employee without his written consent, except for mandatory activities under the
Code.(Vengco vs. Trajano).
DEDUCTIONS FOR UNION SERVICE FEE
Deductions for union service fee are authorized by law and do not require individual
check-off authorizations (Radio Communications of the Philippines Inc. vs. Sec. of Labor).
LABOR ORGANIZATIONS; RIGHTS OF LEGITIMATE LABOR ORGANIZATIONS
COMPROMISE BINDING UPON MINORITY MEMBERS OF UNION
A compromise agreement between the union and the company, pursuant to which the
complaint in an unfair labor practice case had been withdrawn and dismissed, is binding
upon the minority members of the union (Dionela vs. Court of Industrial Relations).
RIGHT TO SELF-ORGANIZATION; COVERAGE
EMPLOYEE-MEMBERS OF A COOPERATIVE
It is the fact of ownership of the cooperative, and not the 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 I the actual
management of the cooperative, all members thereof cannot form, assist or join a labor
organization for the purpose of collective bargaining (Benguet Electric Cooperative vs. FerrerCalleja).
Malao, Mike

UNFAIR LABOR PRACTICES; EMPLOYERS

ACCEPTANCE OF MASS RESIGNATION
Acceptance of a voluntary resignation is not ULP. When persons voluntarily terminate
their employment relationship, they cannot claim that they were dismissed (Enriquez vs.
Zamora).
FORCED VACATION LEAVE
The forced vacation leave without pay in view of the economic crisis, being neither
malicious, oppressive or vindictive, does not constitute ULP (Philippine Graphic Arts, Inc. vs.
NLRB).
ULP EVEN BEFORE UNION ID REGISTERED
Under Art. 248 of the Labor code of the Philippines, to interfere with, restrain, or
coerce employees in their exercise of the right to self-organization is an unfair labor practice
on the part of the employer. Paragraph d of said article also considers it an unfair labor
practice for an employer to initiate, dominant, assist or otherwise interfere with the
formation or administration of any labor organization, including the giving of financial or
other support to it. (Judric Canning Corporation vs. Inciong)
ULP THROUGH VIOLENCE AND INTIMIDATION
An employer unlawfully coerced employers by directing two individuals to his office at
gun point on the day of representation election after the individuals had informed the
employer that they were on the premises to vote in the election and they did in fact vote
(Holly Hill Lumber vs. NLRB).
ULP THROUGH SURVEILLANCE
When an employer engages in surveillance or takes steps leading his employees to
believe it is going on, a violation results because the employees come under threat of
economic coercion or retaliation for their union activities (Henriz Mfg. Co vs. NLRB).
ULP THROUGH ECONOMIC INDUCEMENTS
A violation results from an employers announcement of benefits prior to a
representation election, where it is intended to induce the employees to vote against the
union (Re: Hancock Fabric Outlet).
TOTALITY OF CONDUCT DOCTRINE
The letter, exhibits A and B, should not be considered by themselves alone, but
should be read in the light of the preceding and subsequent circumstances surrounding.
The letter should be interpreted according to the totality of conduct doctrine, whereby the
culpability of an employers remarks were to be evaluated not only on the basis of their
implicit implications, but were to be appraised against the background of and in conjunction
with collateral circumstances (The Insular Life Assurance Co., Ltd., Employees AssociationATU, et al. vs. The Insular Life Assurance Co., Ltd.).
Malao, Mike

LOCKOUT OR CLOSURE AMOUNTING TO ULP

The rule is that it is unlawful for the employer to threaten its employees with moving
or shutting down the plant and consequent loss of employment, as the result of their
support for the union (NLRB vs. Lousiana MFG).
ULP THROUGH COMPANY DOMINATION OF THE UNION
Domination of a labor union is usually manifested in the following forms:
a. Initiation of the company union idea. This may further occur in three styles: (1)
outright formation by the employer or his representatives; (2) employee formation on
outright demand or influence by employer; and (3) managerially motivated formation by
employees.
b. Financial support to the union. An employer commits unfair labor practice if he
defrays the union expenses or pays the attorneys fees to the attorney who drafted the
constitution and by-laws of the union.
c. Employer encouragement and assistance. Immediately granting he union exclusive
recognition as a bargaining agent without determining whether the union represents the
majority of the employees is an illegal form of assistance amounting to unfair labor practice.
d. Supervisory assistance. This takes form of soliciting membership permitting union
activities during working time or coercing employees to join the ion by threats of dismissal
or demotion (Philippine American Cigar & Cigarette Factory Workers Union vs. Philippine
American Cigar &Cigarette MFg. Co., Inc.).
ULP THROUGH DISCRIMINATION IN SALARY ADJUSTMENTS
There is unfair and unjust discrimination in the granting of salary adjustments where
the evidence shows that (a) the management paid the employees of unionized branch; (b)
where the salary adjustments were granted to employees of one of its non-unionized
branches although it was losing in its operations; and (c) the total salary adjustments given
one employee in the non-unionized branch (Manila Hotel Company vs. Pines Hotel Employees
Association).
TEST OF DISCRIMINATION
For the purpose of determining whether or not a discharge is discriminatory, it is
necessary that the underlying reason for the discharge be established. The fact that a lawful
cause for discharge is available is not a defense where the employee is actually discharged
because of his union activities. If the discharge is actually motivated by lawful reason, the
fact that the employee is engaged in union activities at the time will not lie against the
employer and prevent him from the exercise of his business judgment to discharge an
employee for cause (NLRB vs. Ace Comb Co.).
ULP THROUGH CONSTRUCTIVE DISCHARGE
An employee was held to be constructively discharged when she quit her job because
of the employees discriminatory assignment requiring heavy lifting work which the employer
knew she was physically unable to perform (NLRB vs. Vacuum).

Malao, Mike

VALIDITY OF THE CLOSED SHOP AGREEMENT

A closed shop agreement is valid form of union security, and such a provision in a
collective bargaining agreement is not a restriction of the right of freedom of association
guaranteed by the Constitution (Manila Mandarin Employees Union vs. NLRC).
ADVANTAGES AND DISADVANTAGES OF CLOSED-SHOP AGREEMENT
A closed-shop agreement is advantageous because it
a. Increases the strength and bargaining power of labor organizations.
b. Prevents nonunion workers from sharing in the benefits of the unions activities
without also sharing its obligations.
c. Prevents the weakening of labor organizations by discrimination against union
members.
d. Eliminates the lowering of standards caused by competition with nonunion
workers.
e. Enables labor organizations effectively to enforce collective agreements.
f. Facilitates the collection of dues and the enforcement of union rules.
g. Creates harmonious relations between the employer and the employee (NLU vs.
Aguinaldos Echague).
ULP IN A GIVEN PERIOD SHOULD BE INCLUDED IN SINGLE CHARGE
When a labor union accuses an employer of acts of unfair labor practice allegedly
committed during a given period of time, the charges should include all acts of unfair labor
practice committed against any and all members of the union during that period. The union
should not, upon the dismissal of the charges first preferred, be allowed to split its cause of
action and harass the employer with subsequent charges, and based upon acts committed
during the same period of time (Dionela vs. Court of Industrial Relations).
COLLECTIVE BARGAINING AGREEMENT; CONCEPT
CBA DEFINED
A collective bargaining agreement (CBA), as used n Art 252 of the labor code, refers to
a contract executed upon request of either the employer or the exclusive bargaining
representative of the employees incorporating the agreement reached after negotiations with
respect to wages, hours of work and all other terms and conditions of employment,
including proposals for adjusting any grievances or questions under such agreement (Davao
Integrated Port Stevedoring Services vs. Abarquez).
PARTIES TO COLLECTIVE BARGAINING
The duty to bargain collectively arises only between the employer and its employees.
Where nether party is an employer or employee of the other no such duty would exist.
Needless to add, where there is no duty to bargain collectively, the refusal to bargain violates
no rights (Allied Free Workers Union vs. Compania Maritima).

