TABLE OF CONTENTS

I. Fundamental Principles and Policies

A. Constitutional provisions
1. Article II, Secs. 9, 10, 11, 13, 14, 18, 20. 5
2. Article III, Secs. 1, 4, 7, 8, 10, 16, 18(2). 5
3. Article XIII, Secs. 1, 2, 3, 13, 14. 5
B. Civil Code
1. Article 19 7
2. Article 1700 7
3. Article 1702 7
C. Labor Code
Books I, II, III, V, VI and VII 7

II. Recruitment and Placement

A. Recruitment of local and migrant workers 9
1. Illegal recruitment (Sec. 5, R.A. No. 10022) 12
License vs. authority 14
Essential elements of illegal recruitment 15
Simple illegal recruitment 16
Illegal recruitment in large scale 16
Illegal recruitment as economic sabotage 17
Illegal recruitment vs. estafa 17
Liabilities 18
Local recruitment agency 19
Foreign employer 19
Theory of imputed knowledge 19
Solidary liability 20
2. Direct hiring 22
B. Regulation and enforcement
1. Suspension or cancellation of license or authority (Art. 35, Labor Code) 23
2. Regulatory and visitorial powers of the DOLE secretary 23
3. Remittance of foreign exchange earnings 24
4. Prohibited activities 24

III. Labor Standards

A. Hours of work 28
1. Coverage/Exclusions (Art. 82, Labor Code) 28
2. Normal hours of work 29
Compressed work week 32
3. Meal break 32
4. Waiting time 33
5. Overtime work, overtime pay 34
6. Night work (R.A. No. 10151), Night shift differential 37
7. Part-time work 38
8. Contract for piece work (see Civil Code) 38
B. Wages 39
1. Wage vs. salary 40
2. Minimum wage defined, Minimum wage setting 41
 3. Minimum wage of workers paid by results 43
Workers paid by results 43
Apprentices 43
Learners 43
Persons with disability 43
4. Commissions 43
5. Deductions from wages 43
6. Non-diminution of benefits 44
7. Facilities vs. supplements 46
8. Wage Distortion/Rectification [NOTE: no computation; principle only] 47
9. Divisor to determine daily rate [NOTE: no computation; principle only] 49
C. Rest Periods 50
1. Weekly rest day 50
2. Emergency rest day work 50
D. Holiday pay/Premium pay 51
1. Coverage, exclusions 51
2. Teachers, piece workers, takay, seasonal workers, seafarers 54
E. Leaves 56
1. Service Incentive Leave 56
2. Maternity Leave 58
3. Paternity Leave 58
4. Parental Leave (R.A. No. 8972) 59
5. Leave for Victims of Violence against Women and Children (R.A. No. 9262) 60
6. Special leave benefit for women 60
F. Service Charge 60
G. Thirteenth Month Pay 60
H. Separation Pay 66
I. Retirement Pay 64
Eligibility 66
Amount 66
Retirement benefits of workers paid by results 68
Retirement benefits of part-time workers 68
Taxability 68
J. Women Workers 69
Provisions against discrimination 69
Stipulation against marriage 69
Prohibited acts 70
Anti-Sexual Harassment Act (R.A. No. 7877) 71
K. Employment of Minors (Labor Code and R.A. No. 7678, R.A. No. 9231) 73
L. Househelpers (Labor Code as amended by R.A. No. 7655, An Act Increasing 77
The Minimum Wage of Househelpers; see also – Household Service under the
Civil Code)
82
M. Employment of Homeworkers
83
N. Apprentices and Learners 86
O. Persons with disability (R.A. No. 7277, as amended by R.A. No. 9442)
Definition 86
Rights of persons with disability 87
Prohibition on discrimination against persons with disability d. Incentives for employers 87
IV. Termination of Employment
A. Employer-employee relationship 89
1. Four-fold test 90
2. Kinds of employment 93
Probationary 93
Regular 96
Project employment d. Seasonal 99
Casual 102
Fixed-term 102
3. Job contracting 103
Articles 106 to 109 of the Labor Code 104
Department Order No. 18-A 105
Department Circular No. 01-12 105
Effects of Labor-Only Contracting 105
Trilateral relationship in job contracting 105
B. Dismissal from employment 106
1. Just Causes 107
2. Authorized Causes 113
3. Due Process 121
Twin-notice requirement 121
Hearing; meaning of opportunity to be heard 122
C. Reliefs for Illegal Dismissal 125
1. Reinstatement 126
Pending appeal (Art. 223, Labor Code) 129
Separation pay in lieu of reinstatement 129
2. Backwages 130
Computation 131
Limited backwages 131
D. Preventive Suspension 132
E. Constructive Dismissal 132

V. Management Prerogative
A. Discipline 136
B. Transfer of employees 136
C. Productivity standard 137
D. Grant of bonus 137
E. Change of working hours 138
F. Rules on Marriage between employees of competitor-employers 138
137
G. Post-employment ban; non-compete and confidentiality clauses 139

VI. Social Welfare Legislation (P.D. 626)

A. SSS Law (R.A. No. 8282) 140
1. Coverage 141
2. Exclusions from coverage 142
3. Benefits 143
4. Beneficiaries 147
B. GSIS Law (R.A. No. 8291) 150
1. Coverage 154
2. Exclusions from coverage 154
3. Benefits 154
 4. Beneficiaries 159
C. Limited Portability Law (R.A. No. 7699) 160
D. Employee’s compensation – coverage and when compensable 160

VII. Labor Relations Law

A. Right to self-organization 164
1. Who may unionize for purposes of collective bargaining 165
Who cannot form, join or assist labor organizations 166
2. Bargaining unit 168
Test to determine the constituency of an appropriate bargaining unit 168
Voluntary recognition 170
Requirements 170
Certification election 171
In an unorganized establishment 177
In an organized establishment 177
Run-off election 178
Requirements 178
Re-run election 178
Consent election 178
Affiliation and disaffiliation of the local union from the mother union 179
Substitutionary doctrine 181
Union dues and special assessments 181
Requirements for validity 182
Agency fees 183
Requisites for assessment 183
B. Right to collective bargaining 184
1. Duty to bargain collectively 184
When there is absence of a CBA 186
When there is a CBA 186
2. Collective Bargaining Agreement (CBA) 187
Mandatory provisions of CBA 188
Grievance procedure 188
Voluntary arbitration 189
No strike-no lockout clause 190
Labor management council 190
Duration 191
For economic provisions 191
For non-economic provisions 191
Freedom period 191
3. Union Security 193
Union security clauses; closed shop, union shop, maintenance of membership shop, 193
etc.
Check-off; union dues, agency fees
4. Unfair Labor Practice in collective bargaining 194
Bargaining in bad faith 194
Refusal to bargain 194
Individual bargaining 194
Blue sky bargaining 194
Surface bargaining 195
5. Unfair Labor Practice (ULP) 195
Nature of ULP 195
ULP of employers 196
 ULP of labor organizations 203
C. Right to peaceful concerted activities 205
1. Forms of concerted activities 207
2. Who may declare a strike or lockout? 211
3. Requisites for a valid strike 212
4. Requisites for a valid lockout 212
5. Requisites for lawful picketing 216
6. Assumption of jurisdiction by the DOLE Secretary or Certification of the labor 218
dispute to the NLRC for compulsory arbitration
7. Nature of assumption order or certification order 220
8. Effect of defiance of assumption or certification orders 222
9. Illegal strike 223

Liability of union officers 224

Liability of ordinary workers 224
Liability of employer 227
Waiver of illegality of strike 228
10. Injunctions 229
Requisites for labor injunctions 229
230
“Innocent bystander rule” 230

VIII. Procedure and Jurisdiction

A. Labor Arbiter 233
1. Jurisdiction 233
versus Regional Director 235
2. Reinstatement pending appeal 236
3. Requirements to perfect appeal to NLRC 237
B. National Labor Relations Commission (NLRC) 239
1. Jurisdiction 240
2. Effect of NLRC reversal of Labor Arbiter’s order of reinstatement 242
3. Remedies 242
4. Certified cases 243
C. Bureau of Labor Relations – Med-Arbiters 244
1. Jurisdiction (original and appellate) 244
D. National Conciliation and Mediation Board 246
1. Nature of proceedings 246
2. Conciliation vs. Mediation 247
3. Preventive mediation 248
E. DOLE Regional Directors 249
1. Jurisdiction 249
F. DOLE Secretary 250
1. Visitorial and enforcement powers 250
2. Power to suspend/effects of termination 251
3. Assumption of jurisdiction 251
4. Appellate jurisdiction 252
5. Voluntary arbitration powers 252
G. Grievance Machinery and Voluntary Arbitration 252
1. Subject matter of grievance 253
2. Voluntary Arbitrator 253
Jurisdiction 253
Procedure 253
Remedies 254
H. Court of Appeals 256
1. Rule 65, Rules of Court 256
I. Supreme Court 257
1. Rule 45, Rules of Court 257
J. Prescription of actions 257
 FUNDAMENTAL PRINCIPLES AND STATE POLICIES

LEGEND LABOR LAW

BFOQ - Bona Fide Occupational FUNDAMENTAL PRINCIPLES AND POLICIES

Qualification
BLR - Bureau of Labor Relations Labor
CB - Collective Bargaining
CBA - Collective Bargaining Agreement It is the exertion by human beings of physical or
CE - Certification Election mental efforts, or both, towards the production of
DOLE - Department of Labor and goods and services.
Employment
Ee - Employee The State affirms labor as a primary social economic
Er - Employer force. It shall protect the rights of workers and
LA - Labor Arbiter promote their welfare (1987 Constitution, Art. II, Sec.
LC - Labor Code 18).
LLO - Legitimate Labor Organization
LOA Leave of Absence Declaration of basic policy
NCMB - National Conciliation and Mediation
Board It is the policy of the State to:
NLRC - National Labor Relations
Commission 1. Afford full protection to labor,
NSD - Night Shift Differential 2. Promote full employment,
OFW - Overseas Filipino Worker 3. Ensure equal work opportunities regardless of
OT Overtime sex, race, or creed and,
PCE - Petition for Certification Election 4. Regulate the relations between workers and
POEA - Philippine Overseas Employment Ers.
- Administration 5. Assure the rights of workers to self-
RAB Regional Arbitration Branch organization, collective bargaining, security of
RD - Regional Director tenure, just and humane conditions of work
RH - Regular Holiday (LC), Art. 3).
RTWPB - Regional Tripartite Wages and
- Productivity Boards Protection to labor
RW - Regular Wage
RWD - Regular Working Days In affording full protection to labor, this Court must
SIL - Service Incentive Leave ensure equal work opportunities regardless of sex,
SLE - Secretary of Labor and Employment race or creed. Even as we, in every case, attempt to
ULP - Unfair Labor Practice carefully balance the fragile relationship between
UT - Undertime employees and employers, we are mindful of the
VA - Voluntary Arbitrator fact that the policy of the law is to apply the Labor
VR - Voluntary Recognition Code to a greater number of employees. This would
WD - Wage Distortion enable employees to avail of the benefits accorded
WRD - Weekly Rest Day to them by law, in line with the constitutional
mandate giving maximum aid and protection to
labor, promoting their welfare and reaffirming it as
a primary social economic force in furtherance of
social justice and national development. (Angelina
Francisco v. NLRC. G.R. No. 170087 August 31, 2006)

The constitutional policy to provide full protection

to labor is not meant to be a sword to oppress
employers. The commitment under the
fundamental law is that the cause of labor does not
prevent us from sustaining the employer when the
law is clearly on its side. (Estrellita G. Salazar v.
Philippine Duplicators, Inc, G.R. No. 154628
December 6, 2006)

UNIVERSITY OF SANTO TOMAS

1 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
CONSTRUCTION IN FAVOR OF LABOR
All doubts in the implementation and interpretation
of the provisions of this Code, including its
implementing rules and regulations, shall be
resolved in favor of labor (LC, Art. 4).
In case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety
and decent living for the laborer (NCC, Art. 1702).
In case of doubt in the interpretation or application
of laws, it is presumed that the lawmaking body
intended right and justice to prevail (NCC, Art. 10).
When the interest of labor and capital collide, the
heavier influence of capital should be
counterbalanced with the sympathy and
compassion of law for the less priviledged workers.
But protection to labor does not mean oppression or
destruction of capital. The Er’s act will be sustained
when it is in the right. (Eastern Shipping Lines v.
POEA, 166 SCRA 523 (1998))
It is a well-settled doctrine that if doubts exist
between the evidence presented by the employer
and the employee, the scales of justice must be tilted
in favor of the latter. It is a time- honored rule that
in controversies between a laborer and his master,
doubts reasonably arising from the evidence, or in
the interpretation of agreements and writing,
should be resolved in the former’s favor. The policy
is to extend the doctrine to a greater number of
employees who can avail themselves of the benefits
under the law, which is in consonance with the
avowed policy of the State to give maximum aid and
protection to labor. (Lepanto Consolidated Mining
Co. v. Moreno Dumapis, et. al., G.R. No. 163210 August
13, 2008)
Concept of liberal approach in interpreting the
labor code and its IRR
The LC and its IRR, being remedial in character must
be accorded the broadest scope and most beneficial
interpretation. It is only in this way that their
purpose, which is to remedy evils of exploitation,
manipulation and oppression, may be achieved.
Strict adherence to the letter of labor law is not
allowed; the spirit thereof prevails and must be
given effect. Under Art. 4 of the LC, all doubts in the
implementation and interpretation of the
provisions thereof, including its IRR, are to be
resolved in favor of labor.
Compassionate justice
The social justice policy mandates a compassionate
attitude toward the working class in its relation to
management. In calling for protection to labor, the
Constitution does not condone wrong doing by the
Ee. However, it urges a moderation of the sanctions
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
2
that maybe applied to him in the light of the many
disadvantages that weigh heavily on him like an
albatross on his neck.
It is disregarding rigid rules and giving due weight
to all equities of the case (Gandara Mill Supply and
Milagros Sy v. NLRC and Silvestre Germano, G.R.
126703, December 29, 1998).
Compassion and mercy subordinate to justice
for all
Before there can be an occasion for compassion,
sympathy and mercy, there must be justice for all.
Otherwise, Ees will be encouraged to steal and
misappropriate in the expectation that eventually,
in the name of social justice and compassion, they
will not be penalized but instead financially
rewarded. These are not the values the society
cherishes; these are the habits that it abhors (SMC v.
NLRC, G.R. No. 117055, March 29, 2006).
The Employees Compensation Law (P.D. 626)
operates on the principle of social justice, but
sympathy to the workers should also be placed in a
sensible equilibrium with the stability of the ECC
trust fund (Aquino v. SSS, G.R. No. 149256, July 21,
2006).
e.g. An Ee who was validly dismissed may still be
given severance pay.
Q: What is the quantum of evidence required in
labor case? (2012 Bar Question)
a. The degree of proof which produces the
conclusion that the employee is guilty of the
offense charged in an unprejudiced mind;
b. Such amount of relevant evidence which a
reasonable mind might accept as adequate to
justify a conclusion;
c. That degree of proof which is greater in weight
than the opposing party’s evidence;
d. Such evidence which must be highly and
substantially more probable to be true than not
which convinces the trier of facts of its
factuality.
A: c. Such amount of relevant evidence which a
reasonable mind might accept as adequate to justify
a conclusion. (Tancirco v. GSIS, G.R. No. 132916, Nov.
16, 2001)
Recognition of management prerogative
The law also recognizes that management has rights
which are also entitled to respect and enforcement
in the interest of fair play (St. Luke’s Medical Center
Ees Ass’n v. NLRC, G.R. No. 162053, March 7, 2007).
 FUNDAMENTAL PRINCIPLES AND STATE POLICIES
SOCIAL JUSTICE
The State shall promote social justice in all phases
of national development (1987 Constitution, Art. II,
Sec. 10).
The aim of Labor law is social justice
Social justice is “neither communism, nor
despotism, nor atomism, nor anarchy,” but the
humanization of laws and the equalization of
social and economic force by the State so that
justice in its rational and objectively secular
conception may at least be approximated. Social
Justice means the promotion of the welfare of all the
people, the adoption by the government of
measures calculated to insure economic stability of
all the competent elements of society, through the
maintenance of a proper economic and social
equilibrium in the interrelations of the members of
the community, constitutionally, through the
adoption of measures legally justifiable, or extra-
constitutionally, through the exercise of powers
underlying the existence of all governments on the
time-honored principle of salus populi est suprema
lex (Calalang v. Williams, G.R. No. 47800, December 2,
1940).
The promotion of social justice shall include the
commitment to create economic opportunities
based on freedom of initiative and self-reliance
(1987 Constitution, Art. XIII, Sec. 2).
Limitations in invoking the principle of social
justice
1. Not to undermine property rights resulting in
confiscation (Guido v. Rural Progress Adm, L-
2089, October 31, 1949). It should not tolerate
usurpation of property, public or private.
2. May only protect the laborers who come to
court with clean hands (Phil. Long Distance
Telephone Co. v. NLRC, G.R. No. 80609, August 23,
1988) and their motives blameless (Gustilo v.
Wyeth Phils., G.R. No. 149629, October 4, 2004).
3. Never result to an injustice or oppression of the
Er (Phil. Geothermal Inc. v. NLRC, G.R. No.
106370, September 8, 1994).
4. If it is used to shield wrongdoings. It cannot be
permitted to be the refuge of scoundrels (PNCC
v. NLRC, G.R. No. 83320, Feb. 9, 1989).
Q: 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?
(2003 Bar Question)
3 FACULTY OF CIVIL LAW
A: 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
workingman (Fuentes v. NLRC, 266 SCRA 24, January
2, 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
(Corazon Jamer v. NLRC, 278 SCRA 632).
LABOR LAW
Labor law
The law that defines State policies on labor and
employment and governs the rights and duties of
the employer (Er) and employees (Ee) with respect
to:
1. The terms and conditions of employment, and
2. Labor disputes arising from collective
bargaining or other concerted activity
respecting such terms and conditions.
Matters that may properly fall under the term
“labor law”
The term “labor law” covers the following:
1. Statutes passed by the State to promote the
welfare of the workers and Ees and regulate
their relations with their Ers.
2. Judicial decisions applying and interpreting the
aforesaid statutes (NCC, Art. 8).
3. Rules and regulations issued by administrative
agencies, within their legal competence, to
implement labor statutes.
Classification of labor laws
1. Labor Standards – Prescribes the terms and
conditions of employment as affecting wages or
monetary benefits, hours of work, cost of living
allowances, and occupational health, safety and
welfare of the workers. It provides economic
benefits to the workers who are actually
working. e.g. 13th month pay
2. Labor Relations – Defines and regulates the
status, rights and duties, and the institutional
mechanisms, that govern the individual and
collective interactions of Ers, Ees or their
representatives. It is concerned with the
stabilization of relations of Ers and Ees and
seeks to forestall and adjust the differences
between them by the encouragement of CB and
the settlement of labor disputes through
UNIVERSITY OF SANTO TOMAS
 LABOR LAW AND SOCIAL LEGISLATION
conciliation, mediation and arbitration. e.g. Labor legislation vs. Social legislation
Collective Bargaining Negotiations
LABOR SOCIAL LEGISLATION
3. Social Legislation – All laws passed by the LEGISLATION
State to promote public welfare. It includes
statutes intended to enhance the welfare of the 1. Refers to labor 1. Refers to Social
people even where there is no Er-Ee statutes like Labor Security Laws
relationship. It provides economic benefits to Relations Law and 2. Those laws that
workers who are at work because of the Labor Standards provide particular
hazards of employment. e.g. GSIS Law, SSS Law, 2. Focuses on the kinds of protecion
Philhealth benefits, Agrarian Laws rights of the or benefits to
worker in the society or segments
Q: How do the provisions of the law on labor workplace thereof in
relations interrelate, if at all, with the provisions furtherance of social
pertaining to labor standards? (2003 Bar justice
Question)
NOTE: All Labor laws are social legislations, but not
A: The law on Labor Relations provides for rights all social legislations are labor laws.
and procedures by which workers may obtain from
their Er benefits which are over and above the The purpose of labor legislation is to afford
minimum terms and conditions of employment set protection to labor, promote full employment,
by labor standards law. Labor Standards law alone ensure equal work opportunities regardless of sex,
does not guarantee lasting industrial peace. It is race or creed and regulate the relations between
assured through Labor Relations law which enables workers and Ers. The State shall assure the rights of
workers to obtain better benefits guaranteed by workers to self-organization, collective bargaining
labor standards laws and by providing for a (CB), security of tenure and just and humane
mechanism to settle disputes between the Er and conditions of work. Ultimately, the primordial
his Ees. purpose is to promote the welfare of the people
based on the latin maxim salus populi est suprema
Q: Mr. Del Carmen, unsure if his foray into lex. (2006 Bar Question)
business (messengerial service catering purely
to law firms) would succeed but intending to go SOURCES OF LABOR LAWS
long-term if he hurdles the first year, opted to
open his operations with one-year contracts 1. LC and other related special legislation
with two law firms although he also accepts [including their respective Implementing Rules
messengerial service requests from other firms and Regulations (IRR)]
as their orders come. He started with one 2. Contracts
permanent secretary and six (6) messengers on 3. Collective Bargaining Agreement (CBA)
a one-year, fixed-term, contract. 4. Company practices
5. Company policies
Is the arrangement legal from the perspective of
labor standards? (2013 Bar Questions) Contract of labor

a. No, because the arrangement will It is a consensual, nominate, principal, and

circumvent worker's right to security of
tenure.
b. No. If allowed, the arrangement will serve as
starting point in weakening the security of
tenure guarantee.
c. Yes, if the messengers are hired through a
contractor.
d. Yes, because the business is temporary and
the contracted undertaking is specific and
time-bound.
e. No, because the fixed term provided is
invalid.
A: a. No, because the arrangement will circumvent
worker's right to security of tenure.
commutative contract whereby one person, called
the Er, compensates another, called the laborer,
worker or Ee, for the latter’s service. It is a
relationship impressed with public interest in
keeping with our constitutional policy of social
justice.
Essential characteristics of a contract of labor
1. Er freely enters into a contract with the Ee;
2. Er can select who his Ee will be;
3. Er can dismiss the Ee; the Ee in turn can quit his
job;
4. Er must give remuneration; and

UNIVERSITY OF SANTO TOMAS

2016 GOLDEN NOTES
4
 FUNDAMENTAL PRINCIPLES AND STATE POLICIES

5. Er can control and supervise the conduct of the
Ee.
Contracts are subject to police power of the State
The supremacy of the law over the nomenclature of
the contract and the stipulations contained therein
is to bring to life the policy enshrined in the
Constitution to “afford full protection to
labor.” Thus, labor contracts are placed on a higher
plane than ordinary contracts; these are imbued
with public interest and therefore subject to the
police power of the State (Leyte Geothermal Power
Progressive Employees Union-ALU-TUCP v. Philippine
National Oil Company-Energy Development
Corporation, G.R. No. 170351, March 30, 2011).
Wire and Cable Daily Rated Employees Union v.
American Wire and Cable Co., Inc., G.R. No.
155059, April 29, 2005).
NOTE: No passage of time is required for a company
policy to become a source of labor law.
OTHER CONSTITUTIONAL PROVISIONS
Constitutional mandates on labor law
1. Sec. 3, Art. XIII – The State shall afford full
protection to labor, local and overseas,
organized and unorganized, and promote full
employment and equality of employment
opportunities for all.

The relations between capital and labor are not
merely contractual. They are so impressed with
public interest that labor contracts must yield to the
common good. Therefore, such contracts are subject
to the special laws on labor unions, collective
bargaining, strikes and lock outs, closed shop,
wages, working conditions, hours of labor and
similar subject (NCC, Art. 1700).
Prohibitions on contract of labor:
No law impairing the obligation of contracts shall be
passed (1987 Constitution, Art. III, Sec. 10).
No involuntary servitude in any form shall exist
except as a punishment for a crime whereof the
party shall have been duly convicted. (1987
Constitution, Art. III, Sec. 18(2)).
No contract which practically amounts to
involuntary servitude, under any guise whatsoever,
shall be valid (NCC, Art. 1703).
The CBA operating as a source of law
2.
The CBA is the norm of conduct between Er and Ees
and compliance therewith is mandated by the
express policy of the law (DOLE Philippines, Inc.,
v. Pawis ng Makabayang Obrero (PAMAO-NFL), G.R.
No. 146650, January 13, 2003 in citing E. Razon, Inc.
v. Secretary of Labor and Employment, G.R. No.
85867, May 13, 1993).
3.
Requisites before past company practices would
be considered as a source of labor law
It shall guarantee the rights of all workers to
self-organization, collective bargaining and
negotiations, and peaceful concerted activities,
including the right to strike in accordance with
law. They shall be entitled to security of tenure,
humane conditions of work, and a living wage.
They shall also participate in policy and
decision-making processes affecting their
rights and benefits as may be provided by law.
The State shall promote the principle of shared
responsibility between workers and employers
and the preferential use of voluntary modes in
settling disputes, including conciliation, and
shall enforce their mutual compliance
therewith to foster industrial peace.
The State shall regulate the relations between
workers and employers, recognizing the right of
labor to its just share in the fruits of production
and the right of enterprises to reasonable
returns to investments, and to expansion and
growth.
Sec. 9, Art. II – The State shall promote a just and
dynamic social order that will ensure the
prosperity and independence of the nation and
free the people from poverty through policies
that provide adequate social services, promote
full employment, a rising standard of living, and
an improved quality of life for all.
Sec. 11, Art II - The State values the dignity of
every human person and guarantees full
respect for human rights.

There must be:
1. Voluntarily institution by Er without any legal
compulsion
2. A passage of time- should have been done over
a long period of time, and must be shown to
have been consistent and deliberate (American
4. Sec. 13, Art. II - The State recognizes the vital
role of the youth in nation-building and shall
promote and protect their physical, moral,
spiritual, intellectual, and social well-being. It
shall inculcate in the youth patriotism and

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5 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
nationalism, and encourage their involvement
in public and civic affairs.
5. Sec. 14, Art. II - The State recognizes the role of
women in nation-building, and shall ensure the
fundamental equality before the law of women
and men.
Law: Magna Carta of Women
6. Sec. 20, Art. II – The State recognizes the
indispensable role of the private sector,
encourages private enterprise and provide
incentives to needed investments.
7. Sec. 1, Art. III - No person shall be deprived of
life, liberty, or property without due process of
law, nor shall any person be denied the equal
protection of the laws.
8. Sec. 4, Art. III - No law shall be passed abridging
the freedom of speech, of expression, or of the
press, or the right of the people peaceably to
assemble and petition the government for
redress of grievances.
9. Sec. 7, Art. III - The right of the people to
information on matters of public concern shall
be recognized. Access to official records, and to
documents and papers pertaining to official
acts, transactions, or decisions, as well as to
government research data used as basis for
policy development, shall be afforded the
citizen, subject to such limitations as may be
provided by law.
10. Sec. 8, Art. III– The right of the people, including
those employed in the public and private
sectors, to form unions, associations, or
societies for purposes not contrary to law shall
not be abridged.
Law: EO No. 180 S. 1987 providing
guidelines for the exercise of the right to
organize of government employees,
creating a Public Sector Labor Management
Council and for other purposes
11. Sec. 16, Art. III – All persons shall have the right
to a speedy disposition of their cases before all
judicial, quasi-judicial or administrative bodies.
12. Sec. 1, Art. XIII - The Congress shall give highest
priority to the enactment of measures that
protect and enhance the right of all the people
to human dignity, reduce social, economic, and
political inequalities, and remove cultural
inequities by equitably diffusing wealth and
political power for the common good.
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
6
To this end, the State shall regulate the
acquisition, ownership, use, and disposition of
property and its increments.
13. Sec. 13, Art. XIII – The State shall establish a
special agency for disabled persons for their
rehabilitation, self-development and self-
reliance and their integration into the
mainstream of society.
Law: RA 7277 Magna Carta for Disabled
Person
14. Sec. 14, Art. XIII– The State shall protect
working women by providing safe and healthful
working conditions, taking into account their
maternal functions, and such facilities and
opportunities that will enhance their welfare
and enable them to realize their full potential in
the service of the nation.
Law: Maternal benefits law
State policy on labor as found in the constitution
1. Afford full protection to labor
2. Promote full employment
3. Ensure equal work opportunities regardless of
sex, race, or creed
4. Assure the rights of workers to self-
organization, security of tenure, just and
humane conditions of work, participate in
policy and decision-making processes affecting
their right and benefits
5. Regulate the relations between Ers and
workers (Art. XIII, Sec. 3).
Basic rights of workers guaranteed by the
constitution
1. Security of tenure
2. Living wage
3. Just and humane working conditions
4. Share in the fruits of production
5. Self-organization
6. Collective bargaining
7. Collective negotiations
8. Engage in peaceful concerted activities,
including the right to strike
9. Participate in policy and decision making
processes (Art. XIII, Sec. 3).
Q: Which is not a constitutional right of the
workers? (2012 Bar Question)
a. The right to engage in peaceful
concerted activities
b. The right to enjoy security of tenure
c. The right to return on investment
d. The right to receive a living wage.
 FUNDAMENTAL PRINCIPLES AND STATE POLICIES
A: c. The right to return on investment (Art. XIII,
Sec. 3, Constitution)
Principle of Non-oppression
The principle mandates capital and labor not to act
oppressively against each other or impair the
interest and convenience of the public. The
protection to labor clause in the Constitution is not
designed to oppress or destroy capital (Capili v.
NLRC, G.R. No. 117378, March 26, 1997).
The law in protecting the rights of the Ees
authorizes neither oppression nor self-destruction
of the Er (Pacific Mills Inc. v. Alonzo, G.R. No. 78090,
July 26, 1991). It should be made clear that when the
law tilts the scale of justice in favor of labor, it is but
a recognition of the inherent economic inequality
between labor and management. The intent is to
balance the scale of justice; to put the two parties on
relatively equal positions. There may be cases
where the circumstances warrant favoring labor
over the interests of management but never should
the scale be so tilted if the result is an injustice to the
employer. Justitia nemini neganda est (justice is to
be denied to none) (Philippine Geothermal, Inc. v.
NLRC and Edilberto M. Alvarez, G.R. No. 106370,
September 8, 1994).
Neither capital nor labor shall act oppressively
against the other, or impair the interest or
convenience of the public (NCC, Art. 1701).
NEW CIVIL CODE AND OTHER LAWS
1. New Civil Code (NCC)
a. Art. 19 – Every person must, in the exercise
of his rights and in the performance of his
duties, act with justice, give everyone his
due, and observe honesty and good faith.
b. Art. 1704 - In collective bargaining, the
labor union or members of the board or
committee signing the contract shall be
liable for non-fulfillment thereof.
c. Art. 1710 - Dismissal of laborers shall be
subject to the supervision of the
Government, under special laws.
2. Revised Penal Code (RPC)
Art. 289– Formation, maintenance and
prohibition of combination of capital or
labor through violence or threats. – Any
person who, for the purpose of organizing,
maintaining or preventing coalitions or
capital or labor, strike of laborers or lock-
out of employees, shall employ violence or
threats in such a degree as to compel or
force the laborers or employers in the free
and legal exercise of their industry or work,
if the act shall not constitute a more serious
7 FACULTY OF CIVIL LAW
offense in accordance with the provisions
of the RPC.
3. Special Laws
a. E.O. 180- Providing guidelines for the
exercise of the Right to Organize of
Government Employees, creating a Public
Sector Labor-Management Council, and for
other purposes
b. R.A. 8291 - Government Service Insurance
Act of 1997
c. 13th Month Pay Law
d. Retirement Pay Law
e. SSS Law
f. Paternity Leave Act
g. Anti – Child Labor Act
h. Anti – Sexual Harassment Act
i. Magna Carta for Public Health Workers
j. Solo Parents Welfare Act of 2000
k. National Health Insurance Act as amended
by R.A. 9241
l. Migrant Workers and Overseas Filipinos
Act of 1995 as amended by RA 10022
m. PERA Act of 2008
n. Home Development Mutual Fund Law of
2009
o. The Magna Carta of Women
p. Magna Carta for Disabled Person
q. Comprehensive Agrarian Reform Law as
amended by R.A. 9700
r. Batas Kasambahay (RA No. 10361)
s. Working “summer/Christmas” students as
amended by RA 9547 expanding the
coverage of the Special Program for
Employment of Students (SPES)
t. Wage Rationalization Act (RA 6727)
LABOR CODE
Labor code
Presidential Decree No. 442 otherwise known as the
Labor Code of the Philippines is a decree instituting
a labor Code, thereby revising and consolidating
labor and social laws to afford protection to labor,
promote employment and human resources
development and ensure industrial peace based on
social justice. It is a charter of human rights and a
bill of obligations for every working man.
Effectivity date: November 1, 1974
Presidential Decree No. 442 was signed into law on
May 1, 1974. Article 2 says, the Code was to take
effect six months after its promulgation. Therefore,
the law took effect on November 1, 1974.
UNIVERSITY OF SANTO TOMAS
 LABOR LAW AND SOCIAL LEGISLATION
Father of Labor Code Such rules and regulations shall become effective 15
days after announcement of their adoption in
The writing of the labor code began under the newspapers of general circulation.
leadership of then Minister of Labor, Mr. Blas Ople,
who deserves to be regarded as the “Father of the
Labor Code”.

Applicability of the labor code

GR: All rights and benefits granted to workers under

the LC shall apply alike to all workers, whether
agricultural or non-agricultural.

XPNs:
1. Government Ees
2. Ees of government corporations created by
special or original charter
3. Foreign governments
4. International agencies
5. Corporate officers/ intra-corporate disputes
which fall under P.D. 902-A and now fall under
the jurisdiction of the regular courts pursuant
to the Securities Regulation Code.
6. Local water district except where NLRC’s
jurisdiction is invoked.
7. As may otherwise be provided by the LC.

Original charter or manner of creation test

It is determined by the manner of their creation.

Government
Corporation
Incorporated under

Corporation Code Special (original) charter

from Congress

covered by LC subject to Civil Service rules

Agency that exercises the “rule-making power”

granted in the labor code

The Department of Labor and Employment (DOLE)

thru the Secretary of Labor and Employment (SLE)
and other Government agencies charged with the
administration and enforcement of the LC or any of
its parts shall promulgate the necessary IRRs.

Limitations to the “rule-making power” granted

to the SLE and other government agencies

1. It must be issued under the authority of law

2. It must not be contrary to law and the
Constitution

Effectivity of rules and regulations

UNIVERSITY OF SANTO TOMAS

2016 GOLDEN NOTES
8
 RECRUITMENT AND PLACEMENT
RECRUITMENT AND PLACEMENT
RECRUITMENT OF LOCAL AND MIGRANT
WORKERS
Worker
Any member of the labor force, whether employed
or unemployed [Art. 13 (a), LC].
Recruitment and placement
1. Any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring
workers; and
2. Includes referrals, contact services, promising
or advertising for employment, locally or
abroad, whether for profit or not [Art. 13(b),
LC].
Persons deemed engaged in recruitment and
placement
Any person or entity which, in any manner, offers or
promises for a fee employment to 2 or more persons
[Art. 13(b), LC].
Persons or entities that may engage in
recruitment and placement
GR: No person or entity other than the public
employment offices, shall engage in the recruitment
and placement of workers.
XPNs:
1. Construction contractors if authorized by the
DOLE and Construction Industry Authority
2. Other persons or entities as may be authorized
by the SLE
3. Members of the diplomatic corps (but hiring
must go through POEA)
4. Public employment offices
5. Private recruitment offices
6. Private employment agencies
7. POEA
8. Shipping or manning agents or representatives
9. Name hires [Sec. 1(i), Rule II, Omnibus Rules and
Regulations implementing the Migrant Workers
and Overseas Filipinos Act of 1995 as amended by
R.A. 10022].
NOTE: Regardless of the number of persons dealt
with, recruitment and placement is still constituted.
The proviso merely lays down a rule of evidence
that where a fee is collected in consideration of a
promise or offer of employment to 2 or more
prospective workers, the individual or entity
dealing with them shall be deemed to be engaged in
the act of recruitment and placement. The words
9 FACULTY OF CIVIL LAW
"shall be deemed" create that presumption (People
v. Panis, G.R. L-58674-77 July 11, 1986).
Name hires
They are individual workers who are able to secure
contracts for overseas employment opportunities
with Ers without the assistance or participation of
any agency (Omnibus Rules and Regulations
implementing the Migrant Workers and Overseas
Filipinos Act of 1995 as amended by R.A. 10022, Rule
II).
Private employment agency
Any person or entity engaged in the recruitment and
placement of workers for a fee which is charged,
directly or indirectly, from the workers or Ers or
both (Art. 13, LC).
Private recruitment agency
Any person or association engaged in the
recruitment and placement of workers, locally or
overseas, without charging, directly or indirectly,
any fee from the workers or employers [Art. 13(e),
LC].
Seafarer
Refers to any person who is employed or engaged in
overseas employment in any capacity on board a
ship other than a government ship used for military
or non-commercial purposes. The definition shall
include fishermen, cruise ship personnel and those
serving on mobile offshore and drilling units in the
high seas [Sec. 1(ss), Rule II, Omnibus Rules and
Regulations Implementing Migrant Workers Act as
amended by R.A. 10022 (2010)].
Overseas employment
It is the employment of a worker outside the
Philippines [Art. 13(h), LC].
Overseas Filipino Worker (OFW)
A person who is to be engaged, is engaged or has
been engaged in a remunerated activity in a State of
which he or she is not a citizen or on board a vessel
navigating the foreign seas other than a government
ship used for military or non-commercial purposes
or on an installation located offshore or on the high
seas [Sec. 1(jj), Rule II, Omnibus Rules and
Regulations Implementing Migrant Workers Act as
amended by R.A. 10022 (2010)].
The term “OFW” is to be used interchangeably with
“migrant worker” as provided in R.A. 10022.
UNIVERSITY OF SANTO TOMAS
 LABOR LAW AND SOCIAL LEGISLATION
Emigrant
Any person, worker or otherwise, who emigrates to
a foreign country by virtue of an immigrant visa or
resident permit or its equivalent in the country of
destination [Art. 13(i), LC].
EMPLOYMENT OF NON-RESIDENT ALIENS
Non-residents alien may be hired if an employment
permit is issued to a non-resident alien or to the
applicant employer after a;
1. Determination of the non-availability of a
person in the Philippines who is competent,
2. Able and willing at the time of application to
perform the services for which the alien is
desired (Art. 40, Title II, LC).
Requirements in employment of non-resident
aliens
Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign
Er who desires to engage an alien for employment
in the Philippines:
1. Shall obtain an employment permit from the
DOLE
2. The permit may be issued to a non-resident
alien or to the applicant Er after a
determination of the non-availability of a
person in the Philippines who is competent,
able and willing at the time of application to
perform the services for which the alien is
desired
3. For an enterprise registered in preferred areas
of investments, said permit may be issued upon
recommendation of the Government agency
charged with the supervision of said registered
enterprise (Art. 40, Title II, LC).
Q: The DOLE issued an alien employment permit
for Earl Cone, a U.S. citizen, as sports consultant
and assistant coach for GMC. Later, the Board of
Special Inquiry of the Commission on
Immigration and Deportation approved Cone’s
application for a change of admission status
from temporary visitor to pre-arranged
employee. A month later, GMC requested that it
be allowed to employ Cone as full-fledged coach.
The DOLE Regional Director granted the
request. The Basketball Association of the Phils.
appealed the issuance of said permit to the SLE
who cancelled Cone’s employment permit
because GMC failed to show that there is no
person in the Philippines who is competent and
willing to do the services nor that the hiring of
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
10
Cone would redound to the national interest. Is
the act of the SLE valid?
A: Yes. GMC’s claim that hiring of a foreign coach is
an Er’s prerogative has no legal basis. Under Art. 40
of the LC, an Er seeking employment of an alien
must first obtain an employment permit from the
DOLE. GMC’s right to choose who to employ is
limited by the statutory requirement of an
employment permit (GMC v. Torres, G.R. No. 93666,
April 22, 1991).
PROHIBITION AGAINST TRANSFER OF
EMPLOYMENT
Persons required to obtain employment permit
GR: All non-resident foreign nationals who intend to
engage in gainful employment in the Philippines.
XPNs:
1. Diplomatic services and foreign government
officials;
2. Officers and staff of international organizations
and their legitimate spouses;
3. Members of governing board who have voting
rights only;
4. Those exempted by special laws;
5. Owners and representatives of foreign
principals who interview Filipino applicants for
employment abroad;
6. Aliens whose purpose is to teach, present
and/or conduct research studies;
7. Resident aliens (D.O. 75-06, Series of 2006).
Rule as to whether a non-resident alien may
transfer employment after issuance of the
employment permit
After the issuance of an employment permit, the
alien shall not transfer to another job or change his
Er without prior approval of the SLE [Art. 41(a), LC].
Requirement for immigrants and resident
aliens
An Alien Employment Registration Certificate.
Duration of the employment permit
GR: Minimum of 1 year
XPN: If the employment contract, consultancy
services, or other modes of engagement provides
otherwise, which in no case shall exceed 5 years
[DOLE D.O. 97-09, Revised Rules for the Issuance of
Employment Permits to Foreign Nationals (2009)].
 RECRUITMENT AND PLACEMENT
Employment of aliens in entities engaged in
nationalized activities
GR: Aliens may not be employed engaged in
nationalized activities
XPNs:
1. Secretary of Justice specifically authorizes the
employment of technical personnel;
2. Aliens are elected members of the board of
directors or governing body of corporations or
associations engaging in partially nationalized
activities shall be allowed in proportion to their
allowable participation or share in the capital of
such entities [Sec. 2(A), Anti-Dummy Law, as
amended by P.D. 715]; or
3. Enterprises registered under the Omnibus
Investment Code in case of technical,
supervisory or advisory positions, but for a
limited period.
PRIVATE SECTOR PARTICIPATION IN THE
RECRUITMENT AND PLACEMENT OF WORKERS
Entities in the private sectors that can
participate in recruitment and placement of
workers
1. Shipping or manning agents or representatives
2. Private recruitment offices
3. Public employment offices
4. Construction contractors if authorized by the
DOLE and Construction Industry Authority.
5. Persons that may be authorized by the SLE
6. Private employment agencies (Sec. 1, Rule VII,
Book I, IRR of the LC).
Qualifications for participation in recruitment
and placement of workers
1. Filipino citizens, or partnerships or
corporations with at least 75% of the
authorized capital stock is owned and
controlled by Filipino citizens; (Art. 27, LC)
2. Capitalization
a. Single proprietorship or partnership
- A minimum capitalization of P2 million
b. Corporation
- A minimum paid-up capital of P2 million
Provided, that those with existing licenses
shall, within 4 yrs. from the effectivity
hereof, increase their capitalization or paid
up capital, as the case may be, to P2 million
at the rate of Php 250,000.00 every year
(Sec. 2, Rule 1, Part II, Revised POEA Rules of
2016).
3. Not otherwise disqualified by law or other
government regulations to engage in the
recruitment and placement of workers for
11
overseas employment (Rule 1, Part II, Revised
POEA Rules of 2016).
4. Payment of registration fees
5. Posting of surety/cash bonds
Regulation of the private sector’s participation in
the recruitment and overseas placement of workers
is made by setting up a licensing and registration
system (Sec. 14, R.A. 10022).
Q: Rocket Corporation is a domestic corporation
registered with the SEC, with 30% of its
authorized capital stock owned by foreigners
and 70% of its authorized capital stock owned
by Filipinos. Is Rocket Corporation allowed to
engage in the recruitment and placement of
workers, locally and overseas? Briefly state the
basis for your answer. (2015 Bar Question)
A. No. Article 27 of the Labor Code mandates that
pertinently, for a Corporation to validly engage in
recruitment and placement of workers, locally and
overseas, at least seventy-five percent (75%) of its
authorized and voting capital stock must be owned
and controlled by Filipino citizens. Since only 70%
of its authorized capital stock is owned by Filipinos,
it consequently cannot validly engage in
recruitment and placement of workers, locally and
overseas.
Persons and entities disqualified to engage in
the business of recruitment and placement of
workers
1. Travel agencies and sales agencies of airline
companies; (Art. 26, LC)
2. Officers or members of the board of any
corporation or members in a partnership
engaged in the business of a travel agency;
3. Corporations and partnerships, when any of its
officers, members of the board or partners, is
also an officer, member of the board or partner
of a corporation or partnership engaged in the
business of a travel agency;
4. Persons, partnerships or corporations which
have derogatory records, such as but not
limited to those:
a. Certified to have derogatory record or
information by the NBI or by the Anti-
Illegal Recruitment Branch of the POEA;
b. Against whom probable cause or prima
facie finding of guilt for illegal recruitment
or other related cases exists;
c. Convicted for illegal recruitment or other
related cases and/or crimes involving
moral turpitude; and
d. Agencies whose licenses have been
previously revoked or cancelled by the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
POEA for violation of R.A. 8042, P.D. 442 as
amended and their IRRs.
5. Any official or Ee of the DOLE, POEA, OWWA,
DFA and other government agencies directly
involved in the implementation of R.A. 8042
and/or any of his/her relatives within the 4 th
civil degree of consanguinity or affinity; and
6. Persons or partners, officers and directors of
corporations whose licenses have been
previously cancelled or revoked for violation of
recruitment laws (Sec. 2, Rule I, 2002 Rules and
Regulations on the Recruitment and
Employment of Land-Based Workers).
TRAVEL AGENCIES PROHIBITED FROM
RECRUITMENT AND PLACEMENT
Prohibition on travel agencies and sales
agencies of airline companies to recruit
They are prohibited from engaging in the business
of recruitment and placement of workers for
overseas employment whether for profit or not.
Q: WTTA is a well-known travel agency and an
authorized sales agent of the PAL. Since majority
of its passengers are overseas workers, WTTA
applied for a license for recruitment and
placement activities. It stated in its application
that its purpose is not for profit but to help
Filipinos find employment abroad. Should the
application be approved? (2006 Bar Question)
A: No. The application should be disapproved, as it
is prohibited by Art. 26 of the LC, to wit: "Art. 26.
Travel agencies and sales agencies of airline
companies are prohibited from engaging in the
business of recruitment and placement of workers
for overseas employment whether for profit or not."
Rule I, Part II POEA Rules and Regulations
Governing the Recruitment and Employment of
Land-Based Workers (2002) disqualifies any entity
having common director or owner of travel agencies
and sales agencies of airlines, including any
business entity from the recruitment and placement
of Filipino workers overseas, whether they derive
profit or not.
FEES TO BE PAID BY WORKERS
Instances when a worker may be charged
Only when:
1. He has obtained work through recruiter’s
efforts, and
2. The worker has actually commenced working
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
12
A land-based agency may charge and collect from its
hired workers a placement fee in an amount
equivalent to 1 month salary, exclusive of
documentation costs (Sec. 3, Rule V, POEA Rules and
Regulations).
Authorized payments that may be collected
from a hired worker
1. Placement fee in an amount equivalent to one
month’s salary of the worker, and
2. Documentation costs (Sec. 3, Rule V, POEA Rules
and Regulations).
ILLEGAL RECRUITMENT, ART. 38 (LOCAL), SEC.
6, MIGRANT WORKERS ACT, R.A. 8042
Types of illegal recruitment
1. Simple or licensee – Illegal recruitment
committed by a licensee or holder of authority
against one or two persons only;
2. Non-licensee – Illegal recruitment committed by
any person who is neither a licensee nor a
holder of authority;
3. Syndicated – Illegal recruitment committed by a
syndicate if carried out by a group of three or
more persons in conspiracy or confederation
with one another;
4. Large scale or qualified – Illegal recruitment
committed against three or more persons
individually or as a group (People v. Sadiosa, G.R.
No. 107084, 15 May 1998) despite the lack of
necessary license from POEA (People v. Alzona,
G.R. No. 132029, 30 July 2004).
Prohibited practices in recruitment or
placement
1. Furnishing or publishing any falsie
notice/information/document related to
recruitment/employment
2. Failure to file reports required by SLE
3. Inducing or attempting to induce a worker
already employed to quit his employment in
order to offer him another unless the transfer
is designed to liberate a worker from
oppressive terms and conditions
4. Recruitment/placement of workers in jobs
harmful to public health or morality or to the
dignity of the country
5. Engaging directly or indirectly in the
management of a travel agency
6. Substituting or altering employment contracts
without approval of DOLE
7. Charging or accepting any amount greater
than that specified by DOLE or make a worker
pay any amount greater than actually received
by him
 RECRUITMENT AND PLACEMENT
8. Committing any act of misrepresentation to and death benefits. Balatongan met an accident
secure a license or authority as a result of which he was hospitalized in Egypt,
9. Influencing or attempting to influence a and subsequently at the Makati Medical Center.
person/entity not to employ any worker who The medical certificate was issued describing
has not applied employment through his his disability as "permanent in nature." He
agency demanded payment for his claim for total
10. Obstructing or attempting to obstruct disability as provided for in the contract of
inspection by SLE or by his representatives employment but his claim was denied. Can the
11. Withholding or denying travel documents second contract of employment be enforced
from applicant workers before departure for against Philimare despite the absence of NSB
monetary considerations other than verification or approval?
authorized by law A: Yes. The supplementary contract of employment
12. Granting a loan to an overseas Filipino worker was entered into between petitioner and private
with interest exceeding eight percent (8%) per respondent to modify the original contract of
annum, which will be used for payment of legal employment The reason why the law requires that
and allowable placement fees and make the the POEA should approve and verify a contract
migrant worker issue, either personally or under Article 34(i) of the Labor Code is to insure
through a guarantor or accommodation party, that the employee shall not thereby be placed in a
postdated checks in relation to the said loan disadvantageous position and that the same are
13. Refusing to condone or renegotiate a loan within the minimum standards of the terms and
incurred by an OFW after his employment conditions of such employment contract set by the
contract has been prematurely terminated POEA. However, there is no prohibition against
through no fault of his or her own stipulating in a contract more benefits to the
14. For a suspended recruitment/manning agency employee than those required by law. Thus, in this
to engage in any kind of recruitment activity case wherein a "supplementary contract" was
including the processing of pending worker’s entered into affording greater benefits to the
applications; and employee than the previous one, and although the
15. For recruitment/manning agency or a foreign same was not submitted for the approval of the
principal/Er to pass on the OFW or deduct POEA, the same should still be considered to be
from his or her salary the payment of the cause valid and enforceable (Seagull Maritime Corp. v.
of fees, premium or other insurance related Balatongan, G.R. No. 82252, February 28, 1989).
charges, as provided under the compulsory
worker’s insurance coverage Difference between the prohibited acts under LC
16. Imposing a compulsory and exclusive and R.A. 8042 or the Overseas Filipinos and
arrangement whereby an OFW is required to: Overseas Migrant Workers Act, as amended by
a. Avail a loan only from specifically R.A. 10022
designated institutions, or entities or
persons LC R.A. 8042, as
b. To undergo health examinations only amended by RA
from specifically designated medical, 10022
entities or persons, except seafarers 1. Illegal recruitment Illegal recruitment
whose medical examination cost is under Art.38 of LC under Sec. 6 means any
shouldered by the ship owner 2. Prohibited acts recruitment activity
c. To undergo training of any kind only from under Art.34 of LC committed by non-
designated institutions, entities or licensees/ non-holders
persons, except for recommendatory of authority or
trainings mandated by prohibited acts (same
principals/shipowners (Sec. 6, R.A. 8042, as Art. 34, LC)
Migrant Workers and Overseas Filipino Act,
as amended by R.A. 10022). Added to the following
in the list of prohibited
Q: A crew agreement was entered into by Nerry acts:
Balatongan and Philimare Shipping and 1. Failure to actually
Equipment Supply for the employment of the deploy without
former as a seaman on board the vessel "Santa valid reason;
Cruz” which was approved by the National 2. Failure to
Seaman's Board (NSB). While on board said reimburse
vessel the parties entered into a supplementary expenses incurred
contract of employment providing for accident by the worker in

UNIVERSITY OF SANTO TOMAS

13 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
connection with expiration of the same without the approval of
his/her the Secretary of Labor;
documentation 10. To become an officer or member of the Board of
and processing for any corporation engaged in travel agency or to
purposes of be engaged directly or indirectly in the
deployment; management of a travel agency; and
3. To allow a non- 11. To withhold or deny travel documents from
Filipino citizen to applicant workers before departure for
head or manage a monetary or financial considerations other
licensed than those authorized under this Code and its
recruitment/ implementing rules and regulations.
manning agency.
Persons prohibited from engaging in the
Prohibited Acts under Art. 34 of the LC business of recruiting migrant workers

It shall be unlawful for any individual, entity, 1. It is unlawful for any official or Ee of the
licensee, or holder of authority: following agencies to engage in recruiting
migrant workers:
1. To charge or accept, directly or indirectly, any a. DOLE
amount greater than that specified in the b. POEA
schedule of allowable fees prescribed by the c. Overseas Workers Welfare Administration
Secretary of Labor, or to make a worker pay any (OWWA)
amount greater than that actually received by d. DFA
him as a loan or advance; e. Other Government agencies involved in the
2. To furnish or publish any false notice or implementation of R.A. 8042
information or document in relation to 2. The relatives within the 4th civil degree of
recruitment or employment; consanguinity or affinity of such official or Ee
3. To give any false notice, testimony, information are also prohibited from engaging directly or
or document or commit any act of indirectly in the business of recruiting migrant
misrepresentation for the purpose of securing a workers (Sec. 8, R.A. 8042).
license or authority under this Code.
4. To induce or attempt to induce a worker LICENSE vs. AUTHORITY
already employed to quit his employment in
order to offer him to another unless the transfer License requirement in the business of
is designed to liberate the worker from recruitment and replacement
oppressive terms and conditions of
employment; The business of recruitment and replacement is
5. To influence or to attempt to influence any regulated by law by requiring them to obtain license
person or entity not to employ any worker who and authority.
has not applied for employment through his
agency; LICENSE AUTHORITY
6. To engage in the recruitment or placement of A document issued by A document issued by
workers in jobs harmful to public health or DOLE authorizing a the DOLE authorizing a
morality or to the dignity of the Republic of the person or entity to person or association
Philippines; operate a private to engage in
7. To obstruct or attempt to obstruct inspection employment agency. recruitment and
by the Secretary of Labor or by his duly placement activities as
authorized representatives; a private recruitment
8. To fail to file reports on the status of entity.
employment, placement vacancies, remittance
of foreign exchange earnings, separation from Persons who may be issued license and
jobs, departures and such other matters or authority
information as may be required by the
Secretary of Labor. 1. Natural persons – Must be a Filipino
9. To substitute or alter employment contracts 2. Artificial persons – 75% of the capital and voting
approved and verified by the Department of stock of which is owned and controlled by
Labor from the time of actual signing thereof by Filipino.
the parties up to and including the periods of

UNIVERSITY OF SANTO TOMAS

2016 GOLDEN NOTES
14
 RECRUITMENT AND PLACEMENT
Non-licensee / non-holder of authority
Any person, corporation or entity:
1. Which has not been issued a valid license or
authority to engage in recruitment and
placement by the SLE, or
2. Whose license or authority has been
suspended, revoked or cancelled by the POEA
or the SLE
Non-transferability of license or authority
License or authority are non-transferable (Art. 29,
LC). License or authority is granted on the basis of
personal qualifications of the grantee. Thus, it is
beyond the commerce of man.
Q: A recruitment and placement agency
declared voluntary bankruptcy. Among its
assets is its license to engage in business. Is the
license of the bankrupt agency an asset which
can be sold in public auction by the liquidator?
(1998 Bar Question)
A: No, because of the non-transferability of the
license to engage in recruitment and placement. The
LC (Art. 29) provides that no license to engage in
recruitment and placement shall be used directly or
indirectly by any person other than the one in
whose favor it was issued nor may such license be
transferred, conveyed or assigned to any other
person or entity. It may be noted that the grant of a
license is a governmental act by the DOLE based on
personal qualifications, and citizenship and
capitalization requirements (LC, Arts. 27-28).
NOTE: Change of ownership or relationship of a
single proprietorship licensed to engage in overseas
employment shall cause the automatic revocation of
the license.
ESSENTIAL ELEMENTS OF
ILLEGAL RECRUITMENT
Illegal recruitment
Illegal recruitment means any recruitment
activities, including the prohibited practices
enumerated under Article 34 of this Code, to be
undertaken by non-licensees or non-holders of
authority [Art. 38(a), LC].
Illegal recruitment is defined under Article 38 (a) of
the Labor Code, as amended, as any recruitment
activities, including the prohibited practices to be
undertaken by non-licensees or non-holders of
authority (People v. Senoron, G.N. No. 119160,
January 30, 1997).
15
Elements of illegal recruitment
1. Offender is a non-licensee or non-holder of
authority to lawfully engage in the
recruitment/placement of workers.
2. Offender undertakes:
a. Any act of canvassing, enlisting,
contracting, transporting, utilizing, hiring,
or procuring workers and includes
referring, contract services, promising or
advertising for employment abroad,
whether for profit or not [Art. 13(f), R.A.
8042 as amended by R.A. 10022]; or
b. Any of prohibited practices under Art. 34 of
the LC.
3. For complex illegal recruitment, an additional
element the offender commits the act against
three or more persons, individually, or as a
group (People v. Baytic, G.R. No. 150530,
February 20, 2003) or there are three or more
offenders.
Q: Melissa represented herself to have the
capacity to contract, enlist and transport
Filipino workers overseas. Without first having
secured the required license from the DOLE, she
promised job placements to Rey, Billy, Roylan
and Alberto and charged them placement fees
greater than that specified in the schedule of
allowable fees prescribed by the POEA. Without
valid reasons and without the fault of said
complainants, she failed to actually deploy them
and failed to reimburse expenses incurred in
connection with their documentation and
processing for purposes of their deployment. If
a suit for illegal recruitment in large scale is filed
by the complainants against her, will it prosper?
A: Yes. In order to hold a person liable for illegal
recruitment, the following elements must concur:
(1) the offender undertakes any of the activities
within the meaning of recruitment and placement
under Article 13(b) 20 of the Labor Code, or any of
the prohibited practices enumerated under Article
34 of the Labor Code (now Section 6 of RA 8042);
and (2) the offender has no valid license or
authority required by law to enable him to lawfully
engage in recruitment and placement of workers. In
the case of illegal recruitment in large scale, a third
element is added: that the offender commits any of
the acts of recruitment and placement against three
or more persons, individually or as a group. The
presence of all three elements in the case at bar
makes Melissa liable for illegal recruitment in large
scale (People v. Chua, G.R. No. 187052 September 13,
2012).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Persons liable for illegal recruitment
Any person (whether non-licensee, non-holder of
authority, licensee or holder of authority) who
commits any of the prohibited acts, shall be liable
for illegal recruitment (R.A. 8042, as amended by R.A.
10022).
Q: A was approached for possible overseas
deployment to Dubai by X, an interviewer of job
applicants for Alpha Personnel Services, Inc., an
overseas recruitment agency. X required A to
submit certain documents (passport, NBI
clearance, medical certificate) and to pay
P25,000 as processing fee. Upon payment of the
said amount to the agency cashier, A was
advised to wait for his visa. After five months, A
visited the office of Alpha Personnel Services,
Inc. during which X told him that he could no
longer be deployed for employment abroad. A
was informed by the Philippine Overseas
Employment Administration (POEA) that while
Alpha Personnel Services, Inc. was a licensed
agency, X was not registered as its employee,
contrary to POEA Rules and Regulations. Under
POEA Rules and Regulations, the obligation to
register personnel with the POEA belongs to the
officers of a recruitment agency.
a. May X be held criminally liable for illegal
recruitment? Explain.
b. May the officers having control,
management or direction of Alpha
Personnel Services, Inc. be held criminally
liable for illegal recruitment? Explain. (2010
Bar Question)
A:
a. No. X performed his work with the knowledge
that he works for a licensed recruitment agency.
He is in no position to know that the officers of
said recruitment agency failed to register him
as its personnel (People v. Chowdury, G.R. No.
129577-80. February 15, 2000). The fault not
being attributable to him, he may be considered
to have apparent authority to represent Alpha
in recruitment for overseas employment.
b. Yes. Alpha, being a licensed recruitment
agency, still has obligations to A for processing
his papers for overseas employment. Under
Section 6(m) of R.A. 8042, failure to reimburse
expenses incurred by the worker in connection
with his documentation and processing for
purposes of deployment in cases where the
deployment does not actually take place
without the worker’s fault, amounts to illegal
recruitment.
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
16
Way to prove illegal recruitment
There is illegal recruitment when one gives the
impression of having the ability to send a worker
abroad. It is undisputed that appellant gave
complainants the distinct impression that she had
the power or ability to send people abroad for work
such that the latter were convinced to give her the
money she demanded in order to be so employed
(People v. Goce, G.R. No. 113161, August 29, 1995).
It is important that there must at least be a promise
or offer of an employment from the person posing
as a recruiter, whether locally or abroad (People v.
Laogo, G.R. no. 176264, January 10, 2011).
Q: Larry Domingo was accused of the crime of
illegal recruitment. He argued that he issued no
receipt or document in which he acknowledged
as having received any money for the promised
jobs. Hence, he should be free from liability. Was
Larry engaged in recruitment activities?
A: Yes. Even if at the time Larry was promising
employment no cash was given to him, he is still
considered as having been engaged in recruitment
activities, since Art. 13(b) of the LC states that the
act of recruitment may be for profit or not. It suffices
that Larry promised or offered employment for a fee
to the complaining witnesses to warrant his
conviction for illegal recruitment (People v.
Domingo, G.R. No. 181475, April 7, 2009).
SIMPLE ILLEGAL RECRUITMENT
Simple illegal recruitment
It is the violation of Arts. 13(b) and 34 of the LC
involving less than three recruiters or victims.
Complex illegal recruitment
It is the violation of Arts. 13(b) and 34 of the LC
involving at least three recruiters or victims. It may
either be:
1. Committed by a syndicate; or
2. In large Scale or qualified
ILLEGAL RECRUITMENT IN LARGE SCALE (SEC.
6, R.A. 10022)
Illegal recruitment in large scale (qualified)
Illegal recruitment in large scale is committed
against three or more persons individually or as a
group.
 RECRUITMENT AND PLACEMENT
Illegal recruitment committed by a syndicate
Illegal recruitment is committed by a syndicate if it
was carried out by a group of three or more persons
conspiring or confederating with one another.
Q: What qualifying circumstances will convert
“illegal recruitment” to economic sabotage thus
subjecting its perpetrators to a penalty of life
imprisonment and a fine of at least
P500,000.00? (Bar 2005)

“Illegal recruitment in large scale” pertains to the A: An illegal recruitment is considered to have
number of victims while “syndicated illegal evolved into economic sabotage when it is
recruitment” pertains to the number of recruiters. committed by a syndicate or committed in large
scale. Illegal recruitment is deemed to have been
Q: While her application for renewal of her committed by a syndicate when the recruitment is
license to recruit workers for overseas carried out by a group of three or more persons
employment was still pending, Maryrose Ganda conspiring and/or confederating with one another
recruited Alma and her 3 sisters, Ana, Joan, and in carrying out any act under Art. 38. On the other
Mavic, for employment as housemates in Saudi hand, it is deemed committed in large scale if it is
Arabia. Maryrose represented to the sisters that committed against three or more persons
she had a license to recruit workers for overseas individually or as a group.
employment and demanded and received
P30,000.00 from each of them for her services. ILLEGAL RECRUITMENT vs. ESTAFA
Her application for the renewal of her license,
however, was denied, and consequently failed to ILLEGAL RECRUITMENT ESTAFA
employ the four sisters in Saudi Arabia. The Malum prohibitum, thus: Malum in se, thus:
sisters charged Maryrose with large scale illegal 1. Criminal intent is not 1.Criminal intent is
recruitment. Testifying in her defense, she necessary necessary
declared that she acted in good faith because she 2. It is a crime which 2. It is a crime which
believed that her application for the renewal of involves moral involves moral
her license would be approved. She adduced in turpitude turpitude
evidence the Affidavits of Desistance which the It is not required that it be Accused defrauded
four private complainants had executed after shown that the recruiter another by abuse of
the prosecution rested its case. In the said wrongfully represented confidence, or by
affidavits, they acknowledged receipt of the himself as a licensed means of deceit
refund by Maryrose of the total amount of Php recruiter
120,000.00 and indicated that they were no NOTE: It is essential
longer interested to pursue the case against her. NOTE: It is enough that that the false
Resolve the case with reasons. (2005 Bar the victims were deceived statement or
Question) as they relied on the fraudulent
misrepresentation and representation
A: Maryrose is guilty of large scale illegal scheme that caused them constitutes the very
recruitment. It is large scale illegal recruitment to entrust their money in cause or the only
when the offense is committed against 3 or more exchange of what they motive which
persons, individually or as a group [Art. 38(b), LC]. later discovered was a induces the
In view of the above, her defense of good faith and vain hope of obtaining complainant to part
the Affidavit of Desistance as well as the refund employment abroad. with the thing of
given will not save her because R.A. 8042 is a special value.
law, and illegal recruitment is malum prohibitum
(People v. Saulo, G.R. No. 125903, November 15, Illegal recruitment and estafa cases may be filed
2000). simultaneously or separately. The filing of
charges for illegal recruitment does not bar the
ILLEGAL RECRUITMENT AS filing of estafa, and vice versa.
ECONOMIC SABOTAGE Double jeopardy will not set in.

Illegal recruitment as economic sabotage Q: Bugo, by means of false pretenses and

Article 38 (b) of LC, as amended by PD 2018
It is economic sabotage when complex illegal
recruitment is committed, such that it is syndicated
or done in a large scale.
fraudulent representation, convinced Dado to
give the amount of Php 120,000.00 for
processing the latter’s papers so that he can be
deployed to Japan. Dado later on found out that
Bugo had misappropriated, misapplied and
converted the money for her own personal use

UNIVERSITY OF SANTO TOMAS

17 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
and benefit. Can Dado file the cases of illegal
recruitment and estafa simultaneously?
A: Yes. Illegal recruitment and estafa cases may be
filed simultaneously or separately. The filing of
charges for illegal recruitment does not bar the
filing of estafa, and vice versa. Bugo’s acquittal in the
illegal recruitment case does not prove that she is
not guilty of estafa. Illegal recruitment and estafa
are entirely different offenses and neither one
necessarily includes or is necessarily included in the
other. A person who is convicted of illegal
recruitment may, in addition, be convicted of estafa
under Art. 315, par. 2(a) of the RPC. In the same
manner, a person acquitted of illegal recruitment
may be held liable for estafa. Double jeopardy will
not set in because illegal recruitment is malum
prohibitum, in which there is no necessity to prove
criminal intent, whereas estafa is malum in se, in the
prosecution of which, proof of criminal intent is
necessary (Sy v. People, G.R. No. 183879, April 14,
2010).
LIABILITIES
LOCAL RECRUITMENT AGENCY
Liability of the local recruitment agency
A Local Recruitment Angency shall be jointly and
solidarily liable with its principal or foreign-based
Er for any violation of the recruitment agreement
and violation of contracts of employment [Sec.
10(a)(2), Rule V, Book I, IRR]
Q: Santosa Datuman was deployed
to Bahrain after paying the required placement
fee. However, her employer took her passport
and instead of working as a saleslady, she was
forced to work as a domestic helper contrary to
the agreed salary approved by POEA. She
worked without compensation for two years
because of her employers’ continued failure and
refusal to pay her salary despite demand. When
she finally returned to the Philippines, she filed
a complaint against the local agency that
recruited her. Should the suit prosper?
A: Yes. Under Section 1 (f), Rule II, Book II of the
1991 POEA Rules and Regulations, the local agency
shall assume joint and solidary liability with the
employer for all claims and liabilities which may
arise in connection with the implementation of the
contract, including but not limited to payment of
wages, health and disability compensation and
repatriation. Private employment agencies are held
jointly and severally liable with the foreign-based
employer for any violation of the recruitment
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
18
agreement or contract of employment, to assure the
aggrieved worker of immediate and sufficient
payment of what is due him. This is in line with the
policy of the state to protect and alleviate the plight
of the working class (Datuman v. First Cosmopolitan
Manpower, G.R. No. 156029, November 14, 2008).
Liability of corporate officers, directors or
partners if the recruitment/ placement agency
is a juridical being
If the recruitment/placement agency is a juridical
being, the corporate officers, directors or partners
as the case may be, shall themselves be jointly and
solidarily liable with the corporation or partnership
for the claims and damages (Becmen Service
Exporter and Promotion v. Cuaresma, G.R. Nos.
182978-79, April 7, 2009).
Remedies under the Migrant Workers Act and
how may they be enforced:
CRIMINAL ACTIONS
RTC
Province or city:
1. Where the offense was committed or
2. Where the offended party actually resides at
the same time of the commission of the offense
MONEY CLAIMS
NLRC
Original and exclusive jurisdiction to hear and
decide claims arising out of an Er-Ee relationship
or by virtue of any law or contract involving
Filipino workers for overseas deployment
including claims for actual, moral, exemplary and
other forms of damages.
 The liability of the principal/ Er and the
recruitment/ placement agency for any and all
claims shall be joint and several.
 The performance bond to be filed by the
recruitment/ placement agency shall be
answerable for all money claims or damages
that may be awarded to the workers.
 If the recruitment/placement agency is a
juridical being, the corporate officers and
directors and partners as the case may be, shall
themselves be jointly and solidarily liable with
the corporation or partnership for the claims
and damages.
ADMINISTRATIVE ACTIONS
POEA
 RECRUITMENT AND PLACEMENT
Original and exclusive jurisdiction to hear and
decide:
1. All cases which are administrative in character,
involving or arising out of violations of rules
and regulations relating to licensing and
registration of recruitment and employment
agencies or entities and
2. Disciplinary action cases and other special
cases which are administrative in character,
involving Ers, principals, contracting partners
and Filipino migrant workers.
a. It may be filed with the POEA Adjudication
Office or the DOLE/POEA regional office of
the place where the complaint applied or
was recruited at the option of the
complainant. The office with which the
complaint was first filed shall take
cognizance of the case.
b. DA cases and other special cases, as
mentioned in the preceding Section, shall be
filed with POEA Adjudication Office.
Rule as to whether compromise agreement on
money claims is allowed
Consistent with the policy encouraging amicable
settlement of labor disputes, Sec. 10 of R.A. 8042
allows resolution by compromise of cases filed with
the NLRC.
Period as to when shall compromise agreements
on money claims be paid
Any compromise/amicable settlement or voluntary
agreement on money claims inclusive of damages
shall be paid within four months from the approval
of the settlement by the appropriate authority.
Rule as to whether overtime and leave pay are
included in the terms which is the basis for the
computation of the monetary award
The word “salaries” in Sec. 10(5) of the LC does not
include OT and leave pay. For seafarers, DO No. 33,
series of 1996, provides a Standard Employment
Contract of Seafarers, in which salary is understood
as the basic wage, exclusive of OT, leave pay and
other bonuses; whereas OT pay is compensation for
all work “performed” in excess of the regular 8
hours, and holiday pay is compensation for any
work “performed” on designated rest days and
holidays (Serrano v. Gallant Maritime Services &
Marlow Navigation Co., Inc., G.R. No.167614, March
24, 2009).
Q: Antonio Serrano was hired by Gallant
Maritime Services, Inc. and Marlow Navigation
Co., Inc., under a POEA-approved contract of
employment for 12 months, as Chief Officer,
19
with a monthly salary of US$1,400, and $700 per
month overtime pay, and 7 days paid vacation
leave per month. On the date of his departure, he
was constrained to accept a downgraded
employment contract upon the assurance and
representation of Gallant that he would be Chief
Officer by the end of April 1998. Gallant did not
deliver on their promise hence he refused to
stay on as second Officer and was repatriated to
the Philippines, serving only two months and 7
days, leaving an unexpired portion of nine
months and twenty-three days. He filed with the
Labor Arbiter a complaint for constructive
dismissal and for payment of his money claims
contending that his overtime and leave pay
should form part of the salary basis in the
computation of his monetary award, because
these are fixed benefits that have been
stipulated into his contract. Is he correct?
A: No. The word salaries in Section 10(5) does not
include overtime and leave pay. For seafarers like
Serrano, DOLE Department Order No. 33, series
1996, provides a Standard Employment Contract of
Seafarers, in which salary is understood as the basic
wage, exclusive of overtime, leave pay and other
bonuses; whereas overtime pay is compensation for
all work "performed" in excess of the regular eight
hours, and holiday pay is compensation for any
work "performed" on designated rest days and
holidays.
By the foregoing definition alone, there is no basis
for the automatic inclusion of overtime and holiday
pay in the computation of petitioner's monetary
award, unless there is evidence that he performed
work during those periods. The contract provision
guarantees the right to overtime pay but the
entitlement to such benefit must first be
established. In the same vein, the claim for the day's
leave pay for the unexpired portion of the contract
is unwarranted since the same is given during the
actual service of the seamen (Serrano v. Gallant
Maritime Services & Marlow Navigation Co., Inc., G.R.
No.167614, March 24, 2009).
FOREIGN EMPLOYER
THEORY OF IMPUTED KNOWLEDGE
Theory of Imputed Knowledge
A rule in insurance law that any information
material to the transaction, either possessed by the
agent at the time of the transaction or acquired by
him before its completion, is deemed to be the
knowledge of the principal, at least so far as the
transaction is concerned, even though in fact the
knowledge is not communicated to the principal at
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
all (Leonor v. Filipinas Compania, 48 OG 243, January
10, 1950).
Q: Sunace International Management Services
(Sunace), deployed to Taiwan Montehermozo as
a domestic helper under a 12-month contract
effective Feb. 1, 1997. The deployment was with
the assistance of a Taiwanese broker, Edmund
Wang, President of Jet Crown International Co.,
Ltd. After her 12-month contract expired on
Feb. 1, 1998, Montehermozo continued working
for her Taiwanese employer for two more years,
after which she returned to the Philippines on
Feb. 4, 2000. Shortly after her return she filed a
complaint before the NLRC against Sunace, one
Perez, the Taiwanese broker, and the employer-
foreign principal alleging that she was jailed for
three months and that she was underpaid.
Should Sunace be held liable for the
underpayment for the additional two years that
she worked for her Taiwanese employer under
the theory of imputed knowledge?
A: No, the theory of imputed knowledge ascribes the
knowledge of the agent, Sunace, to the principal
Taiwanese Er, not the other way around. The
knowledge of the principal-foreign Er cannot,
therefore, be imputed to its agent Sunace.
There being no substantial proof that Sunace knew
of and consented to be bound under the 2-year
employment contract extension, it cannot be said to
be privy thereto. As such, it and its owner cannot be
held solidarily liable for and of Montehermozo’s
claims arising from the 2-year employment
extension (Sunace v. NLRC, G.R. No. 161757, January
25, 2006).
SOLIDARY LIABILITY
Liability of the private employment agency and
the principal or foreign-based employer
They are jointly and solidarily liable for any
violation of the recruitment agreement and the
contracts of employment.
This joint and solidary liability imposed by law
against recruitment agencies and foreign Ers is
meant to assure the aggrieved worker of immediate
and sufficient payment of what is due him (Becmen
Service Exporter and Promotion v. Cuaresma, G.R.
Nos. 182978-79, April 7, 2009).
Effect of absence of employment contract,
special power of attorney and affidavit of
responsibility, as required by the POEA rules
and regulations to the private employment
agency and the principal
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
20
Non-compliance with POEA Rules and Regulations
cannot be utilized to relieve the agency and its
principal from liabitliy. In fact, such non-compliance
is a ground for the cancellation or suspension of
their license (Hornales v. NLRC, et al., G.R. No.
118934, September 10, 2001).
PRETERMINATION OF CONTRACT OF
MIGRANT WORKER
Q: Serrano, a seafarer, was hired by Gallant
Maritime and Marlow Navigation Co. for 12
months as Chief Officer. On the date of his
departure, he was constrained to accept a
downgraded employment contract for the
position of Second Officer, upon the assurance
that he would be made Chief Officer after a
month. It was not done; hence, he refused to stay
on as Second Officer and was repatriated to the
Phils. He had served only 2 months & 7 days of
his contract, leaving an unexpired portion of 9
months & 23 days.
Serrano filed with the LA a Complaint against
Gallant Maritime and Marlow for constructive
dismissal and for payment of his money claims.
The LA rendered a favorable decision to Serrano
awarding him $8,770.00, representing his
salary for 3 months of the unexpired portion of
his contract of employment applying R.A. 8042,
Sec 10, par. 5:
Money Claims. - In case of termination
of overseas employment without just,
valid or authorized cause as defined
by law or contract, the workers shall
be entitled to the full reimbursement
of his placement fee with interest of
12% per annum, plus his salaries for
the unexpired portion of his
employment contract or for 3 months
for every year of the unexpired term,
whichever is less.
Is the subject clause constitutional?
A: No. The subject clause contains a suspect
classification in that, in the computation of the
monetary benefits of fixed-term Ees who are
illegally discharged, it imposes a 3-month cap on the
claim of OFWs with an unexpired portion of one
year or more in their contracts, but none on the
claims of other OFWs or local workers with fixed-
term employment. The subject clause singles out
one classification of OFWs and burdens it with a
peculiar disadvantage.
 RECRUITMENT AND PLACEMENT
The clause is a violation of the right of Serrano and
other OFWs to equal protection and right to
substantive due process, for it deprives him of
property, consisting of monetary benefits, without
any existing valid governmental purpose.
Furthermore, prior to R.A. 8042, all OFWs,
regardless of contract periods or the unexpired
portions thereof, were treated alike in terms of the
computation of their monetary benefits in case of
illegal dismissal. Their claims were subjected to a
uniform rule of computation: their basic salaries
multiplied by the entire unexpired portion of their
employment contracts. The same applies local
workers with fixed-term employment.
Thus, Serrano is entitled to his salaries for the entire
unexpired period of nine months and 23 days of his
employment contract, pursuant to law and
jurisprudence prior to the enactment of RA 8042
(Serrano v. Gallant Maritime Services & Marlow
Navigation Co., Inc., G.R. No.167614, March 24, 2009).
Basis in computing an employee’s compensation
in case of premature termination of contract
A worker dismissed from overseas employment
without just, valid or authorized cause as defined by
law or contract is entitled to full reimbursement of
his placement fee with interest at 12% per annum,
plus his salary for the unexpired portion of his
employment contract or for three months for every
year of the unexpired term, whichever is less. (Sec.
7, R.A. 10020, 2010).
Basis in computing an employee’s compensation
in case of premature termination of contract
The Migrant Workers Act provides that salaries for
the unexpired portion of the employent contract or
three months for every year of the unexpired term,
whichever is less, shall be awarded to the overseas
Filipino worker, in cases of illegal dismissal. In
Serrano v. Gallant Maritime Services (G.R. No.
167614, March 24, 2009) however, the clause “or for
three months for every year of the unexpired term,
whichever is less” was declared unconstitutional
and awarded the entire unexpired portion of the
employment contract to the overseas Filipino
worker.
Nonetheless, Sec. 7 of R.A. 10022 amended Sec. 10
of the Migrant Workers Act, and once again
reiterated the provision of awarding the unexpired
portion of the employent contract or three months
for every year of the unexpired term, whichever is
less (Skippers United Pacific, Inc. v. Doza, et. al, G.R.
No. 175558, February 8, 2012).
21
The declaration in March 2009 of the
unconstitutionality of the clause “or for three
months for every year of the unexpired term,
whichever is less” in RA 8042 shall be given
retroactive effect to the termination that occurred
in January 1999 because an unconstitutional clause
in the law confers no rights, imposes no duties and
affords no protection. The unconstitutional
provision is inoperative, as if it was not passed into
law at all (Yap v. Thenamaris Ship’s Management and
Intermare Maritime Agencies, Inc., G.R. No. 179532,
May 30, 2011).
Q: Joy was deployed to work for Taiwan Wacoal,
Co. Ltd. on June 26, 1997 for 1 year. She alleged
that Sameer Overseas Agency required her to
pay a placement fee of P70, 000.00. On July 14,
1997, Mr. Huwang of Wacoal informed Joy,
without prior notice, that she was terminated
and was given a salary from June 26 to July 14,
1997 only. Joy filed a complaint for illegal
dismissal with the NLRC. She asked for the
return of her placement fee, the withheld
amount for repatriation costs, payment of her
salary for 23 months as well as moral and
exemplary damages. The NLRC ruled that Joy
was illegally dismissed and awarded her three
months’ worth of salary, the reimbursement of
the cost of her repatriation, and attorney’s fees.
Should Joy be awarded three months’ worth of
salary and reimbursement of the cost of her
repatriation?
A: No. Joy is entitled to her salary for the unexpired
portion of her contract, in accordance with Section
10 of Republic Act No. 8042. Since she started
working on June 26, 1997 and was terminated on
July 14, 1997, Joy is entitled to her salary from July
15, 1997 to June 25, 1998. Furthermore, there is an
implied stipulation in contracts between the
placement agency and the overseas worker that in
case the overseas worker is adjudged as entitled to
reimbursement of his or her placement fees, the
amount shall be subject to a 12% interest per
annum. This implied stipulation has the effect of
removing awards for reimbursement of placement
fees from Circular No. 799’s coverage. However, if
judgment did not become final and executory before
July 1, 2013 and there was no stipulation in the
contract providing for a different interest rate, other
money claims under Section 10 of Republic Act No.
8042 shall be subject to the 6% interest per annum
in accordance with Circular No. 799 (Sameer v.
Cabiles, G.R. No. 170139, Aug. 05, 2014).
Q: Peter worked for a Norwegian cargo vessel.
He worked as a deckhand, whose primary duty
was to assist in cleaning the ship. He signed a
five-year contract starting in 2009. In 2011,
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Peter’s employers began treating him Deportation without
differently. He was often maltreated and his further proceedings
salary was not released on time. These were
frequently protested to by Peter. Apparently Automatic revocation of
exasperated by his frequent protestations, license or authority and
Peter’s employer, a once top official in China, all permits and
suddenly told him that his services would be In every case privileges of the
terminated as soon as the vessel arrived at the recruitment or manning
next port, in Indonesia. Peter had enough agency, lending
money to go back home, and immediately upon institutions, training
arriving, he filed a money claim with the NLRC school or medical clinic
against his former employer’s local agent. Will PERIODS
Peter’s case prosper? (2012 Bar Question) Mandatory Period for Resolution of Illegal
Recruitment Cases
A: Yes, he is entitled to his salaries for the unexpired The preliminary investigations of cases under
portion of his employment contract, plus full R.A. 10022 shall be terminated within a period of
reimbursement of his placement fee with interest at 30 calendar days from the date of their filing.
12% per annum [Serrano vs. Gallant Maritime, G.R. If the PI is conducted
No. 167614, March 24, 2009]. If the PI is conducted
by a prosecution
by a judge and a
officer and a prima
PENALTIES FOR ILLEGAL RECRUITMENT prima facie case is
facie case is
found to exist
established
Consequence of conviction for illegal Information shall be Prosecution officer
recruitment: filed in court within 24 within 48 hours from
hours from the the date of receipt of
PENALTIES (Under R.A. 10022) termination of the the records of the
Offender / Offense Penalty investigation case. (Sec. 11)
Illegal recruitment as Prescriptive Period for Illegal Recruitment
Life imprisonment + Cases
economic sabotage
fine of P2M-P5M Simple Illegal Economic
Provided: Recruitment Sabotage
1. If person illegally Within 20 yrs. from
recruited is below Within 5 yrs. from the the time illegal
18 years of age or time illegal recruitment recruitment has
Maximum penalty has happened happened (Sec. 12,
2. Illegal recruitment
shall be imposed R.A. 8042).
is committed by a
non-licensee/non-
holder DIRECT HIRING
Any person found 12 yrs. and 1 day - 20
guilty of illegal yrs. imprisonment; or Direct hiring
recruitment Fine: P1M-P2M
Any person found 6 yrs. and 1 day - 12 yrs. It is when an Er hires a Filipino worker for overseas
guilty of the imprisonment; or employment without going through the POEA or
prohibited acts Fine of P500K - P1M entities authorized by the SLE.
2-5 yrs. imprisonment;
Licensee/holder of Ban on direct hiring
or
authority violates
Fine: P10K - P50K;
provisions GR: An Er may only hire Filipino worker for
or both
4-8 yrs. imprisonment; overseas employment through POEA or entities
Non-licensee/non- authorized by DOLE.
or
holder of authority
Fine: P20K - P100K
violates provisions XPNs: Direct hiring by:
or both
Corporation, Penalty imposed upon 1. International organizations
partnership, officer/s responsible for 2. Name hires
association, or entity violation 3. Members of the diplomatic organizations
Penalties prescribed 4. Other Ers as may be allowed by DOLE
Alien under RA 10022,
+

UNIVERSITY OF SANTO TOMAS

2016 GOLDEN NOTES
22
 RECRUITMENT AND PLACEMENT
Purposes of the prohibition on direct hiring:
1. To ensure the best possible terms and
conditions of employment for the worker.
2. To assure the foreign Er that he hires only
qualified Filipino workers.
3. To ensure full regulation of employment in
order to avoid exploitation.
REGULATION AND ENFORCEMENT
SUSPENSION OR CANCELLATION OF
LICENSE OR AUTHORITY
Person who can suspend or cancel license or
authority
The Secretary of Labor and Employment is vested
with power to suspend or cancel any license or
authority to recruit employees for overseas
employment.
Grounds for revocation of license:
1. Incurring an accumulated 3 counts of
suspension by an agency based on final and
executory orders within the period of validity of
its license
2. Violations of the conditions of license
3. Engaging in acts of misrepresentation for the
purpose of securing a license or renewal
4. Engaging in the recruitment or placement of
workers to jobs harmful to the public health or
morality or to the dignity of the country (Sec. 3,
Rule I, Book VI, Rules and Regulations Governing
Overseas Employment).
Grounds for suspension or cancellation of
license
1. Commission of prohibited acts under Art. 34 of
LC
2. Publishing job announcements w/o POEA’s
approval
3. Charging a fee which may be in excess of the
authorized amount before a worker is
employed
4. Deploying workers w/o processing through
POEA
5. Recruitment in places outside its authorized
area (Sec. 4, Rule II, Book IV, POEA Rules).
6. If the employment agency fails to provide the
ticket or PTA within 48 hours from receipt of
the notice [R.A. 10022].
Degree of proof required for suspension of
license or authority
23
Administrative determinations require only
substantial proof and not clear and convincing
evidence. In proceedings for cancellation or
suspension of license or authority, no rule requires
that testimonies or complaints be corroborated by
documentary evidence, if the charge of unlawful
exaction is substantially proven.
Q: Concerned Filipino contract workers in the
Middle East reported to the DFA that XYZ, a
private recruitment and placement agency, is
covertly transporting extremists to terrorist
training camps abroad. Intelligence agencies of
the Government allegedly confirmed the report.
Upon being alerted by the DFA, the DOLE issued
orders cancelling the licenses of XYZ, and
imposing an immediate travel ban on its
recruits for the Middle East. XYZ appealed to the
Office of the President to reverse and set aside
the DOLE orders, citing damages from loss of
employment of its recruits, and violations of due
process including lack of notice and hearing by
the DOLE. The DOLE in its answer claimed the
existence of an emergency in the Middle East
which required prompt measures to protect the
life and limb of OFWs from a clear and present
danger posed by the ongoing war against
terrorism. Should the DOLE orders be upheld or
set aside? (2004 Bar Question)
A: The DOLE order cancelling the licenses of XYZ is
void because a report that an agency is covertly
transporting extremists is not a valid ground for
cancellation of a Certificate of Registration (Art. 239,
LC) and there is failure of due process as no hearing
was conducted prior to the cancellation (Art. 238,
LC).
The DOLE order imposing the travel ban is valid
because it is a valid exercise of police power to
protect the national interest (Sec. 3, Art. XIII,
Constitution on full protection to labor safety of
workers) and on the rule making authority of the
SLE (Art. 5, LC; Phil. Ass’n. of Service Exporters v.
Drilon, G.R. No. 81958, June 30, 1988).
REGULATORY AND VISITORIAL POWERS OF
THE DOLE SECRETARY
Regulatory powers of the SLE
1. Restrict and regulate the recruitment and
placement activities of all agencies
2. Issue orders and promulgate rules and
regulations
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Visitorial power
1. Access to Er’s records and premises at any time
of the day or night, whenever work is being
undertaken
2. To copy from said records
3. Question any Ee and investigate any fact,
condition or matter which may be necessary to
determine violations or which may aid in the
enforcement of the LC and of any labor law,
wage order, or rules and regulation issued
pursuant thereto.
Instances where the visitorial power of the SLE
may be exercised under the LC
1. Inspect books of accounts and records of any
person or entity engaged in recruitment and
placement; require it to submit reports
regularly on prescribed forms and act in
violations of any provisions of the LC on
recruitment and placement (LC, Art. 37).
2. Have access to Er’s records and premises to
determine violations of any provisions of the LC
on recruitment and placement (LC, Art. 128).
3. Conduct industrial safety inspections of
establishments (LC, Art. 165).
4. Inquire into the financial activities of legitimate
labor organizations (LLO) and examine their
books of accounts upon the filing of the
complaint under oath and duly supported by
the written consent of at least 20% of the total
membership of the labor organization
concerned.
SLE cannot issue search warrants or warrants of
arrest
Under the 1987 Constitution, only a judge may issue
search warrants or warrants of arrest. Hence, Art.
38(c) of the LC is unconstitutional inasmuch as it
gives the SLE the power to issue search warrants
and warrants of arrest. The labor authorities must
go through the judicial process (Salazar v. Achacoso,
G.R. No. 81510, March 14, 1990).
REMITTANCE OF FOREIGN
EXCHANGE EARNINGS
Remittance of foreign exchange earnings
GR: It shall be mandatory for all OFWs to remit a
portion of their foreign exchange earnings to their
families, dependents, and/or beneficiaries ranging
from 50% - 80% depending on the worker’s kind of
job (Rule VIII, Book III, POEA Rules).
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
24
XPNs:
1. The worker’s immediate family members,
beneficiaries and dependents are residing with
him abroad
2. Immigrants and Filipino professionals and Ees
working with the UN agencies or specialized
bodies
3. Filipino servicemen working in U.S. military
installations (Resolution No. 1-83, Inter-Agency
Committee for Implementation of E.O. 857).
Effect of failure to remit
1. Workers – Shall be suspended or removed
from the list of eligible workers for overseas
employment.
2. Employers – Will be excluded from the
overseas employment program. Private
employment agencies shall face cancellation or
revocation of their licenses or authority to
recruit (E.O. 857).
PROHIBITED ACTIVITIES
Prohibited practices in recruitment/ placement
1. Furnishing or publishing any false
notice/information/document related to
recruitment/employment
2. Failure to file reports required by SLE
3. Inducing or attempting to induce a worker
already employed to quit his employment in
order to offer him another unless the transfer is
designed to liberate a worker from oppressive
terms and conditions
4. Recruitment/placement of workers in jobs
harmful to public health or morality or to the
dignity of the country
5. Engaging directly or indirectly in the
management of a travel agency
6. Substituting or altering employment contracts
without approval of DOLE
7. Charging or accepting any amount greater than
that specified by DOLE or make a worker pay
any amount greater than actually received by
him
8. Committing any act of misrepresentation to
secure a license or authority
9. Influencing or attempting to influence any
person/entity not to employ any worker who
has not applied of employment through his
agency
10. Obstructing or attempting to obstruct
inspection by SLE or by his representatives
11. Withholding or denying travel documents from
applicant workers before departure for
monetary considerations other than authorized
by law
 RECRUITMENT AND PLACEMENT
12. Granting a loan to an OFW which will be used
for payment of legal and allowable placement
fees
13. Refusing to condone or renegotiate a loan
incurred by an OFW after his employment
contract has been prematurely terminated
through no fault of his or her own
14. For a suspended recruitment/manning agency
to engage in any kind of recruitment activity
including the processing of pending workers'
applications; and
15. For a recruitment/manning agency or a foreign
principal/ Er to pass on the OFW or deduct from
his or her salary the payment of the cost of
insurance fees, premium or other insurance
related charges, as provided under the
compulsory worker's insurance coverage
16. Imposing a compulsory and exclusive
arrangement whereby an OFW is required to:
a. Avail a loan only from specifically
designated institutions, entities or persons
b. To undergo health examinations only from
specifically designated medical, entities or
persons, except seafarers whose medical
examination cost is shouldered by the
shipowner
c. To undergo training of any kind only from
designated institutions, entities or persons,
except for recommendatory trainings
mandated by principals/shipowners (Sec.
6, R.A. 10022).
PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION (POEA)
Principal functions of the POEA
1. Protection of the right of Filipino workers to
fair and equitable employment practices
2. Regulation of private sector participation in
the recruitment and overseas placement of
workers by setting up a licensing and
registration system
3. Deployment of Filipino workers through
Government to Government hiring
4. Formulation, implementation, and monitoring
of overseas employment of Filipino workers
taking into consideration their welfare and
domestic manpower requirements
5. Shall inform migrant workers not only of their
rights as workers but also of their rights as
human beings, instruct and guide the workers
how to assert their rights and provide the
available mechanism to redress violation of
their rights (Sec. 14, R.A. 10022).
6. Implementation, in partnership with other
law-enforcement agencies, of an intensified
program against illegal recruitment activities
(Sec. 14, R.A. 10022).
25
Power of the POEA’s to terminate or impose a
ban on employment of migrant workers
The POEA may at any time terminate or impose a
ban on employment of migrant workers, to do so, in
consultation with the DFA based on the ff. grounds:
1. In pursuit of the national interest; or
2. When public welfare so requires (Sec. 4, R.A.
10022)
Minimum conditions/ provisions of overseas
employment contracts
1. Guaranteed wages for regular hours and OT, not
lower than the minimum wage prescribed in all
of the following:
a. The host country
b. Bilateral agreements or international
conventions ratified by the host country
and the Philippines
c. The Philippines
2. Free transportation to and from the worksite or
offsetting benefit
3. Free food and accommodation or offsetting
benefit
4. Just/authorized causes of termination of the
contract or services of the worker
NOTE: An agreement that diminishes the Ees’ pay
and benefits as contained in a POEA-approved
contract is void, unless such subsequent agreement
is approved by the POEA.
Deployment of OFWs
The State shall allow the deployment of OFWs
1. Only in countries where the rights of Filipino
migrant workers are protected.
2. To vessels navigating the foreign seas or to
installations located offshore or on high seas
whose owners/Ers are compliant with
international laws and standards that protect
the rights of migrant workers.
3. To companies and contractors with
international operations: Provided, That they
are compliant with standards, conditions and
requirements, as embodied in the employment
contracts prescribed by the POEA and in
accordance with internationally-accepted
standards (Sec. 3, R.A. 10022 amending R.A.
8042).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Guarantees of the receiving country for the
protection of the rights of OFWs
1. It has existing labor and social laws protecting
the rights of workers, including migrant
workers;
2. It is a signatory to and/or a ratifier of
multilateral conventions, declarations or
resolutions relating to the protection of
workers, including migrant workers; and
3. It has concluded a bilateral agreement or
arrangement with the government on the
protection of the rights of OFWs (Sec. 3, R.A.
10022 amending R.A. 8042).
Provided, that the receiving country is taking
positive, concrete measures to protect the rights of
migrant workers in furtherance of any of the
guarantees.
NOTE: In the absence of a clear showing that any of
the guarantees exists in the country of destination
of the migrant workers, no permit for deployment
shall be issued by the POEA.
Repatriation of a worker
GR: The repatriation of the:
1. Worker and the transport of his personal
belongings – shall be the primary responsibility
of the agency which recruited or deployed the
worker overseas.
2. Remains and transport of the personal
belongings of a deceased worker and all costs
attendant thereto – shall be borne by the
principal and/or the local agency.
XPNs:
1. If the termination of employment is due solely
to the fault of the worker, the principal/ Er or
agency shall not be responsible for the
repatriation of the former and/or his
belongings.
2. In cases of war, epidemic, disaster or calamities,
natural or man-made, and other similar event,
and where the principal or recruitment agency
cannot be identified, the Overseas Workers
Welfare Administration, in coordination with
appropriate international agencies, shall take
charge of the repatriation (Sec. 15, R.A. 8042).
Mandatory repatriation of underage migrant
workers
Upon discovery or being informed of the presence
of migrant workers whose ages fall below the
minimum age requirement for overseas
deployment, the responsible officers in the foreign
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
26
service shall without delay repatriate said workers
and advise the DFA through the fastest means of
communication available of such discovery and
other relevant information. The license of a
recruitment/manning agency which recruited or
deployed an underage migrant worker shall be
automatically revoked and shall be imposed a fine
of not less than P500,000 but not more than
P1,000,000 (Sec. 9, R.A. 10022).
Regulatory and adjudicatory functions of the
POEA
1. Regulatory – It regulates the private sector
participation in the recruitment and overseas
placement of workers through its licensing and
registration system.
2. Adjudicatory
a. Administrative cases involving violations of
licensing rules and regulations and
registration of recruitment and
employment agencies or entities
b. Disciplinary action cases and other special
cases which are administrative in character
involving employers, principals,
contracting partners and Filipino migrants.
Grounds for disciplinary action of OFWs
Under R.A. 8042, these are:
1. Prostitution
2. Unjust refusal to depart for the worksite
3. Gunrunning or possession of deadly weapons
4. Vandalism or destroying company property
5. Violation of the laws and sacred practices of the
host country and unjustified breach of
employment contract
6. Embezzlement of funds of the company or
fellow worker entrusted for delivery to
relatives in the Phils.
7. Creating trouble at the worksite or in the vessel
8. Gambling
9. Initiating or joining a strike or work stoppage
where the laws of the host country prohibits
strikes or similar actions
10. Commission of felony punishable by Philippine
laws or by the host country
11. Theft or robbery
12. Drunkenness
13. Drug addiction or possession or trafficking of
prohibited drugs
14. Desertion or abandonment
 RECRUITMENT AND PLACEMENT
Jurisdiction of the LA vs. POEA 2. Torts – falls under the provisions of the Civil
Code.
JURISDICTION
Labor Arbiter POEA Q: Apolinario Siador was claiming death
Original and exclusive benefits from a local manning agent, Agile
Original and jurisdiction over: Maritime Resources (Agile) for allegedly, his
exclusive son, Dennis, fell from the vessel and died in the
jurisdiction over all 1. All cases which are high seas. Siador claims that Dennis was
claims arising out administrative in suffering with mental disability days prior to the
of Er-Ee character relating to incident. Agile claimed that Dennis willfully
relationship or by licensing and registration took his life by jumping overboard. A life ring
virtue of any law or of recruitment and was immediately thrown into the water by the
contract involving employment agencies vessel’s crew but Dennis floated on his back and
OFWs including made no efforts to swim towards the life ring.
claims for: 2. Disciplinary Action Under the Philippine Overseas Employment
cases and other special Administration Standard Employment Contract
1. Actual cases, which are (POEA-SEC), the employer is not liable for the
2. Moral administrative in compensation if the death is directly
3. Exemplary character, involving Ees, attributable to the seafarer. If Agile is able to
4. Other forms of principals, contracting prove by substantial evidence that Dennis
damages (Sec. 10, partners and Filipino willfully took his life by jumping overboard,
R.A. 8042). migrant workers (Rule does the burden of proof shift to Apolinario who
VII, Book VII, POEA Rules). must prove by substantial evidence that Dennis
was insane at the time of the incident?
Q: A seafarer was prevented from leaving the
port of Manila and refused deployment without A: Yes. Unarguably, Apolinario has discharged his
valid reason. His POEA-approved employment burden of proof. Since Apolinario has initially
contract provides that the employer-employee discharged his burden of proof, Agile, in order to
relationship shall commence only upon the avoid liability, must similarly establish their
seafarer’s actual departure from the port in the defense. If they are able to establish their defense by
point of hire. Is the seafarer entitled to relief substantial evidence, the burden now rests on
under the Migrant Workers’ Act, in the absence Apolinario to overcome the employer’s defense. In
of an employer-employee relationship? other words, the burden of evidence now shifts to
the seafarer’s heirs. Since the POEA-SEC requires
A: Yes. Despite the absence of an Er-Ee relationship, the employer to prove not only that the death is
the NLRC has jurisdiction over the seafarer’s directly attributable to the seafarer himself but also
complaint. The jurisdiction of LAs is not limited to that the seafarer willfully caused his death, evidence
claims arising from Er-Ee relationships. Sec. 10 of of insanity or mental sickness may be presented to
the Migrant Workers Act provides that the LAs shall negate the requirement of willfulness as a matter of
have jurisdiction over claims arising out of an Er-Ee counter-defense. In this case, Agile sufficiently
relationship or by virtue of any law or contract established that Dennis willfully caused his death
involving Filipino workers for overseas deployment while Siador's evidence fell short of substantial
including claims for actual, moral, exemplary and evidence to establish its counter-defense of insanity
other forms of damages. Since the present case (Agile v. Siador, G.R. No. 191034, October 1, 2014)
involves the employment contract entered into by
petitioner for overseas employment, his claims are
cognizable by the LAs of the NLRC (Santiago v. CF
Sharp Crew Management,G.R. No. 162419, July 10,
2007).

Matters that fall outside the jurisdiction of the

POEA

1. Foreign judgments – such claim must be

brought before regular courts. POEA is not a
court; it is an administrative agency,
exercising adjudicatory or quasi-judicial
functions.

UNIVERSITY OF SANTO TOMAS

27 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
LABOR STANDARDS
HOURS OF WORK
COVERAGE/ EXCLUSIONS
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:
1. Government employees
2. Managerial employees
3. Officers and members of the managerial staff
4. Field personnel
5. Members of the family of the employer who are
dependent on him for support
6. Domestic helpers
7. Persons in the personal service of another; ad
8. Workers paid by results (Secs. 1 and 2, Rule I,
Book III, Rules Implementing the Labor Code.)
The aforementioned employees are not entitled to
overtime pay, premium pay for rest days and
holidays, night shift differential pay, holiday pay,
service incentive leave and service charges. (Poquiz,
page 171)
Government employees
The terms and conditions of their employment are
governed by the Civil Service Law.
In case of government-owned or controlled
corporations with original charters, terms and
conditions of employment may be governed by such
legislated charters.
Government-owned or controlled corporations
without original charters are governed by the Labor
Code. (Poquiz, page 172)
Managerial employees
a. Their primary duty consists of the management
of the establishment in which they are
employed or of a department or sub-division
thereof.
b. They customarily and regularly direct the work
of two or more employees therein.
c. They have the authority to hire or fire
employees of lower rank; or their suggestions
and recommendations as to hiring and firing
and as to the promotion or any other change of
status of other employees, are given particular
weight. (Sec. 2[b], Rule I, Book III, Rules
Implementing the Labor Code.)
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
28
They are employed as such by virtue of their special
training or expertise, experience or knowledge and
for positions which require the exercise of
independent judgment and discretion. They are not
subject to the rigid observance of regular office
hours, as the true worth of their services do not
depend so much on the time they spend in office but
more on the results of their accomplishments. For
these type of workers, it is not feasible to provide
fixed hourly rate of pay or maximum hours of labor.
(NAWASA v, NWSA Consolidated Union, 11 SCRA 766)
Officers or members of managerial staff
a. Their primary duty consists of the performance
of work directly related to management policies
of their employer;
b. They customarily and regularly exercise
discretion and independent judgment; and
c. They regularly and directly assist a proprietor
or -- a managerial employee whose primary
duty consists of the management of the
establishment in which he is employed or
subdivision thereof; or execute under general
supervision work along specialized or technical
lines requiring special training, experience, or
knowledge; or execute, under general
supervision, special assignments and tasks; and
d. They do not devote more than 20 percent of
their hours worked in a work week to activities
which are not directly and closely related to the
performance of the work described above. (Sec.
2[c], Rule I, Book III, Rules Implementing the
Labor Code.)
Officers and members of a managerial staff (such as
project engineers) are considered managerial
employees for they customarily and regularly
exercise discretion and independent judgment, that
is, their powers are not subject to evaluation, review
and final action by the department heads and other
higher executives of the company (Franklin Baker
Co. of the Philippines vs. Trajano, 157 SCRA 416)
Domestic servants/ persons in the personal
service of another
These are those who perform such services in the
employer's home which are usually necessary or
desirable for the maintenance and enjoyment
thereof, or minister to the personal comfort,
convenience, or safety of the employer as well as the
members of his employer's household. (Sec. 2[d],
Rule I, Book III, Rules Implementing the Labor Code.)
 LABOR STANDARDS
A laundrywoman in staff houses of a company or
within the premises of the business of the employer,
not actually serving the family of the employer, is a
regular employee. She is not included in the
definition of domestic servants. (Apex Mining Co. Inc.
v NLRC, 196 SCRA 251)
Field personnel
Field personnel refers to non-agricultural
employees who regularly perform their duties away
from the principal place of business or branch office
of the employer and whose actual hours of work in
the field cannot be determined with reasonable
certainty. (Sec. 27, Rule II, Book III, Rules
Implementing the Labor Code.)
They are exempted from the coverage due to the
nature of their functions which requires
performance of service away from the principal
place of business. Hence, they are free from the
personal supervision of the employer and the latter
cannot determine with reasonable certainty the
actual number of hours of work expended for the
employer's interest. Example of these personnel are
outside sales personnel, agents on commission
basis, or insurance field agents. (San Miguel Brewery
vs Democratic Labor Union, 8 SCRA 613)
Members of the Family
They are exempted from the coverage, for the
support given by the employer may exceed the
benefit for which an employee is entitled under
appropriate labor provisions. Moreover, to cover
them under Art. 82, may create labor problems that
would eventually break-up the family, which is the
evil sought to be prevented. (Poquiz, page 175)
Workers paid by results
Workers who are paid by results include those who
are paid on piece-work, "takay," "pakiao," or task
basis.
Payment of this type of worker is determined by the
results of the work performed or the number of
units produced, not the number of hours used in the
completion of the job or the time spent in
production. (Poquiz, page 175)
Tailors and similar workers hired in the tailoring
establishment, although paid weekly wages on
piece-work basis, are employees and not
independent contractors, and accordingly, as
regular employees paid on piece-rate basis, they are
not entitled to overtime pay, holiday pay, premium
pay for holiday/rest day and service incentive leave
29
pay. (Villaga v. NLRC, G.R. No. 75038, 23 August
1993)
NORMAL HOURS OF WORK
GR: The normal hours of work of any Ee shall not
exceed 8 hours a day (LC, Art. 83).
XPNs:
1. Health personnel
2. Compressed workweek
Normal hours of work may be shortened or
compressed. Neither does it follow that a person
who does not observe normal hours of work cannot
be deemed an employee. In Cosmopolitan Funeral
Homes, Inc. v. Maalat, the employer similarly denied
the existence of an Er-Ee relationship, as the
claimant according to it, was a "supervisor on
commission basis" who did not observe normal
hours of work. This Court declared that there was
an Er-Ee relationship, noting that "the supervisor,
although compensated on a commission basis, [is]
exempt from the observance of normal hours of
work for his compensation is measured by the
number of sales he makes" (Lazaro v. SSS, 435 SCRA
472).
The eight-hour work requirement does not,
however, preclude the employer in the exercise of
its management prerogatives to reduce the number
of working hours, provided that there is no
diminution of existing benefits. (Poquiz, page 176)
Rationale behind the law on eight-hour labor
It is enacted not only to safeguard the health and
welfare of the Ee or laborer, but also in a way to
minimize unemployment by forcing Ers, in cases
where more than 8-hour operation is necessary, to
utilize different shifts of laborers or Ees working
only for 8 hours each. (Manila Terminal Co. Inc vs
The Court of Industrial Relations, 1952)
Compensable hours worked
It shall include:
a. all time during which an employee is required
to be on duty or to be at the employer's
premises or to be at a prescribed workplace,
b. all time during which an employee is suffered or
permitted to work (Art. 84, infra)
The law provides that rest periods of short duration
during working hours shall be counted as hours
worked, such as coffee or snack time.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
In its simple concept, working time is one during
which an employee is actually working. Broadly, it
may include an instance when an employee is not
actually working but he is required to be present in
the employer's premises. Thus, the fact that he is
required to be present although not actually doing
any work, is still deemed working time. (Poquiz,
page 179)
Principles in determining hours worked
1. All hours which the Ee is required to give to his
Er regardless of whether or not such hours are
spent in productive labor or involve physical or
mental exertion.
2. Rest period is excluded from hours worked,
even if Ee does not leave his workplace, it being
enough that:
a. He stops working
b. May rest completely
c. May leave his workplace, to go elsewhere,
whether within or outside the premises of
the workplace
3. All time spent for work is considered hours
worked if:
a. The work performed was necessary
b. If it benefited the Er
c. Or the Ee could not abandon his work at the
end of his normal working hours because
he had no replacement
d. Provided, the work was with the
knowledge of his Er or immediate
supervisor
4. The time during which an Ee is inactive by
reason of interruptions in his work beyond his
control shall be considered working time:
a. If the imminence of the resumption of the
work requires the Ees presence at the place
of work; or
b. If the interval is too brief to be utilized
effectively and gainfully in the Ees own
interest (IRR, Book III, Rule I, Sec. 4).
Instances when hours of worked are
compensable
1. Ee is required to be on duty
2. Ee is suffered or permitted to work
3. Rest periods of short duration during working
hours
4. Travel time, when beneficial to the Er (Rada v.
NLRC, 205 SCRA 69):
Instances of working time
The following shall be considered as working time:
(Poquiz, page 180)
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
30
a. Time spent by the employee for the benefit of
the employer whether such service is necessary
or not such as serving coffee to visitors.
b. Time spent by the office messenger in playing
chess when not yet summoned by his superior
(compensable idle time).
c. Travel time which is in connection with the
work of the employee; if not, it is not considered
as working time.
d. Time spent during which an employee is
inactive by reason of interruptions beyond his
control is working time, such as twenty-minute
electric power failure or machine breakdowns.
The pay for this non-productive time is known
as idle-time pay. Where the work is broken or is
not continuous, the idle time that an employee
may spend for rest is not counted as working
time (NDC vs CIR, 6 SCRA 763)
e. Waiting time spent by an employee shall be
considered as working time if waiting is an
integral part of this work or the employee is
required or engaged by the employer to wait. In
effect, he is under the absolute control of the
employer such that the employee is effectively
deprived of the time to attend other personal
pursuits. (Arica v. NLRC, 170 SCRA 776)
An employee who is required to remain on call
in the employer's 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 work at
his home or with company officials where he
may be reached is not working while on call.
(Sec. 5, Rule I, Book III, Rules Implementing the
Labor Code.)
Where the nature of the job of the employee
requires him to wait, the waiting time during
the eight-hour period is compensable working
time. An example is a driver who delivers
company products to different outlets; time
spent in waiting for the loading of the goods to
his delivery van is compensable working time.
However, a thirty-minute assembly time long
practiced and institutionalized by mutual
consent of the parties under the collective
bargaining agreement cannot be considered
waiting time of the employees if they are not
subject to the absolute control of the company
during this period. Otherwise, their failure to
report in the assembly time would justify the
company to impose disciplinary measures.
(Arica v. NLRC, 170 SCRA 776)
f. Sleeping time is compensable working time if
the nature of the employee's work allows
 LABOR STANDARDS
sleeping without interrupting or prejudicing
the performance of his work.
g. Time spent by the Union's officers in the
collective bargaining table is not compensable
working time, unless it is as provided in the
CBA.
h. Attendance at lectures, meetings, training
programs, and other similar activities shall not
be counted as working time if all of the
following conditions are met:
1. Attendance is outside of the employee's
regular working hours;
2. Attendance is in fact voluntary;
3. The employee does not perform any
productive work during such attendance.
(Sec. 6, Rule I, Book III, Rules Implementing
the Labor Code.)
i. Preliminary (before work) and postliminary
(after actual work) activities deemed
performed during working hours, where such
activities are controlled or required by the
employer and are pursued necessarily and
primarily for the employer's benefit (31 Am. Jur.
882-883). Employees are the entitled to portal
pay for time spent on incidental activities
before or after the regular working period.
(CCHI, Labor Law Course, 318)
j. Rest periods running from five to twenty
minutes is considered as compensable hours
worked (Sec. 7, Rule I, Book III, Rules
Implementing the Labor Code.)
k. Semestral break of teachers is considered as
compensable hours worked for it is a form of an
interruption beyond their control (University of
Pangasinan Faculty Union v. University of
Pangasinan, 127 SCRA 691)
In the Philippines, the Department of Labor Manual
states the principles which apply in determining
whether or not time spent in travel is working time
depend upon the kind of travel involved. (Azucena,
page 207)
a. Travel from home to work
GR: Normal travel from home to work is not
working time.
XPNs:
i. Emergency call outside his regular
working hours where he is required to
travel to his regular place of business or
some other work site.
ii. Done through a conveyance provided by
the Er.
iii. Done under the supervision and control of
the Er.
iv. Done under vexing and dangerous
circumstance.
31
b. Travel that is all in a day’s work – time spent
in travel as part of the Ees principal activity
E.g. travel from job site to job site during the
work day, must be counted as working hours.
c. Travel away from home
GR:
a. Travel that requires an overnight stay on
the part of the Ee when it cuts across the
Ees workday is clearly working time.
b. The time is not only hours worked on
regular workdays but also during
corresponding working hours on non-
working days. Outside of these regular
working hours, travel away from home is
not considered working time.
XPN: During meal period or when Ee is
permitted to sleep in adequate facilities
furnished by the Er.
Hours of work of health personnel
GR: 8 hours for 5 days (40-hour workweek),
exclusive of time for meals.
XPN: Where the exigencies of the service require
that such personnel work for 6 days or 48 hours,
they shall be entitled to an additional compensation
of at least 30% of their regular wage for work on the
6th day (LC, Art. 83).
Health personnel covered by the 40-hour
workweek
1. Those in cities and municipalities with a
population of at least 1 million; or
2. Those in hospitals and clinics with a bed
capacity of at least 100.
NOTE: Art. 83(2) of the LC does not require
hospitals to pay the Ees a full weekly salary with
paid 2 days off (San Juan de Dios Ees Assoc.-AFW et
al. v. NLRC, G.R. No. 126383, November 28, 1997).
Resident physicians to be on duty beyond the
40-hour workweek limitation
GR: The customary practice of requiring resident
physicians beyond the 40 hours of work per week is
not permissible and violates the limitation under
Art. 83.
XPN: If there is a training agreement between the
resident physician and the hospital and the training
program is duly accredited or approved by
appropriate government agency.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
COMPRESSED WORKWEEK
Compressed workweek
The normal workweek is reduced to less than 6 days
but the total number of work-hours of 48 hours per
week shall remain. The normal workday is
increased to more than 8 hours but not to exceed 12
hours, without corresponding overtime premium.
The concept can be adjusted accordingly depending
on the normal workweek of the company
(Department Advisory Order No. 2, Series of 2009).
This scheme was originally conceived for
establishments wishing to save on energy costs,
promote greater work efficiency and lower the rate
of employee absenteeism, among others. Workers
favor the scheme considering that it would mean
savings on the increasing cost of transportation
fares for at least one day a week; savings on meal
and snack expenses; longer weekends or an
additional 52 off-days a year that can be devoted to
rest leisure, family responsibilities, studies and
other personal matters, and that it will spare them
for at least another day in a week from certain
inconveniences that are the normal incidents of
employment, such as commuting to and from the
workplace, travel time spent, exposure to dust and
motor vehicl fumes, dressing up for work, etc. (Bisig
Manggagawa sa Tryco v. NLRC, G.R. No. 151309,
October 15, 2008).
Requisites for the adoption of compressed
workweek
1. The Er shall notify the DOLE through the
Regional Office which has jurisdiction over the
workplace, of the adoption of compressed
workweek.
2. The notice shall be in Report Form attached to
the advisory.
The Regional Office shall conduct an ocular visit
to validate whether the adoption of the flexible
work arrangements is in accordance with this
issuance (Department Advisory Order No. 2,
Series of 2009).
Instance when the implementation of a taken inside or outside company premises. For a full
compressed workweek is considered valid
The validity of the reduction of working hours can
be upheld when the arrangement is:
1. Temporary
2. It is a more humane solution instead of a
retrenchment of personnel
3. There is notice and consultations with the
workers and supervisors
4. A consensus is reached on how to deal with
deteriorating economic conditions; and
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
32
5. It is sufficiently proven that the company was
suffering from losses.
NOTE: Under the Bureau of Working Conditions’
bulletin, a reduction of the number of regular
working days (RWD) is valid where the
arrangement is resorted to by the Er to prevent
serious losses due to causes beyond his control,
such as when there is a substantial slump in the
demand for his goods or services or when there is a
lack of raw materials. There is one main
consideration in determining the validity of
reduction of working hours – that the company was
suffering from losses. A year of financial losses
would not justify a reduced workweek (Linton
Commercial v. Hellera, G.R. No. 163147, October 10,
2007).
Conditions where a "compressed workweek"
schedule may be legally authorized as an
exception to the "8-hour a day" requirement
under the LC (2005 Bar Question)
1. The Ee voluntarily agrees to it
2. There is no diminution in their weekly or
monthly take home pay or fringe benefits
3. The benefits are more than or at least
commensurate or equal to what is due to the
Ees without the compressed work week
4. OT pay will be due and demandable when they
are required to work on those days which
should have ceased to be working days because
of the compressed work week schedule.
5. No strenuous physical exertion or that they are
given adequate rest periods.
6. It must be for a temporary duration as
determined by the DOLE.
MEAL BREAK
Duration of the meal period
Every Er shall give his Ees not less than 60 minutes
or 1 hour time-off for regular meals.
As a general rule, employees are entitled to at least
one hour time-off for regular meals which can be
one-hour undisturbed lunch break, the employees
can freely and effectively use this hour not only for
eating but also for their rest and comfort which are
conducive to more efficiency and better
performance in their work. Since the employees are
no longer required to work during this one-hour
lunch break, there is no more need for them to be
compensated for this period. (Sime Darby Pilipinas,
Inc. v. NLRC, G.R. No. 119205)
 LABOR STANDARDS
Non- compensability of the meal period
It is not compensable during a time-off. Ee must be
completely relieved from duty.
Instance when the meal period is considered
compensable
It is compensable where the lunch period or meal
time:
1. Is predominantly spent for the Er’s benefit; or
2. Where it is less than 20 min. It will be
considered only as a coffee break.
NOTE: Where during a meal period, the laborers are
required to stand by for emergency work, or where
the meal hour is not one of complete rest, such is
considered OT (Pan Am v. Pan Am Ees Association,
G.R. No. L-16275, (1961).Rest periods or coffee
breaks running from 5 to 20 mins shall be
considered as compensable working time (IRR,
Book III, Rule, Sec. 7).
Compensability of meal periods provided
during overtime work
Meal periods provided during overtime work are
compensable, since the 1 hour meal period (non-
compensable) is not given during OT work because
the latter is usually for a short period and to deduct
from the same would reduce to nothing the Ees’ OT
work. Thus, the 1 hour break for meals during OT
should be treated as compensable.
Instances where meal periods are shortened
and if it is compensable or not compensable
1. Compensable – At the instance of Er, when:
a. Work is non-manual in nature or does not
involve strenuous physical exertion;
b. Establishment regularly operates less than
16 hours a day;
c. Work is necessary to prevent serious loss of
perishable goods.
d. Actual or impending emergency or there is
urgent work to be performed on
machineries and equipment to avoid
serious loss which the Er would otherwise
suffer (Sec. 7, Rule I, Book III, IRR).
e. Establishment regularly operates less than
16 hours a day;
f. Work is necessary to prevent serious loss of
perishable goods.
g. Actual or impending emergency or there is
urgent work to be performed on
machineries and equipment to avoid
serious loss which the Er would otherwise
suffer (Sec. 7, Rule I, Book III, IRR).
33
2. Not Compensable – Ee requested for the
shorter meal time so that he can leave work
earlier than the previously established
schedule. Requisites:
a. Ees voluntarily agree in writing and are
willing to waive OT pay for the shortened
meal period;
b. No diminution in the salary and other
fringe benefits of the Ees which are existing
before the effectivity of the shortened meal
period;
c. Work of the Ees does not involve strenuous
physical exertion and they are provided
with adequate coffee breaks in the morning
and afternoon;
d. Value of the benefits derived by the Ees
from the proposed work arrangements is
equal to or commensurate with the
compensation due them for the shortened
meal period as well as the OT pay for 30
min. as determined by the Ees concerned;
e. OT pay will become due and demandable
after the new time schedule
f. Arrangement is of temporary duration.
NOTE: The implementing rules allow the meal time
to be less than 60 minutes, under specified cases
and in no case shorter than 20 minutes (IRR, Book
III, Rule 1, Sec. 7).
If the so called “meal time” is less than 20 minutes,
it becomes only a rest period and under the same
section 7, is considered working time. (Azucena,
page 213)
WAITING TIME
Waiting time considered as working time
1. It is considered working time if waiting is an
integral part of his work, or
2. The Ee is required or engaged by the Er to wait
(engaged to wait). (Azucena, page 84)
The controlling factor is whether waiting time spent
in idleness is so spent predominantly for the Er’s
benefit or for the Ee’s.
Waiting time not considered as working time
It is not considered working time when the Ee is
waiting to be engaged; idle time is not working time.
Hence, it is not compensable (waiting to be
engaged).
NOTE: Under the law, the idle time that an Ee may
spend for resting and during which he may leave the
spot or place of work though not the premises of his
Er, is not counted as working time only where the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
work is broken or is not continuous (National
Development Co. v. CIR, 6 SCRA 763).
Idle time considered as working time
It is when the Ee is idle or inactive by reason of
interruptions beyond his control.
OVERTIME WORK, OVERTIME PAY
Work day
Work day is the 24-hour period which commences
from the time the Ee regularly starts to work
Illustration:
If the worker starts to work 8 am today, the
workday is from 8 am today up to 8 am
tomorrow. (Azucena, page 221)
Minimum normal working hours fixed by law need
not be continuous to constitute the legal working
day.
The reason behind the law requiring additional
compensation for work beyond the normal working
day is to encourage employers to dispense with
such work thus providing employees an
opportunity to satisfy their mental, moral and
spiritual needs. They may have more hours to
devote to reading, amusement, and other
recreational activities necessary for their well-
being. Moreover, they could share longer hours in
the company of their family, attending to spiritual or
religious needs. Law on overtime will surely ease
unemployment problem, for employers will be
constrained to employ additional employees to
work in other shifts necessary for the operation of
the business. (Shell Co. v NLU, 81 Phil 315; PNB v
PNBEA, 115 SCRA 527)
Condition for entitlement to overtime pay
Entitlement to overtime pay must first be filed by
sufficient proof that said overtime work was
actually performed, before an employee may avail of
said benefit (Cagampan v NLRC, 195 SCRA 633)

Overtime work Is an employee entitled to overtime pay for work

rendered in excess of eight hours, despite the fact
Service rendered in excess of and in addition to that his employment contract specifies a 12-hour
eight hours on ordinary working days, which are the workday at a fixed monthly salary rate that is above
prescribed daily work period, is overtime work. the legal minimum rate? The answer should be in
(Caltex Regular Employees at Mla. Office v Caltex the affirmative. The contract in question could have
Phils., Inc., 247 SCRA 398) been deemed in violation of pertinent labor laws.
And the provisions of the latter prevail over the
NOTE: Express instruction from the Er to the Ee to terms of the contract. (Pesala v. NLRC, G.R. No.
render OT work is not required for the Ee to be 105963, 22 August 1996)
entitled to OT pay; it is sufficient that the Ee is
permitted or suffered to work. (Azucena, page 222) Overtime pay vs. Premium pay
However, written authority after office hours
during rest days and holidays are required for OVERTIME
PREMIUM PAY
entitlement to compensation. PAY
Additional
Additional compensation for
Overtime pay compensation
work performed within 8
for work
Any employee who is permitted or required to work hours on days when normally
performed
beyond eight hours on ordinary working days shall he should not be working (on
beyond 8
be paid an additional compensation for the non-working days, such as
hours on
overtime work in an amount equivalent to his rest days and special days.)
ordinary days
regular wage plus at least 25% thereof. It is the But additional compensation
(within the
amount obtained by multiplying the overtime for work rendered in excess
worker’s 24-
hourly rate by the number of hours worked in of 8 hours during these days
hour
excess of eight hours. (Poquiz, page 186) is also considered OT pay.
workday)

Rationale behind the overtime pay Overtime pay rates

Ee is made to work longer than what is OVERTIME PAY RATES

commensurate with his agreed compensation for During a
the statutory fixed or voluntarily agreed hours of regular Additional compensation of 25%
labor he is supposed to do (PNB v. PEMA and CIR, working of the regular wage
G.R. No. L-30279, July 30, 1982). day

UNIVERSITY OF SANTO TOMAS

2016 GOLDEN NOTES
34
 LABOR STANDARDS
Rate of the first 8 hours worked
on
plus at least 30% of the regular
wage (RW):
During a
holiday or If done on a special holiday OR
rest day rest day:
30% of 130% of RW
If done on a special holiday AND
rest day:
30% of 150% of RW
If done on a regular holiday:
30% of 200% of RW
Basis of computing the overtime pay and
additional remuneration
Regular wage which includes the cash wage only,
without deduction on account of the facilities
provided by the Er (LC, Art. 90).
Q: In lieu of overtime pay, the employee was
given permission to go on leave on some other
day, is that valid?
A: No. Permission given to the Ee to go on leave on
some other day of the week shall not exempt the Er
from paying the additional compensation required
because it would prejudice the Ee, for he will be
deprived of the additional pay for the OT work he
has rendered and which is utilized to offset the
undertime he may have incurred. Undertime could
be charged against the Ees accrued leave.
Q: Socorro 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 11 hours a day
but has not been given OT pay since her place of
work is a charitable institution. Is Socorro
entitled to overtime pay? Explain briefly. (2002
Bar Question)
A: Yes. Socorro is entitled to OT pay. She does not
fall under any of the exceptions to the coverage of
Art. 82, under the provisions of hours of work. The
LC is equally applicable to non-profit institutions. A
covered Ee who works beyond 8 hours is entitled to
OT compensation.
Q: Danilo Flores applied for the position of
driver in the motor-pool of Gold Company, a
multinational corporation. Danilo was informed
that he would frequently be working overtime
as he would have to drive for the company's
executives even beyond the ordinary 8-hour
work day. He was provided with a contract of
35
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 company's executives using the
cars do not need Danilo's 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?
A: Except for the provision that Danilo shall have
time off with pay when the company's executives
using the cars do not need Danilo's service for more
than 8 hours a day, in lieu of OT, the provisions of
the contract of employment of Danilo are not
violative of any labor law because they instead
improve upon the present provisions of pertinent
labor laws.
Instances where an Ee may or may not be
compelled to render OT work
GR: An Ee may not be compelled to render OT work;
OT work is voluntary.
XPNs: Compulsory OT work in any of the following
situations:
1. Urgent work to be performed on machines and
installations in order to avoid serious loss or
damage to the Er or some other cause of similar
nature
2. Work is necessary to prevent loss or damage to
perishable goods
3. In case of imminent danger to the public safety
due to an actual or impending emergency in the
locality caused by serious accidents, fire, flood,
typhoon, earthquake, epidemic or other
disaster or calamity
4. Country is at war
5. Completion or continuation of the work started
before the 8th hour is necessary to prevent
serious obstruction or prejudice to the business
operations of the Er
6. Any other national or local emergency has been
declared
7. Necessary to prevent loss of life or property.
(LC, Art. 89)
NOTE: There should be payment of additional
compensation. Ees’ refusal to obey the order of the
Er constitutes insubordination for which he may be
subjected to disciplinary action.
Q: The employment contract requires work for
more than 8 hours a day with a fixed wage
inclusive of OT pay. Is that valid?
A: It depends.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
1. When the contract of employment requires
work for more than 8 hours at specific wages
per day, without providing for a fixed hourly
rate or that the daily wages include OT pay, said
wages cannot be considered as including OT
compensation (Manila Terminal Co. v. CIR, et al.,
91 Phil., 625).
2. However, the employment contract may
provide for a “built-in” OT pay. Because of this,
non-payment of OT pay by the employer is valid
(Engineering Equipment v. Minister of Labor,
G.R. No. L-64967, September 23, 1985).
Undertime cannot offset overtime (Art. 88, LC)
Where a worker incurs undertime hours during his
regular daily work, said undertime hours should not
be offset against the overtime hours on the same
day or on any other day (Azucena, page 233)
The rationale behind the law is reflected in the
doctrine laid down by the Supreme Court that
"offsetting the overtime with undertime and at the
same time charging said undertime to the accrued
leave is unfair and cannot be done" (NAWASA v
NWSA Consolidated Union, 11 SCRA 766, 778)
To allow undertime work on a particular day to be
offset by overtime work will work to the great
advantage of the employer, for it will exempt him
from paying additional pay for overtime work. It has
been held the proper method should be to deduct
undertime or absences against the employee's
accrued leave but pay him the overtime to which he
is rightfully entitled. Lastly, the rule will prevent the
anomalous situation whereby an employee could
schedule his working hours at will thereby
destroying the regular working schedules.
(Detective and Protective Bureau, Inc. v. United
Employees Welfare Association, G.R. No. L-4337, 29
December 1951)
Right to OT pay cannot be waived
GR: 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 labourer shall work beyond eight hours without
additional compensation for the extra hours is
contrary to law and null and void. (Azucena, page
225)
The right cannot be waived, because while the
workers did not claim overtime pay until the
commencement of the litigation, still the law gives
them the right to claim overtime compensation and
they could not be held to have impliedly waived
such extra compensation for the obvious reason
that they could not have expressly waived it.
(Manila Terminal Co., Inc. v CIR, 48 Off. Gazette 7, p.
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
36
2725; Mercader v Manila Polo Club, G.R. No. L-8373,
28 September 1956).
XPNs:
1. When the alleged waiver of overtime pay is in
consideration of benefits and privileges which
may be more than what will accrue to them in
overtime pay, the waiver may be permitted.
(Azucena, page 228)
2. Compressed workweek
Night differential and overtime pay
When the tour of duty of an employee falls at night
time, the receipt of overtime pay will not preclude
the right to night differential pay. The latter is
payment for work done during the night and the
other is payment for the excess of the regular eight-
hour work. (NARIC v NARIC Workers Union, 105 Phil.
891)
Overload work and overtime work
distinguished
Where a teacher is engaged to undertake actual
additional teaching work after completing his
regular teaching load, such additional work is
referred to as overload.
When the overload is performed within eight hours
normal working day, such overload pay is
considered part of the basic pay for the purpose of
computing 13th month pay. "Overload work" is
sometimes misunderstood as synonymous to
"overtime work." The two terms are not the same.
Overtime work is work rendered in excess of the
normal working hours of eight in a day. On the other
hand, since overload work may be performed either
within or outside eight hours in a day, overload
work may or may not be overtime work. (DOLE's
Explanatory Bulletin on Inclusion of Teacher's
Overload in Computing 13th Month Pay)
OT rate may be subject to stipulation of the Er
and Ee
GR: The premium for work performed on the Ee’s
rest days or on special days or regular holidays are
included as part of the regular rate of the Ee in the
computation of OT pay for any OT work rendered on
said days especially if the Er pays only the minimum
OT rates prescribed by law.
XPN: Ees and Er may stipulate in their collective
agreement the payment of OT rates higher than
those provided by law and exclude the premium
rates in the computation of OT pay. Such agreement
may be considered valid only if the stipulated OT
 LABOR STANDARDS
pay rates will yield to the Ees not less than the
minimum prescribed by law.
OT pay in a compressed workweek scheme
Any work performed beyond 12 hours a day or 48
hours a week shall be subject to OT premium
(Department Advisory No. 02, s. of 2004).
Q: LKG Garments Inc. makes baby clothes for
export. As part of its measures to meet its
orders, LKG requires its employees to work
beyond eight (8) hours everyday, from Monday
to Saturday. It pays its employees an additional
35% of their regular hourly wage for work
rendered in excess of eight (8) hours per day.
Because of additional orders, LKG now requires
two (2) shifts of workers with both shifts
working beyond eight (8) hours but only up to a
maximum of four (4) hours. Carding is an
employee who used to render up to six (6) hours
of overtime work before the change in schedule.
He complains that the change adversely affected
him because now he can only earn up to a
maximum of four (4) hours worth of overtime
pay. Does Carding have a cause of action against
the company? (2015 Bar Question)
A: NO. A change in work schedule is a management
prerogative of LKG. Thus, Carding has no cause of
action against LKG if, as a result of its change to two
(2) shifts, he now can only expect a maximum of
four (4) hours overtime work. Besides, Art. 97 of the
Labor Code does not guarantee Carding a certain
number of hours of overtime work. In Manila Jockey
Employees’ Union v. Manila Jockey Club (517 SCRA
707), the Supreme Court held that the basis of
overtime claim is an employee’s having been
“permitted to work”. Otherwise, as in this case, such
is not demandable.
NIGHT WORK (R.A. 10151)
Night work
Any and all work rendered between 6 pm and 6 am
(National Rice & Corn Corp. v. NARIC, 105 Phil 891).
Night worker
Any employed person whose work requires
performance of a substantial number of hours of
night work which exceeds a specified limit. This
limit shall be fixed by the SLE after consulting the
workers’ representatives/labor organizations and
Ers (LC, Chapter V, Art. 154 as amended by R.A.
10151).
37
Persons covered by the provisions on night
work under R.A. 10151
GR: All persons who shall be employed or permitted
or suffered to work at night.
XPN: Those employed in agriculture, stock raising,
fishing, maritime transport and inland navigation,
during a period of not less than 7 consecutive hours,
including the interval from midnight to 5 in the
morning, to be determined by the SLE after
consulting the workers’ representatives/labor
organizations and Ers.
Right of the workers to undergo health
assessment to avoid health problems associated
with night work
At their request, workers shall have the right to
undergo health assessment without charge and to
receive advice on how to reduce or avoid health
problems associated with their work:
1. Before taking up an assignment as a night
worker;
2. At regular intervals during such an assignment;
and
3. If they experience health problems during such
an assignment which are not caused by factors
other than the performance of night work.
Night workers who are certified as unfit for night
work, due to health reasons, shall be transferred,
whenever practicable, to a similar job for which
they are fit to work. If such transfer to a similar job
is not practicable, these workers shall be granted
the same benefits as other workers who are unable
to work, or to secure employment during such
period.
Employability of women for night work
R.A. 10151 repealed Arts. 130 and 131 of the LC on
Night Work prohibition with regard to women
workers. However, measures shall be taken to
ensure that an alternative to night work is available
to women workers who would otherwise be called
upon to perform such work:
1. Before and after childbirth, for a period of at
least 16 weeks, which shall be divided between
the time before and after childbirth;
2. For additional periods, in respect of which a
medical certificate is produced stating that said
additional periods are necessary for the health
of the mother or child:
a. During pregnancy;
b. During a specified time beyond the period,
after childbirth is fixed pursuant to number
1, the length of which shall be determined
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
by the DOLE after consulting the labor
organizations and Ers.
During the periods referred in Art. 158 in RA 10151:
a. A woman worker shall not be dismissed or
given notice of dismissal, except for just or
authorized causes provided for in the Code that
are not connected with pregnancy, childbirth
and childcare responsibilities.
b. A woman worker shall not lose the benefits
regarding her status, seniority, and access to
promotion which may attach to her regular
night work position.
Pregnant women and nursing mothers may be
allowed to work at night
They are allowed if a competent physician, other
than the company physician, shall certify their
fitness to render night work, and specify, in the case
of pregnant Ees, the period of the pregnancy that
they can safely work.
Facilities required from Ers under R.A. 10151
1. Suitable first-aid facilities, including
arrangements where such workers, where
necessary, can be taken immediately to a place
for appropriate treatment.
2. Safe and healthful working conditions and
adequate or reasonable facilities, i.e. sleeping or
resting quarters in the establishment, and
transportation from the work premises to the
nearest point of their residence subject to
exceptions and guidelines to be provided by the
DOLE.
NIGHT WORK (R.A. 10151) NIGHT SHIFT
DIFFERENTIAL
Night Shift Differential (NSD)
An employee shall be paid night shift differential of
no less than ten percent (10%) of his regular wage
for each hour of work performed between ten
o'clock in the evening and six o'clock in the morning
(Sec. 2, Rule II, Book III, Rules Implementing the
Labor Code).
Where the night-time work of an employee overlaps
with overtime work, the receipt of overtime pay
does not preclude the receipt of night differential
pay. The latter is night pay; the former is payment
beyond eight-hour work. (Poquiz, page 185)
Purpose of granting night differential pay
The philosophy behind the provision is to give
premium to night work when an employee is
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
38
supposed to be sleeping. Working at night is
violative of the law of nature for it is the period for
rest and sleep. An employee who works at night has
less stamina and vigor; thus, he can easily contract a
disease.
Work done at night places has a greater burden on
the worker. It is more strenuous and onerous than
work done during the day; therefore it deserves
greater or extra compensation. (Shell Co. vs. NLU, 81
Phil. 315)
Non-waivability of NSD
GR: Waiver of NSD is against public policy (Mercury
Drug Co., Inc. v. Dayao, et al., G.R. No. L-30452,
September 30, 1982).
XPN: Waiver is allowed if this will result to higher
or better benefits to Ees.
PART-TIME WORK
Non-prohibition of part-time work
Considering the purpose of the law, it is not
prohibited to have “normal hours of work” of less
than eight hours a day. What the law regulates is
work hours exceeding eight. It prescribes a
maximum but not a minimum. Article 83 does not
say that the normal hours of work is or should be
eight hours but it shall not exceed eight. Therefore,
part-time work, or a day’s work of less than eight
hours but that shall not exceed eight. (Azucena, page
200)
NOTE: Under Art. 124, as amended by R.A. 6727,
wage proportionate to part-time work is recognized
The wage and benefits of a part-time worker are in
proportion to the number of hours worked. For
example, if an Ee earns P300.00 for an 8-hour work,
he shall then get P150.00 for work done in 4 hours.
CONTRACT FOR A PIECE OF WORK
Contract for a piece of work
It is a contract whereby the contractor binds himself
to execute a piece of work for the Er, in price or
consideration of a certain compensation. The
contractor may employ his labor, skill or also
furnish the material.
NOTE: All workers paid on piece-work shall be
entitled to receive not less than the prescribed daily
minimum wage or a proportion thereof for working
less than 8 hours.
 LABOR STANDARDS
Contract for piece of work vs. Lease of services a view of obtaining compensation
commensurate to the risk assumed.
CONTRACT FOR
LEASE OF SERVICES
PIECE OF WORK Q: A asked B to make a radio cabinet. B bound
The object is the himself to furnish the material. Before the radio
work done or the cabinet could be delivered, it was destroyed by
The object is services. a fortuitous event.
result of the said
work.
The risk is generally a. Who suffers the loss?
The risk is borne by borne by the Er, not by b. Is the contract extinguished?
the worker before the worker unless the
delivery. latter is guilty of fault A:
or negligence. a. B suffers the loss of both the materials and the
work, unless there was mora accipiendi. If there
Contractor was mora accipiendi, it is evident that A suffers
the loss.
The worker is also called a contractor. He in turn b. No. Therefore B may be required to do the work
may obtain the services of others, who will work all over again, unless there had been a prior
under him. stipulation to the contrary or unless a re-
making is possible (NCC, Art. 1717).
Test to determine if one is an Ee or an
independent contractor NOTE: The law merely refers to the burden of the
loss, and not to the extinguishment of the contract.
The “right of control” test is used. If the person for
whom services are to be performed controls only Effects when the Er accepts the work
the end to be achieved, the worker is a contractor; if
the former controls not only the end but also the 1. The contractor is generally relieved of liability.
manner and means to be used, the latter is an Ee. 2. If the acceptance is made without objection, the
Er may still sue for hidden defects.
Things that the contractor can furnish
Place of payment
1. Both material and labor, or
2. Only labor 1. Where stipulated
2. If no stipulation, then at the time and place of
Duties of a contractor who furnishes both work delivery.
and the material
Mechanic’s lien
This is equivalent to sale; therefore, these are the
duties: One who executed a work on a movable property
1. To deliver has a right to retain it by way of pledge until he is
2. To transfer ownership paid.
3. To warrant against eviction and hidden defects
WAGES
Remedies of the ER in case of defects
It is the remuneration or earnings, however
1. Ask the contractor to remove the defect or to designated, capable of being expressed in terms of
execute another work. money, whether fixed or ascertained on a time, task,
2. If the contractor fails or refuses, the Er can ask piece, or commission basis, or other method of
another at the contractor’s expense. If a calculating the same, payable by an Er to an Ee
building is involved, expenses for correction under a written or unwritten contract of
and completion may be recovered. employment:

Rule on agreements waiving or limiting the 1. For work done or to be done, or for services
contractor’s liability rendered or to be rendered; and includes
2. Fair and reasonable value of board, lodging,
1. In the absence of fraud, the agreement would or other facilities customarily furnished by
ordinarily be valid. the Er to the Ee as determined by SLE.
2. In the absence of prohibitory statute, the
validity of a limitation is generally upheld, with
UNIVERSITY OF SANTO TOMAS
39 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
NOTE: Fair and reasonable value means it shall not NOTE: Retail and service establishments must file
include any profit to the Er or to any person an application for exemption with the duly
affiliated with the Er. (Art. 97, LC) appropriate Regional Board.

In a broader sense, the term "wages" has twin
attributes: the cash wage and facilities. The cash
wage takes the form of ready money paid by the
employer for services rendered by the employee. On
the other hand, facilities are articles or services
customarily given for the benefit of the employee
and are voluntarily accepted by him.
The term "wages" also covers all benefits of the
employee under the CBA such as severance pay,
educational allowance, accrued vacation leave
earned but not enjoyed, as well as workmen's
compensation awards and unpaid salaries for
services rendered (PNB v Cruz, 180 SCRA 206)
“No Work, No Pay” Principle (Fair day’s wage
for a fair day’s labor)
Note: Barangay Micro Business Enterprise refers to
any business entity or enterprise engaged in the
production, processing or manufacturing of
products or commodities, including agro-
processing, trading and services, whose total assets
including those arising from loans but exclusive of
the land on which the particular business entity's
office, plant and equipment are situated, shall not be
more than Three Million Pesos. (RA 9178)
“Equal pay for equal work” Principle
Persons who work with substantially equal
qualifications, skill, effort and responsibility, under
similar conditions, should be paid similar salaries
(International School Alliance of Educators v.
Quisumbing, G.R. No. 128845, June 01, 2000).

GR: If there is no work performed by the Ee, without WAGE vs. SALARY
the fault of the Er, there can be no wage or pay.
WAGE SALARY
XPNs: The laborer was able, willing and ready to (Gaa v.CA, G.R. No. 44169, Dec. 3, 1985)
work but was: Compensation for
1. Prevented by management; manual labor (skilled Paid to “white collared
2. Illegally locked out; or unskilled) also workers” and denotes
3. Illegally suspended; known as “blue a higher degree of
4. Illegally dismissed collared workers,” employment or a
5. Illegally prevented from working (Aklan paid at stated times superior grade of
Electric Coop. v. NLRC, G.R. No. 129246, January and measured by the services and implies a
10, 2000). day, week, month or position in the office.
season.
Applicability of the term wages Suggestive of a larger
Considerable pay for a
and more permanent
GR: It applies to all Ees. lower and less
or fixed compensation
responsible character
for more important
XPNs: of employment.
service.
1. Farm tenancy or leasehold; GR: Not subject to
2. Household or domestic helpers, including execution
family drivers and persons working in the
personal service of another; XPN: Debts incurred Subject to execution.
3. Home workers engaged in needlework or in any for food, shelter,
cottage industry duly registered in accordance clothing and medical
with law; attendance.
4. Workers in any duly registered cooperatives
when so recommended by the Bureau of Our Supreme Court reached the same conclusion,
Cooperative Development and upon approval of the words “wages” and “salary” are in essence
the SLE; synonymous. (Azucena, page 268)
5. Workers of a barangay micro business
enterprise (R.A. 9178); The distinction between salary and wage in Gaa v.
6. Retail and service establishments regularly Court of Appeals, 140 SCRA 304, was only for the
employing not more than 10 workers (RA 6727, purpose of Art. 1708 of the Civil Code which
Sec. 4); mandates that "laborer's wages shall not be subject
to execution or attachment except for debts
incurred for food, shelter, clothing and medical

UNIVERSITY OF SANTO TOMAS

2016 GOLDEN NOTES
40
 LABOR STANDARDS
attendance." In labor law, the distinction is only a Not directly dependent Intimately related to or
matter of semantics. It is settled that wage and on the extent an directly proportional
salary are synonymous. Likewise, the term "pay" is individual employee to the extent or energy
also synonymous with wage and salary. (Equitable exerts himself of an employee’s
PCI v Sadac, G.R. No. 164772, 8 June 2006) endeavors
Something extra for A percentage of the
Bonus which no specific sales closed by a
additional services are salesman and operates
Refers to the payment in excess of regular or rendered by a as an integral part of
guaranteed wages. It is granted to an employee for particular employee; such salesman’s basic
his tangible contribution to the success of the hence, not legally pay
employer’s business, without which the employer demandable, absent a
may not realize bigger profits. The contribution may contractual
be in the form of an employee’s commitment to the undertaking to pay it
job, his industry and loyalty. (Metro Transit Org., Inc.
v. NLRC, G.R. No. 116008, July 11, 1995) NOTE: Voluntary and contractual bonuses can be
credited for the purpose of determining liability for
GR: The payment of bonus is a management the 13th month pay. The employer who acceded and
function, not a demandable and enforceable is already bound to give bonuses to his employees,
obligation, which cannot be enforced upon the the additional burden of 13th month pay would
employer who may not be obliged to assume the amount to a penalty for his munificence or liberality.
onerous burden of granting bonuses or other (NSFW v. Ovejera, et al., G.R. No. 59743, May 31, 1982)
benefits aside from the employee’s basic salaries or
wages. (Philippine National Construction MINIMUM WAGE DEFINED,
Corporation v. NLRC, G.R. No. 128345, May 18, 1999) MINIMUM WAGE SETTING

XPN: Bonuses can be demanded as a matter of right Minimum wage

if:
a. given without any condition; hence, part of the
wage or salary (Atok Big Wedge Mining Co., Inc.
v. Atok Big Wedge Mutual Benefit Assn., 92 Phil.
754)
b. grant thereof is a result of an agreement such as
the CBA (Gery v. Insular Lumber, 93 Phil. 807)
c. given on account of company policy or practice
(Claparols v. CIR, 65 SCRA 613)
d. grant is mandated by law
Bonus treated as not part of wages
Bonus is not considered part of wages if it is paid
only upon realization of profits or amount of
production or output. (Atok Big Wedge Mining Co.,
Inc. v. Atok Big Wedge Mutual Benefit Assn., 92 Phil.
754)
Where the bonus is not payable to all but only to
some employees and only when their labor becomes
more efficient or more productive, it is only an
inducement for efficiency, a prize therefor, not a
part of the wage. (Poquiz, 2012)
Productivity bonus vs. Sales commission
Productivity Bonus Sales Commission
Generally tied to the Paid upon the specific
productivity or profit results achieved by a
generation of the salesman-employee
employer corporation
41
Statutory minimum wage is the lowest wage rate
fixed by law that an Er can pay his workers.
Purpose of the minimum wage law
The compulsory payment of a fair statutory wage is
a preventive action, not remedial, for it settles the
wage rates before industrial disputes arise thereby
foreclosing the eruption of social and economic
disquietude.
The purpose of minimum wage law is “to set barrier
below which wages may not fall, in order to develop
competition on a high level of efficient rather than
competition on a low level of wages.” The
establishment of a minimum wage encourages
competition above the lower limits set by the law.
The minimum wage law discourages the sweat-
shop operators from exploiting their workers.
(Poquiz, Vol. I)
Standards or criteria for minimum wage setting
In the determination of such regional minimum
wages, the Regional Board shall, among other
relevant factors consider the following:
1. The demand for living wages
2. Wage adjustment vis-a-vis the consumer price
index
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
3. The cost of living and changes or increases
therein
4. The needs of workers and their families
5. The need to induce industries to invest in the
countryside
6. Improvements in standards of living
7. The prevailing wage levels
8. Fair return on the capital invested and capacity
to pay by Ers
9. Effects on employment generation and family
income
10. The equitable distribution of income and
wealth along the imperatives of economic and
social development (LC, Art. 124).
Persons exempted from the coverage of fixing a
minimum wage
1. Household or domestic helpers, including
family drivers and persons in the personal
service of another;
2. Homeworkers engaged in needle-work;
3. Workers employed in any establishment duly
registered with the National Cottage Industries
and Development Authority, provided that such
workers perform the work in their respective
homes;
4. Workers in a duly registered cooperative when
so recommended by the Bureau of Cooperative
Development and upon approval of the SLE
(IRR of LC, Book III, Rule VII, Sec. 2).
5. Workers of a barangay micro business
enterprise (R.A. 9178).
Economically feasible
a. From Er’s standpoint – a minimum wage is
economically feasible if it will not prevent the
industry from operating efficiently and
prosperously over the long run (Dir. Harry
Kantor’s analysis of Senate Bill No. 202 and
House Bill No. 1732);
b. From Ee’s standpoint – an economically
feasible minimum wage should be as nearly
adequate to maintain the minimum standard of
living necessary for the health, efficiency and
general well-being of employees.
METHODS OF MINIMUN WAGE ADJUSTMENT
Salary Ceiling Method
A method of minimum wage adjustment whereby
the wage adjustment is applied to Ees receiving a
certain denominated salary ceiling. In other words,
workers already being paid more than the existing
minimum wage are also to be given a wage increase
(ECOP v. NWCP, G.R. No. 96169, September 24, 1991).
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
42
Floor Wage Method
It involves the fixing of a determinate amount to be
added to the prevailing statutory minimum wage
rates.
Two basic methods of payment
1. Time wages – refer to pay by the hour, day or
month, without specifying the amount of work
to be done
2. Production wages – refer to pay related to the
amount of work the individual or group
performs regardless of the time involved in its
performance. This applies to workers paid by
result (Beal and Wickersham, The Practice of
Collective Bargaining; Poquiz, Vol. I).
Minimum wage non-negotiable; non waivable
The minimum wage fixed by law is mandatory; thus
it is non-waivable and non-negotiable. The
enactment is compulsory in nature in order to
ensure decent living conditions (PAM Co. v, PAMEA-
FFW, 51 SCRA 98)
Q: The Regional Wage Board of Region II issued
a Wage Order granting all Ees in the private
sector throughout the region an across-the-
board increase of P15.00 daily. Is this Wage
Order valid?
A:It depends. The Wage Order is valid insofar as the
mandated increase applies to Ees earning the
prevailing minimum wage rate at the time of the
passage of the Wage Order and void with respect to
its application to Ees receiving more than the
prevailing minimum wage rate at the time of the
passage of the Wage Order. The Regional Wage
granted an across-the-board wage increase of
P15.00 to all Ees in the region. It did not set a wage
level nor a range to which a wage adjustment or
increase shall be added. In doing so, the Regional
Wage Board exceeded its authority by extending the
coverage of the Wage Order to wage earners
receiving more than the prevailing minimum wage
rate, without a denominated salary ceiling. The
Wage Order granted additional benefits not
contemplated by R.A. No. 6727 (MBTC v. NWPC
Commission, G.R. No. 144322, February 06, 2007).
Q: Since the Wage Order was declared void with
respect to its application to employees receiving
more than the prevailing minimum wage rate at
the time of the passage of the Wage Order,
should these Ees refund the wage increase
received by them?
 LABOR STANDARDS
A: No. The Es should not refund the wage increase
since they received it in good faith, in the honest
belief that they are entitled to such wage increase
and without any knowledge that there was no legal
basis for the same (MBTC v. NWPC Commission, G.R.
NO.144322, February 06, 2007).
MINIMUM WAGE OF WORKERS
PAID BY RESULTS
Workers paid by results including those who are
paid on piece work, “takay” or task basis, shall be
entitled to receive not less than the prescribed
statutory minimum wage for an eight-hour work or
a proportion thereof for less than eight hours work
(Art. 124, infra.)
Purpose of the law
It is to ensure the payment of fair and reasonable
wage rates to "worker paid by results" who should
be protected from unjust and unfair employers
whose only concern is their interest. (Poquiz, page
231)
WORKERS PAID BY RESULTS
Workers paid by results
They are:
1. Paid based on the work completed; and
2. Not on the time spent in working
Including those who are paid on piecework, “takay”,
“pakiaw”, or task basis if their output rates are in
accordance with the standards prescribed (Sec. 2[e],
Rule I, Book III, Rules Implementing the Labor Code.)
Minimum wage of workers paid by results
1. Those who are paid piece rates which are
prescribed in Piece Rate Orders issued by
DOLE – Wages or earnings are determined by
simply multiplying the number of pieces
produced by the rate per piece.
2. Those who are paid output rates which are
prescribed by the Er and are not yet
approved by the DOLE – The number of pieces
produced is multiplied by the rate per piece as
determined by the Er.
a. If resulting amount is equivalent to or
more than the applicable statutory
minimum rate in relation to the number
of hours worked– Worker will receive
such amount
b. If the amount is less than the applicable
legal rate – Er is required by law to pay the
difference between the resulting amount
43
and the applicable legal minimum rate.
(Azucena, page 318)
APPRENTICES/LEARNERS/PERSONS WITH
DISABILITY
Minimum wage rate for apprentices/learners
and persons with disability
The wage or salary rate shall not be less than 75%
of the applicable minimum wage.
COMMISSIONS
Commission
A fee paid based on a percentage of the sale made by
an Ee or agent, as distinguished from regular
payments of wages or salary.
Commissions included or not included in the
computation of the basic salary
1. Included in the basic salary – If the commission
is comprised of a pre-determined percentage of
the selling price of the goods.
2. Excluded from basic salary – If the commission
were paid as productivity bonuses or closely
resemble profit-sharing, or when it has no clear,
direct or necessary relation to the amount of
work actually done by each individual
employee.
DEDUCTIONS FROM WAGES
Wage deduction prohibited
The law prohibits the employer from making
deductions from the wages of an employee. The evil
sought to be prevented is to forestall the
commission of unwarranted practices of employers
by making unnecessary deductions without
employee's knowledge or authorization (Galvadores
v Trajano, 144 SCRA 138)
Wage deductions
GR: No employer, in his own behalf or in behalf of
any person, shall make any deduction from the
wages of his employees (LC, Art. 113).
XPNs:
1. Deductions under Art. 113 of the LC for
insurance premiums.
2. Union dues in cases where the right of the
worker or his union to check off has been
recognized by the Er or authorized in writing by
the individual worker concerned (LC, Art. 113).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
NOTE: Art. 241(o) of the LC provides that
special assessments may be validly checked-off
provided that there is an individual written
authorization duly signed by every Ee.
3. Deductions for SSS, PhilHealth and Pag-ibig
premiums
4. Taxes withheld pursuant to the Tax Code
5. Deductions under Art. 114 of the LC for loss or
damage to tools, materials or equipment
supplied by the employer when the latter is
engaged in such trades, occupations or
businesses where the practice of making
deductions or requiring deposits is a
recognized one or is necessary or desirable as
determined by SLE
6. Deductions made with the written
authorization of the Ee for payment to a third
person (IRR, Book III, Rule VIII, Sec 13).
7. Deductions as disciplinary measures for
habitual tardiness (Opinion dated March 10,
1975 of the Labor Secretary).
8. Agency fees under Art. 248(e)of the LC
9. Deductions for value of meals and facilities
freely agreed upon
10. In case where the Ee is indebted to the Er where
such indebtedness has become due and
demandable (NCC, Art. 1706).
11. In court awards, wages may be subject of
execution or attachment, but only for debts
incurred for food, shelter, clothing, and medical
attendance (NCC, Art. 1703).
12. Salary deduction of a member of a legally
established cooperative (R.A. 6938; LC, Art. 59).
Deductions for absences and tardiness
(Principle of No-work No-pay)
An employer will not be liable for violation of the
prohibition against wage deduction for absences or
tardiness incurred by the employee.
Check-off
Check-off is a system by which union dues and other
assessments are deducted from the employee's
wage by the employer upon authorization from the
worker or by mandate of the law. (Poquiz, page 259)
Duration of check-off
The employees' check-off authorization even if
declared irrevocable, is good only as the employees
remain members of the union concerned, because
as such members they were obliged to pay the
corresponding dues and assessments to their union.
The moment they are separated from and left the
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
44
union and joined another labor organization, they
were no longer obliged to pay said dues and
assessments. There would be no longer any reason
or occasion for the company to continue making
deductions. (Phil. Federation of Petroleum Workers
v. CIR, L-26346, 27 February 1971, 37 SCRA 711)
Compulsory check-off
Check-off may be enforced with the consent of the
employer or by authority in writing by the
employees.
When the union and the employer agree, the
attitude of the employees is immaterial. When the
employees duly authorize the check-off, the
employer's consent is unnecessary and its
recognition of the right is obligatory. (A.L. Ammen
Trans. Co. v BITEMAA, 91 Phil 649)
Illegal deductions
The employment contract provides for 25%
deduction from employee's salary representing the
employer's share in procuring job placement for
him. The provision in the contract was contested,
but the employer argued that the employee was
already estopped in complaining about the
deduction. The Supreme court declared the
employment contract illegal and inequitous; thus
null and void. (Commando Security Agency v NLRC,
211 SCRA 645)
NON-DIMINUTION OF BENEFITS
Non-diminution of benefits; Exception
GR: Benefits being given to Ees cannot be taken
back or reduced unilaterally by the Er because the
benefit has become part of the employment
contract, whether written or unwritten.
XPN: When diminution of benefits is done to correct
an error.
NOTE: If the error is not corrected in a reasonable
time, it ripens into a company policy and Ees can
demand it as a matter of right.
Instances when non-diminution of benefits is
applicable
It is applicable if it is shown that the grant of benefit:
1. Is based on an express policy of the law; or
2. Has ripened into practice over a long period of
time and the practice is consistent and
deliberate and is not due to an error in the
construction/ application of a doubtful or
difficult question of law.
 LABOR STANDARDS
Purpose of non-diminution of benefits
The philosophy behind the law is to prohibit
employers from reducing benefits already enjoyed
by employees. A contrary rule will corrupt the
employer's mind to abuse and exploit employees,
prostituting the social justice and protection to
labor clauses enshrined in the fundamental charter.
Thus, a change of method of payment of wages from
monthly to daily will not be allowed if it would
result in reduction of pay. However, if the method
introduced would, augment the worker's pay it will
be valid. Reclassification of position of employees
pursuant to reorganization, without affecting their
compensation is not covered by the proscription.
(Opinion of the Secretary of Labor, 7 October 1975)
An agreement reducing certain labor standards
benefits such as overtime and premium pay violates
Art. 100. Provisions of existing laws are deemed
part of a contract. (Republic Planters Bank v. NLRC,
266 SCRA 142).
However, if there is an impelling reasonable
justification of the diminution or reduction because
of an emergency or exigency, or business losses,
such diminution or reduction would be valid,
provided it is duly approved by the Secretary of
Labor and Employment or his duly authorized
representative pursuant to Art. 233. (Poquiz, page
229)
Meaning of facilities
The term "facilities" shall include articles or services
for the benefit of the employee or his family but
shall not include tools of trade or articles or service
primarily for the benefit of the employer or
necessary to the conduct of the employer's business.
The fair and reasonable value of the facilities can be
deducted from the employee's cash wage without
violating the principle of non-diminution of benefits
(Sec. 5 Rule VII, Book III, Rules Implementing the
Labor Code; Atok Big Wedge Mining Co., Inc. v Atok
Big Wedge Mutual Benefit Assn., 97 Phil. 294)
Benefits derived from law are exclusive of
benefits arrived at through negotiation and
agreement (Stoplock gate or nonchargeability
clause)
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 grants the employees the same or better terms
and conditions of employment. Employee benefits
45
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 v. Hon. Drilon, 185 SCRA
50)
Any allowance/wage granted under the collective
bargaining agreement cannot be credited to similar
form of benefit that may thereafter be ordained by
the government through legislation. Such portion of
the contract is the "stoplock" gate or known in its
technical term as the "non-chargeability" clause
(Marcopper Mining Corp. v. NLRC, G.R. No. 103525, 29
March 1996)
This doctrine was resounded in this manner: the
CBA provides "It is hereby agreed that these salary
increases shall be exclusive of any wage increase
that may be provided by the law as a result of any
economic change."
The Supreme Court ruled that the above provision
in the CBA is clear that the salary increases shall not
include any wage increase that may be provided by
law as a result of economic change. The CBA needs
no interpretation as it is not ambiguous. Thus, the
wage increase granted by the petitioner to its
employees under the CBA cannot be considered as
creditable benefit. (Mindanao Steel Corp. v Minsteel
Free Workers Organization, G.R. No. 130693, 4 March
2004; UKCEU-PTGWO v. Kimberly Clark Phils, G.R. No.
162957, 6 March 2006)
Benefit acquired through company practice
An employee can demand as a matter of right
benefits granted by the employer for a considerable,
long period of time as the same may ripen into a
company practice (Globe Mackay v. NLRC, 163 SCRA
71)
Thus, enjoyment of the privilege of commutation of
sick leave benefits into cash equivalent as a
company practice (Davao Integrated Port
Stevedoring Services v Abarquez, 220 SCRA 197),
grant of resignation benefits to a Branch Manager
on the basis of company practice of applying expired
CBA concluded by the supervisory union (Republic
Planters Bank, v, NLRC, 166 SCRA 197), and the
giving of special bonus as the company's long and
regular practice, the same can no longer be
withdrawn as they would amount to diminution of
employee's existing benefits (Meralco v. Quisimbing,
302 SCRA 173) violative of the proscription under
Art. 100.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
FACILITIES vs. SUPPLEMENTS are not considered as facilities. (Sec. 5, Rule VII, Book
III, Rules Implementing the Labor Code).
BASIS FACILITIES SUPPLEMENT
Items of Voluntary acceptance of facilities
Extra
expenses
remuneration Acceptance of facilities is voluntary, for to compel
necessary for
or special the employee to accept such facilities against his
the laborer’s
privileges or will would be violative of the fundamental right of
and his
benefits given employee to the free disposal of his wage
Definition family’s
to or received guaranteed under Art. 112. (Mabeza v NLRC, G.R. No.
existence and
by the 118506, 18 April 1997)
subsistence
laborers over
and above Facilities exclude profit
NOTE: Does
their ordinary
not include
earnings or The value of facilities should not be more than the
tools of trade
wages [Atok actual cost to the employer of the board, lodging, or
or articles /
Big Wedge other facilities customarily furnished by him to his
services
Mining Co. v. employees. The "fair and reasonable value" does not
primarily for
Atok Big include any profit to the employer or to any persons
the benefit of
Wedge Mutual affiliated with the employer (Art. 97)
the Er or
Benefit Assoc.,
necessary to
G.R. No. L- Customarily furnished facilities
the conduct of
7349, July 19,
the Er’s
1955). It is important to determine when facilities are
business.
Inclusion Forms part of Independent customarily furnished or not, for the fair and
the wage of wage reasonable value of facilities not customarily
Deduction Deductible Not wage furnished cannot be charged against the cash wage.
from wage deductible For example, a messenger who slept in the office
Granted for cannot be charged by the employer for housing
For the benefit allowance because the office is not a regular
To whose the
of the worker sleeping quarter. On the other hand, housing
benefit convenience
and his family. quarters are common in a mining industry; hence,
of the Er.
the latter can charge its employees for housing
Facilities as part of wages quarter (Mabeza v NLRC, G.R. No. 118506, 18 April
1997).
The term "wage" includes the fair and reasonable
value of facilities customarily furnished by the Tips not part of wages; element of compulsion in
employer to an employee (Art. 97). Facilities have tipping
been defined to include those articles or services of
benefit to the employee and his family such as rice Wage is the remuneration directly paid by the
ration, housing, recreational facilities, medical employer to an employee. On the other hand, tips
treatment to dependents, school facilities, cost of are paid directly to an employee by the customer;
light, water, fuel, meals or snacks. (Atok Big Wedge hence, they fall short of the definition provided in
Mutual Benefit Assn. v Atok Big Wedge Mining Co., 97 Art. 97. Although a tip denotes a voluntary act, it
Phil. 294; Mayon Hotel v. Adana, G.R. No. 157634, 16 lacks the essential element of a gift, that is, the free
May 2005). bestowing of a gratuity without consideration.
Despite its apparent voluntariness, there is an
Determination of facilities beneficial to element of compulsion in tipping (Ace Navigation
employer or employee Co., Inc. v. C.A., 338 SCRA 70).