Malao, Mike

JURISDICTIONAL PRECONDITIONS OF COLLECTIVE BARGAINING

Although bargaining is a mutual obligation of the parties, the employer is not under
any legal duty to initiate contract negotiation. The mechanics of collective bargaining is set n
motion only when the following jurisdictional preconditions namely: (1) possession of the
status of majority representation of the employees representative in accordance with any of
the means of selection or designation provided for by the labor code; (2) proof of majority
representation; and (3) a demand to bargain under Art. 250, par. (a) of the Labor Code (Loy
vs. NLRC).
WAGE AGREEMENT; SOLOMONIC APPROACH IN WAGE DISPUTE
The middle ground approach employed by the secretary in this case which the
Supreme Court does not necessarily find the best method of resolving a wage. Merely finding
the midway point between the demands of the company and the union, and splitting the
difference is a simplistic solution that fails to recognize that the parties may already be at
the limits of the wage levels they can afford. It may lead to the danger too that neither of the
parties will engage principled bargaining; the company may keep its low position while the
union presents an artificially high position, on the fear that a Solomonic solution cannot
be avoided. Thus rather than encourage agreement, a middle ground approach instead
promotes a play safe attitude that leads to more deadlocks than to successfully negotiated
CBAs (Manila Electric Co vs. Hon. Sec of Labor and Mewa).
WORK RULES
Company rules relating to safety and work practices come within the meaning of the
phrase other terms and conditions of employment as used in the Act and, therefore,
constitute a mandatory subject of collective bargaining (NLRB vs. Gulf Power Co.).
BARGAINING TO POINT OF IMPASSE
The question as to what are mandatory and what are merely permissive subjects of
collective bargaining is of significance on the right of a party to insist on his position to the
point of stalemate. A party may refuse to enter into a collective bargaining contract unless it
includes a desired provision as to a matter which is a mandatory subject of collective
bargaining; but a refusal to contract in good faith that the insistence on the disputed clause
was not the sole cause of the failure to agree or that agreement was not reached with respect
to other disputed clauses (Samahang Manggagawa sa Top Form Manufacturing-United
Workers of the Philippines vs. NLRC).
BARGAINING TO THE POINT OF IMPASSE: BAD FAITH
Over a non-mandatory subject, on the other hand, a party may not insist on
bargaining to the point of impasse, otherwise his insistence can be construed as bargaining
in bad faith (NLRB vs. Woorster Division of Borg-Warner Corp.).
RATIFICATION; MANDATORY REQUIREMENTS
The rules require posting of the CBA in two conspicuous places for five days. In one
case, the CBA was not posted for at east five days in two conspicuous places n the
establishment before ratification, to enable the workers to clearly inform themselves of its
provisions. Moreover, the CBA submitted to the MOLE did not carry the sworn statement of
Malao, Mike

the union secretary, attested by the union president, that the CBA had been duly posted
and ratified, as required by section 1, Rule 9, Book V of the implementing Rules and
Regulations. The court ruled that these requirements being mandatory, noncompliance
there with rendered the CB ineffective (Associated Trade Unions vs. Trajano).
UNRATIFIED BUT IMPLEMENTED CBA
The parties to a collective agreement are required to furnish copies to the appropriate
Regional Office with accompanying proof of ratification by the majority of all the workers in
the bargaining unit. This was not done in the case at bar. We do not declare the CBA invalid
or void considering that the employees have enjoyed from it. They cannot receive benefits
under the provisions favorable to them and later insist that the CBA is void simply because
other provisions turn out not to the liking of certain employees. It is iniquitous to receive
benefits from a CBA and later on disclaim its validity (Planters Products, Inc. vs. NLRC).
CERTIFICATION OF THE CBA BY THE BUREAU OF LABOR RELATIONS
Neither is the certification of the CBA by the bureau of labor relations required to put
a stamp of validity to such contract. Once it is duly entered into and signed by the parties, a
collective bargaining agreement becomes effective as between the parties regardless of
whether the same has been certified by the BLR (Liberty Flour Mills Employees vs. Liberty
Flour Mills, Inc.).
COLLECTIVE BARGAINING AGREEMENT: TERMS
EFFECTIVITY OF CBA CONCLUDED AFTER SIX MONTHS
FROM EXPIRATION OF THE OLD CBA
In the absence of a new CBA, the parties must maintain status quo and must
continue in full force and effect the terms and conditions of the existing agreement until a
new agreement is reached. In this manner, the law prevents the existence of a gap in the
relationship between the collective bargaining parties. Another legal principle that should
apply is that in the absence of an agreement between the parties, then, an arbitrated CBA
takes on the nature of any judicial or quasi-judicial award; it operates and may be executed
only prospectively unless there are legal justifications for its retroactive application (Manila
Electric Company vs. Quisumbing and MEWA).
AGREED BUT UNSIGNED CBA WITHIN SIX MONTHS
The renegotiated CBA retroacts if the parties reached agreement within six months
from expiry date. The determining point is the date they agreed, not the date they signed
(Mindanao Terminal vs. Confesor and ALU-TUCP).
COLLECTIVE BARGAINING AGREEMENT: EXCLUSIVE BARGAINING REPRESENTATION
EMPLOYEES PARTICIPATION IN FORMULATING THE CODE OF DISCIPLINE
Verily, a line must be drawn between management prerogatives regarding business
operations pers se and those which affect the rights of the employees. In treating the latter,
management should see to it that its employees are at least properly informed of its
decisions or modes of action.
Malao, Mike