It is significant to determine when articles or Supplements not part of wages

services are beneficial to an employee because
those articles or services which are not of benefit to
the employee cannot be charged against the cash
wage of an employee. Articles or tools of the trade
that are primarily for the benefit of the employer or
necessary to the conduct of his business cannot be
deducted from the employer's wages because they
Supplements are extra remunerations or benefits
given to an employee such as vacation leave pay,
overtime pay in excess of the legal rate, profit-
sharing benefits, sick pension, retirement and death
benefits, family allowances, Christmas bonus, war-
risk or cost-of-living bonuses or other bonuses
other than those paid as reward for extra output or

UNIVERSITY OF SANTO TOMAS

2016 GOLDEN NOTES
46
 LABOR STANDARDS
time spent on the jobs (Atok Big Wedge Mining Co.,
97 Phil. 294). Since they are not considered as part
of wages, their value cannot be deducted from the
cash wage of an employee.
Criterion in determining whether an item is a
supplement or facility
The criterion is not so much with the kind of the
benefit or item (food, lodging, bonus or sick leave)
given, but its purpose (State Marine v. Cebu Seamen’s
Ass’n., G.R. No. L-12444, February 28, 1963).
Cost of facilities furnished by the Er may be
charged against an Ee
In order that the cost be charged against the Ee,
his/her acceptance of such facilities must be
voluntary.
Requirements for deducting values for facilities
1. Proof must be shown that such facilities are
customarily furnished by the trade
2. The provision of deductible Facilities must be
voluntarily accepted in writing
3. The Facilities must be charged at fair and
reasonable value (Mabeza v. NLRC, G.R. No.
118506, April 18, 1997).
Status of food and lodging, or the electricity and
water consumed by a hotel worker
These are supplements. Considering, therefore, that
hotel workers are required to work different shifts
and are expected to be available at various odd
hours, their ready availability is a necessary matter
in the operations of a small hotel. Furthermore,
granting that meals and lodging were provided and
indeed constituted facilities, such facilities could not
be deducted without the Er complying first with
certain legal requirements (Mabeza v. NLRC, G.R. No.
118506, April 18, 1997).
Q: Gamma Company pays its regular employees
P350.00 a day, and houses them in a dormitory
inside its factory compound in Manila. Gamma
Company also provides them with three full
meals a day.
In the course of a routine inspection, a
Department of Labor and Employment (DOLE)
Inspector noted that the workers' pay is below
the prescribed minimum wage of P426.00 plus
P30.00 allowance, and thus required Gamma
Company to pay wage differentials.
Gamma Company denies any liability,
explaining that after the market value of the
47
company-provided board and lodging are added
to the employees' P350 cash daily wage, the
employees' effective daily rate would be way
above the minimum pay required by law. The
company counsel further points out that the
employees are aware that their food and lodging
form part of their salary, and have long accepted
the arrangement.
Is the company's position legally correct? (2013
Bar Questions)
A: No. The following requisites were not complied
with:
a. proof that such facilities are customarily
furnished by the trade
b. the provision of deductible facilities is
voluntarily accepted by the employee
c. the facilities are charged at the fair and
reasonable value. Mere availment is not
sufficient to allow deduction from employee’s
wages. (Mayon Hotel & Restaurant v. Adarna,
485 SCRA 609 [2005])
WAGE DISTORTION/RECTIFICATION
Concept of Wage Distortion (WD)
A situation where an increase in wage results in the
elimination or severe contraction of intentional
quantitative differences in wage or salary rates
between and among the Ee-groups in an
establishment as to effectively obliterate the
distinctions embodied in such wage structure based
on skills, length of service or other logical bases of
differentiation (LC, Art. 124).
It is the disappearance or virtual disappearance of
pay differentials between lower and higher
positions in an enterprise because of compliance
with a wage order (P.I. Manufacturing v. P.I.
Manufacturing Supervisors and Foreman, G.R. No.
167217, February 4, 2008).
Elements of Wage Distortion
1. An existing hierarchy of positions with
corresponding salary rates.
2. A significant change or increase in the salary
rate of a lower pay class without a
corresponding increase in the salary rate of a
higher one;
3. The elimination of the distinction between the
2 groups or classes; and
4. The WD exists in the same region of the country
(Alliance Trade Unions v. NLRC, G.R. No. 140689,
February 17, 2004).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Basic principles in Wage Distortion
1. The concept of WD assumes an existing group
or classification of Ees which establishes
distinctions among such Ees on some relevant
or legitimate basis. This classification is
reflected in a differing wage rate for each of the
classes of Ees.
2. Often results from Government decreed
increases in minimum wages.
3. Should a WD exist, there is no legal requirement
that, in the rectification of that distortion by a
re-adjustment of the wage rates of the differing
classes of Ees, the gap which had previously or
historically existed be restored in precisely the
same amount. In other words, correction of a
WD may be done by re-establishing a
substantial or significant gap (as distinguished
from the historical gap) between the wage rates
of the differing classes of Ees.
4. The re-establishment of a significant difference
in wage rates may be the result of the resort to
grievance procedures or CB negotiations.
(National Federation of Labor vs National Labor
Relations Commission, 234 SCRA 311)
In mandating an adjustment, the law did not require
that there be an elimination or total abrogation of
quantative wage or salary differences; a severe
contraction is enough (Metrobank v. NLRC, G.R. No.
102636, September 10, 1993).
Wage distortion does not arise when a wage order
gives employees in one branch of a bank higher
compensation than that given to their counterparts
in other regions occupying the same pay scale who
are not covered by said wage order. In short, the
implementation of wage orders in one region but
not in others does not in itself necessarily result in
wage distortion (Prubankers Association v.
Prudential Bank & Trust Company, G.R. No. 131247,
January 25, 1999).
Causes of wage distortions
Wage distortions have often been the result of
government decreed increases in minimum wages,
although there are 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, and also
where the wage distortion arose because the
effectivity dates of wage increases given to each of
the two classes of employees (rank-and-file and
supervisory) had not been synchronized in their
respective CBAs (Metro Transit Org., Inc. v NLRC, 67
SCRA 477)
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
48
Where a significant change occurs at the lowest
level of positions in terms of basic wage without a
corresponding change in the other level in the
hierarchy of positions, negating as a result thereof
the distinction between one level of position from
the next higher level, and resulting in a parity
between the lowest level and the next higher level
or rank, between new entrants and old hires, there
exists a wage distortion (Prubankers Association v
Prudential Bank & Trust Company, 302 SCRA 74)
Cases not representative of wage distortion
1. Where the hierarchy of positions based on
skills, length of service and other logical bases
of differentiation was preserved (Prubankers
Association v Prudential Bank & Trust Company,
302 SCRA 74)
2. A disparity in wages between employees
holding similar positions but in different
regions
3. Where the disparity was simply due to the fact
that the employees had been hired on different
dates and were thus receiving different salaries
(Manila Mandarin Employees Union v NLRC, G.R.
No. 108556, 19 November 1996)
4. That an employee was initially hired at a
position level carrying a hiring rate higher than
the rates of others
5. That an employee failed to meet the cut-off date
in the grant of yearly CBA increase; or
6. That the employee had been promoted while
the others were not
Q: Bankard, Inc. approved a New Salary Scale
which increased the hiring rates of new
employees. The Bankard Employees Union
pressed the company for the increase in the
salary of its old, regular employees. The
company refused to do so. The union filed a
Notice of Strike on the ground of discrimination
for it claimed that a wage distortion exists and
the company refused to negotiate to correct the
distortions. Is there a wage distortion brought
about by the New Salary Scale?
A: No. The union cannot legally obligate the
Bankard to correct the alleged “wage distortion” as
the increase in the wages and salaries of the newly-
hired was not due to a prescribed law or wage order.
If the compulsory mandate under Art. 124 to correct
wage distortion is applied to voluntary and
unilateral increases by the employer in fixing hiring
rates which is inherently a business judgment
prerogative, then the hands of the employer would
be completely tied even in cases where an increase
in wages of a particular group is justified due to a re-
evaluation of the high productivity of a particular
group or the need to increase the competitiveness
 LABOR STANDARDS
of Bankard’s hiring rate. An employer would be ORGANIZED UNORGANIZED
discouraged from adjusting the salary rates of a ESTABLISHMENT ESTABLISHMENT
particular group of employees for fear that it would (with union) (without union)
result to a demand by all employees for a similar The Er and the
increase, especially if the financial conditions of the The Er and the union
workers shall
business cannot address an across-the-board shall negotiate to
endeavor to correct the
increase (Bankard Employees Union-WTU v. NLRC, correct distortion.
distortion.
G.R. No. 140689, February 17, 2004). Any dispute shall be
Any dispute shall be
resolved through a
Duty of the Er and the union/worker if there is settled through the
grievance procedure
WD NCMB.
under the CBA.
If it remains If it remains
The Er and the union shall negotiate to correct the unresolved, it shall be unresolved within 10
distortions. If there is no union, the Er and the dealt with through days it shall be
workers shall endeavor to correct such distinctions. voluntary arbitration. referred to the NLRC.
The dispute will be The NLRC shall
Negotiated wage increases to correct wage resolved within 10 conduct continuous
distortion; its interest and validity days from the time the hearings and decide
dispute was referred the dispute within 20
The law recognizes the validity of negotiated wage to voluntary days from the time the
increases to correct wage distortion. The legislative arbitration. same was referred.
intent is to encourage the parties to solve the
problem of wage distortion through voluntary The pendency of the dispute arising from a wage
negotiations or arbitration, rather than strikes, distortion shall not in any way delay the
lockouts, or other concerted activities. Unilateral applicability of any wage increase prescribed
grant of wage increase on the part of an employer is pursuant to the provisions of law or Wage order.
recognized as a means of correcting wage (Sec. 7, Chapter III, Rules Implementing R.A. 6727)
distortions including wage adjustments under a
collective bargaining agreement. Recognition and Non-strikeablity of WD
validation of wage increases given by employers
after unilaterally or as a result of collective WD is non-strikeable (Ilaw at Buklod ng
bargaining negotiations for the purpose of Manggagawa v. NLRC, G.R. No. 91980, June 27, 1991).
correcting wage distortions are in keeping with the WD is neither a deadlock in collective bargaining
public policy of encouraging employers to grant nor ULP.
wage and allowance increases to their employees
which are higher than the minimum rates of NOTE: Minimum wage in NCR is P481.00 (P466
increases prescribed by statute or administrative basic wage + 15 COLA). Effective April 4, 2015.
regulation (ALU v NLRC, 235 SCRA 395)
DIVISOR TO DETERMINE DAILY RATE
To compel employers simply to add on legislated
increases in salaries or allowances without regard Ways for the computation of the estimated
to what is already being paid would be to penalize equivalent monthly rate (EEMR) of daily-paid
employers who grant their workers more than the Ees
statutory prescribed minimum rates of increases.
Clearly, this would be counter-productive so far as 1. For those who are required to work every day
securing the interest of labor is concerned (Metro including Sundays or rest days, special days and
Bank & Trust Co. Employees Union v NLRC, G.R. No. regular holidays.
102636, 10 September 1993)
EEMR = (Applicable daily rate x 393.50
Settlement of wage distortion days)/12
Where 393.50:
The application of wage increases brought about by = 298 ordinary working days
Wage Orders issued by the Board may result in = 24 for 12 regular holidays x 200%
distortions in the wage structure within the = 67.60 for 52 rest days x 130%; and
establishment. The employer and the workers are = 3.90 for 3 special days x 130%
mandated by law to resolve such wage distortion
problems in the following manner: 2. For those who do not work and are not
considered paid on Sundays or rest days.

UNIVERSITY OF SANTO TOMAS

49 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
EEMR = (Applicable daily rate x 313
days)/12
Where 313:
= 298 ordinary working days
= 12 regular holidays; and
= 3 special holidays
3. For those who do not work and are not
considered paid on Saturdays and Sundays or
rest days
EEMR = (Applicable daily rate x 261
days)/12
Where 261:
= 246 ordinary working days
= 12 regular holidays; and
= 3 special holidays
REST PERIODS
WEEKLY REST DAY
Right to weekly rest day (WRD)
Every Er shall give his Ees a rest period of not less
than 24 consecutive hours after every 6 consecutive
normal work days (IRR, Book III, Rule III, Sec. 3).
Rest day not necessarily Sunday or holiday
All establishments and enterprises may operate or
open for business on Sundays and holidays
provided that the employees are given the weekly
rest day and the benefits provided under the law
(Sec. 2, Rule III, Book III)
Scope of WRD
It shall apply to all Ers whether operating for profit
or not, including public utilities operated by private
persons(IRR, Book III, Rule III, Sec. 1).
Person who determines the WRD
GR: Er shall determine and schedule the WRD of his
Ee.
XPNs:
1. CBA
2. Rules and regulations as the SLE provides
3. Preference of Ee based on religious grounds –
Ee shall make known his preference in writing
at least 7 days before the desired effectivity of
the initial rest day so preferred [IRR, Book III,
Rule III, Sec. 4(1)].
XPNs to XPN no. 3: Er may schedule the WRD of his
choice for at least 2 days in a month if the
preference of the Ee will inevitably result in:
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
50
a. serious prejudice to the operations of the
undertaking and
b. the Er cannot normally be expected to
resort to other remedial measures [IRR,
Book III, Rule III, Sec. 4(2)].
The employer is mandated to respect the choice of
its employee as to their rest day based on religion.
He cannot compel the employee to work on
Saturday as it is the day declared by his religion as
Sabbath day. On the other hand, the employee
cannot compel the employer to open on Sunday in
lieu of Saturday for it would prejudice the
employer's interest and disrupt his regular work
schedule. A fair remedial solution is to allow the
employee to go on leave on Saturday and charge the
same as his rest day. (Poquiz, page 194)
Right of the Ee to know the schedule of their
WRDs
Er shall make known rest period by means of
1. Written notice
2. Posted conspicuously in the workplace
3. At least 1 week before it becomes effective (IRR,
Book III, Rule III, Sec. 5).
EMERGENCY REST DAY WORK
Ee to work on his rest day
GR: The Ee cannot be compelled by the Er to work
on his rest day.
XPNs:
1. Urgent work to be performed on the machinery,
equipment or installation, to avoid serious loss
which the Er would otherwise suffer;
2. Nature of work requires continuous operations
for 7 days in a week or more and stoppage of the
work may result in irreparable injury or loss to
the Er;
3. Abnormal pressure of work due to special
circumstances, where the Er cannot be
ordinarily expected to resort to other
measures;
4. Actual or impending emergencies (serious
accident, fire, flood, typhoon, earthquake, etc.)
5. Prevent loss or damage to perishable goods;
6. Analogous or similar circumstances as
determined by the SLE;
7. Work is necessary to avail of favorable weather
or environmental conditions where
performance or quality of work is dependent
thereon. (LC, Art. 92)
 LABOR STANDARDS
Ee volunteers to work on his rest day under Reason: Work
other circumstances performed is
considered work on
He shall express it in writing subject to additional ordinary working days
compensation [IRR, Book III, Rule III, Sec. 6(2)]. (IRR, Book III, Rule III,
Sec. 7)
Premium pay
NOTE: Holiday work provided under Art. 93
It is the additional compensation for work rendered pertains to special holidays or special days.
by the Ee on days when normally he should not be
working such as special holidays and WRDs. Q: Jose applied with Mercury Drug Company for
the position of Sales Clerk. Mercury Drug
Er and Ee can agree on the rate of premium pay Company maintains a chain of drug stores that
other than that provided by law are open every day till late at night. Jose was
informed that he had to work on Sundays and
Nothing shall prevent the Er and his Ee or their holidays at night as part of the regular course of
representatives from entering into any agreement employment. He was presented with a contract
with terms more favorable to the Ees; Provided, it of employment setting forth his compensation
shall not be used to diminish any benefit granted to on an annual basis with an express waiver of
the Ees under existing laws, agreements and extra compensation for work on Sundays and
voluntary Er practices (IRR, Book III, Rule III, Sec. 9). holidays, which Jose signed. Is such a waiver
binding on Jose? Explain. (1996 Bar Question)
Rates of compensation for rest day, Sunday or
holiday work A: No. The waiver is not binding on Jose. Rights may
be waived, unless the waiver is contrary to law,
RATES OF public order, public policy, morals and customs. The
INSTANCES ADDITIONAL waiver in this case is void.
COMPENSATION
Work on a scheduled HOLIDAY PAY/PREMIUM PAY
+ 30% premium pay
rest day
of 100% RW (IRR, Book
COVERAGE/ EXCLUSIONS
III, Rule III, Sec. 7)
Work performed on Persons entitled to holiday pay
Sundays and Holidays + 30% premium pay
by an Ee who has no of 100% RW (IRR, Book GR: All Ees are entitled (IRR, Book III, Rule IV, Sec.1).
regular workdays and III, Rule III, Sec. 7)
rest days XPNs:
Work on a Sunday + 30% premium pay 1. Government Ees and any of its political
(If Ee’s scheduled rest of 100% RW (IRR, Book subdivisions, including GOCCs (with original
day) III, Rule III, Sec. 7) charter)
1st 8 hrs: + 30% PP of 2. Retail and service establishments regularly
100% RW employing less than 10 workers
3. Domestic helpers and persons in the personal
Work performed on service of another
Excess of 8 hrs: + 30%
any Special Holiday 4. Ee engaged on task or contract basis or purely
of hourly rate on said
date (M.C. No. 10, Series commission basis
of 2004). 5. Members of the Family of the Er who are
1st 8 hrs: + 50% PP of dependent on him for support
100% RW 6. Managerial Ee and other members of the
Work performed on a managerial staff
Special Holiday and 7. Field personnel and other Ee whose time and
Excess of 8 hrs:+ 30%
same day is the performance are unsupervised by the Er
of hourly rate on said
scheduled rest day 8. Ee paid fixed amount for performing work
date (M.C. No. 10, Series
of 2004). irrespective of the time consumed in the
Ee is only entitled to performance thereof (IRR, Book III, Rule IV,
Work performed on a Sec.1).
his basic rate. No PP is
Special Working
required.
Holiday

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51 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Retail establishments Last Monday of
National Heroes Day
August
They are engaged in the sale of goods to end users First day following
for personal or household use. (e.g. Grocery) Eidl Fitr the 30-day fasting
period of Ramadan
Service establishments 10th day in the
month of Hajj or
They are engaged in the sale of services to Eidl Adha
Islamic Pilgrimage to
individuals for their own or household use. (e.g. TV Mecca
repair shop) Monday nearest
Bonifacio Day
November 30
Legal holiday
Christmas Day December 25
It is a day designated or set apart by the legislature, Monday nearest
Rizal Day
for a purpose within the meaning of the term December 30
"holiday" (29 C.J. 762), in order to commemorate an SPECIAL (NON-WORKING) HOLIDAYS
important event.
Ninoy Aquino Day August 21
Holiday pay All Saints Day November 1

It is a premium given to Ees pursuant to the law
even if he has not been suffered to work on a regular
holiday. It is limited to the 12 regular holidays, also
called legal holidays listed by law. The Ee should not
have been absent without pay on the working day
preceeding the regular holiday.
Purpose of holiday pay
To secure the payment of undiminished monthly
income undisturbed by any work interruption (JRC
v. NLRC, G.R. No. 65482, Dec. 1, 1987).
Holiday pay is primarily aimed at benefiting the
daily-paid workers whose income is circumscribed
by the principle of "no-work, no pay." Prior to the
enactment of the Labor Code, daily paid workers
were not paid for unworked regular holidays. On the
other hand, monthly-paid employees do not suffer
any reductions in pay for not working during such
holidays. The law on holiday pay is thus conceived
to be the countervailing measure to partially offset
the disadvantages inherent in the daily
compensation system of employment. (Poquiz, 199)
Last day of the year December 31
Regular holidays (RH)
They are compensable whether worked or
unworked subject to certain conditions. They are
also called legal holidays. The following are
considered regular holidays:
NOTE: RH falling within temporary or periodic
shutdown and temporary cessation of work are
compensable. However, if the temporary or periodic
shutdown and cessation of work is due to business
reverses, the Er may not pay the Ees during such
period.
Muslim holidays (MH)
Muslim holidays are those observed in specified
Muslim areas. All private corporations, offices,
agencies and entities or establishments operating
within the designated Muslim provinces and cities
are required to observe Muslim holidays.

REGULAR HOLIDAYS DATE Determination of eid’l fitr and/or eid’l adha

New Year’s Day January 1
Monday nearest April The proclamation declaring a national holiday for
Araw ng Kagitingan the observance of Eid’l Fitr and/or Eid’l Adha shall
9
Movable date be issued:
Maundy Thursday 1. After the approximate date of the Islamic
(March 24, 2016)
Movable date holiday has been determined in accordance
Good Friday with the:
(March 25, 2016)
Monday nearest May a. Islamic Calendar (Hijra) or
Labor Day b. Lunar Calendar or
1
Monday nearest June c. Upon astronomical calculations
Independence Day d. Whichever is possible or convenient
12
2. The Office of Muslim Affairs shall inform the
Office of the President on which day the holiday

UNIVERSITY OF SANTO TOMAS

2016 GOLDEN NOTES
52
 LABOR STANDARDS
shall fall (Proclamation 295, s. 2011 by President
Benigno Aquino III). Regular holiday vs. Special holiday

A Christian Ee working within the Muslim area REGULAR SPECIAL

cannot be compelled to work during Muslim BASIS HOLIDAY HOLIDAY
holiday If unworked Regular pay
(subject to
All workers, Muslims and Christians, working certain No Pay
within the Muslim area are entitled to holiday pay conditions for
on Muslim holidays (SMC v. CA, G.R. 146775, January daily paid Ee’s)
30, 2002). If worked + 30%
2x regular pay premium
Muslim Ee working outside the Muslim area (200) pay of 100%
cannot be compelled to work during the RW
observance of the MH
Rates of compensation for RH on Ee’s regular
GR: Muslim Ees shall be excused from work during workday and rest day
MH without diminution of salary or wages.
FORMULAS TO COMPUTE WAGES ON
XPN: Those who are permitted or suffered to work REGULAR HOLIDAYS
on MH are entitled to at least 100% basic pay + (M.C.No.10, Series of 2004)
100% as premium of their basic pay (SMC v. CA, G.R. RH on Ee’s
146775, January 30, 2002). RH on Ee’s
Basis regular
rest day
workday
Rule as to payment of regular Muslim holidays 100%
100%
If
There is no distinction between Muslims and non– unworked e.g. Php 300
Muslims as regards payment of benefits for Muslim e.g. Php 300 RW
RW
holidays. Muslims throughout the Philippines are 200% + 30%
also entitled to holiday pay on Christian holidays of 200%
declared by law as regular holidays. Wages and 200%
other emoluments granted by law are determined If worked e.g 600
on the basis of the criteria laid down by laws and e.g. 300(RW)
(1st 8 (200% of
certainly not on the basis of the worker's faith or + 300
hours) RW)
religion (SMC v C.A., G.R. No. 146775, 30 January 600 = Total X 0.3
2002). The law on holiday pay knows no religion. Wage (TW)
180
Regular holiday and special day distinguished
600 + 180 =
780 (TW)
The distinctions are the following:
230%
If worked 230% + 30%
a. A covered employee who does not report for
(OT)(excess 200% + 30% of of hourly rate
work during regular holidays is paid 100% of
of 8 hours) hourly rate on on said date
his regular wage. On the other hand, a covered
said date
employee who fails to report for work on a
special day (special holiday) is not entitled to
any compensation under the principle of "no Important condition that should be met in order
work, no-pay." to avail/receive the single holiday pay
b. A covered employee who reports for work on
regular holidays is entitled to 200% of his The Ee should not have been absent without pay on
the working day preceding the RH.
regular wage. While, a covered employee who
works on special days (special holidays) is paid
an additional compensation of not less than Monthly paid vs. Daily paid Ees
30% of his basic pay or a total of 130%. If the
worker has suffered to work on special days Monthly Paid Ees Daily Paid Ees
(special holidays) which falls on his scheduled One whose wage or salary One whose wage or
rest day, he is entitled to an additional pay is being paid everyday of salary is being paid
equivalent to at least 50% over his basic pay or the month, including rest only on those days
a total of 150%. (Poquiz, 2013) days, Sundays, regular or he actually

UNIVERSITY OF SANTO TOMAS

53 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
special days, although he worked, except in CONCEPT OF ABSENCES
does not regularly work on cases of regular or
these days. special days, Effects of absences on holiday pay; successive
although he does regular holiday
Not excluded from benefit not regularly work
of holiday pay. on these days. a. If an employee is on leave of absence with pay,
(In re United South Dockhandlers, Inc., Opinion of he is entitled to holiday pay
the Bureau of Working Conditions, November 23, b. If an employee is on leave of absence without
1987) pay on the day immediately preceding the
regular holiday, he is not entitled to holiday pay.
Effect if a legal holiday falls on a Sunday c. If the day immediately preceding the holiday is
a non-working day or the scheduled rest day of
A legal holiday falling on a Sunday creates no legal an employee, he is not considered to be on leave
obligation for the Er to pay extra to the Ee who does of absence on that day, in which case he shall be
not work on that day, aside from the usual holiday entitled to holiday pay if the employee should
pay to its monthly paid Ee (Wellington v.Trajano, work on the day immediately preceding the
G.R. 114698, July 03, 1995). non-working day or rest day.
d. If there are two successive regular holidays like
DIVISOR Holy Thursday and Good Friday, an employee is
not entitled to holiday pay for both holidays if
The divisor assumes an important role in he absents himself from work without pay on
determining whether or not holiday pay is already the day immediately preceding the first regular
included in the monthly paid employee’s salary and holiday. But if he works on the first holiday, he
in the computation of his daily rate (Chartered Bank is entitled to holiday pay on the second holiday
Employees Association v. Ople, G.R. No. L-44717, (Secs. 6 and 10, Rule IV, Book III, Rules
August 28, 1985). Implementing the Labor Code)

If the divisor used is: Effects of business closure on holiday pay

365 (days in a year) All the 12 holidays, 52
Sundays and 52 a. In case of temporary or periodic shutdown and
Saturdays are paid. temporary cessation of work of an
313 12 holidays and 52 establishment, as when a yearly inventory or
(365 – 52 = 313) Sundays (or when the repair or cleaning of machineries and
Saturdays) are paid. equipment is undertaken, the regular holidays
261 All the 12 holidays are falling within the period shall be compensated.
(313 – 52 = 261) paid excluding the b. The regular holiday during the cessation of
Saturdays and operation of an enterprise due to business
Sundays. reverses as authorized by the Secretary of
249 The 12 holidays are not Labor may not be paid by the employer (Sec. 7,
(261 – 12 = 249) paid. Rule IV, Book III, Rules Implementing the Labor
Code)
Significance of the divisor in determining
payment of holiday pay for monthly paid TEACHERS, PIECE WORKERS, TAKAY,
employees SEAFARERS, SEASONAL WORKERS

The divisor is significant in determining whether or Holiday pays of certain Ees

not holiday pay has already been included in the
salary of the monthly paid employees. Where the EMPLOYEES RULE
company undertakes a six-day working schedule, 1. RH during semestral
Private school
the divisor 314 indicates that the ten (10) now vacations
teachers
eleven (11) legal holidays have already been - Not entitled to holiday
(Faculty
included in the salary of monthly paid employees pay
members of
(Producers Bank v. NLRC, 355 SCRA 489) 2. RH during Christmas
colleges and
vacation
universities)
On the other hand, where the company provides for - Entitled to holiday pay
a five-day working period, the divisor 261 indicates 1. No pay on regular
that the holiday pay has already been included in Hourly-paid holidays including
the monthly salary of the employee. teachers Christmas and semestral
vacations

UNIVERSITY OF SANTO TOMAS

2016 GOLDEN NOTES
54
 LABOR STANDARDS
2. But with pay on special 2. If during special public holidays – Yes. The law
public holidays and and the IRR governing holiday pay are silent as
other no-class days to payment on Special Public Holidays. It is
when classes are called readily apparent that the declared purpose of the
off or shortened on holiday pay which is the prevention of
account of floods, diminution of the monthly income of the Ees on
typhoons, rallies and the account of work interruptions is defeated when
like (Jose Rizal College v. a regular class day is cancelled on account of a
NLRC, G.R. No. 65482, special public holiday and class hours are held on
Dec. 1, 1987). another working day to make up for time lost in
Holiday pay shall not be less the school calendar. Otherwise stated, the faculty
than his average daily member, although forced to take a rest, does not
earnings for the last 7 actual earn what he should earn for that day. Be it noted
Ee paid by: that when a special public holiday is declared,
work days preceding the
1. results or the faculty member paid by the hour is deprived
Regular holiday.
2. output of expected income, and it does not matter that
Provided: Holiday pay shall
(Piece work the school calendar is extended in view of the
not be less than the statutory
payment) days or hours lost, for their income that could be
minimum wage rate.
earned from other sources is lost during the
(Sec. 8, Rule IV, Book III) extended days. Similarly, when classes are called
May not be paid the required off or shortened on account of typhoons, floods,
Holiday pay during off- rallies, and the like, these faculty members must
Seasonal season where they are not at likewise be paid, whether or not extensions are
Workers work. ordered (Jose Rizal College v. NLRC, G.R. No.
65482, December 01, 1987).
(Sec. 8, Rule IV, Book III)
Rule on two regular holidays falling on the same
day (Double holiday pay)
Shall be entitled to holiday
pay If two regular holidays fall on the same day (such as
Workers having Good Friday falling on Araw ng Kagitingan (April 9),
no regular work the employees should be paid 400% of the basic
days wage for both holidays provided he worked on that
day or was on leave of absence with pay or was on
authorized absence on the day prior to the regular
(Sec. 8, Rule IV, Book III) holiday
Shall be entitled to holiday
Seafarers Double holiday pay
pay

Q: Are the school faculty who according to their There are 2 RHs falling on the same day.
contracts are paid per lecture hour entitled to
unworked holiday pay? MAUNDY
THURSDAY &
WED RATE
A: ARAW NG
1. If during RH – No. Art. 94 of the LC is silent with KAGITINGAN
respect to faculty members paid by the hour who Present Unworked 200%
because of their teaching contracts are obliged to LOA w/pay Unworked 200%
work and consent to be paid only for work 300%
LOA w/ pay Worked
actually done (except when an emergency or a (at least)
fortuitous event or a national need calls for the Authorized 300%
Worked
declaration of special holidays). Regular holiday absence (at least)
specified as such by law are known to both 390%
school and faculty members as "no class days" Authorized Worked and day is (+30% of
certainly the latter do not expect payment for absence Rest Day each 3
said unworked days, and this was clearly in their 100%)
minds when they entered into the teaching
contracts (Jose Rizal College v. NLRC, G.R. No.
65482, December 01, 1987).

UNIVERSITY OF SANTO TOMAS

55 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Concept of successive regular holidays of commutation. This provision is without prejudice
to the provisions of collective or individual
ENTITLED agreement or employer policy or practice granting
MAUNDY GOOD TO higher and more favorable benefits to the workers.
WED
THURS FRIDAY HOLIDAY Where the leave benefit is other than service
PAY incentive leave and is a result of an individual/
Worked RH RH Yes. Both collective agreement or employer practice or policy,
LOA it is equivalent if unused shall be computed as
RH RH Yes. Both stipulated in the agreement or policy (In re Maxim's
w/pay
LOA w/o Tea House, Opinion of the Bureau of Working
RH RH No. Both Conditions, 8 March 1988)
pay
Yes. Only to
LOA w/o The service incentive leave pay should start a year
Worked RH holiday pay
pay after commencement of service, for it is only then
on Friday
that the employee is entitled to such benefit (JPL
Conditions so that an Ee may be entitled to 2 Mktg. v. C.A., G.R. No. 151966, 8 July 2005)
successive holiday pays
There is no law which makes the grant of vacation
On the day immediately preceding the 1st
RH, he leave and its benefits mandatory on the part of
must be: management. The claim for vacation pay can only be
1. Present (worked), or availed of through an agreement or through a
2. On LOA with pay (IRR, Book III, Rule IV, Sec. 10). voluntary unilateral grant by the employer. In the
absence of any contract or company policy
If the above stated conditions are not met providing for such benefit, it is unavailing (Foz, 1
NLRC Reports 91)
He must work on the 1st RH to be entitled to holiday
pay on the 2nd RH (IRR, Book III, Rule IV, Sec. 10). Vacation and sick leaves when accorded by the
employer become a matter of right and not a mere
LEAVES privilege on the part of the employees.
Commutation of such leaves to cash equivalent can
SERVICE INCENTIVE LEAVE be demanded as a matter of right for "to hold
otherwise would be to undermine an employee's
Purpose of the law morale and dedication to his job and would be no
different from robbing him of his savings in his
The purpose of the law in providing service thrifty deposit box" (Foz, 2 NLRC Reports, 19-20)
incentive leave, in the form of vacation leave; is to
afford to a laborer a chance to get a much needed Service incentive leave (SIL)
rest to replenish his worn out energies and acquire
a new vitality to enable him to efficiently perform It is 5-days leave with pay for every Ee who has
his duties, and not merely to give him additional rendered at least 1 year of service. It is commutable
salary or bounty. The stipulation in the contract for to its money equivalent if not used or exhausted at
the allowance of a vacation to employees is merely the end of the year.
a recognition by management and labor that a short
interval of complete rest and relaxation from daily “At least 1 year of service”
routine with the benefit of full pay is essential to the
mental and physical well-being of the workmen Service for not less than 12 months, whether
(Bencio v. Joseph Bouder, Inc., 24 So. 2d 398; A.L.R. 2d continuous or broken reckoned from the date the Ee
352; Sunripe Coconut Products v. NLU, 97 Phil. 691). started working, including authorized absences and
paid regular holidays unless the working days in the
Right to service incentive leave; vacation leave establishment as a matter of practice or policy, or
not mandated by law that provided in the employment contract is less
than 12 months, in which case said period shall be
The Labor Code provides a five-day service considered as one year (Sec. 3, Rule V, Book III, IRR).
incentive leave with pay for employees who have
rendered at least one year one year of service which Persons entitled to SIL
may be used as vacation or sick leave. If unused at
the end of the year, this benefit is convertible to its GR: Applies to every Ee who has rendered at least 1
cash equivalent based on the salary rate at the date year of service (LC, Art. 95[a]).

UNIVERSITY OF SANTO TOMAS

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56
 LABOR STANDARDS
XPNs:
1. Government Ees and any of its political
subdivisions including GOCCs
2. Those already enjoying the benefit
3. Domestic helpers and persons in the personal
services of another
4. Those already enjoying vacation leave with pay
of at least 5 days
5. Managerial Ees
6. Field personnel and other Ees whose
performance is unsupervised by the Er
7. Employed in establishments regularly
employing less than 10 workers
8. Exempt establishments
9. Engaged with atask or contract basis, purely
commission basis, or those who are paid in a
fixed amount of performing work irrespective
of the time consumed in the performance
thereof [LC, Art. 95(b)].
Teachers of private schools on contract basis are
entitled to service incentive leave
The phrase "those who are engaged on task or
contract basis" should, however, be related to "field
personnel" applying the rule on ejusdem generis that
those general and unlimited terms are restrained
and limited by the particular terms that they follow.
Clearly, Cebu Institute of Technology teaching
personnel cannot be deemed as field personnel
which refers "to non-agricultural Ees who regularly
perform their duties away from the principal place
of business or branch office of the Er and whose
actual hours of work in the field cannot be
determined with reasonable certainty” (Par. 3, Art.
82, LC); (CIT v. Ople, G.R. No. 70203, December 18,
1987).
Part-time workers are entitled to the full benefit
of the yearly 5-day service incentive leave
A part-time worker is entitled to service incentive
leave whether the service within 12 months is
continuous or broken or where the working days in
the employment contract as a matter of practice or
plicy is less than 12 months. The availment and
commutation of the same can be proportionate to
the daily work rendered and the regular daily
salary. (DOLE’s explanatory Bulletin on Part-time
Employment, January 2, 1996).
Entitlement of piece-rate workers to SIL
Piece-rate workers are entitled to the full benefit of
the yearly 5-day service incentive leave. Under P.D.
851 or the SIL Law, the exclusion from its coverage
of workers who are paid on a purely commission
basis is only with respect to field personnel. Ees
engaged on task or contract basis or paid on
57
purely commission basis are not automatically
exempted from the grant of SIL, unless, they fall
under the classification of field personnel (Serrano
v. Severino Santos, G.R. No. 187698, August 09,
2010).
NOTE: “Field personnel” shall refer to non-
agricultural Ees who regularly perform their duties
away from the principal place of business or branch
office of the employer and whose actual hours of
work in the field cannot be determined with
reasonable certainty (Ibid.)
Entitlement of Ees with salaries above minimum
wage to SIL
Ees with salaries above minimum wage are entitled
to service incentive leave. The difference between
the minimum wage and the actual salary received
by the Ees cannot be deemed as their 13th month
pay and SIL pay as such difference is not equivalent
to or of the same import as the said benefits
contemplated by law (JPL Marketing Promotions v.
CA, G.R. No. 151966, July 08,2005).
Entitlement of terminated Ees to SIL
1. Illegally dismissed Ees- entitled to SIL until
actual reinstatement (Integrated Contractor
and Plumbing Works, Inc. v. NLRC, G.R. No.
August 09, 2005).
2. Legally dismissed Ees – the Ee who had not
been paid of SIL from the outset of employment
is entitled only of such pay after a year from
commencement of service until termination of
employment or contract (JPL Marketing
Promotions v. CA, G.R. No. 151966, July 08, 2005).
Commutability of SIL to monetary equivalent
It is commutable if not used at the end of the year. It
is aimed primarily at encouraging workers to work
continuously and with dedication to the company.
Basis for cash conversion
The basis shall be the salary rate at the date of
commutation. The availment and commutation of
the SIL may be on a pro-rata basis [No. VI(c), DOLE
Handbook on Worker’s Statutory Monetary Benefit,
No.VI(c)].
Establishments exempt from the application of
the SIL Law
Establishments employing less than 10 Ees are
exempted by the LC and the Implementing Rules
from paying SIL. The clear policy of the LC is to
include all establishments, except a few classes,
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
under the coverage of the provision granting SIL to
workers (Murillo v. Sun Valley Realty, Inc., G.R. No. L-
67272 June 30, 1988).
MATERNITY LEAVE
Maternity leave benefit
A covered female Ee, regardless of her civil status, is
entitled to a daily maternity benefit equivalent to
100% of her present basic salary, allowances and
other benefits or the cash equivalent of such
benefits for 60 days or 78 days in case of caesarean
delivery.
Every pregnant woman is entitled to maternity
leave benefits regardless off her civil status,
whether married or unmarried. Being an unmarried
woman is not an obstacle for the grant of such
benefits provided she is a covered employee. Her
plight should be the moving spirit of the law to grant
such benefits to the less fortunate. (Poquiz, page
300)
Conditions for availment of maternity leave
benefit
1. The Ee shall have notified her Er of her
pregnancy and the probable date of her
childbirth which notice shall be transmitted to
the SSS;
2. The payment shall be advanced by the Er in 2
equal installments within 30 days from the
filing of the maternity leave application;
3. In case of caesarean delivery, the Ee shall be
paid the daily maternity benefit for 78 days;
4. Payment of daily maternity benefits shall be a
bar to the recovery of sickness benefits for the
same compensable period of 60 days for the
same childbirth, abortion, or miscarriage;
5. The maternity benefits provided under Sec. 14-
A shall be paid only for the first four deliveries;
6. The SSS shall immediately reimburse the Er of
100% of the amount of maternity benefits
advanced to the Ee by the Er upon receipt of
satisfactory proof of such payment and legality
thereof; and
7. If an Ee should give birth or suffer abortion or
miscarriage without the required contributions
having been remitted for her by her Er to the
SSS, or without the latter having been
previously notified by the Er of the time of the
pregnancy, the Er shall pay to the SSS damages
equivalent to the benefits which said Ee would
otherwise have been entitled to, and the SSS
shall in turn pay such amount to the Ee
concerned.
Requirements in order that maternity benefits
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
58
may be claimed
1. There is childbirth, abortion or miscarriage
2. She has paid at least three monthly
contributions
Maternity leave benefits excluded in the
computation of 13th month pay
Maternity leave benefits and other benefits
provided by Social Security Act are granted to
employees in lieu of wages. Thus, the same are
excluded in computing the employee's 13th month
pay for the calendar year.
Self-employed members not entitled to
maternity leave benefits; exception
Voluntary or self-employed members of the SSS are
not entitled to maternity leave benefits because the
law requires the corresponding maternity
contributions to be paid by the employers.
Voluntary or self-employed members have no
employers to remit such contributions (Sec. 14-A,
R.A. 8282). However, under Circular 36-V issued by
the SSS dated 24 May 1997, if they have qualifying
contributions using the new contribution schedule,
they shall be entitled to maternity benefits.
PATERNITY LEAVE
Paternity leave
It refers to the benefits granted to a married male Ee
allowing him not to report for work for 7 days but
continues to earn the compensation therefore, on
the condition that his spouse has delivered a child
or suffered a miscarriage for purposes of enabling
him to effectively lend support to his wife in her
period of recovery and/or in the nursing of the
newly-born child. In the event it is not availed of,
such leave is not convertible to cash. (RA 8187)
Concept of paternity leave benefits
Every married male Ee in the private and public
sectors shall be entitled to a paternity leave of 7
days with full pay for the first 4 deliveries of the
legitimate spouse with whom he is cohabiting.
Conditions for entitlement to paternity leave
The male Ee is:
1. Legally married to, and is cohabiting with the
woman who delivers the baby;
2. Ee of private or public sector;
3. Maybe availed of only for the first 4 deliveries
of the legitimate spouse with whom he is
cohabiting; and
 LABOR STANDARDS
4. Notify his Er of the pregnancy of his legitimate
spouse and the expected date of such delivery
NOTE: Delivery shall include childbirth or any
miscarriage.
Q: Ron is a bank employee of BPI. He is
cohabiting with Michelle for five straight years
with whom he has four children. In the fifth year
of their cohabitation, Michelle had her
miscarriage. Ron is availing himself of his
paternity leave. Is he entitled to paternity leave?
A: No. Ron is not entitled to paternity leave because
the facts of the case only show that he is only
cohabiting with Michelle. The law (RA 8187)
expressly provides that the male must be legally
married to the woman with whom he is cohabiting
as a condition for entitlement of paternity leave.
Even assuming that Ron is legally married to
Michelle, he cannot avail also of the paternity leave
because the law limits the deliveries only to four
which include childbirth or miscarriage. Based on
the facts, it is already the 5th delivery of the woman.
Q: Because of the stress in caring for her four (4)
growing children, Tammy suffered a final conviction of the offender; Provided, That
miscarriage late in her pregnancy and had to
undergo an operation. In the course of the
operation, her obstetrician further discovered a
suspicious-looking mass that required the
subsequent removal of her uterus
(hysterectomy). After surgery, her physician
advised Tammy to be on full bed rest for six (6)
weeks. Meanwhile, the biopsy of the sample
tissue taken from the mass in Tammy's uterus
showed a beginning malignancy that required
an immediate series of chemotherapy once a
week for four (4) weeks.
(B) What can Roger-Tammy's 2nd husband and
the father of her two (2) younger children -claim
as benefits under the circumstances? (2013 Bar
Questions)
A: Under RA 8187 or the Paternity Leave Act of
1996, Roger can claim paternity leave of seven (7)
days with full pay if he is lawfully married to Tammy
and cohabiting with her at the time of the
miscarriage.
PARENTAL LEAVE
Parental leave
Leave benefits granted to a solo parent to enable
him/her to perform parental duties and
59
responsibilities - where physical presence is
required.
In addition to leave privileges under existing laws,
parental leave of not more than 7 working days
every year shall be granted to any solo parent Ee
who has rendered service of at least 1 year. (Sec. 8,
RA 8972)
Conditions for entitlement of parental leave
1. He or she must fall among those referred to as a
solo parent
2. Must have the actual and physical custody of the
child or children
3. Must have at least rendered service of one year
to his or her employer
4. He or she must remain a solo parent
Persons considered a solo parent entitled to
parental leave
Any individual who falls under any of the ff.
categories:
1. A woman who gives birth as a result of rape and
other crimes against chastity even without a
the mother keeps and raises the child;
2. Parent left solo or alone with the responsibility
of parenthood due to:
a. Death of spouse;
b. Detention or service of sentence of spouse
for a criminal conviction for at least 1 yr;
c. Physical and/or mental incapacity of
spouse
d. Legal separation or de facto separation
from spouse for at least 1 year as long as
he/she is entrusted with the custody of the
children;
e. Nullity or annulment of marriage as
decreed by a court or by a church as long as
he/she is entrusted with the custody of the
children;
f. Abandonment of spouse for at least 1 yr;
3. Unmarried mother/father who has preferred to
keep and rear his or her child/children instead of:
a. having others care for them or
b. give them up to a welfare institution;
4. Any other person who solely provides:
a. parental care and
b. support to a child or children;
5. Any family member who assumes the
responsibility of head of family as a result of the:
a. death,
b. abandonment,
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
c. disappearance or
d. prolonged absence of the parents or solo
parent.
NOTE: A change in the status or circumstance of the
parent claiming benefits under this Act, such that
he/she is no longer left alone with the responsibility
of parenthood, shall terminate his/her eligibility for
these benefits. (Sec. 3, RA 8972)
LEAVES FOR VICTIMS OF VIOLENCE AGAINST
WOMEN and their CHILDREN (R.A. 9262)
A female Ee who is a victim of violence (physical,
sexual, or psychological) is entitled to a paid leave
of 10 days in addition to other paid leaves (R.A.
9262, Anti- VAWC Act). This is known as the battered
woman leave
SPECIAL LEAVE BENEFIT FOR WOMEN
A woman Ee having rendered continuous aggregate
employment service of at least 6 months for the last
12 months shall be entitled to a special leave benefit
of 2 months with full pay based on her gross
monthly compensation following surgery caused by
gynaecological disorders (Sec. 18, R.A. 9710, Magna
Carta of Women).
Q: Because of the stress in caring for her four (4)
growing children, Tammy suffered a be considered integrated in their wages on the basis
miscarriage late in her pregnancy and had to
undergo an operation. In the course of the
operation, her obstetrician further discovered a
suspicious-looking mass that required the
subsequent removal of her uterus
(hysterectomy). After surgery, her physician
advised Tammy to be on full bed rest for six (6)
weeks. Meanwhile, the biopsy of the sample
tissue taken from the mass in Tammy's uterus
showed a beginning malignancy that required
an immediate series of chemotherapy once a
week for four (4) weeks. What benefits can
Tammy claim under existing social legislation?
(2013 Bar Questions)
A: Assuming she is employed, Tammy is entitled to
a special leave benefit of two months with full pay
(Gynecological Leave) pursuant to RA 9710 or the
Magna Carta of Women. She can also claim Sickness
Leave Benefit in accordance with the SSS Law.
SERVICE CHARGES
Service charges
These are charges collected by hotels, restaurants
and similar establishments at the rate of 85% for
covered Ees equally distributed among them, and
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
60
15% for the management to answer for losses and
breakages.
Covered employees
GR: All Ees are covered, regardless of their position,
designation, and employment status, irrespective of
the method by which their wages are paid.
NOTE: Applies only to hotels, restaurants and
similar establishment collecting service charges.
XPN: Managerial Ees (IRR, Book III, Rule VI, Sec. 2)
Period to distribute the share of Ee
The period is not less than once every 2 weeks or
twice a month at intervals not exceeding 16 days.
Service charge vs. Tips
SERVICE CHARGE TIPS
Collected by the Voluntary payments
management from the made by the customers
customers. to the Ees for excellent
service.
Rule if service charge is abolished
If it is abolished, the share of the covered Ees shall
of the average monthly share of each Ees for the past
12 months immediately preceding the abolition.
(Sec. 5, Rule V, Book III, Rules Implementing the Labor
Code.)
NOTE: Service charges form part of the award in
illegal dismissal cases.
13th MONTH PAY
13th month pay or its equivalent
Additional income based on wage required by P.D.
851 requiring all Ers to pay their Ees a 13th month
pay which is equivalent to 1/12 of the total basic
salary earned by an Ee within a calendar year.
Basic Salary
Includes all remunerations or earnings paid by the
employer to an employee for services rendered
including cost-of-living allowances.
It does not include all allowancs and monetary
benefits which are not consdered or integrated as
part of the regular or basic salary such as:
 LABOR STANDARDS
1. Cash equivalent of unused vacation and sick
leave credits;
2. Overtime pay;
3. Premium pay;
4. Night Shift Differential;
5. Holiday pay;
6. Commisions, if it is not an integral part of the
basic salary.(Philippine Duplicators, Inc. v. NLRC,
G.R. No. 110068, Febuary 15, 1995)
These salary-related benefits should be included in
the computation of the 13th moth pay if by individual
or collective agreement, company practice or policy,
the same are treated as part of the basic salary of the
employees.
Absence of CBA provision not a bar in giving 13th
month pay
The absence of an express provision in the CBA
obligating the Er to pay the members of a union 13th
month pay is immaterial. Notwithstanding
therefore the absence of any contractual agreement,
the payment of a 13th month pay being a statutory
grant, compliance with the same is mandatory and
is deemed incorporated in the CBA.
Nature of 13th month pay
Such is in the nature of additional income granted to
employees who are not receiving the same.(Agabon
v. NLRC, G.R. No. 158693, November 17, 2004)
It is based on wage but not part of wage. (Central
Azucarera de Tarlac v. Central Azucarera de Tarlac
Labor Union-NLU, G.R. No. 188949, July 26, 2010)
Minimum Period of Service Required
It is imposed as a ‘minimum service requirement’
that the employee should have worked for atleast
one month during a calendar year.(No. X[A], DOLE
Handbook on Workers Statutory Monetary Benefits)
Persons covered by P.D. 851
1. Employees
GR: All rank-and-file Ees are covered by P.D. 851
regardless of the amount of basic salary that they
receive in a month, if their Ers are not otherwise
exempted from paying the 13th month pay. Such
Ees are entitled to the 13th month pay regardless of
said designation of employment status, and
irrespective of the method by which their wages are
paid.
61
Provided, that they have worked for at least 1
month, during a calendar year (Revised Guidelines on
the Implementation of the 13th Month Pay Law).
XPN:
1. Government Ees;
2. Ees paid purely on commission basis;
3. Ees already receiving 13th month pay
Managerial employees are not entitled to 13th
month pay.(House of Sara Lee v. Rey, G.R. No.
149013, August 31, 2006)
But, managerial employees may revieve 13th month
pay, if such payment has been a company practice.
2. Employers
GR: All Ers are covered by PD 581.
XPN:
a. The Government and any of its political
subdivisions, including GOCCs;
XPN to XPN: Corporations operating
essentially as privated subsidiearies of the
Government
b. Ers already paying their Ees 13th month pay or
more in a calendar year ir its equivalent at the
time of the issuance of the Revised Guidleines;
c. Ers of those who are paid on purely basis of:
i. Commission;
ii. Boundary; or
iii. Task; and
iv. Fixed amount for performing a specific
work
Irrespective of the time consumed in the
performance thereof.
XPN: where the workers are paid on a piece-
rate basis, in which case, the employer shall
be covered by the Revised Guidelines insofar
as the workers are concerned.
Note: ‘Piece-Rate Workers’ refers to those who
are paid a standard amount for every piece or
unit of work produced that is more or less
regularly replicated without regard to the time
spent in producing the same.
d. Distressed Ers:
a. Currently incurring substantial losses; or
b. In the case of non-profit institutions and
organizations, where their income,
whether from donations, contributions,
grants and other earnings from any
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
source, has consistently declined by
more than 40% of their normal income
for the last 2 years, subject to the
provision of Sec. 7 of P.D. 851
Options of covered Ers
1. Pay 1/2 of the 13th month pay required before
the opening of the regular school year and the
other half on or before the 24th day of
December of every year.
2. In any establishment where a union has been
recognized or certified as the CB agent of the Ee,
the periodicity or frequency of payment of the
13th month pay may be the subject of
agreement.
Government Ees working as part-time in private
sector or those with multiple employers entitled
to 13th month pay
Such includes private educational institutions, as
well as employees working in two or more private
firms, whether in full or part-time basis, regardless
of their total earnings from each on all their
employers (Revised Guidelines on the
Implementation of 13th Month Pay Law)
Dismissed or resigned employee entitled to 13th
month pay
An Ee who has resigned or was terminated at any
time before the payment of the 13th month is due,
his monetary benefit shall be computed in
proportion to the length of time he worked during
the year, reckoned in proportion to the length of
time he worked during the calendar year up to his
resignation or termination or 1/12 of his total basic
pay earned during the period (Section 6, DOLE
Revised Guidleines on 13th Month Pay)
Other types of employment entitled to 13th
month pay
1. Part-time Employee(Item 5[b], Revised
Guidelines of PD 851);
2. Extras;
3. Casual Employee; and
4. Seasonal Employee(BWC Opinion, December 19,
1987)
Q: What would be your advice to your client, a
manufacturing company, who asks for your
legal opinion on whether or not the 13th Month
Pay Law covers a casual Ee who is paid a daily
wage? (1998 Bar Question)
A: I will advise the manufacturing company to pay
the casual Ee 13th Month Pay if such casual Ee has
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
62
worked for at least 1 month during a calendar year.
The law on the 13th Month Pay provides that Ees
are entitled to the benefit of said law regardless of
their designation or employment status.
The SC interpreted P.D.851, as follows: Ees are
entitled to the 13th month pay benefits regardless of
their designation and irrespective of the method by
which their wages are paid (Jackson Building-
Condominium Corp. v. NLRC, G.R. No. 112546, March
14, 1996).
NOTE: An Er may give to his Ees ½ of the required
13th Month pay before the opening of the regular
school year and the other half on or before Dec. 24.
Equivalent forms of the 13th month pay
1. Christmas Bonus
2. Midyear Bonus
3. Profit Sharing Scheme
4. Other Cash bonuses amounting to not less than
1/12 of its basic salary
NOTE: It must always be in the form of a legal
tender.
Things not proper substitutes for 13th month
pay
1. Free rice
2. Electricity
3. Cash and stock dividends
4. Cost-of-living Allowance (P.D. 851, Sec. 3)
Q: Concepcion Textile Co. included the OT pay,
night-shift differential pay, and the like in the
computation of its Ees’ 13th month pay.
Subsequently, with the promulgation of the
decision of the SC in the case of SMC v. Inciong
(103 SCRA 139) holding that these other
monetary claims should not be included in the
computation of the 13th Month Pay, Concepcion
Textile Co. sought to recover under the principle
of solutio indebiti the overpayment of the Ees’
13th month pay, by debiting against future 13th
month payments whatever excess amounts it
had previously made.
a. Is the Company's action tenable?
b. With respect to the payment of the 13th
month pay after the SMC ruling, what
arrangement, if any, must the Company
make in order to exclude from the 13th
month pay all earnings and remunerations
other than the basic pay? (1994 Bar
Question)
A:
 LABOR STANDARDS
a. The Company's action is not tenable. The
principle of solutio indebiti which is a civil law
concept is not applicable in labor law (Davao
Fruits Corp. v. NLRC, et al., G.R. No. 85073, August
24, 1993). After the 1981 SMC ruling, the
Supreme Court decided the case of Philippine
Duplicators Inc. v. NLRC, GR 110068, November
15, 1995. Accordingly, management may
undertake to exclude sick leave, vacation leave,
maternity leave, premium pay for regular
holiday, night differential pay and cost of living
allowance.
b. The company shall include sales commissions
based on the settled rule. (Songco v. NLRC, G.R.
No. L-50999, March 23, 1990).
Adjudicated claims
Non-payment of the 13th month pay provided by
P.D. 851 and the rules of NLRC shall be treated as
money claims cases.
NOTE: Difference of opinion on how to compute the
13th month pay is non-strikable and a strike held on
that ground is illegal.(Isalama Machine Works Corp.
v. NLRC, G.R. No. 10016, March 2 1995.)
The following Ees may or may not be entitled to
13th month pay
1. Ee paid by results – Entitled to 13th month pay.
NOTE: Ees paid a fixed or guaranteed wage plus
commission are also entitled to the mandated
13thmonth pay, based on their total earnings
during the calendar year, i.e. on both their fixed
or guaranteed wage and commission.
2. Those with Multiple Ers – Government Ees
working part time in a private enterprise,
including private educational institutions, as
well as Ees working in 2 or more private firms,
whether full or part time basis, are entitled to
the required 13th month pay from all their
private Ers regardless of their total earnings
from each or all their Ers.
3. Private School Teachers, including faculty
members of universities and colleges –
Entitled regardless of the number of months
they teach or are paid within a year, if they have
rendered service for at least 1 month within a
year.
4. Resigned or Separated Ees - If resigned or
separated from work before the time of
payment of 13th month pay, entitled to
monetary benefits in proportion to the length of
time he started working during the calendar
63
year up to the time of resignation or
termination of service (Pro-rated 13th month
pay).
Application of pro-ration of 13th month pay
GR: Pro-ration of 13th month pay applies only in
cases of resignation or separation from work;
computation should be based on length of service
and not on the actual wage earned by the worker
(Honda Phils. v. Samahan ng Manggagawasa Honda,
G.R. No. 145561, June 15, 2005).
XPN: Ees who are paid a guaranteed minimum wage
or commissions earned are entitled to 13th Month
Pay based on total earnings (Philippine Agricultural
Commercial and Industrial Workers Union v. NLRC,
G.R. No. 107994, August 14, 1995).
14th month pay not legally demandable
The granting of 14th month pay is a management
prerogative and is not legally demandable. It is
basically a bonus and is gratuitous in nature
(Kamaya Point Hotel v. NLRC, G.R. No. 75289, August
31, 1989).
Exception
A bonus, however, becomes a demandable or
enforceable obligation when it is made part of the
wage or salary or compensation of the employee. If
it is additional compensation which the employer
promised and agreed to give without any conditions
imposed for its payment, such as success of business
or greater production or output, then it is part of the
wage. But if it is paid only if profits are realized or if
a certain level of productivity is achieved, it cannot
be considered part of the wage. Where it is not
payable to all but only to some employees and only
when their labor becomes more efficient or more
productive, it is only an inducement for efficiency, a
prize therefore, not a part of the wage. (Metro
Transit Organization, Inc. v. NLRC, G.R. No. 116008,
July 11, 1995)
Q: ETPI (company) entered into a collective
bargaining agreement with ETEU (union). A side
agreement of the said CBA provided that
company confirms that the 14th, 15th and
16th month bonuses (other than 13th month pay)
are granted. The company then planned to defer
the payment of the 14th, 15th and 16th month
bonuses due continuing deterioration of
company’s financial position. The union
opposed and filed a preventive mediation
complaint before the NCMB. May the company
validly postpone the payment of said bonuses?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
A: No. A reading of the provision reveals that the
same provides for the giving of 14th, 15th and
16th month bonuses without qualification. There
were no conditions specified in the CBA Side
Agreements for the grant of the benefits contrary to
the claim of ETPI that the same is justified only
when there are profits earned by the company.
Terse and clear, the said provision does not state
that the subject bonuses shall be made to depend on
the ETPI’s financial standing or that their payment
was contingent upon the realization of profits.
Neither does it state that if the company derives no
profits, no bonuses are to be given to the employees.
In fine, the payment of these bonuses was not
related to the profitability of business operations.
Verily, by virtue of its incorporation in the CBA Side
Agreements, the grant of 14th, 15th and 16th month
bonuses has become more than just an act of
generosity on the part of ETPI but a contractual
obligation it has undertaken (ETPI v. ETEU, G.R. No.
185665, Feb. 8, 2012).
Commission in relation to 13th month pay
1. The salesman’s 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. v. NLRC, G.R. No. 110068,
February 15, 1995).
2. The so-called commission paid to or received by
medical representatives of BoieTakeda
Chemicals or by the rank-and-file Ees of Phil. Fuji
Xerox were excluded from the term basic salary
because these were paid as productivity
bonuses. Such bonuses closely resemble profit
sharing, payments and have no clear, direct,
necessary relation to the amount of work
actually done by each individual Ee.(Boie-Takeda
Chemicals, Inc. v. Dela Serna, G.R. No. 92174,
December 10, 1993)
3. Earnings and remuneration which are closely
akin to fringe benefits, overtime pay or profit-
sharing payments are excluded in computing
13th month pay. However, sales commissions
which are effectively an integral portion of the
basic salary structure of an employee shall be
included in determining his 13th month pay.
RETIREMENT PAY
Retirement
It is the result of a bilateral act of the parties, a
voluntary agreement between the Er and the Ee
whereby the latter after reaching a certain age
agrees and/or consents to sever his employment
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
64
with the former (Ariola v. Philex Mining Corp, G.R.
No. 147756. August 9, 2005).
Persons covered by retirement benefit
All Ees in the private sector:
1. Regardless of their position, designation or
status; and
2. Irrespective of the method by which their
wages are paid (IRR, Book VI, Rule II, Sec.1);
3. Part-time Ees;
4. Ees of service and other job contractors;
5. Domestic Helpers or Persons in the personal
service of another(Department Order 20, May
31, 1994);
6. Underground mine workers(R.A. 8558);
7. Ees of GOCCs organized under the Corporation
Code (without original charters)[Postigo, et al.
v. Philippine Tubercolosis Society, Inc., G.R. No.
155146, January 24, 2006]
Persons not covered by retirement benefits
1. Ees of the National Government and its political
subdivisions, including GOCCs (if they are
covered by the Civil Service Law);
2. Ees of retail, service, and agricultural
establishments or operations employing not
more than 10 Ees (IRR, Book VI, Rule II, Sec.2).
Kinds of retirement schemes
1. Compulsory and contributory in nature;
2. One set up by the agreement between the Er
and Ees in the CBA or other agreements
between them (other applicable employment
contract);
3. One that is voluntarily given by the Er,
expressly as announced company policy or
impliedly as in the failure to contest the Ee’s
claim for retirement benefits (Marilyn
Odchimar Gertach v. Reuters Limited Phils., G.R.
No. 14854, January 17, 2005).
Retroactive application of Art. 287 of the LC (on
retirement) as amended by R.A. 7641
Art. 287 of the LC as amended by R.A. 7641 can be
applied retroactively, provided that;
1. The claimant for retirement benefits was still
the Ee of the Er at the time the statute took
effect; and
2. The claimant was in compliance with the
requirements for eligibility under the statute
for such retirement benefits (PSVSIA v. NLRC,
G.R. No. 115019, April 14, 1997).
Provisions of the retirement plan binding as
part of the employment contract
 LABOR STANDARDS
The retirement plan forms part of the employment
contract since it is made known to the Ees and
accepted by them, and such plan has an express
provision that the company has the choice to retire
an Ee regardless of age, with 20 years of service, said
policy is within the bounds contemplated by the LC.
Moreover, the manner of computation of retirement
benefits depends on the stipulation provided in the
company retirement plan (Progressive Dev’t
Corporation v. NLRC, G.R. No. 138826, October 30,
2000).
ELIGIBILITY
Retirement age
It is the age of retirement that is specified in the
1. CBA;
2. Employment contract;
3. Retirement plan (IRR, Book VI, Rule II, Sec. 3); or
4. Optional retirement age for underground
mining Ees
Retirement age in the absence of a retirement
plan or other applicable agreement
1. Optional – Upon reaching 60 years old
provided that Ee has rendered 5 years of
service.
The option to retire upon reaching the age of 60
years or more but not beyond 65 is the
exclusive prerogative of the Ee if there is no
provision on retirement in a CBA or any other
agreement or if the Er has no retirement plan
(Capili v. NLRC, G.R. No. 117378, March 26,
1997).
2. Compulsory – 65 years old, regardless of years
of service (IRR, Book VI, Rule II, Sec. 4).
Retirement benefits, where not mandated by
law, may be granted by agreement of the Ees
and their Er or as a voluntary act on the part of
the Er. Retirement benefits are intended to help
the Ee enjoy the remaining years of his life,
lessening the burden of worrying for his
financial support, and are a form of reward for
his loyalty and service to the Er (Aquino v. NLRC,
G.R. No. 87653, February 11, 1992).
5 year service requirement only applies to
absence of retirement plan
Being in a nature of ‘minimun requirement’, the
parties cannot stipulate a period higher that five
years since this will run counter to the law.(Chan,
2014)
65
The minimum length of service includes authorized
absences and vacations, regular holidays, and
mandatory fulfillment of a military or civic
duty.(Section 4.4, Rule II, IRR of the Retirement pay
Law)
Employee must have met the conditions of
eligibility as condition precedent
Although retirement plan forms part of the
employment contract, before a right to retirement
benefits or pension vests in an Ee, he must have met
the stated conditions of eligibility with respect to
the nature of employment, age, and length of
service. This is a condition precedent to his
acquisition of rights thereunder. (Brion v. South Phil.
Union Mission of the Seventh Day Adventist Church,
G.R. No. 135136 May 19, 1999).
NOTE: SC ruled that the conditions of eligibility for
retirement must be met at the time of retirement at
which juncture the right to retirement benefits or
pension, if the Ee is eligible, vests in him.(Ibid.)
Compulsory retirement age below 60 allowed by
mutual agreement
Art. 287 permits Er and Ee to fix the applicable
retirement age at below 60. The same is legal and
enforceable so long as the parties agree to be
governed by such CBA (Pantranco North Express v.
NLRC, G.R. No. 95940, July 24, 1996).
NOTE: In order for retirement at an earlier age to be
valid, it must be shown that the Ee’s participation in
the plan is voluntary.(Jaculbe v. Siliman University,
G.R. No. 156934, March 16, 2007)
Different Retirement Age for mine workers
under RA 8558
The optional retirement age of underground mine
workers is fifty (50) years of age; while the
compulsory retirement age is sixty (60) yearls
old.(Section 2.2, Department Order No. 09, Series of
1998)
Rule for extension of service of retiree upon
reaching the compulsory retirement age
Upon the compulsory retirement of an Ee or official
in the public or private service, his employment is
deemed terminated. The matter of extension of
service of such Ee or official is addressed to the
sound discretion of the Er (UST Faculty Union v.
NLRC, G.R. No. 89885, August 6, 1990).
Q: After thirty (30) years of service, Beta
Company compulsorily retired Albert at age 65
pursuant to the company's Retirement Plan.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Albert was duly paid his full retirement benefits
of one (1) month pay for every year of service
under the Plan. Thereafter, out of compassion,
the company allowed Albert to continue
working and paid him his old monthly salary
rate, but without the allowances that he used to
enjoy.
After five (5) years under this arrangement, the
company finally severed all employment
relations with Albert; he was declared fully
retired in a fitting ceremony but the company
did not give him any further retirement benefits.
Albert thought this treatment unfair as he had
rendered full service at his usual hours in the
past five (5) years. Thus, he filed a complaint for
the allowances that were not paid to him, and for
retirement benefits for his additional five (5)
working years, based either on the company's
Retirement Plan or the Retirement Pay Law,
whichever is applicable.
a. After Albert's retirement at age 65, should
he be considered a regular employee
entitled to all his previous salaries and
benefits when the company allowed him to
continue working?
b. Is he entitled to additional retirement
benefits for the additional service he
rendered after age 65? (2013 Bar Question)
A:
a. He would be considered a contractual
employee, not a regular employee. His salaries
and benefits will be in accordance with the
stipulations of the contract he signed with the
company.
The present case is similar to a case decided by
the Supreme Court in Januaria Rivera v. United
Laboratories, G.R. No. 155639, where the Court
held that the company, in employing a retired
employee whose knowledge, experience and
expertise the company recognized, as an
employee or as a consultant, is not an illegality;
on the contrary, it is a recognized practice in
this country.
b. No. He cannot be compulsorily retired twice in
the same company.
Retirement Pay Separation Pay
Distinctions
Required in cases
enumerated under
Paid by reason of Article 283 and 284
retirement and as a substitute
where reinstatement is
not possible
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
66
Purpose is to held the Wherewithal during
Ee enjoy the remaining the period that an
years of his life thereby employee is looking for
lessening the burden of another employment
worrying for his after his termination
financial support
When both must be paid
Payment of retrenchment embodied in the CBA
as well as retirement pay provided under a
separate Retirement Plan due to the demand of
the Ee of their right under the CBA which was
result of negotiations between the company and
Ees.(Aquino v. NLRC, G.R. No. 87653, Feb 11, 1992)
When Ees are entitled to only
one form of benefit
When the CBA provisions are considered an
effective bar to the availment if retirement
benefits once the Ees have chosen separation pay
or vice versa. Such when the CBA enunciates
express prohibition against ‘double
recovery.’(Zuelig Pharma Corp. v. Sibal, G.R. No.
173587, July 15, 2013)
AMOUNT
Computation of retirement benefits in the
absence of an applicable agreement or
retirement plan
A retiree is entitled to a retirement pay equivalent
to at least ½ month salary for every year of service,
a fraction of at least 6 months being considered as 1
whole year (R.A. 7641).
Composition of ½ month salary or retirement
pay
Unless parties provide for broader inclusions,
retirement pay is comprised of:
1. 15 days salary based on latest salary rate;
2. Cash equivalent of not more than 5 days of
service incentive leaves (22.5/year of service)
3. 1/12 of the 13th month pay
4. All other benefits as may be agreed upon by the
Er and Ee (IRR, Book VI, Rule II, Sec.5.2).
NOTE: Under Sec. 26 of R.A. 4670, otherwise known
as “Magna Carta for Public School Teachers”, public
school teachers having fulfilled the age and service
requirements of the applicable retirement laws
shall be given one range salary raise upon the
retirement, which shall be the basis of the
computation of the lump sum of the retirement pay
and monthly benefit thereafter.
 LABOR STANDARDS
Superiority of Benefits Rule It is paid to the
beneficiary for the past
Are intended to help
Once the Ee retires, it is not Article 287 that is services or favor
the Ee enjoy the
controlling but the retirement plan under the CBA rendered purely out of
remaining years of his
or other applicable employment contract. (Chan, the generosity of the
life, releasing him from
2014) giver or grantor. It is
the burden of worrying
not intended to pay a
for his financial
Article 287 becomes relevant only in the matter of worker for actual
support, and are a form
ensuring that the retirement benefits are not less services rendered or
of reward for his
than whose provided therein.(Elegir v. PAL, Inc., G.R. for actual
loyalty to the Er (Sta.
No. 181995, July 16, 2012) performance. It is a
Catalina College and Sr.
money benefit or
Loreta Oranza, v. NLRC
Q: The instant labor dispute between bounty given to the
and Hilaria Tercera,
petitioners (PAL) stemmed from petitioner’s act worker, the purpose of
G.R. No. 144483,
of unilaterally retiring airline pilot Captain which is to reward Ee’s
November 19, 2003).
Albino Collantes under PAL-ALPAP Retirement who have rendered
Plan. The SLE assailed the order of PAL’s action satisfactory service to
of unilaterally retiring Captain Collantes the company.
andfurther ordered that the basis of the
computation of Captain Collantes’ retirement Q: In 1955, Hilaria was hired as a grade school
benefits should be Art. 287 of the LC the PAL- teacher at the Sta. Catalina College. In 1970, she
ALPAP Retirement Plan. But PAL contends that applied for and was granted a 1 year leave of
the retirement plan should prevail as it is the absence (LOA) without pay due to the illness of
agreement between the parties. What should be her mother. After the expiration in 1971 of her
the basis of the computation of Captain LOA, she had not been heard from by Sta.
Collantes’ retirement benefits? Catalina. In the meantime, she was employed as
a teacher at the San Pedro Parochial School
A: The basis of computation of Collantes’ retirement during SY ‘80-‘81 and at the Liceo de San Pedro,
benefits should be Art. 287 of the LC. The given during SY 1981-1982. In 1982, she applied anew
retirement benefits under the retirement plan is low at Sta. Catalina which hired her. On Mar 22,
compared to the retirement benefits provided 1997, during the 51st Commencement Exercises
under Art. 287 of the LC. Applying the second of Sta. Catalina, Hilaria was awarded a Plaque of
paragraph of Art. 287 ofthe LC, an Ee’s retirement Appreciation for 30 yrs. of service and Php
benefits under any collective bargaining and other 12,000 as gratuity pay. On May 31, 1997, Hilaria
agreement shall not be less than those provided in reached the compulsory retirement age of
the LC. Hence, Art. 287 of the LC and not the PAL- 65. Sta. Catalina pegged her retirement benefits
ALPAP Retirement Plan, should govern the at Php 59,038.35. However, amount of Php
computation of the benefits to be awarded to 12,000 representing the gratuity pay, which was
Captain Collantes. Moreover, a pilot who retires given to her, was deducted from her retirement
after twenty years of service or after flying 20,000 benefits.
hours would still be in the prime of his life and at the
peak of his career, compared to one who retires at Should the gratuity pay be deducted from the
the age of 60 years old. Based on this peculiar retirement benefits?
circumstance that PAL pilots are in, the parties
provided for a special scheme of retirement A: Yes. Gratuity pay is separate and distinct from
different from that contemplated in the LC. retirement benefits. It is paid purely out of
Conversely, the provisions of Art. 287 of the LC generosity.
could not have contemplated the situation of PAL’s
pilots. Rather, it was intended for those who have no RETIREMENT PAY UNDER RA 7641
more plans of employment after retirement, and are VIS-À-VIS RETIREMENT BENEFITS UNDER
thus in need of financial assistance and reward for SSS AND GSIS LAWS
the years that they have rendered service.
(Philippine Airlines, Inc. v. Airline Pilots Association of Retirement pay under the LC in relation to
the Philippines, G.R. No. 143686, January 15, 2002). retirement benefits under SSS and GSIS laws
(1997 Bar Question)
Gratuity Pay vs. Retirement Benefits

RETIREMENT
GRATUITY PAY
BENEFITS

UNIVERSITY OF SANTO TOMAS

67 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Revised RETIREMENT BENEFITS OF WORKERS
Governme Employees’ PAID BY RESULTS/ RETIREMENT
Social
nt Service Compensatio BENEFITS OF PART-TIME WORKERS
Security Law
Insurance n Act
Act Determination of the amount of retirement
Compulsory Compulsory benefits of workers paid by results and part-
for all upon all Ers time workers
Compulsory permanent and their Ees The 15-day salary of workers paid by results and
upon all E e s Ees below 60 not over part-time workers shall be determined from their
n o t o v e r 6 0 years of age 60years of average daily salary (ADS), which is the average
years of age and upon age; daily salary for the last 12 months reckoned from
their Ers. appointment Provided, the date of their retirement, divided by the number
of permanent that an Ee of actual working days in that particular period
1. Filipinos status, and who is over (Rules Implementing the New Retirement Law, Sec.
recruited in the for all elective 60 years of 5.2 and 5.3).
Philippines by officials for age and Note: The rule mentioned is the same for
foreign-based the duration paying underground mine Ees.(Section 4.3, Rule II-A,
Ers for of their contributions Department Order No. 09, Series of 1998)
employment tenure. to qualify for
abroad may be the TAXABILITY
covered by the NOTE: Any retirement or
SSS on a person, life insurance Non-taxability of retirement benefits under R.A.
voluntary basis. whether benefit 7641
elected or administered
2. Compulsory appointed, in by the System Retirement benefits under R.A 7641 are tax exempt
upon all self- the service of shall be provided that such benefits provided by the
employed an Er is a subject to retirement plan be equal or less than the minimum
persons covered Ee if compulsory requirement provided by law.
earning Php 1, he receives coverage.
800 or more compensation Requirements for tax exemption under R.A.
per annum. for such 7641
service.
1. That there be no CBA or other applicable
employment contract providing for retirement
Right to contributory retirement plan benefits for an Ee; or
2. Even if there is a CBA or other applicable
Where both Er and Ee contribute to a retirement employment contract providing for retirement
fund in accodrdance with the CBA or other benefits for an Ee, that the same is below the
applicable employment contract, the Er’s total requirements set forth by law.
contribution thereto should not be less than the total
retirement benefits to which the Ee would have been Retirement benefits if private firms shall not be
entitled had there been no such retirement fund. In subject to any tax
case the Er’s contribution is less than the retirement
benefits provided under the law, the Er should pay The following conditions must be complied with:
the deficiency.(Section 3.3, Rule II, IRR or the
Retirement Pay Law) 1. The retirement benefits received by the officials
and Ees of private firms, whether individual or
Right to non-contributory retirement plan corporate, is in accordance with a reasonable
private benefit plan maintained by the Er;
The Ee have a vested and demandable right to a non- 2. The retiring official or Ee has been in the service
contributory retirement plan. It is an existing benefit of the same Er for at least ten (10) years;
voluntarily granted to them by their Er. The latter 3. He/She is not less than fifty (50) years of age at
may not unilaterally withdraw, eliminate or the time of his/her retirement; and
diminish such benefits.(Nestle Philippines, Inc. v. 4. The benefits shall be availed of by an official or
NLRC, G.R. No. 91231, Febuary 4, 1991) employee only once.(RA 4971)

RA 8424, the Tax Reform Act of 1997, which

amended the NIRC, expressly excludes retirement
benefits from gross income based on the same four

UNIVERSITY OF SANTO TOMAS

2016 GOLDEN NOTES
68
 LABOR STANDARDS
(4) conditions enumerated above. Non-compliance
with any of the requirements would subject the
benefits to tax.(Santos v. Servier Philippines, Inc.. G.R.
No. 166377, November 28, 2008)
Exemption of retirement pay of underground
mine workers from tax
The retirement pay provided in RA 8558 may be
exempted from tax consistend with the BIR as
discussed above.
WOMEN WORKERS
PROVISIONS AGAINST DISCRIMINATION
State policy on non-discrimination against
women
The State condemns discrimination against women
in all its forms and pursues by all appropriate means
and without delay the policy of eliminating
discrimination against women in keeping with the
Convention on the Elimination of All Forms of
Discrimination Against Women (CEDAW) and other
international instruments consistent with
Philippine law. The State shall accord women the
rights, protection, and opportunities available to
every member of society (R.A. 9710 or the Magna
Carta of Women, Sec. 2).
The State shall take steps to review and, when
necessary, amend and/or repeal existing laws that
are discriminatory to women within 3 years from
the effectivity of this Act (R.A. 9710, Sec. 12).
Discriminatory acts against women Ee
1. Discrimination with respect to the terms and
conditions of employment solely on account of
sex
a. Discrimination in pay – Payment of a lesser
compensation including wage, salary or
other forms of remuneration and fringe
benefits, to a female Ee as against a male Ee;
b. Discrimination in employment opportunity –
favoring a male Ee over a female Ee with
respect to promotion, assignment, transfer,
training opportunities, study and
scholarship grants solely in account or their
sexes;
c. Discrimination in hiring – favoring a male
applicant with respect to hiring where the
particular job can equally be handled by a
woman;
d. Discrimination in dismissal – favoring a
male Ee over a female Ee with respect to
dismissal of personnel or the application of
the last in / first out principle or other
69
retrenchment policy of the Er.(Poquiz,
2012)
2. Stipulating, whether as a condition for
employment or continuation of employment:
a. That a woman Ee shall not get married, or
b. That upon marriage, such woman Ee shall
be deemed resigned or separated (LC, Art.
136).
3. Dismissing, discriminating or otherwise
prejudice a woman Ee by reason of her being
married (LC, Art. 136).
NOTE: Discrimination in any form from pre-
employment to post employment, including
hiring, promotion or assignment, based on the
actual, perceived or suspected HIV status of an
individual is unlawful (Philippine AIDS
Prevention and Control Act of 1998, R.A. 8504).
Standard of reasonable test
Under the standard reasonable test which is parallel
to the concept of a bona-fide occupational
qualification test in American jurisdictions, the Er
has the burden of proof to prove the existence of a
reasonable business necessity that would justify an
employment policy (Star Paper Corp. v. Simbol, G.R.
No. 164774, April 12, 2006).
Q: Can an individual, the sole proprietor of a
business enterprise, be said to have violated the
Anti-Sexual Harassment Act of 1995 if he clearly
discriminates against women in the adoption of
policy standards for employment and
promotions in the enterprise? Explain. (2003
Bar Question)
A: When an Er discriminates against women in the
adoption of policy standards for employment and
promotion in his enterprise, he is not guilty of
Sexual Harassment. Instead, the Er is guilty of
discrimination against women Ees which is
declared to be unlawful by the LC.
For an Er to commit Sexual Harassment, he – as a
person of authority, influence or moral ascendancy
– should have demanded, requested or otherwise
required a sexual favor from his Ee whether the
demand, request or requirement for submission is
accepted by the object of said act.
STIPULATION AGAINST MARRIAGE
(LC, ART. 136)
No-spouse employment policy
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
It is a policy banning spouses from working in the
same company.
No-spouse employment policy may or may not
violate provisions of the LC
GR: It may not facially violate Art. 136 of the LC but
it creates a disproportionate effect and the only way
it could pass judicial scrutiny is by showing that it is
reasonable despite the discriminatory and
disproportionate effect.
XPN: Bona fide occupational qualification rule
(BFOQR)
Bona fide occupational qualification rule
(BFOQR)
There must be a finding of any BFOQ to justify an
Er’s no spouse employment rule. There must be a
compelling business necessity for which no
alternative exists other than the discriminating
practice. To justify a BFOQ, the Er must prove two
factors:
1. That the employment qualification is
reasonably related to the essential operation of
the job involved; and
2. That there is a factual basis for believing that all
or substantially all persons meeting the
qualification would be unable to properly
perform the duties of the job (Star Paper v.
Simbol, G.R. No. 164774, April 12, 2006).
Importance of the BFOQR
1. To ensure that the Ee can effectively perform
his work
2. So that the no-spouse employment rule will not
impose any danger to business.
Q: Glaxo, a company which has a policy against
employees having relationships with the
employees of its competitors, employed Tecson
as a medical representative. Tecson married
Bettsy, a Branch coordinator in one of Glaxo’s
competitors. Tecson was then transferred to
another area but he did not accept such transfer.
Is the policy of Glaxo valid and reasonable so as
to constitute the act of Tecson as willful
disobedience?
A: Yes. The prohibition against personal or marital
relationships with Ees of competitor companies
upon Glaxo’s Ees is reasonable under the
circumstances because relationships of that nature
might compromise the interest of the company.
Glaxo does not impose an absolute prohibition
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
70
against relationships between its Ees and those of
competitor companies. Its Ees are free to cultivate
relationships with and marry persons of their own
choosing. What the company merely seeks to avoid
is a conflict of interest between the Ee and the
company that may arise out of such relationships.
Furthermore, the prohibition forms part of the
employment contract and Tecson was aware of such
restrictions when he entered into a relationship
with Bettsy (Duncan Assoc. of Detailman-PTGWO v.
Glaxo Wellcome Phil. Inc., G.R. No. 162994, September
17, 2004).
Q: May a woman worker be dismissed on the
ground of dishonesty for having written ‘’single”
on the space for civil status on the application
sheet, contrary to the fact that she was married?
A: Art. 136 of the LC, explicitly prohibits
discrimination merely by reason of marriage of a
female Ee. The policy of not accepting or
disqualifying from work any woman worker who
contracts marriage is afoul of the right against
discrimination provided to all women workers by
our labor laws and by our Constitution (PT&T Co. v.
NLRC, G.R. No. 118978, May 23, 1997)
PROHIBITED ACTS
Prohibited acts under Art. 137 of the LC
It shall be unlawful for any Er to:
1. Deny any woman Ee benefits provided by law.
2. Discharge any woman for the purpose of
preventing her from enjoying any of the
benefits provided by law.
3. Discharge such woman on account of her
pregnancy, or while on leave or in confinement
due to her pregnancy.
4. Discharge or refuse the admission of such
woman upon returning to her work for fear that
she may again be pregnant.
Persons covered under the classification of
certain women workers
Any women who is permitted or suffered to work:
1. With or without compensation;
2. In any night club, cocktail lounge, massage
clinic, bar or similar establishment;
3. Under the effective control or supervision of the
Er for a substantial period of time; and
4. Shall be considered as an Ee of such
establishment for purposes of labor and social
legislation.
Discharging a woman due to pregnancy
 LABOR STANDARDS
Article 137 contemplates the following prohibited
acts in connection with the pregnance of a woman
employee:
1. To discharge her on account of her pregnancy ;
or
2. To discharge her while she is on leave due to her
pregnancy; or
3. To discharge her while she is in confinement
due to her pregnancy; or
4. To discharge her upon returning to her work for
fear that she may again be pregnant; or
5. To refuse her admission upon returning to her
work for fear that she may again be
pregnant.(Section 13, Rule XII, Book III, Rules to
Implement the LC)
Series of absences due to pregnancy and its
related ailments not a ground to dismiss Ee
The court agreed that in concluding that
respondent’s sickness was pregnancy-related and
therefore, the petitioner cannot terminate
respondent’s services because in doin so, petitioner
will be violating the Article 137 of the LC.(Del Monte
Philippines, Inc. v. Velasco, G.R. No. 153477, March 6,
2007)
Q: Can an Er dismiss an Ee on the ground of
deliberately concealing her pregnancy and
incurring absences without official leave?
A: No. Her absence was justified considering that
she had just delivered a child, which can hardly be
considered a forbidden act, a dereliction of duty;
much less does it imply wrongful intent on the part
of the Ee.(Lakpue Drug, Inc. v. Belga, G.R. No. 166379,
October 20, 2005.)
Discharging a woman Ee for having filed a case
or for testifying or being about to testify in a case
Of relevance to Article 118 and 248(f) of the LC, this
is the only ULP act of the Er which need not be
related to the exercise by the Ee of his right to self-
organization and collective bargaining.(Bisig
Manggagawa sa Tryco v. NLRC, G. R. No. 151309,
October 15, 2008.)
Penalty for commission of the prohibited acts
mentioned
The offender would be subject to the penalties
provided under Article 288 of the LC, the general
penalty clause under said code.
71
ANTI-SEXUAL HARASSMENT ACT
(R.A. 7877)
State policy in enacting the Anti-Sexual
Harassment Law
The State shall:
1. Value the dignity of every individual
2. Enhance the development of its human
resources
3. Guarantee full respect for human rights, and
4. Uphold the dignity of workers, Ees, applicants
for employment, students or those undergoing
training, instruction or education (R.A. 7877,
Sec. 2).
Persons who may be held liable for sexual
harassment
In a work, education or training-related
environment Sexual Harassment may be committed
by an:
1. Er
2. Manager
3. Supervisor
4. Agent of the Er
5. Teacher, instructor, professor
6. Coach, trainer, or
7. Any other person who, having authority,
influence or moral ascendancy over another in
a work or training or education environment:
a. Demands
b. Requests or
c. Requires any sexual favor from the other,
regardless of whether the demand, request
or requirement for submission is accepted
by the object of R.A. 7877 (R.A. 7877, Sec. 3).
The definition of sexual harassment does not
require a categorical demand or request for
sexual favor
While the provision states that there must be a
“demand, request or requirement of a sexual favor.”
It is not necessary that the demand, request or
requirement of a sexual favor be articulated in a
categorical manner. It may be discerned, with equal
certitude, from the acts of the offender.
Likewise, it is not essential that the demand, request
or requirement be made as a condition for
continued employment or for promotion to a higher
position. It is enough that the respondent’s acts
result in creating an intimidating, hostile or
offensive environment for the employee (Domingo
v.Rayala, G.R. No. 155831, February 18, 2008).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Places where sexual harassment are committed
Specifically:
1. In a work-related or employment environment:
a. The sexual favor is made as a condition in
the hiring or in the employment, re-
employment or continued employment of
said individual, or in granting said
individual favorable compensation, terms,
conditions, promotions, or privileges; or
the refusal to grant the sexual favor results
in limiting, segregating or classifying the Ee
which in a way would discriminate, deprive
or diminish employment opportunities or
otherwise adversely affect said Ee (Quid
Pro Quo Sexual Harassment);
b. The above acts would impair the Ees’ rights
or privileges under existing labor laws; or
c. The above acts would result in an
intimidating, hostile, or offensive
environment for the Ee (Hostile
Environment Harassment).
2. In an education or training environment sexual
harassment is employed:
a. Against one who is under the care, custody
or supervision of the offender;
b. Against one whose education, training,
apprenticeship or tutorship is entrusted to
the offender;
c. When sexual favor is made a condition to
the giving of a passing grade, or the
granting of honors and scholarships, or the
payment of a stipend, allowance or other
benefits, privileges, or considerations; or
d. When sexual advances result in an
intimidating, hostile or offensive
environment for the student, trainee or
apprentice.
Duties of the Er or head of office in a work-
related, education or training environment
1. Prevent or deter the commission of acts of
Sexual Harassment, and
2. Provide the procedures for the resolution,
settlement or prosecution of acts of Sexual
Harassment.
Duty of the Er or Head of Office towards these
end
1. Promulgate appropriate rules and regulations
in consultation with and jointly approved by the
Ees or students or trainees, through their duly
designated representatives, prescribing the
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
72
procedure for the investigation or Sexual
Harassment cases and the administrative
sanctions therefore (Sec. 4, R.A. 7877).
NOTE: Administrative sanctions shall not be a
bar to prosecution in the proper courts for
unlawful acts of Sexual Harassment.
The said rules and regulations issued shall
include, among others, guidelines on proper
decorum in the workplace and educational or
training institutions.
2. Create a committee on decorum and
investigation of cases on Sexual Harassment.
3. The Er or head of office, education or training
institution shall disseminate or post a copy of
this R.A. 7877 for the information of all
concerned
Liability of the Er, head of office, educational or
training institution
Er shall be solidarily liable for damages arising from
the acts of Sexual Harassment committed in the
employment, education or training environment
provided:
1. The Er or head of office, educational or training
institution is informed of such acts by the
offended party; and
2. No immediate action is taken thereon (R.A.
7877, Sec. 5).
An independent action for damages may be filed
Nothing under R.A. 7877 shall preclude the victim of
work, education or training-related Sexual
Harassment from instituting a separate and
independent action for damages and other
affirmative relief (Sec. 6).
Three-fold liability rule in sexual harassment
cases
An act of Sexual Harassment may give rise to civil,
criminal and administrative liability on the part of
the offender, each proceeding independently of the
others.
Prescription of action
The civil, criminal and administrative action shall
prescribe in 3 years.
Q: A Personnel Manager, while interviewing an
attractive female applicant for employment,
stared directly at her for prolonged periods,
albeit in a friendly manner. After the interview,
 LABOR STANDARDS
the manager accompanied the applicant to the
door, shook her hand and patted her on the
shoulder. He also asked the applicant if he could
invite her for dinner and dancing at some future
time. Did the Personnel Manager, by the above
acts, commit Sexual Harassment? Reason. (2000
Bar Question)
A: Yes. The Personnel Manager, is in a position to
grant or not to grant a favor (a job) to the applicant.
Under the circumstances, inviting the applicant for
dinner or dancing creates a situation hostile or
unfriendly to the applicant's chances for a job if she
turns down the invitation [R.A. No. 7877, Anti-Sexual
Harassment Act, Sec. 3 (a) (3)].
Q: In the course of an interview, another female
applicant inquired from the same Personnel
Manager if she had the physical attributes
required for the position she applied for. The
Personnel Manager replied: "You will be more
attractive if you will wear micro-mini dresses
without the undergarments that ladies normally
wear." Did the Personnel Manager, by the above
reply, commit an act of sexual harassment?
Reason.
A: Yes. The remarks would result in an offensive or
hostile environment for the Ee. Moreover, the
remarks did not give due regard to the applicant’s
feelings and it is a chauvinistic disdain of her honor,
justifying the finding of Sexual Harassment
(Villarama v. NLRC, G.R. No. 106341, September 02,
1994).
Q: Pedrito Masculado, a college graduate from
the province, tried his luck in the city and landed
a job as a utility/maintenance man at the
warehouse of a big shopping mall. After working
as a casual employee for 6 months, he signed a
contract for probationary employment for 6
months. Being well-built and physically
attractive, his supervisor, Mr. Hercules Barak,
took special interest to befriend him. When his
probationary period was about to expire, he was
surprised when one afternoon after working
hours, Mr. Barak followed him to the men’s
comfort room. After seeing that no one else was
around, Mr. Barak placed his arm over Pedrito’s
shoulder and softly said: “You have great
potential to become a regular Ee and I think I can
give you a favorable recommendation. Can you
come over to my condo unit on Saturday evening
so we can have a little drink? I’m alone, and I’m
sure you want to stay longer with the company.”
Is Mr. Barak liable for Sexual Harassment
committed in a work-related or employment
environment? (2000 Bar Question)
73
A: Yes. The elements of Sexual Harassment are all
present. The act of Mr. Barak was committed in a
workplace. Mr. Barak, as supervisor of Pedrito
Masculado, has authority, influence and moral
ascendancy over Masculado.
Given the specific circumstances mentioned in the
question like Mr. Barak following Masculado to the
comfort room, etc. Mr. Barak was requesting a
sexual favor from Masculado for a favorable
recommendation regarding the latter's
employment. It is not impossible for a male, who is
a homosexual, to ask for a sexual favor from another
male.
EMPLOYMENT OF MINORS
Rules on employment of minor workers
GR:
1. No person under 18 years of age will be allowed
to be employed in an undertaking which is
hazardous or deleterious in nature.
2. No Er shall discriminate against any person in
respect to terms and conditions of employment
on account of his age.
XPNs:
A. Below 15 yrs. Old
1. The child works directly under the sole
responsibility of his parents or legal
guardian and where only members of the
family are employed, subject to the
following conditions:
a. Employment does not endanger the
child’s safety, health and morals
b. Employment does not impair the
child’s normal development
c. Er-parent or legal guardian provides
the child with the primary and/or
secondary education prescribed by the
Department of Education
2. The child’s employment or participation in
public entertainment or information
through cinema, theater, radio or television
is essential provided:
a. Employment contract is concluded by
the child’s parents or legal guardian,
b. With the express agreement of the
child concerned, if possible, and
c. The approval of DOLE, the following
must be complied with:
i. The employment does not involve
advertisement or commercials
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
promoting alcoholic beverages,
intoxicating drinks, tobacco and its
by-products or exhibiting violence
ii. There is a written contract
approved by DOLE
iii. The conditions provided in the
first instance are met
B. Above 15 but below 18 – May be employed in
any non-hazardous work
A: No. Under Art. 139 of the LC 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 department
order of DOLE to the contrary notwithstanding. A
mere department order cannot prevail over the
express prohibitory provisions of the LC.
Regulation of Working Hours of a child

C. Above 18 – No prohibition It includes:

a. All time during which a child is required to be at
Employment Conditions a prescribed workplace; and
b. All time during which a child is suffered or
Such conditions must be strictly followed: permitted to work.

a. The total number of hours worked shall be in Rest periods of short duration during working
accordance with Section 15 of Department hours shall be counted as hours worked.(Section 3,
Order No. 65-04; Chapter 1, Ibid.)
b. The employment does not endanger the child’s
life, safety, health abd morals, nor impair the Time not
Age
child’s normal development; Hours of Work allowed to
Bracket
work
‘Normal Development of the child’ refers to Not be more Between eight
physical, emotional, mental, and spiritual that twenty o’clock in the
growth of a child within a safe and nurturing (20) hours per evening
environment where he/she is given adequate week (8:00pm) and
nourishment, care and protection and the six o’clock in the
opportunity to perform tasks appropriat at Below 15
Provided, the morning
each stage of development.(Section 3, Chapter 1, work shall not (6:00am) of the
Department Order No. 65-04) be more than following day
four (4) hours
c. The child is provided with at least the at any given day
mandatory elementary or secondary education; Not be more Between ten
and than eight (8) o’clock in the
d. The employer secures a work permit for the hours a day evening
child.(Section 8 to 12, Ibid.) 15 years (10:00pm) and
of age In no case six o’clock in the
Q: A spinster school teacher took pity on one of but below beyond forty morning
her pupils, a robust and precocious 12-year old 18 years (40) hours a (6:00am) of the
boy whose poor family could barely afford the week following
cost of his schooling. She lives alone at her house day(Section 15,
near the school after her housemaid left. In the Chapter 5, Ibid.)
afternoon, she lets the boy do various chores as
cleaning, fetching water and all kinds of errands Duty of the Er before engaging a minor into
after school hours. She gives him rice and Php employment
30.00 before the boy goes home at 7 every night.
The school principal learned about it and The Er shall first secure a work permit from the
charged her with violating the law which DOLE which shall ensure observance of the
prohibits the employment of children below 15 requirements (R.A. 7160, Sec. 12).
years of age. In her defense, the teacher stated
that the work performed by her pupil is not Rule in the issuance of work certificates/
hazardous, and she invoked the exception permits to children at least 15 but below 18
provided in the Department Order of DOLE for years of age
the engagement of persons in domestic and
household service. Is her defense tenable? The issuance of a DOLE Certificate to youth aged 15
(2004 Bar Question) to below 18 years of age is not required by law. No
Er shall deny opportunity to any such youth

UNIVERSITY OF SANTO TOMAS

2016 GOLDEN NOTES
74
 LABOR STANDARDS
applying for employment merely on the basis of lack
of work permit or certificate of eligibility for
employment. Any young person aged 15 to below 18
years of age may present copy of this DOLE advisory
to any Er, job provider, government authority, or
his/her representative when seeking employment
or anytime during employment (DOLE Department
Advisory No. 01-08).
Non-hazardous work
It is any work or activity in which the Ee is not
exposed to any risk which constitutes an imminent
danger to his safety and health.
Hazardous workplaces
1. Nature of work exposes the workers to
dangerous environmental elements,
contaminants or work conditions
2. Workers are engaged in construction work,
logging, fire-fighting, mining, quarrying,
blasting, stevedoring, dock work, deep-sea
fishing, and mechanized farming
3. Workers are engaged in the manufacture or
handling of explosives and other pyrotechnic
products
4. Workers use or are exposed to heavy or power-
driven tools
Q: You were asked by a paint manufacturing
company regarding the possible employment as
a mixer of a person aged 17, who shall be
directly under the care of the section supervisor.
What advice would you give? Explain briefly.
(2002 Bar Question)
A: The paint manufacturing company cannot hire a
person who is aged 17. Art. 139(c) of the LC
provides that a person below 18 years of age shall
not be allowed to work in an undertaking which is
hazardous or deleterious in nature as determined
by the SLE. Paint manufacturing has been classified
by the SLE as a hazardous work.
Prohibitions on the employment of children in
certain advertisements
Employment of child models in all commercial
advertisements promoting the following shall be
prohibited:
1. Alcoholic beverage
2. Intoxicating drinks
3. Tobacco and its by products
4. Gambling
5. Violence
6. Pornography
75
Q: Iya, 15 years old, signed up to model a
clothing brand. She worked from 9am to 4 pm
on weekdays and 1pm to 6pm on Saturdays for
two (2) weeks. She was issued a child working
permit under RA 9231. Which of the following
statements is the most accurate? (2012 Bar
Question)
a) Working permit for Iya’s employment is not
required because the job is nit hazardous;
b) Her work period exceeds the required
working hours for children aged 15 years
old;
c) TO require a 15-year old to work without
obtaining the requisites working permit is a
form of child labor;
d) Iya, who was engaged in a work that is not
child labor, is a working child.
A: d). Iya, who was engaged in a work that is not
child labor, is a working child [Sec. 12-A, 8 hours but
not beyond 40 hours].
Q: Determine whether the following minors
should be prohibited from being hired and from
performing their respective duties indicated
hereunder: (2006 Bar Question)
a. A 17-year old boy working as miner at the
Walwadi Mining Corporation.
b. An 11-year old boy who is an accomplished
singer and performer in different parts of
the country.
c. A 15-year old girl working as a library
assistant in a girls' high school.
d. A 16-year old girl working as model
promoting alcoholic beverages.
e. A 17-year old boy working as a dealer in a
casino. (2006 Bar Question)
A:
a. Yes. He should be prohibited from being hired
and from performing the duties of a miner
because such constitutes hazardous work
under D.O. No. 04 Series of 1999. Art. 139(c) of
LC expressly prohibits the employment of
persons below 18 years of age in an
undertaking which is hazardous or deleterious
in nature as determined by the SLE.
b. No. He should not be prohibited from being
hired and from performing as a singer. Under
Art. VIII Sec. 12(2) of R.A. 7619 as amended by
R.A. 7658, this constitutes an exception to the
general prohibition against the employment of
children below 15 years of age, provided that
the following requirements are strictly
complied with:
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
1. The Er shall ensure the protection, health
safety and morals of the child
2. The Er shall institute measures to prevent
the child’s exploitation or discrimination
taking into account the system and level of
remuneration, and the duration and
arrangement of working time; and
3. The Er shall formulate and implement,
subject to the approval and supervision of
competent authorities, a continuing
program for training and skill acquisition of
the child. Moreover, the child must be
directly under the sole responsibility of his
parents or guardian and his employment
should not in any way interfere with his
schooling.
c. No. She should not be prohibited from working
as a library assistant because the prohibition in
the LC against employment of persons below 18
years of age merely pertains to employment in
an undertaking which is hazardous or
deleterious in nature as identified in the
guidelines issued by the SLE. Working as a
library assistant is not one of undertakings
identified to be hazardous under D.O. No 04
Series of 1999.
d. Yes. She should be prohibited from working as
a model promoting alcoholic beverages. R.A.
7610 categorically prohibits the employment of
child models in all commercials or
advertisements promoting alcoholic beverages
and intoxicating drinks, among other things.
e. Yes. He should be prohibited from working as a
dealer in casino, because Art. 140 of the LC
prohibits the employment of persons below 18
years of age in an undertaking which is
hazardous or deleterious in nature identified in
the guidelines issued by the SLE. Working as a
dealer in a casino is classified as hazardous
under D.O. No. 04 Series of 1999 as it exposes
children to physical, psychological or sexual
abuses.
ACT AGAINST CHILD LABOR (R.A. 9231) AND
CHILD ABUSE LAW (R.A. 7610)
Child labor
Any work or economic activity performed by a child
that subjects him or her to any form of exploitation
or is harmful to his or her health and safety or
physical, mental or psychosocial development.
Working child
Any child engaged as follows:
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
76
1. When the child is below 18 years of age in a
work or economic activity that is not child
labor; or
2. When the child is below 15 years of age:
a. In work where he/she is directly under the
responsibility of his/her parents or legal
guardian and where only members of the
child’s family are employed; or
b. In public entertainment or information
Instances when the state can intervene in behalf
of the child
1. When the parent, guardian, teacher or person
having care or custody of the child fails or is
unable to protect the child against abuse,
exploitation and discrimination; or
2. When such acts are committed against the child
by the said parent, guardian, teacher or person
having care and custody over the child.
Worst forms of labor
1. All forms of slavery (Anti-Trafficking of Persons
Act of 2003) or practices similar to slavery such
as sale and trafficking of children, debt bondage
and serfdom and forced or compulsory labor,
including recruitment of children for use in
armed conflict;
2. The use, procuring, offering of a child for
prostitution, for the production of pornography
or for pornographic performances;
3. The use, procuring, offering or exposing of a
child for illegal or illicit activities, including the
production and trafficking of dangerous drugs
and volatile substances prohibited under
existing laws;
4. Employing child models in all commercials or
advertisements promoting alcoholic beverages,
intoxicating drinks, tobacco and its byproducts
and violence; and
5. Work which, by its nature or circumstances in
which it is carried out, is hazardous or likely to
be harmful to the health, safety or morals of
children.
Persons who can file a complaint for unlawful
acts committed against children
1. Offended party
2. Parents or guardians
3. Ascendants or collateral relatives within the 3 rd
degree of consanguinity
4. Officer, social worker or representative of a
licensed child-caring institution
5. Officer or social worker of DSWD
 LABOR STANDARDS
6. Barangay chairman of the place where the
violation occurred, where the child is residing
or employed
7. At least 3 concerned, responsible citizens
where the violation occurred
Jurisdiction over offenses punishable under R.A.
9231
The Family Courts shall have original jurisdiction
over all cases involving offenses punishable under
this Act.
EMPLOYMENT OF HOUSEHELPERS
Note: The prescribed references mentioned in the
syllabus, namely: ‘LC as amended by RA 7655’ as
well as ‘Household service under the Civil Code’ are
no longer accurate by reason of the passage of RA
10361.
Persons covered by R.A. 10361 otherwise
known as “Batas kasambahay”
All kasambahay engaged in domestic work, whether
on a live-in or live-out arrangement, such as, but not
limited to, the following:
1. General househelp
2. Nursemaid or Yaya
3. Cook
4. Gardener
5. Laundry person
6. Working children or domestic workers 15 years
and above but below 18 years of age; or
7. Any person who regularly performs domestic
work in one household on an occupational basis
(live-out arrangement) [Sec. 3(d), R.A. 10361].
Persons not covered by the batas kasambahay
1. Service providers
2. Family drivers
3. Children under foster family arrangement; and
4. Any other person who performs work
occasionally or sporadically and not on an
occupational and regular basis.
Children under foster family arrangement
Children under foster family arrangement are those
who are living with a family or household of
relative/s and are provided access to education and
given an allowance incidental to education, i.e.,
“baon,” transportation, school projects, and school
activities; provided, that the foster family and foster
care arrangements are in compliance with the
procedures and requirements as prescribed by R.A.
10165 or Foster Care Act of 2012.
77
Q: Soledad, a widowed school teacher, takes
under her wing one of her students, Kiko, 13
years old, who was abandoned by his parents
and has to do odd jobs in order to study. She
allows Kiko to live in her house, provides him
with clean clothes, food, and a daily allowance of
200 pesos. In exchange, Kiko does routine
housework, consisting of cleaning the house and
doing errands for Soledad. One day, a
representative of the DOLE and the DSWD came
to Soledad's house and charged her with
violating the law that prohibits work by minors.
Soledad objects and offers as a defense that she
was not requiring Kiko to work as the chores
were not hazardous. Further, she did not give
him chores regularly but only intermittently as
the need may arise. Is Soledad's defense
meritorious? (2015 Bar Question)
A: Soledad’s defense is meritorious. Sec. 4(d) of the
Kasambahay Law (RA 10361) provides that the
term “Domestic Worker” shall not include children
who are under foster family arrangement, and are
provided access to education and given an
allowance incidental to education, i.e. “baon”,
transportation, school projects and school activities.
Examples of persons performing work
occasionally or sporadically and not on an
occupational basis
1. A janitress doing irregular laundry work for a
household during rest day;
2. A construction worker doing casual gardening
job for a household; or
3. A hospital nurse or a student doing baby-sitting
job.
Employable age for a kasambahay
The employable age for a kasambahay is 15 years
old and above.
NOTE: The employment of children 15 but below 18
years of age may be made under the following
conditions:
1. They shall not be allowed to work for more
than 8 hours a day, and in no case beyond 40
hours a week;
2. They shall not be allowed to work between 10
p.m. to 6 a.m. of the following day;
3. They shall not be allowed to do hazardous
work; and
4. They shall not be denied access to education
and training.
The consent of the parent/guardian of working
children is required in the employment contract.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Er of a kasambahay
An Er is any person who engages and controls the
services of a kasambahay and is party to the
employment contract.
Er’s household
Household refers to the immediate family members
or other occupants of the house who are directly and
regularly provided services by the kasambahay.
Modes of hiring a kasambahay
An Er can hire directly or through private
employment agencies registered with the DOLE
regional offices. The Er, whether the kasambahay is
hired directly or through POEA, shall shoulder the
expenses for hiring. The kasambahay shall not be
charged of any cost of the recruitment, placement,
or finder’s fee.
NOTE: The Er shall pay the expenses that are
directly used for the transfer of the kasambahay
from place of origin to the place of work. An Er can
be reimbursed of the deployment expenses when
the kasambahay unreasonably leaves the Er within
6 months from the time he/she started work.
If a kasambahay is hired thru a Private
Employment Agency, the agency is allowed to
collect Service Fee from the Er.
Pre-employment requirements
Before entering into an employment contract, the Er
has the option to require the following from a
kasambahay:
1. Medical certificate or health certificate issued
by a local government health officer;
2. Barangay and police clearance;
3. NBI clearance; and
4. Duly authenticated birth certificate or, if not
available, voter’s identification card, baptismal
record, or passport showing the kasambahay’s
age.
NOTE: Requirements are mandatory when the
employment of the kasambahay is facilitated
through a private employment agency.
It is not a requirement for a kasambahay to be
trained and certified by TESDA prior to
employment. However, the kasambahay is
encouraged to undergo competency assessment and
be certified by TESDA. Training is not a requirement
for competency assessment.
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
78
Contract between the Er and kasambahay
should be written and should contain conditions
set by law
The Er and the kasambahay shall enter into a
contract of employment written in a language or
dialect understood by them.
NOTE: The contract need not be notarized. The
Punong Barangay or his/her designated officer may
attest to the contract and serve as witness to its
execution.
Contents of the employment contract
1. Duties and responsibilities of the kasambahay;
2. Period of employment;
3. Compensation;
4. Authorized deductions;
5. Hours of work and proportionate additional
payment;
6. Rest days and allowable leaves;
7. Board, lodging and medical attention;
8. Agreements on deployment expenses, if any;
9. Loan agreement;
10. Termination of employment; and
11. Any other lawful condition agreed upon by both
parties.
Registration of the kasambahay
The Er is required to register the kasambahay in the
Registry of Domestic Workers in the barangay
where the Er resides. For this purpose, the DILG, in
coordination with the DOLE, shall formulate a
registration system.
NOTE: The registration of the kasambahay is free of
charge.
Domestic workers cannot acquire regularity of
employment under RA 10361
All the indicia of regularity of employment remain
absent in the employment of domestic
helpers.(Chan, 2014)
XPN: Mere fact that the househelper is working
within the premises of the business of the employer
and in relation to or in connection with the business,
as in staffhouses for its guest or even for its officers
and Ees, warrants the conclusion that such
househelper is and should be considered as a
regular employee.(Remington Industrial Sales Corp.
v. Castaneda, G.R. 169295-96, November 20, 2006)
NOTE: Such case must be based as to its factual
antecedents.
 LABOR STANDARDS
Q: Linda was employed by Sectarian University
(SU) to cook for the members of a religious order
who teach and live inside the campus. While
performing her assigned task, Linda
accidentally burned herself. Because of the
extent of her injuries, she went on medical leave.
Meanwhile, SU engaged a replacement cook.
Linda filed a complaint for illegal dismissal, but
her employer SU contended that Linda was not a
regular employee but a domestic househelp.
Decide. (2014 Bar Question)
A: The employer's argument that Linda was not a
regular employee has no merit. The definition of
domestic servant or househelper contemplates one
who is employed in the employer’s home to minister
exclusively to the personal comfort and enjoyment
of the employer’s family. The Supreme Court already
held that the mere fact that the househelper is
working in relation to or in connection with its
business warrants the conclusion that such
househelper or domestic servant is and should be
considered as a regular employee. (Apex Mining Co.,
Inc. v. NLRC, G.R. No. 94951, April 22, 1991). Here,
Linda was hired not to minister to the personal
comfort and enjoyment of her employer's family but
to attend to other employees who teach and live
inside the campus.
Mandatory benefits of a kasambahay
1. Monthly minimum wage;
2. Daily rest period of 8 (total) hours;
3. Weekly rest period of 24 (uninterrupted) hours
4. 5 days annual service incentive leave with pay;
5. 13th month pay;
6. SSS benefit;
7. PhilHealth benefit; and
8. Pag-IBIG benefit
Other rights and privileges of a kasambahay
1. Freedom from Er’s interference in wage
disposal;
2. Standard of treatment;
3. Board, lodging, and medical attendance;
4. Right to privacy;
5. Access to outside communication;
6. Access to education and training;
7. Right to be provided a copy of the employment
contract;
8. Right to Certificate of Employment;
9. Right to form, join, or assist labor organization;
10. Right to terminate employment based on just
cause; and
11. Right to exercise religious beliefs and cultural
practices.
79
Basic necessities of a kasambahay
1. At least 3 adequate meals a day, taking into
consideration the kasambahay’s religious
beliefs and cultural practices;
2. Humane sleeping condition; and
3. Appropriate rest and basic medical assistance.
NOTE: Though not part of the “basic necessities”
required to be provided by the Er to the
kasambahay, shampoo, soap, toothpaste etc. may
be provided gratuitously.
Monthly minimum wage of a kasambahay
Employed In Amount
National Capital
Php 2, 500
Region
Cities and 1st Class
Php 2, 000
Municipalities
Other Municipalities Php 1, 500(Section
24, RA 10361)
The law provides a mechanism for increasing the
minimum wage of the kasambahay. Initially, one
year from 4 June 2013, the Regional Tripartite
Wages and Productivity Boards (RTWPB) may
review, and if proper, determine and adjust the
minimum wage (Sec. 24, Ibid).The RTWPB shall
coordinate with TESDA on the wage review and
adjustment based on the kasambahay’s competency
level, in line with the thrust to professionalize the
domestic service sector.
Payment of Wage
Wage shall be in cash and at least be paid once a
month.
NOTE: The Er shall at all times provide the
kasambahay with a copy of the pay slip every pay
day containing the amount paid and all deductions
made, if any. The copies of the pay slip shall be kept
by the Er for a period of 3 years (Sec. 26, Ibid.).
Payment of wages by means of promissory,
voucher, coupon, token, ticket, chit, or anything
other than the cash wage is prohibited.
Daily rest period
The kasambahay is entitled to a total daily rest
period of at least 8 hours.
Prohibition of work beyond 16 hours
The Er cannot require the kasambahay to work
beyond 16 hours at any given workday in return for
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
an equivalent hourly rate. The eight-hour rest
period must be observed.
NOTE: Kasambahays are also entitled to at least 24
consecutive hours of rest in a week. The Er and the
kasambahay may determine the schedule of the
weekly rest period. The Er shall respect the
preferred weekly rest day of the kasambahay on
religious grounds (Sec. 21 Ibid.).
Five-day annual service incentive leave
The kasambahay can avail the five day annual
service incentive leave after 1 year of service.
NOTE: If the kasambahay fails to avail of any of
his/her annual SIL, it shall be forfeited and cannot
be converted to cash.
Other agreement that the Er and the
kasambahay can enter into relative to the
kasambahay’s weekly rest day and service
incentive leave
1. Offsetting a day of absence with a particular rest
day;
2. Waiving a particular rest day in return for an
equivalent daily rate of pay;
3. Accumulating rest days not exceeding 5 days;
4. Adding the accumulated rest days (maximum of
5 days) to the five-day SIL; and
5. Waiving a particular SIL in return for an
equivalent daily rate of pay.
13th month pay
The kasambahay is entitled to 13th month pay after
1 month of service.
Computation of the 13thmonth pay
In computing the 13thmonth pay, the total basic
wage received in a given calendar year shall be
divided by 12. The amount derived shall be paid not
later than December 24.
SSS, PHILHEALTH, and PAG-IBIG
The kasambahay is covered by SSS, PhilHealth and
Pag-IBIG after 1 month of service.
Er’s obligation to register the kasambahay in
SSS, PHILHEALTH, and PAG-IBIG
Under the SSS, PhilHealth, and PAG-IBIG laws, the Er
has the obligation to register the kasambahay and
deduct and remit the required premiums and
contributions. The Er shall incur certain liabilities,
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
80
including criminal prosecution, if he fails or refuses
to comply with his/her obligations.
Employer’s liability in case the kasambahay
refuses to be a member of SSS, PHILHEALTH, and
PAG-IBIG
The employer is still liable under the SSS,
PHILHEALTH, and PAG-IBIG laws in case the
kasambahay refuses membership with those
agencies, because it is mandatory and non-
negotiable.
Person liable to pay the SSS premium,
PHILHEALTH and PAG-IBIG contributions of the
kasambahay
GR: The Er shall pay the SSS premium, and
PHILHEALTH and PAG-IBIG contributions of the
kasambahay
XPN: If the wage of the kasambahay is Php 5,000.00
or more, the kasambahay will pay his/her share in
the premiums/contributions.
Provisions protecting Ers of a kasambahay
1. Prohibition against privileged information;
2. Er may require certain pre-employment
documents prior to engagement;
3. Ers are assured of quality services through
DOLE-TESDA training, assessment, and
certification of kasambahay;
4. Forfeiture of 15-day unpaid salary should the
kasambahay leave the residence of the Er
without any justifiable reason; and
5. Right to terminate the employment on
justifiable grounds.
Grounds for termination of contract by the
kasambahay
1. Verbal or emotional abuse of the kasambahay
by the Er or any member of the household;
2. In human treatment including physical abuse of
the kasambahay by the Er or any member of the
household;
3. Commission of a crime or offense against the
kasambahay by the Er or any member of the
household;
4. Violation by the Er of the terms and conditions
of the employment contract and other
standards set forth under the law;
5. Any disease prejudicial to the health of the
kasambahay, the Er, or member/s of the
household; and
6. Other causes analogous to the foregoing (Sec.
33, R.A. 10361).
 LABOR STANDARDS
Grounds for termination of contract by the Er
1. Misconduct or willful disobedience by the
kasambahay of the lawful order of the Er in
connection with the former’s work;
2. Gross or habitual neglect or inefficiency by the
kasambahay in the performance of duties;
3. Fraud or willful breach of the trust reposed by
the Er on the kasambahay;
4. Commission of a crime or offense by the
kasambahay against the person of the Er or any
immediate member of the Er’s family;
5. Violation by the kasambahay of the terms and
conditions of the employment contract and
other standards set forth under the law;
6. Any disease prejudicial to the health of the
kasambahay, the Er, or member/s of the
household; and
7. Other causes analogous to the foregoing (Sec.
34, Ibid.).
NOTE: Neither the domestic worker nor the Er may
terminate the contract before the expiration of the
term except for grounds provided for in Secs. 33
and 34 of the Batas Kasambahay.
The domestic worker and the Er may mutually
agree upon written notice to pre-terminate the
contract of employment to end the employment
relationship (Sec. 32, Ibid.).
Termination of contract if the duration of
service is not determined in the contract
The kasambahay or the Er may terminate the
contract anytime if the duration of service is not
determined in the contract. Either the Er or the
kasambahay may give notice to end the working
relationship 5 days before the intended date of the
termination of service.
Effect of unjust dismissal by the Er
The kasambahay shall receive the following if
he\she is unjustly dismissed by the Er:
1. Outright payment of earned wage; and
2. Indemnity benefit in the form of wage
equivalent to 15 days work.
Liabilities of a kasambahay who leaves his/her
Er without justifiable reason
1. Forfeiture of wage equivalent to 15 days work;
and
2. Reimbursement of the deployment expenses, if
the employment contract is terminated within
6 months from employment.
Right against inspection of his belongings
81
The Er cannot inspect the belongings of the
kasambahay. However, the Er and the kasambahay
can agree in their employment contract that an
inspection can be made before he/she leaves the
household.
Kasambahay desk officer
In case of non-payment or underpayment of wage
and other labor-related concerns, the kasambahay
can seek assistance to the Kasambahay Desk Officer
situated in their respective barangays or the
nearest DOLE field/provincial/regional office.
Replacement of a kasambahay from a private
employment
The Er can demand from a private employment
agency the replacement of a kasambahay within 1
month from the day the kasambahay reported for
work on the following cases:
1. The kasambahay is found to be suffering from
an incurable or contagious disease, or mental
illness as certified by a competent or
government physician;
2. The kasambahay abandons the job without
justifiable cause, voluntarily resigns, commits
theft or any other analogous acts prejudicial to
the Er or his/her family; or
3. The kasambahay is physically or mentally
incapable of discharging the minimum
requirements of the job, as specified in the
employment contract.
Effect of failure of the private employment
agency to provide a qualified replacement
After one month from receipt of the Er’s request
and the private employment agency failed to
provide a qualified replacement, the Er shall be
entitled to a refund of 75% of the fees paid to the
private employment agency.
Responsibilities of the private employment
agency under the law
1. Ensure that the kasambahay is qualified as
required by the Er;
2. Secure the best terms and conditions of
employment for the kasambahay;
3. Ensure that the employment agreement
between the kasambahay and the employer
stipulates the terms and conditions of
employment and all the benefits in accordance
with the IRR;
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
4. Provide a pre-employment orientation
briefing to the kasambahay and the Er about
their rights and responsibilities in accordance
with this IRR;
5. Ensure that the kasambahay is not changed or
required to pay any recruitment or placement
fees;
6. Keep copies of employment contracts and
agreements pertaining to recruited
kasambahay which shall be made availabe
during inspections or whenever required by
the DOLE or local government officials;
7. Assist the kasambahay in filing his/her
complaints or grievances against the Ers;
8. Cooperate with government agencies in rescue
operations involving abused or exploited
kasambahay; and
9. Assume joint and solidary liability with the Er
for payment of wages, wage-related and other
benefits, including monthly contribution for
SSS, PhilHealth, and Pag-IBIG membership.
Unlawful acts under the Batas Kasambahay
1. Employment of children below 15 years of age;
2. Withholding of the kasambahay’s wages;
3. Interference in the disposal of the kasambahay’s
wages;
4. Requiring kasambahay to make deposits for loss
or damage;
5. Placing the kasambahay under debt bondage;
and
6. Charging another household for temporarily
performed tasks.
NOTE: Unlawful acts are punishable with an
administrative fine ranging from Php 10,000 to Php
40,000 to be imposed by the DOLE Regional Offices.
Remedies for unlawful acts
The aggrieved party may file the appropriate civil or
criminal action before the regular courts.
Remedy for abused or exploited kasambahay
The law mandates the conduct of immediate rescue
of abused or exploited kasambahay by the municipal
or city social welfare officer or a social welfare
officer from DSWD, in coordination with the
concerned barangay officials. The law sets out that
crimes or offenses committed under the Penal Code
and other criminal laws shall be filed with the
regular courts.
Q: Albert, a 40-year old Er, asked his domestic
helper, Inday, to give him a private massage.
When Inday refused, Albert showed her Art. 141
of the Labor Code, which says that one of the
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
82
duties of a domestic helper is to minister to the
Er’s personal comfort and convenience. Is
Inday’s refusal tenable? (2009 Bar Question)
A: Yes. Inday’s refusal to give her Er a “private
massage” is in accordance with law because the
nature of the work of a domestic worker must be in
connection with household chores. Massaging is not
a domestic work.
Q: NBC has a rest house and recreational facility
in the highlands of Tagaytay City for the use of
its top executives and corporate clients. The rest
house staff includes a caretaker, two cooks and
a laundrywoman. All of them are reported to the
SSS as domestic or household Ees of the
resthouse and recreational facility and not of
NBC. Can NBC legally consider the caretaker,
cooks and laundrywoman as domestic Ees of the
rest house and not of NBC? (2000 Bar Question)
A: No, they are not domestic Ees. They are the Ees of
NBC because the rest house and recreational facility
are business facilities which are for use of NBC’s top
executives and clients (Traders Royal Bank v. NLRC,
G.R. No. 127864, December 22, 1999).
EMPLOYMENT OF HOMEWORKERS
Homeworkers
They are those who perform in or about his own
home any processing or fabrication of goods or
materials, in whole or in part, which have been
furnished directly or indirectly, by an Er and sold
thereafter to the latter.
Househelpers v. Homeworkers
HOUSEHELPERS HOMEWORKERS
Performs in or about
his own home any
processing or
Minister to the fabrication of goods or
personal needs and materials, in whole or
comfort of his Er in the in part, which have
latter’s home been furnished directly
or indirectly, by an Er
and sold thereafter to
the latter.
Er of a homeworker
Includes any person, natural or artificial who, for his
account or benefit, or on behalf of any person
residing outside the country, directly or indirectly,
or through an Ee, agent contractor, subcontractor or
any other person:
 LABOR STANDARDS
1. Delivers or causes to be delivered, any goods,
articles or materials to be processed or
fabricated in or about a home and thereafter to
be returned or to be disposed of or distributed
in accordance with his directions.
2. Sells any goods, articles or materials to be
processed or fabricated in or abut a home and
then rebuys them after such processing or
fabrication, either by himself or through some
other person.
Duty of the Er in case he contracts with another
in the performance of his work
It shall be the duty of the Er to provide in such
contract that the Ees or homeworkers of the
contractor and the latter’s subcontractor shall be
paid in accordance with the LC.
Liability of the Er if the contractor or
subcontractor fails to pay the wages or earnings
of his Ees
Er shall be jointly and severally liable with the
contractor or sub-contractor to the workers of the
latter to the extent that such work is performed
under such contract, in the same manner as if the
Ees or homeworkers were directly engaged by the
Er.
Right of industrial homeworkers to form labor
organizations
DO No. 5, replacing Rule XIV of the IRR Book 3 of the
LC, authorizes the formation and registration of
labor organization of industrial homeworkers. It
also makes explicit the Ers duty to pay and remit
SSS, PHILHEALTH and ECC premiums.
Prohibitions against homework
The following shall be prohibited as homework:
1. Explosives, fireworks and similar articles;
2. Drugs and poisons; and
3. Other articles, the processing of which requires
exposure to toxic substances (IRR, Book III, Rule
XIV, Sec. 13).
Prohibition of any deduction from the
homeworkers earnings due to loss or damage
GR: The Er, contractor or subcontractor shall not
make any deduction from the homeworker’s
earnings for the value of materials which have been
lost, destroyed, soiled or otherwise damage.
XPNs: Unless the following conditions are met:
83
1. The homeworker is clearly shown to be
responsible for the loss or damage;
2. The Ee is given reasonable opportunity to show
cause why deductions should not be made;
3. The amount of such deduction is fair and
reasonable and shall not exceed the actual loss
or damages; and
4. The deduction is made at such rate that the
amount deducted does not exceed 20% of the
homeworker’s earnings in a week.
Q: Josie is the confidential secretary of the
Chairman of the Board of the bank. She is
presently on maternity leave. In an arrangement
where the Chairman of the Board can still have
access to her services, the bank allows her to
work in her residence during her leave. For this
purpose, the bank installed a fax machine in her
residence, and gave her a cellphone and a
beeper. Is Josie a homeworker under the law?
Explain. (2000 Bar Question)
A: No, she is actually an office worker. She is not an
industrial homeworker who accepts work to be
fabricated or processed at home for a contractor,
which work, when finished, will be returned to or
repurchased by said contractor (LC, Art. 155).
APPRENTICES AND LEARNERS
Apprenticeship
It is practical training on the job supplemented by
related theoretical instruction involving a contract
between an apprentice and an Er on an approved
apprenticeable occupation.
Apprentice
Any worker who is covered by a written
apprenticeship agreement with an individual Er or
any of the entities recognized under the LC.
GR: Apprenticeship programs shall be primarily
voluntary
XPNs: Compulsory Apprenticeship:
1. National security or economic development so
demand, the President may require compulsory
training
2. Services of foreign technicians are utilized by
private companies in apprenticeable trades.
Apprenticeable occupation
Any trade, form of employment or occupation which
requires more than three (3) months of practical
training with theoretical instruction officially
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
endorsed by the tripartite body and approved for
apprenticeship by the TESDA.
On the job training (OJT)
It is practical work experience through actual
participation in productive activities given to or
acquired by an apprentice.
Highly technical industries
Highly technical industries are those which are
engaged in the application of advanced technology.
NOTE: Prior approval by TESDA (formerly DOLE) of
the proposed apprenticeship program is a condition
sine qua non. Otherwise, an apprentice becomes a
regular Ee (Nitto Enterprises v. NLRC, 248 SCRA 654).
Qualifications of an apprentice
1. At least 15 years of age
Those below 18 years of age shall not work in
hazardous occupations
2. Physically fit for the occupation
3. Possess vocational aptitude and capacity
4. Possess:
a. The ability to comprehend, and
b. Follow oral and written instructions
5. The company must have an apprenticeship
program duly approved by the DOLE.
NOTE: Trade and industry associations may
recommend to the SLE appropriate educational
requirements for different occupations.
When occupation deemed hazardous
1. Nature of work exposes worker to dangerous
environmental elemental contaminants or
work conditions
2. Workers are engaged in construction work,
logging, fire fighting, mining, quarrying,
blasting, stevedoring, deep-sea fishing, and
mechanized farming
3. Workers are engaged in the manufacture or
handling of explosives and other pyrotechnic
products
4. Workers use, or are exposed to heavy or power-
driven machinery or equipment.
Ers of apprentices
1. Only Ers in highly technical industries and
2. Only in apprenticeable occupations approved
by SLE
UNIVERSITY OF SANTO TOMAS
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84
Employment status of apprentices
They are contractual workers whose length of
service depends on the term provided for in the
apprenticeship agreement. Thus, the Er is not
obliged to employ the apprentice after the
completion of his training.
Conditions for employment of an apprentice
1. Should be an apprenticeable trade as
determined by TESDA
2. Prior approval by the DOLE of the proposed
apprenticeship program is a condition sine qua
non before an apprenticeship agreement can be
validly entered into (Nitto Enterprises v. NLRC,
248 SCRA 654).
NOTE: One of the objectives of Title II (Training and
Employment of Special Workers) of the LC is to
establish apprenticeship standards for the
protection of apprentices. An apprenticeship
program should first be approved by the DOLE
before an apprentice may be hired, otherwise a
person hired will be considered a regular Ee.
(Century Canning Corp. v. CA, G.R. No. 152894
August 17, 2007)
Period of apprenticeship
Apprenticeship must not exceed 6 months.
NOTE:
1. 2 months/400 hours: Trades or occupations
which normally require 1 year or more for
proficiency
2. 1 month/200 hours: Occupations and jobs which
require more than 3 months but less than 1 year
for proficiency (IRR, Book II, Rule VI, Sec. 19).
Status of an apprentice after the lapse of the
period of apprenticeship
He is deemed a regular Ee. He cannot be hired as a
probationary Ee since the apprenticeship is deemed
the probationary period.
Compensation of an apprentice
GR: It starts at not less than 75% of the statutory
minimum wage for the 1st 6 months (except OJT);
thereafter, shall be paid in full minimum wage,
including the full COLA.
XPN: Art. 72 of the LC provides that the SLE may
authorize the hiring of apprentices without
compensation whose training on the job is required:
1. By the school or;
2. By a training program curriculum or;
 LABOR STANDARDS
3. As requisite for graduation or
4. As requisite for board examination.
Rules regarding apprenticeship agreements
Apprenticeship agreements, including the wage
rates of apprentices, shall:
1. Conform to the rules issued by SLE.
2. The period of Apprenticeship shall not exceed 6
months.
3. Apprenticeship agreements providing for wage
rates below the legal minimum wage, which in
no case shall start below 75% of the applicable
minimum wage, may be entered into only in
accordance with Apprenticeship programs duly
approved by the SLE.
4. The DOLE shall develop standard model
programs of Apprenticeship (IRR, Book II, Rule
VI, Sec. 18).
Person to sign the apprenticeship agreement
1. The Er or his agent, or
2. An authorized representative of any of the
recognized organizations, associations or
groups, and
3. The apprentice.
Apprenticeship agreement with a minor
An apprenticeship agreement with a minor shall be
signed in his behalf by:
1. His parent or guardian, or if the latter is not
available,
2. An authorized representative of the DOLE.
Rules on working scholars
There is no Er-Ee relationship between students on
one hand, and schools, 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. (IRR, Book III, Rule
IX, Sec. 14).
NOTE: The student is not considered an Ee.
Q: Padilla entered into a written agreement with
Gomburza College to work for the latter in
exchange for the privilege of studying in said
institution. His work was confined to keeping
clean the lavatory facilities of the school. One
school day, he got into a fist fight with a
classmate, Monteverde, as a result of which the
latter sustained a fractured arm.
Monteverdefiled a civil case for damages against
him, impleading Gomburza College due to the
latter's alleged liability as his Er. Under the
85
circumstances, could Gomburza College be held
liable by Monteverde as Padilla’s employer?
(1997 Bar Question)
A: No. Gomburza College is not liable for the acts of
Padilla because there is no Er-Ee relationship
between them. As provided in the IRR of the LC,
"there is no Er-Ee relationship between students on
one hand, and schools, colleges, or universities on
the other, where students work with the latter in
exchange for the privilege to study free of charge,
provided the students are given real opportunity,
including such facilities as may be reasonable and
necessary to finish their chosen courses under such
arrangement."
Procedure for the termination of apprenticeship
The party terminating shall:
1. Serve a written notice on the other at least 5
days before actual termination,
2. Stating the reason for such decision; and
3. A copy of said notice shall be furnished to the
Apprenticeship Division concerned.
Party which can terminate an apprenticeship
agreement
1. Either party may terminate an agreement after
the apprenticeship period but only for a valid
cause.
2. It may be initiated by either party upon filing a
complaint or upon DOLE’s own initiative.
Party which appeal the decision of the
authorized agency of the DOLE
It may be appealed by any aggrieved person to the
SLE within 5 days from receipt of the decision.
NOTE: The decision of the SLE shall be final and
executory.
Principle of Exhaustion of Administrative
Remedies applied in case of breach of
apprenticeship agreement
Exhaustion of Administrative Remedies is a
condition precedent to the institution of an action
for enforcing application of agreement.
Duty of the plant apprenticeship committee
The plant apprenticeship committee shall have the
initial responsibility for settling differences arising
out of Apprenticeship agreement [IRR, Book II, Rule
VI, Sec. 32(b)]).
Learners
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Learnership vs. Apprenticeship
1. They are persons hired as trainees in semi-
skilled and other industrial occupations BASIS Apprenticeshi
Learnership
2. Which are non-apprenticeable and p
3. Which may be learned through practical Training on the
training on the job in a relatively short period of job in semi- Training in
time skilled and trades which
4. Which shall not exceed 3 months other industrial are
5. Whether or not such practical training is occupation or apprenticeable,
supplemented by theoretical instructions [IRR, trades which that is, practical
Book II, Rule VII, Sec. 1(a)]. are non- training on the
apprenticeable job
Employment of learners Nature and which may supplemented
be learned thru by related
Learners may be employed when: practical theoretical
1. No experienced worker is available training on the instruction for
2. It is necessary to prevent curtailment of job in a more than 3
employment opportunities; and relatively short months.
3. Employment does not create unfair period of time.
competition in terms of labor costs or impair or Duration of Min: 3 months
lower working standards. Max: 3 months
training Max: 6 months
With
Contents of a learnership agreement commitment to
employ the
Any Er desiring to employ learners shall enter into learner as a No commitment
a learnership agreement with them, which Commitmen
regular Ee if he to hire
agreement shall include: t to employ
desires upon
completion of
1. The names and addresses of the learners; learnership
2. The duration of the learnership period, which Considered a
shall not exceed 3 months; regular Ee if
3. The wages or salary rates of the learners which In case of pre-termination
shall begin at not less than 75% of the pre- occurs after 2 Worker not
applicable minimum wage; and termination months of considered as
4. A commitment to employ the learners if they so of contract training and the regular Ee.
desire, as regular Ees upon completion of the dismissal is
Learnership. without fault of
the Learner.
Employment of minors as learners Highly technical
Semi- industries and
A learner must be at least 15 years of age. Coverage skilled/Industri only in
al occupations industrial
NOTE: Those below 18 years of age shall not work occupation
in hazardous occupations. There is a list of
List learnable trades No list
Persons who may employ learners by TESDA
Requires Requires
Only Ers in semi-skilled and other industrial Written
learnership apprenticeship
occupations which are non-apprenticeable may agreement
agreement agreement
employ learners.
PERSONS WITH DISABILITY (R.A. 7277 as
Pre-termination of Learnership contract; amended by R.A. 9442)
regular employment
DEFINITION
If training is terminated by the Er before the end of
the stipulated period through no fault of the Persons with disability (PWD)
Learners, they are deemed regular Ees (IRR, Book II,
Rule VII, Sec. 4). Provided, they have already been Those whose earning capacity is impaired by:
trained for 2 months.

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 LABOR STANDARDS
1. Physical deficiency
2. Age
3. Injury
4. Disease
5. Mental deficiency
6. Illness
Employment of PWD
1. When their employment is necessary to prevent
curtailment of employment opportunities; and
2. When it will not create unfair competition in
labor costs or lower working standards (LC, Art.
79).
Employment period of PWD
There is no minimum or maximum duration. It
depends on the agreement but it is necessary that
there is a specific duration stated.
Persons with disability can be a regular Ee
Persons with disability can be a regular Ee if work is
usually or necessarily desirable to the business
(Bernardo v. NLRC, G.R No. 122917, July 12, 1999).
Persons who may employ persons with
disability
Ers in all industries: Provided, the disability is not
such as to effectively impede the performance of job
operations in the particular occupations for which
they are hired.
Not all workers with a disability are considered
disabled workers
The mere fact that a worker has a disability does not
make him a disabled worker because his disability
may not impair his efficiency or the quality of his
work. If despite his disability he can still efficiently
perform his work, he would be considered a qualified
disabled worker entitled to the same treatment as
qualified able-bodied workers (Bernardo v. NLRC, G.R.
No. 122917, July 12, 1999).
RIGHTS OF PERSONS WITH DISABILITY
Rights and privileges of PWD
1. Equal opportunity for employment - No PWD shall
be denied access to opportunities for sutable
employment. Five percent (5%) of all casual
emergency and contractual positions in the
DSWD, Health, Education and other government
agencies, offices or corporations engaged in
social development shall be reserved for
PWDs.(Section 5, Chapter 1, Title II, RA 7277)
87
2. Sheltered employment - The Government shall
endeavour to provide them work if suitable
employment for disabled persons cannot be
found through open employment
3. Apprenticeship - PWD may be hired as
apprentices or learners if their disability is not
such as to effectively impede the performance
of job operations in the particular occupations
for which they are hired (LC, Art. 81).
4. Vocational rehabilitation - To develop the skills
and potentials of disabled workers and enable
them to compete in the labor market
5. Vocational guidance and counselling
Wage Rate (2013 Bar)
GR: Handicaped workers are entitled to not less than
seventy-five percent (75%) of the applicable adjusted
minimum wage. (Article 80, LC)
XPN: All qualified handicapped workers shall recaive
the full amount of the minimum wage rate prescribed
herein pursuant to RA 7277.(Wage Order No. NCR-18,
Effective October 4, 2013)
If a PWD is hired as an apprentice or learner,
he shall be paid not less than seventy-five
percent (75%) of the applicable minimum
wage.
XPN: if the PWD, however is hired as a
learner and employed in piece or incentive-
rate jobs during the training period, he shall
be paid one hundred percent (100%) of the
applicable minimum wage.(Chan, 2014)
PROHIBITIONS ON DISCRIMINATION AGAINST
PERSONS WITH DISABILITY
The following constitutes acts of discrimination:
1. Limiting, segregating or classifying a job
applicant with disability in such a manner that
adversely affects his work opportunities;
2. GR: Using qualification standards, employment
tests or other selection criteria that screen out
or tend to screen out a PWD;
XPN: such standards, tests or other selection
criteria are shown to be job-related for the
position in question and are consisten with
business necessity
3. Utilizing standards, criteria, or methods of
administration that:
a. Have the effect of discrimination on the
basis of disability; or
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
b. Perpetuate the discrimination of others improvements or modifications (R.A. 7277, Sec.
who are subject to common administrative 8).
control
The financial incentive, if any, granted by law to SPQ
4. Providing less compensation, by reason of his Garments whose cutters and sewers in its
disability, that the amount to which a non- garments-for-export operations are 80% staffed by
disabled person performing the same work is deaf and deaf-mute workers is additional deduction
entitled; from its gross income equivalent to 25% of amount
5. Favoring a non-disabled Ee over a qualified Ee paid as salaries to persons with disability. (2013
with disabilty with respect to promotion, Bar) Basis: Magna Carta for Disabled Persons.
training opportunities, study and scholarship
grants, solely on account of the latter’s Persons with Disability vs. Differently Abled
disability;
6. GR: Dismissing or terminating the services of an Persons with
Differently Abled
Ee with disability by reason of his disablity Disability
Refers to all suffering from
XPN: the Er can prove that he impairs the restriction of different
satisfactory performance of the work incolved abilities as a result of
to the prejudice of the business entity; Earning capacity is
mental, physical or
provided, however, that the Er first sought to impaired by age, or
sensory impairment to
provide reasonable accomodations for persons physical or mental
perform an activity in the
with disbility; deficiency or injury.
manner or within range
7. Failing to selct or administer in the most considered normal for a
effective manner employment tests which human being.
accurately reflect the skills, aptitude or other Covers only Covers all activities or
factor of tha applicant or employee with workers. endeavors.
disabilty that such test purports to measure, Basis: Basis: range of activity
rather than the impaired sensory manual or loss/impairment of which is normal for a
speaking skills of such applicant or employee, in earning capacity. human being.
any; and Restriction due to
8. Excluding PWD from membership in labor Loss due to injury or
impairment of
unions or similar organizations.(Section 32, physical or mental
mental/physical/ sensory
Charpter I, Title III, RA 7277) defect or age.
defect.
If hired, entitled to
INCENTIVES FOR EMPLOYERS 75% of minimum
If qualified, entitled to all
wage.
Incentives of Er who are employing disabled terms and conditions as
workers qualified able-bodied
Subject to definite
person.
periods of
1. Entitled to an additional deduction, from their employment.
gross income, equivalent to 25% of the total No restrictions on
amount paid as salaries and wages to disabled Employable only
employment.
persons when necessary to
prevent curtailment
Must get equal
Provided, however, That such entities present of employment
opportunity and no unfair
proof as certified by the DOLE that disabled opportunity.
competition.
persons are under their employ

Provided further, That the disabled Ee is

accredited with the DOLE and the Department
of Health as to his disability, skills and
qualifications.