The collective bargaining agreement may not be interpreted as cession of employees

right to participate in the deliberation of matter which may affect their rights and the
formulation of policies relative thereto. And one such matter is the formulation of a code of
discipline (Philippine Airlines, Inc. vs. NLRC).
GLOBE DOCTRINE
The desires of the employees are relevant to the determination of the appropriate
bargaining unit. The relevancy of the wishes of the employees concerning their inclusion or
exclusion from a proposed bargaining unit is inherent in the basic right of self-organization.
While the desires of employees with respect to their inclusion in the bargaining unit is not
controlling, it is a factor which would be taken into consideration in reaching a decision
(Globe Machine & Stamping Co).
SINGLE OR EMPLOYER UNIT IS FAVORED
The proliferation of unions in an employer unit is discouraged as a matter of policy
unless there are compelling reasons which would deny a certain class of employees the right
to self-organization for purposes of collective bargaining (Philtranco Service Enterprises vs.
Bureau of Labor Relations).
EXCEPTIONS TO ONE-UNIT POLICY
The usual exception, of course, is where the employer unit has to give way to the other
units like the craft unit, plant unit, or a subdivision thereof; the recognition of these
exceptions takes into account the policy to assure employees of the fullest freedom in
exercising their rights. Otherwise stated, the one company-one union policy must yield to
the right of the employees to form unions or associations for purposes not contrary to law,
to self-organization and to enter into collective bargaining negotiations, among others which
the Commission guarantees (Barbizon Phil. Vs. Nagkakaisang Supervisor ng Barbizon, et.al.).
TWO COMPANIES WITH RELATED BUSINESS
Two corporations cannot be treated as single bargaining unit even if their businesses
are related (Indophil Textile Mill Workers Union-PTGWO vs. Voluntary Arbitrator Calica and
IndoPhil Textile Mills, Inc.).
SUBSIDIARIES AND SPUN-OFF CORPORATIONS
In determining an appropriate bargaining unit, the test of grouping is mutuality or
commonality of interests. The employees sought to be represented by the collective
bargaining agent must have substantial mutual interests in terms of employment and
working conditions as evinced by the type of work they performed. Considering the spin-offs,
the companies would consequently have their respective and distinctive concerns in terms of
the nature of work, wages, hours of work and other conditions of employment. Interests of
employees in the different perforce differ. The employees of different companies see the need
to group themselves together and organize themselves into distinctive and different groups.
It would then be best to have separate bargaining units for the different companies where
the employees can bargain separately according to their needs and according to their own
working condition (San Miguel Corp. Employees Union-PTGWO, etc vs. Confesor, San Miguel
Corp., Magnolia Corp., and San Miguel Foods, Inc.).
Malao, Mike

COLLECTIVE BARGAINING AGREEMENT: CERTIFICATION ELECTION

ULP IN RELATION TO ELECTION
It is unfair labor practice for the company to suspend the workers on the ground of
abandonment of work on the day on which the pre-election had been scheduled. It is the
employees right to hold a certification election, the exercise of which is their sole prerogative
(CLLC E. G. Gochonco Workers Union, et al. vs. NLRC).
TWELVE-MONTH BAR
No petition for a CE maybe filed within one year from the date of a valid certification,
consent, or run-off election or from the date of voluntary recognition. Suppose, for instance,
that an election has been held but not one of the unions won. The next election cannot be
held within twelve-months.
The prohibition presupposes that there was an actual conduct of election, i.e. ballots
were cast and there was a counting of votes. In case where there was no certification
election conducted precisely because the first petition was dismissed on the ground of a
defective petition which did not include all the employees who should be properly included
in the collective bargaining unit, the certification year bar does not apply (R. Tranport Corp.
vs. Laguesma).
DEADLOCK BAR RULE
The Deadlock rule simply provides that a petition for certification can only be
entertained if there is no pending bargaining deadlock submitted to conciliation or
arbitration or had become the subject of a valid notice of strike or lockout. The principle
purpose is to ensure stability in the relationship of the workers and the management
(National Congress of Unions in the Sugar Industry of the Philippinines-TUCP vs. Trajano).
DEADLOCK RULE WHEN NOT APPLICABLE
The deadlock rule does not apply where there is a certification of election ordered to be
conducted (Kaisahan ng Manggagawang Pilipino vs. Trajano).
FREEDOM PERIOD UNDER 253-A AND 256
The freedom period under Arts 253-A and 256 is different from and ought not to be
mistaken for the other 60-day period mentioned in art. 253. The latter speaks of the right of
the parties to propose modifications in the existing CBA, as an exception of the rule that the
CBA cannot be modified during its lifetime. This 60-day period under Art. 253 does not and
cannot refer to the representative status of the incumbent union since the acquisition or
loss of representative status of a union is to be resolved through a certification election, and
not through CBA negotiation with the employer. Therefore, the 60-day period under 253
refers to modifying or renegotiating the CBA provisions other than the representational.
Those stipulations, in practice, are called economic or non-political. To clarify terms, the
60-days in 253 may be called renegotiation proposal period or simply proposal period,
while under Arts 253-A and 256 is, as already established, the freedom period. The proposal
period is the last 60 days of the last year of the nonrepresentational provisions; the freedom
period is the last 60 days of the CBAs fifth year (San Miguel Corporation vs. Trajano).

Malao, Mike

CBA SURREPTITIOUSLY REGISTERED

Even if the existing CBA is registered surreptitiously, as alleged by the petitioner
union, but no evidence is presented proving the alleged surreptitious registration, the
petition for C.E. cannot be granted. The contract bar rule applies. Whether or not the CBA
was indeed surreptitiously registered is a factual matter whose determination is outside the
ambit of a petition for certiorari (Pambansang Kapatiran ng mga Anak Pawis sa Formey vs.
Sec. of Labor).
CBA SIGNED BEFORE OR WITHIN FREEDOM PERIOD
A collective bargaining agreement which was prematurely renewed is not a bar to the
holding of a certification election. Such indecent haste in renewing the CBA despite an order
enjoining them from doing so is designed to frustrate the constitutional right of the
employees to self-organization (Associated Labor Unions vs. Calleja).
VALIDITY OF CBA SIGNED DURING REPRESENTATION DISPUTE
When a collective bargaining agreement is entered into at the time when the petition
for certification election had already been filed by a union and was then pending resolution,
the said collective bargaining agreement cannot be deemed permanent, precluding the
commencement of negotiations by another union with the management. In the meantime,
however, so as not to deprive the workers of the benefits of the said agreement, it shall be
recognized and given effect on a temporary basis, subject to the results of the certification
election. The agreement may be continued in force if the union that negotiated it is certified
as the exclusive bargaining representative of the workers or may be rejected and replaced in
the event the rival union emerges as the winner (Associated Trade Unions vs. Trajano).
CBA WHICH IS NOT AUTOMATICALLY RENEWED
A bargaining contract which provides for automatic renewal in the absence of notice
by one of the contracting parties to alter, modify or terminate it prior to a specified period
preceding the terminating date, will usually operate as a bar to a certification election.
However, this rule does not apply where the employer filed, with the Court of Industrial
Relations, reasonably prior to specified date for automatic renewal, a petition or
manifestation of its intention to terminate such contract if and when it is found that the
collective bargaining agency with whom the employer had the contract no longer represented
the majority of the employers workers (PLDT Employees Union vs. PLDT Company and Free
Telephone Workers Union).
CBA THAT DOES NOT FOSTER STABILITY
Basic to the contract bar rule is the proposition that the delay of the right to select
representatives can be justified only where stability is deemed paramount. Excepted from
the contract-bar rule are certain types of contracts which do not foster industrial stability,
such as contracts where the identity of the representatives is in doubt. Any stability derived
from such contracts must be subordinated to the employees freedom of choice because it
does not establish the type of industrial peace contemplated by the law (Philippine
Association of Free Labor Unions vs. Estrella).