2. Private entities that improve or modify their

physical facilities in order to provide
reasonable accommodation for disabled
persons shall also be entitled to an additional
deduction from their net taxable income,
equivalent to 50% of the direct costs of the

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2016 GOLDEN NOTES
88
 TERMINATION OF EMPLOYMENT
TERMINATION OF EMPLOYMENT
Coverage: Applies to all establishments or
undertakings whether for profit or not. (Art. 284,
Labor Code)
Termination – broader concept that is used to
denote dismissal or lay-off. May also imply complete
severance of employer-employee relationship.
Dismissal – a form of ending an employer-
employee relationship initiated either by the
employee or employer. ie: just cause or authorized
cause dismissal.
Lay-off - termination initiated by the employer
without prejudice to reinstatement or recall of an
employee who has been temporarily separated
brought about by adverse economic conditions.
EMPLOYER-EMPLOYEE RELATIONSHIP
Existence of an employment relationship
Employment relationship is determined by law and
not by contract (Insular Life Assurance Co. Ltd. v.
NLRC, G.R. No. 119930, March 12, 1998).
NOTE: Taxi or jeepney drivers under the
“boundary” system are Ee’s of the taxi or jeepney
owners/operators; so also the passenger bus
drivers and conductors (Jardin v. NLRC and
Goodman Taxi, G.R. No. 119268, February 23, 2000).
Er-Ee relation is a question of law
An employment contract which stipulates that there
is no Er-Ee relationship between the parties is
invalid. The existence of an Er-Ee relation is a
question of law and being such, it cannot be made
the subject of agreement (Tabas v. California
Manufacturing Co., G.R. No. L-80680, January 26,
1989).
Q: Romel is working as a pianist to in the
restaurant of a hotel for almost 7 years. During
his employment, he was given a time for his
performance fixed at 7-10pm for 3-6x a week,
the manager requires him to conform with the
venue’s motiff and is subjected to the rules and
regulations of the employees of the hotel. His
salary was given every night. His services were
terminated as a cost-cutting measure. He filed
for illegal dismissal. As a defense, the hotel
management alleged that there can be no illegal
dismissal as er-ee relationship is absent. Is the
defense of the hotel tenable?
A: Yes. Romel is an employee of the hotel. The issue
89
of whether or not an employer-employee
relationship existed between petitioner and
respondent is essentially a question of fact. The
factors that determine the issue include who has the
power to select the employee, who pays the
employee’s wages, who has the power to dismiss the
employee, and who exercises control of the methods
and results by which the work of the employee is
accomplished. Although no particular form of
evidence is required to prove the existence of the
relationship, and any competent and relevant
evidence to prove the relationship may be admitted,
a finding that the relationship exists must
nonetheless rest on substantial evidence, which is
that amount of relevant evidence that a reasonable
mind might accept as adequate to justify a
conclusion. (Legend Hotel v. Realuyo G.R. No. 153511
July 18, 2012).
Q: Banco de Manila and the Ang Husay Janitorial
and Pest Control Agency entered into an
Independent Contractor Agreement with the
usual stipulations specifically, the absence of Er-
Ee relationship, and the relief from liability
clauses. Can the bank, as a client, and the agency,
as an independent contractor, stipulate that no
Er-Ee relationship exists between the bank and
the employees of the Agency who may be
assigned to work in the Bank? Reason.
A: Yes, they can stipulate provided that the
relationship is job contracting. However the
stipulation cannot prevail over the facts and the
laws. The existence of Er-Ee relationship is
determined by facts and law and not by stipulation
of the parties.
It is axiomatic that the existence of an Er-Ee
relationship cannot be negated by expressly
repudiating it in the management contract and
providing therein that the Ee is an independent
contractor when the terms of the agreement clearly
show otherwise. For the employment status of a
person is defined and prescribed by law and not by
what the parties say it should be. In determining the
status of the management contract, the "four-fold
test" on employment has to be applied (Insular Life
Assurance Co.. Ltd. v. NLRC, G.R. No. 119930, March
12, 1998).
Q: ASIA executed a 1-year contract with the
Baron Hotel for the former to provide the latter
with 20 security guards to safeguard the
persons and belongings of hotel guests, among
others. The security guards filled up Baron
application form and submitted the executed
forms directly to the Security Department of
Baron. The pay slips of the security guards bore
Baron's logo and showed that Baron deducted
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
the amounts for SSS premiums, medicare
contributions and withholding taxes from the
wages of the secutiry guards. The assignments of
security guards, who should be on duty or on
call, promotions, suspensions, dismissals and
award citations for meritorious services were
all done upon approval by Baron's chief security
officer. After the expiration of the contract with
ASIA, Baron did not renew the same and instead
executed another contract for security services
with another agency. ASIA placed the affected
security guards on "floating status" on "no work
no pay" basis. Having been displaced from work,
the ASIA security guards filed a case against
Baron for illegal dismissal, OT pay, minimum
wage differentials, vacation leave and sick leave
benefits, and 13thmonth pay. Baron denied
liability alleging that ASIA is the Er of the
security guards and therefore, their complaint
for illegal dismissal and payment of money
claims should be directed against ASIA.
Nevertheless, Baron filed a Third Party
Complaint against ASIA.
Is there an Er-Ee relationship between the
Baron, on one hand, and the ASIA security
guards, on the other hand? Explain briefly.
(1999 Bar Question)
A: Yes. As a general rule, the security guards of a
private security guard agency are the Ees of the
latter and not of the establishment that has entered
into a contract with the private security guard
agency for security services. But under the facts in
the question, Baron Hotel appear to have hired the
security guards, paid their wages, have the power to
promote, suspend or dismiss the security guards
and the power of control over them, in other words,
the security guards were under orders of Baron
Hotel as regard their employment. Because of the
above-mentioned circumstances, Baron Hotel is the
Er of the security guards.
Q: Assuming that ASIA is the Er, is the act of ASIA
in placing the security guards on "floating
status" lawful? Why?
A: Yes. It is lawful for a private security guard
agency to place its security guard on a "floating
status" if it has no assignment to give to said
security guards. But if the security guards are placed
on a "floating status" for more than 6 months, the
security guards may consider themselves as having
been dismissed.
Q: Lacson was one of more than 100 Ees who
were terminated from employment due to the
closure of LBM Construction Corporation. LBM
was a sister company of Lastimoso Construction,
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
90
Inc. and RL Realty & Dev’t Corp. All three entities
formed what came to be known as the Lastimoso
Group of Companies. The three corporations
were owned and controlled by members of the
Lastimoso family; their incorporators and
directors all belonged to the Lastimoso family.
The three corporations were engaged in the
same line of business, under one management,
and used the same equipment including
manpower services. Lacson and his co-Ees filed
a complaint with the Labor Arbiter against LBM,
RL Realty and Lastimoso Construction to hold
them jointly and severally liable for back wages
and separation pay. Lastimoso Construction,
Inc. RL Realty & Development Corporation
interposed a Motion to Dismiss contending that
they are juridical entitles with distinct and
separate personalities from LBM Construction
Corporation and therefore, they cannot be held
jointly and severally liable for the money claims
of workers who are not their employees. Rule on
the motion to dismiss. Should it be granted or
denied? Why? (1999 Bar Question)
A: It is very clear that even if LBM Construction
company, Lastimoso Construction Company, Inc.
and RL Realty & Dev’t Corp. all belong to the
Lastimoso family and are engaged in the same line
of business under one management and used the
same equipment including manpower services,
these corporations were separate juridical entities.
Thus, only the LBM Construction Corporation is the
Er of Teofilo Lacson. The other corporation do not
have any Er-Ee relations with Lacson. The case in
question does not include any fact that would justify
piercing the veil of corporate fiction of the other
corporations in order to protect the rights of
workers. In a case (Concept Builders, Inc. v. NLRC,
G.R. No. 108734, May 29,1996) the SC ruled that it is
a fundamental principle of corporation law that a
corporation is an entity separate and distinct from
its stockholders and from other corporations to
which it may be connected. But this separate and
distinct personality of a corporation is merely a
fiction created by law for convenience and to
promote justice. So, when the notion of separate
juridical personality is used to defeat public
convenience, justify wrong, protect fraud or defend
crime, or is used as a device to defeat the labor laws,
this separate personality of the corporation maybe
disregarded or the veil of corporate fiction pierced.
FOUR- FOLD TEST
Factors determining the existence of an
employer-employee relationship
The four–fold test (indicia of determination):
1. Selection and engagement of the employee;
 TERMINATION OF EMPLOYMENT
2. Payment of wages;
3. Power of dismissal; and
4. Power of control (Azucena, Vol. I).
Control test
The control test assumes primacy in the overall
consideration. There is an Er-Ee relationship when
the person for whom the services are performed
reserves the right to control not only the end
achieved but also the manner and means used to
achieve that end (Television and Production
Exponents Inc. v. Servana, 542 SCRA 578).
Kinds of control exercised by an Er
Not every form of control establishes employer-
employee relationship. A demarcation line should
be drawn between: (a) rules that merely serve as
guidelines which only promote the result, and (b)
rues that fix the methodology and bind or restrict the
party hired to the use of such means or methods.
Under the first category, there exists no employer-
employee relationship. In the second category, it has
the effect of establishing employer-employee
relationship (Insular life v. NLRC, 179 SCRA 439;
Consulta v. CA, G.R. No. 145443, March 18, 2005).
NOTE: However, in certain cases the control test is
not sufficient to give a complete picture of the
relationship between the parties, owing to the
complexity of such a relationship where several
positions have been held by the worker. The better
approach is to adopt the two-tiered test (Francisco
v. NLRC, G.R. No. 170087, August 31, 2006).
This two-tiered test would provide us with a
framework of analysis, which would take into
consideration the totality of circumstances
surrounding the true nature of the relationship
between the parties. This is especially appropriate
in this case where there is no written agreement or
terms of reference to base the relationship on and
due to the complexity of the relationship based on
the various positions and responsibilities given to
the worker over the period of the latter’s
employment (Francisco v. NLRC, G.R. No. 170087,
August 31, 2006).
Q: The Pizza Corporation (PizCorp) and Ready
Supply Cooperative (RSC) entered into a
"service agreement" where RSC in consideration
of service fees to be paid by PizCorp's will
exclusively supply PizCorp with a group of RSC
motorcycle-owning cooperative members who
will henceforth perform PizCorp's pizza
delivery service. RSC assumes under the
agreement --- full obligation for the payment of
the salaries and other statutory monetary
91
benefits of its members deployed to PizCorp.
The parties also stipulated that there shall be no
Er-Ee relationship between PizCorp and the RSC
members. However, if PizCorp is materially
prejudiced by any act of the delivery crew that
violates PizCorp’s directives and orders,
PizCorp can directly impose disciplinary actions
on, including the power to dismiss, the erring
RSC member/s.
a. Is the contractual stipulation that there is no
Er-Ee relationship binding on labor
officials?
b. Based on the test/s for Er-Ee relationship,
determine the issue of who is the Er of the
RSC members. (2008 Bar Question)
A:
a. No. The contractual stipulation that there is no
Er-Ee relationship between PizCorp and the
RSC members is not binding on labor officials
because what determines the existence or non-
existence of employer-employee relationship is
the actual factual situation between PizCorp
and RSC members and not what is stipulated in
the contract.
b. Using the control test, the Er of the RSC
members is PizCorp. According to the facts, the
RSC members are supposed to make their
deliveries in accordance with PizCorp
directives and orders. In addition, the PizCorp
can directly impose disciplinary sanction,
including the power to dismiss the RSC
members.
Q: Genesis entered into a Career’s Agent
Agreement with EmoLife Insurance Company, a
domestic corporation engaged in insurance
business. In the Agreement, it provides that the
agent is an independent contractor and nothing
therein shall be construed or interpreted as
creating an Er-Ee relationship. It further
provides that the agent must comply with three
requirements: (1) compliance with the
regulations and requirements of the company;
(2) maintenance of a level of knowledge of the
company's products that is satisfactory to the
company; and (3) compliance with a quota of
new businesses. However, EmoLife insurance
company terminated Genesis’ services. Genesis
filed an illegal dismissal complaint alleging
therein that an Er-Ee relationship exists and that
he was illegally dismissed. Is he an employee of
the Insurance Company?
A: No. Genesis is not an Ee of EmoLife Insurance
Company. Generally, the determinative element is
the control exercised over the one rendering the
service. The concept of “control” in LC has to be
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
compared and distinguished with “control” that
must necessarily exist in a principal-agent
relationship. The Er controls the Ee both in the
results and in the means and manner of achieving
this result. The principal in an agency relationship,
e.g. insurance agent, on the other hand, also has the
prerogative to exercise control over the agent in
undertaking the assigned task based on the
parameters outlined in the pertinent laws. In the
present case, the Agreement fully serves as grant of
authority to Genesis as EmoLife’s insurance agent.
This agreement is supplemented by the company’s
agency practices and usages, duly accepted by the
agent in carrying out the agency. Foremost among
these are the directives that the principal may
impose on the agent to achieve the assigned tasks,
to the extent that they do not involve the means and
manner of undertaking these tasks. The law
likewise obligates the agent to render an account; in
this sense, the principal may impose on the agent
specific instructions on how an account shall be
made, particularly on the matter of expenses and
reimbursements. To these extents, control can be
imposed through rules and regulations without
intruding into the labor law concept of control for
purposes of employment (Gregorio Tongko v.
ManuLife Insurance Company, G.R. No. 167622, June
29, 2010).
Q: Ador is a student working on his master's
degree in horticulture. To make ends meet, he
takes on jobs to come up with flower
arrangements for friends. His neighbor, Nico, is
about to get married to Lucia and needs a floral
arranger. Ador offers his services and Nico
agrees. They shake hands on it, agreeing that
Nico will pay Ador :P20,000.00 for his services
but that Ador will take care of everything. As
Ador sets about to decorate the venue, Nico
changes all of Ador's plans and ends up
designing the arrangements himself with Ador
simply executing Nico's instructions. Is there an
employer-employee relationship between Nico
and Ador? (2015 Bar Question)
A: Yes. With Ador’s simply executing Nico’s
instruction, Nico, who now has control over Ador’s
work, has become the employer of Ador. In Royale
Homes Marketing Corp. v. Fidel Alcantara (G.R. No.
195190, July 28, 2014) the Supreme Court held that
control is the most important determinant of
employer-employee relationship.
Two-tiered test
1. The putative Er’s power to control the Ee with
respect to the means and methods by which the
work is to be accomplished (Four-fold test);
2. The underlying economic realities of the
activity or relationship (economic reality test).
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
92
The existence or non-existence of the Er-Ee
relationship is commonly determined by
examination of certain factors or aspects of the
relationship, as follows:
1. The manner of selection and engagement of the
putative employee;
2. The mode of payment of wages;
3. The presence or absence of the power of
dismissal; and
4. The presence or absence of a power to control
the putative employee’s conduct (Hijos De F.
Escano, Inc. v. NLRC, G.R. No. 59229. April 22,
1991I, i.e., the power to control the employee
with respect to the means and methods by
which the work is to be accomplished.
To bolster the payment of wages and control test,
the existing economic conditions prevailing
between the parties, like the inclusion of the Ee in
the payrolls (Sevilla v. CA, G.R. Nos. 44182-3, April 15,
1988), submission of his name with the SSS, PAG-
IBIG, PhilHealth, otherwise known as the economic
test, are also applied in determining Er-Ee
relationship (Poquiz, Vol. I).
Proper standard for economic dependence
The proper standard is whether the worker is
dependent on the alleged Er for his continued
employment in that line of business.
The determination of the relationship between Er
and Ee depends upon the circumstances of the
whole economic activity, such as:
1. The extent to which the services performed are
an integral part of the Er’s business
2. The extent of the worker’s investment in
equipment and facilities;
3. The nature and degree of control exercised by
the Er;
4. The worker’s opportunity for profit and loss;
5. The amount of initiative, skill, judgment, or
foresight required for the success of the claimed
independent enterprise;
6. The permanency and duration of the
relationship between the worker and Er; and
7. The degree of dependency of the worker upon
the Er for his continued employment in that line
of business (Francisco v. NLRC, G.R. No. 170087,
August 31, 2006).
Application of the four-fold test and the two-
tiered test
Present Philippine law recognizes a two-tiered test.
The first tier of the test is the four-fold test. The
second tier is the economics of the relationship test.
 TERMINATION OF EMPLOYMENT
But the latter test is used if and only if there is going XPNs:
to be harshness in the results because of the strict 1. Covered by an Apprenticeship or Learnership
application of the four-fold test (Francisco v. NLRC, agreement stipulating a different period
G.R. No. 170087, August 31, 2006). 2. Voluntary agreement of parties (especially
when the nature of work requires a longer
KINDS OF EMPLOYMENT period)
3. The Er gives the Ee a second chance to pass the
1. Probationary standards set (Mariwasa Manufacturing, Inc. v.
2. Regular Leogardo, Jr., G.R. No. 74246, January 26, 1989).
3. Project Employees 4. When the same is required by the nature of the
4. Seasonal work, e.g. the probationary period set for
5. Casual professors, instructors and teachers is 3
6. Fixed-term consecutive years of satisfactory service
pursuant to DOLE Manual of Regulations for
PROBATIONARY EMPLOYMENT Private Schools.
5. When the same is established by company
Probationary employment policy.

Employment where the Ee, upon his engagement:
1. Is made to undergo a trial period
2. During which the Er determines his fitness to
qualify for regular employment,
3. Based on reasonable standards made known to
the Ee at the time of engagement (IRR, Book VI,
Rule I, Sec 6).
Period of probation shall be reckoned from the date
the Ee actually started working [IRR, Book VI, Rule I,
Sec.6(b)]. Probationary Ees may be dismissed for
cause before end of the probationary period.
After the lapse of the probationary period (6
months), Ee becomes regular.

Characteristics of probationary employment Purpose of the probation period

1. It is an employment for a trial period;
2. It is a temporary employment status prior to
regular employment;
3. It arises through a contract with the following
elements:
a. The Ee must learn and work at a particular
type of work
b. Such work calls for certain qualifications
c. The probation is fixed
d. The Er reserves the power to terminate
during or at the end of the trial period
e. And if the Ee has learned the job to the
satisfaction of the Er, he becomes a regular
Ee.
Rules on probationary employment
The purpose of the probation period is to afford the
Er an opportunity to observe the fitness of a
probationary Ee at work.
Extension of the probationary period beyond six
months
The Er and Ee may validly agree to extend the
probationary period beyond six months. Such an
extension may be lawfully agreed upon, despite the
restrictive language of Art. 281. A voluntary
agreement extending the original probationary
period to give the Ee a second chance to pass the
probation standards constitutes a lawful exception
to the statutory limit (Mariwasa Manufacturing, Inc.
v. Leogardo, Jr., G.R. No. 74246, January 26, 1989).

1. Er shall make known to the Ee at the time he is
hired, the standards by which he will qualify as
a regular Ee;
2. An Ee allowed to continue work after the
probationary period shall be considered a
regular Ee;
3. During the probationary period, the Ee enjoys
security of tenure; his services can only be
terminated for just or authorized causes.
NOTE: By voluntarily agreeing to such an extension,
the Ee waived any benefit attaching to the
completion of the period if he still failed to make the
grade during the period of extension (Mariwasa
Mfg. Inc. v. Hon. Leogardo, G.R. No. 74246, January 26,
1989).
Instances when extension of probationary
period is allowed

Period of probationary employment Extension is allowed only when:

GR: It shall not exceed 6 months. 1. Nature of the job requires extensive training, or

UNIVERSITY OF SANTO TOMAS

93 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
2. If it is a company policy that the period of
probationary employment should be an
extended period
NOTE: The extension of period should always be
reasonable; Such that, the nature of the work so
requires and that it is the amount of time required
for an ordinary worker to learn the job.
Essence of the prohibition on double or
successive probation
The evil sought to be prevented is to discourage
scheming Ers from using the system of double or
successive probation to circumvent the mandate of
the law on regularization and make it easier for
them to dismiss their Ees (Holiday Inn Manila v.
NLRC, G.R. No. 109114, September 14, 2003).
Q: Michelle Miclat was employed on a
probationary basis as marketing assistant by
Clarion Printing House but during her
employment she was not informed of the
standards that would qualify her as a regular Ee.
30 days after, Clarion informed Miclat that her
employment contract had been terminated
without any reason. Miclat was informed that
her termination was part of Clarion’s cost-
cutting measures. Is Miclat considered as a
regular Ee and hence entitled to its benefits?
A: Yes. In all cases of probationary employment, the
Er shall make known to the Ee the standards under
which he will qualify as a regular Ee at the time of
his engagement. Where no standards are made
known to the Ee at that time, he shall be deemed a
regular Ee. In the case at bar, she was deemed to
have been hired from day one as a regular Ee
(Clarion Printing House Inc., v. NLRC, G.R. No. 148372,
June 27, 2005).
Obligation of the Er to his probationary Ees
There is obligation on the part of Er to inform
standards for regularization at the time of
engagement. The failure to inform has the effect that
upon the expiry of the probationary employment,
with or without the period provided for in the
contract, the worker is deemed to be regular.
Q: Middleby Phils. Corp. hired Alcira as
engineering support services supervisor on a
probationary basis for six months. Apparently
unhappy with Alcira’s performance, Middleby
terminated his services. Alcira contends that he
was already a regular Ee when his employment
was terminated. According to Alcira’s
computation, since Art. 13 of the NCC provides
that 1 month is composed of 30 days, 6 months
totaling 180 days, then his 180th day would fall
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
94
on Nov. 16, 1996 making him a regular Ee before
his termination. Is the contention of the
petitioner in the computation of six months
correct?
A: No, the computation of the 6-month probationary
period is reckoned from the date of appointment up
to the same calendar date of the 6th month following.
In short, since the number of days in each particular
month was irrelevant, Alcira was still a
probationary Ee when Middleby opted not to
“regularize” him on Nov. 20, 1996 (Alcira v. NLRC,
G.R. No. 149859, June 9, 2004).
NOTE: In Mitsubishi Motors v. Chrysler Phils. Labor
Union, G.R. No. 148738, June 29, 2004, the SC ruled in
this wise:
“Applying Art. 13 of the NCC, the
probationary period of 6-months consists of
180 days. This is in conformity with Art.
13(1) of the NCC. The number of months in
the probationary period, 6, should then be
multiplied by the number of days within a
month, 30; hence, the period of 180 days. As
clearly provided for the in last par. of Art. 13,
in computing a period, the first day shall be
excluded and the last day included. Thus, the
180 days commenced on May 27, 1996, and
ended on Nov. 23, 1996. The termination
letter dated Nov. 25, 1996 was served on
Paras only on Nov. 26, 1996. He was, by then
already a regular Ee of the company under
Art. 281 of the LC.”
How to resolve the conflict between the Alcira
and Mitsubishi Motors case:
1. Statutory Construction – The latter case
prevails (Mitsubishi Motors); or
2. Rule more favorable to the Ee – Use the
computation which would amount to granting
the subject Ee regular employment status
(based on Constitutional and statutory
provisions for the liberal interpretation of labor
laws)
Instances when a probationary Ee is deemed to
be a regular Ee
1. If he is allowed to work after a probationary
period (LC, Art. 281).
2. If no standards, under which he will qualify as a
regular Ee, are made known to him at the time
of his engagement [IRR, Book VI, Rule I, Sec.
6(d)].
Grounds for terminating a probationary
employment
 TERMINATION OF EMPLOYMENT
1. Just/authorized causes
2. When he fails to qualify as a regular Ee in
accordance with reasonable standards made
known by the Er to the Ee at the time of his
engagement (ICMC v. NLRC, G.R. No. 72222,
January 30, 1989; LC, Art. 281).
NOTE: If Pre-termination of probationary contract
is due to the valid causes, the Er is not liable to pay
the monetary value of the unexpired portion of the
employment.
While probationary Ees do not enjoy permanent
status, they are afforded the security of tenure
protection of the Constitution. Consequently, they
cannot be removed from their positions unless for
cause. Such constitutional protection, however,
ends upon the expiration of the period stated in
their probationary contract of employment.
Thereafter, the parties are free to renew the
contract or not (CSA v. NLRC, G.R. No. 87333,
September 6, 1991).
Limitations on the Er’s power to terminate a
probationary employment contract
1. The power must be exercised in accordance
with the specific requirements of the contract;
2. If a particular time is prescribed, the
termination must be within such time and if
formal notice is required, then that form must
be used;
3. The Er’s dissatisfaction must be real and in good
faith, not feigned so as to circumvent the
contract or the law; and
4. There must be no unlawful discrimination in
the dismissal.
NOTE: The probationary Ee is entitled to
procedural due process prior to dismissal from
service.
Q: Ron Cruz was employed as gardener by
Manila Hotel on “probation status” effective
Sept. 22, 1976. The appointment signed by Cruz
provided for a 6 month probationary period. On
Mar. 20, 1977, or a day before the expiration of
the probationary period, Cruz was promoted to
lead gardener position. On the same day, Cruz’
position was “abolished” by Manila Hotel
allegedly due to economic reverses or business
recession, and to salvage the enterprise from
imminent danger of collapse. Was Cruz illegally
dismissed?
A: Yes. There is no dispute that as a probationary
Ee, Cruz had but limited tenure. Although on
probationary basis, however, Cruz still enjoys the
95
constitutional protection on security of tenure.
During his tenure of employment, therefore, or
before his contract expires, Cruz cannot be removed
except for cause as provided for by law.
What makes Cruz’ dismissal highly suspicious is
that it took place at a time when he needs only but a
day to be eligible as a regular Ee. That he is
competent finds support in his being promoted to a
lead gardener in so short span of less than 6 months.
By terminating his employment or abolishing his
position with but only one day remaining in his
probationary appointment, the hotel deprived Cruz
of qualifying as a regular Ee with its concomitant
rights and privileges (Manila Hotel Corp. v. NLRC,
G.R. No. L-53453, January 22, 1986).
Period of probationary employment of private
school teachers
The probationary employment of academic
teaching personnel shall not be more than a period
of 6 consecutive semesters or 9 consecutive
trimesters of satisfactory service, as the case may be
(The Manual of Regulations for Private Higher
Education, Sec. 117).
NOTE: An academic teaching personnel, who does
not possess the minimum academic qualifications
under Section 35 and 36 of the Manual of
Regulations for Private Higher Education shall be
considered as a part-time Ee, and therefore can not
avail of the status and privileges of a probationary
employment. A part-time Ee cannot acquire a
regular permanent status, and hence, may be
terminanted when a qualified teacher becomes
available (Manual of Regulations for Provate Higher
Education).
Q: Colegio de San Agustin (CSA) hired Gela Jose
as a grade school classroom teacher on a
probationary basis for SY ‘84 – ‘85. Her contract
was renewed for SY’s ‘85-‘86 and ‘86-‘87. On
Mar. 24, ‘87, the CSA wrote the Gela that "it
would be in the best interest of the students and
their families that she seek employment in
another school or business concern for next
school year." Notwithstanding the said notice,
the CSA still paid Gela her salary for April 15 to
May 15, 1987. On April 6, ‘87, Gela wrote the CSA
and sought reconsideration but she received no
reply. Thereafter, she filed a complaint for
illegal dismissal. Was Gela illegally dismissed?
A: No. The Faculty Manual of CSA underscores the
completion of three years of continuous service at
CSA before a probationary teacher acquires tenure.
Hence, Gela cannot claim any vested right to a
permanent appointment since she had not yet
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
achieved the prerequisite 3-year period under the
Manual of Regulation for Private Schools and the
Faculty Manual of CSA.
In the instant case where the CSA did not wish to
renew the contract of employment for the next
school year, Gela has no ground to protest. She was
not illegally dismissed. Her contract merely expired
(CSA v. NLRC, G.R No. 87333, September 6, 1991).
Q: During their probationary employment,
eight employees were berated and insulted by
their supervisor. In protest, they walked out.
The supervisor shouted at them to go home and
never to report back to work. Later, the
personnel manager required them to explain
why they should not be dismissed from
employment for abandonment and failure to
qualify for the positions applied for. They filed
a complaint for illegal dismissal against their
Er. As the Labor Arbiter, how will you resolve
the case? (2006 Bar Question)
A: As the LA, I will resolve the case in favor of the 8
probationary Ees due to the following:
1. Probationary Ees also enjoy security of tenure
( Biboso v. Victoria Milling, G.R.No. L-44360,
March 31, 1977).
2. In all cases involving Ees on probationary
status, the Er shall make known to the Ee at the
time he is hired, the standards by which he will
qualify for the positions applied for.
3. The filing of the complaint for illegal dismissal
effectively negates the Er’s theory of
abandonment (Rizada v. NLRC, G.R. No. 96982,
September 21, 1999).
4. The order to go home and not to return to work
constitutes dismissal from employment.
5. The 8 probationary Ees employment were
terminated without just cause and without due
process.
In view of the foregoing, I will order reinstatement
to their former positions without loss of seniority
rights with full back wages, plus damages and
attorney’s fees.
REGULAR EMPLOYMENT
Types of regular employment
1. An employment shall be deemed to be regular
where the Ee has been engaged to perform
activities which are usually necessary or
desirable in the usual business or trade of the
Er, the provisions of written agreements to the
contrary notwithstanding and regardless of the
oral agreements of the parties [IRR, Book VI,
Rule I, Sec. 5 (a)]. (Nature of work)
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
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2. Any Ee who has rendered at least one year of
service, whether such service is continuous or
broken, shall be considered a regular Ee with
respect to the activity in which he is employed
and his employment shall continue while such
activity exists [IRR, Book VI, Rule I, Sec. 5 (b)].
(Years of service)
Regularization is not a management prerogative;
rather, it is the nature of employment that
determines it. It is a mandate of the law (PAL v.
Pascua, G.R. No. 143258, August 15, 2003).
Regular employment does not mean permanent
employment. A probationary Ee becomes a regular
Ee after 6 months. The service of a regular Ee may
only be terminated for just/authorized causes.
The practice of entering into employment contracts
which would prevent the workers from becoming
regular should be struck down as contrary to public
policy and morals (Universal Robina Corp. v.
Catapang, G.R. No. 164736, October 14, 2005).
Tests to determine regular employment
1. The primary standard of determining regular
employment is the reasonable connection
between the particular activity performed by
the Ee to the usual trade or business of the Er.
The test is whether the former is usually
necessary or desirable in the usual business or
trade of the Er (De Leon v. NLRC, G.R. No. 70705,
August 21, 1989).
NOTE: The connection can be determined by
considering the nature of the work performed
and its relation to the scheme of the particular
business or trade in its entirety (Highway Copra
Traders v. NLRC, G.R. No. 108889, July 30, 1998).
2. Also, the performance of a job for at least a year
is sufficient evidence of the job’s necessity if not
indispensability to the business. This is the rule
even if its performance is not continuous and
merely intermittent. The employment is
considered regular, but only with respect to
such activity and while such activity exists
(Universal Robina Corp. v. Catapang, G.R. No.
164736, October 14, 2005).
The status of regular employment attaches to the
casual Ee on the day immediately after the end of his
first year of service. The law does not provide the
qualification that the Ee must first be issued a
regular appointment or must first be formally
declared as such before he can acquire a regular
status (Aurora Land Projects Corp. v. NLRC, G.R. No.
114733, January 2, 1997).
 TERMINATION OF EMPLOYMENT
Mode of compensation is not determinative of
regular employment
While the Ees mode of compensation was on a “per
piece basis” the status and nature of their
employment was that of regular Ees (Labor
Congress of the Phils v. NLRC, G.R. No. 123938, May
21, 1998).
NOTE: Seafarers cannot be considered as regular
Ees. Their employment is governed by the contracts
they sign every time they are hired and their
employment terminated when the contract expires.
Their employment is fixed for a certain period of
time (Ravago v. Esso Eastern Maritime Ltd., G.R. No.
158324, March 15, 2005).
In case of OFWs, Art280 of the LC does not apply.
Q: Moises was employed by La Tondeña at the
maintenance section of its Engineering
Department paid on a daily basis through petty
cash vouchers. His work consisted mainly of
painting company building and equipment and
other odd jobs relating to maintenance. After a
service of more than 1 year, Moises requested
that he be included in the payroll of regular
workers, instead of being paid through petty
cash vouchers. Instead, La Tondeña dismissed
Moises and claimed that Moises was contracted
on a casual basis specifically to paint certain
company buildings and that its completion
terminated Moises’ employment. Can Moises be
considered as a regular Ee?
A: Yes. The law demands that the nature and
entirety of the activities performed by the Ee be
considered. Here, the painting and maintenance
work given to Moises manifests a treatment
consistent with a maintenance man and not just a
painter, for if his job was only to paint a building
there would be no basis for giving him other work
assignments in-between painting activities.
It is not tenable to argue that the painting and
maintenance work of Moises are not necessary in La
Tondeña’s business of manufacturing liquors;
otherwise, there would be no need for the regular
maintenance section of the company’s engineering
department (De Leon v. NLRC, August 21, G.R. No.
70705, 1989).
Q: Honorio Dagui was hired by Doña Aurora
Suntay Tanjangco in 1953 to take charge of the
maintenance and repair of the Tanjangco
apartments and residential bldgs. He was to
perform carpentry, plumbing, electrical and
masonry work. Upon the death of Doña Aurora
97
Tanjangco in 1982, her daughter, Teresita
Tanjangco Quazon, took over the administration
of all the Tanjangco properties, and dismissed
Dagui. Is Honorio Dagui a regular Ee?
A: Yes. The jobs assigned to Dagui as maintenance
man, carpenter, plumber, electrician and mason
were directly related to the business of the
Tanjangco’s as lessors of residential and apartment
bldgs. Moreover, such a continuing need for his
services by the Tanjangcos is sufficient evidence of
the necessity and indispensability of his services to
their business or trade.
Dagui should likewise be considered a regular Ee by
the mere fact that he rendered service for the
Tanjangcos for more than one year, that is,
beginning 1953 until 1982, under Doña Aurora; and
then from 1982 up to June 8, 1991 under the
daughter, for a total of 29 and 9 years respectively.
Owing to Dagui's length of service, he became a
regular Ee, by operation of law, one year after he
was employed in 1953 and subsequently in 1982
(Aurora Land Projects Corp. v. NLRC, G.R. No. 114733,
January 2, 1997).
Q: A total of 43 Ees who are deaf-mutes were
hired and re-hired on various periods by Far
East Bank and Trust Co. as money sorters and
counters through a uniformly worded
agreement called “Employment Contract for
Handicapped Workers.” The company
disclaimed that these Ees were regular Ees and
maintained among others that they are a special
class of workers, who were hired temporarily
under a special employment arrangement
which was a result of overtures made by some
civic and political personalities to the Bank.
Should the deaf-mute Ees be considered as
regular Ees?
A: Yes. The renewal of the contracts of the
handicapped workers and the hiring of others leads
to the conclusion that their tasks were beneficial
and necessary to the bank. It also shows that they
were qualified to perform the responsibilities of
their positions; their disability did not render them
unqualified or unfit for the tasks assigned to them.
The Magna Carta for Disabled Persons mandates
that a qualified disabled Ee should be given the
same terms and conditions of employment as a
qualified able-bodied person. The fact that the Ees
were qualified disabled persons necessarily
removes the employment contracts from the ambit
of Art. 80. Since the Magna Carta accords them the
rights of qualified able-bodied persons, they are
thus covered by Art. 280 of the LC (Bernardo v.
NLRC, G.R. No. 122917, July 12, 1999).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Q: Coca-Cola Bottlers Phils, Inc., (CCBPI)
engaged the services of the workers as “sales
route helpers” for a period of 5 months. After 5
months, the workers were employed by the
company on a day-to-day basis. According to the
company, the workers were hired to substitute
for regular route helpers whenever the latter
would be unavailable or when there would be an
unexpected shortage of manpower in any of its
work places or an unusually high volume of
work. The practice was for the workers to wait
every morning outside the gates of the sales
office of the company, if thus hired, the workers
would then be paid their wages at the end of the
day. Should the workers be considered as
regular Ees of CCBPI?
A: Yes, the repeated rehiring of the workers and the
continuing need for their services clearly attest to
the necessity or desirability of their services in the
regular conduct of the business or trade of the
company. The fact that the workers have agreed to
be employed on such basis and to forego the
protection given to them on their security of tenure,
demonstrate nothing more than the serious
problem of impoverishment of so many of our
people and the resulting unevenness between labor
and capital (Magsalin & Coca-Cola v. N.O.W.M., G.R.
No. 148492, May 9, 2003).
Q: Metromedia Times Corp. entered, for the fifth
time, into an agreement with Efren Paguio,
appointing him to be an account executive of the
firm. He was to solicit advertisements for “The
Manila Times.” The written contract between
the parties provided that, “You are not an
employee of the Metromedia Times Corp. nor
does the company have neither any obligations
towards anyone you may employ, nor any
responsibility for your operating expenses or
for any liability you may incur. The only rights
and obligations between us are those set forth in
this agreement. This agreement cannot be
amended or modified in any way except with the
duly authorized consent in writing of both
parties.” Is Efren Paguio a regular Ee of
Metromedia Times Corporation?
A: Yes. He performed activities which were
necessary and desirable to the business of the Er,
and that the same went on for more than a year. He
was an account executive in soliciting
advertisements, clearly necessary and desirable, for
the survival and continued operation of the
business of the corp.
The corporation cannot seek refuge under the terms
of the agreement it has entered into with Efren
Paguio. The law, in defining their contractual
relationship, does so, not necessarily or exclusively
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
98
upon the terms of their written or oral contract, but
also on the basis of the nature of the work of Efren
has been called upon to perform. A stipulation in an
agreement can be ignored as and when it is utilized
to deprive the Ee of his security of tenure (Paguio v.
NLRC, G.R. No. 147816, May 9, 2003).
Q: Super Comfort Hotel employed a regular pool
of “extra waiters” who are asked to report for
duty when the Hotel’s volume of business is
beyond the capacity of the regularly employed
waiters to undertake. Pedro has been an “extra
waiter” for more than 10 years. He is also called
upon to work on weekends, on holidays and
when there are big affairs at the hotel. What is
Pedro’s status as an Ee under the LC? (2008 Bar
Question)
A: Pedro has acquired the status of a regular Ee.
Pedro was engaged to perform activities which are
necessary or desirable in the usual business or trade
of the Er. Moreover, Pedro has been “extra waiter”
for more than 10 years. Under the law, any Ee who
has rendered service for at least one year, whether
such service is continuous or broken, shall be
considered a regular Ee with respect to the activity
in which he is employed and his employment shall
continue while such activity exists (LC, Art. 280).
Q: Linda was employed by Sectarian University
(SU) to cook for the members of a religious order
who teach and live inside the campus. While
performing her assigned task, Linda
accidentally burned herself. Because of the
extent of her injuries, she went on medical leave.
Meanwhile, SU engaged a replacement cook.
Linda filed a complaint for illegal dismissal, but
her employer SU contended that Linda was not a
regular employee but a domestic househelp.
Decide. (2014 Bar Question)
A: The employer's argument that Linda was not a
regular employee has no merit. The definition of
domestic servant or househelper contemplates one
who is employed in the employer’s home to minister
exclusively to the personal comfort and enjoyment
of the employer’s family. The Supreme Court
already held that the mere fact that the househelper
is working in relation to or in connection with its
business warrants the conclusion that such
househelper or domestic servant is and should be
considered as a regular employee. (Apex Mining Co.,
Inc. v. NLRC, G.R. No. 94951, April 22, 1991). Here,
Linda was hired not to minister to the personal
comfort and enjoyment of her employer's family but
to attend to other employees who teach and live
inside the campus.
 TERMINATION OF EMPLOYMENT
Q: Don Don is hired as a contractual employee of
CALLHELP, a call center. His contract is
expressly for a term of 4 months. Don Don is
hired for 3 straight contracts of 4 months each
but at 2-week intervals between contracts. After
the third contract ended, Don Don is told that he
will no longer be given another contract because
of "poor performance." Don Don files a suit for
"regularization" and for illegal dismissal,
claiming that he is a regular employee of
CALLHELP and that he was dismissed without
cause. You are the Labor Arbiter. How would you
decide the case? (2015 Bar Question)
A: As Labor Arbiter, I will decide the case in favor of
Don Don. Given the nature of Don Don’s work, which
consist of activities usually or desirable in the usual
business of CALLHELP, Don Don should be
considered a regular employee. CALLHELP’s
termination of Don Don’s service in the guise of
“poor performance” is not valid. Whether for a
probationary or regular employee, the requisites of
dismissal on that ground do not appear to have been
complied with by the employer here.
PROJECT EMPLOYMENT
Project
A "project" has reference to a particular job or
undertaking that may or may not be within the
regular or usual business of the Er. In either case,
the project must be distinct, separate and
identifiable from the main business of the Er, and its
duration must be determined or determinable (PAL
v. NLRC, G.R. No. 125792, November 9, 1998).
Project employment
Project employment is employment that has been
fixed for a specific project or undertaking the
completion for which has been determined at the
time of engagement of the Ee [IRR, Book VI, Rule I,
Sec. 5(a)]. The period is not the determining factor,
so that even if the period is more than 1 year, the Ee
does not necessarily become regular.
NOTE: Where the employment of a project Ee is
extended long after the supposed project has been
finished, the Ees are removed from the scope of
project Ees and considered as regular Ees.
Repeated hiring on a project-to-project basis is
considered necessary and desirable to the business
of the Er. The Ee is deemed regular (Maraguinot v.
NLRC, G.R. No. 120969, July 22, 1998).
Indicators of project employment
99
Either one or more of the following circumstances,
among others, may be considered as indicators that
an Ee is a project Ee (Hanjin v. Ibañez, G.R. No.
170181, June 26, 2008).
a. The duration of the specific/identified
undertaking for which the worker is engaged is
reasonably determinable;
b. Such duration, as well as the specific
work/service to be performed, is defined in an
employment agreement and is made clear to
the Ee at the time of hiring;
NOTE: Absent any other proof that the project
Ees were informed of their status as such, it will
be presumed that they are regular Ees.
c. The work/service performed by the Ee is in
connection with the particular project/
undertaking for which he is engaged;
d. The Ee, while not employed and awaiting
engagement, is free to offer his services to any
other Er;
e. The termination of his employment in the
particular project/undertaking is reported to
the DOLE Regional Office having jurisdiction
over the workplace within 30 days following
the date of his separation from work, using the
prescribed form on Ee’s termination, dismissal
or suspensions;
f. An undertaking in the employment contract by
the Er to pay completion bonus to the project Ee
as practiced by most construction companies
Requisites in determining whether an Ee is a
project Ee
1. The project Ee was assigned to carry out a
specific project or undertaking, and
2. The duration and scope of which were specified
at the time the Ee was engaged for that project
(Imbuido v. NLRC, G.R. No. 114734, May 31,
2000).
3. The Ee must have been dismissed every after
completion of his project or phase
4. Report to the DOLE of Ee’s dismissal on account
of completion of contract [Policy Inst. No. 20;
D.O. 19 (1997)].
Q: Diosdado, a carpenter, was hired by Building
Industries Corporation (BIC), and assigned to
build a small house in Alabang. His contract of
employment specifically referred to him as a
"project employee," although it did not provide
any particular date of completion of the project.
Is the completion of the house a valid cause for
the termination of Diosdado’s employment?
(2009 Bar Question)
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
A: Yes. The completion of the house should be a
valid cause for termination of Diosdado’s
employment. Although the employment contract
may not state a particular date, but if it did not
specify that the termination of the parties’
employment relationship was to be on a “day
certain” – the day when the phase of work would be
completed – the Ee cannot be considered to have
been a regular Ee (Filipinas Pre-Fabricated Building
Systems, v. Puente, 453 SRA 820).
To satisfy due process requirements, under DOLE
Department Order No. 19, Series of 1993, the
employer is required to report to the relevant DOLE
Regional Office the fact of termination of project Ees
as a result of the completion of the project or any
phase thereof in which one is employed.
Q: The Er hires the Ees whereby their
employment would automatically expire upon
the completion of a project. When the employer
Er proceeded to serve notices of termination of
employment when the project was about to be
completed, the Ees filed a notice of strike for
mass termination. Is the action of the Ees
correct?
A: No. The litmus test to determine whether an
individual is a project Ee lies in setting a fixed period
of employment involving a specific undertaking
which completion or termination has been
determined at the time of the particular Ee’s
engagement. In this case, as previously adverted to,
the officers and the members of the Union were
specifically hired as project Ees for Leyte
Geothermal Power Project. Consequently, upon the
completion of the project or substantial phase
thereof, the officers and the members of the Union
could be validly terminated (Leyte Geothermal
Power Progressive Employees Union v. Philippine
National Oil Company, G.R. No. 170351, March 30,
2011).
Requisites to acquire regular Ee status of project
Ee or a member of work pool
The following must concur to acquire a status of a
regular Ee status:
1. There is a continuous rehiring of project Ee’s
even after cessation of a project; and
2. The tasks performed by the alleged “project Ee”
are vital, necessary and indispensable to the
usual business or trade of the Er (D.M. Consunji,
Inc. v. JAMIN, G.R. No. 192514, April 18, 2012).
The length of time during which the Ee was
continuously re-hired is not controlling, but merely
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
100
serves as a badge of regular employment. Enero and
Maraguinot have been employed for a period of not
less than 2 years and have been involved in at least
18 projects. These facts are the basis in considering
them as regular Ees of the company.
A work pool may exist although the workers in the
pool do not receive salaries and are free to seek
other employment during temporary breaks in the
business, provided that the worker shall be
available when called to report for a
project. Although primarily applicable to regular
seasonal workers, this set-up can likewise be
applied to project workers insofar as the effect of
temporary cessation of work is concerned. This is
beneficial to both the Er and Ee for it prevents the
unjust situation of “coddling labor at the expense of
capital” and at the same time enables the workers to
attain the status of regular Ees (Maraguinot v. NLRC,
G.R. No. 120969, January 22, 1998).
“Day certain” rule
It states that a project employment that ends on a
certain date does not end on an exact date but upon
the completion of the project.
Entitlement to separation pay
GR: Project Ees are not entitled to separation pay if
their services are terminated as a result of the
completion of project.
XPN: If the projects they are working on have not
yet been completed when their services are
terminated; project Ees also enjoy security of tenure
during the limited time of their employment (De
Ocampo v. NLRC, G.R. No. 81077, June 6, 1990).
Q: Roger Puente was hired by Filsystems, Inc.,
initially as an installer and eventually promoted
to mobile crane operator, and was stationed at
the company’s premises. Puente claimed in his
complaint for illegal dismissal, that his work
was continuous and without interruption for 10
years, and that he was dismissed from his
employment without any cause. Filsystems on
its part averred that Puente was a project Ee in
the company’s various projects, and that after
the completion of each project, his employment
was terminated, and such was reported to the
DOLE. Is Roger Puente a regular Ee?
A: No. Puente is a project Ee. The contracts of
employment of Puente attest to the fact that he was
hired for specific projects. His employment was
coterminous with the completion of the projects for
which he had been hired. Those contracts expressly
provided that his tenure of employment depended
 TERMINATION OF EMPLOYMENT
on the duration of any phase of the project or on the
completion of the construction projects.
Furthermore, the company regularly submitted to
the labor dep’t reports of the termination of services
of project workers. Such compliance with the
reportorial requirement confirms that Puente was a
project Ee.
The mere rehiring of Puente on a project-to-project
basis did not confer upon him regular employment
status. “The practice was dictated by the practical
consideration that experienced construction
workers are more preferred.” It did not change his
status as a project Ee [Filipinas Pre-Fabricated
Building Systems (FILSYSTEMS), Inc. v. Puente, G.R.
No. 153832, March 18, 2005].
SEASONAL EMPLOYMENT
Seasonal employment
Employment where the job, work or service to be
performed is seasonal in nature and the
employment is for the duration of the season [IRR,
Book VI, Rule I, Sec.5 (a)].
An employment arrangement where an Ee is
engaged to work during a particular season on an
activity that is usually necessary or desirable in the
usual business or trade of the Er.
NOTE: For Seasonal Ees, their employment legally
ends upon completion of the project or the season.
The termination of their employment cannot and
should not constitute an illegal dismissal (Mercado
v. NLRC, G.R. No. 79869, September 5, 1991).
One year duration on the job is pertinent in deciding
whether a casual Ee has become regular or not, but
it is not pertinent to a Seasonal or Project Ee.
Passage of time does not make a seasonal worker
regular or permanent (Mercado v. NLRC, G.R. No.
78969, September 5, 1991).
During off-season, the relationship of Er-Ee is not
severed; the Seasonal Ee is merely considered on
LOA without pay. Seasonal workers who are
repeatedly engaged from season to season
performing the same tasks are deemed to have
acquired regular employment (Hacienda Fatima v.
National Federation of Sugarcane Workers-Food and
General Trade, G.R. No. 149440, January 28, 2003).
Entitlement to separation pay
When the business establishment is sold which
effectively terminates the employment of the
seasonal Ees, the latter would be entitled to
separation pay.
101
Seasonal Ees as regular Ees
Seasonal Ees can be considered regular Ees. The fact
that Seasonal Ees do not work continuously for one
whole year but only for the duration of the season
does not detract from considering them in regular
employment. Seasonal workers who are called to
work from time to time and are temporarily laid off
during off-season are not separated from service in
that period, but merely considered on leave until re-
employed.
If the Ee has been performing the job for at least a
year, even if the performance is not continuous and
merely intermittent, the law deems repeated and
continuing need for its performance as sufficient
evidence of the necessity if not indispensability of
that activity to the business. Hence, the employment
is considered regular, but only with respect to such
activity and while such activity exists (Benares v.
Pancho, G.R. No. 151827, April 29, 2005).
But one year duration on the job is pertinent in
deciding whether a casual Ee has become regular or
not, but it is not pertinent to a Seasonal or Project
Ee. Passage of time does not make a seasonal
worker regular or permanent (Mercado v. NLRC, G.R.
No. 78969, September 5, 1991).
Q: Carlito Codilan and Maximo Docena had been
working for the rice mill for 25 years, while
Eugenio Go, Teofilo Trangria and Reynaldo
Tulin have been working for 22, 15, and 6 years
respectively. The operations of the rice mill
continue to operate and do business throughout
the year even if there are only two or three
harvest seasons within the year. This seasonal
harvesting is the reason why the company
considers the workers as seasonal employees. Is
the company correct in considering the Ees as
seasonal Ees?
A: No. The fact is that big rice mills such as the one
owned by the company continue to operate and do
business throughout the year even if there are only
two or three harvest seasons within the year. It is a
common practice among farmers and rice dealers to
store their palay and to have the same milled as the
need arises. Thus, the milling operations are not
seasonal. Finally, considering the number of years
that they have worked, the lowest being 6 years, the
workers have long attained the status of regular Ees
as defined under Art. 280 (Tacloban Sagkahan Rice
Mill v. NLRC, G.R. No. 73806, March 21, 1990).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
CASUAL EMPLOYMENT
Casual employment
1. It is an employment where the Ee is engaged in
an activity which is not usually necessary or
desirable in the usual business or trade of the
Er, Provided: such employment is neither
Project nor Seasonal (LC, Art. 281). He performs
only an incidental job in relation to the principal
activity of the Er.
hardly necessary or desirable in the usual business
of the Yakult.
The workers are casual Ees. Nevertheless, they may
be considered regular Ees if they have rendered
services for at least 1 year. When, as in this case,
they were dismissed from their employment before
the expiration of the 1-year period they cannot
lawfully claim that their dismissal was illegal
(Capule, et al. v. NLRC, G.R. No. 90653, November 12,
1990).

NOTE: But despite the distinction between Project Ee vs. Casual Ee

regular and casual employment, every Ee shall
be entitled to the same rights and privileges, PROJECT EE CASUAL EE
and shall be subject to the same duties as may Employed for a specific Engaged to perform a
be granted by law to regular Ees during the project or undertaking job, work or service
period of their actual employment. the completion or which is incidental to
termination of which is the business of the Er
2. An Ee is engaged to perform a job, work or determined at the time and the definite period
service which is merely incidental to the of his engagement. of his employment is
business of the Er, and such job, work or service made known to him at
is for a definite period made known to the Ee at the time of his
the time of engagement [IRR, Book Vi, Rule I, Sec. engagement.
5 (b)]. His work need not be His continued
Casual Ee becoming a regular Ee incidental to the employment after the
business of the Er and lapse one year makes
If he has rendered at least 1 year of service, whether his employment may him a regular Ee.
such service is continuous or broken, he is exceed one year
considered as regular Ee with respect to the activity without necessarily
in which he is employed and his employment shall making him a regular
continue while such activity exists. Ee.
Job is coterminous No termination report
A casual Ee is only casual for 1 year, and it is the with a specific project required.
passage of time that gives him a regular status or phase thereof. It is
(KASAMMA-CCO v. CA, G.R. No. 159828, April 19, required that a
2006). termination report be
submitted at the
The purpose is to give meaning to the constitutional nearest employment
guarantee of security of tenure and right to self- office upon completion
organization (Mercado v. NLRC, G.R. No. 79868, of the project or phase.
September 5, 1991).
FIXED TERM EMPLOYMENT
Q: Yakult Phils. is engaged in the manufacture of
cultured milk. The workers were hired to cut Term employment
cogon grass and weeds at the back of the factory
building used by Yakult. They were not required A contract of employment for a definite period
to work on fixed schedule and they worked on terminates by its own terms at the end of such
any day of the week on their own discretion and period (Brent School v. Zamora, G.R. No. L-48494,
convenience. The services of the workers were February 5, 1990).
terminated by Yakult before the expiration of
the 1 year period. May casual or temporary Ees Term employment is not a circumvention of the law
be dismissed by the Er before the expiration of on security of tenure if it follows the requisites laid
the 1-year period of employment? down by the Brent ruling (Romares v. NLRC, G.R. No.
122327, August 19, 1998).
A: Yes. The usual business or trade of Yakult Phils.
is the manufacture of cultured milk. The cutting of Decisive determinant in term employment
the cogon grasses in the premises of its factory is

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2016 GOLDEN NOTES
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 TERMINATION OF EMPLOYMENT
It is the day certain agreed upon by the parties for
the commencement and the termination of their
employment relation.
Fixed term employment
It is an employment where a fixed period of
employment was agreed upon:
1. Knowingly and voluntarily by the parties,
2. Without any force, duress or improper pressure
being brought to bear upon the Ee and business
of Er (Philips Semiconductor v. Fadriquela, G.R.
No. 141717, April 14, 2004).
Q: Darrell was hired as an athletic director in
Amorita School for a period of five years. As
such, he oversees the work of coaches and
related staff involved in intercollegiate or
interscholastic athletic programs. However, he
was not rehired upon the expiration of said
period. Darrell questions his termination
alleging that he was a regular Ee and could not
be dismissed without valid cause.
a. Is he a regular Ee?
b. Will Rene automatically become a regular
Ee if he is rehired by the school for another
definite period of employment?
A:
a. No. Darrell was not a regular Ee but an Ee under
a fixed- term contract. While it can be said that
the services he rendered were usually
necessary and desirable to the business of the
school, it cannot also be denied that his
employment was for a fixed term of five years.
The decisive determinant in fixed- term
employment should not be the activities that
the employee is called upon to perform, but the
day certain agreed upon by the parties for the
commencement and termination of their
employment relation (Brent School Inc. v.
Zamora, G.R. No. 48494, February 5, 1990).
b. No. The decisive determinant in term
employment is the day certain agreed upon by
the parties for the commencement and
termination of their employment relationship, a
day certain being understood to be that which
must necessarily come, although it may not be
known when and not whether the work is
usually necessary and desirable to the business
of the Er.
Q: Does the “Reasonable Connection Rule” apply
in fixed term employment for a fixed-term Ee to
be eventually classified as a regular Ee?
103
A: No. It should be apparent that this settled and
familiar notion of a period, in the context of a
contract of employment, takes no account at all of
the nature of the duties of the Ee; it has absolutely
no relevance to the character of his duties as being
usually necessary and desirable to the usual
business of the Er, or not.
Q: Dean Jose and other Ees are holding
administrative positions as dean, dep’t heads
and institute secretaries. In the implementation
of the Reorganization, Retrenchment and
Restructuring program effective Jan. 1, 1984,
Dean Jose and other Ees were retired but
subsequently rehired. Their appointment to
their administrative positions as dean, dep’t
heads and institute secretaries had been
extended by the company from time to time
until the expiration of their last appointment on
May 31, 1988. Were Dean Jose and other Ees
illegally dismissed?
A: No. Petitioners were dismissed by reason of the
expiration of their contracts of employment.
Petitioners' appointments as dean, dep’t heads and
institute secretaries were for fixed terms of definite
periods as shown by their respective contracts of
employment, which all expired on the same date,
May 31, 1988. The validity of employment for a
fixed period has been acknowledged and affirmed
by the SC (Blancaflor v. NLRC, G.R. No. 101013,
February 2, 1993).
Q: Lina has been working as a steward with a
Miami, U.S.A.-based Loyal Cruise Lines for the
past 15 years. She was recruited by a local
manning agency, Macapagal Shipping, and was
made to sign a 10-month employment contract
everytime she left for Miami. Macapagal
Shipping paid for Lina’s round-trip travel
expenses from Manila to Miami. Because of a
food poisoning incident which happened during
her last cruise assignment, Lina was not re-
hired. Lina claims she has been illegally
terminated and seeks separation pay. If you
were the Labor Arbiter handling the case, how
would you decide? (2014 Bar Question)
A: I will dismiss Lina's complaint. Lina is a
contractual employee and the length of her
employment is determined by the contracts she
entered into. Here, her employment was terminated
at the the expiration of the contract (Millares, et al.
v. NLRC, 385 SCRA 306, 318 [2002]).
JOB CONTRACTING
Job Contracting is allowed by law provided the
following conditions are met:
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
a. the independent contractor carries on an
independent business and undertakes the
contract work on his own account, his own
responsibility, according to his own manner and
method, free from 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
b. the independent 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 his business. (Sec. 8, Rule VIII, Book
III, Rules Implementing the Labor Code; Baguio
v. NLRC, G.R. Nos. 79004-08, October 4, 1991;
Wack Wack Golf v. NLRC, G.R. No. 149793, April
15,2005)
Substantial Capital refers to paid-up capital
stocks/shares of at least PHP 3 Million in the
case of corporations, partnerships and
cooepratives. PHP 3 Million net worth in the
case of a single proprietorship (DOLE D.O. No.
18-A S. 2011).
The law does not require both substantial
capital and investments, it is sufficient that
either of the two is complied with (Neri v. NLRC,
G.R. Nos. 97008-09, July 23,1993).
Burden of proof to prove that he/it has
substantial capital or investment rests on the
contractor himself (Guarin v. NLRC, G.R. No.
86010, October 3, 1989)
c. The Service Agreement ensures compliance
with all the rights and benefits under Labor
Laws (Sec. 4 of D.O. No. 18-A, S. 2011).
There is no Er-Ee relationship exists between the
owner of the project and the employees of the
independent contractor (Baguio v. NLRC, G.R. Nos.
79004-08, October 4, 1991). The principal employer
is considered only an indirect employer (PCI
Automation Center, Inc. v. NLRC, G.R. No. 115920,
January 29, 1996).
Indirect or Statutory Employer is one who enters
into a contract with an independent contractor for
the performance of any work, task, job, or project
not diectly relted to the employer’s business
(Baguio v. NLRC, G.R. Nos. 79004-08, October 4,
1991).
Independent Contractor those who undertake
“job-contracting.” They exercise independent
employment, contracting to do a piece of work
according to their own methods and without being
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
104
subject to control of their employer except as to the
result of their work (Villuga v. NLRC, G.R. No. 75038,
August 23, 1993).
An employer or indirect employer may require the
contractor or subcontractor to furnish a bond equal
to the cost of labor under contract, on the condition
that the bond will answer for the wages due the
employees should the contractor or subcontractor,
as the case may be, fail to pay the same (LC,Art 107).
NOTE: Where the employer fails to require the
posting of the bond, he must be liable for whatever
the contractor my have incurred to his employees,
without prejudice to its right of reimbursement
from the contractor for whatever amount paid
(Baguio v NLRC, G.R. Nos. 79004-08, October 4, 1991).
In legitimate Job Contracting, the principal is jointly
and severally liable with the contractor for the
payment of unpaid wages (Arts. 106, 107 & 109, LC)
“Labor-only” contracting
Labor-only contracting exists where the person
supplying workers to an employer does not have
substantial capital or investment in the form of
tools, equipment, machineries, work premises,
among others, and the workers recruited and placed
by such persons are performing activities which are
directly related to the principal business of such
employer (LC,Art. 106).
A finding that a contractor is a “labor-only”
contractor is equivalent to declaring that there is an
ER-EE relationship between the principal and the
employees of the “labor-only” contractor. (San
Miguel Corp. vs. MAERC Integrated Systems. G.R. No.
144672; July 10, 2003).
The law prohibits “labor-only” contracting and
creates an er-ee relationship between the er and the
contractor’s workers for the protection of laborers
(Poquiz,Labor Standards book, Vol. 1, 2012 edition;
DOLE Department Order No. 18-A, S. 2011).
“Activities which are “Activities necessary
directly related to the or desirable in the
principal business of usual business or
the employer” trade”
Governed by Art. 106 Governed by Art. 280
Refers to the standard Used to determine
used whether or not regular or casual
labor-only contracting employee
exists
While the services may be considered directly
related to the principal business of the employer;
nevertheless, they are not necessary in the conduct
 TERMINATION OF EMPLOYMENT
of the principal business of th employer. (Neri v as it clearly speaks of a trilateral relationship that
NLRC, G.R. Nos. 97008-09, July 23,1993) characterizes the covered
contracting/subcontracting arrangement. Thus,
“Labor-only” contractor is considered merely as an vendor-vendee relationship for entire business
agent of the employer and is responsible to the processes covered by the applicable provisions of
employees of the “labor-only” contractor as if they the Civil Code on Contracts is excluded.(DOLE D.O.
had been directly employed by the employer. (LC, No. 01-12 S. 2012)
Art. 106)
Effect of Failure to Register by the Independent
The law in effect holds both the employer and the Contractor with DOLE: A Certificate of
“labor-only” contractor responsible to the latter’s Registration is good for 3 years. Failure to register
employees for the more effective safeguarding of shall give rise to the presumption that the
the employee’s rights under the Labor Code. (Ecal v. contractor is engaged in labor-only contracting
NLRC, G.R. Nos. 92777-78, March 13, 1991; SMC v (Section 14, D.O. No. 18-A, Series 2011).
Aballa G.R. No. 149011, June 28, 2005)
Trilateral relationship - relationship in a
In-house agency refers to a contractor or contracting or subcontracting arrangement where
subcontractor engaged in the supply of labor which: there is a contract for a specific job, work or service
a. is owned, managed or controlled by the between the principal and the contractor, and a
principal; and contract of employment between the contractor and
b. operates solely for the principal owning, its workers (DOLE D.O. No 18-A, S. 2011).
managing or controlling it.
Parties involved:
Contracting out a job, work or service through an in- 1. Principal – any employer who puts out or
house agency is contrary to law or public policy farms out a job.
(Secs. 2 & 7, Rule Viii-A, Dept. Order No. 10, S. 1997) 2. Contractor/Subcontractor – any person or
entity engaged in a legitimate contracting or
Job Contracting vs. Labor-only Contracting subcontracting arrangement.
3. Contractual Employee - employed by a
Job Contracting Labor-only Contracting contractor or a subcontractor to perform or
The er/principal is The er/principal is treated complete a job pursuant to the agreement
merely an indirect as direct employer of the between the latter and the principal.
employer, by contractor’s employees in
operation of law, of all instances. (contractor = Rights of Contractor’s Employees
his contractor’s agent of the employer)
employees. 1. Safe and healthful working conditions;
the law creates an the statute creates an er- 2. Labor standards such as but not limited to
er-ee relationship ee relationship for a service incentive leave, rest 
days, overtime
for a limited comprehensive purpose. pay, holiday pay, 13th month pay, and
purpose. separation pay as 
may be provided in the
The principal The principal becomes Service Agreement or under the Labor Code;
becomes solidarily solidarily liable with the 3. Retirement benefits under the SSS or
liable. The liability contractor not only for retirement plans of the contractor, 
if there is
however does not unpaid wages but also for any;
extend to the all the rightful claims of 4. Social security and welfare benefits;
payment of the employees under the 5. Self-organization, collective bargaining and
backwages or Labor Code and ancillary peaceful concerted activities; 
and
separation pay of laws. 6. Security of tenure.
employees who are
illegally dismissed. Q: Luningning Foods engaged the services of
Allowed by law Prohibited by law Lamitan Manpower, Inc., a bona fide
Presence of Absence of substantial independent contractor, to provide “tasters”
substantial capital capital or investment. that will check on food quality. Subsequently,
or investment. these “tasters” joined the union of rank-and-file
employees of Luningning and demanded that
NOTE: D.O. 18-A is not applicable to Business they be made regular employees of the latter as
Process Outsoucing (BPO) or Knowledge Process they are performing functions necessary and
Outsourcing (KPO) and in the Construction industry desirable to operate the company’s business.