Malao, Mike

EFFECT OF WITHDRAWAL OF SIGNATORIES

It appearing indisputably that the 321 union members had withdrawn their support
to the petition. It would be otherwise if the withdrawal was made after the filing of the
petition for it would then be presumed that the withdrawal was not free and voluntary. The
presumption would arise that the withdrawal was procured through duress, coercion or for
valuable consideration. In other words, the distinction must be that withdrawals made
before the filing of the petition are presumed voluntary unless there is convincing proof to
the contrary, whereas withdrawals made after the filing of the petition are deemed
involuntary.
The reason for such distinction is that if the withdrawal or retraction is made before
the filing of the petition, the names of employees supporting the petition are supposed to be
held secret to the opposite party. Logically, any such withdrawal or retraction shows
voluntariness in the absence of proof to the contrary. Moreover, it becomes apparent that
such employees had not given consent to the filing of the petition; hence the subscription
requirement has not been met.
When the withdrawal or retraction is made after the petition is filed, the employees
who are supporting the petition become known to the opposite party since their names are
attached to the petition at the time of filing. Therefore, it would not be unexpected that the
opposite party would use foul means for the subject employees to withdraw their support (La
Suerte Cigar and Cigarete Factory vs. Trajano).
DISMISSED EMPLOYEES
In Philippine jurisprudence it is now settled that employees who have been improperly
laid off but who have a present, unabandoned right to an expectation of reemployment, are
eligible to vote in certification elections. Thus, and to repeat, if the dismissal is under
question, as in the case now at bar, whereby the case of illegal dismissal and/or unfair labor
practice is filed, the employees concerned could sill qualify to vote in the elections (Phil.
Fruits and Vegetables Industries, Inc. vs. Torres).
PROBATIONARY EMPLOYEES
In certification election all rank-and-file employees in the appropriate bargaining unit
are entitled to vote. This principle is stated in Article 255 of the Labor Code, which states
that the labor organization designated or selected by the majority of the employees in an
appropriate bargaining unit shall be the exclusive representative of the employees in such
unit for the purpose of collective bargaining (Airtime Specialists, Inc. vs. Director of Labor
Relations).
STRIKES AND LOCKOUTS; CONCEPT
OBJECTIVE OF STRIKE AND LOCKOUT
Ordinarily, a strike is a coercive activity resorted to by laborers to enforce their
demands. The idea behind a strike is that a company engaged in a profitable business
cannot afford to have its production or activities interrupted, much less paralyzed. Any
interruption or stoppage of production spells loss, even disaster. The capital invested in
machinery, factory and other properties connected with the business would be unproductive
during a strike or stoppage of the business. On the other hand, the overheard expenses
consisting of the salaries of its officials, including real estate taxes and licenses fees
continue. Knowing this, the strikers by going on strike seek to interrupt and paralyze the
Malao, Mike

business and production of the company. The employer company is on the defensive. It
almost invariably wants the strike stopped and the strikers go back to work so as to resume
and continue production. Because of the threat or danger of loss to the company, it does not
infrequently give in to the demands of the strikers, just so it can maintain the continuity of
its production (Philippine Can Company vs. Court of Industrial Relations and Liberal Labor
Union).
NATURE OF LOCKOUT
Lockout means the temporary refusal of any employer to furnish work as a result of
an industrial or labor dispute; an employers act excluding employees who are union
members from his plant (Sta. Mesa Slipways Engineering Co. vs. CIR).
TERMS AND CONDITIONS OF GOVERNMENT EMPLOYMENT
In government employment, it is the legislature and, where properly given delegated
power, the administrative heads of government, which fix the terms and conditions of
employment. And this is effected through statutes or administrative circulars, rules, and
regulations, not through collective bargaining (Social Security System Employees Association
vs. Court of Appeals).
SECOND FACTOR IN LEGALITY OF STRIKE: PROCEDURAL REQUIREMENTS
When the law says the labor union may strike should the dispute remain unsettled
until the lapse of the requisite number of days (cooling-off period) from the mandatory filing
of the notice, the unmistakable implication is that the union may not strike before the lapse
of the cooling-off period. Similarly, the mandatory character of strike ban after the report on
the strike vote is manifest in the provision that every case, the union shall furnish the
MOLE with results of the voting at least seven days before the intended strike, subject to
the (prescribed) cooling-off period and 7-day strike ban must both be complied with,
although the labor union may take a strike vote and report the same within the statutory
cooling-off period (National Federation of Sugar Workers vs. Ovejera).
LEGALITY OF STRIKE NOT DEPENDENT UPON ABILITY OF MANAGEMENT
TO GRANT DEMANDS
The demands that gave rise to the strike may not properly be granted under the
circumstances of this case, but the fact should not make said demands and the consequent
strike illegal. The ability of the Company to grant said demands is one thing, and the right of
the laborers to make said demands is another thing. The latter should be kept inviolate.
There are adequate instrumentalities which may be resorted to in case of excesses (Central
Vegetable Oil Manufacturing vs. Philippine Oil Industry Workers Union).
STRIKE AGAINST EMPLOYEES UNFAIR LABOR PRACTICES
Union busting, or interference with the formation of a union, constitutes an unfair
labor practice act, hence a valid ground for the declaration of strike (Zamboanga Wood
Products, Inc., vs. NLRC).

Malao, Mike

TESTS IN DETERMINING THE EXISTENCE OF AN UNFAIR LABOR PRACTICE STRIKE

There are two tests in determining the existence of an unfair labor practice strike:
1.
Objectively, when the strike is declared in protest of unfair labor practice which
is found to have been actually committed; and
2. Subjectively, when a strike is declared in protest of what the union believed to be
unfair labor practices committed by management, and the circumstances warranted such
belief in good faith, although found subsequently as not committed (Norton and Harrison Co.
Labor Union v. Norton and Harrison Co.).
MINORITY UNION STRIKE
By law, the right to be the exclusive representative of all the employees in an
appropriate collective bargaining unit is vested in the labor union designated or selected
for such purpose by the majority of the employees in the unit concerned. When a union,
after winning in an election, is certified as the exclusive bargaining representative, any other
union who participated in the election thereby becomes a minority union. A minority union
cannot demand collective bargaining with the employer. Such right properly belongs to the
union that commands the majority. Moreover, the defeated union cannot lawfully undertake
a strike against the employer; if one is being done, it must come to a halt. Neither can it
picket to compel bargaining. To allow said union to continue picketing for the purpose of
drawing the employer to collective bargaining table would obviously be to disregard the
results of the consent election. To further permit the unions picketing activities would be to
flaunt at the will of the majority. After a union has been certified as the bargaining
representative, a strike by a minority union t compel an employer to bargain with it is
unlawful. No labor dispute can exist between a minority union and an employer in such a
case (United Restaurors Employees and Labor Union v. Torres and Delta Development).
DEFIANCE OF RETURN-TO-WORK-ORDER
The return-to-work order should benefit not only those workers who comply with it
and regardless of the outcome of the compulsory arbitration proceedings, are entitled to be
paid for the work they have actually performed. Conversely, those workers who refuse to
obey said return-to-work order and instead wage a strike are not entitled to be paid for work
not done or to reinstatement to the positions they have abandoned by their refusal to return
thereto as ordered (Sarmiento vs. Tuico).
STRIKE OVER AN UNFAIR LABOR PRACTICE ACT DESPITE
A NO-STRIKE/NO-LOCKOUT PROVISION IN THE CBA
A no-strike prohibition in a collective bargaining agreement is applicable only to
economic strikes. In other words, ULP strike is not covered and workers may go on strike
based on ULP despite the no-strike provision (Philippine Metal Foundaries, Inc. vs. CIR).
The union brands as illegal the stipulation in the collective bargaining agreements
that in case of any unfair labor practice on the part of either party, there will be no strikes,
lockouts, or any prejudicial action xxx until the question or grievance is resolved by the
proper court if not settled through a grievance procedure therein outlined.
The authorities are numerous which hold that strikes held in violation of the terms
contained in a collective bargaining agreement are illegal, especially when they provide for
conclusive arbitration clauses. These agreements must be strictly adhered to and respected
if their ends have to be achieved (GOP-CCP Workers UNION vs. CIR).
Malao, Mike