UNIVERSITY OF SANTO TOMAS

105 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Luningning rejected the demand for
regularization. On behalf of the “tasters”, the
union then filed a notice of strike with the
Department of Labor and Employment (DOLE).
In response, Luningning sought a restraining
order from the Regional Trial Court (RTC)
arguing that the DOLE does not have jurisdiction
over the case since it does not have an employer-
employee relationship with the employees of an
independent contractor. If you were the RTC
judge, would you issue a restraining order
against the union? (2014 Bar Question)
A: Yes. There is no labor dispute in the instant case.
Since Lamitan Manpower is a bona fide independent
contractor, there is no employee-employer
relationship between the Luningning and the
tasters.
Q: Linis Manpower, Inc. (LMI) had provided
janitorial services to the Philippine Overseas
Employment Administration (POEA) since
March 2009. Its service contract was renewed
every three months. However, in the bidding
held in June 2012, LMI was disqualified and
excluded. In 2013, six janitors of LMI formerly
assigned at POEA filed a complaint for
underpayment of wages. Both LMI and POEA
were impleaded as respondents. Should POEA, a
government agency subject to budgetary
appropriations from Congress, be held liable
solidarily with LMI for the payment of salary
differentials due to the complainant? Cite the
legal basis of your answer. (2014 Bar Question)
A: Yes, but only to the extent of work performed
under the contract. As what the second paragraph of
Article 106 of the Labor Code provides. The fact that
POEA is a government agency is of no moment. In
U.S.A v. Ruiz (G.R. No. L-35645, May 22, 1985), the
Supreme Court ruled that the State may be sued if
the contract it entered into is pursuant to its
proprietary functions.
Q: Star Crafts is a lantern maker based in
Pampanga. It supplies Christmas lanterns to
stores in Luzon, Metro Manila, and parts of
Visayas, with the months of August to November
being the busiest months. Its factory employs a
workforce of 2,000 workers who make different
lanterns daily for the whole year. Because of
increased demand, Star Crafts entered into a
contractual arrangement with People Plus, a
service contractor, to supply the former with I
00 workers for only 4 months, August to
November, at a rate different from what they pay
their regular employees. The contract with
People Plus stipulates that all equipment and
raw materials will be supplied by Star Crafts
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
106
with the express condition that the workers
cannot take any of the designs home and must
complete their tasks within the premises of Star
Crafts. Is there an employer-employee
relationship between Star Crafts and the 100
workers from People Plus? Explain. (2015 Bar
Question)
A: Yes. People Plus is a labor-only-contractor
because it is not substantially capitalized. Neither
does it carry on an independent business in which it
uses its own investment in the form of tools,
equipment, machineries or work premises. Hence,
it is just an agent or recruiter of workers who
perform work directly related to the trade of Star
Crafts. Since both the essential element and the
conforming element of labor-only contracting are
present, Star Crafts becomes the employer of the
supplied worker. As principal, Star Crafts will
always be an employer in relation to the workers
supplied by its contractor. Its status as employer is
either direct or indirect depending on whether the
contractor is legitimate or not. Thus even if People
Plus were a legitimate job contractor, still Star
Crafts will be treated as a statutory employer for
purposes of paying the workers’ unpaid wages and
benefits.
DISMISSAL FROM EMPLOYMENT
No worker shall be dismissed except for a just or
authorized cause provided by law and after due
process (Both substantive and procedural due
process must be afforded to the employee).
In case of regular employment, the requirement of
substantive due process (Security of Tenure) is
satisfied when the Er does not terminate the
services of an Ee unless it is for a just cause or when
authorized by the LC on Termination of
Employment (LC, Art. 279).
Just Cause vs. Authorized Cause
Just Cause Authorized Cause
Those initiated by the Those initiated by the
employee employer in the
exercise of
Management
prerogative.
The law do not The law requires that
require that the Separation pay be
Separation pay be paid.
paid.
Non-complaince of Non-compliance of due
due process; process; indemnity:
indemnity: PHP PHP 50,000
30,000
 TERMINATION OF EMPLOYMENT
JUST CAUSES
Termination intitated by the employee. Exercise of
management prerogative, however must not be
exercised wwith abuse of discretion.
Procedural requirements:
1. Notice (two-notice rule)
2. Hearing
3. Judgment
Where the employer had a valid reason to dismiss
the employee but has failed to comply with the due
process requirement, the dismissal may be upheld
but the employer will be penalized to pay an
indemnity to the employee (Wenphil Corp. v. NLRC,
G.R. No. 80587, February 8, 1989).
Just causes for termination
1. Serious misconduct or willful disobedience by the
Ee of the lawful orders of his Er or
representative in connection with his work;
2. Gross and habitual neglect by the Ee of his
duties;
3. Fraud or willful breach by the Ee of the trust
reposed in him by his Er or duly organized
representative;
4. Commission of a crime or offense by the Ee
against the person of his Er or any immediate
member of his family or his duly authorized
representative;
5. Other causes analogous to the foregoing (LC,
Art. 282).
NOTE: The burden of proving that the termination
was for a valid or authorized cause shall rest on the
Er [LC, Art. 277(b)].
1st cause: Serious misconduct
It is an improper or wrong conduct; the
transgression of some established and definite rule
of action, a forbidden act, a dereliction of duty,
willful in character, and implies wrongful intent and
not mere error in judgment. To be serious within the
meaning and intendment of the law, the misconduct
must be of such grave and aggravated character and
not merely trivial or unimportant (Villamor Golf
Club v. Pehid, G.R. No. 166152, October 4, 2005).
Elements of serious misconduct
1. It must be serious or of such a grave and
aggravated character;
2. Must relate to the performance of the Ees’
duties;
107
3. Ee has become unfit to continue working for the
Er (Philippine Aeolus Automotive United Corp. v.
NLRC, G.R. No. 124617, April 28, 2000).
Examples of serious misconduct:
1. Sexual Harassment
2. Fighting within the company premises
3. Uttering obscene, insulting or offensive words
against a superior
4. Falsification of time records
5. Gross immorality
Q: Escando, upset at his transfer to the washer
section, repeatedly uttered “gago ka” and
threatened bodily harm to his superior Mr.
Andres. Is the utterance of the obscene words
and threats of bodily harm gross and willful
misconduct?
A: Yes. The repeated utterances by Escando of
obscene, insulting or offensive words against a
superior were not only destructive of the morals of
his co-Ees and a violation of the company rules and
regulations, but also constitute gross misconduct
which is one of the grounds provided by law to
terminate the services of an Ee (Autobus Workers
Union v. NLRC, G.R. No. 117453, June 26, 1998).
Q: Samson made insulting and obscene
utterances towards the General Manager saying
“Si EDT bullshit yan, sabihin mo kay EDT yan”
among others during the Christmas party. Are
the utterances towards the General Manager
gross misconduct?
A: The alleged misconduct of Samson when viewed
in its context is not of such serious and grave
character as to warrant his dismissal. Samson made
the utterances and obscene gestures at an informal
Christmas gathering and it is to be expected during
this kind of gatherings, where tongues are more
often than not loosened by liquor of other alcoholic
beverages, that Ees freely express their grievances
and gripes against their Ers. Ees should be allowed
wider latitude to freely express their grievances and
gripes against their Er. Ees should be allowed wider
latitude to freely express their sentiments during
these kinds of occasions which are beyond the
disciplinary authority of the Er (Samson v. NLRC, G.R.
No. 121035, April 12, 2000).
Q: Cheryll Leus was a non-teaching personnel
employed in St. Scholastica’s College Westgrove
(SSCW). Cheryll and her boyfriend conceived a
child out of wedlock. SSCW dismissed her on the
ground that her pregnancy out of wedlock
constitutes disgraceful and immoral conduct
and ran counter to the moral principles that
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
SSCW stands for and teaches its students. Does
pregnancy out of wedlock (without a legal
impediment to marry) constitutes immoral
conduct as a ground for dismissal contemplated
by law?
A: No. It is an immoral conduct if such does ot
conform to what society generally views as
respectable or moral. Substantial evdence must be
presented to prove that such conduct is considered
immoral. The two-step process to determine
whether or not the conduct is immoral: 1)
Consideration of the totality of the circumstances
surrounding it; 2) assessment of said circumtances
based on the prevailing norms of conduct. Pre-
marital sexual relations between two consenting
adults who have no impediment to marry each
other, and, consequently, conciving a child out of
wedlock,does not amount to a disgraceful or
immoral conduct (Leus v. SSCW, G.R. No. 187226,
January 28, 2015).
A teacher engaging in an extra-marital affair with
another married person is a serious misconduct, if
not an immoral act. But a teacher falling in love with
her pupil and, subsequently, contracting a lawful
marriage with him, though there is a disparity in
their ages and academic level cannot be considered
as a defiance of contemporary social mores. (Chua-
Qua vs. Clave. G.R. No. 49549; August 30, 1990)
Q: Jose and Erica, former sweethearts, both
worked as sales representatives for Magna, a
multinational firm engaged in the manufacture
and sale of pharmaceutical products. Although
the couple had already broken off their
relationship, Jose continued to have special
feelings for Erica. One afternoon, Jose chanced
upon Erica riding in the car of Paolo, a co-
employee and Erica's ardent suitor; the two
were on their way back to the office from a sales
call on Silver Drug, a major drug retailer. In a fit
of extreme jealousy, Jose rammed Paolo's car,
causing severe injuries to Paolo and Erica. Jose's
flare up also caused heavy damage to the two
company-owned cars they were driving. As
lawyer for Magna, advise the company on
whether just and valid grounds exist to dismiss
Jose. (2013 Bar Question)
A: Jose can be dismissed for serious misconduct,
violation of company rules and regulations, and
commission of a crime against the employer’s
representatives. For misconduct to be serious and
therefore a valid ground for dismissal, it must be: of
grave and aggravated character and not merely
trivial or unimportant and connected with the work
of the employee.
UNIVERSITY OF SANTO TOMAS
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108
Q: Assuming this time that Magna dismissed Jose
from employment for cause and you are the
lawyer of Jose, how would you argue the
position that Jose's dismissal was illegal? (2013
Bar Question)
A: The offense committed by Jose did not relate to
the performance of his duties.For misconduct or
improper behavior to be a just cause for dismissal,
it (a) must be serious; (b) must relate to the
performance of the employee’s duties; and (c) must
show that the employee has become unfit to
continue working for the employer. On the basis of
the forgoing guidelines, it can be concluded that
Paolo was not guilty of serious misconduct: Paolo
was not performing official work at the time of the
incident. (Lagrosas v. Bristol Myers Squibb, G.R. No.
168637/170684 [2008]) Additionally, there was no
compliance with the rudimentary requirements of
due process.
Willful disobedience
The employee’s disobedience must relate to
substantial matters, not merely to trivial or
unimportant matters. Disobedience to be
considered willful must be resorted to wihout regrd
to its consequences. (DOLE Manual; BLTB Co. v CA 71
SCRA 470; Family Planning Org. of the Phil. Inc. v.
NLRC, G.R. No. 75907, March 23, 1992)
Requisites that must concur in order that willful
disobedience of the Er’s lawful orders are
considred just cause for termination:
1. The Ees assailed conduct must have been willful
or intentional, the willfulness being
characterized by a wrongful and perverse
attitude.
2. The disobeyed orders, regulations or
instructions of the Er must be:
a. Reasonable and lawful
b. Sufficiently known to the Ee
c. In connection with the duties which the Ee
has been engaged to discharge (Cosep v.
NLRC, G.R. No. 124966, June 16, 1998).
Q. Is refusal to a promotion by an Ee an act of
insubordination or willful disobedience?
A. No. There is no law that compels an Ee to accept
a promotion for the reason that a promotion is in the
nature of a gift or reward, which a person has the
right to refuse. The exercise of the Ee of the right to
refuse a promotion cannot be considered in law as
insubordination or willful disobedience (PT&T Corp.
v. CA, G.R. No. 152057, September, 29, 2003).
 TERMINATION OF EMPLOYMENT
Q: A company vehicle was brought twice out of
the company premises without authorization. In
the first instance the company opted not to
implement any action against Homer and
instead issued a memorandum reminding
Homer as well as the security guards of the
proper procedure. However, in the second
instance the vehicle met an accident. Is Homer
guilty of willful disobedience even though he
was not the one who personally brought the
company vehicle out of the company premises
and was merely a passenger in the second
incident?
A: Yes. A rule prohibiting Ees from using company
vehicles for private purpose without authority from
management is a reasonable one. When Homer rode
the company vehicle, he was undoubtedly aware of
the possible consequences of his act and taking into
consideration his moral ascendancy over the
security guards it was incumbent upon him not only
to admonish them but also to refrain from using the
company car himself. Homer is responsible for the
unauthorized release of the vehicle of the company
which is a violation of the rules and regulations of
the company. Homer was already reminded of the
proper procedure of the company (Family Planning
Org. of the Phil. v. NLRC, G.R. No. 75907, May, 23,
1992).
The refusal to obey a valid transfer order
constitutes willful disobedience of a lawful order of
an employer. Employees may object to, negotiate
and seek redress against employers for rules or
orders that they regard as unjust or illegal.
However, until and unless these rules or orders are
declared illegal or improper by competent
authority, the employees ignore or disobey them at
their peril. But transfer should not result to
demotion of rank, which is tantamount to
constructive dismissal. (Manila Pavilion Hotel vs.
Henry Delada. G.R. No. 189947; January 25, 2012).
Q: Escobin’s group were security guards based
in Basilan. They were placed in floating status
and were asked to report for reassignment in
Metro Manila by PISI. Upon failure to report or
respond to such directives they were ordered
dismissed from employment by PISI for willful
disobedience. Did the failure to report to Manila
amount to willful disobedience?
A: No. The reasonableness of the rule pertains to the
kind of character of directives and commands and
to the manner in which they are made. In this case,
the order to report to the Manila office fails to meet
this standard. The order to report to Manila was
inconvenient, unreasonable, and prejudicial to
Escobin’s group since they are heads of families
109
residing in Basilan and they were not given
transportation money or assurance of availability of
work in Manila (Escobin v. NLRC, G.R. No. 118159,
April 15, 1998).
2nd cause: Gross negligence
It implies a want or absence of or failure to exercise
diligence that an ordinary prudent man would use
in his own affairs. However, such neglect must not
only be gross but must also be habitual in character
(DOLE Manual)
It has been defined as the want or absence of or
failure to exercise slight care or diligence, or the
entire absence of care. It evinces a thoughtless
disregard of consequences without exerting any
effort to avoid them. (NBS vs. Court of Appeals. G.R.
No. 146741; February 27, 2002)
Degree of negligence as a just cause for
termination: Gross and habitual negligence.
An employee who was grossly negligent in the
performance of his duty, though such negligence
committed was not habitual, may be dismissed
especially if the grossly negligent act resulted in
substantial damage to the company. (LBC Express vs.
Mateo. G.R. No. 168215; June 9, 2009).
Habitual neglect of duties
Imply repeated failure to perform one’s duties over
a period of time, depending upon the circumstance
(JGB and Associates v. NLRC, GR No. 10939, March, 7,
1996).
Q: Antiola, as assorter of baby infant dress for
Judy Phils., erroneously assorted and packaged
2,680 dozens of infant wear. Antiola was
dismissed from employment for this infraction.
Does the single act of misassortment constitute
gross negligence?
A: No. Such neglect must not only be gross but also
habitual in character. Hence, the penalty of
dismissal is quite severe considering that Antiola
committed the infraction for the first time (Judy
Phils. v. NLRC, G.R. No. 111934, April 29, 1998).
Q: Does the failure in performance evaluations
amount to gross and habitual neglect of duties?
A: As a general concept “poor performance” is
equivalent to inefficiency and incompetence in the
performance of official duties. The fact that an Ee’s
performance is found to be poor or unsatisfactory
does not necessarily mean that the Ee is grossly and
habitually negligent of his duties. Gross negligence
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
implies a want or absence of or failure to exercise
slight care of diligence or the entire absence or care.
He evinces a thoughtless disregard of consequences
without exerting any effort to avoid them (Eastern
Overseas Employment Center Inc. v. Bea, G.R. 143023,
November 29, 2005).
Q: Is inefficiency a just cause for dismissal?
A: Yes. Failure to observe prescribed standards of
work or to fulfill reasonable work assignments due
to inefficiency may constitute just cause for
dismissal. Such inefficiency is understood to mean
failure to attain work goals or work quotas, either
by failing to complete the same within the allotted
reasonable period, or by producing unsatisfactory
results (Buiser v. Leogardo, G.R. No. L-63316, 1984).
This ground is considered analogous to those
enumerated under Art. 282. (Skippers United Pacific
v. Magud, G.R. No. 166363, August 15, 2006).
Q: Gamido was a quality control inspector of VH
Manufacturing. Gamido was allegedly caught by
the company Pres. Dy Juanco of sleeping and was
dismissed from employment. Did Gamido’s act
of sleeping on the job constitute a valid cause of
dismissal?
A: No. Sleeping on the job as a valid ground for
dismissal only applies to security guards whose
duty necessitates that they be awake and watchful
at all times. Gamido’s single act of sleeping further
shows that the alleged negligence or neglect of duty
was neither gross nor habitual (VH Manufacturing v.
NLRC, G.R. No. 130957, January, 19, 2000).
Some forms of neglect of duty
1. Habitual tardiness and absenteeism
2. Abandonment:
a. Failure to report for work or absence
without justifiable reason
b. Clear intention to sever Er-Ee relationship
manifested by some overt acts (Labor et. al
v. NLRC, GR No. 110388, September 14,
1995).
3rd cause: Fraud
Any act, ommission, or concealment which
invlovesa breach of leagal duty, trust, or confidence
justly reposed and is injurious to another.
Fraud must be committed against the employer or
representative and in connection with the
employee’s work. (Poquiz, 2012)
Loss of trust and confidence as a just cause for
termination:
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
110
1. It applies only to cases involving:
a. Ees occupying positions of trust and
confidence (confidential and
managerial Ee’s) – To this class belong
managerial Ees, i.e., those vested with the
powers or prerogatives to lay down
management policies and/or to hire,
transfer, suspend, lay-off, recall, discharge,
assign or discipline Ees or effectively
recommend such managerial actions
Position of trust and confidence Is one
where a person is entrusted with
confidence on delicate matters, or with the
custody, handling, or care and protection of
the employer’s proerty ( Pandoy v. NLRC,
G.R. No. 67664, May 20, 1992) and/or funds.
(Gonzales v NLRC, 355 SCRA 197)
NOTE: The mere existence of a basis for the
loss of trust and confidence justifies the
dismissal of the managerial Ee because
when an Ee accepts a promotion to a
managerial position or to an office
requiring full trust and confidence, such Ee
gives up some of the rigid guaranties
available to ordinary workers (Cecilia T.
Manese v. Jollibee Foods Corporation, G.R.
No. 170454, October 11, 2012).
b. Ees routinely charged with the care and
custody of the Er’s money or property –
To this class belong cashiers, auditors,
property custodians, etc., or those who, in
the normal and routine exercise of their
functions, regularly handle significant
amounts of money or property (Mabeza v.
NLRC, G.R. No. 118506, April 18, 1997).
2. The loss of trust and confidence must be based
on willful breach.
A breach is willful if it is done intentionally,
knowingly, and purposely without justifiable
excuse, as distinguished from an act done
carelessly, thoughtlessly, heedlessly, or
inadvertently (De la Cruz v. NLRC, G.R. No.
119536, February 17, 1997).
3. The act constituting the breach must be “work-
related” such as would show the Ee concerned
to be unfit to continue working for the Er
(Gonzales v. NLRC, G.R. No. 131653, March 26,
2001).
4. It must be substantial and founded on clearly
established facts sufficient to warrant the Ee’s
separation from employment (Sulpicio Lines
Inc. v. Gulde, G.R. No. 149930, February 22, 2002).
 TERMINATION OF EMPLOYMENT
5. Fraud must be committed against the Er or his
representatives, e.g.:
a. Falsification of time cards
b. Theft of company property
c. Unauthorized use of company vehicle
NOTE: The treatment of rank and file personnel and
managerial Ees in so far as the application of the
doctrine of loss of trust and confidence is concerned
is different. As regards managerial Ees, such as
Caoile, mere existence of a basis for believing that
such Ee has breached the trust of his Er would
suffice for his dismissal (Caoile v. NLRC, G.R. No.
115491, November 24, 1998).
Guidelines for the Doctrine of Loss of Confidence
to apply
1. Loss of confidence should not be simulated
(reasonable basis for loss of trust and
confidence);
2. Not used for subterfuge for causes which are
improper and/or illegal and unjustified;
3. Not arbitrarily asserted in the face of
overwhelming evidence to the contrary;
4. Must be genuine, not a mere afterthought to
justify earlier action taken in bad faith; and
5. The Ee involved holds a position of trust and
confidence.
NOTE: The breach of trust must rest on substantial
grounds and not on the Er’s arbitrariness, whims,
caprices, or suspicion; otherwise, the Ee would
eternally remain at the mercy of the Er. It should be
genuine and not simulated, nor should it appear as
a mere afterthought to justify earlier action taken in
bad faith of a subterfuge for causes which are
improper, illegal, or unjustified. It has never been
intended to afford and occasion for abuse because
of its subjective nature. There must, therefore, be an
actual breach of duty committed by the Ee which
must be established by substantial evidence (Dela
Cruz v. NLRC, G.R. No. 119536, February 17, 1997).
Q: Rico has a temper and, in his work as Division
Manager of Mata tag Insurance, frequently loses
his temper with his staff. One day, he physically
assaults his staff member by slapping him. The
staff member sues him for physical injuries.
Matatag Insurance decides to terminate Rico,
after notice and hearing, on the ground of loss of
trust and confidence. Rico claims that he is
entitled to the presumption of innocence
because he has not yet been convicted. Comment
on Matatag's action in relation to Rico's
argument. (2015 Bar Question)
A: Matatag Insurance does not have to await the
result of the criminal case before exercising its
prerogative to dismiss. Dismissal is not affected by
111
a criminal case. Under the Three-fold Liability Rule,
a single act may result in three liabilities, two of
which are criminal and administrative. To establish
them, the evidence of the crime must amount to
proof beyond reasonable doubt; whereas, the
evidence of the ground for dismissal is substantial
evidence only. In this regard, the company has some
basis already for withholding the trust it has
reposed on its manager. Hence, Rico’s conviction
need not precede the employee’s dismissal.
Q: Mabeza, a chambermaid at Hotel Supreme
was terminated from employment because of
her refusal to sign an affidavit attesting to their
Er’s compliance with minimum wage and other
labor standards. Mabeza filed a complaint for
illegal dismissal against Hotel Supreme. As a
defense, Hotel Supreme claimed that she
abandoned her work and belatedly claimed loss
of confidence as the ground for the dismissal of
Mabeza because she stole some of the properties
of her Er. Is loss of confidence a valid ground for
dismissal of a hotel chambermaid?
A: No. Loss of confidence as a just cause for
dismissal was never intended to provide Ers with a
blank check for terminating their Ees. Evidently, an
ordinary chambermaid who has to sign out for linen
and other hotel property from the property
custodian each day and who has to account for each
and every towel or bed sheet utilized by the hotel's
guests at the end of her shift would not fall under
any of these two classes of Ees for which loss of
confidence, if ably supported by evidence, would
normally apply (Mabeza v. NLRC, G.R. No. 118506,
April 18, 1997).
Q: Abelardo Abel was first hired by Philex
Mining Corp. in January 1988. He was later
assigned to the company’s Legal Department as
a Contract Claims Asst., and held the position for
5 yrs. prior to his transfer to the Mine
Engineering and Draw Control Department
wherein he was appointed Unit Head. In 2002,
he was implicated in an irregularity occurring in
the subsidence area of the company’s mine site
at Benguet. His co-worker Lupega, executed an
affidavit known as the “Subsidence Area
Anomaly.” The incidents in Lupega’s affidavit
supposedly took place when Abel was still a
Contract Claims Asst. at the company’s legal
dep’t. An investigation was promptly launched
by the company’s officers. Abel attended the
meetings but claimed that he was neither asked
if he needed the assistance of counsel nor
allowed to properly present his side. By memo,
the company found Abel guilty of (1) fraud
resulting in loss of trust and confidence and (2)
gross neglect of duty, and was meted out the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
penalty of dismissal from employment. Was
Abel validly dismissed for any of the causes
provided for in Art.282 of the LC?
A: No. The 1st requisite for dismissal on the ground
of loss of trust and confidence is that the Ee
concerned must be holding a position of trust and
confidence. Abel was a contract claims assistant at
the time he allegedly committed the acts which led
to its loss of trust and confidence. It is not the job
title but the actual work that the Ee performs. It was
part of Abel’s responsibilities to monitor the
performance of the company’s contractors in
relation to the scope of work contracted out to them.
The 2nd requisite is that there must be an act that
would justify the loss of trust and confidence. Loss
of trust and confidence, to be a valid cause for
dismissal, must be based on a willful breach of trust
and founded on clearly established facts. The basis
for the dismissal must be clearly and convincingly
established but proof beyond reasonable doubt is
not necessary. The company’s evidence against Abel
fails to meet this standard. Its lone witness, Lupega,
did not support his affidavit and testimony during
the company investigation with any piece of
evidence at all. It could hardly be considered
substantial evidence (Abel v. Philex Mining Corp., G.R.
No. 178976, July 31, 2009).
Q: Is failure to reach the monthly sales quota a
valid ground for dismissal based on loss of trust
and confidence?
A: No. It is stated in Art. 282 of the LC that loss of
trust and confidence is a ground for termination of
an employee. However, it requires that such breach
of trust be willful – whether it be done intentionally,
knowingly, and purposely, without justifiable
excuse. The court finds that failure to reach the
monthly sales quota is not valid ground for loss of
trust and confidence as this is not what has been
contemplated in Art. 282(c) of the LC.
Several factors can be attributed to the low sales
performance, which may not be compelled by the
respondent. It being involuntary on his part the
factors cannot be taken as a valid ground as they are
not to be considered willful breach of trust, for they
were not done intentionally, knowingly and
purposely, without justifiable excuse (Norkis
Distributors, Inc and Alex D. Buat v. Delfin S.
Descallar, G.R. No. 185255, March 14, 2012).
Abandonment as a just cause for termination
It means deliberate and unjustified refusal of an
employee to resume his employment.
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
112
Requirements for a valid finding of
abandonment
Two (2) factors must be present:
1. The failure to report for work, or absence
without valid or justifiable reason; and
2. A clear intention to sever Er-Ee relationship,
with the 2nd element as the more
determinative factor, being manifested by some
overt acts (Sta. Catalina College v. NLRC, G.R. No.
144483, November 19, 2003).
How to prove abandonment
Abandonment is proven when the Er must show
that the Ee deliberately and unjustifiably refused to
resume his employment without any intention of
returning. There must be a concurrence of the
intention to abandon and some overt acts from
which an Ee may be deduced as having no more
intention to work. The law, however, does not
enumerate what specific overt acts can be
considered as strong evidence of the intention to
sever the Ee-Er relationship (Sta. Catalina College v.
NLRC, G.R. No. 144483, November 19, 2003).
Q: Mejila, a barber at Windfield Barber Shop,
had an altercation with a fellow barber which
resulted in his subsequent turning over the
duplicate keys of the shop to the cashier and
took away all his belongings there from and
worked at different barbershop. Mejila then
filed an illegal dismissal case but did not seek
reinstatement as a relief. Did Mejila commit
abandonment?
A: Yes. Mejila’s acts such as surrendering the shop’s
keys, not reporting to the shop anymore without
any justifiable reason, his employment in another
barber shop, and the filing of a complaint for illegal
dismissal without praying for reinstatement clearly
show that there was a concurrence of the intention
to abandon and some overt acts from which it may
be inferred that the Ee concerned has no more
interest in working (Jo v. NLRC, G.R. No. 121605,
February 2, 2000).
Q: The Ees averred that they were underpaid
and filed a complaint for money claims against
the Er before the LA. As a result of their
complaint, they were relieved from their posts
and were not given new assignments despite the
lapse of six months. On the other hand, the Er
maintains that the Ees were not dismissed but
were merely transferred to a new post and
voluntarily abandoned their jobs when they
failed to report for duty in the new location.
Upon termination, the Ee moved to file a joint
 TERMINATION OF EMPLOYMENT
complaint for illegal dismissal. Is there a valid
indication of abandonment from work?
A. No. For abandonment of work to fall under Art.
282 of the LC, as amended, as gross and habitual
neglect of duties there must be the occurrence of
two elements: first, there should be a failure of the
Ee to report for works without a valid or justifiable
reason and second, there should be a showing that
the Ee intended to sever the Er-Ee relationship, the
second element being the more determinative
factor as manifested by overt acts.
The Er cannot simply conclude knowledge that an
Ee is ipso facto notified of a transfer when there is
no evidence to indicate that the Ee had knowledge
of the transfer order. Hence, the failure of an Ee to
report for work at the new location cannot be taken
against him as an element of abandonment.
In addition to these tests for valid transfer, there
should be proper and effective notice to the Ee
concerned. It is the Er’s burden to show that the Ee
was duly notified of the transfer. Verily, an Er cannot
reasonably expect an Ee to report for work in a new
location without first informing said Ee of the
transfer. Alert security’s insistence on the
sufficiency of mere issuance of the transfer order is
indicative of bad faith on their part (Alert Security
and Investigation Agency, Inc. et al v. Saidali
Pasawilan, et al., G.R. No. 182397, September 14,
2011).
Guidelines to determine the validity of
termination:
Validity of termination per se is determined by
compliance with two-notice rule, hearing, just or
authorized cause. This is more or propriety of
dismissal as penalty as oppose to reprimand,
suspension, etc.
4th cause: Commission of a crime or offense
When an offense committed by the Ee against the
person of his Er or any immediate member of his
family or his duly authorized representative and
thus, conviction of a crime involving moral
turpitude is not analogous thereto as the element of
relation to his work or to his Er is lacking.
NOTE: A criminal case need not be actually filed.
Commission of acts constituting a crime itself is
sufficient.
5th cause: Analogous cases
For an act to be included in analogous cases of just
causes of termination, it must be due to the
113
voluntary and/or willful act or omission of the Ee
(Nadura v. Benguet Consolidated, G.R. No. L-17780,
August 24, 1962).
e.g.:
1. Violation of company rules and regulations
2. Drunkenness
3. Gross inefficiency
4. Illegally diverting Er’s products
5. Failure to heed an order not to join an illegal
picket
6. Violation of safety rules and code of discipline
To fall within the ambit of “analogous cases” the act
or omission must have an element similar to those
found in the specific Just cause enumerated under
Art. 282. (International Rice Research Institute v.
NLRC, G.R. No. 97239, May 12, 1993).
Past offenses
Previous offenses may be so used as a valid
justification for dismissal from work ONLY if the
infractions are related to the subsequent offense
upon which the basis the termination of
employment is decreed (Stellar Industrial Service
Inc. v. NLRC, G.R. No. 117418. Jan. 24, 1996).
The school failed to show that Chua took
advantage of her position to court her student
Chua. If the two eventually fell in love, despite
the disparity in their ages and academic levels,
this only lends substance to the truism that the
heart has reasons of its own which reason does
not know. But, yielding to this gentle and
universal emotion is not to be so casually
equated with immorality. The deviation of the
circumstances of their marriage from the usual
social pattern cannot be considered as a defiance
of contemporary social mores (Chua-Qua v.
Clave, G.R. No. L-49549 August 30, 1990).
Doctrine of Incompatibility
Where the Ee has done something that is contrary
or incompatible with the faithful performance of his
duties, his Er has a just cause for terminating his
employment (Manila Chauffeur’s League v. Bachrach
Motor Co., G.R. No. L-47071, June 29, 1940).
AUTHORIZED CAUSES
Authorized causes – initiated by the employer’s
exercise of management prerogative, who shall be
liable to pay separation pay as mandated by law.
Does not usually require delinquency or culpability
on the part of the employee.
Authorized causes of termination by the Er:
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
1. Installation of labor-saving devices
2. Redundancy
3. Reorganization
4. Retrenchment
5. Closing or cessation of operation of the
establishment or undertaking
6. Disease
1st cause: Installation of labor-saving devices
Robotics is the Switch from ‘men’ employment to
‘mechanical’ employment.
Reduction of the number of workers in a company’s
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. G.R. No. L-2028;
April 28, 1949).
2nd cause: Redundancy
It is the superfluity in the performance of a
particular work. It Exists where the services of an Ee
are in excess of what is reasonably demanded by the
actual requirements of the enterprise (Wiltshire File
Co., Inc. v. NLRC, G.R. No. 82249, February 7, 1991).
The redundancy should not have been created by
the Er.
Requisites of a valid redundancy:
1. Written notice served on both the Ees and the
DOLE at least 1 month prior to separation from
work
2. Payment of separation pay equivalent to at least
1 month pay or at least 1 month pay for every
year of service, whichever is higher
3. Good faith in abolishing redundant position
4. Fair and reasonable criteria in ascertaining
what positions are to be declared redundant:
a. Less preferred status, e.g. temporary Ee
b. Efficiency and
c. Seniority (DAP v. Court of Appeals. G.R. No.
165811; December 14, 2005).
Q: Ong, a Sales Manager of Wiltshire File Co., Inc.,
was informed of the termination of his
employment due to redundancy upon returning
from a trip abroad. Ong maintains that there can
be no redundancy since he was the only person
occupying his position in the company.
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
114
Is there redundancy even though Ong was the
only one occupying his position?
A: Yes. Redundancy in an Er’s personnel does not
necessarily or even ordinarily refer to duplication of
work. The characterization of Ong’s services as no
longer necessary or sustainable and therefore
properly terminable, was an exercise of business
judgment on the part of Wiltshire. Furthermore, a
position is redundant where it is superfluous, and
superfluity of a position or positions may be the
outcome of a number of factors, such as 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. The Er has no legal obligation to keep
in its payroll more Ees that are necessary for the
operation of its business (Wiltshire File Co., Inc. v.
NLRC, G.R. No. 82249, February 7, 1991).
NOTE: The losses which the company may suffer or
is suffering may be proved by financial statements
audited by independent auditors (Asian Alcohol
Corporation v. NLRC, G.R. No. 131108, March 25,
1999).
3rd cause: Reorganization
An Er is not precluded from adopting a new policy
conducive to a more economical and effective
management, and the law does not require that the
Er should be suffering financial losses before he can
terminate the services of the Ee on the ground of
redundancy (DOLE Phil., Inc. v. NLRC, G.R. No. L-
55413, July 25, 1983).
4th cause: Retrenchment
Cutting of expenses and includes the reduction of
personnel; It is a management prerogative, a means
to protect and preserve the Er’s viability and ensure
his survival. To be an authorized cause it must be
effected in good faith and for the retrenchment,
which is after all a drastic recourse with serious
consequences for the livelihood of the Ee’s or
otherwise laid-off.
Requisites of a valid retrenchment:
1. Written notice served on both the Ee and the
DOLE at least 1 month prior to the intended
date of retrenchment
2. Payment of separation pay equivalent to at least
one month pay or at least 1/2 month pay for
every year of service, whichever is higher
3. Good faith
4. Proof of expected or actual losses
5. The Er used fair and reasonable criteria in
ascertaining who would be retained among the
 TERMINATION OF EMPLOYMENT
Ees, such as status, efficiency, seniority,
physical fitness, age, and financial hardship of
certain workers (FASAP v. PAL, G.R. No. 178083,
October 2, 2009).
Criteria in selecting Ees to be retrenched:
There must be fair and reasonable criteria to be
used in selecting Ees to be dismissed such as:
1. Less preferred status;
2. Efficiency rating;
3. Seniority (Phil. Tuberculosis Society, Inc. v.
National Labor Union, G.R. No. 115414, August
25, 1998).
“Last In First Out” (LIFO) Rule
It applies in the termination of employment in the
line of work. What is contemplated in the LIFO rule
is that when there are two or more Ees occupying
the same position in the company affected by the
retrenchment program, the last one employed will
necessarily be the first one to go (Maya Farms Ees’
Organization v. NLRC, G.R. No. 106256, December 28,
1994).
Q: Is the seniority rule or "last in first out"
policy to be strictly followed in effecting a
retrenchment or redundancy program? (2001
Bar Question)
A: No. In Asian Alcohol Corp., the SC stated that with
regard the policy of "first in, last out" in choosing
which positions to declare as redundant or whom
to retrench to prevent further business losses,
there is no law that mandates such a policy. The
reason is simple enough. A host of relevant factors
come into play in determining cost efficient
measures and in choosing the Ees who will be
retained or separated to save the company from
closing shop. In determining these issues,
management plays a pre-eminent role. The
characterization of positions as redundant is an
exercise of business judgment on the part of the Er.
It will be upheld as long as it passes the test of
arbitrariness.
Q: Philippine Tuberculosis Society, Inc.
retrenched 116 Ees after incurring deficits
amounting to 9.1 million pesos. Aside from
retrenching its Ees, the company also
implemented cost cutting measures to prevent
such losses for increasing and minimizing it. The
NLRC ruled that the retrenchment was not valid
on the ground that the Society did not take the
seniority rule into account in the selection of the
retrenchment. Was the retrenchment done by
the Society not valid for its failure to follow the
criteria laid down by law?
115
A: No. The Society terminated the employment of
several workers who have worked with the Society
for great number of years without consideration for
the number of years of service and their seniority
indicates that they had been retained for such a long
time because of loyal and efficient service. The
burden of proving the contrary rests on the Society
(Phil. Tuberculosis Society, Inc. v. National Labor
Union, G.R. No. 115414, August 25, 1998).
Q: Due to mounting losses the former owners of
Asian Alcohol Corporation sold its stake in the
company to Prior Holdings. Upon taking control
of the company and to prevent losses, Prior
Holdings implemented a reorganization plan
and other cost-saving measures including the
retrenchment of 117 Ees some of which are
members of the union and the majority held by
non-union members. Some retrenched workers
filed a complaint for illegal dismissal alleging
that the retrenchment was a subterfuge for
union busting activities.
Was the retrenchment made by Asian Alcohol
valid and justified?
A: Yes. Even though the bulk of the losses were
suffered under the old management and continued
only under the new management, ultimately the
new management of Prior Holdings will absorb such
losses. The law gives the new management every
right to undertake measures to save the company
from bankruptcy (Asian Alcohol Corp. v. NLRC, G.R.
No. 131108, March 25, 1999).
Redundancy vs. Retrenchment
REDUNDANCY RETRENCHMENT
Does not involve losses Involves losses,
or the closing or closures or cessation of
cessation of operations operations of
of the establishment. establishment or
undertaking due to
serious business losses
or financial reverses.
Standards to Justify Retrenchment:
1. The losses expected should be substantial and
not merely de minimis in extent;
2. The substantial loss apprehended must be
reasonably imminent. It must be 
reasonably
necessary and likely to effectively prevent the
expected losses;
3. The employer should have taken other
measures prior or parallel to retrenchment 
to
forestall losses;
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
4. The alleged losses if already realized, and the
expected imminent losses must be proved by
sufficient and convincing evidence. (Oriental
Petroleum & Minerals Corp. vs. Fuentes. G.R. No.
151818. October 14, 2005)
NOTE: The phrase “to prevent losses” means
that retrenchment or termination from the
service of some Ees is authorized to be
undertaken by the Er sometime before the
anticipated losses are actually sustained or
realized. Evidently, actual losses need not set in
prior to retrenchment (Cajucom VII v. TP Phils
Cement Corp., et al, G.R. No. 149090, February 11,
2005).
5th cause: Closure
Must be done in good faith and not for the purpose
of circumventing pertinent labor laws.
A change of business ownership does not create an
obligation on the part of the new owner to absorb
the employees of the previous owner, unless
expressly assumed. Labor contracts being in
personam, are not enforceable against a transferee.
(Fernando v. Angat Labor Unit, 5 SCRA 248)
Closure contemplated is a unilateral and voluntary
act on the part of the Er to close the business
establishment.
Requisites:
1. Written notice served on both the Ees and the
DOLE at least 1 month prior to the intended
date of closure
2. Payment of separation pay equivalent to at least
one month pay or at least 1/2 month pay for
every year of service, whichever is higher,
except when closure is due to serious business
losses
3. Good faith
4. No circumvention of the law
5. No other option available to the Er
Test for the validity of closure or cessation of
establishment or undertaking
The ultimate test of the validity of closure or
cessation of establishment or undertaking is that it
must be bona fide in character. And the burden of
proving such falls upon the Er (Capitol Medical
Center, Inc. v. Dr. Meris, G.R. No. 155098, September
16, 2005).
Payment of separation pay in case of closure
Payment of separation pay is required only where
closure is neither due to serious business losses nor
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
116
due to an act of Government (North Davao Mining
Corp v. NLRC, G.R. No. 112546, Mar. 13, 1996;NFL v.
NLRC, G.R. No. 127718, March 2, 2000).
Basis for computation: latest salary rate, unless
reduced by the employer to circumvent the law, in
which case, it shall be based on the rate before its
deduction. (Sec. 10, Rule 1, Book IV, Rules and
Regulations Implementing the Labor Code)
There is no obligation to pay separation pay:
a. When the closure of the business is due to
serious business loss
b. Where closure of business is by compulsion of
law because closure of business is not
attributed to Er’s will. (e.g.: the land where the
building is situated was declared covered by the
Comprehensive Agrarian Reform Law)
Q: Galaxie Steel Corp. decided to close down
because of serious business loses. It filed a
written notice with the DOLE informing its
intended closure and the termination of
employment. It posted the notice of closure on
the corporate bulletin board.
a. Does the written notice posted by Galaxie on
the bulletin board sufficiently comply with
the notice requirement under Art. 283 of the
LC?
b. Are Galaxie Ees entitled to separation pay?
A:
a. No. In order to meet the purpose, service of the
written notice must be made individually upon
each and every Ee of the company. However, the
Court held that where the dismissal is for an
authorized cause, non-compliance with
statutory due process should not nullify the
dismissal, or render it illegal, or ineffectual.
Still, the Er should indemnify the Ee, in the form
of nominal damages, for the violation of his
right to statutory due process (Galaxie Steel
Workers Union v. NLRC, G.R. No. 165757, October
17, 2006).
b. No. Galaxie had been experiencing serious
financial losses at the time it closed business
operations. Art. 283 of the LC governs the grant
of separation benefits "in case of closures or
cessation of operation" of business
establishments "not due to serious business
losses or financial reverses." Where, the closure
then is due to serious business losses, the LC
does not impose any obligation upon the Er to
pay separation benefits (Galaxie Steel Workers
Union v. NLRC, G.R. No. 165757, October 17,
2006).
 TERMINATION OF EMPLOYMENT
Q: Rank-and-file workers of SIMEX filed a
petition for direct certification and affiliated
with Union of Filipino Workers (UFW).
Subsequently, 36 workers of the company’s
“lumpia” department and 16 other workers
from other departments were effectively locked
out when their working areas were cleaned out.
The workers through UFW filed a complaint for
unfair labor practices against the company.
SIMEX then filed a notice of permanent
shutdown/total closure of all units of operation
in the establishment with the DOLE allegedly
due to business reverses brought about by the
enormous rejection of their products for export
to the United States.
Was the closure warranted by the alleged
business reverses?
A: No. The closure of a business establishment is a
ground for the termination of the services of any Ee
unless the closing is for the purpose of
circumventing the provisions of the law. But, while
business reverses can be a just cause for
terminating Ees, they must be sufficiently proved. In
this case, the audited financial statement of SIMEX
clearly indicates that they actually derived earnings.
Although the rejections may have reduced their
earnings they were not suffering losses. There is no
question that an Er may reduce its work force to
prevent losses but it must be serious, actual and real
otherwise this ground for termination would be
susceptible to abuse by scheming Ers who might be
merely feigning business losses or reverses in their
business ventures to ease out Ees (Union of Filipino
Workers v. NLRC, G.R. No. 90519, March 23, 1992).
Q: Carmelcraft Corporation closed its business
operations allegedly due to losses of Php 1,
603.88 after the Carmelcraft Employees Union
filed a petition for certification election.
Carmelcraft Union filed a complaint for illegal
lockout and ULP with damages and claim for
employment benefits. Were the losses incurred
by the company enough to justify closure of its
operations?
A: No. The determination to cease operations is a
prerogative of management that is usually not
interfered with by the State as no business can be
required to continue operating at a loss simply to
maintain the workers in employment. That would
be a taking of property without due process of law
which the Er has a right to resist. But where it is
manifest that the closure is motivated not by a
desire to avoid further losses but to discourage the
workers from organizing themselves into a union
for more effective negotiations with management,
the State is bound to intervene. The losses of less
117
than Php 2,000 for a corporation capitalized at Php
3 million cannot be considered serious enough to
call for the closure of the company (Carmelcraft
Corp. v. NLRC, G.R. No. 90634-35, June 6, 1990).
Q: Is the transferee of the closed corporation
required to absorb the Ees of the old
corporation?
A:
GR: There is no law requiring a bona fide purchaser
of assets of an on-going concern to absorb in its
employ the Ee’s of the latter except when the
transaction between the parties is colored or
clothed with bad faith (Sundowner Dev’t Corp. v.
Drilon, G.R. No. 82341, December 6, 1989).
XPNs:
1. Where the transferee was found to be merely an
alter ego of the different merging firms
(Filipinas Port Services, Inc. v. NLRC, G.R. No.
97237, August 16, 1991).
2. Where the transferee voluntarily agrees to do
so (Marina Port Services, Inc. v. Iniego, G.R. No.
77853, January 22, 1990).
Q: Marikina Dairy Industries, Inc. decided to sell
its assets and close operations on the ground of
heavy losses. The unions alleged that the
financial losses were imaginary and the
dissolution was a scheme maliciously designed
to evade its legal and social obligations to its Ees.
The unions want the buyers of the corporations
assets restrained to operate unless the
members of the unions are hired to operate the
plant under the terms and conditions specified
in the collective bargaining agreements.
Is the buyer of a company’s assets required to
absorb the Ees of the seller?
A: No. There is no law requiring that the purchaser
of a company’s assets should absorb its Ees and the
most that can be done for reasons of public policy
and social justice was to direct that buyers of such
assets to give preference to the qualified separated
Ees in the filling up of vacancies in the facilities of
the buyer (MDII Supervisors & Confidential Ees Ass’n
(FFW) v. residential Assistant on Legal Affairs, G.R.
Nos. L-45421-23, September 9, 1977).
Closure vs. Retrenchment
CLOSURE RETRENCHMENT
It is the reversal of Is the reduction of
fortune of the Er personnel for the
whereby there is a purpose of cutting down
complete cessation of on costs of operations in
business operations to terms of salaries and
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
prevent further wages resorted to by an of labor (Manly Express v. Payong, G.R. No. 167462,
financial drain upon Er because of losses in October 25, 2005).
an Er who cannot pay operation of a business
anymore his Ees occasioned by lack of Procedure in terminating an Ee’s employment
since business has work and considerable on the ground of disease
already stopped. reduction in the volume
of business. 1. The Er shall not terminate his employment
In the case of unless:
retrenchment, however, a. There is a certification by a competent
for the closure of a public health authority
One of the b. That the disease is of such nature or at such
business or a
prerogatives of a stage that it cannot be cured within a
department due to
management is the period of 6 months even with proper
serious business losses
decision to close the medical treatment.
to be regarded as an
entire establishment
authorized cause for
or to close or abolish 2. If the disease or ailment can be cured within the
terminating Ees, it must
a department or period, the Er shall not terminate the Ee’s
be proven that the losses
section thereof for employment but shall ask the Ee to take a leave.
incurred are substantial
economic reasons, The Er shall reinstate such Ee to his former
and actual or reasonably
such as to minimize position immediately upon the restoration of
imminent; that the same
expenses and reduce his normal health (IRR, Book VI, Rule I, Sec.8).
increased through a
capitalization.
period of time; and that
the condition of the Entitlement to reinstatement
company is not likely to
improve in the near An Ee suffering from a disease is entitled to a
future. reinstatement. Provided he presents a certification
LC provides for the by a competent public health authority that he is fit
Does not obligate the to return to work (Cebu Royal Plant v. Deputy
payment of separation
Er for the payment of Minister, G.R. No. L-58639, August 12, 1987).
package in case of
separation package if
retrenchment to prevent
there is closure of Medical Certificate as mandatory requirement
losses.
business due to
serious losses. The requirements of a medical certificate is
mandatory. Only where there is a prior certification
6th cause: Disease from a competent public authority that the disease
afflicting the Ee sought to be dismissed is of such
Must be incurable within 6 months and the nature or at such stage that it cannot be cured
continued employment is prohibited by law or within 6 months even with proper medical
prejudicial to his health as well as to the health of treatment that the latter could be validly terminated
his co-Ees with a certification from the public health from his job (Tan v. NLRC, G. R. No. 116807, April 14,
officer that the disease is incurable within 6 months 1997).
despite due to medication and treatment
NOTE: Termination from work on the sole basis of
Disease as a ground for dismissal actual perceived or suspected HIV status is deemed
unlawful (R.A. 8504 HIV/AIDS Law, Sec. 35).
When the Ee suffers from a disease, and:
1. His continued employment is prohibited by law Q: Anna Ferrer has been working as a
or prejudicial to his health or to the health of his bookkeeper at Great Foods, Inc., which
co-Ees (IRR, Book VI, Rule I, Sec.8). operates a chain of high-end restaurants
2. With a certification by competent public health throughout the country, since 1970 when it was
authority that the disease is incurable within 6 still a small eatery at Binondo. In the early part
months despite due medication and treatment of the year 2003, Anna, who was already 50
(Solis v. NLRC, GR No. 116175, October 28, 1996). years old, reported for work after a week-long
vacation in her province. It was the height of the
NOTE: The requirement for a medical certification SARS scare, and management learned that the
cannot be dispensed with; otherwise, it would first confirmed SARS death case in the Phils, a
sanction the unilateral and arbitrary determination “balikbayan” nurse from Canada, is a townmate
by the Er of the gravity or extent of the Ee’s illness of Anna. Immediately, a memorandum was
and thus defeat the public policy on the protection issued by management terminating the services

UNIVERSITY OF SANTO TOMAS

2016 GOLDEN NOTES
118
 TERMINATION OF EMPLOYMENT
of Anna on the ground that she is a probable
carrier of SARS virus and that her continued Purpose for providing separation pay
employment is prejudicial to the health of her
co-Ees. Is the action taken by the Er justified? Separation pay intendeds to provide the Ee with the
(2004 Bar Question) wherewithal during the period he is looking for
another employment (Gabuay v. Oversea Paper
A: The Er’s act of terminating the employment of Supply, G.R. No. 148837, August 13, 2004).
Anna is not justified. There is no showing that said
Ee is sick with SARS, or that she associated or had Instances when Ee is entitled to separation pay
contact with the deceased nurse. They are merely
town mates. Furthermore, there is no certification by 1. When the termination of employment is due to
a competent public health authority that the disease causes authorized by law (Art. 284, LC).
is of such a nature or such a stage that it cannot be 2. When the severance of employment is caused
cured within a period of 6 months even with proper by a disease, particularly when the Ee is found
medical treatment (IRR, Book VI, Rule 1, Sec. 8). to be suffering from any disease and whose
continued employment is prohibited by law or
Other authorized causes is prejudicial to his health and of his co-Ees (LC,
Art. 284).
1. Total and permanent disability of Ee 3. When the termination from service has been
2. Valid application of union security clause declared illegal, but his reinstatement to his
3. Expiration of period in term of employment former position is no longer feasible for some
4. Completion of project in project employment valid reason (Gabuay v. Oversea Paper Supply,
5. Failure in probation G.R. No. 148837, August 13, 2004).
6. Relocation of business to a distant place 4. In case of pre-termination of employment
7. Defiance of return-to work-order contract in job-contracting arrangement (D.O
8. Commission of Illegal acts in strike 18-02, Rules Implementing Art. 106 – 109, LC).
9. Violation of contractual agreement 5. Where separation pay is awarded as a measure
10. Retirement of social or compassionate justice (PLDT v.
NLRC, G.R. No. L-80609, August 23, 1988).
Steps required in termination of an Ee’s
employment for authorized causes: Rules on separation pay with regard to each
cause of termination:
1. Written Notice to DOLE 30 days prior to the
intended day of termination. CAUSE OF
Purpose: To enable it to ascertain the veracity SEPARATION PAY
TERMINATION
of the cause of termination. Equivalent to at least 1
2. Written notice to Ee concerned 30 days prior month pay or at least 1
the intended date of termination. Automation
month pay for every year of
3. Payment of separation pay – Serious business service, whichever is higher
losses do not excuse the Er from complying with Equivalent to at least 1
the clearance or report required in Art. 283 of month pay or at least 1
the LC and its IRR before terminating the Redundancy
month pay for every year of
employment of its workers. In the absence of service, whichever is higher
justifying circumstances, the failure of the Er to
Equivalent to 1 month pay
observe the procedural requirements under
Retrenchment or at least ½ month pay
Art. 284 of the LC taints their actuations with
for every year or service
bad faith if the lay-off was temporary but then
Closures or
serious business losses prevented the Equivalent to at least 1
cessation of
reinstatement of respondents, the Er’s should month pay or at least 1
operation not due
have complied with the requirements of written month pay for every year of
to serious
notice. service (if due to severe
business
financial losses, no
losses/financial
Separation pay separation pay
reverses
Separation pay refers to the amount due to the Ee Equivalent to at least 1
who has been terminated from service for causes month pay or at least ½
Disease
authorized by law such as the installation of labor- month pay for every year of
saving losses or the closing or cessation of operation service, whichever is higher
of the establishment or undertaking.

UNIVERSITY OF SANTO TOMAS

119 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
NOTE: A fraction of at least 6 months shall be
considered 1 whole year.
There is no separation pay when the closure is due
to an act of the Government.
Purpose of the two notices served to the Ee and
the DOLE 1 month prior to termination
1. To give the Ees some time to prepare for the
eventual loss of their jobs and their
corresponding income, look for other
employment and ease the impact of the loss of
their jobs.
2. To give the DOLE the opportunity to ascertain
the veracity of the alleged cause of termination
(Phil. Telegraph & Telephone Corp. v. NLRC, G.R.
No. 147002, August 15, 2005).
NOTE: Notice to both the Ees concerned and the
DOLE are mandatory and must be written and given
at least 1 month before the intended date of
retrenchment – and the fact that the Ees were
already on temporary lay-off at the time notice
should have been given to them is not an excuse to
forego the 1-month written notice (Sebuguero v.
NLRC, G.R. No.115394, September 27, 1995).
Q: DAP Corp. ceased its operation due to the
termination of its distribution agreement with
Int’l Distributors Corp. which resulted in its
need to cease its business operations and to
terminate the employment of its Ees. Marcial et
al. filed a complaint for illegal dismissal and for
failure to give the Ees written notices regarding
the termination of their employment. On the
other hand, DAP claims that their Ees actually
knew of the termination therefore the written
notices were no longer required. Are written
notices dispensed with when the Ees have actual
knowledge of the redundancy?
A: The Ees’ actual knowledge of the termination of a
company’s distributorship agreement with another
company is not sufficient to replace the formal and
written notice required by law. In the written notice,
the Ees are informed of the specific date of the
termination, at least a month prior to the date of
effectivity, to give them sufficient time to make
necessary arrangements. In this case,
notwithstanding the Ees knowledge of the
cancellation of the distributorship agreement, they
remained uncertain about the status of their
employment when DAP failed to formally inform
them about the redundancy (DAP Corp. v. CA, G.R. No.
165811, December 14, 2005).
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
120
SEPARATION PAY
Separation Pay prescribed under the Labor
Code
1. When termination is due to authorized
causes:
a. Under Article 283 (Closure of
Establishment and Reduction of
Personnel), such as:
i. Installation of labor-saving devices;
ii. Redundancy;
iii. Retrenchment;
iv. Closing or cessation of business
operations; and
b. Under Article 284 (Disease as ground for
Termination), when termination is due to
the disease of an employee and his
continued employent is prejudicial to
himself or his co-Ees.
2. Under Article 286 (When Employment Not
Deemed Terminated) - after the lapse of six
(6) months in cases involving bona-fide
suspension of the operation of business or
undertaking or after the lapse of ‘floating
status.’
3. Under Article 149 when the Er terminates
without just cause - the services of a
househelper prior to the expiration of the fixed-
term employment.(Composite Enterprises, Inc. v.
Caparoso. G.R. No. 159919, August 8, 2007)
NOTE: Under Batas Kasambahay, if the domestic
worker is unjustly dismissed, the domestic worker
shall be paid the compensation already earned plus
the equivalent of fifteen (15) days work by way of
indemnity. (Chan, 2014)
Separation Pay prescribed under RA 7610
That in case of violation its provisions has resulted
in the death, insanity or serious physical injury to a
child employed in such establishment or that the
firm or establishment has employed a child for
prostitution or obscene or lewd shows or if there is
imminent danger to the life and limb of the working
child in accordance with the occupational health
and safety and health standards, the employer shall
pay all employees affected by the closure their
separation pay and other monetary benefits
provided by law.(Section 21, Chapter, Department
Order No. 65-04; Section 16, R.A. 7610, as amended by
Section 6, R.A. No. 9231)
Other prescription of Separation Pay by the
Supreme Court
 TERMINATION OF EMPLOYMENT
1. In lieu of reinstatement; and
2. As ‘Financial Assistance’
When pronounced:
A. Granted by the Er unilaterally by way of a
voluntary policy or practice or through
negotiated agreement such as CBA;
B. PLDT Doctrine - Separation Pay as a
measure of Social Justice shall be allowed
only if the Ee is validly dismissed:
i. For causes other than serious
misconduct; or
ii. For causes that do not reflect on his
moral character.(PLDT v. NLRC and
Marilyn Abucay, G.R. No. L-80609,
August 23, 1988)
C. Toyota Doctrine – the commision of any of
the grounds under Article 282 of the LC,
would merit payment of fnancial
assistance.(Toyota Motor Phils. Corp
Workers Association v. NLRC, G.R. No.
158786, October 19, 2007)
XPN: All of the causes under Article 282
applies, except analogous causes.(Ibid.)
D. PAL Doctrine – Reversion to PDLT
doctrine’s social justice exception.
The grant of separation pay as a matter of
equity to a valid dismissed Ee is not
contingent on whether the ground reelied
upon is akin to serious misconduct or
invokes willful or wrongful intent on the
part of the Ee.(PAL, Inc. v. NLRC, G.R. No.
123294, October 20, 2010)
E. Solidbank Doctrine – Ees terminated due to
authorized cause are not entitled to be paid
additional separation pay by way of
financial assistance.(Solidbank Corp. v.
NLRC, G.R. No. 165951, March 30, 2010)
The reson is that the Er is only required
under the law to pay his Es separation pay
in accordance with Article 283 of the
LC. That is all wha the law requires.(Chan,
2014)
121
DUE PROCESS
TWIN NOTICE REQUIREMENT
Two-fold requirements of a valid dismissal for a
just cause
1. Substantive – It must be for a just cause.
2. Procedural – There must be notice and
hearing.
Twin requirements of procedural due process
(Art. 277(b), LC)
1. Notice – “Twin-notice rule”
a. First notice – Necessity of first notice to
inform the worker of the violation and
preparation for the defense (Pre-notice)
b. Last notice – To give the worker a notice
of the Er’s final decision (Post notice)
2. Hearing – Two fundamental rules:
a. Hearing means ample opportunity to be
heard
b. What the law prohibits is total absence of
opportunity to be heard
i. If ample opportunity to be heard is
given, there is no violation.
ii. Position paper – A position paper is a
valid alternative because not all
cases are of litigation concerns. It
should suffice in matters that only
involve a question of law.
When termination is based on just cause, notice
should be given to the Ee applying the “twin notice
rule”
If the termination is based on all of the authorized
causes, notices should be given to all Ees affected
and the DOLE at least one month before the
intended date of termination.
Purpose of notice and hearing
The requirement of notice is intended to inform the
Ee concerned of the Er’s intent to dismiss him and
the reason for the proposed dismissal.
On the other hand the requirement of Hearing
affords the Ee the opportunity to answer his Er’s
charges against him and accordingly to defend
himself there from before dismissal is effected
(Salaw v. NLRC, G.R. No. 90786, September 27, 1991).
Failure to comply with the requirement of the 2
notices makes the dismissal illegal. The procedure
is mandatory (Loadstar Shipping Co. Inc. v. Mesano,
G.R. No. 138956, August 7, 2003). And for non-
compliance with the due process requirements in
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
the termination of a person’s employment, a
company is sanctioned to pay a certain amount as
damages (King of Kings v. Mamac, G.R. No.
166208, June 29, 2007).
Q: Should there exist a valid and just cause, may
the Er depart from giving theEe the right to be
heard?
A: No. Art. 277(b) of the LC mandates that an Er who
seeks to dismiss an Ee must “afford the latter ample
opportunity to be heard and to defend himself with
the assistance of his representative if he so desires.”
Expounding on this provision, the SC held that
“ample opportunity” connotes every kind of
assistance that management must accord the Ee to
enable him to prepare adequately for his defense
including legal representation (U-BIX Corp. v. Bravo,
G.R. No. 177647, October 31, 2008).
Procedure to be observed by the Er for the
termination of employment based on any of the
just causes for termination
1. A written notice should be served to the Ee
specifying the ground/s for termination and
giving the said Ee reasonable opportunity to
explain.
This first written notice must apprise the Ee
that his termination is being considered due to
the acts stated in the notice (Phil. Pizza Inc. v.
Bungabong, G.R. No. 154315, May 9, 2005).
2. A hearing or conference should be held during
which the Ee concerned, with the assistance of
counsel, if the Ee so desires, is given the
opportunity to respond to the charge,
providefor his evidence and present the
evidence offered against him.
The “ample opportunity to be heard” under the
LC is paramount over the “hearing or
conference” standard in the IRR of LC
3. A written notice of termination – If termination
is the decision of the Er, it should be served on
the Ee indicating that upon due consideration of
all the circumstance, grounds have been
established to justify his termination.
Single notice of termination does not comply
with the requirements of the law (Aldeguer &
Co., Inc. v. Honeyline Tomboc, G.R. No. 147633,
July 28, 2008).
Q: Caong, Tresquio and Daluyon were employed
by Regualos under a boundary agreement, as
drivers of his jeepneys. Later on, the three were
barred by Regualos from driving the vehicles
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
122
due to deficiencies in their boundary
payments.Is the policy of suspending jeepney
drivers pending payment of arrears in their
boundary obligations reasonable?
A: Yes. The policy of suspending drivers who fail to
remit the full amount of the boundary was fair and
reasonable under the circumstances. Notice was
given to the drivers who were getting lax in
remitting their boundary payments. In fact,
Regualos incurred a considerable amount of
arrears. He had to put a stop to it as he also relied on
these boundary payments to raise the full amount of
his monthly amortizations on the jeepneys.
Caong, Tresquio and Daluyon were not denied due
process. Due process is not a matter of strict, rigid
or formulaic process. The essence of due process is
simply the opportunity to be heard, or as applied to
administrative proceedings, an opportunity to
explain one’s side or an opportunity to seek a
reconsideration of the action or ruling complained
of. A formal or trial-type hearing is not at all times
and in all instances essential, as the due process
requirements are satisfied where the parties are
afforded fair and reasonable opportunity to explain
their side of the controversy at hand (Caong v.
Regualos, G.R. No. 179428, January 26, 2011).
HEARING; MEANING OF
OPPORTUNITY TO BE HEARD
Coverage of opportunity to be heard
The first written notice to be served on the Ees
should contain the specific causes or grounds for
termination against them, and a directive that the
Ees are given the opportunity to submit their
written explanation within a reasonable period.
Under the Omnibus Rules, reasonable opportunity
means every kind of assistance that management
must accord to the Ees to enable them to prepare
adequately for their defense. This should be
construed as a period of at least five (5) calendar
days from receipt of the notice to give the Ees an
opportunity to study the accusation against them,
consult a union official or lawyer, gather data and
evidence, and decide on the defenses they will raise
against the complaint. To enable the Ees to
intelligently prepare their explanation and
defenses, the notice should contain a detailed
narration of the facts and circumstances that will
serve as basis for the charge against the Ees. A
general description of the charge will not suffice.
Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which
among the grounds under Art. 282 is being charged
against the Ees.
 TERMINATION OF EMPLOYMENT
After serving the first notice, the Ers should
schedule and conduct a hearing or conference
wherein the Ees will be given the opportunity to:
1. explain and clarify their defenses to the charge
against them;
2. present evidence in support of their defenses;
and
3. rebut the evidence presented against them by
the management. During the hearing or
conference, the Ees are given the chance to
defend themselves personally, with the
assistance of a representative or counsel of
their choice. Moreover, this conference or
hearing could be used by the parties as an
opportunity to come to an amicable settlement
(King of Kings v. Mamac, G.R. No. 166208, June
29, 2007).
Q: The illegal dismissal case was referred to the
LA. Is a formal hearing or trial required to satisfy
the requirement of due process?
A: No. Trial-type hearings are not required in labor
cases and these may be decided on verified position
papers, with supporting documents and their
affidavits.
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 (Shoppes Manila v. NLRC, 419 SCRA 354).
NOTE: It is not necessary for the affiants to appear
and testify and be cross-examined by the counsel for
the adverse party. It is sufficient that the documents
submitted by the parties have a bearing on the issue
at hand and support the positions taken by them
(C.F. Sharp & Co. v. Zialcita, 495 SCRA 387).
The essence of due process is simply an opportunity
to be heard, or as applied to administrative
proceedings, an opportunity to explain one’s side or
an opportunity to seek a reconsideration of the
action or ruling complained of (PLDT v. Bolso, 530
SCRA 550).
The burden of proof in termination cases
The burden of proof rest upon the Er to show that
the dismissal of the Ee is for a just cause, and failure
to do so would necessarily mean that the dismissal
123
is not justified, consonant with the constitutional
guarantee of security of tenure.
Due process refers to the process to be followed;
burden of proof refers to the amount of proof to be
adduced. In money claims, the burden of proof as to
the amount to be paid the Ees rests upon the Er
since he is in custody of documents that would be
able to prove the amount due, such as the payroll.
Degree of proof required
In illegal dismissal cases, the Er is burdened to
prove just cause for terminating the employment of
its Ee with clear and convincing evidence to give
flesh and blood to the guaranty of security of tenure
granted by the Constitution to Ees under the LC
(Duty Free Phils. Services, Inc. v. Tria, G.R. No. 174809,
June 27, 2012).
Q: Perez and Doria were employed by PT&T.
After investigation, Perez and Doria were placed
on preventive suspension for 30 days for their
alleged involvement in anomalous transactions
in the shipping section. PT&T dismissed Perez
and Doria from service for falsifying documents.
They filed a complaint for illegal suspension and
illegal dismissal. The LA found that the
suspension and the subsequent dismissal were
both illegal. The NLRC reversed the LA’s
decision, it ruled that Perez and Doria were
dismissed for just cause, that they were
accorded due process and that they were
illegally suspended for only 15 days (without
stating the reason for the reduction of the period
of petitioners’ illegal suspension). On appeal,
thev CA held that they were dismissed without
due process. Were petitioners illegally
dismissed?
A: Yes. The Er must establish that the dismissal is
for cause in view of the security of tenure that Ees
enjoy under the Constitution and the LC. PT&T
failed to discharge this burden. PT&T’s illegal act of
dismissing Perez and Doria was aggravated by their
failure to observe due process. To meet the
requirements of due process in the dismissal of an
Ee, an Er must furnish the worker with 2 written
notices: (1) a written notice specifying the grounds
for termination and giving to said Ee a reasonable
opportunity to explain his side and (2) another
written notice indicating that, upon due
consideration of all circumstances, grounds have
been established to justify the Er's decision to
dismiss the Ee (Perez. v. Phil. Telegraph and
Telephone Company, G.R. No. 152048, April 29, 2009).
Guidelines in determining whether the penalty
imposed on Ee is proper
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
not complied with, should the dismissal be held
1. Gravity of the offense illegal?
2. Position occupied by the Ee
3. Degree of damage to the Er A: No. In Agabon v. NLRC, G.R. No. 158693, November
4. Previous infractions of the same offense 17, 2004, it was held that when dismissal is for just
5. Length of service (ALU-TUCP v. NLRC, G.R. No. or authorized cause but due process was not
120450, February 10, 1999); PAL v. PALEA, G.R. observed, the dismissal should be upheld.
No.L-24626, June 28, 1974)
The Er, however, should be held liable for non-
Q: Felizardo was dismissed from Republic Flour compliance with the procedural requirements of
Mills-Selecta Ice Cream Corporation for due process in the form of damages.
dishonesty and theft of company property for
bringing out a pair of boots, 1 piece aluminum Procedural Due Process under Art. 282-284 of
container and 15 pieces of hamburger patties. Is the LC as applied in the Agabon Case
the penalty of dismissal commensurate with the Art. 282 Art. 283 Art. 284
offense committed? The Er must The Er must Er may
give the Ee a give the Ee terminate the
A: There is no question that the Er has the inherent notice and the DOLE services of his
right to discipline its Ees which includes the right to specifying the written Ee.
dismiss. However this right is subject to the police grounds for notices 30
power of the State. As such, the Court finds that the which days prior to
penalty imposed upon Felizardo was not dismissal is the effectivity
commensurate with the offense committed sought a of his
considering the value of the articles he pilfered and hearing or an separation.
the fact that he had no previous derogatory record opportunity to
during his 2 years of employment in the company. be heard and
Moreover, Felizardo was not a managerial or after hearing
confidential Ee in whom greater trust is reposed by or opportunity
management and from whom greater fidelity to to be heard, a
duty is correspondingly expected (ALU-TUCP v. notice of the
NLRC, G.R. No. 120450, February 10, 1999). decision to
dismiss.
Hearing is not an indispensable part of due The Worker is an There is no
process requirement inactive party hearing
under Art. 277 in the cause requirement
Art. 277(b) of the LC provides that, in cases of (b) of notice for in diseases but
termination for a just cause, an Ee must be given and hearing termination. there is notice
“ample opportunity to be heard and to defend applies only in Only notice requirement
himself.” Thus, the opportunity to be heard afforded Art. 282 with dole and to worker, but
by law to the Ee is qualified by the word “ample” because the Er notice to no
which ordinarily means “considerably more than is accusing the worker is notice to
adequate or sufficient.” In this regard, the phrase worker that required. No DOLE.
“ample opportunity to be heard” can be reasonably the latter need for a
interpreted as extensive enough to cover actual committed an hearing
hearing or conference. To this extent, Sec. 2(d), Rule act or because due
I of the IRR of Book VI of the LC requiring a hearing omission process is
and conference during which the Ee concerned is constituting a found in LC
given the opportunity to respond to the charge is in cause for (Art. 283) not
conformity with Art. 277(b). Significantly, Sec. 2(d), termination of in
Rule I of the IRR of Book VI of the LC itself provides his Constitution
that the so-called standards of due process outlined employment. according to
therein shall be observed “substantially,” not Agabon.
strictly. This is a recognition that while a formal
hearing or conference is ideal, it is not an absolute, NOTE: in Art.
mandatory or exclusive avenue of due process 277 (b) in
(Perez v. PT&T, G.R. No. 152048, April 29, 2009). relation
to Art. 283, if
Q: If the dismissal is for just or authorized cause the closure of
but the requirement of notice and hearing were

UNIVERSITY OF SANTO TOMAS

2016 GOLDEN NOTES
124
 TERMINATION OF EMPLOYMENT
business will requirement, the sanction should be stiffer
result in a because the dismissal process was initiated by
mass Er’s exercise of his management prerogative.
layoff and
serious labor Principle of Commensurate penalty or
dispute, the proportionality rule:
SLE can
enjoin the Er Employer’s directives must always be fair and
as regards reasonable, and the corresponding penalties, when
mass prescribed must be commensurate to the offense
termination involved and to the degree of the infraction (Moreno
v San Sebastian College-Recoletos, Manila, 550 SCRA
Possible Effect of 414)
Liability of ER
Situations termination
a.) With Just NO Liability Circumstances affecting validity of dismissal:
or
Authorized NOTE: 1. Gravity of the offense
VALID 2. Employment position
Cause Separation Pay
b.) With Due if for Authorized 3. Length of service
Process Cause 4. Totality of infractions
Reinstatement + 5. Nature of the business
a.) Without 6. First-offense rule
Full
Just or 7. Principle of equity
Backwages
Authorized 8. Principle of compassion and understanding
INVALID
Cause
NOTE: If
b.) With Due RELIEFS FOR ILLEGAL DISMISSAL
Reinstatement
Process
not possible —
Separation Pay Remedies of Ee in case of illegal dismissal
Reinstatement +
a.) Without In case where the worker is illegally terminated, his
Full
Just or remedies are:
Backwages
Authorized
INVALID
Cause 1. Reinstatement without loss of seniority rights –
NOTE: If
b.) Without Actual reinstatement or payroll reinstatement
Reinstatement
Due Process 2. Full backwages – Full backwages means no
not possible—
Separation Pay deduction
Liable for 3. Separation pay in lieu of reinstatement
a.) With Just noncompliance 4. Damages, including Attorney’s fees
or With procedural
Authorized requirements Q: Does the offer to reinstate the illegally
VALID dismissed Ee affect the liability of the erring Er?
Cause
b.) Without NOTE:
Due Process Separation Pay A: No. At any rate, sincere or not, the offer of
if for Authorized reinstatement could not correct the earlier illegal
Cause dismissal of the Ee. The Er incurred liability under
the LC from the moment an Ee was illegally
NOTE: The Agabon ruling was modified by JAKA dismissed, and the liability did not abate as a result
Food Processing v. Pacot G.R. No. 151378, March 28, of the Er's repentance (Ranara v.NLRC, 212 SCRA
2005 where it was held that: 631).

1. If based on just cause (LC, Art. 282) but the Er
failed to comply with the notice requirement,
the sanction to be imposed upon him should be
tempered because the dismissal process was, in
effect, initiated by an act imputable to the Ee;
and
2. If based on authorized causes (LC, Art. 283) but
the Er failed to comply with the notice
Q: PAL dismissed strike leader Capt. Gaston as a
result of which the Union resolved to undertake
the grounding of all PAL planes and the filing of
applications for “protest retirement” of
members who had completed 5 years of
continuous service, and “protest resignation”
for those who had rendered less than 5 years of
service in the company. PAL acknowledged
receipt of said letters and among the pilots

UNIVERSITY OF SANTO TOMAS

125 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
whose “protest resignation or retirement” was
accepted by PAL were Enriquez and Ecarma.
Before their readmission, PAL required
Enriquez and Ecarma to accept 2 conditions,
namely: that they sign conformity to PAL’s letter
of acceptance of their retirement and or
resignation and that they submit an application
for employment as new Ees without protest or
reservation. As a result of this, their seniority
rights were lost.
Are the pilots entitled to the restoration of their
seniority rights?
A: No. An Ee has no inherent right to seniority. He
has only such rights as may be based on a contract,
statute, or an administrative regulation relative
thereto. Seniority rights which are acquired by an
Ee through long-time employment are contractual
and not constitutional. The discharge of an Ee
thereby terminating such rights would not violate
the Constitution. When the pilots tendered their
respective retirement or resignation and PAL
immediately accepted them, both parties mutually
terminated the contractual employment
relationship between them thereby curtailing
whatever seniority rights and privileges the pilots
had earned through the years.
Full backwages
The LC as amended by R.A. 6715 points to "full
backwages" as meaning exactly that, i.e., without
deducting from backwages the earnings derived
elsewhere by the concerned Ee during the period of
his illegal dismissal (Buenviaje v. CA, G.R. 147806,
November 12, 2002).
Separation pay in lieu of reinstatement when
1. Doctrine of Strained Relations (applies to
confidential and managerial Ees only)
2. In case the position has been abolished (applies
to both managerial and rank and file Ees)
NOTE: Moral and exemplary damages may also be
awarded.
Prescriptive period for filing an action for illegal
dismissal
An action for reinstatement by reason of illegal
dismissal is one based on an injury which may be
brought within 4 years from the time of dismissal
pursuant to Art. 1146 of the NCC (Azcor
Manufacturing v. NLRC, 303 SCRA 26).
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
126
REINSTATEMENT
PENDING APPEAL (ART. 223, LC)
Reinstatement
It is the restoration of the Ee to the state from which
he has been unjustly removed or separated without
loss of seniority rights and other privileges.
Forms of reinstatement
1. Actual or physical –The Ee is admitted back to
work
2. Payroll – The Ee is merely reinstated in the
payroll
NOTE: An order of reinstatement by the LA is not
the same as actual reinstatement of a dismissed or
separated Ee, however it is immediately executory
even pending appeal. Thus, until the Er
continuously fails to actually implement the
reinstatement aspect of the decision of the LA, their
obligation to the illegally dismissed Ee, insofar as
accrued backwages and other benefits are
concerned, continues to accumulate. It is only when
the illegally dismissed Ee receives the separation
pay (in case of strained relations) that it could be
claimed with certainty that the Er-Ee relationship
has formally ceased thereby precluding the
possibility of reinstatement (Triad Security & Allied
Services, Inc. et al v.Ortega, G.R. No. 160871, February
6, 2006).
Q: Is an illegally dismissed Ee entitled to
reinstatement as a matter of right?
A: GR: Yes.
XPNs:
Proceeds from an illegal dismissal wherein
reinstatement is ordered but cannot be carried
out as in the following cases:
1. Reinstatement cannot be effected in view of
the long passage of time or because of the
realities of the situation.
2. It would be inimical to the Ers’ interest.
3. When reinstatement is no longer feasible.
4. When it will not serve the best interest of the
parties involved.
5. Company will be prejudiced by
reinstatement.
6. When it will not serve a prudent purpose.
7. When there is resultant strained relation
(applies to both confidential and managerial
Ees only).
8. When the position has been abolished (applies
to managerial, supervisory and rank-and-file
Ees).
 TERMINATION OF EMPLOYMENT
NOTE: In such cases, it would be more prudent to The test is two-fold: (1) there must be actual delay
order payment of separation pay instead of or the fact that the order of reinstatement pending
reinstatement (Quijano v. Mercury Drug appeal was not executed prior to its reversal; and
Corporation, G.R. No. 126561, July 8, 1998). (2) the delay must not be due to the Er’s unjustified
act or omission. If the delay is due to the Er’s
Order of reinstatement unjustified refusal, the Er may still be required to
pay the salaries notwithstanding the reversal of the
It means restoration to a state or condition from LA’s decision (Garcia v. PAL, G.R. No. 164856, August
which one had been removed or separated. The 29, 2009).
person reinstated assumes the position he had
occupied prior to his dismissal. Reinstatement Q: PAL dismissed Garcia, for violating PAL’s
presupposes that the previous position from which Code of Discipline for allegedly sniffing shabu in
one had been removed still exists, or that there is an PAL’s Technical Center Tool Room Section.
unfilled position which is substantially equivalent Garcia then filed for illegal dismissal and
or of similar nature as the one previously occupied damages where the LA ordered PAL to
by the Ee. immediately reinstate Garcia. On appeal, the
NLRC reversed the decision and dismissed
An order for reinstatement entitles an Ee to receive Garcia’s complaint for lack of merit. Garcia’s
his accrued backwages from the moment the motion for reconsideration was denied by the
reinstatement order was issued up to the date when NLRC. It affirmed the validity of the writ and the
the same was reversed by a higher court without notice issued by the LA but suspended and
fear of refunding what he had received (Pfizer v. referred the action to the Rehabilitation
Velasco, G.R. 177467, March 9, 2011). Receiver for appropriate action. May Garcia
collect wages during the period between the
Arts. 223 vs. 279 of the LC LA’s order of reinstatement pending appeal and
the NLRC decision overturning that of the LA?
Art. 223 Art. 279
May be availed of as A: Art. 223(3) of the LC provides that the decision of
Presupposes that the the LA reinstating a dismissed or separated Ee,
soon as the LA renders
judgment has already insofar as the reinstatement aspect is concerned,
a judgment declaring
become final and shall immediately be executory, pending appeal.
that the dismissal of
executory.
the Ee is illegal and
Consequently, there is Even if the order of reinstatement of the LA is
ordering said
nothing left to be done reversed on appeal, it is obligatory on the part of the
reinstatement. It may
except the execution Er to reinstate and pay the wages of the dismissed
be availed of even
thereof. Ee during the period of appeal until reversal by the
pending appeal
higher court. On the other hand, if the Ee has been
NOTE: An award or order for reinstatement is self- reinstated during the appeal period and such
executory. It does not require the issuance of a writ reinstatement order is reversed with finality, the Ee
of execution (Pioneer Texturizing Corp. v. NLRC, G.R. is not required to reimburse whatever salary he
No. 118651, October 6, 1997). received for he is entitled to such, more so if he
actually rendered services during the period.
Rule on wages during reinstatement pending
appeal In Genuino v. NLRC, 539 SCRA 342, the Ee reinstated
should refund the salaries he received while the
Dismissed Ee whose case was favorably decided by case was pending appeal for he should not enrich
the LA is entitled to receive wages pending appeal himself at the expense of the Er. However, in Garcia
upon reinstatement, which is immediately v. PAL, 576 SCRA 479, the Supreme Court ruled that
executory. Unless there is a restraining order, it is the principle of social justice renders inapplicable
ministerial upon the LA to implement the order of the civil law doctrine of unjust enrichment.
reinstatement and it is mandatory on the Er to
comply therewith. Q: May the Court order the reinstatement of a
dismissed employee even if the prayer of the
After the LA’s decision is reversed by a higher complaint did not include such relief?
tribunal, the Ee may be barred from collecting the
accrued wages, if it is shown that the delay in A: Yes. So long as there is a finding that the Ee was
enforcing the reinstatement pending appeal was illegally dismissed, the court can order the
without fault on the part of the Er. reinstatement of an Ee even if the complaint does
not include a prayer for reinstatement, unless, of

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127 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
course the Ee has waived his right to reinstatement.
By law, an Ee who is unjustly dismissed is entitled
to reinstatement among others. The mere fact that
the complaint did not pray for reinstatement will
not prejudice the Ee, because technicalities of law
and procedure are frowned upon in labor
proceedings (Pheschem Industrial Corp. v. Moldez,
G.R. No. 116158, May 9, 2005).
In any case, Sec.2(c), Rule 7 of the Rules of Court
provides that a pleading shall specify the relief
sought, but may add a general prayer for such
further or other reliefs as may be deemed just and
equitable. Under this rule, a court can grant the
relief warranted by the allegation and the proof
even if it is not specifically sought by the injured
party; the inclusion of a general prayer may justify
the grant of a remedy different from or together
with the specific remedy sought, if the facts alleged
in the complaint and the evidence introduced so
warrant. The prayer in the complaint for other
reliefs equitable and just in the premises justifies
the grant of a relief not otherwise specifically
prayed for (Prince Transport, Inc. v. Garcia et.al, G.R.
No. 167291, January 12, 2011).
Q: A complaining Ee obtained a favorable
decision in an illegal dismissal case. The LA
ordered her immediate reinstatement. The Er
opted payroll reinstatement pending appeal.
The NLRC reversed the decision of the LA ruled
that the dismissal was valid. The Er stopped the
payroll reinstatement. The Ee elevated the case
to the CA, and eventually to the SC. The SC upheld
the dismissal. Is the Ee entitled to continued
payroll reinstatement after the NLRC decision?
A: No. The Ee is not entitled to continued payroll
reinstatement. The decision of the NLRC on appeals
from decisions of the LA shall become final and
executory after 10 calendar days from receipt
thereof by the parties. That the CA may take
cognizance of and resolve a petition for certiorari
for the nullification of the decisions of the NLRC on
jurisdictional and due process considerations does
not affect the statutory finality of the NLRC decision.
Since the NLRC decision which upheld the dismissal
became final, the Er was correct in stopping the
payroll reinstatement of the Ee (Bago v. NLRC, G.R.
No. 170001, April 4, 2007).
Q: Can the Er demand that the Ee reimburse the
amount that had been paid under the period of
payroll reinstatement?
A: No. Even if the order of reinstatement of the LA is
reversed on appeal, it is obligatory on the part of the
Er to reinstate and pay the wages of the dismissed
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
128
Ee during the period of appeal until reversal by the
higher court.
If the Ee has been reinstated during the appeal
period and such reinstatement order is reversed
with finality, the Ee is not required to reimburse
whatever salary he received for he is entitled to
such, more so if he actually rendered services
during the period (Garcia v. PAL, G.R. No. 164856,
June 20, 2009).
Q: What happens if there is an Order of
Reinstatement but the position is no longer
available?
A: The Ee should be given a substantially equivalent
position. If no substantially equivalent position is
available, reinstatement should not be ordered
because that would in effect compel the Er to do the
impossible. In such a situation, the Ee should merely
be given a separation pay consisting of 1-month
salary for every year of service (Grolier Int’l Inc. v.
ELA, G.R. No. 83523, August 31, 1989).
Q: Can the order of reinstatement be
immediately enforced in the absence of a motion
for the issuance of a writ of execution? (2009 Bar
question)
A: Yes. In Pioneer Texturizing Corp. v. NLRC, the
Court held that an award or order of reinstatement
is self-executory and does not require a writ of
execution to implement and enforce it. To require
the application for and issuance of a writ of
execution as a prerequisite for the execution of a
reinstatement award would certainly betray and
run counter to the very objective and intent of Art.
223 of the Labor Code (on the immediate execution
of a reinstatement order).
Alternative Answer:
The decision to reinstate pending appeal is not self-
executory. A motion for a writ of execution is
mandatory before an order of reinstatement can be
enforced because an Ee needs, the assistance of the
NLRC Sheriff to enforce the order.
“Strained relations” rule
It is when the Er can no longer trust the Ee and vice
versa or there were imputations of bad faith to each
other, reinstatement could not effectively serve as a
remedy. This rule applies only to positions which
require trust and confidence (Globe Mackay v. NLRC,
G.R. No. 82511, March 3, 1992).
NOTE: Under the circumstances where the
employment relationship has become so strained to
preclude a harmonious working relationship and
 TERMINATION OF EMPLOYMENT
that all hopes at reconciliation are naught after
reinstatement, it would be more beneficial to accord
the Ee backwages and separation pay.
The following must be proven before the
strained relations rule can be applied to a
particular case
1. The Ee concerned occupies a position where he
enjoys the trust and confidence of his Er; and
2. That it is likely if the Ee is reinstated, an
atmosphere of antipathy and antagonism may
be generated as to adversely affect the
efficiency and productivity of the Ee concerned
(Globe Mackay Cable & Wire Corp. v. NLRC G.R.
No. 82511, March 3, 1992).
Q: Does the strained relations rule always bar
reinstatement in all cases?
A: No. The rule should be applied on a case to case
basis, based on each case’s peculiar conditions and
not universally. Otherwise, reinstatement can never
be possible simply because some hostility is
invariably engendered between the parties as a
result of litigation. That is human nature (Anscor
Transport v. NLRC, G.R. No. 85894, September 28,
1990).
Besides, no strained relations should arise from a
valid and legal act of asserting one's right; otherwise
an Ee who shall assert his right could be easily
separated from the service, by merely paying his
separation pay on the pretext that his relationship
with his Er had already become strained (Globe
Mackay Cable & Wire Corp. v. NLRC, G.R. No. 82511,
March 3, 1992).
SEPARATION PAY
IN LIEU OF REINSTATEMENT
Separation pay can be viewed
Under present laws and jurisprudence, separation
pay may be viewed in 4 ways:
1. In lieu of reinstatement in illegal dismissal
cases, where Ee is ordered reinstated but
reinstatement is not feasible.
2. As Er’s statutory obligation in cases of legal
termination due to authorized causes under
Arts. 283 and 284 of the LC.
3. As financial assistance, as an act of social justice
and even in case of legal dismissal under Art.
282 of the LC.
4. As employment benefit granted in CBA or
company policy (Poquiz, 2005).
Q: Delfin and Luisito are licensed drivers of
public utility jeepneys owned by Moises Capili.
129
When Capili assumed ownership and operation
of the jeepneys, the drivers were required to
sign individual contracts of lease of the
jeepneys. The drivers gathered the impression
that signing the contract was a condition
precedent before they could continue driving.
The drivers stopped plying their assigned
routes and a week later filed with the LA a
complaint for illegal dismissal praying not for
reinstatement but for separation pay. Are the
respondents entitled to separation pay?
A: No. When the drivers voluntarily chose not to
return to work anymore, they must be considered
as having resigned from their employment. The
common denominator of those instances where
payment of separation pay is warranted is that the
employee was dismissed by the Er (Capili v. NLRC,
G.R. 117378, March 26, 1997).
Q: Romeo has been an Ee of AAA Company from
1993 to 1999 but was unable to report to work
due to some illness. Romeo claimed that he was
offered by AAA of Php 15,000 separation pay, on
the contrary AAA claimed Romeo was never
terminated and even told the latter that Romeo
could go back to work anytime but Romeo
clearly manifested that he was no longer
interested in returning to work and instead
asked for separation pay. Is Romeo terminated
or considered resigned? Is Romeo entitled to
separation pay?
A: Romeo is considered resigned. Romeo’s various
pleadings support his intention of not returning to
work on the ground that his health is failing.
Moreover, Romeo did not ask for reinstatement and
rejected AAA Company’s offer for him to return to
work. This is tantamount to resignation.
Resignation is defined as the voluntary act of an Ee
who finds himself in a situation where he believes
that personal reasons cannot be sacrificed in favor
of the exigency of the service and he has no other
choice but to disassociate himself from his
employment.
Romeo is not entitled to separation pay. There is no
provision in the LC which grants separation pay to
voluntarily resigning Ees. In fact, the rule is that an
Ee who voluntarily resigns from employment is not
entitled to separation pay, except when it is
stipulated in the employment contract or CBA, or it
is sanctioned by established Er practice or policy.
Hence, Romeo is not entitled to separation pay in
the absence of a Labor provision and a stipulation in
his employment contract or CBA (Romeo Villaruel v.
Yeo Han Guan, G.R. No. 169191, June 1, 2011).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Q: Two groups of seasonal workers claimed
separation benefits after the closure of Phil.
Tobacco processing plant in Balintawak and the
transfer of its tobacco operations to Candon,
Ilocos Sur. Phil. Tobacco refused to grant
separation pay to the workers belonging to the
first batch, because they had not been given
work during the preceding year and, hence,
were no longer in its employ at the time it closed
its Balintawak plant. Likewise, it claims
exemption from awarding separation pay to the
second batch, because the closure of its plant
was due to "serious business losses," as defined
in Art. 283 of the LC. Both labor agencies held
that the two groups were entitled to separation
pay equivalent to 1/2 month salary for every
year of service, provided that the employee
worked at least 1 month in a given year. Is the
separation pay granted to an illegally dismissed
Ee the same as that provided under Art.283 of
the LC in case of retrenchment to prevent losses?
A: No. The separation pay awarded to Ees due to
illegal dismissal is different from the amount of
separation pay provided for in Art. 283 of the LC.
Preceding from the above, Phil. Tobacco is liable for
illegal dismissal and should be responsible for the
reinstatement of the first group and the payment of
their backwages. However, since reinstatement is
no longer possible as Phil. Tobacco have already
closed its Balintawak plant, members of the said
group should instead be awarded normal
separation pay (in lieu of reinstatement) equivalent
to at least one month pay, or one month pay for
every year of service, whichever is higher. It must be
stressed that the separation pay being awarded to
the first group is due to illegal dismissal; hence, it is
different from the amount of separation pay
provided for in Art. 283 in case of retrenchment to
prevent losses or in case of closure or cessation of
the Er’s business, in either of which the separation
pay is equivalent to at least one (1) month or one-
half (1/2) month pay for every year of service,
whichever is higher (Phil. Tobacco Flue-Curing &
Redrying Corp. v. NLRC, G.R. No. 127395, December
10, 1998).
Q: Does separation pay apply in cases of legal
dismissal?
A: It depends. As Er’s statutory obligation in cases
of legal termination due to authorized causes under
Arts. 283 and 284 of the LC. As financial assistance,
as an act of social justice and even in case of legal
dismissal under Art. 282 of the LC. Art. 223 of the LC
concerns itself with an interim relief, granted to a
dismissed or separated Ee while the case for illegal
dismissal is pending appeal. It does not apply where
there is no finding of illegal dismissal. On the other
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
130
hand, an Ee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other
benefits or their monetary equivalent computed
from the time his compensation was withheld from
him up to the time of his actual reinstatement
(Lansangan v. Amkor Technology Philippines, Inc.,
G.R. No. 177026, (2009).
BACKWAGES
Backwages
It refers to the relief given to an Ee to compensate
him for the lost earnings during the period of his
dismissal. It presupposes illegal termination.
NOTE: Entitlement to backwages of the illegally
dismissed Ee flows from law. Even if he does not ask
for it, it may be given. The failure to claim
backwages in the complaint for illegal dismissal is a
mere procedural lapse which cannot defeat a right
granted under substantive law (St. Michael’s
Institute v. Santos, G.R. No. 145280, December 4,
2001).
Q: What is the basis of awarding backwages to an
illegally dismissed employee?
A: The payment of backwages is generally granted
on the ground of equity. It is a form of relief that
restores the income that was lost by reason of the
unlawful dismissal; the grant thereof is intended to
restore the earnings that would have accrued to the
dismissed Ee during the period of dismissal until it
is determined that the termination of employment
is for a just cause. It is not private compensation or
damages but is awarded in furtherance and
effectuation of the public objective of the LC. Nor is
it a redress of a private right but rather in the nature
of a command to the Er to make public reparation
for dismissing an Ee either due to the former’s
unlawful act or bad faith (Tomas Claudio Memorial
College Inc., v. CA, G.R. No. 152568, February 16,
2004).
Q: What is the period covered by the payment of
backwages?
A: The backwages shall, from the time that wages
are unlawfully withheld until the time of actual
reinstatement or, if reinstatement is no longer
feasible, until the finality of judgment awarding
backwages, cover the period from the date of
dismissal of the Ee up to the date of:
1. Actual reinstatement, or if reinstatement is no
longer feasible
2. Finality of judgment awarding backwages
(Buhain v. CA, G.R. 143709, July 2, 2002).
 TERMINATION OF EMPLOYMENT
The backwages to be awarded should not be
diminished or reduced by earnings elsewhere
during the period of his illegal dismissal. The reason
is that the Ee while litigating the illegality of his
dismissal must earn a living to support himself and
his family (Bustamante v. NLRC, G.R. No. 111651,
Mar. 15, 1996; Buenviaje v. CA, G.R. No. 147806,
November 12, 2002).
Q: Baldo was dismissed from employment for
having been absent without leave (AWOL) for
eight (8) months. It turned out that the reason
for his absence was his incarceration after he
was mistaken as his neighbor’s killer. Eventually
acquitted and released from jail, Baldo returned
to his Er and demanded reinstatement and full
backwages. Is Baldo entitled to reinstatement
and backwages? Explain your answer. (2009
BAR QUESTION)
A: Yes, Baldo is entitled to reinstatement. Although
he shall not be entitled to backwages during the
period of his detention, but only from the time the
company refused to reinstate him. (Magtoto v. NLRC,
140 SCRA 58).
COMPUTATION
The following are included in the computation
of backwages
1. Transportation and emergency allowances
2. Vacation or SIL and sick leave
3. 13th month pay
NOTE: Facilities such as uniforms, shoes, helmets
and ponchos should not be included in the
computation of backwages because said items are
given for free, to be use only during official tour of
duty not for private or personal use.
The award of backwages is computed on the basis of
30-day month (JAM Trans Co. v. Flores, G.R. No.
82829, March 19, 1993).
Q: How are the backwages of a probationary Ee
who fails to qualify as a regular Ee computed?
A: The backwages that should be awarded to
respondent shall be reckoned from the time of her
constructive dismissal until the date of the
termination of her employment. The computation
should not cover the entire period from the time her
compensation was withheld up to the time of her
actual reinstatement. This is because as a
probationary Ee, the lapse of probationary
employment without appointment as a regular Ee of
effectively severed the Er-Ee relationship between
131
the parties (Robinsons Galleria v. Ranchez, G.R. No.
177937, January 9, 2011).
Q: Is an Ee entitled to backwages even after the
closure of the business?
A: No. The closure of the business rendered the
reinstatement of complainant to an Ees previous
position impossible but she is still entitled to the
payment of backwages up to the date of dissolution
or closure. An Er found guilty of ULP in dismissing
his Ee may not be ordered to pay backwages beyond
the date of closure of business where such closure
was due to legitimate business reasons and not
merely an attempt to defeat the order of
reinstatement (Pizza Inn v. NLRC, G.R. No. 74531,
June 28, 1988).
Circumstances that prevent award of backwages
1. Dismissal for cause
2. Death, physical or mental incapacity of the
employee
3. Business reverses
4. Detention in prison
LIMITED BACKWAGES
Rule on backwages for dismissed employees
GR: In the case of Osmalik Bustamante, et al. v. NLRC
and Evergreen Farms, Inc., the SC held that the
passing of R.A. 6715, particularly Sec. 34, which took
effect on March 21, 1989, amended Art. 279 of the
LC, which now states in part:
ART. 279. Security of Tenure. - An Ee who
is unjustly dismissed from work shall be
entitled to reinstatement without loss of
seniority rights and other privileges and to
his full backwages, inclusive of allowances,
and to his other benefits or their monetary
equivalent computed from the time his
compensation was withheld from him up
to the time of his actual reinstatement.
Verily, the evident legislative intent as expressed in
R.A. 6715, is that the backwages to be awarded to an
illegally dismissed Ee, should not, as a general rule,
be diminished or reduced by the earnings derived
by him elsewhere during the period of his illegal
dismissal. The underlying reason for this ruling is
that the Ee, while litigating the legality (illegality) of
his dismissal, must still earn a living to support
himself and his family. Corollary thereto, full
backwages have to be paid by the Er as part of the
price or penalty he has to pay for illegally dismissing
his Ee. Thus, the provision calling for “full
backwages” to illegally dismissed Ees is clear, plain
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
and free from ambiguity and, therefore, must be
applied without attempted or strained
interpretation.
XPN: Award of backwages to a separated Ee may be
limited for a certain number of years considering
good faith on the part of the Er in terminating the
Ee, which period shall depend on the attending
circumstances of the case (Victory Liner, Inc. v. Race,
G.R. No. 164820 March 28, 2007).
NOTE: The rule providing for the entitlement of an
illegally dismissed Ee to only three years backwages
“without deduction or qualification” to obviate the
need for further proceedings in the course of
execution, otherwise known as the “Mercury Drug
Rule,” has long been abandoned since March 21,
1989 (BPI Employees Union & Uy v. BPI, et al., G.R. No.
137863, March 31, 2005).
PREVENTIVE SUSPENSION
Preventive suspension
It means that during the pendency of the
investigation, the Er may place the Ee under
preventive suspension leading to termination when
there is an imminent threat or a reasonable
possibility of a threat to the lives and properties of
the Er, his family and representatives as well as the
offender’s co-workers by the continued service of
the Ee.
Duration of preventive suspension
It should not last for more than 30 days. The Ee
should be made to resume his work after 30 days. It
can be extended provided the Ee’s wages are paid
after the 30-day period.
This period is intended only for the purpose of
investigating the offense to determine whether he is
to be dismissed or not. It is not a penalty.
NOTE: The Er may continue the period of
preventive suspension provided that he pays the
salary of the Ee. If more than 1 month, the Ee must
actually be reinstated or reinstated in the payroll.
Officers are liable only for the offense committed if
done with malice.
Q: Cantor and Pepito were preventively
suspended pending application for their
dismissal by Manila Doctor’s Hospital after
being implicated by one Macatubal when they
refused to help him when he was caught stealing
x-ray films from the hospital. Was the
preventive suspension of Cantor and Pepito
proper?
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
132
A: No. Where the continued employment of an Ee
poses a serious and imminent threat to the life and
property of the Er or on his co-Ees, the Ees’
preventive suspension is proper. In this case, no
such threat to the life and property of the Er or of
their co-Ee’s is present and they were merely
implicated by Macatubal (Manila Doctors Hospital v.
NLRC, G.R. No L-64897, February 28, 1985).
Q: Karina Santos is a famous news anchor
appearing nightly in the country's most watched
newscast. She is surprised, after one newscast,
to receive a notice of hearing before the station's
Vice-President for Human Resources and calls
the VP immediately to ask what was wrong.
Karina is told over the phone that one of her
crew filed a complaint against her for verbal
abuse and that management is duty bound to
investigate and give her a chance to air her side.
Karina objects and denies that she had ever
verbally assaulted her crew. The VP then
informed her that pending the investigation she
will be placed on a 30-day preventive
suspension without pay and that she will not be
allowed to appear in the newscast during this
time. Is the preventive suspension of Karina
valid? Discuss the reasons for your answer.
(2015 Bar Question)
A: No. The preventive suspension of Karina is not
valid. The employer may place an employee under
preventive suspension if his/her continued
employment would pose a serious and imminent
threat to the life or property of the employer or of
his/her co-employees. These requirements are not
present here.
CONSTRUCTIVE DISMISSAL
Constructive dismissal
It occurs when there is cessation of work because
continued employment is rendered impossible,
unreasonable, or unlikely as when there is a
demotion in rank or diminution in pay or when a
clear discrimination, insensibility, or disdain by an
Er becomes unbearable to the Ee leaving the latter
with no other option but to quit (The University of
Immaculate Conception v. NLRC, G.R. No. 181146,
January 26, 2011).
Relief entitled to illegally or constructively
dismissed Ees
An an illegally or constructively dismissed Ee is
entitled to: (1) either reinstatement, if viable, or
separation pay, if reinstatement is no longer viable;
and (2) backwages. These two reliefs are separate
and distinct from each other and are awarded
 TERMINATION OF EMPLOYMENT
conjunctively (Robinsons Galleria v. Ranchez, G.R. No.
177937, January 9, 2011).
Q: Reynaldo was hired by Geminilou Trucking
Service (GTS) as a truck driver to haul and
deliver products of San Miguel Pure Foods
Company, Inc. He was paid Php 400 per trip and
made 4 trips a day. He claimed that he was
requested by GTS to sign a contract entitled
“Kasunduan Sa Pag-upa ng Serbisyo” which he
refused as he found it to alter his status as a
regular Ee to merely contractual. He averred
that on account of his refusal to sign the
Kasunduan, his services were terminated
prompting him to file a complaint before the
NLRC for constructive dismissal against the GTS.
Would Reynaldo’s refusal to sign the Kasunduan
adequately support his allegation of
constructive dismissal?
A: No. The test of constructive dismissal is whether
a reasonable person in the Ee’s position would have
felt compelled to give up his job under the
circumstances. In the present case, the records
show that the lone piece of evidence submitted by
Reynaldo to substantiate his claim of constructive
dismissal is an unsigned copy of the Kasunduan.
This falls way short of the required quantum of
proof which is substantial evidence, or such
relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.
Reynaldo was not dismissed, but that he simply
failed to report for work after an altercation with a
fellow driver (Madrigalejos v. Geminilou Trucking
Service, G.R. No. 179174, December 24, 2008).
Q: Flores, a conductor of JAM Transportation Co.,
Inc., had an accident where he had to be
hospitalized for a number of days. Upon
reporting back to the company he was told to
wait. For several days this continued and he was
promised a route assignment which did not
materialize. Upon speaking to Personnel
Manager Medrano, he was told that he will be
accepted back to work but as a new Ee. Flores
rejected the offer because it would mean
forfeiture of his 18 years of service to the
company. Is the offer for reinstatement as a new
Ee a constructive dismissal?
A: Yes. Flores’ re-employment as a new Ee would be
very prejudicial to him as it would mean a demotion
in rank and privileges and the retirement benefits
for his previous 18 years of service with the
company would simply be considered as non-
existent. It amounts to constructive dismissal (JAM
Transportation Co., Inc. v. Flores, G.R. No. 82829,
March 19, 1993).
133
Q: Quinanola was transferred from the position
of Executive Secretary to the Executive Vice
President and General Manager to the
Production Dep’t as Production Secretary.
Quinanola rejected the assignment and filed a
complaint for illegal dismissal due to
constructive dismissal. Did the transfer of
Quinanola amount to constructive dismissal?
A: No. Quinanola’s transfer was not unreasonable
since it did not involve a demotion in rank or a
change in her place of work nor a diminution in pay,
benefits and privileges. It did not constitute
constructive dismissal. Furthermore, an Ee’s
security of tenure does not give him a vested right
in his position as would deprive the company of its
prerogative to change his assignment or transfer
him where he will be most useful (Philippine Japan
Active Carbon Corp. v. NLRC, G.R. No. 83239, March 8,
1989).
Q: Sangil was a utility man/assistant steward of
the passenger cruise vessel Crown odyssey
under a one-year contract. Sangil suffered head
injuries after an altercation with a Greek
member of the crew. He informed the captain
that he no longer intends to return aboard the
vessel for fear that further trouble may erupt
between him and the other Greek crewmembers
of the ship. Was Sangil constructively
dismissed?
A: Yes. There is constructive dismissal where the
act of a seaman in leaving ship was not voluntary
but was impelled by a legitimate desire for self-
preservation or because of fear for his life.
Constructive dismissal does not always involve
diminution in pay or rank but may be inferred from
an act of clear discrimination, insensibility or
disdain by an Er may become unbearable on the
part of the Ee that it could foreclose any choice by
him except to forego his continued employment
(Sunga Ship Management Phil., Inc. v. NLRC, G.R. No.
119080, April 14, 1998).
Q: Does the validity of suspending operation
excuse the Er from paying separation pay?
A: No. The validity of its act of suspending its
operations does not excuse it from paying
separation pay. Art. 283 of the LC is emphatic that
an Ee, who was dismissed due to cessation of
business operation, is entitled to the separation pay
equivalent to one month pay or at least 1/2 month
pay for every year of service, whichever is higher.
And it is jurisprudential that separation pay should
also be paid to Ees even if the closure or cessation of
operations is not due to losses (Manila Minings Corp.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Employees Assn. v. Manila Mining Corp., G.R. Nos. Since, the suspension of work lasted more than six
178222-23, September 29, 2010). months, there is now constructive dismissal
(Sebuguero v. NLRC, 245 SCRA 532 [1995]).
Circumstances where financial assistance are
proper

The general rule is that financial assistance is

allowed only in instances where the Ee is validly
dismissed for causes other than serious misconduct
or those reflecting on his moral character.
Nonetheless, financial assistance may be allowed as
a measure of social justice and exceptional
circumstances, and as an equitable concession for
balancing the interests of the Er with those of the
worker.Where there is neither a dismissal nor
abandonment, it has been previously held that
separation pay may be awarded under appropriate
circumstances. Also, in cases where there is no
dismissal, the status quo between the Ee and Er
should be maintained; and in lieu of reinstatement
thegrant of separation pay to Ee is proper (Luna v.
Allado Construction Co., Inc., G.R. No. 175251, May
30, 2011).