BOOK SIX
TERMINATION OF EMPLOYMENT; JUST AND AUTHORIZED CAUSES
INTRODUCTION OF LABOR SAVING DEVICES
Reduction of the number of workers in a companys factory made necessary by the
introduction of machinery in the manufacture of its products is justified. There can be no
question as to the right of the manufacturer to use new labor saving devices with a view to
effecting more economy and efficiency in its method of production (Philippine Sheet Metal
Workers Union vs. CIR).
RETRENCHMENT
Retrenchment is one of the economic grounds to dismiss employees. It is resorted to
by an employer primarily to avoid or minimize business losses. The law recognizes this
under Art 283 of the Labor Code. However, the employer bears the burden to prove his
allegation of economic or business reverses. The employers failure to prove it necessarily
means that the employees dismissal was not justified (Precision Electronics Corporation vs.
NLRC).
RETRENCHMENT: WHOM TO LAY-OFF
There must be fair and reasonable criteria to be used in selecting employees to be
dismissed, on account of retrenchment, such as (a) less preferred status (i.e., temporary
employees); (b) efficiency rating, and (c) seniority (Asiaworld Publishing House, Inc. vs. Ople).
LACK OF WORK
Lack of work is a justifiable cause for termination of employment. Protection to labor
does not mean oppression or self-destruction of capital. Where the continuation of the men
in service is patently inimical to the interest of the employer, there is no alternative but for
the court to authorize the employer to lay off such number of workers as the circumstances
may warrant. But the court may impose the condition that the employer shall not admit any
new laborer in case of available work in the future before the laid-off men who are able,
willing and available to do the same shall have been recalled to work (Mayon Engineering
Workers Union vs. Mayon Engineering and Machine Shop).
RETRENCHMENT AND CONSERVATORSHIP
The retrenchment of personnel as a consequence of conservatorship proceedings
against an insurance company in financial difficulties is a cost-saving measure resorted to
by the conservator to preserve the assets of the company for the protection of not only the
policyholders and creditors but also the investors and the public in general. Conservatorship
proceedings contemplate, not the liquidation of the company involved, but a conservation of
company assets and business during the period of stress by the commissioner of Insurance,
who thereafter yields control to the regular officers of the company (Garcia vs. NLRC).

Malao, Mike

FOUR STANDARDS OF RETRENCHMENT

Firstly, the losses expected should be substantial and not merely de minimis in extent.
If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be
insubstantial and inconsequential in character, the bona fide nature of the retrenchment
would appear to be seriously in question.
Secondly, the substantial loss apprehended must be reasonably imminent, as such
imminence can be perceived objectively and n good faith by the employer. There should, in
other words, be certain degree of urgency for the retrenchment, which is, after all, a drastic
recourse with serious consequences for the livelihood of the employees retired or otherwise
laid-off.
Thirdly, there must be reasonably necessary and likely to effectively prevent the
expected losses. The employer should have taken other measures prior or parallel to
retrenchment to forestall losses, i.e., cut other costs than labor costs.
Lastly, but certainly not the least important, alleged losses if already realized, and the
expected imminent losses sought to be forestalled, must be proven by sufficient and
convincing evidence. The reason for requiring this quantum of proof is readily apparent: any
less exacting standard of proof would render too easy the abuse of this ground for
termination of services of employees (Lopez Sugar Corporation vs. Federation of Free Workers,
et al.)
REDUNDANCY DISTINGUISHED FROM RETRENCHMENT
Redundancy exists where the services of an employee are in the excess of what is
reasonably demanded by the actual requirements of the enterprise. A position is redundant
where it is superfluous, a superfluity of a position or positions may be the outcome of a
number of factors, such as over hiring of workers, decreased volume of business, or
dropping of a particular product line or service activity previously manufactured or
undertaken by the enterprise.
Retrenchment, on the other hand, is used interchangeably with the term lay-off. It is
the termination of employment initiated by the employer through no fault of the employees
and without prejudice to the latter resorted to by management during periods of business
recession, industrial depression, or seasonal fluctuations, or during lulls occasioned by lack
of orders, shortage of materials, conversion of the plant machinery, or of automation. Simply
put, it is an act of the employer of dismissing employees because of losses in the operation
of a business, lack of work, and considerable reduction on the volume of his business a
right consistently recognized and affirmed by this court (Sebuguero, et al. vs. NLRC).
CLOSURE OF BUSINESS
Under Article 284 of the Labor Code, three requirements may be seen to be
established in respect of cessation of business operations of an employer company not due
to business reverses, namely: a) service of written notice to the employees and to the MOLE
at east one month before the intended date thereof; b) the cessation of or withdrawal from
business operations must be bona fide in character; and c) payment to the employees of
termination pay amounting to at east one-half month pay for each year of service, or one
month pay, whichever is higher (Mobil Employees Association and Inter-Island Labor
Organization).

Malao, Mike

TEMPORARY SHUTDOWN
Temporary shutdown of one of the furnaces of a glass plant is not a good reason to
terminate employees where operations continued after such repairs, and it is apparent that
the closure of the companys warehouse was merely a ploy to get rid of the employees who
were then agitating the company for benefits, reforms and collective bargaining as a union.
There is no showing that petitioners had been remiss in their obligations and inefficient in
their jobs to warrant their separation (Brotherhood Labor Unity Movement of the Philippines,
et al. vs. Zamora).
MERGER
By the fact of merger, succession of employment rights and obligations occurs
between the absorbing corporation and the employees of the absorbed corporation. Not only
must the absorbing corporation retain the employees, it should likewise recognize the length
of service in the previous employer. In merger, like in sale in bad faith, the successor
employer principle applies (Filipinas Port Services, Inc. vs. NLRC).
AILMENT OR DISEASE
A medical certificate issued by the companys own physician, is not certificate by
competent public health authority (Cebu Royal Plant [San Miguel Corporation] vs. Deputy
Minister of Labor).
PREVENTIVE SUSPENSION AND INVESTIGATION
DO NOT REPLACE TWO-NOTICE REQUIREMENT OF DUE PROCESS
The notice of preventive suspension cannot be considered adequate notice since the
objectives of the petitioners preventive suspension, as stated in the notice, were merely to
ascertain the extent of the loss to the bank and to pinpoint responsibility of the arties
involved, and not to apprise the petitioner of the causes of is desired dismissal. Likewise, the
subsequent interview is not the ample opportunity to be heard contemplated by law.
Ample opportunity to be heard is especially accorded to the employee sought to be dismissed
after he is informed of the charges against him in order to give him an opportunity to refute
the accusations leveled against him, and it certainly does not consist of an inquiry
conducted merely for the purpose of filing a criminal case against another person (Norman
de Vera vs. NLRC and Bank of the Philippine Islands).
The employer is mandated to furnish the employee sought to be dismissed two
notices, the written charge, and, if, after hearing, dismissal is indeed warranted.
INSUFFICIENT NOTICE: CONSULTATION WITH UNION
The employers prior consultation with the union with which the employee is
affiliated is legally insufficient. The rights of an employee whose services are sought to be
terminated to be informed beforehand of his proposed dismissal (or suspension) as well as of
the reasons therefore, and to be afforded an adequate opportunity to defend himself from
the charges leveled against him, are rights personal to the employee. Those rights are not
satisfied by the employers obtaining the consent of or consulting with the labor union. Such
consultation or consent is not substitute for actual observance of those rights of the
employee. The employee can waive those rights, if he chooses, but the union cannot waive
them for him (Century Textile Mills, Inc. vs. NLRC, et. al.).