Q: What is a floating status? When is an Ee in a

floating status considered to be constructively
dismissed?

A: Pursuant to Art. 286 of the LC, the bona fide

suspension of the operation of a business
undertaking for a period not exceeding 6 months, or
the fulfillment by the Ee of a civic duty shall not
terminate employment. In all such cases the Er shall
reinstate the Ee to his former position without loss
of seniority rights if he indicates his desire to
resume his work not later than one month from the
resumption of operations of his Er or from his relief
from the military or civic duty.Only when such a
"floating status" lasts for more than 6 months that
the Ee may be considered to have been
constructively dismissed (Nippon Housing Phil. Inc.,
v. Leynes, G.R. No. 177816, August 3, 2011).

Q: An accidental fire gutted the JKL factory in

Caloocan. JKL decided to suspend operations
and requested its employees to stop reporting
for work. After six (6) months, JKL resumed
operations but hired a new set of employees.
The old set of employees filed a case for illegal
dismissal. If you were the Labor Arbiter, how
would you decide the case? (2014 Bar Question)
A: I will rule in favor of the employees. JKL factory
merely suspended its operations as a result of the
fire that gutted its factory. Article 286 of the Labor
Code states that an employer may bona fide suspend
the operation of its business for a period not
exceeding six (6) months. In such a case, there
would be no termination of the employment of the
employees, but only a temporary displacement.

UNIVERSITY OF SANTO TOMAS

2016 GOLDEN NOTES
134
 MANAGEMENT PREROGATIVE
MANAGEMENT PREROGATIVE
Management prerogative
This prerogative flows from the established rule
that labor laws do not authorize the substitution of
judgment of the employer in the conduct of his
business. The employer can exercise this
prerogative without fear of liability as long as it is
done in good faith for the advancement of his
interests, and not for the purpose of defeating or
circumventing the rights of the employees under
special laws or valid agreements. It is valid as long
as it is not performed in a malicious, harsh,
oppressive, vindictive or wanton manner, or out of
malice or spite. (Great Pacific Employees Union vs.
Great Pacific Life Assurance, G.R. No. 126717,
February 11, 1999)
As long as the company’s exercise of the same is
exercised in good faith for the advancement of the
employer’s interest, and not for the purpose of
defeating or circumventing the rights of the
employees under special laws or valid agreements,
the courts will uphold them (also: San Miguel
Brewery Sales Force Union (PTGWO) vs. Ople | G.R.
No. L-53515; February 8, 1989). (Capitol Medical
Center, Inc. v. Meris, G.R. No. 155098, September 16,
2005)
Q: Little Hands Garment Company, an
unorganized manufacturer of children's apparel
with around 1,000 workers, suffered losses for
the 1st first time in history when its US and
European customers shifted their huge orders
to China and Bangladesh. The management
informed its Ees that it could no longer afford to
provide transportation shuttle services.
Consequently, it announced that a normal fare
would be charged depending on the distance
traveled by the workers availing of the service.
Was the Little Hands Garments Company within
its rights to withdraw this benefit which it had
unilaterally been providing its Ees? (2005 Bar
Question)
A: Yes. This is a management prerogative which is
not due any legal or contractual obligation. The
facts of the case do not state the circumstances
through which the shuttle service may be
considered as a benefit that ripened into a
demandable right. There is no showing that the
benefit has been deliberately and consistently
granted, i.e. with the Er’s full consciousness that
despite its not being bound by law or contract to
grant it, it just the same granted the benefit.
Limitations on management prerogative

GR: It is the right of an Er to regulate, according to It is circumscribed by limitations found in:

his own discretion and judgment, all aspects of
employment, including: 1. Law,
2. CBA, or
1. Hiring 3. General principles of fair play and justice
2. Work assignments
3. Working methods Furthermore, a line must be drawn between
4. Time, place and manner of work management prerogatives regarding business
5. Tools to be used operations per se and those which affect the rights
6. Processes to be followed of Ees. In treating the latter, management should see
7. Supervision of workers to it that its Ees are at least properly informed of its
8. Working regulations decisions and modes of actions. Such management
9. Transfer of Ees prerogative may be availed of without fear of any
10. Work supervision liability so long as it is exercised in good faith for the
11. Lay-off of workers advancement of the Er’s interest and not for the
12. Discipline purpose of defeating or circumventing the rights of
13. Dismissal Ees under special laws or valid agreement and are
14. Recall of workers not exercised in a malicious, harsh, oppressive,
vindictive or wanton manner or out of malice or
XPN: Otherwise limited by law, contract, and spite (PAL v. NLRC, G.R. No. 85985, August 13, 1993;
principles of fair play and justice. San Miguel Brewery Sales v. Ople, G.R. No. 53515,
February 8, 1989; Punzal v. ETSI Technologies Inc,
NOTE: So long as a company’s prerogatives are 518 SCRA 66).
exercised in good faith for the advancement of the
Er’s interest and not for the purpose of defeating or NOTE: It must be established that the prerogative
circumventing the rights of the Ees under special being invoked is clearly a managerial one.
laws or under valid agreements, the Supreme Court
will uphold them. Q: Is withholding an Ee’s salary a valid exercise
of management prerogative?

UNIVERSITY OF SANTO TOMAS

135 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
A: No. Any withholding of an Ee’s wages by an Er
may only be allowed in the form of wage deductions
under the circumstances provided in Art. 113 of the
LC: 1) the worker is insured; 2) for union dues; 3) in
cases authorized by law or regulation issued by the
SLE. In the absence of the following circumstances,
withholding thereof is thus unlawful (SHS
Perforated Materials, Inc. v. Diaz, G.R. 185814,
October 13, 2010).
Q: May a MERALCO Ee invoke the remedy of writ
of habeas data available where his Er decides to
transfer her workplace on the basis of copies of
an anonymous letter posted therein, imputing to
her disloyalty to the company and calling for her
to leave, which imputation it investigated but
fails to inform her of the details thereof?
A: No. The writs of amparo and habeas data will not
issue to protect purely property or commercial
concerns nor when the grounds invoked in support
of the petitions therefore are vague or doubtful.
Employment constitutes a property right under the
context of the due process clause of the
Constitution. The writ of habeas data directs the
issuance of the writ only against public officials or
Ees, or private individuals or entities engaged in the
gathering, collecting or storing of data or
information regarding an aggrieved party’s person,
family or home; and that MERALCO (or its officers)
is clearly not engaged in such activities (MERALCO v.
Lim, G.R. No. 184769, October 5, 2010).
RIGHT TO HIRE
It is both a right and a prerogative.
Legal limitations and prohibitions prior to
hiring
Stipulation against marriage. It shall be unlawful
for an employer to require as a condition of
employment or continuation of employment that a
woman employee shall not get married, or to
stipulate expressly or tacitly that upon getting
married, a woman employee shall be deemed
resigned or separated, or to actually dismiss,
discharge, discriminate or otherwise prejudice a
woman employee merely by reason of her marriage
(LC, Art. 136).
To require as a condition of employment that a
person or an employee shall not join a labor
organization or shall withdraw from one to which
he belongs [LC, Art. 248 (2)].
Minimum employable age
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
136
1. No child below fifteen (15) years of age shall be
employed, except when he works directly under
the sole responsibility of his parents or
guardian, and his employment does not in any
way interfere with his schooling.
2. Any person between fifteen (15) and eighteen
(18) years of age may be employed for such
number of hours and such periods of the day as
determined by the Secretary of Labor and
Employment in appropriate regulations.
3. The foregoing provisions shall in no case allow
the employment of a person below eighteen
(18) years of age in an undertaking which is
hazardous or deleterious in nature as
determined by the Secretary of Labor and
Employment (LC, Art. 139).
DISCIPLINE
Er's right to discipline his Ees
The Er has the prerogative to instill discipline in his
Ees and to impose reasonable penalties, including
dismissal, on erring Ees pursuant to company rules
and regulations (San Miguel Corporation v. NLRC,
G.R. No. 87277, May 12, 1989).
An Er has the prerogative to prescribe reasonable
rules and regulations necessary for the proper
conduct of its business, to provide certain
disciplinary measures in order to implement said
rules and to assure that the same would be complied
with. An Er enjoys a wide latitude of discretion in
the promulgation of policies, rules and regulations
on work-related activities of the Ees. This is
inherent in its right to control and manage its
business effectively (San Miguel Corp. v. NLRC, 551
SCRA 410).
Limitation on the Er’s power to discipline
While management has the prerogative to discipline
its Ees and to impose appropriate penalties on
erring workers, pursuant to company rules and
regulations, however, such management
prerogative must be exercised in good faith for the
advancement of the Er’s interest and not for the
purpose of defeating or circumventing the rights of
the Ees under special laws and valid agreements.
(PLDT v. Teves, G.R. No. 143511, November 15, 2010).
TRANSFER OF EMPLOYEES
Employer’s right to transfer and reassign Ees
In the pursuit of its legitimate business interests,
especially during adverse business conditions,
management has the prerogative to transfer or
assign Ees from one office or area of operation to
 MANAGEMENT PREROGATIVE
another provided there is no demotion in rank or
diminution of salary, benefits and other privileges
and the action is not motivated by discrimination,
bad faith, or effected as a form of punishment or
demotion without sufficient cause. This privilege is
inherent in the right of Ers to control and manage
their enterprises effectively.
NOTE: The right of Ees to security of tenure does not
give them vested rights to their positions to the
extent of depriving management of its prerogative
to change their assignments or to transfer them
(Endico v. Quantum Foods Distribution Center, G.R.
No. 161615, January 30, 2009).
Q: May the Er exercise his right to transfer an Ee
and compel the latter to accept the same if said
transfer is coupled with or is in the nature of
promotion?
A: No. There is no law that compels an Ee to accept
promotion. Promotion is in the nature of a gift or a
reward which a person has a right to refuse. When
an Ee refused to accept his promotion, he was
exercising his right and cannot be punished for it.
While it may be true that the right to transfer or
reassign an Ee is an Er’s exclusive right and the
prerogative of management, such right is not
absolute (Dosch v. NLRC and Northwest Airlines, G.R.
No. 51182, July 5, 1983).
Burden of proving that the transfer was
reasonable
The Er must be able to show that the transfer is not
unreasonable, inconvenient or prejudicial to the Ee;
nor does it involve a demotion in rank or a
diminution of his salaries, privileges and other
benefits. Should the Er fail to overcome this burden
of proof, the Ee’s transfer shall be tantamount to
constructive dismissal (Blue Dairy Corporation v.
NLRC, 314 SCRA 401).
Limitations on management prerogatives
1. Such that the Er must be motivated by good
faith
2. The contracting out should not be resorted to
circumvent the law or must not have been the
result of malicious or arbitrary actions
(MERALCO v. Quisumbing, G.R. no. 127598.
February 22, 2000).
It is the inherent prerogative of an employer to
transfer and reassign its employees to meet the
requirements of its business. Be that as it may, the
prerogative of the management to transfer its
employees must be exercised without grave abuse
of discretion. The exercise of the prerogative should
137
not defeat an employee's right to security of tenure.
The employer’s privilege to transfer its employees
to different workstations cannot be used as a
subterfuge to rid itself of an undesirable worker.
(Veterans Security Agency v. Vargas, G.R. No. 159293,
December 16, 2005)
PRODUCTIVITY STANDARD
Q: May an Er impose productivity standards for
its workers?
A: Yes. An Er is entitled to impose productivity
standards for its workers. In fact, non-compliance
may be visited with a penalty even more severe than
demotion. The practice of a company in laying off
workers because they failed to make the work quota
has been recognized in this jurisdiction. Failure to
meet the sales quota assigned to each of them
constitute a just cause of their dismissal, regardless
of the permanent or probationary status of their
employment. Likewise, failure to observe
prescribed standards of work, or to fulfill
reasonable work assignments due to inefficiency
may constitute just cause for dismissal. Such
inefficiency is understood to mean failure to attain
work goals or work quotas, either by failing to
complete the same within the allotted reasonable
period, or by producing unsatisfactory results. This
management prerogative of requiring standards
may be availed of so long as they are exercised in
good faith for the advancement of the Er’s interest.
(Leonardo v. NLRC, G.R. No. 125303, 2000)
Failure to observe prescribed standards of work; or
to fulfill reasonable work assignments due to
insufficiency may constitute just cause for dismissal.
Such inefficiency is understood to mean failure to
attain work goals or work quotas, either by failing
to complete the same within the allotted reasonable
period, or by producing unsatisfactory results. This
management prerogative of requiring standards
may be availed of so long as they are exercised in
good faith for the advancement of the employer’s
interest. (Buiser vs. Leogardo, G.R. No. L-63316, July
31, 1984)
GRANT OF BONUS
Bonus
It is an amount granted and paid to an Ee for his
industry and loyalty which contributed to the
success of the Er’s business and made possible the
realization of profits.
Q: Can bonus be demanded?
A:
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
GR: No. Bonus is not demandable as a matter of
right. It is a management prerogative given in
addition to what is ordinarily received by or strictly
due to recipient (Producers Bank of the Phil. v. NLRC,
G.R. No. 100701, March 28, 2001).
XPNs: Given for a long period of time, provided that:
1. Consistent and deliberate – Er continued giving
benefit without any condition imposed for its
payment;
2. Er knew he was not required to give benefit;
3. Nature of benefit is not dependent on profit;
4. Made part of the wage or compensation agreed
and stated in the employment contract;
5. It was promised to be given without any
conditions imposed for its payment in which
case it is deemed part of the wage;
6. It has ripened into practice. (Marcos v. NLRC,
G.R. No. 111744, September 8, 1995)
Please see discussion on Bonus under WAGES
Q: The projected bonus for the Ees of Suerte Co.
was 50% of their monthly compensation.
Unfortunately, due to the slump in the business,
the president reduced the bonus to 5% of their
compensation. Can the company unilaterally
reduce the amount of bonus? (2002 Bar
Question)
A: Yes. The granting of a bonus is a management
prerogative, something given in addition to what is
ordinarily received by or strictly due the recipient.
An Er cannot be forced to distribute bonuses when
it can no longer afford to pay. To hold otherwise
would be to penalize the Er for his past generosity
(Producers Bank of the Phil. v. NLRC, G.R. No. 100701,
March 28, 2001).
CHANGE OF WORKING HOURS
Er’s right to change working hours
The working hours may be changed, at the
discretion of the company, should such change be
necessary for its operations, and that employees
shall observe such rules as have been laid down by
the company. (Interphil Laboratories Union-FFW vs.
Interphil Laboratories, Inc., G.R. No. 142824,
December 19, 2001)
Q: May the normal hours fixed in Art. 83 of the
LC be reduced by the Er? Explain.
A: It depends. Art. 83 provides that the normal
hours of work of an Ee shall not exceed 8 hours a
day. This implies that the Er, in the exercise of its
management prerogatives, may schedule a work
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
138
shift consisting of less than 8 hours. And following
the principle of “a fair day’s wage for a fair day’s
labor,” the Er is not obliged to pay an Ee, working for
less than 8 hours a day, the wages due for 8 hours.
Nonetheless, if by voluntary practice or policy, the
Ee for a considerable period of time has been paying
his Ees’ wages due for 8 hours work although the
work shift less than 8 hours (e.g. seven) it cannot
later on increase the working hours without an
increase in the pay of the Ees affected. An Er is not
allowed to withdraw a benefit which he has
voluntarily given.
Q: Sime Darby Pilipinas issued a memorandum
implementing a new work schedule. It
eliminated the 30 minute paid “on call” lunch
break of its monthly salaried employees and
instead provided for a 10 minute break time and
one hour lunch break. The employees felt
adversely affected by the memorandum and
filed before the Labor Arbiter a complaint for
unfair labor practice. The LA dismissed the
complaint on the ground that the change in the
work schedule constituted a valid exercise of
management prerogative. Is changing the work
schedule of the employees a valid exercise of
management prerogative?
A: Yes. The right to fix the work schedules of the
employee rests principally on their employer. The
petitioner, as the employer, cites as reason for the
adjustment the efficient conduct of its business
operations and improved production. Management
retains the prerogative, whenever exigencies of the
service so require, to change the working hours its
employees. So long as such prerogative is exercised
in good faith for the advancement of the employer’s
interest and not for the purpose of defeating and
circumventing the rights of the employees under
special laws or under valid agreements, this court
will uphold such exercise (Sime Darby Pilipinas v.
NLRC, G.R. No. 119205, April 15, 1998).
RULE ON MARRIAGE BETWEEN EMPLOYEES OF
COMPETITOR-EMPLOYEES
Q: Is the stipulation in the employment contract
prohibiting an Ee from marrying another Ee of a
competitor company a valid exercise of
management prerogative?
A: Yes. The policy is not aimed at restricting a
personal prerogative that belongs only to the
individual. However, an Ee’s personal decision does
not detract the Er from exercising management
prerogatives to ensure maximum profit and
business success. It does not impose an absolute
prohibition against relationships between its Ees
and those of competitor companies. Its Ees are free
 MANAGEMENT PREROGATIVE
to cultivate relationships with and marry persons of
their own choosing. What the company merely
seeks to avoid is a conflict of interest between the
employee and the company that may arise out of
such relationships. It is also not violative of the
equal protection clause because it is a settled
principle that the commands of the equal protection
clause are addressed only to the State or those
acting under color of its authority. Corollarily, it has
been held in a long array of U.S. Supreme Court
decisions that the equal protection clause erects no
shield against merely private conduct, however,
discriminatory or wrongful. The only exception
occurs when the State in any of its manifestations or
actions has been found to have become entwined or
involved in the wrongful private conduct (Duncan
Association of Detailman-PTGWO and Pedro A.
Tecson v. Glaxo Wellcome Philippines, Inc., G.R. No.
162994, September 17, 2004).
The failure of the employer to prove legitimate
business concern in imposing the questioned policy
cannot prejudice the employee’s right to be free
from arbitrary discrimination based upon
stereotypes of married persons working together in
one company. Thus, for failure of the employer to
present undisputed proof of a reasonable business
necessity, we rule that the questioned policy is an
invalid exercise of management prerogative. (Star
Paper Corp. vs. Simbol, G.R. No. 164774, April 12,
2006)
POST-EMPLOYMENT BAN
Q: Genesis Fulgencio had been working for
Solidbank Corporation since 1977. He later on
applied for retirement. Solidbank required
Genesis to sign an undated Undertaking where
he promised that "[he] will not seek
employment with a competitor bank or financial
institution within one (1) year from February
28, 1995, and that any breach of the
Undertaking or the provisions of the Release,
Waiver and Quitclaim would entitle Solidbank
to a cause of action against him before the
appropriate courts of law.” Equitable Banking
Corporation (Equitable) employed Genesis. Is
the post-retirement employment ban
incorporated in the Undertaking which Genesis
executed upon his retirement unreasonable,
oppressive, hence, contrary to public policy?
A: No. There is a distinction between restrictive
covenants barring an Ee to accept a post-
employment competitive employment or restraint
on trade in employment contracts and restraints on
post-retirement competitive employment in
pension and retirement plans either incorporated in
employment contracts or in CBAs between the Er
139
and the union of Ees, or separate from said contracts
or CBAs which provide that an Ee who accepts post
retirement competitive employment will forfeit
retirement and other benefits or will be obliged to
reinstitute the same to the Er. The strong weight of
authority is that forfeitures for engaging in
subsequent competitive employment included in
pension and retirement plans are valid even though
unrestricted in time or geography. A post-
retirement competitive employment restriction is
designed to protect the Er against competition by
former Ee who may retire and obtain retirement or
pension benefits and, at the same time, engage in
competitive employment (Rivera v. Solidbank, G.R.
No. 163269, April 19, 2006).
Non-involvement Clause
A non-involvement clause is not necessarily void
for being in restraint of trade as long as there are
reasonable limitations as to time, trade, and place. It
was also stated in this case that the Labor Law
validity of a non-involvement clause depends upon
the nature of work of the subject employee. Since
petitioner was the Senior Assistant Vice-President
and Territorial Operations Head in charge of
respondent’s Hong Kong and ASEAN operations, she
had been privy to confidential and highly sensitive
marketing strategies of respondent’s business. To
allow her to engage in a rival business soon after she
leaves would make respondent’s trade secrets
vulnerable especially in a highly competitive
marketing environment. In sum, we find the non-
involvement clause not contrary to public welfare
and not greater than is necessary to afford a fair and
reasonable protection to respondent. (Daisy Tiu vs.
Platinum Plans, G.R. No. 163512, February 28, 2007).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
SOCIAL AND WELFARE LEGISLATION (P.D. 629)
Social Legislation
It consists of statutes, regulations and
jurisprudence that afford protection to labor,
especially to working women and minors, and is in
full accord with the constitutional provisions on the
promotion of social justice to insure the well-being
and economic security of all the people.
SOCIAL SECURITY SYSTEM LAW (R.A. 8282)
Policy objective in the enactment of the Social
Security Law
To establish, develop, promote and perfect a sound
and viable tax-exempt social security service
suitable to the needs of the people throughout the
Philippines, which shall promote social justice and
provide meaningful protection to members and
their beneficiaries against the hazards of disability,
sickness, maternity, old age, death, and other
contingencies resulting in loss of income or financial
burden (R.A. 8282, Sec. 2).
NOTE: The enactment of SSS law is a legitimate
exercise of the police power. It affords protection to
labor and is in full accord with the constitutional
mandate on the promotion of social justice [Roman
Catholic Archbishop of Manila vs. SSS, G.R. No. 15045,
(1961)].
Definitions
1. Employer - Any person, natural or juridical,
domestic or foreign, who carries into the
Philippines any trade, business, industry,
undertaking or activity of any kind and uses the
services of another person who is under his
orders as regards the employment, except the
Government and any of its political
subdivisions, branches or instrumentalities,
including corporations owned or controlled by
the Government: Provided, That a self-
employed person shall be both Ee and Er at the
same time [Sec 8(c), R.A. 8282].
2. Employee – Any person who:
a. performs services for an Er which either or
both mental and physical efforts are used
b. who receives compensation for such
services
c. there is an Er-Ee relationship. Provided,
That a self-employed person shall be both
Ee and Er at the same time [Sec. 8(d), R.A.
8282].
UNIVERSITY OF SANTO TOMAS
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140
3. Employment – Any service performed by an Ee
for his Er.
XPNs:
a. Employment purely casual and not for the
purpose of occupation or business of the Er;
b. Service performed on or in connection with
an alien vessel by an Ee if he is employed
when such vessel is outside the Phils;
c. Service performed in the employ of the Phil.
Government or instrumentality or agency
thereof;
d. Service performed in the employ of a
foreign government or international
organization, or their wholly-owned
instrumentality:
e. Such other services performed by
temporary and other Ees which may be
excluded by regulation of the SSC. Ees of
bona fide independent contractors shall not
be deemed Ees of the Er engaging the
services of said contractors. [Sec. 8(j), R.A.
8282].
4. Contingency - The retirement, death, disability,
injury or sickness and maternity of the member.
5. Monthly pension – The monthly pension shall
be the highest of the following amounts:
a. The sum of the following:
i. Php 300.00; plus
ii. 20% of the average monthly salary
credit; plus
iii. 2% of the average monthly salary
credit for each credited year of service
in excess of 10 years; or
b. 40% of the average monthly salary credit;
or
c. Php 1,000.00, provided that the monthly
pension shall in no case be paid for an
aggregate amount of less than sixty (60)
months [Sec. 12 (a), R.A. 8282].
Minimum Pension
a. Php 1,200.00 - members with at least 10
credited years of service
b. Php 2, 400.00 for those with 20 credited
years of service [R.A. 8282, Sec. 12(b)].
NOTE: The monthly dependents’ pension
shall be suspended:
1. Upon the reemployment or resumption of
self-employment;
2. Recovery of the disabled member from his
permanent total disability
3. Failure to present himself for examination
at least once a year upon notice by the SSS
[RA 8282, Sec. 13-A (b)].
 SOCIAL WELFARE LEGISLATION
6. Average monthly credit – The result obtained
by:
a. Dividing the sum of the last 60 monthly
salary credits immediately preceding the
semester of contingency by 60; or
b. Dividing the sum of all the monthly salary
credits paid prior to the semester of
contingency by the number of monthly
contributions paid in the same period,
whichever is greater.
Provided, that the injury or sickness which
caused the disability shall be deemed as the
permanent disability for the purpose of
computing the average monthly salary
credit [Sec. 8(m), RA 8282].
7. Average daily salary credit – The result
obtained by dividing the sum of the 6 highest
monthly salary credits in the 12-month period
immediately preceding the semester of
contingency by 180 [Sec. 8(n), RA 8282].
8. Compensation – all actual remuneration for
employment, including the mandated cost of
living allowance, as well as the cash value of any
remuneration paid in any medium other than
cash exept that part of the remuneration
received during the month in excess of the
maximum salary credit as provided under
section eighteen of this Act [Sec. 8(f), RA 8282].
SSS premiums are not taxes
The funds contributed to the System belong to the
members who will receive benefits, as a matter of
right, whenever the hazards provided by the law
occur [CMS Estate, Inc., vs. SSS, G.R. No. 26298,
(1984)].
Benefits received under SSS law are not part of
the estate of a member
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.
The benefits are specifically declared not
transferable and exempt from tax, legal processes
and liens [SSS vs. Davac, et. al., G.R. No.21642,
(1966)].
2. Voluntary
COVERAGE
1. Compulsory Coverage
a. All Ees not over 60 years of age and their
Ers;
141
b. Domestic helpers whose income is not less
than P 1000/month and not over 60 years
of age and their Ers;
Limitations:
i. Any benefit earned by the Ees under
private benefit plans existing at the
time of the approval of the Act shall not
be discontinued, reduced or otherwise
impaired;
ii. Existing private plans shall be
integrated with the SSS but if the Er
under such plan is contributing more
than what is required by this Act, he
shall pay to the SSS the amount
required to him, and he shall continue
with his contributions less the amount
paid to SSS;
iii. Any changes, adjustments,
modifications, eliminations or
improvements in the benefits of the
remaining private plan after the
integration shall be subject to
agreements between the Ers and the
Ees concerned; and
iv. The private benefit plan which the Er
shall continue for his Ees shall remain
under the Ers management and control
unless there is an existing agreement to
the contrary
c. All self-employed – considered both an Er
and Ee
NOTE: A self-employed person is one
whose income is not derived from
employment as well as those mentioned in
Sec. 9-A of the law [Sec. 8(s), RA 8282].
d. All self-employed professionals;
e. Partners and single proprietors of
business;
f. Actors and actresses, directors,
scriptwriters and news correspondents
who do not fall within the definition of the
term “Ee”;
g. Professional athletes, coaches, trainers and
jockeys; and
h. Individual farmers and fisherman. [Sec. 9,
R.A. 8282].
a. Spouses who devote full time to managing
the household and family affairs, unless
they are also engaged in other vocation or
employment which is subject to mandatory
coverage; [Sec. 9(b), R.A. 8282]
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
b. Filipinos recruited by foreign-based Ers for
employment abroad may be covered by the
SSS on a voluntary basis; [Sec. 9(c), R.A.
8282]
c. Ee separated from employment to maintain
his right to full benefits; and
d. Self-employed who realizes no income for a
certain month.
3. By agreement
Any foreign government, international
organization, or their wholly-owned
instrumentality employing workers in the
Philippines, may enter into an agreement with
the Philippine government for the inclusion of
such Ees in the SSS except those already
covered by their respective civil service
retirement systems.
NOTE: Seafarers are also covered by the SSS Law
– The result of the Memorandum of Agreement
entered by SSS and DOLE approved by the Social
Security Commission per the Commission's
Resolution No. 437, dated July 14, 1988 was that the
Standard Contract of Employment to be entered
into between foreign shipowners and Filipino
seafarers is the instrument by which the former
express their assent to the inclusion of the latter in
the coverage of the Social Security Act. In other
words, the extension of the coverage of the SSS to
Filipino seafarers arises by virtue of the assent
given in the contract of employment signed by Er
and seafarer. By extending the benefits of the Social
Security Act to Filipino seafarers on board foreign
vessels, the individual employment agreements
entered into with the stipulation for such coverage
contemplated in the DOLE-SSS Memorandum of
Agreement, merely gives effect to the constitutional
mandate to the State to afford protection to labor
whether "local or overseas" (Ben Sta. Rita v. Court of
Appeals, G.R. No. 11989).
Effectivity of compulsory coverage
Effect of separation of an employee from his
employment under compulsory coverage
1. His Er’s obligation to contribute arising from
that employment shall cease at the end of the
month of separation.
2. But said Ee shall be credited with all
contributions paid on his behalf and entitled to
benefits according to the provisions of R.A.
9282.
3. He may, however, continue to pay the total
contributions to maintain his right to full
benefit (R.A. 8282, Sec. 11).
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
142
The above provision recognizes the “once a member,
always a member” rule.
Effect of the interruption of business or
professional income
If the self-employed member realizes no income in
any given month:
1. He shall not be required to pay contributions
for that month.
2. He may, however, be allowed to continue
paying contributions under the same rules and
regulations applicable to a separated Ee
member:
3. Provided, that no retroactive payment of
contributions shall be allowed other than as
prescribed under Sec.22-A [R.A. 8282, Sec.
11(a)].
Determination of the contributions of the self-
employed
The contribution shall be determined in accordance
with Sec. 18 of the SSS Law, provided that:
1. The monthly earnings declared at the time of
registration shall be considered as his monthly
compensation and he shall pay for both Er and
Ee contributions
2. The monthly earnings declared at the time of
registration shall remain the basis of his
monthly salary credit, unless another
declaration of his monthly earnings was made,
the latter becomes the new basis of his monthly
salary credits [Sec. 19(a), R.A. No. 8282].
Reportorial requirements of the ER and self-
employed
1. Employer – Report immediately to SSS the
names, ages, civil status, occupations, salaries
and dependents of all his covered Ees.
2. Self-employed – Report to SSS within 30 days
from the first day of his operation, his name,
age, civil status, occupation, average monthly
net income and his dependents.
EXCLUSIONS FROM COVERAGE
The compulsory coverage is deemed effective:
As to the employer On the first of
operation
As to the employee On the first day of his
employment
As to the self-employed Upon his registration
with the SSS
Employment which are excluded from
compulsory coverage under the SSS Law
 SOCIAL WELFARE LEGISLATION
1. Employment purely casual and not for the
purpose of occupation or business of the Er;
2. Service performed on or in connection with an
alien vessel by an employee if he is employed
when such vessel is outside the Philippines;
3. Service performed in the employ of the
Philippine Government or instrumentality or
agency thereof; and
4. Service performed in the employ of a foreign
government or international organization, or
their wholly-owned instrumentality:
Provided, however, that this exemption
notwithstanding, any foreign government,
international organization or their wholly-
owned instrumentality employing workers in
the Philippines or employing Filipinos outside
of the Philippines, may enter into an agreement
with the Philippine Government for the
inclusion of such Ees in the SSS except those
already covered by their respective civil service
retirement systems: Provided, further, that the
terms of such agreement shall conform with the
provisions of this Act on coverage and amount
of payment of contributions and
benefits: Provided, finally, that the provisions of
this Act shall be supplementary to any such
agreement; and
5. Such other services performed by temporary
and other Ees which may be excluded by
regulation of the Commission. Ees of bona
fide independent contractors shall not be
deemed Ees of the Er engaging the service of
said contractors [Sec. 8(j), R.A. 1161, as
amended].
. than 3 days or elsewhere with the Commission’s
Q: A textile company hires 10 carpenters to
repair the roof of its factory which was
destroyed by typhoon “Bening.” Are the
carpenters subject to compulsory coverage
under the SSS Law? Why?
A: NO. The employment is purely casual and not for
the purpose of the occupation or business of the Er.
Their engagement is occasioned by the passage of
the typhoon; they are not hired on a regular basis.
BENEFITS
Benefits under the SSS Law
1. Sickness Benefits
2. Permanent Disability Benefits
3. Maternity Leave Benefit
4. Retirement Benefit
5. Death and funeral Benefits
143
Non-transferability of the benefits provided for
in the SSS law
Benefits provided for in the SSS Law are not
transferable and no power of attorney or other
document executed by those entitled thereto in
favor of any agent, attorney or any other person for
the collection thereof on their behalf shall be
recognized, except when they are physically unable
to collect personally such benefits (R.A. 1161 as
amended, Sec. 15).
Q: On her way home from work, Mikaela, a
machine operator in a sash factory, decided to
watch a movie in a movie house. However, she is
stabbed by an unknown assailant. When she
filed a claim for benefits under the SSS Law, it
was denied on the ground that her injury is not
work-connected. Is the denial legal? Why?
A: No. It is not necessary, for the enjoyment of
benefits under the SSS Law that the injury is work-
connected. What is important is membership in the
SSS and not the causal connection of the work of the
Ee to his injury or sickness.
Note: Claims based on work-connected injuries or
occupational diseases are covered by the State
Insurance Fund.
SICKNESS BENEFITS
Sickness benefit
It is a daily allowance paid to a covered Ee who
becomes sick and is confined in a hospital for more
approval.
Entitlement to sickness benefit
Under Sec. 14 of the Social Security Law, the
following are the requisites for the enjoyment by a
covered individual of the sickness benefits:
1. Payment of at least 3 monthly contributions in
the 12-month period immediately preceding
the semester of sickness;
2. Sickness or injury and confinement for more
than 3 days in a hospital or elsewhere with the
Commission’s approval;
3. Notice of the fact of sickness by the Ee to the Er
(or to the SSS in case the member is
unemployed) within 5 calendar days after the
start of his confinement; and
4. Exhaustion of sick leaves of absence with full
pay to the credit of the Ee.
The requirement of notification is not necessary
when:
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
1. Confinement is in a hospital; or
2. The employee became sick or was injured while
working or within the premises of the
employer.
Requisites that must be complied with in order
to avail of sickness benefits
1. In no case shall the daily sickness benefit be
paid longer than 120 days in 1 calendar year,
nor shall any unused portion of the 120 days of
sickness benefit granted be carried forward and
added to the total number of compensable days
allowable in the subsequent year;
2. No employee shall be paid any sickness benefit
for more than 240 days on account of the same
confinement;
3. Ee member shall notify his Er of the fact of his
sickness or injury within 5 calendar days after
the start of his confinement unless such
confinement:
a. Is in a hospital
b. The Ee became sick or was injured while
working or within the premises of the Er
(notification to the Er not necessary);
NOTE: If the member is unemployed or self-
employed, he shall directly notify the SSS of his
confinement within 5 calendar days after the start
thereof unless such confinement is in a hospital in
which case notification is also not necessary.
Where notification is necessary, confinement
shall be deemed to have started not earlier than
the 5th day immediately preceding the date of
notification (Sec. 14[b], R.A. 8282).
Compensable confinement
1. It begins on the 1st day of sickness
2. Payment of such allowances shall be promptly
made by the Er:
a. Every regular payday or on the 15th and last
day of each month,
b. In case of direct payment by the SSS - as
long as such allowances are due and
payable. (Sec. 14[b], R.A. 8282).
Payment of sickness benefit
1. The Er shall pay the Ee for each compensable
confinement or fraction thereof
2. The SSS shall pay the member who is
unemployed, self-employed or voluntary
members with a daily sickness benefit
equivalent to 90% of his average daily salary
credit.
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
144
Requirements for an Er to claim reimbursement
of the sickness benefit
1. 100% of daily benefits shall be reimbursed by
SSS if the following requirements are satisfied:
a. Receipt of SSS of satisfactory proof of such
payment and legality thereof;
b. The Er has notified the SSS of the
confinement within 5 calendar days after
receipt of the notification from the Ee
member.
2. Er shall be reimbursed only for each day of
confinement starting from the 10th calendar day
immediately preceding the date of notification
to the SSS if the notification to the SSS is made
beyond 5 calendar days after receipt of the
notification from the Ee member [Sec. 14 (c),
R.A. 8282].
Reimbursement by SSS
GR: SSS shall reimburse the Er or pay the
unemployed member only for confinement within 1
year immediately preceding the date the claim for
benefit or reimbursement is received by the SSS.
XPN: Confinement in a hospital in which case the
claim for benefit or reimbursement must be filed
within 1 year from the last day of confinement [Sec.
14(c), R.A. 8282).
Instances when the employer or the
unemployed member is not entitled to
reimbursement
1. Where the Er failed to notify the SSS of the
confinement;
2. In the case of the unemployed; where he failed
to send the notice directly to the SSS except
when the confinement is in a hospital; and
3. Where the claim for reimbursement is made
after 1 year from the date of confinement.
PERMANENT DISABILITY BENEFITS
Permanent disability benefit
It is a cash benefit paid to a member who becomes
permanently disabled, either partially or totally.
Permanent total disability
The following are deemed permanent total
disabilities:
1. Complete loss of sight of both eyes;
2. Loss of two limbs at or above the ankle or
wrists;
3. Permanent complete paralysis of two limbs;
 SOCIAL WELFARE LEGISLATION
4. Brain injury resulting to incurable imbecility or MATERNITY LEAVE BENEFIT
insanity; and
5. Such cases as determined and approved by the Maternity benefit
SSS [Sec. 13-A (d), RA 8282].
The maternity benefit is a daily cash allowance
Death benefits vs. Permanent total disability granted to a female member who was unable to
benefits work due to childbirth or miscarriage.

BASIS DEATH PERMANENT Qualifications for entitlement to maternity

BENEFITS TOTAL benefit
DISABILITY
BENEFITS 1. She has paid at least three monthly
At least 36 At least 36 contributions within the 12-month period
Requisite monthly monthly immediately preceding the semester of her
contributions contributions childbirth or miscarriage.
Benefits Primary Member 2. She has given the required notification of her
payable to Beneficiaries pregnancy through her Er if employed, or to the
whom SSS if separated, voluntary or self-employed
Benefits shall Benefits shall be member.
be in lump sum in lump sum
equivalent to equivalent to the NOTE: A voluntary or a self-employed member is
the monthly monthly pension entitled to the maternity benefit provided that she
Failure to pension times times the number meets the aforementioned qualifying conditions.
make 36 the number of of monthly
monthly monthly contributions paid Guidelines
payments contributions to SSS or 12 times
paid to SSS or the monthly 1. Circular No. 15-V – Pursuant to RA No. 7322
12 times the pension, increasing the maternity benefits provided for
monthly whichever is under Sec. 14-A of the SS Law
pension, higher. a. The daily maternity benefit shall be paid for
whichever is compensable period of 60 days in case of
higher. normal delivery, abortion or miscarriage,
or 78 days in case of caesarean delivery.
Effect of the death of a pensioner with b. The payment of daily maternity benefit
permanent total disability shall bar the recovery of sickness benefits
for the same compensable period
1. Primary beneficiaries are entitled to receive c. The daily maternity benefit shall be
monthly pension as of the date of disability. equivalent to 100% of the average daily
2. If there are no primary beneficiaries and the salary credit as defined under the SSS Law
pensioner dies within 60 months from the d. These guidelines shall be observed for child
start of his monthly pension – secondary deliveries, abortions and miscarriages
beneficiaries shall be entitled to a lump sum occurring on or after April 23, 1991.
benefit equivalent to the total monthly pensions 2. Circular No. 22-V – Circular No. 103-T on
corresponding to the balance of the 5-year Maternity Leave Benefits has been amended to
guaranteed period excluding the dependents’ 10 years instead of 1 year prescriptive period for
pension [Sec. 13-A (c), RA 8282]. the employers to file their reimbursement for
maternity benefits claims from the date said
Effect of retirement or death of a pensioner with advances were made in line with Arts. 1144 and
a partial disability 1150 of the NCC. (Alcantara, Vol. II)

If the pensioner with partial disability retires or RETIREMENT BENEFIT

dies, the disability pension shall cease upon his
retirement or death [Sec. 13-A (j), RA 8282]. Retirement benefit

It is a cash benefit paid to a member who can no

longer work due to old age.

UNIVERSITY OF SANTO TOMAS

145 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Types of retirement benefit
1. Monthly Pension– Lifetime cash benefit paid
to a retiree who has paid at least 120 monthly
contributions to the SSS prior to the semester of
retirement.
2. Lump Sum Amount – Granted to a retiree who
has not paid the required 120 monthly
contributions.
Members entitled to retirement benefits
1. A member who
a. Is at least 60 years old
b. Has paid at least 120 monthly contributions
prior to the semester of retirement; and
c. Already separated from employment or has
ceased to be self-employed,
2. A member who has reached the age of 65 years
old, shall be entitled for as long as he lives to the
monthly pension [Sec 12-B (a) R.A. 8282];
3. A member who
a. At least 60 years old at retirement; and
b. Does not qualify for pension benefits under
paragraph a of Sec. 12-B – entitled to a lump
sum benefit equal to the total contributions
paid by him and on his behalf;
c. Must be separated from employment and is
not continuing payment of contributions to
the SSS on his own [Sec. 12-B (b), R.A. 8282].
Consequence of the re-employment or
resumption to work of a retired pensioner
The monthly pension of a retired member who
resumes employment and is less than 65 years old
will be suspended. He and his Er will again be
subject to compulsory coverage [Sec. 13-A (c), RA
8282].
Children of the retiree member who are entitled
to dependent’s pension
Only 5 minor children, beginning from the youngest,
are entitled to the dependent’s pension. No
substitution is allowed. Where there are more than
5 legitimate and illegitimate children, the legitimate
ones will be preferred [Sec. 12-A RA 8282].
NOTE: The dependent child will receive the pension
until the child reaches (1) 21 years of age, (2) gets
married, (3) gets employed and earns Php 300 a
month or more, or (4) dies.
However, the dependent's pension is granted for life
to children who are over 21 years old, provided they
are incapacitated and incapable of self-support due
to physical or mental defect which is congenital or
acquired during minority.
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
146
DEATH AND FUNERAL BENEFITS
Entitlement to death benefits
1. Upon death of a member, if he has paid at least
36 monthly contributions prior to the semester
of death:
a. primary beneficiaries shall be entitled to
the monthly pension; or
b. If there are no primary beneficiaries,
secondary beneficiaries shall be entitled to
a lump sum benefit equivalent to 36 times
the monthly pension.
2. Upon death of a member if he has not paid the
required 36 monthly contributions prior to the
semester of death:
a. Primary or secondary beneficiaries shall be
entitled to a lump sum benefit equivalent to
the monthly pension multiplied by the
number of monthly contributions paid to
the SSS: or
b. 12 times the monthly pension, whichever is
higher (Sec 13, R.A. 8282).
Primary beneficiaries
1. The dependent spouse until he or she remarries
2. The dependent legitimate, legitimated or legally
adopted, and illegitimate children: Provided,
that the dependent illegitimate children shall be
entitled to 50% of the share of the legitimate,
legitimated or legally adopted children. In the
absence of the dependent legitimate,
legitimated or legally adopted children of the
member, his/her dependent illegitimate
children shall be entitled to one hundred
percent (100%) of the benefits.
Secondary beneficiaries
1. In the absence of primary beneficiaries, the
dependent parents of the member
2. In the absence of the foregoing, any other
person designated by the covered employee as
secondary beneficiary [R.A. 8282, Sec. 8(k)].
Dependents
1. The legal spouse entitled by law to receive
support from the member;
2. The legitimate, legitimated, or legally adopted,
and illegitimate child who:
a. Is unmarried,
b. Not gainfully employed, and
c. Has not reached 21 years of age, or if over
21 years of age, he is congenitally or while
still a minor has been permanently
incapacitated and incapable of self-support,
physically or mentally.
 SOCIAL WELFARE LEGISLATION
d. The parent who is receiving regular
support from the member.
3. The parent who is receiving regular support
from the member [Sec. 8(e), RA 8282].
Length of time the primary beneficiaries shall be
entitled to the death benefits
The primary beneficiary shall be entitled to death
benefits consisting of monthly pension and
dependent’s pension until:
1. Dependent spouse – entitled until he/she
remarries
2. Dependent children – entitled until:
a. They get married;
b. Find gainful employment;
c. Reach the age of 21 years; or
d. Recover from mental or physical incapacity
and can now support themselves.
Funeral benefit
A funeral grant equivalent to Php 12, 000.00 shall be
paid, in cash or in kind, to help defray the cost of
expenses upon the death of a member or retiree
(Sec. 13-B, R.A. 8282).
BENEFICIARIES
Dependent for support
The entitlement to benefits as a primary beneficiary
requires not only legitimacy but also dependence
upon the member Ee (Gil v. SSC CA- GR SP. 37150,
May 8, 1996).
NOTE: The Court defined a dependent as one who
derives his or her main support from
another. Meaning, relying on, or subject to, someone
else for support; not able to exist or sustain oneself,
or to perform anything without the will, power, or
aid of someone else. It should be noted that the GSIS
law likewise defines a dependent spouse as the
legitimate spouse dependent for support upon the
member or pensioner. If a wife is already separated
de facto from her husband, she cannot be said to be
"dependent for support" upon the husband, absent
any showing to the contrary. Conversely, if it is
proved that the husband and wife were still living
together at the time of his death, it would be safe to
presume that she was dependent on the husband for
support, unless it is shown that she is capable of
providing for herself (SSS vs. Aguas, G.R. No. 165546,
Feb. 27, 2006).
Q: A, an SSS member was survived by his legal
wife, who is not dependent upon him. He was
also survived by two common-law wives with
147
whom he had illegitimate minor children. Who
among them is entitled to the benefits?
A: The illegitimate minor children shall be entitled
to the death benefits as primary beneficiaries
because the legal wife is not dependent upon the
member. The SSS Law is clear that for a minor child
to qualify as a “dependent” the only requirements
are that he/she must be below 21 yrs. of age, not
married nor gainfully employed (Signey vs. SSS, G.R.
No. 173582, Jan. 28, 2008).
Q: Bonifacio and Elena Dycaico lived together as
husband and wife without the benefit of
marriage. In June 1989, Bonifacio was
considered retired and began receiving his
monthly pension from the SSS. Bonifacio
married Elena on January 6, 1997. He continued
to receive the monthly pension until he passed
away on June 19, 1997. Elena filed with the SSS
an application for survivors pension but it was
denied on the ground that under Section 12-B(d)
of the SSS Law, the primary beneficiaries who
are entitled to survivors pension are those who
qualify as such as of the date of retirement of the
deceased member. Hence, Elena, who was not
then the legitimate spouse of Bonifacio as of the
date of his retirement, could not be considered
his primary beneficiary. Is Elena entitled to
claim survivors pension?
A: Yes. The proviso as of the date of his retirement
in Section 12-B (d) of Rep. Act No. 8282, which
qualifies the term primary beneficiaries, is
unconstitutional for it violates the due process and
equal protection clauses of the Constitution. The
classification of dependent spouses on the basis of
whether their respective marriages to the SSS
member were contracted prior to or after the
latter’s retirement for the purpose of entitlement to
survivors pension does not rest on real and
substantial distinctions. It is too sweeping because
the proviso effectively disqualifies the dependent
spouses whose respective marriages to the retired
SSS member were contracted after the latter’s
retirement as primary beneficiaries and unfairly
lumps all these marriages as sham relationships or
were contracted solely for the purpose of acquiring
benefits accruing upon the death of the other
spouse. It unduly prejudices the rights of the legal
surviving spouse and defeats the avowed policy of
the law to provide meaningful protection to
members and their beneficiaries against the hazards
of disability, sickness, maternity, old age, death, and
other contingencies resulting in loss of income or
financial burden. The proviso runs afoul of the due
process clause as it outrightly deprives the
surviving spouses whose respective marriages to
the retired SSS members were contracted after the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
latter's retirement of their survivors benefits. There
is outright confiscation of benefits due such
surviving spouses without giving them an
opportunity to be heard (Dycaico v. SSS, G.R. No.
161357, Nov. 30, 2005).
NOTE: The reckoning point in determining the
beneficiaries of the deceased should be the time of
the latter’s death (SSS v. De Los Santos, G.R. No.
164790, Aug. 29, 2008).
QUALIFICATION OF SPOUSE-BENEFICIARY
To insure a uniform implementation of the Dycaico
case, the SSS issued the following guidelines:
1. Spouse
a. must have been legally married to the
retiree-pensioner at the time of death,
provided that if the marriage was
celebrated after the retirement of the
member, any of the following
circumstances is present:
i. The spouses were living together as
husband and wife without legal
impediment to marry each other
prior to the retirement of the
member; or
ii. The surviving spouse was reported
as beneficiary-spouse in the SSS
Forms prior to the retirement of the
member; or
iii. A child was born during the
existence of the marriage between
the retiree-pensioner and the
surviving spouse; or
iv. Before marriage, a child was born
during the time the spouses were
living together as husband and wife
without legal impediment to marry
each other; or
v. The marriage between the
surviving spouse and retiree-
pensioner is established to have
been contracted not for any
fraudulent purpose. In this regard,
the SSS Branch concerned shall
conduct an appropriate
investigation to satisfy this
requirement. One indicator of a
marriage celebrated in good faith is
that of the retiree-pensioner and
surviving spouse had subsequently
lived together as husband and wife.
b. Must have been dependent for support
upon the retiree-pensioner during the
existence of marriage (SSS Office Order
No. 2010-025).
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
148
Q: Antonio and Gloria de los Santos, both
Filipinos, got married in 1964. In 1983, Gloria
left Antonio and went to the United
States. In 1986, she filed for divorce against
Antonio in California. The divorce was granted.
In 1987, Antonio married Cirila de
los Santos. On her part, Gloria married Larry
Thomas Constant, an American citizen, in the US.
In 1999, Antonio died of respiratory
failure. Cirila applied for and began receiving
his SSS pension benefit. On December 21, 1999,
Gloria filed a claim for Antonio’s death benefits
with the SSS. Her claim was denied on the
ground that she was not a qualified beneficiary
of Antonio. She contended that her marriage to
Larry Constant was not the subsequent
marriage contemplated under SS Law that
would disqualify her as a beneficiary; that the
decree of divorce issued by a foreign state
involving Filipino citizens has no validity and
effect under Philippine law. Is Gloria still
qualified as a primary beneficiary of Antonio
under the SS Law?
A: Yes. The divorce obtained by Gloria against the
deceased Antonio was not binding in this
jurisdiction. Under Philippine law, only aliens may
obtain divorces abroad, provided they are valid
according to their national law. The divorce was
obtained by Gloria while she was still a Filipino
citizen and thus covered by the policy against
absolute divorces. It did not sever her marriage ties
with Antonio. Although Gloria was the legal spouse
of the deceased, the Court finds that she is
still disqualified to be his primary beneficiary
under the SS Law. She fails to fulfill the requirement
of dependency upon her deceased husband Antonio
(SSS v. De Los Santos, G.R. No. 164790, Aug. 29, 2008).
Compensation
All actual remuneration for employment, including
the mandated cost of living allowance, as well as the
cash value of any remuneration paid in any medium
other than cash except that part of the remuneration
received during the month in excess of the
maximum salary.
Q: The owners of FALCON Factory, a company
engaged in the assembling of automotive
components, decided to have their building
renovated. Fifty (50) persons, composed of
engineers, architects and other construction
workers, were hired by the company for this
purpose. The work was estimated to be
completed in 3 years. The workers contended
that since the work would be completed after
more than 1 year, they should be subject to
compulsory coverage under the Social Security
 SOCIAL WELFARE LEGISLATION
Law. Do you agree with their contention?
Explain your answer fully. (2000 Bar Question)
A: No. Under Sec. 8 (j) of R.A.1161, as amended,
employment of purely casual and not for the purpose
of the occupation or business of the Er is excepted
from compulsory coverage. An employment is
purely casual if it is not for the purpose of occupation
or business of the Er. In the problem given, Falcon
Factory is a company engaged in the assembly of
automotive components. The 50 persons (engineers,
architects and construction workers) were hired by
Falcon Factory to renovate its building. The work to
be performed by these 50 people is not in connection
with the purpose of the business of the factory.
Hence, the employment of these 50 persons is purely
casual. They are, therefore, excepted from the
compulsory coverage of the SSS law.
SETTLEMENT OF DISPUTES
DISPUTE SETTLEMENT
Disputes involving:
1. Coverage
2. Benefits
3. Contributions
4. Penalties
5. Any other matter
related thereto.
Social
Security Note: Disputes within the
Commission mandatory period of 20 days
(SSC) after the submission of
evidence [R.A. 8282, Sec. 5(a)].
Decision, in the absence of
appeal, shall be final and
executory 15 days after date of
notification [R.A. 8282, Sec.
5(b)].
Decisions of SSC shall be
appealable to:
1. CA – questions of law and
fact [R.A. 8282, Sec. 5(c); Rule
CA / SC
43, 1997 Rules of Court]
2. SC – questions of law. [
R.A. 8282, Sec. 5(c); Rule 45,
1997 Rules of Court]
SSC may, motu proprio or on
motion of any interested party,
Execution of issue a writ of execution to
decision enforce any of its decisions or
awards, after it has become
final and executory [Sec. 5d¸
R.A. 8282, Sec. 5(d)].
Q: Can the SSC validly re-evaluate the findings of
the RTC, and on its own, declare the latter’s
decision to be bereft of any basis?
149
A: No. It cannot review, much less reverse, decisions
rendered by courts of law as it did in the case at bar
when it declared that the CFI Order was obtained
through fraud and subsequently disregarded the
same, making its own findings with respect to the
validity of Bailon and Alice’s marriage on the one
hand and the invalidity of Bailon and Teresita’s
marriage on the other. In interfering with and
passing upon the CFI Order, the SSC virtually acted
as an appellate court. The law does not give the SSC
unfettered discretion to trifle with orders of regular
courts in the exercise of its authority to determine
the beneficiaries of the SSS (SSS vs. Teresita Jarque
Vda. De Bailon, G.R. No. 165545, March 24, 2006).
Q: Due to the delinquency incurred by ABC Co.
on its premium and loan amortizations, SSS
suggested settling its obligation either through
installment or through dacion en pago. ABC
chose dacion en pago and offered its property
situated in Baguio City. It was approved by the
SSS. However, SSS refused to accept the payment
unless the interest and charges will be paid. ABC
then filed a suit in court. SSS moved for dismissal
contending that the SSC, and not regular courts,
has the jurisdiction to entertain controversies
arising from the non-implementation of dacion
en pago agreed upon by the parties as a means
of settlement of ABC’s liabilities. Resolve.
A: The law clearly vests upon the Commission
jurisdiction over “disputes arising under this Act
with respect to coverage, benefits, contributions
and penalties thereon or any matter related
thereto...” Dispute is defined as “a conflict or
controversy.”From the allegations of the complaint,
it readily appears that there is no longer any dispute
with respect to ABC’s accountability to the SSS. It
had, in fact, admitted their delinquency and offered
to settle them by way of dacion en
pago subsequently approved by the SSS in
Resolution No. 270-s. 2001. The controversy,
instead, lies in the non-implementation of the
approved and agreed dacion en pago on the part of
the SSS. As such, ABC filed a suit to obtain its
enforcement which is, doubtless, a suit for specific
performance and one incapable of pecuniary
estimation beyond the competence of the
Commission [SSS vs. Atlantic Gulf and Pacific
Company of Manila, Inc. and Semirara Coal Corp., G.R.
No. 175952, (2008)].
Prescriptive period to claim the benefits
GR: 10 years from the date of contingency
XPNs: Life insurance and retirement (SSS Office
Order Number 2015-005).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
NOTE: Pursuant to SSC Resolution Number 10-
19279-10, the reckoning point for the 10-year
prescriptive period depends on when the claim was
originally settled. For claims settled before March 1,
2006, the 10-year prescriptive period will start on
the said date. For claims settled on or after March 1,
2006, the prescriptive period will start on the initial
settlement date of the retirement, disability or
death claim.
GSIS LAW
(R.A. 8291)
Purpose for the enactment of the GSIS law
To provide and administer the following social
security benefits for government Ees:
1. Compulsory life insurance
2. Optional life insurance
3. Retirement benefits
4. Disability benefits to work-related
contingencies; and
5. Death benefits
Definitions
1. Employer
a. National Government
b. Its political subdivisions, branches,
agencies, instrumentalities
c. GOCCs, and financial institutions with
original charters
d. Constitutional Commissions and the
Judiciary [Sec. 2 (c), R.A. 8291].
2. Employee or member – Any person, receiving
compensation while in the service of an Er,
whether by election or appointment,
irrespective of status of appointment, including
barangay and sanggunian officials [Sec. 2(d),
R.A. 8291].
3. Compensation – The basic pay or salary
received by an Ee, pursuant to his or her
election or appointment, excluding per diems,
bonuses, OT pay, honoraria, allowances, and
any other emoluments received in addition to
the basic pay which are not integrated into the
basic pay under existing laws [Sec. 2(i), R.A.
8291].
Q: Baradero is a member of the Sangguniang
Bayan of the Municipality of La Castellana,
Negros Occ. and is paid on a per diem basis. On
the other hand, Belo a Vice-Governor of Capiz is
in a hold over capacity and is paid on a per diem
basis. Are the services rendered by Baradero
and Belo on a per diem basis creditable in
computing the length of service for retirement
purposes?
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150
A: Yes. The traditional meaning of per diem is a
reimbursement for extra expenses incurred by the
public official in the performance of his duties.
Under this definition, the per diem is intended to
cover the cost of lodging and subsistence of officers
and employees when the latter are on a duty outside
of their permanent station. On the other hand, a per
diem could rightfully be considered a compensation
or remuneration attached to an office.
The per diems paid to Baradero and Belo were in the
nature of compensation or remuneration for their
services as Sangguniang Bayan and Vice-Governor,
respectively, rather than a reimbursement for
incidental expenses incurred while away from their
home base.
If the remuneration received by a public official in
the performance of his duties does not constitute a
mere “allowance for expenses” but appears to be his
actual base pay, then no amount of categorizing the
salary as a “per diem” would take the allowances
received from the term service with compensation
for the purpose of computing the number of years of
service in government (GSIS v. CSC, G. R. Nos. 98395
and 102449, June 19, 1995).
Reportorial requirements of the Er
Er must report to GSIS the names, employment
status, positions, salaries of the Ee and such other
matter as determined by the GSIS.
Penalty in case of delayed remittance or non-
remittance of contributions
The unremitted contributions shall be charged
interests as prescribed by the GSIS Board of
Trustees but shall not be less than 2% simple
interest per month from due date to the date of
payment by the employers concerned (Sec. 7, R.A.
8291).
Q: May a member enjoy the benefits provided for
in the Revised GSIS Act simultaneous with
similar benefits provided under other laws for
the same contingency?
A: Whenever other laws provide similar benefits for
the same contingencies covered by this Act, the
member who qualifies to the benefits shall have the
option to choose which benefits will be paid to him.
However, if the benefits provided by the law chosen
are less than the benefits provided under this Act,
the GSIS shall pay only the difference (Sec. 55, R.A.
8291).
 SOCIAL WELFARE LEGISLATION
Similarities between the SSS law and the GSIS law
Basis Social Security Act of 1997
(RA 8282)
Dependents 1. Legal spouse entitled for support;
2. Child, whether legitimate, legitimated, legally adopted or illegitimate;
3. Parents dependent for support
Funding 1. Er’s contribution
2. Ee’s / member’s contribution
Exemption from tax, Property, assets, revenues of SSS and GSIS are all exempt from taxes, and all benefits
legal processes, lien paid by SSS or GSIS shall likewise be exempt from taxes, assessments, fees, charges
and duties of all kinds.
SSS law vs. GSIS law
Basis Social Security Act of 1997 (RA 8282)
Who are 1. Employer – Any person, natural or
covered judicial, domestic or foreign who carries
on in the Philippines any trade, business,
industry, undertaking or activity of any
kind and uses the services of another
person who is under his orders as regards
employment
Exempt employer – Government and any
of its political subdivisions, branches and
instrumentality, including GOCCs, i.e.
those under GSIS
2. Employee – any person who performs
services for an employer who receives
compensation for such services, where
there is an Er-Ee relationship
3. Self-employed – considered both Er
and Ee
Conditions for 1. Unmarried;
child to be 2. Not gainfully employed;
considered 3. Has not reached 21 years of age; OR
dependent 4. Incapable of supporting himself either
physically or mentally prior to 21 years of
age or age of majority, as the case may be
Beneficiaries 1. Primary
a. Dependent Spouse until remarriage
AND
b. Dependent Legitimate or Legitimated
or Legally Adopted and Illegitimate
Children
2. Secondary
a. Dependent Parents
b. Absent any primary and secondary
beneficiaries, any other person designated
by member as secondary beneficiary
Benefits 1. Sickness Benefits
2. Permanent Disability Benefits
3. Maternity Benefits
151
Government Service Insurance Act of 1997
(RA 8291)
Government Service Insurance Act of
1997 (RA 8291)
1. Employer – the National Government, its
political subdivisions, branches, agencies, or
instrumentalities, including GOCCs, and
financial institutions with original charters,
the Constitutional Commissions and the
Judiciary
2. Employee – any person receiving
compensation while in service of an Er as
defined herein, whether by election or
appointment, regardless of the status of
employment, including Barangay and
Sanggunian Members
1. Unmarried;
2. Not gainfully employed;
3. Not over the age of majority; OR
4. Incapable of supporting himself either
physically or mentally prior to 21 years of
age or age of majority, as the case may be
1. Primary
a. Legal dependent spouse until remarriage
AND
b. Dependent Children
2. Secondary
a. Dependent parents AND
b. Legitimate descendants, subject to
restrictions on dependent children,
legitimate descendants
1. Separation Benefits
2. Retirement Benefits
3. Pemanent Disability Benefits
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
4. Retirement Benefits 4. Temporary Disability Benefits
5. Death Benefits 5. Survivorship Benefits
6. Funeral Benefits 6. Funeral Benefits
7. Loan Grant 7. Life Insurance Benefits
XPN: The members of the Judiciary and
Constitutional Commissions shall have life
insurance only.
Coverage 1. Compulsory Compulsory for all employees receiving
a. All Ees not over sixty (60) years of age compensation who have not reached
and their Ers; compulsory coverage of the compulsory retirement age, irrespective of
Ers shall take effect on the first day of his employment status
operation and that of the Ee on the day of
his employment
b. Self-employed persons as may be
determined by the Commission, including
but not limited to: all self-employed
professionals; partners and single-
proprietors of business; actors and
actresses, directors, scriptwriters and
news correspondents not employees;
professional athletes, coaches, trainers
and jockeys, and individual farmers and
fishermen, upon their registration with
the SSS.
c. Domestic helpers sixty years of age and
below with a monthly income of not less
than P1000 on the date of their
employment.
d. Individual farmers and fishermen under
SSS rules and regulation.
2. Voluntary
a. Filipinos recruited by foreign-based Ers
for employment abroad
b. Ees separated from employment to
maintain his right to full benefits
c. Self-employed who realizes no income
for a certain month
d. Spouses who devote full time to
managing household and family affairs
unless specifically mandatorily covered
Exceptions 1. Employment purely casual and not for 1. Members of the AFP
from coverage purpose, occupation, or business of the Er. 2. Members of the PNP
2. Services performed on or in connection 3. Contractual Ees, who have no Er-Ee
with alien vessel, if employed when such relationship with the agency they serve
vessel is outside of the Philippines. 4. Members of Judiciary and Constitutional
3. Ees of Philippine Government or Commissions covered by life insurance only
instrumentality or agency thereof.
4. Service performed in the employ of a
foreign government, or international
organizations, or wholly owned
instrumentality employing workers in the
Philippines or employing Filipinos outside
of the Philippines.
5. Services performed by temporary Ees
and other Ees excluded by SSS regulation;
Ees of bona fide independent contractors
shall not be deemed Ees of the Er engaging
the services of an independent contractor

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 SOCIAL WELFARE LEGISLATION
Compensation All actual remuneration for employment,
including the mandated COLA, as well as
the cash value of any remuneration paid in
any medium other than cash EXCEPT that
part of the remuneration in excess of the
maximum salary credit
Effects of 1. Er’s contribution on his account ceases;
separation 2. Ee’s obligation to contribute also ceases
from at the end of the month of separation;
employment 3. Ee shall be credited with all
contributions paid on his behalf and
entitled to benefits according to the
provisions of the SSS Act.
153
The basic pay or salary received by an Ee,
pursuant to his election/appointment,
EXCLUDING per diems, bonuses, overtime
pay, honoraria, allowances and any other
emoluments received in addition to the basic
pay
A member separated from the service shall
continue to be a member, and shall be
entitled to whatever benefits he has qualified
to in the event of any contingency
compensable under the GSIS Act.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
COVERAGE
Compulsory coverage of the GSIS (2009 Bar
Question)
The following are compulsorily covered by the GSIS:
1. All Ees receiving compensation who have not
reached the compulsory retirement age,
irrespective of employment status.
2. Members of the Judiciary and Constitutional
Commissions for life insurance policy (Sec. 3, RA
8291).
Government Ees subject to coverage under the
GSIS law
2. Policyholders
a. Covered for life insurance only
b. Can avail of policy loan privilege only
c. May also apply for housing loans
d. Judiciary and Constitutional Commissions
3. Retired Members
a. Former active members who have retired
from the service and are already enjoying
the corresponding retirement benefits
applied for;
b. Not entitled to any loan privilege, except
stock purchase loan (Sec. 2.2, Rule II, IRR,
R.A. 8291).

GR: All Ees receiving compensation who have not EXCLUSIONS FROM COVERAGE
reached the compulsory retirement age,
irrespective of employment status. Persons excluded from the coverage of the GSIS
law
XPNs:
1. Uniformed members of the: 1. Ees who have separate retirement schemes
a. AFP; and (members of the Judiciary, Constitutional
b. PNP Commissions and others who are similarly
2. Contractual Ees who have no Er and Ee situated)
relationship with the agencies they serve. 2. Contractual Ees who have no Er-Ee with the
agencies they serve
Coverage of life insurance, retirement and other 3. Uniformed members of the AFP, BJMP, whose
social security protection coverage by the GSIS have ceased, effective June
24, 1997
GR: All members of the GSIS shall have life 4. Uniformed members of the PNP whose
insurance, retirement, and all other social security coverage by the GSIS has ceased, effective
protections such as disability, survivorship, February 1, 1996 (Sec. 2.4, Rule II, R.A. 8291,
separation, and unemployment benefits (Sec. 3, R.A. IRR).
8291).
BENEFITS
XPNs: The members of the following shall have life
insurance only: Benefits under the GSIS Act
1. The Judiciary; and
2. Constitutional Commissions 1. Separation
2. Unemployment or involuntary separation
Compulsory coverage of life insurance 3. Retirement
4. Permanent disability
GR: All Ees receiving compensation who have not 5. Temporary disability
reached the compulsory retirement age, 6. Survivorship
irrespective of employment status 7. Funeral
8. Life Insurance
XPNs: All members of the Armed Forces of the 9. Such other benefits and protection as may be
Philippines (AFP) and the Philippine National Police extended to them by the GSIS such as loans.
(PNP).
SEPARATION BENEFITS
Classification of members for the purpose of
benefit entitlement Entitlement of a member to separation benefits

1. Active members A member who has rendered a minimum of 3 years

a. Still in the service and are paying of creditable service shall be entitled to separation
integrated premiums; benefit upon resignation or separation under the
b. Covered for the entire package benefits and following terms:
privileges being extended by GSIS.