Malao, Mike

DUE PROCESS IN AUTHORIZED CAUSES

In employment termination due to authorized causes, the due process requirement is
not completely done away with. Investigation and hearing need not be done by the employer,
but the one-month advance notices to the affected employee and to the DOLE must be
complied with, otherwise the termination is illegal (Wittshire File Co. vs. NLRC).
BASIS OF COMPUTATION OF BACKWAGES
The base figure to be used in the computation of backwages due to the employee
should include not just the basic salary, but also the regular allowances that he had been
receiving such as the emergency living allowances and the 13 th- month pay mandated by the
law (Paramount Vinyl Product Corporation vs. NLRC).
BACKWAGES UP TO RETIREMENT AGE ONLY
If the ordered reinstatement is no longer feasible because he employee has reached
retirement age, the court will not insist on reinstatement and even the backwages will not
extend beyond the employees retirement date (Equitable Banking Corporation vs. NLRC and
R.L. Salac).
INFLATION
Regarding the argument that the inflation that has supervened justifies the imposition
of interest, the Court has held that the effects of extraordinary inflation are not to be applied
without an agreement between the parties and without an official declaration thereof by
competent authorities (Lantion, et al. vs. NLRC).
APPLICABILITY OF THE STRAINED RELATIONS PRINCIPLE
The rule is that strained relations may be invoked only against employees whose
positions demand trust and confidence, or whose differences with their employer are of such
nature or degree as to preclude reinstatement (Maranaw Hotels vs. CA).
REINSTATEMENT SHOULD HAVE BEEN ORDERED BY LABOR ARBITER
If the labor arbiter has not ordered reinstatement of the employee, the NLRC cannot
award backwages for the period when the appeal was pending at the NLRC. An order for
reinstatement must be specifically declared and cannot be presumed; like backwages, it is
separate and distinct relief given to an illegally dismissed employee. There being no specific
order of reinstatement and the order being for complainants separation, there can be no
basis for the award of salaries/ backwages during the pendency of appeal (Filflex Industrial
and MFG. Corp vs. NLRC).
DAMAGES
If the evidence adduced by the employee before the Labor Arbiter should establish that
the employer did indeed terminate the employees services without just cause or without
according him due process, the Labor Arbiters judgment shall be for the employer to
reinstate the employee and him backwages, or exceptionally, for the employee simply to
receive separation pay. These are reliefs explicitly prescribed by the labor code. But any
award of moral damages by the Labor Arbiter obviously cannot be based on the labor code
Malao, Mike

but would be grounded on the Civil Code. Such an award cannot be justified solely upon the
premise (otherwise sufficient for redress under the Labor Code) that the employer fired his
employee without just cause or due process (Suario vs. Bank of the Philippine Islands).
MORAL DAMAGES
Moral damages may be awarded to compensate one for diverse injuries such as
mental anguish, besmirched reputation, wounded feelings and social humiliation. It is
however, not enough that such injuries have arisen. It is essential that they have sprung
from a wrongful act or omission of the defendant which was the proximate cause thereof
(Suario vs. BPI).
TERMINATION OF EMPLOYMENT: BY EMPLOYEE
RESIGNATION AND RESIGNATION NOTICE
Resignation is the voluntary act of an employee who finds himself is a situation
where he believes that personal reason cannot be sacrificed in favor of the exigency of the
service, then he has no other choice but to disassociate himself from his employment The
employer has no control over resignations and so the notification requirement was devised
in order to insure that no disruption of work would be involved by reason of the resignation.
Resignation, once accepted and being the sole act of the employee may not be withdrawn
without the consent of the employer (Intertrod Maritime, Inc. vs. NLRC).
RESIGNATION PAY
The general rule is that an employee who voluntarily resigns from employment is not
entitled to separation pay, unless there is a stipulation for payment in the employment
contract or Collective Bargaining Agreement, or payment of the amount is sanctioned by
established employer practice or policy (Travelaire & Tours Corp. vs. N. Medelyn).

Malao, Mike

BAR-TYPE QUESTIONS
1. Does the penal provisions of RA 8042 violate the equal protection clause of the
Constitution?
The equal protection clause is directed principally against undue favor and individual
or class privilege. It is not to prohibit legislation which is limited to the object to which it is
directed and by the territory in which it is to operate. It does not require absolute equality,
but merely all persons be treated under like conditions both as to privileges conferred and
liabilities imposed. (EXEC. SECRETARY VS. CA, May 25, 2004)
2. Is every controversy or money claim by an employee against the employer or vice
versa within the exclusive jurisdiction of the labor arbiter?
No. Not every controversy or money claim by an employee against the meployer or vice
versa is within the exclusive jurisdiction of the labor arbiter. A money claim by a worker
against the employer or vice versa is within the exclusive jurisdiction of the labor arbiter
only if there is a reasonable causal connection between the claim asserted and the
employer-employee relation. Absent such link, the complaint will be cognizable by the
regular courts of justice. (EVIOTA VS. CA, July 29, 2003)
3. Natividad works with TCM College as a liaison officer with a rank of Assistant
Registrar. He was arrested by police authorities for violation of he Dangerous Drugs
Act without warrant, and a criminal complaint was filed against him. TCM College
sent a Memorandum to Natividad informing him that his employment is already
terminated. The criminal case was dismissed for lack of merit. Natividad did not,
however, file any complaint to the NLRC against the college on account of his
dismissal.
Natividad was arrested anew for violation of the same Act. This time, he filed
with the NLRC a complaint for illegal dismissal. The Labor Arbiter and the NLRC
denied Natividad but on certiorari, the CA affirmed, with modification, holding that
although there was a valid cause for private respondents dismissal, the petitioner did
not follow the procedure for the termination of his employment. Was Natividad
illegally dismissed so as to entitle him to backwages?
The normal consequences of finding that an employee is illegally dismissed are, firstly,
the employee becomes entitled to reinstatement without loss of seniority rights and second,
payment of backwages to the period from his illegal dismissal up to actual reinstatement.
The award of backwages is not conditioned on the employers ability or inability to pay.
While it may be true that Natividad was detained, he was not convicted by final judgement
in the Criminal Case. Indeed, he is presumed innocent until his guilt is proved beyond
reasonable doubt. (TOMAS CLAUDIO MEMORIAL COLLEGE, INC. VS. CA, February 16, 2004)
4. Is an order of execution of a final and executory judgement in a labor case still
appealable?
No. Settled is the rule that after a judgemnt has become final, no additions can be
made thereto, and nothing can be done therewith except execution; otherwise, there would
be no end to litigations, thus settling at naught the main role of courts of justice, which is to
assist in the enforcement of the rule of law and the maintenance of peace and order, by
setting justiceable controversies with finality. (KING INTEGRATED SECURITY SERVICES, INC.
VS. GALO S. GATAN, July 7, 2003)
Malao, Mike

5. What evidence is needed to show that employer committed ULP under the Labor
Code?
Substantial evidence is required to support the claim. Substantial evidence has been
defined as such relevant evidence as a reasonable mind might accept as adequate to support
a conclusion. In the case at bar, the complaint was made only after a deadlock was declared
by the Union. It is clear that such ULP charge was merely an afterthought. (STANDARD
CHARTERD BANK EMPLOYEES UNION VS. CONFESOR, June 16, 2004)

6. What is surface bargaining?

It is defined as going through the motions of negotiating without any legal intent to
reach an agreement. (STANDARD CHARTERD BANK EMPLOYEES UNION VS. CONFESOR,
June 16, 2004)
7. Petitioner and respondent union entered into and signed a CBA covering the period
of July 10, 1988 to July 9, 1991. On September 27, 1990, the respondent union filed
a notice of strike based on violation of CBA, among others. On October 16, 1990, the
petitioner's general manager, wrote the Acting Secretary of Labor and Employment
(SOLE for brevity) informing him of the petitioner's decision to retrench 171
employees on a staggered basis, spread over a period of 60 days, to lessen the daily
financial losses being incurred by the petitioner. The next day, the respondent union
informed the DOLE-NCR that the union will conduct a strike vote referendum. The
members of the respondent union voted to stage a strike. DOLE-NCR was thereafter
informed of the results of the strike vote referendum. On October 31, 1990, the SOLE
issued a status quo ante bellum order certifying the case to the NLRC for compulsory
arbitration and enjoining the parties from engaging in any strike or lockout.
The petitioner wrote the SOLE of its decision to implement its retrenchment
program to stem its huge losses. Subsequently, the petitioner terminated the
employment of 148 employees. The remaining employees were also informed that it
will close in six months. The respondent union protested the actions of the petitioner
invoking Section 15, Article VI of the CBA. By way of riposte, the respondent union
filed on November 16, 1990 another notice of strike because of what it perceived as
the petitioner's continuing unfair labor practices (ULP). On the same day, the officers
of the respondent union and some members staged a picket in the premises of the
hotel, obstructing the free ingress and egress thereto. The following day, petitioner
terminated the employment of the officers and members of the respondent union. On
November 28, 1990, the SOLE issued an order certifying the labor dispute to the
NLRC. The SOLE issued a return-to-work order, which the respondent officers and
members complied.
Petitioner however filed a complaint with the Regional Arbitration Office of the
NLRC for illegal strike against the respondents on the ground that the latter failed to
comply with the requirements provided under Arts. 263 and 264 of the Labor Code. In
their answer, the respondents alleged that the petitioner committed ULP prior to the
filing of the November 16, 1990 notice of strike. Hence, there was no need for the
respondent union to comply with Arts. 263 and 264 of the Labor Code, as the notice

Malao, Mike

filed by the union on September 27, 1990 was sufficient compliance with the law. Is
the strike staged by the respondent union on November 16 legal?
NO. The requisites for a valid strike are as follows: (a) a notice of strike filed with the DOLE
thirty days before the intended date thereof or fifteen days in case of ULP; (b) strike vote
approved by a majority of the total union membership in the bargaining unit concerned
obtained by secret ballot in a meeting called for that purpose; and (c) notice given to the
DOLE of the results of the voting at least seven days before the intended strike. The
requisite seven-day period is intended to give the DOLE an opportunity to verify whether the
projected strike really carries the approval of the majority of the union members. The notice
of strike and the cooling-off period were intended to provide an opportunity for mediation
and conciliation. The requirements are mandatory and failure of a union to comply
therewith renders the strike illegal. A strike simultaneously with or immediately after a
notice of strike will render the requisite periods nugatory. Moreover, a strike that is
undertaken, despite the issuance by the SOLE of an assumption or certification order,
becomes a prohibited activity and, thus, illegal pursuant to Art. 264 of the Labor Code, as
amended. Consequently, the union officers and members are deemed to have lost their
employment status for having knowingly participated in an illegal act.
In this case, the respondent union filed its notice of strike with the DOLE on
November 16, 1990 and on the same day, staged a picket on the premises of the hotel, in
violation of the law. The respondents cannot argue that since the notice of strike on
November 16, 1990 were for the same grounds as those contained in their notice of strike on
September 27, 1990 which complied with the requirements of the law on the cooling-off
period, strike ban, strike vote and strike vote report, the strike staged by them on November
16, 1990 was lawful. The matters contained in the notice of strike of September 27, 1990
had already been taken cognizance of by the SOLE when he issued on October 31, 1990 a
status quo ante bellum order enjoining the respondent union from intending or staging a
strike. Despite the SOLE order, the respondent union nevertheless staged a strike on
November 16, 1990 simultaneously with its notice of strike, thus violating Art. 264(a) of the
Labor Code, as amended, which provides that x x x No strike or lockout shall be declared
after assumption of jurisdiction by the President or the Secretary or after certification or
submission of the dispute to compulsory or voluntary arbitration or during the pendency of
cases involving the same grounds for the strike or lockout. (GRAND BOULEVARD HOTEL
VS. GENUINE LABOR ORGANIZATION OF WORKERS IN HOTEL, RESTAURANT AND ALLIED
INDUSTRIES, July 8, 2003)
8. Respondents applied for employment in Taiwan with petitioner, Phil. Employ
Services and Resources, Inc. (PSRI for brevity). The respondents were deployed in
Taiwan. When they encountered problems, they brought their attention to the
manager who told them to forget about it and refrain to air their complaints.
Respondent Navarra and another employee, Pio Gabito, were summoned by the
management and told that they were to be repatriated, without specifying the ground
or cause therefor. They pleaded that they be informed of the cause or causes for their
repatriation, but their requests were rejected.
The manager of their employer
summoned the police, who arrived and escorted them to the airport. Upon respondent
Navarra's arrival in Manila, the petitioner sought to settle his complaints. After the
negotiations, the petitioner agreed to pay P49,000 to the said respondent but, in
consideration thereof, the latter executed a quitclaim releasing the petitioner from
any or all liabilities for his repatriation. Were petitioners illegally dismissed when

Malao, Mike

they repatriated by their Taiwan employers? Was Navarras execution of quitclaim and
receipt of P 49, 000 sufficient to conclude his waiver of right against illegal dismissal?
Yes. Respondents dismissal was not based on just, valid and legal grounds. As such,
the rule lex loci contractus (the law of the place where the contract is made) governs.
Therefore, the Labor Code, its implementing rules and regulations, and other laws affecting
labor, apply in this case. In order to effect a valid dismissal of an employee, the law requires
that there be just and valid cause as provided in Article 282 and that the employee was
afforded an opportunity to be heard and to defend himself. Dismissal may also be based on
any of the authorized causes provided for in Articles 283 and 284 of the Labor Code.
The petitioner failed to substantiate its claim that respondent Navarra's repatriation
was based on a valid, legal and just cause. We thus rule that the respondents were
constructively dismissed from their employment. There is constructive dismissal if an act of
clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the
part of the employee that it would foreclose any choice by him except to forego his continued
employment. It exists where there is cessation of work because "continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and
a diminution in pay."
We rule that the deed of release executed by respondent Navarra did not completely
release the petitioner from its liability on the latter's claim. As a rule, quitclaims, waivers or
releases are looked upon with disfavor and are commonly frowned upon as contrary to
public policy and ineffective to bar claims for the measure of a worker's legal rights. If (a)
there is clear proof that the waiver was wangled from an unsuspecting or gullible person; or
(b) the terms of the settlement are unconscionable, and on their face invalid, such
quitclaims must be struck down as invalid or illegal. (PHIL EMPLOY SERVICES VS.
PARAMIO, ET AL, April 15, 2004)
9. The petitioner is a domestic corporation engaged in the business of providing
telegraph and communication services thru its branches all over the country. It
employed various employees, among whom were private respondents. The petitioner
came up with a Relocation and Restructuring Program. Private respondents received
separate letters from the petitioner, giving them the option to choose the branch to
which they could be transferred. Thereafter, the private respondents and other
petitioner's employees were directed to "relocate" to their new PT&T Branches.
The petitioner offered benefits/allowances to those employees who would agree
to be transferred under its new program. Moreover, the employees who would agree to
the transfers would be considered promoted. The private respondents rejected the
petitioner's offer. Hence, the petitioner sent letters to the private respondents
requiring them to explain in writing why no disciplinary action should be taken
against them for their refusal to be transferred/relocated. In their respective replies
to the petitioner's letters, the private respondents explained that the transfers
imposed by the management would cause enormous difficulties on the individual
complainants. Dissatisfied with this explanation, the petitioner considered the private
respondents' refusal as insubordination and willful disobedience to a lawful order;
hence, the private respondents were dismissed from work. Subsequently, the private
respondents' bargaining agent, PT&T Workers Union-NAFLU-KMU, filed a complaint
against the petitioner for illegal dismissal and unfair labor practice for and in behalf of
the private respondents. Are the respective transfers of the private respondents
considered promotions? If so, is the denial of a promotion a just and authorized cause
for dismissal?

Malao, Mike

Yes. With or without a corresponding increase in salary, the respective transfers of the
private respondents were in fact promotions, following the ruling enunciated in Homeowners
Savings and Loan Association, Inc. v. NLRC: Promotion, as we defined in Millares v. Subido,
is the advancement from one position to another with an increase in duties and
responsibilities as authorized by law, and usually accompanied by an increase in salary.
Apparently, the indispensable element for there to be a promotion is that there must be an
advancement from one position to another or an upward vertical movement of the
employee's rank or position. Any increase in salary should only be considered incidental but
never determinative of whether or not a promotion is bestowed upon an employee.
However, An employee cannot be promoted, even if merely as a result of a transfer,
without his consent. A transfer that results in promotion or demotion, advancement or
reduction or a transfer that aims to 'lure the employee away from his permanent position
cannot be done without the employees' consent. There is no law that compels an employee
to accept a promotion for the reason that a promotion is in the nature of a gift or reward,
which a person has a right to refuse. Hence, the exercise by the private respondents of their
right cannot be considered in law as insubordination, or willful disobedience of a lawful
order of the employer. As such, there was no valid cause for the private respondents'
dismissal. (PT&T VS. CA, September 29, 2003)
10. The petitioner is a domestic corporation engaged in garments manufacturing using
the brand name KAMISETA. The petitioner employed private respondent Torno as
trimmer. The private respondent and a co-employee, Maricar Buan, were tasked to
handle the inventory of finished products. Sometime thereafter, the petitioner
started to receive information from the head of its production department that,
according to other employees, Buan and the private respondent had been stealing
KAMISETA items from the factory. On the basis of a report, the petitioner issued a
disciplinary action form suspending the private respondent indefinitely without pay. A
notice of dismissal was addressed to the private respondent specifying the charge
against her, the factual basis thereof and the imposable penalties for the said charge if
proven.
The private respondent failed to appear during the scheduled hearing.
Consequently, the petitioner decided to dismiss the private respondent from her
employment. When notified of the petitioners decision, the private respondent filed a
complaint for illegal dismissal with prayer for reinstatement and payment of
backwages, non-payment of service incentive leave pay and 13th-month pay against
the petitioner before the National Capital Regional Arbitration Branch. LA rendered a
decision holding that the respondent was illegally dismissed and directed the
petitioner to pay backwages and separation pay to the private respondent. However,
according to the labor arbiter, reinstatement could no longer be effected, as the
relationship between the private respondent and the petitioner had been strained and
ruptured. Aggrieved, the petitioner appealed the decision to the NLRC, alleging that it
was deprived of its right to a formal hearing before the labor arbiter rendered her
decision. LAs failure to conduct a hearing deprived the petitioner of its vested right;
consequently, her decision was null and void. Does the absence of a formal hearing
amount to denial of petitioners right to due process? Is termination of the private
respondents employment based on a just and valid cause?
We agree with the CA that the petitioner did not have a vested right to a formal
hearing simply and merely because LA Tumanong granted its motion and set the case for
hearing. Pursuant to Section 5, Rule V of the New Rules of Procedure of the NLRC, the labor
Malao, Mike

arbiter has the authority to determine whether or not there is a necessity to conduct formal
hearings in cases brought before him for adjudication. The holding of a formal hearing or
trial is discretionary with the labor arbiter and is something that the parties cannot demand
as a matter of right. It is entirely within his authority to decide a labor case before him,
based on the position papers and supporting documents of the parties, without a trial or
formal hearing. The requirements of due process are satisfied when the parties are given the
opportunity to submit position papers wherein they are supposed to attach all the
documents that would prove their claim in case it be decided that no hearing should be
conducted or was necessary.
The private respondent was illegally dismissed. In order to effect a valid dismissal, the
law requires that (a) there be just and valid cause as provided under Article 282 of the Labor
Code; and (b) the employee be afforded an opportunity to be heard and to defend himself. As
stated by the CA, the petitioner had failed to show that it had complied with the two-notice
requirement: (a) a written notice containing a statement of the cause for the termination to
afford the employee ample opportunity to be heard and defend himself with the assistance of
his representative, if he so desires; (b) if the employer decides to terminate the services of
the employee, the employer must notify him in writing of the decision to dismiss him, stating
clearly the reason therefor. (SHOPPES MANILA VS. NLRC, January 14, 2004)

Malao, Mike