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 SOCIAL WELFARE LEGISLATION
1. A member with at least 3 years but less than
15 years – Cash payment equivalent to 100% of
the average monthly compensation for every
year of service the member has paid
contributions:
a. Not less than Php 12,000.00
b. Payable upon reaching 60 years of age or
upon separation, whichever comes later.
2. A member with less than 15 years of service
and less than 60 years of age at the time of
resignation or separation:
a. Cash payment equivalent to 18 times the
basic monthly pension (BMP), payable at
the time of resignation or separation
b. An old-age pension benefit equal to the
BMP, payable monthly for life upon
reaching the age of 60.
Effects of separation from service with regard to
membership
A member separated from the service shall continue
to be a member and shall be entitled to whatever
benefits he has qualified to (once a member is
always a member).
Note: A member separated for a valid cause shall
automatically forfeit his benefits, unless the terms
of resignation or separation provide otherwise. In
case of forfeiture, the separated employee shall be
entitled to receive only ½ of the cash surrender
value of his insurance.
UNEMPLOYMENT BENEFITS
Unemployment benefits
It will consist of cash payment equivalent to 50% of
the average monthly compensation.
A member who has rendered at least 15 years of
service will be entitled to separation benefits
instead of unemployment benefits.
Conditions for entitlement to unemployment
benefits
1. The recipient must be a permanent Ee at the
time of separation;
2. His separation was involuntary due to the
abolition of his office or position resulting from
reorganization; and
3. He has been paying the contribution for at least
1 year prior to separation.
RETIREMENT BENEFITS
Reason for compulsory retirement
155
The compulsory retirement of government officials
and Ees upon reaching the age of 65 years is
founded on public policy which aims to maintain
efficiency in the government service and at the same
time give the retiring public servants the
opportunity to enjoy during the remainder of their
lives the recompense, for their long service and
devotion to the government, in the form of a
comparatively easier life, freed from the rigors of
civil service discipline and the exacting demands
that the nature of their work and their relations
with their superiors as well as the public would
impose upon them [Beronilla vs. GSIS, G.R. No. 21723,
(1970)].
Conditions in order to be entitled to retirement
benefits
1. A member has rendered at least 15 years of
service;
2. He is at least 60 years of age at the time of
retirement; and
3. He is not receiving a monthly pension benefit
from permanent total disability (R.A. 8291, Sec.
13-A).
Options of the retiree with regard to his or her
retirement benefits
The retiree may get either of the following:
1. Lump sum equivalent to 6 months of the basic
monthly pension (BMP) payable at the time of
retirement and an old-age pension benefit
equal to BMP payable for life, starting upon the
expiration of the 5 years covered by the lump
sum; or
2. Cash payment equivalent to 18 times his BMP
and monthly pension for life payable
immediately [R.A. 8291, Sec. 13(a)].
Rule in case of extension of service in order to be
entitled for retirement benefits
The Supreme Court held that the head of the
government agency concerned is vested with
discretionary authority to allow or disallow
extension of the service of an official or Ee who has
reached 65 years old without completing the 15
years of government service. However, this
discretion is to be exercise conformably with the
provisions of Civil Service Memorandum Circular
No. 27, series of 1990 which provides that the
extension shall not exceed 1 year (Rabor v. CSC, G.R.
No. 111812, May 31, 1995).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
PERMANENT DISABILITY BENEFITS monthly compensation for each year of
service he has pad contributions but not less
Disability than Php 12,000.00 which should have been
his separation benefit [RA 8291, Sec. 16(b)].
Any loss or impairment of the normal functions of
the physical and/or mental faculty of a member, The following disabilities shall be deemed total
which reduces or eliminates his/her capacity to and permanent
continue with his/her current gainful occupation or
engage in any other gainful occupation. 1. Complete loss of sight of both eyes
2. Loss of two (2) limbs at or above the ankle or
Total disability wrist
3. Permanent complete paralysis of two (2) limbs
Complete incapacity to continue with present 4. Brain injury resulting in incurable imbecility or
employment or engage in any gainful occupation insanity
due to the loss or impairment of the normal 5. Such other cases as may be determined by the
functions of the physical and/or mental faculties of GSIS [RA 8291, Sec. 6(d)].
the member.
Benefits for permanent partial disability
Types of permanent disability
A member is entitled to cash payment in accordance
1. Permanent Total Disability (PTD) – Accrues with the schedule of disabilities to be prescribed by
or arises when recovery from any loss or GSIS, if he satisfies the given conditions of either (1)
impairment of the normal functions of the or (2) of Sec. 16(a).
physical and/or mental faculty of a member
which reduces or eliminates his capacity to The following disabilities shall be deemed
continue with his current gainful occupation or permanent partial
engage in any other gainful occupation is
medically remote [R.A. 8291, Sec. 2(q) and (s)]. 1. Complete and permanent loss of the use of:
2. Permanent Partial Disability (PPD) – a. Any finger
Accrues or arises upon the irrevocable loss or b. Any toe
impairment of certain portion/s of the physical c. One arm
faculties, despite which the member is able to d. One hand
pursue a gainful occupation [R.A. 8291, Sec. e. One foot
2(u)]. f. One leg
g. One or both ears
Benefits for permanent total disability h. Hearing of one or both ears
i. Sight of one eye
1. A member is entitled to the monthly income 2. Such other cases as may be determined by the
benefit for life equivalent to the BMP when: GSIS [RA 8291, Sec. 17(b)].
a. He is in the service at the time of the
disability or Suspension of payment of benefits
b. If separated from service
i. He has paid at least 36 monthly 1. In case a member is re-employed; or
contributions within 5 years 2. Member recovers from disability as determined
immediately preceding his disability by the GSIS; or
ii. He has paid a total of at least 180 3. Fails to present himself for medical
monthly contribution prior his examination when required by the GSIS [R.A.
disability 8291, Sec. 16(c)].
iii. He is not receiving old-age retirement
pension benefits [RA 8291, Sec. 16(a)]. Instances when recovery is precluded

NOTE: A member cannot enjoy the monthly If the permanent disability was due to the following
income benefit for permanent disability and acts of the subject Ee, recovery from the GSIS is
the old-age retirement simultaneously. precluded:

2. If the member does not satisfy the conditions 1. Grave misconduct

above but has rendered at least 3- years- 2. Notorious negligence
service, he shall be advanced the cash 3. Habitual intoxication
payment equivalent to 100% of his average 4. Willful intention to kill himself or another

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 SOCIAL WELFARE LEGISLATION
TEMPORARY DISABILITY BENEFITS
Temporary total disability
It accrues or arises when the impaired physical
and/or mental faculties can be rehabilitated and/or
restored to their normal functions [R.A. 8291, Sec.
2(t)].
NOTE: A member cannot enjoy the temporary total
disability benefit and sick leave pay simultaneously.
Benefits for temporary disability
1. Member is entitled to 75% of his current daily
compensation for each day or fraction thereof
of total disability benefit, to start at the 4th day
but not exceeding 120 days in one calendar year
when:
a. He has exhausted all sick leaves
b. CBA sick leave benefits
Provided, that:
i. He was in the service at time of
disability; or
ii. If separated, he has rendered at least 3
years of service and has paid at least 6
monthly contributions in the year
preceding his disability
2. The temporary total disability benefits shall in
no case be less than P70 a day.
NOTE: An application for disability must be filed
with the GSIS within 4 years from the date of the
occurrence of the contingency.
SURVIVORSHIP BENEFITS
Persons entitled to survivorship benefits
Upon the death of a member or pensioner, his
beneficiaries shall be entitled to survivorship
benefits. Such benefit shall consist of:
1. The basic survivorship pension which is 50% of
the basic monthly pension; and
2. The dependent children’s pension not
exceeding 50% of the basic monthly pension
Note: The dependent children shall be entitled to
the survivorship pension as long as there are
dependent children and, thereafter, the surviving
spouse shall receive the basic survivorship pension
for life or until he or she remarries.
Conditions for the primary beneficiaries to be
entitled to basic monthly pension
Upon the death of a member, the primary
beneficiaries shall be entitled to:
157
1. Survivorship pension – Provided, that the
deceased:
a. Was in the service at the time of his death;
or
b. If separated from the service, has rendered
at least 3 years of service at the time of his
death and has paid 36 monthly
contributions within the five-year period
immediately preceding his death; or has
paid a total of at least 180 monthly
contributions prior to his death; or
2. The survivorship pension plus a cash
payment equivalent to 100% of his average
monthly compensation for every year of
service – Provided, that the deceased was in the
service at the time of his death with at least 3
years of service; or
3. A cash payment equivalent to 100% of his
average monthly compensation for each
year of service he paid contributions, but
not less than Php 12,000.00 – Provided, that
the deceased has rendered at least 3 years of
service prior to his death but does not qualify
for the benefits under item (1) or (2) of this
paragraph [R.A. 8291, Sec. 21(a)].
Secondary beneficiaries
In the absence of primary beneficiaries, the
secondary beneficiaries shall be entitled to:
1. The cash payment equivalent to 100% of his
average monthly compensation for each year of
service he paid contributions, but not less than
Php 12,000.00 – Provided, That the member is
in the service at the time of his death and has at
least 3 years of service; or
2. In the absence of secondary beneficiaries, the
benefits under this paragraph shall be paid to
his legal heir [R.A. 8291, Sec. 21(c)].
Payment of survivorship pension
After the end of the guaranteed 30 months, the
beneficiaries are still entitled to survivorship
benefits. The survivorship pension shall be paid as
follows:
1. When the dependent spouse is the only
survivor, he/she shall receive the basic
survivorship pension for life or until he or she
remarries;
2. When only dependent children are the
survivors, they shall be entitled to the basic
survivorship pension for as long as they are
qualified, plus the dependent children’s
pension equivalent to 10% of the basic monthly
pension for every dependent child not
exceeding 5, counted from the youngest and
without substitution;
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
3. When the survivors are the dependent spouse
and the dependent children, the dependent
spouse shall receive the basic survivorship
pension for life or until he/she remarries, and
the dependent children shall receive the
dependent children’s pension [R.A. 8291, Sec.
21(b)].
Benefits that the beneficiaries are entitled to
upon the death of the pensioner
1. Upon the death of an old-age pensioner or a
member receiving the monthly income benefit
for permanent disability, the qualified
beneficiaries shall be entitled to the
survivorship pension.
2. When the pensioner dies within the period
covered by the lump sum, the survivorship
pension shall be paid only after the expiration
of such period.
Q: Gary Leseng was employed as a public school
teacher at the Marinduque High School. On April
27, 1997, a memorandum was issued by the
school principal designating Gary to prepare the
model dam project, which will be the official
entry of the school in the search for Outstanding
Improvised Secondary Science Equipment for
Teachers. Gary complied with his superior's
instruction and took home the project to enable
him to finish before the deadline. While working
on the model dam project, he came to contact
with a live wire and was electrocuted. The death
certificate showed that he died of cardiac arrest
due to accidental electrocution.
Bella (Gary’s common-law wife) and Jobo (his
only son) filed a claim for death benefits with
the GSIS which was denied on the ground that
Gary’s death did not arise out of and in the
course of employment and therefore not
compensable because the accident occurred in
his house and not in the school premises. Is
Bella entitled to file a claim for death benefits
with the GSIS? Why? (1991 Bar Question)
A: No. Not being a beneficiary, Bella is not entitled
to receive survivorship benefits. She is not a
beneficiary because she is a common-law wife and
not a legal dependent spouse. The beneficiaries of a
member of the GSIS are entitled to the benefits
arising from the death of said member. Death
benefits are called survivorship benefits under the
GSIS Law.
Q: Is the cause of death of Gary (cardiac arrest
due to accidental electrocution in his house)
compensable? Why?
A: Yes. To be compensable under the GSIS Law, the
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
158
death need not be work-connected.
Q: Abraham, a policeman, was on leave for a
month. While resting in their house, he heard
two of his neighbors fighting with each other.
Abraham rushed to the scene intending to
pacify the protagonists. However, he was shot
to death by one of the protagonists. Eva Joy, a
housemaid, was Abraham's surviving spouse
whom he had abandoned for another woman
years back. When she learned of Abraham's
death, Eva Joy filed a claim with the GSIS for
death benefits. However, her claim was denied
because: (a) when Abraham was killed, he was
on leave; and (b) she was not the dependent
spouse of Abraham when he died. Resolve with
reasons whether GSIS is correct in denying the
claim. (2005 Bar Question)
A: Yes, because under the law, a dependent is one
who is a legitimate spouse living with the Ee [LC, Art.
167 (i)]. In the problem given, Eva Joy had been
abandoned by Abraham who was then living already
with another woman at the time of his death.
Moreover, Abraham was on leave when he was
killed. The 24-hour duty rule does not apply when
the policeman is on vacation leave [ECC v. CA, G.R. No.
121545, Nov. 14, 1996]. Taking together
jurisprudence and the pertinent guidelines of the
ECC with respect to claims for death benefits,
namely:
1. That the Ee must be at the place where his work
requires him to be;
2. That the Ee must have been performing his
official functions; and
3. That if the injury is sustained elsewhere, the
Ee must have been executing an order for the Er,
it is not difficult to understand then why Eva
Joy's claim was denied by the GSIS [Tancinco v.
GSIS, G.R. No. 132916, (2001)].
In the present case, Abraham was resting at his
house when the incident happened; thus, he was
not at the place where his work required him to be.
Although at the time of his death Abraham was
performing a police function, it cannot be said that
his death occurred elsewhere other than the place
where he was supposed to be because he was
executing an order for his Er.
No presumption of Sham Marriages
The present GSIS law does not presume that
marriages contracted within three years before
retirement or death of a member are sham
marriages contracted to avail of survivorship
benefits. The law acknowledges that whether the
surviving spouse contracted the marriage mainly to
 SOCIAL WELFARE LEGISLATION
receive survivorship benefits is a matter of promulgated by the GSIS, be compulsorily covered
evidence. It no longer prescribes a sweeping with life insurance, which shall automatically take
classification that unduly prejudices the legitimate effect as follows:
surviving spouse and defeats the purpose for which 1. Those employed after the effectivity of this Act,
Congress enacted the social legislation (Alcantara, their insurance shall take effect on the date of
Book II; GSIS v. Montesclaros, G.R. No. 146494, July 14, their employment;
2004). 2. For those whose insurance will mature after the
effectivity of this Act, their insurance shall be
FUNERAL BENEFITS deemed renewed on the day following the
maturity or expiry date of their insurance;
Funeral benefits 3. For those without any life insurance as of the
effectivity of this Act, their insurance shall take
The funeral benefit is in the amount Php 20,000. It effect following said effectivity.
is intended to defray the expenses incident to the
burial and funeral of the deceased member, Optional life insurance coverage
pensioner, or retiree under R.A. 660, R.A. 1616, P.D.
1146, and R.A. 8291. It is payable to the members of 1. A member may at any time apply for himself
the family of the deceased, in the order which they and/or his dependents an insurance and/or
appear: pre-need coverage embracing:
a. Life
1. Legitimate spouse b. Memorial plans
2. Legitimate child who spent for the funeral c. Health
services, or d. Education
3. Any other person who can show e. Hospitalization
unquestionable proof that he has borne the f. Other plans as maybe designed by GSIS
funeral expenses of the deceased. 2. Any Er may apply for group insurance coverage
for its Ees.
Payment of funeral benefits
BENEFICIARIES
Funeral benefits will be paid upon the death of:
1. An active member Beneficiaries
2. A member who has been separated from the
service but is entitled to future separation or 1. Primary beneficiaries
retirement benefits a. The legal dependent spouse until he/she
3. A member who is a pensioner (excluding remarries, and
survivorship pensioners) b. The dependent children (Sec. 2[g], R.A. 8291)
4. A retiree who is at the time of his retirement 2. Secondary beneficiaries
was of pensionable age, at least 60 years old, a. The dependent parents, and
who opted to retire under RA 1616 (An act b. Subject to the restrictions on dependent
further amending Sec.12, C.A. 186, as amended, children, the legitimate descendants [RA
by prescribing two other modes of retirement 8291, Sec. 2(h)].
and for other purposes).
Dependents
LIFE INSURANCE
1. Legitimate spouse dependent for support upon
Classes of life insurance coverage under the GSIS the member or pensioner;
law 2. Legitimate, legitimated, legally adopted child,
including the illegitimate child,
1. Compulsory Life Insurance a. Who is unmarried,
2. Optional Life Insurance b. Not gainfully employed,
c. Not over the age of majority, or if over the
The plans may be endowment or ordinary life. age of majority, incapacitated and
incapable of self-support due to a
Compulsory life insurance coverage mental or physical defect acquired prior to
age of majority; and
All Ees including the members of the Judiciary and d. Parents dependent upon the member for
the Constitutional Commissioners except for support [RA 8291, Sec. 2(f)].
Members of the AFP, the PNP, BFP and BJMP, shall,
under such terms and conditions as may be

UNIVERSITY OF SANTO TOMAS

159 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Prescriptive period to claim the benefits
GR: 4 years from the date of contingency
XPNs: Life insurance and retirement (R.A. 8291, Sec.
28).
LIMITED PORTABILITY LAW
(R.A. 7699)
Limited portability rule
A covered worker who transfers employment from
one sector to another or is employed on both
sectors, shall have creditable services or
contributions on both Systems credited to his
service or contribution record in each of the
Systems and shall be totalized for purposes of old-
age, disability, survivorship, and other benefits in
either or both Systems (R.A. 7699, Sec. 3).
All contributions paid by such member personally,
and those that were paid by his employers to both
Systems shall be considered in the processing of
benefits which he can claim from either or both
Systems (R.A. 7699, Sec. 4).
This is advantageous to the SSS and GSIS members
for purposes of death, disability or retirement
benefits. In the event the Ees transfer from the
private sector to the public sector, or vice-versa, their
creditable employment services and contributions
are carried over and transferred as well.
EMPLOYEES’ COMPENSATION
Employees’ compensation program
It is the program provided for in Arts. 166 to 208 of
the LC whereby a fund known as the State Insurance
Fund is established through premium payments
exacted from Ers and from which the Ees and their
dependents in the event of work-connected
disability or death, may promptly secure adequate
income benefit, and medical or related benefits.
NOTE: The claimant under the Employee’s
Compensation Program is required to present proof
of casual relation or aggravation, if the cause or
origin of the disease is still unknown. Compassion
for the victims of diseases not covered by law
ignores the need to show a greater concern for the
trust fund to which the tens of millions of workers
and their families look for compensation whenever
accidents, disease, and deaths occur. The law,
however, does not require a direct casual relation. It
is enough that the hypothesis on which the
workman’s claim is based is PROBABLE.
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
160
Contributions to the State Insurance Fund
Contributions under this Title shall be paid in their
entirety by the Er and any contract or device for the
deduction of any portion thereof from the wages or
salaries of the Ees shall be null and void [LC,
Art.183(c)].
Definitions
1. Injury – Any harmful change in the human
organism from any accident arising out of and
in the course of employment.
2. Sickness – Any illness definitely accepted as an
occupational disease.
3. Occupational Disease – One which results from
the nature of the employment, and by nature is
meant conditions which all Ees of a class are
subject and which produce the disease as a
natural incident of a particular occupation, and
attach to that occupation a hazard which
distinguishes it from the usual run of
occupations and is in excess of the hazard
attending the employment in general. To be
occupational, the disease must be wholly due to
causes and conditions which are normal and
constantly present and characteristic of the
particular occupation.
NOTE: Although the cause of cancer is not yet
known, it has already been included as a
qualified occupational disease in certain cases
(Abadiano v. GSIS and ECC, G.R. No. L-52254, Jan.
30, 1984).
4. Compensable Sickness – It means any illness
definitely accepted as an occupational disease
listed by the Commission or any illness caused
by employment, subject to proof that the risk of
contracting the same is increased by working
conditions [LC, Art. 167(l)].
Accrual of the right to compensation or benefit
under the Employee’s Compensation Program
The right to compensation or benefit for loss or
impairment of an employee’s earning capacity due
to work-related illness or injury arises or accrues
upon, and not before, the happening of the
contingency. Hence, an Ee acquires no vested right
to a program of compensation benefits simply
because it was operative at the time he became
employed (San Miguel Corporation vs. NLRC, G.R. No.
57473, Aug. 15, 1988).
Benefits under the State Insurance Fund
1. Medical Benefits
2. Disability Benefits
 SOCIAL WELFARE LEGISLATION
3. Death Benefits
4. Funeral Benefits
Persons entitled to benefits under the
Employees’ Compensation Program
The covered Ee, his dependents, and in case of his
death, his beneficiaries.
Dependents of the employee
1. Legitimate, legitimated, legally adopted or
acknowledged natural child who is unmarried,
not gainfully employed, and not over 21 years
of age or over 21 years of age provided he is
incapacitated and incapable of self-support due
to a physical or mental defect which is
congenital or acquired during minority;
2. Legitimate spouse living with the Ee;
3. Parents of said Ee wholly dependent upon him
for regular support [LC as amended by P.D. 1921,
Art.167 (i)].
Beneficiaries
Primary beneficiaries
1. Dependent spouse until he remarries
2. Dependent children
Secondary beneficiaries
1. In absence of primary beneficiaries, the
dependent parents
2. Subject to the restrictions imposed on
dependent children, the illegitimate children
and legitimate descendants. Provided, that the
dependent acknowledged natural child shall be
considered as a primary beneficiary when there
are no other dependent children who are
qualified and eligible for monthly income
benefit (LC, Art. 167, as amended by Sec. I, P.D.
1921).
Recovery from the State Insurance Fund does
not bar a claim for benefits under the SSS Law
As expressly provided for in Art. 173 of the LC,
payment of compensation under the State
Insurance Fund shall not bar the recovery of
benefits under the SSS Law. Benefits under the State
Insurance Fund accrue to the Ees concerned due to
hazards involved and are made a burden on the
employment itself. On the other hand, social
security benefits are paid to SSS members by reason
of their membership therein for which they
contribute their money to a general fund (Ma-ao
Sugar Central Co., Inc. vs. CA, G.R. No. 83491, Aug. 27,
1990).
161
COVERAGE
Coverage
Ers and their Ees not over 60 years of age are subject
to compulsory coverage under this program.
The Er may belong to either the:
1. Public sector covered by the GSIS, comprising
the National Government, including GOCCs,
Philippine Tuberculosis Society, the Philippine
National Red Cross, and the Philippine Veterans
Bank; and
2. Private sector covered by the SSS, comprising
all Ers other than those defined in the
immediately preceding paragraph.
The Ee may belong to either the:
1. Public sector comprising the employed workers
who are covered by the GSIS, including the
members of the AFP, elective officials who are
receiving regular salary and any person
employed as casual emergency, temporary,
substitute or contractual;
2. Private sector comprising the employed
workers who are covered by the SSS.
Effectivity of the compulsory coverage
1. Employer – On the first day of operation
2. Employee – On the day of his employment
Theory of increased risk
The term “sickness” as defined in Art. 167(l) of the
LC is recognition of the theory of increased risk. To
establish compensability under the same, the
claimant must show substantial proof of work-
connection, but what is required is merely a
reasonable work-connection and not a direct causal
relation. Proof of actual cause of the ailment is not
necessary. The test of evidence of relation of the
disease with the employment is probability and not
certainty (Jimenez v. Employees’ Compensation
Commission, G.R. No. L-58176, Mar. 23, 1984; Panotes
vs. ECC, G.R. No. L-64802, Sept. 23, 1985).
NOTE: An illness not listed by the Employees’
Compensation Commission as an occupational
disease is compensable provided that it is
established that the risk of contracting the same is
increased by working conditions.
Going and coming rule
GR: In the absence of special circumstances, an Ee
injured while going to or coming from his place of
work is excluded from the benefits of Workmen’s
Compensation Act.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
XPNs:
1. Where the Ee is proceeding to or from his work
on the premises of the Er;
2. Proximity Rule—where the Ee is about to enter
or about to leave the premises of his Er by way
of exclusive or customary means of ingress and
egress;
3. Ee is charged, while on his way to or from his
place of employment or at his home, or during
this employment with some duty or special
errand connected with his employment; and
4. Where the Er as an incident of the employment
provides the means of transportation to and
from the place of employment.
Personal comfort doctrine
Acts performed by an Ee within the time and space
limits of his employment, to minister personal
comfort, such as satisfaction of his thirst, hunger, or
other physical demands, or to protect him from
excessive cold, shall be deemed incidental to his
employment and injuries suffered in the
performance of such act shall be considered
compensable and arising out of and in the course of
employment.
Defenses that may be interposed by the state
insurance fund against a claim for compensation
made by a covered Ee or his dependents
The following defenses may be set up:
1. Injury is not work-connected or the sickness is
not occupational
2. Disability or death was occasioned by the Ee’s
intoxication, willful intention to injure or kill
himself or another, or his notorious negligence
(LC, Art. 172).
3. No notice of sickness, injury or death was given
to the Er (LC, Art. 206).
4. Claim was filed beyond 3 years from the time
the cause of action accrued (LC, Art. 201 as
amended by P.D. 1921).
NOTE: Notorious negligence is equivalent to gross
negligence; it is something more than mere
carelessness or lack of foresight.
Q: Abraham Dino works as a delivery man in a
construction supply establishment owned by
Abraham Julius. One day, while Dino was
making reports on his delivery, he had an
altercation with Julius; irked by the
disrespectful attitude of Dino, Julius pulled out
his gun and shot Dino, hitting him in the spinal
column and paralyzing him completely. Julius
was prosecuted for the act.
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
162
a. Is the disability suffered by Abraham Dino
compensable?
b. If Abraham Dino recovers compensation
from the SIF, can he still recover from
Abraham Julius damages in the criminal
case? Why?
A:
a. Yes. The injury was sustained by Abraham Dino
in his place of work and while in the
performance of his official functions.
b. No. Under Art. 173 of the LC, as amended by P.D.
1921, the liability of the State Insurance Fund
under the Employees’ Compensation Program
shall be exclusive and in place of all other
liabilities of the Er to the Ee or his dependents
or anyone otherwise entitled to recover
damages on behalf of the Ee or his dependents.
Q: Wilfredo, a truck driver employed by a local
construction company, was injured in an
accident while on assignment in one of his
employer’s project in Iraq. Considering that his
injury was sustained in a foreign country, is
Wilfredo entitled to benefits under the
Employees’ Compensation Program?
A: Yes. Filipinos working abroad in the service of an
Er, domestic or foreign, who carries on in the
Philippines any trade, business, industry,
undertaking or activity of any kind, are covered by
the ECP (ECC Rules, Rule 1, Section 5; LC, Art.169).
MEDICAL BENEFIT (MEDICAL SERVICES)
Conditions for the entitlement to medical
services
For an Ee to be entitled to medical services, the
following conditions must be satisfied:
1. He has been duly reported to the System (SSS or
GSIS);
2. He sustains a permanent disability as a result of
an injury or sickness; and
3. The System has been notified of the injury or
sickness which caused his disability.
DISABILITY BENEFIT
Disability benefits
They are income benefits in case of temporary total
disability, permanent total disability and
permanent partial disability.
Permanent and total disabilities
The following disabilities shall be deemed
permanent and total:
 SOCIAL WELFARE LEGISLATION
1. Temporary total disability lasting continuously
for more than one hundred twenty days, except
as otherwise provided for in the Rules;
2. Complete loss of sight of both eyes;
3. Loss of two limbs at or above the ankle or wrist;
4. Permanent complete paralysis of two limbs;
5. Brain injury resulting in incurable imbecility or
insanity; and
6. Such cases as determined by the Medical
Director of the System and approved by the
Commission [LC, Art.192(c)].
NOTE: Permanent total disability may arise
although the employee does not lose the use of any
part of his body. Where the Ee is unable, by reason
of the injury or sickness, to perform his customary
job for more than 120 days, permanent total
disability arises (Ijares vs. CA, G.R. No. 105854, Aug.
26, 1999).
Conversion of a permanent partial disability to
permanent total disability
A permanent partial disability is converted to
permanent total disability after the employee’s
retirement. This is in line with the social justice
provision in the Constitution. A person’s disability
may not manifest itself fully at one precise moment
in time but rather over a period of time. Disability
should not be understood more on its medical
significance but on the loss of earning capacity.
DEATH BENEFITS
2. Dependent Children — until they get married, or
find gainful employment, or reach 21 years of
age.
3. Dependent Child suffering from physical or
mental defect — until such defect disappears.
Er’s liability in case of death or injury of the Ee
1. If the cause of the death or personal injury arose
out of and in the course of employment, the Er
is liable.
2. If the cause was due to the Ee’s own notorious
negligence, or voluntary act or drunkenness,
the Er shall not be liable.
3. If the cause was partly due to the Ee’s lack of due
care, the compensation shall be inequitably
reduced.
4. If the cause was due to the negligence of a fellow
Ee, the Er and the guilty Ee shall be liable
solidarily.
5. If the cause was due to the intentional or
malicious act of fellow Ee, the fellow Ee and Er
are liable unless the Er exercised due diligence
in selecting and supervising his Ees.
FUNERAL BENEFIT
Funeral benefit
A funeral benefit of Php 10, 000.00 shall be paid
upon the death of a covered Ee or permanently
totally disabled pensioner.

Conditions for entitlement to death benefits

The beneficiaries of a deceased Ee shall be entitled

to an income benefit if all of the following conditions
are satisfied:

1. The Ee has been duly reported to the System;

NOTE: If an employee suffers disability or dies

before he is duly reported for coverage to the
System (SSS or GSIS), the Er shall be liable for
the benefits (Rule X, Sec. 1; Rule XI, Sec. 1; Rule
XII, Sec. 1; Rule XIII, Sec. 1; ECC Rules).

2. He died as a result of an injury or sickness; and

3. The System has been duly notified of his death,
as well as the injury or sickness which caused
his death.

Length of time the primary beneficiaries are

entitled to death benefits

1. Dependent Spouse — until he or she remarries.

UNIVERSITY OF SANTO TOMAS

163 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
LABOR RELATIONS LAW
DECLARATION OF POLICY
The state aims to promote:
1. Free CB and negotiations, including voluntary
arbitration, mediation and conciliation as
modes of settling labor or industrial disputes;
2. Free trade unionism;
3. Free and voluntary organization of a strong and
united labor movement;
4. Enlightenment of workers concerning their
rights and obligations as union members and as
Ees;
5. Adequate administrative machinery for the
expeditious settlement of labor or industrial
disputes;
6. Stable but dynamic and just industrial peace;
7. Participation of workers in the decision-making
processes affecting their rights, duties and
welfare;
8. Truly democratic method of regulating the
relations between the Ers and Ees by means of
agreements freely entered into through CB, no
court or administrative agency or official shall
have the power to set or fix wages, rates of pay,
hours of work or other terms and conditions of
employment, except as otherwise provided
under the LC (LC, Art. 211).
RIGHT TO SELF ORGANIZATION
Right to Self-Organization
It is the right of workers and Ees to form, join or
assist unions, organizations or associations for
purposes of CB and negotiation and for mutual aid
and protection. It also refers to the right to engage
in peaceful concerted activities or to participate in
policy and decision-making processes affecting
their rights and benefits.
NOTE: The LC incorporated the policy laid down in
the International Labor Organization Convention
No. 87: Freedom of Association and Protection of
the Right to Organization which provides that
workers and Ers, without distinction whatsoever,
shall have the right to establish and, subject only to
the rules of the organization concerned, to join
organizations of their own choosing without
previous authorization.
Also, under the International Covenant on Civil and
Political Rights, - Everyone shall have the right to
freedom of association with others, including the
right to form and join trade unions for the
protection of his interests.
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
164
Constitutional provisions that protect the right
to self-organization
1. The State affirms labor as a primary social
economic force. It shall protect the rights of the
workers and promote their welfare (Art. II, Sec.
18).
2. The State is required to guarantee the rights of
all workers to self-organization, CB and
negotiations, and peaceful concerted activities,
including the right to strike in accordance with
law (Art. XIII, Sec. 3).
3. The right of the people, including those
employed in the public and private sectors, to
form unions, associations, or societies for
purposes not contrary to law, shall not be
abridged (Art. III, Sec. 8).
4. The civil service embraces all branches,
subdivisions, instrumentalities, and agencies of
the Government, including government-owned
or controlled corporations with original
charters [Art. IX-B, Sec. 2(1)].
Extent of the Right to Self-Organization
It includes the right
1. To form, join and assist labor organizations for
the purpose of CB through representatives of
their own choosing; and
2. To engage in lawful and concerted activities for
the purpose of CB or for their mutual aid and
protection (Art. 246, LC).
Exercise of right to self-organization by aliens
GR: All aliens, natural or juridical, as well as foreign
organizations are strictly prohibited from engaging
directly or indirectly in all forms of trade union
activities without prejudice to normal contacts
between Philippine labor unions and recognized
international labor centers.
XPN: Alien Ees with valid working permits issued by
the DOLE may exercise the right to self-organization
and join or assist labor organizations for purposes
of CB, if they are nationals of a country which grants
the same or similar rights to Filipino workers, as
certified by the DFA.
Q: At what particular point does a labor
organization acquire a legal personality? (2012
Bar Question)
A: On the date the Certificate of Registration is
actually issued (Art. 234, Labor Code)
Q: A, an employee of XYZ Cooperative, owns 500
shares in the cooperative. He has been asked to
 LABOR RELATIONS
join the XYZ Cooperative Employees
Association. He seeks your advice on whether he
can join the association. What advice will you
give him? (2010 Bar Question)
A: A cannot join XYZ Cooperative Employees
Association because owning shares makes him a co-
owner thereof. An Ee-member of a cooperative
cannot join a union and bargain collectively with his
cooperative for an owner cannot bargain with
himself and his co-owners (Cooperative Rural Bank
of Davao City, Inc. v. Calleja, 165 SCRA 725).
EMPLOYEES UNDER LABOR RELATIONS
Managerial employee
The person who is vested with the powers or
prerogatives to lay down and execute management
policies and/or to hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline Ees.
NOTE: The exercise of independent judgment and
discretion primarily belongs to managerial Ees.
Supervisory employee
The person who effectively recommends such
managerial actions if the exercise of such authority
is not merely routinary or clerical in nature but
requires the use of independent judgment.
Rank-and-file employees
Those persons who are neither managerial nor
supervisory Ees are considered rank-and-file [Art.
212 (m), LC]. They perform job that is routinary or
clerical in nature.
WHO MAY UNIONIZE FOR PURPOSES OF
COLLECTIVE BARGAINING
1. All persons employed in commercial, industrial
and agricultural enterprises
2. Employees of government-owned and/or
controlled corporation, without original
charters established under the Corporation
Code
3. Workers in religious, charitable, medical, or
educational institutions, whether operating for
profit or not
4. Supervisors
5. Alien employees
6. Working children
7. Homeworkers
8. Security Guards
9. Workers of Cooperatives
10. Employees of legitimate contractors not with
the principal but with the contractors
165
Right of supervisory Ees in self-organization
Supervisory Ees shall not be eligible for
membership in a labor organization of the rank-
and-file Ees but may join, assist or form separate
labor organizations of their own. The rank and file
union and the supervisors’ union operating within
the same establishment may join the same
federation or national union (LC, Art. 245).
Effect of inclusion as members of employees
outside the bargaining unit
The inclusion as union members of employees
outside the bargaining unit shall not be a ground for
the cancellation of the registration of the union. Said
employees are automatically deemed removed from
the list of membership of said union (LC, Art. 245-A;
RA No. 9481).
Ees eligible to join a labor organization for
mutual aid and protection
The following enjoy the right to self-organization for
mutual aid and protection
1. Ambulant workers
2. Intermittent workers
3. Itinerant workers
4. Self-employed people
5. Rural workers
6. Those without definite Ers (LC, Art. 243).
NOTE: The reason for this rule is that the
abovementioned workers have no Ers to
collectively bargain with.
When Ee are eligible to join a labor organization
Any Ee, whether employed for a definite period or
not, shall, beginning on his first day of service, be
considered as an employee for purposes of
membership in any labor union [LC, Art. 277 (c) as
amended by Sec. 33, R.A. No. 6715].
Q: What is the rule on the "equity of the
incumbent"? (2015 Bar Question)
A: The Equity of the Incumbent rule has it that all
existing federations or national unions, possessing
all qualifications of an LLO and none of the grounds
for CR cancellation, shall continue to maintain their
existing affiliates regardless of their location or
industry to which they belong. In case of
dissociation, affiliates are not required to observe
the one union-one industry rule.
NOTE: Organizations of workers and Ers shall have
the right to establish and join federations and
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
confederations, and any such organization,
federation or confederation shall have the right to
affiliate with international organizations of workers
and Ers (ILO Convention No. 87, Art. 5).
WHO CANNOT FORM, JOIN, AND ASSIST
LABOR ORGANIZATIONS
Exceptions to Article 243, notwithstanding the
all-inclusive coverage of “all persons”
1. High level or Managerial Government Ees (E.O.
180, Sec. 3).
2. Ees of International organizations with
functional immunities
3. Managerial Ees – vested with the powers or
prerogatives to lay down and execute
management policies and/or to hire, transfer,
suspend, lay-off, recall, discharge, assign or
discipline Ees [LC, Art. 212 (m)].
NOTE: The mere fact that an Ee is designated
as “manager” does not ipso facto make him one.
Job description determines the nature of his
employment
4. Members of the AFP including the police
officers, policemen, firemen, and jail guards
(E.O. 180, Sec. 4).
5. Confidential Ees who have access to
confidential labor relations information.
6. Ees of cooperatives who are its members.
However they may form workers’ association.
7. Non-Ees
8. Government Ees, including GOCC’s with original
charters
NOTE: Government Ees are governed by the
Civil Service Commission.
9. Aliens without a valid working permit or aliens
with working permits but are nationals of a
country which do not allow Filipinos to exercise
their right of self-organization and to join or
assist labor organizations [LC, Art. 269; D.O. No.
9, Rule II, Sec. 2 (1997)].
Doctrine of necessary implication
While Art. 245 of the Labor Code singles out
managerial employees as ineligible to join, assist or
form any labor organization, under the doctrine of
necessary implication, confidential employees are
similarly disqualified. This doctrine states that what
is implied in a statute is as much a part thereof as
that which is expressed (National Association of
Trade Unions (NATU) – Republic Planters Bank
Supervisors Chapter v. Torres, G.R. No. 93468, Dec. 29,
1994).
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
166
CONFIDENTIAL EMPLOYEES
Definitions based from jurisprudence
Those who by reason of their positions or nature of
work are required to assist or act in a fiduciary
manner to managerial employees and hence, are
likewise privy to sensitive and highly confidential
records like executive secretaries (Metrolab
Industries v. Confesor, G.R. No. 108855, Feb. 28, 1996).
Confidential Ees are defined as those who
1. Assist or act in a confidential capacity,
2. Formulate, determine, and effectuate
management policies in the field of labor
relations.
The two (2) criteria are cumulative, and both must
be met if an employee is to be considered a
confidential employee – that is, the confidential
relationship must exist between the employee and
his supervisor, and the supervisor must handle the
prescribed responsibilities relating to labor
relations (Tunay na Pagkakaisa ng Manggawa sa
Asia Brewery vs. Asia Brewer, Inc., G.R. No. 162025,
August 3, 2010).
NOTE: An important element of the “confidential Ee
rule” is the Ee’s access to confidential labor relations
information. An Ee may not be excluded from the
appropriate bargaining unit merely because he has
access to confidential information concerning the
Er’s internal business which is not related to the
field of labor relations and has no relevance to
negotiations and settlement of grievances wherein
the interests of a union and the management are
invariably adversarial (San Miguel Corp. Supervisors
v. Laguesma, G.R. 110399, August 15, 1997).
Examples of Confidential Ees who could not
unionize
1. Bank cashiers
2. Accounting personnel,
3. Radio and telegraph operators who, having
access to confidential information
4. Personnel staff (Standard Chartered Bank
Employees Union v. Standard Chartered Bank,
G.R. No. 161933, April 22, 2008)
Rationale behind the exclusion of confidential
employees from the rank-and-file bargaining
unit
The rationale for their separate category and
disqualification to join any labor organization is
similar to the inhibition for managerial Ees, because
if allowed to be affiliated with a union, the latter
 LABOR RELATIONS
might not be assured of their loyalty in view of
evident conflict of interests and the union can also
become company-dominated with the presence of
managerial Ees in the union membership. Having
access to confidential information, confidential Ees
may also become the source of undue advantage.
Said Ees may act as a spy or spies of either party to
a CBA (San Miguel Foods Inc., vs. San Miguel
Corporation Supervisors and Exempt Union, G.R. No.
146206, August 1, 2011).
Human Resource Assistant and Personnel
Assistant are considered confidential Ees
As Human Resource Assistant, the scope of one’s
work necessarily involves labor relations,
recruitment and selection of employees, access to
Ees' personal files and compensation package, and
human resource management. As regards a
Personnel Assistant, one's work includes the
recording of minutes for management during CB
negotiations, assistance to management during
grievance meetings and administrative
investigations, and securing legal advice for labor
issues from the petitioner’s team of lawyers, and
implementation of company programs. Therefore,
in the discharge of their functions, both gain access
to vital labor relations information which outrightly
disqualifies them from union membership.
Exception: Payroll master
A confidential employee is one entrusted with
confidence on delicate, or with the custody,
handling or care and protection of the employer’s
property. Confidential employees, such as
accounting personnel, should be excluded from the
bargaining unit, as their access to confidential
information may become the source of undue
advantage. However, such fact does not apply to the
position of Payroll Master and the whole gamut of
employees who has access to salary and
compensation data. The position of Payroll Master
does not involve dealing with confidential labor
relations information in the course of the
performance of his functions. Since the nature of his
work does not pertain to company rules and
regulations and confidential labor relations, it
follows that he cannot be excluded from the subject
bargaining unit (San Miguel Foods Inc. v. San Miguel
Corporation Supervisors and Exempt Union, G.R. No.
146206, August 1, 2011).
Exclusive Bargaining Representation and
Worker’s Participation in Policy and Decision-
Making
Bargaining representative of the Ees for
purposes of collective bargaining
167
The labor organization designated or selected by
the majority of the Ees in an appropriate collective
bargaining unit shall be the exclusive representative
of the Ees in such unit for the purpose of CB.
However, an individual Ee or group of Ees shall have
the right at any time to present grievances to their
Er [LC, Art. 255 as amended by R.A. No. 6715, Sec. 22
(1989)].
Rule on solicitation of questions, suggestions
and complaints by the Er from the Ees who are
represented by a union
GR: The Er may not solicit questions, suggestions
and complaints from Ees who are represented by a
union.
XPN:
1. The CB representative executes an agreement
waiving the right to be present on any occasion
when Ee grievances are being adjusted by the
Er; and
2. Er acts strictly within the terms of his waiver
agreement.
Q: The hotel union filed a Notice of Strike with
the National Conciliation and Mediation Board
(NCMB) due to an unfair labor practice against
the Diamond Hotel who refused to bargain with
it. The hotel advised the union that since it was
not certified by the DOLE as the exclusive
bargaining agent, it could not be recognized as
such. The union sought to bargain for members
only. May the Union bargain collectively?
A: No. Art. 255 of the LC declares that only the labor
organization designated or selected by the majority
of the Ees in an appropriate CB unit is the exclusive
representative of the Ees in such unit for the
purpose of CB. The union is admittedly not the
exclusive representative of the majority of the Ees
of the hotel, hence, it could not demand from the
hotel the right to bargain collectively in their behalf
(Manila Diamond Hotel v. Manila Diamond Hotel Ees
Union, G.R. No. 158075, June 30, 2006).
Principle of Codetermination or co-sharing
(2007 Bar Question)
It refers to the right of workers to participate in
policy and decision-making process affecting their
rights and benefits (PAL v. NLRC, G.R. No. 85985,
August 13, 1993; 1987 Constitution, Art. XIII, Sec. 3).
Extent of the worker’s right to participate in
policy and decision-making processes in a
company
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Such right refers not only to formulation of
corporate programs and policies but also to
participation in grievance procedures and
voluntary modes of settling disputes.
Q: Does the worker’s right to participate in
policy and decision-making process as provided
under Art. XIII, Sec. 13 of the 1987 Constitution
include membership in the Board of Directors of
a corporation? (2008 Bar Question)
A: No..The SC recognized the right of the union to
participate in policy formulation and decision-
making process on matters affecting the union
members’ rights, duties and welfare. However, such
participation of the union in committees of the Er is
not in the nature of a co-management control of the
business. Impliedly, therefore, workers’
participatory right in policy and decision-making
processes does not include the right to put a union
member in a corporation’s Board of Directors
(Manila Electric Company v. Quisumbing, G.R. No.
127598, January 27, 1999).
Q: May the management be compelled to share
with the union or its employees its prerogative
of formulating a Code of Discipline?
A: Yes. The management may be compelled to do so.
The Code of Discipline involves security of tenure
and loss of employment — a property right. It is
time that management realizes that to attain
effectiveness in its conduct rules, there should be
candidness and openness by Management and
participation by the union, representing its
members. In fact, our Constitution has recognized
the principle of shared responsibility between Ers
and workers and has likewise recognized the right
of workers to participate in policy and decision-
making process affecting their rights (PAL v. NLRC,
G.R. No. 85985, August 13. 1993).
PROPER BARGAINING UNIT
It is a group of Ees of a given Er, comprised of all or
less than all of the entire body of the Ees which the
collective interest of all the Ees consistent with
equity to the Er, indicate to be best suited to serve
the reciprocal rights and duties of the parties under
the collective bargaining provisions of the law.
TEST TO DETERMINE THE CONSTITUENCY OF
AN APPROPRIATE BARGAINING UNIT
Factors/tests considered in determining the
appropriateness of a bargaining unit
1. Will of the Ees (Globe Election Doctrine)
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
168
2. Prior CB history (Collective Bargaining History
Doctrine)
3. Similarity of employment status (Employment
Status Doctrine)
4. Affinity and unity of the Ees’ interest, such as
substantial similarity of work and duties, or
similarity of compensation and working
conditions (Substantial or Mutuality of Interest
Doctrine / Community of Interest Rule)
Globe Election Doctrine
In defining the appropriate bargaining unit, the
determining factor is the express will of the workers
which is the inherent and basic right to self-
organization.
Collective Bargaining History Doctrine
In determining the appropriate bargaining unit,
prior CB history and affinity of the Ees may be
resorted to.
Employment Status Doctrine
The determination of the appropriate bargaining
unit is based on the employment status of the Ees.
Substantial or Mutuality of Interest Doctrine
The Ees sought to be represented by the CB agent
must have substantial mutual interest in terms of
employment and working condition as evinced by
the type of work they perform (San Miguel Corp.
Employees Union-PTGWO v. Confesor, 262 SCRA 81).
Factors considered in determining the
Substantial or Mutuality Interest Doctrine
1. Similarity in the scale and manner of
determining earnings
2. Similarity in employment benefits, hours of
work, and other terms and conditions of
employment
3. Similarity in the kinds of work performed
4. Similarity in the qualifications, skills and
training of Ees
5. Frequency of contract or interchange among
the Ees
6. Geographical proximity
7. Continuity and integration of production
processes
8. Common supervision and determination of
labor-relations policy
9. History of CB
10. Desires of the affected Ees or
11. Extent of union organization
 LABOR RELATIONS
Q: Samahang Tunay, a union of rank-and-file
employees lost in a certification election at
Solam Company and has become a minority
union. The majority union now has a signed CBA
with the company and the agreement contains a
maintenance of membership clause.
What can Samahang Tunay still do within the
company as a union considering that it still has
members who continue to profess continued
loyalty to it? (2013 Bar Questions)
A: Basis: Article 248 (formerly Art. 242) of the Labor
Code. As a legitimate labor organization, it can
continue to represent its members on non-CBA-
related matters.
Q: A registered labor union in UP, ONAPUP, filed
a petition for certification election among the
non-academic employees. The university did
not oppose, however, another labor union, the
All UP Workers Union assents that it represents
both academic and non-academic personnel and
seeks to unite all workers in one union. Do
employees performing academic functions need
to comprise a bargaining unit distinct from that
of the non-academic employees?
A: Yes. The mutuality of interest test should be
taken into consideration. There are two classes of
rank and file Ees in the university, those who
perform academic functions such as the professors
and instructors, and those whose function are non-
academic who are the janitors, messengers, clerks
etc. Thus, not much reflection is needed to perceive
that the mutuality of interest which justifies the
formation of a single bargaining unit is lacking
between the two classes of Ees (U.P. v. Ferrer-
Calleja, G.R. No.96189, July 14, 1992).
Bargaining history not a decisive factor in the
determination of appropriateness of bargaining
unit
While the existence of a bargaining history is a
factor that may be reckoned with in determining the
appropriate bargaining unit, the same is not
decisive or conclusive. Other factors must be
considered. The test of grouping is community or
mutuality of interests. This is so because the basic
test of an asserted bargaining unit’s acceptability is
whether or not it is fundamentally the combination
which will best assure to all Ees the exercise of their
CB rights (Democratic Labor Association v. Cebu
Stevedoring Company, Inc., G.R. No. L-10321,
February 28, 1958).
“One-company, One-union” Policy
169
GR: All the rank-and-file Ees with substantially the
same interests and who invoke the right to self-
organization are part of a single unit so that they can
deal with their Er with just one and potent voice.
The Ees’ bargaining power is strengthened thereby
(General Rubber and Footwear Corporation v.
Bureau of Labor Relations, et al., G.R. No. 74262,
October 29, 1987).
XPNs:
1. Supervisory Ees who are allowed to form their
own unions apart from the rank-and-file Ees
and
2. Craft Unit – bargaining unit composed of
employees of the company with the same
occupation, such as pilots as distinguished from
ground personnel
3. Plant Unit – bargaining unit composed of
employees in a particular plant of the company,
such as the company’s Cebu plant as
distinguished from its Ilocos Plant.
The main consideration in a plant unit is
geographical while it is occupational in a craft unit
(Alcantara, 2008).
NOTE: The policy should yield to the right of Ees to
form union for purposes not contrary to law, self-
organization and to enter into CB negotiations.
Two companies cannot be treated into a single
bargaining unit even if their businesses are related.
Corporate spin-off
Subsidiaries or corporations formed out of former
divisions of a mother company following a re-
organization may constitute a separate bargaining
unit.
Q: Union filed a petition for certification
election among the rank and file employees of
three security agencies including the Veterans
Security. The latter opposed alleging that the
three security agencies have separate and
distinct corporate personalities. May a single
petition for certification election be filed by a
labor union in the three corporations instead of
filing three separate petitions?
A: Yes. The following are indications that the three
agencies do not exist and operate separately and
distinctly from each other with different corporate
direction and goals: 1) Veterans Security failed to
rebut the fact that they are managed through the
Utilities Management Corporation with all their
employees drawing their salaries and wages from
the said entity; 2) that the agencies have common
and interlocking incorporators and officers; 3) that
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
they have a single mutual benefit system and
followed a single system of compulsory retirement;
4) they could easily transfer security guards of one
agency to another and back again by simply filling-
up a common pro-forma slip; 5) they always hold
joint yearly ceremonies such as the PGA Annual
Awards Ceremony; and 6) they continue to be
represented by one counsel.
Hence, the veil of corporate fiction of the three
agencies should be lifted for the purpose of allowing
the Ees of the three agencies to form single union.
As a single bargaining unit, the Ees need not file
three separate PCE (Philippine Scout Veterans
Security and Investigation Agency v. SLE, G.R. No.
92357, July 21, 1993).
Q: Company XYZ has two recognized labor
unions, one for its rank-and-file employees and
the other for its supervisory employees. Of late,
the company instituted a restructuring program
by virtue of which A, a rank-and-file employee
and officer of rank-and-file employees’ labor
union, was promoted to a supervisory position
along with four other colleagues, also active
union members and/or officers. Labor Union
KMJ, a rival labor union seeking recognition as
the rank-and-file bargaining agent, filed a
petition for the cancellation of the registration
of rank-and-file Ees labor union on the ground
that A and her colleagues have remained to be
members of rank-and-file Ees labor union. Is the
petition meritorious? Explain. (2010 Bar
Question)
A: No. The inclusion as union members of Ees
outside the bargaining unit shall not be a ground for
the cancellation of the registration of the union. Said
Ees are automatically deemed removed from the list
of membership of said union.
There are only three grounds for the cancellation of
union registration:
a. Misrepresentation, false statement or fraud in
connection with the adoption or ratification of
the constitution and by-laws or amendments
thereto, the minutes of ratification and the list
of members who took part in the ratification;
b. Misrepresentation, false statements or fraud in
connection with the election of officers, minutes
of the election of officers, and the list of voters;
c. voluntary dissolution by the members (LC, Art.
239 as amended by RA 9481, June 14, 2007)
Methods in determining the exclusive
bargaining representative
1. Voluntary recognition (VR)
2. Certification election
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
170
3. Consent election
VOLUNTARY RECOGNITION
Voluntary recognition
The process by which a legitimate labor union is
recognized by the Er as the exclusive bargaining
representative or agent in a bargaining unit,
reported with the Regional Office [IRR, Book V, Rule
I, Sec. 1 (bbb)]. Simply stated, what is allowed is
voluntary recognition not direct certification.
Voluntary recognition when proper
VR is proper only in cases where there is only one
legitimate labor organization existing and operating
in a bargaining unit.
REQUIREMENTS
The notice of VR shall be accompanied by the
original copy and two duplicate copies of the
following requirements:
1. Joint statement under oath of the VR
2. Certificate of posting of joint statement for 15
consecutive days in at least two conspicuous
places in the establishment of the bargaining
unit
3. Certificate of posting
4. Approximate number of Ees in the bargaining
unit and the names of those who supported the
recognition
5. Statement that the labor union is the only
legitimate labor organization operating within
the bargaining unit
NOTE: Where the notice of VR is sufficient in form,
number and substance and where there is no
registered labor union operating within the
bargaining unit concerned, the Regional Office,
through the Labor Relations Division shall, within
10 days from receipt of the notice, record the fact of
VR in its roster of legitimate labor unions and notify
the labor union concerned.
Conditions to Voluntary Recognition
1. VR is possible only in an unorganized
establishment.
2. Only one union must ask for recognition. If
there are two or more unions asking to be
recognized, the Er cannot recognize any of
them; the rivalry must be resolved through an
election.
3. The union voluntarily recognized should be the
majority union as indicated by the fact that
members of the bargaining unit did not object
 LABOR RELATIONS
to the projected recognition. If no objection is
raised, the recognition will proceed and the
DOLE shall be informed. If objection is raised,
the recognition is barred and a CE or consent
election will have to take place.
NOTE: In an organized establishment, VR is not
possible. A petition to hold a CE has to be filed
within the freedom period which means the last 60
days of the 5th year of the expiring CBA. The petition
may be filed by any LLO, but the petition must have
written support of at least 25% of the Ees in the
bargaining unit.
Where and when to file the petition for
Voluntary Recognition
Within 30 days from such recognition, Er shall
submit a notice of VR with the Regional Office which
issued the recognized labor union’s certificate of
registration or certificate of creation of a chartered
local.
Effects of recording of fact of voluntary
recognition
1. The recognized labor union shall enjoy the
rights, privileges and obligations of an existing
bargaining agent of all the Ees in the bargaining
unit.
2. It shall also bar the filing of a PCE by any labor
organization for a period of one year from the
date of entry of VR.
Employer cannot voluntarily recognize a union
in case there are other legitimate labor
organizations in a bargaining unit
An Er cannot ignore the existence of an LLO at the
time of its VR of another union. The Er and the
voluntarily recognized union cannot, by themselves,
decide whether the other union represented an
appropriate bargaining unit (Sta. Lucia East
Commercial Corporation v. Hon. Secretary of Labor,
G.R. 162355, August 14, 2009).
CERTIFICATION ELECTION
Certification Election (sole concern rule/by-
stander rule)
It is the process of determining through secret ballot
the sole and exclusive representative of the Ees in
an appropriate bargaining unit, for purposes of CB
or negotiation [IRR, Book V, Rule I, Sec. 1 (h)].
NOTE: The process is called CE because it serves as
the official, reliable and democratic basis for the
BLR to determine and certify the union that shall be
171
the exclusive bargaining representative of the Ees
for the purpose of bargaining with the Er.
Nature of certification election
A CE is not a litigation but merely an investigation of
a non-adversarial fact-finding character in which
BLR plays a part of a disinterested investigator
seeking merely to ascertain the desire of the Ees as
to the matter of their representation (Airline Pilots
Association of the Philippines v. CIR, G.R. No. L-33705,
April 15, 1977).
Purpose of a certification election
It is a means of determining the worker’s choice of
1. Whether they want a union to represent them
for CB or if they want no union to represent
them at all.
2. And if they choose to have a union to represent
them, they will choose which among the
contending unions will be the sole and exclusive
bargaining representative of the Ees in the
appropriate bargaining unit.
Filing a petition for certification election (PCE)
The following may file a PCE
1. Any LLO
2. A national union or federation which has
already issued a charter certificate to its local
chapter participating in the CE
3. A local chapter which has been issued a charter
certificate
4. An Er only when requested to bargain
collectively in a bargaining unit where no
registered CBA exists (IRR as amended by D.O.
40-F-03, Book V, Rule VIII, Sec. 1).
NOTE: A national union or federation filing a
petition in behalf of its local/chapter shall not be
required to disclose the names of the
local/chapter’s officers and members, but shall
attach to the petition the charter certificate it issued
to its local/chapter (IRR as amended by D.O. 40-F-03,
Book V, Rule VIII, Sec. 1).
In registration of federation or national union,
the 20% membership requirement may not be
complied with
The registration requirement of submitting the
names of all its members comprising at least 20% of
all the Ees in the bargaining unit where it seeks to
operate is applicable only to registration of
independent union. LC merely requires for proof of
affiliation of at least 10 local chapters and the names
and addresses of the companies where they operate.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
No 20% membership requirement is required for
registration of a federation or national union.
NOTE: Under the LC and the rules, the power
granted to labor organizations to directly create a
chapter or local through chartering is given to a
federation or national union only, not to a trade
union center (SMCEU v. San Miguel Packaging
Products Employees Union, G.R. No. 171153,
September 12, 2007).
Employer may file a petition for certification
election
Er may file a petition for certification election when
requested to bargain collectively. But thereafter it
should not be allowed to have an active role in the
CE; it shall merely act as a bystander.
CE proceeding is not a litigation, but a mere
summary and non-litigious proceeding. The only
purpose is to ascertain the will of the parties in
determining who will be the bargaining agent.
Double Majority rule (certification election)
1. Valid election – majority of eligible voters shall
have validly cast their votes (First Majority
rule).
2. Winning Union – the winner who obtained
majority of the valid votes casts shall be
declared as the bargaining agent in the
bargaining unit (Second Majority rule).
Q: Liwayway Glass had 600 rank-and-file
employees. Three rival unions A, B, and C ‒
participated in the certification elections
ordered by the Med-Arbiter. 500 employees
voted. The unions obtained the following votes:
A-200; B-150; C-50; 90 employees voted “no
union”; and 10 were segregated votes. Out of the
segregated votes, four (4) were cast by
probationary employees and six (6) were cast by
dismissed employees whose respective cases
are still on appeal. (2014 Bar Question)
a. Should the votes of the probationary and
dismissed employees be counted in the total
votes cast for the purpose of determining
the winning labor union?
b. Was there a valid election
c. Should Union A be declared the winner?
d. Suppose the election is declared invalid,
which of the contending unions should
represent the rank-and-file employees?
e. Suppose that in the election, the unions
obtained the following votes: A-250; B-150;
C-50; 40 voted “no union”; and 10 were
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
172
segregated votes. Should Union A be
certified as the bargaining representative?
A:
a. Yes. Rule IX, Section 5 of DOLE Department
Order 40-03 provides that “all employees who
are members of the appropriate bargaining unit
sought to be represented by the petitioner at
the time of the issuance of the order granting
the conduct of a certification election shall be
eligible to vote. An employee who has been
dismissed from work but has contested the
legality of the dismissal in a forum of
appropriate jurisdiction at the time of the
issuance of the order for the conduct of a
certification election shall be considered a
qualified voter, unless his/her dismissal was
declared valid in a final judgment at the time of
the conduct of the certification election.”
b. Yes. To have a valid election, at least a majority
of all eligible voters in the unit must have cast
their votes. In the instant case, 500 out of 600
rank-and-file employees voted.
c. No. The Labor Code provides that the Labor
Union receiving the majority of the valid votes
cast shall be certified as the exclusive
bargaining agent of all the workers in the unit.
Here, the number of valid votes cast is 490;
thus, the winning union should receive at least
246 votes. Union A only received 200 votes.
d. None of them should represent the rank-and-
file employees
e. Yes. The Labor Code provides that the Labor
Union receiving the majority of the valid votes
cast shall be certified as the exclusive
bargaining agent of all the workers in the unit
Here, the number of valid votes cast is 490.
Thus, the winning union should receive at least
246 votes; Union A received 250 votes.
Employer as a Bystander (Bystander Rule)
In all cases, whether the PCE is filed by an Er or a
LLO, the Er shall not be considered a party thereto
with a concomitant right to oppose a PCE. The Er’s
participation in such proceedings shall be limited
to: (1) being notified or informed of petitions of
such nature; and (2) submitting the list of Ees
during the pre-election conference should the
Mediator-Arbiter act favorably on the petition.
Except when it is requested to bargain collectively,
an Er is a mere bystander to any PCE; such
proceeding is non-adversarial and merely
investigative, for the purpose thereof is to
determine which organization will represent the
Ees in their CB with the Er. The choice of their
representative is the exclusive concern of the Ees;
the Er cannot have any partisan interest therein; it
 LABOR RELATIONS
cannot interfere with, much less oppose, the process
by filing a motion to dismiss or an appeal from it; not
even a mere allegation that some Ees participating
in a PCE are actually managerial Ees will lend an Er
legal personality to block the CE. The Er’s only right
in the proceeding is to be notified or informed
thereof (Republic v. Kawashima Textile, G.R. No.
160352, July 23, 2008).
Q: May an organization which carries a mixture
of rank-and-file and supervisory employees
possess any of the rights of a legitimate labor
organization, including the right to file a petition
for certification election for the purpose of
collective bargaining?
A: Yes. While there is a prohibition against the
mingling of supervisory and rank-and-file
employees in one labor organization, the Labor
Code does not provide for the effects thereof. Thus,
the Court held that after a labor organization has
been registered, it may exercise all the rights and
privileges of a legitimate labor organization. Any
mingling between supervisory and rank-and-file
employees in its membership cannot affect its
legitimacy for that is not among the grounds for
cancellation of its registration, unless such mingling
was brought about by misrepresentation, false
statement or fraud under Article 239 of the Labor
Code (Republic vs. Kawashima Textile, G.R. No.
160352, July 23, 2008).
Issues directly involved in a certification
proceeding
1. Proper composition and constituency of the
bargaining unit; and
2. The veracity of majority membership claims of
the competing unions so as to identity the one
union that will serve as the bargaining
representative of the entire bargaining unit.
NOTE: Some of the Ees may not want to have a
union; hence, “no union” is one of the choices named
in the ballot. If “no union” wins, the company or the
bargaining unit remains un-unionized for at least 12
months, the period is known as 12-month bar. After
that period, a PCE may be filed again.
Five-year representation status of a bargaining
agent cannot be extended
While the parties may agree to extend the CBA’s
original five-year term together with all other CBA
provisions, any such amendment or term in excess
of five years will not carry with it a change in the
union’s exclusive CB status. Under Art. 253-A, LC,
the exclusive bargaining status cannot go beyond
five years and the representation status is a legal
173
matter not for the workplace parties to agree upon.
In other words, despite an agreement for a CBA with
a life of more than five years, either as an original
provision or by amendment, the bargaining union’s
exclusive bargaining status is effective only for five
years and can be challenged within 60 days prior to
the expiration of the CBA’s first five years (FVC
Labor Union-Philippine Transport and General
Workers Organization v. Sama-samang
Nagkakaisang Manggagawa sa FVC-Solidarity of
Independent and General Labor Organizations, G.R.
No. 176249, November 27, 2009).
Q: The Pinagbuklod union filed a Petition for
Certification Election, alleging that it was a
legitimate labor organization of the rank-and-
file employees of Delta Company. On Delta's
motion, the Med Arbiter dismissed the Petition,
based on the finding that Pinagbuklod was not a
legitimate labor union and had no legal
personality to file a Petition for Certification
Election because its membership was a mixture
of rank-and-file and supervisory employees.
Is the dismissal of the Petition for Certification
Election by the Med-Arbiter proper? (2013 Bar
Questions)
A: No, because Delta Company did not have the legal
personality to participate in the certification
election proceedings and to file a motion to dismiss
based on the legitimacy status of the petitioning
union.
Requisits for the validity of the petition for
certification election
1. The union should be legitimate which means
that it is duly registed and listed in the registry
of legitimate labor unions of the BLR or that its
legal personality has not been revoked or
cancelled with finality
2. In case of organized establishments, the
petition for certification election is filed during
(and not before or after) the 60-day freedom
period of a duly registered CBA
3. In case of organized establishments, the
petition complied with the 25% written
support of the members of the bargaining unit
4. The petition is filed not in violation of any of the
four (4) bar rules
Rules prohibiting the filing of petition for
certification election (Bar rules)
A. General rule
The general rule is that in the absence of a CBA duly
registered in accordance with Article 231 of the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Labor Code, a petition for certification election may
be filed at any time.
B. Bar rules
No certification election may be held nder the
following rules:
1. Certification year bar rule;
2. Negotiations bar rule;
3. Bargaining deadlock bar rule; or
4. Contract bar rule
CERTIFICATION YEAR BAR RULE
Under this rule, a petition for certification election
may not be filed within one (1) year:
a. from the date the fact of voluntary recognition
has been entered; or
b. from the date a valid certification, consent, run-
off or re-run election has been conducted
within the bargaining unit.
NEGOTIATION BAR RULE
Under this rule, no petition for certification election
should be3 entertained while the sole and exclusive
bargaining agent and the employer have
commenced and sustained negotiations in good
faith withint the period of one (1) year from the date
of a valid certification, consent, run-off, re-run or
from the date of voluntary recognition.
Once the CBA negotiation have commenced and
while the parties are in the process of negoiating the
terms and conditions of the CA, no challening union
is allowed to file a petition for certification election
that would disturb the process and unduly forestall
the early conclusion of the agreement.
BARGAINING DEADLOCK BAR RULE
Under this rule, a petition for certification election
may not be entertained when a bargaining deadlock
to which an incumbent or certified bargaining agent
is a party has been submitted to conciliation or has
become the subject of a valid notice of strike or
lockout.
CONTRACT BAR RULE
Under this rule, a petition for certification election
may not be filed when a CBA between the employer
and a duly recognized or certified baargaining agent
has been registered with the Bureau of Labor
Relations (BLR) in accordance with the Labor Code.
Where the CBA duly registered, a petition for
certification election may be filed within the 60-day
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
174
freedom period prior to its expiry. The purpose of
this rule is ensure stability in the relationship of the
workers and the employer by preventing frequent
modifications of any CBA entered into by them in
good faith and for the stipulated original period.
The contract bar rule does not apply in the
following cases:
1. Where there is an automatic renewal provision
in the CBA but prior to the date when such
automatic renewal became effective, the
employer seasonably filed a manifestation with
the Bureau of Labor Relations of its intention to
terminate the said agreement if and when it is
established that the bargaining agent does not
represent anymore the majority of the workers
in the bargaining unit.
2. Where the CBA, despite its due registration, is
found in appropriate proceedings that (a) it
contains provisions lower than the standards
fixed by law; or (b) the documents supporting
its registration are falsified, fraudulent or
tainted with misrepresentation.
3. Where the CBA does not foster industrial
stability, such as contracts wher ethe identity of
the representative is in doubt since the mployer
extended direct recognition to the union and
conducted a CBA therewith less than one (1)
year from the time a certification election was
conducted where the “no union” vote won. This
situation obtains in a case where the company
enteed into a CBA with the union when its
status as exclusive bargaining agent of the
employees has not been established yet.
4. Where the CBA was registed before or during
the last sixty (60) days of a subsisting
agreement or during the pendency of a
representation case. It is well-settled that the
60-day freedom period based on the origina
CBA should not be affected by any amendment,
extension or renewal of the CBA for purposes of
certification election.
GROUNDS FOR DENIAL OF PCE
In the following instances, PCE is barred:
1. Non-appearance – Non appearance of the
petitioner for two consecutive scheduled
conferences before the Mediator-Arbiter
despite notice (No appreance rule).
2. Unregistered Union – The petitioning union or
national union/federation is not listed in the
Department’s registry of legitimate labor
unions or that its registration certificate has
been cancelled with finality (Not listed in the
registry union rule).
 LABOR RELATIONS
NOTE: A filing of a petition to cancel DOES NOT
SUSPEND the PCE. To serve as a ground for
dismissal, the legal personality of the
petitioner should have been revoked or
cancelled with finality.
The authority to hear and resolve the petition for
certification election rests with the Mediator-
Arbiter.
When petition for certification election is filed

3. No Charter – Failure of a local/chapter or The proper time to file the PCE depends on whether
national union/federation to submit duly the certified bargaining unit has a CBA or not:
issued charter certificate upon filling of the
petition for certification eletction (Non- 1. If it has no CBA, the petition may be filed
submission of charter certificate rule). anytime outside the 12-month bar (certification
4. Absence of Employment Relationship – year).
Absence of employer-employee relationship 2. If it has CBA, it can be filed only within the last
between all members of the petitioning union 60 days of the 5th year of the CBA.
and the establishment where the propsed
bargaining unit is sought to be represented (No NOTE: At the expiration of the freedom period, the
employment relationship rule). Er shall continue to recognize the majority status of
5. The 12 month Bar – Filing of a petition within the incumbent bargaining agent where no PCE is
one (1) year from the date of the recording of filed.
the voluntary recognition, or within the same
period from a valid certification, consent or Union Election vs. Certification Election
run-off election where no appeal on the results
of the certification, consent or run-off election CERTIFICATION
UNION ELECTION
is pending (One year bar rule). ELECTION
6. Negotiation or Deadlock – a duly certified union Held pursuant to the The process is ordered
has commenced and sustained negotiations union’s constitution and supervised by
with the employer in accordance with Article and by-laws DOLE
250 of the LC within the 12 month bar, or there All Ees whether union
exists a bargaining deadlock which had been or non-union members
submitted to conciliation or arbitration or had Right to vote is
who belong to the
become the subject of a valid notice of strike or enjoyed only by union
appropriate
lockout to which an incumbent or certified members
bargaining unit can
bargaining agent is a party vote
(Negotiation/Deadlock bar rule). The winner in a CE is
7. Existing CBA an entity, a union,
8. Lack of Support – In an organized Winners of union
which becomes the
establishment, the failure to submit the twenty election become
representative of the
five percent (25%) signature requirement to officers and
whole bargaining unit
support the filling of the petition for the representatives of the
that includes even the
certification election (Failure to submit 25% union only
members of the
consent requirement rule). defeated unions.
Ee may intervene in the petition for certification
election NOTE: Both in CE and union election, the prescribed
procedures should be followed.
An Ee may intervene in the petition for certification
election for the purpose of protecting his individual Q: Can a "No-union" win in a certification
right (IRR as amended by D.O. 40-F-03, s. 2008, Book election? (2006 Bar Question)
V, Rule VIII, Sec. 1).
A: Yes. The objective in a CE is to ascertain the
Where petition for certification election is filed majority representation of the bargaining
representative, if the Ees desire to be represented at
The petition for certification election shall be filed all by anyone. Hence, no union is one of the choices
with the Regional Office (IRR, as amended by D.O. 40- in a CE.
F-03, s. 2008).
Alternative Answer: No. A “no union” cannot win
Authority to hear and resolve the petition for in a CE. The purpose of a CE is to select an exclusive
certification election bargaining agent and a no union vote would
precisely mean that the voter is not choosing any of
the contending unions. If the no-union votes
UNIVERSITY OF SANTO TOMAS
175 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
constitute a majority of the valid votes cast, this fact
will all the more mean that no union won in CE. A
one-year bar will consequently stop the holding of
another CE to allow the Er to enjoy industrial peace
for at least one year.
A Petition for Certification Election can be filed at
any time outside of the 60-day freedom period if
there is a mass withdrawal or split from the majority
union (Poquiz, 2012).
Q: In what instance may a petition for
certification election be filed outside the
freedom period of a current collective
bargaining agreement? (1997 Bar Question)
A: As a general rule in an establishment where there
is a CBA in force and effect, a PCE may be filed only
during the freedom period of such CBA. But to have
that effect, the CBA should have been filed and
registered with the DOLE (LC, Art. 231, 253-A and
256).
Thus, a CBA that has not been filed and registered
with the DOLE cannot be a bar to a CE and such
election can be held outside the freedom period of
such CBA.
Alternative Answer: A PCE may be filed outside the
freedom period of a current CBA if such CBA is a new
CBA that has been prematurely entered into,
meaning, it was entered into before the expiry date
of the old CBA. The filing of the PCE shall be within
the freedom period of the old CBA which is outside
the freedom period of the new CBA that had been
prematurely entered into.
Q: Are probationary employees entitled to vote
in a certification election? Why? (1999 Bar
Question)
A: Yes. In a CE, all rank-and-file Ees in the
appropriate bargaining unit are entitled to vote.
This principle is clearly stated in Art. 255, LC which
states that the "labor organization designated or
selected by the majority of the Ees in such unit shall
be the exclusive representative of the Ees in such
unit for the purpose of CB" (Airtime Specialists ,Inc.
v. Ferrer-Calleja, G.R. No. 80612-16, December 29,
1989).
Any Ee, whether employed for a definite period or
not, shall beginning on the first day of his service, be
eligible for membership in any labor organization.
In a CE for the bargaining unit of rank and file Ees,
all rank and file Ees, whether probationary or
permanent are entitled to vote. As long as
probationary Ees belong to the defined bargaining
unit, they are eligible to support the PCE
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
176
(NUWHRAIN-Manila Pavilion Hotel Chapter v.
Secretary, G.R. No. 181531, July 31, 2009).
Direct certification
It is the process whereby the Mediator-Arbiter
directly certifies a labor organization of an
appropriate bargaining unit of a company after a
showing that such petition is supported by at least a
majority of the Ees in the bargaining unit.
Direct certification is no longer allowed
By virtue of Executive Order No. 111, which became
effective on March 4, 1987, the direct certification
previously allowed under the Labor Code had been
discontinued as a method of selecting the exclusive
bargaining agents of the workers. Even in a case
where a union has filed a PCE, the mere fact that
there was no opposition does not warrant a direct
certification. More so in a case when the required
proof is not presented in an appropriate proceeding
and the basis of the direct certification is the union’s
self-serving assertion that it enjoys the support of
the majority of the Ees, without subjecting such
assertion to the test of competing claims (Samahang
Manggagawa sa Permex v. Secretary, G.R. No.
107792, March 2, 1998).
Failure of an independent union to prove its
affiliation with a federation does not affect its
right to file a petition for certification election as
an independent union
As a LLO, it has the right to file a PCE on its own
beyond question. Its failure to prove its affiliation
with a federation cannot affect its right to file said
PCE as an independent union. At the most, its failure
will result in an ineffective affiliation with the
federation. Despite affiliation, the local union
remains the basic unit free to serve the common
interest of all its members and pursue its own
interests independently of the federation (Samahan
ng mga Manggagawa sa Filsystems v. SLE, G.R. No.
128067, June 5, 1998).
Illegally dismissed employees of the company
may participate in the certification election
It is now well-settled that Ees who have been
improperly laid off but who have at present an
unabandoned right to or expectation of re-
employment, are eligible to vote in CEs. Thus, and
to repeat, if the dismissal is under question, as in the
case now at bar whereby a case of illegal dismissal
and/or ULP was filed, the Ees concerned could still
qualify to vote in the elections (Phiippine Fruits &
Vegetables Industries v. Torres, G.R. No. 92391, July 3,
1992).
 LABOR RELATIONS
Employees whose services were terminated are
still entitled to vote during the certification
election
Provided that there is a pending illegal dismissal
case filed by them. While the case is still pending,
the Er-Ee relationship is not yet severed.
How protest should be made during
certification elections
Protest must be raised and contained in the minutes
of the proceedings otherwise it is deemed waived
(National Association of Trade Free Unions v. Mainit
Lumber Development Co. Workers Union, G.R. No.
79526, December 21, 1990). Protests should be
formalized before the Med-Arbiter within 5 days
from the close of the proceedings otherwise it is
deemed abandoned (Timbungco v. Castro, G.R. No.
76111, March 14, 1990).
IN AN UNORGANIZED ESTABLISHMENT
Unorganized Establishment
An unorganized establishment is a bargaining unit
with no recognized or certified bargaining agent. It
does not necessarily refer to an entire company.
NOTE: It may happen that the rank-and-file unit has
a bargaining agent while the supervisory unit still
does not have such agent; thus, the former is already
an “organized establishment” while the latter
remains, in the same company, an unorganized
establishment.
Requirement for certification election in
unorganized establishments
The certification election shall be automatically
conducted upon the filing of a PCE by a LLO.
IN AN ORGANIZED ESTABLISHMENT
Requisites for certification election in an
Organized Establishment
The Mediator-Arbiter is required to automatically
order the conduct of a CE by secret ballot in an
organized establishment as soon as the following
requisites are met:
1. A petition questioning the majority status of the
incumbent bargaining agent is filed before the
DOLE within the 60-day freedom period;
2. Such petition is verified;
3. The petition is supported by the written
consent of at least 25% of all the Ees in the
177
bargaining unit (LC, Art. 256; TUPAS-WFTU v.
Laguesma, G.R. No. 102350, June 30, 1994).
Filing of 25% consent signature in the petition
for certification election
Ideally, the signature should be filed together with
the petition. However, it may be filed after the
petition within a reasonable period of time.
Effect if the petition for certification election
was not accompanied by the requisite 25%
consent signatures
Under the Implementing Rules, absence or failure to
submit the written consent of at least 25% of all the
Ees in the bargaining unit to support the petition is
a ground for denying the said petition. The Supreme
Court said that the Mediator-Arbiter may still have
the discretion to grant or deny the petition. Even if
there is no 25% consent signature submitted
together with the petition, it is within the discretion
of the Med-Arbiter whether to grant or deny the
petition (Port Workers Union v. Bienvenido
Laguesma, G.R. Nos. 94929-30, March 18, 1992). If
the petition, however, is accompanied by the 25%
consent signatures, then the holding of the CE
becomes mandatory (California Manufacturing
Corp. v. Laguesma, G.R. No. 97020, June 8, 1992).
Consent signatures of at least 25% of the
employees in the bargaining unit may not be
submitted simultaneously with the filing of the
petition for certification election
The administrative rule requiring the simultaneous
submission of the 25% consent signatures upon the
filing of PCE should not be strictly applied to
frustrate the determination of the legitimate
representative of the workers. Accordingly, the
Court held that the mere filing of a PCE within the
freedom period is sufficient basis for the issuance of
an order for the holding of a CE, subject to the
submission of the consent signatures within a
reasonable period from such filing (Port Workers
Union of the Phils. v. Laguesma, G.R. Nos. 94929-30,
March 18, 1992).
Effect of Ee’s withdrawal of his signature in the
petition for certification election
If the withdrawal was made before the filing of the
petition, then the withdrawal is presumed to be
voluntary unless there is convincing proof to the
contrary. If the withdrawal was made after the filing
of the petition, the withdrawals are deemed
involuntary. Thus, withdrawals made after the filing
of the petition will not affect the PCE.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Requisites for a petition for certification winner provided they get the majority votes of
election between organized and unorganized the total votes cast.
establishments
Requirements for a run-off election
Art.256. Art.257.
BASIS
ORGANIZED UNORGANIZED 1. An election was conducted with three or more
Bargaining choices
Present None None of the contending union obtained the
agent 2.
Has to be a required majority vote of 50% + 1 of the valid
Petition No need to be votes cast
verified
filed verified There are no objections or challenges that can
petition 3.
No PCE except alter the results materially
within 60 Not applicable. 4. The number of votes received by all contending
days before No freedom unions when added together amounts to at least
Freedom 50% of the total votes cast
the expiration period. Petition
Period
of the CBA. can be filed
(See Art. 253 anytime. NOTE: Thus if “no union” garnered the majority
& 253-A) vote, no run-off elections may be held.
Must be duly
supported by Choices in a run-off election
25% of all the
members of No substantial The unions receiving the highest and 2nd highest
the support rule. number of the votes cast (IRR, Book V, Rule X, Sec. 2).
appropriate
bargaining It is the “No Union” is not a choice in the Run-off Election.
Substantial
unit. intention of law
support Posting of notice for run-off election
is to bring in the
rule
Percentage union, to
base: all implement The notice should be posted by the Election Officer
members of policy behind at least five days before the actual date (IRR, Book V,
an Art. 211(a). Rule X, Sec. 1).
appropriate
bargaining RE-RUN ELECTION
unit.
It is an election that takes place when
NOTE: The approval of the PCE in an unorganized 1. One choice receives a plurality of the vote and
bargaining unit is NEVER appealable, the reason the remaining choices results in a tie; or
being that the law favors unionized than not 2. All choices received the same number of votes.
unionized.
In both instances, the “no union” is also a choice.
RUN-OFF ELECTION CONSENT ELECTION

It is an election conducted when It is an election voluntarily agreed upon by the

1. A CE which provides for three or more choices parties, with or without the intervention by the
results in none of the contending unions DOLE [IRR, Book V, Rule I, Sec.1 (h)].
receiving a majority of the valid votes cast, and
2. There are no objections or challenges which if NOTE: To afford an individual Ee-voter an informed
sustained can materially alter the results, choice where a local/chapter is the petitioning
provided union, the local/chapter shall secure its certificate
3. The total number of votes for all the contending of creation at least five working days before the date
unions is at least 50% of the number of votes of the consent election (IRR as amended by DO 40-F-
cast (IRR, Book V, Rule X, Sec. 1). 03, Book V, Rule VIII, Sec. 1).
4. None of the choices obtained the majority of the
valid votes cast (50%+ 1 second majority);
5. The two choices which garnered the highest
votes will be voted and the one which garners
the highest number of votes will be declared the

UNIVERSITY OF SANTO TOMAS

2016 GOLDEN NOTES
178
 LABOR RELATIONS
Certification election vs. consent election vs. run-off election vs. re-run election

Participation of
Purpose
Election Mediator-Arbiter
Requires PCE filed by a union or
Er. A Med-Arbiter grants the
petition and an election officer is
To determine the sole and
designated by regional director to
exclusive bargaining agent of all
supervise the election.
Certification Election the Ees in an appropriate
bargaining unit for the purpose of
NOTE: Med-Arbiter may
CB.
determine if there is an Er-Ee
relationship and if the voters are
eligible.
To determine the issue of majority
representation of all the workers
in the appropriate CB unit mainly
for the purpose of determining the
Held by agreement of the unions
administrator of the CBA when the
Consent Election with or without the participation
contracting union suffered
of the Med-Arbiter.
massive disaffiliation and not for
the purpose of determining the
bargaining agent for purpose of
CB.
Takes place between the unions
who received the two highest
numbers of votes in a CE with
three or more choices, where not
Run-Off Election
one of the unions obtained the
majority of the valid votes cast,
provided the total union votes is at
least 50% of the votes cast.
Takes place in two instances:
1. If one choice receives a plurality
of the vote and the remaining
choices results in a tie; or
Re-run Election 2. If all choices received the same
number of votes.

In both instances, the no union is

also a choice.

NOTE: Petition for cancellation of registration is not a bar to a PCE. No prejudicial question shall be entertained
in a PCE (D.O. 40-03).

AFFILIATION AND DISAFFILIATION OF THE Purpose of affiliation

LOCAL UNION FROM THE MOTHER UNION
“Affiliate” refers to
1. An independent union affiliated with a
federation, national union; or
2. A local chapter which was subsequently
granted independent registration but did not
disaffiliate from its federation.
The purpose of affiliation is to foster the free and
voluntary organization of a string and united labor
movement [LC, Art. 211 (c)].
How local chapter is created
A duly registered federation or national union may
directly create a local/chapter by issuing a charter
certificate indicating the establishment of a
local/chapter.

UNIVERSITY OF SANTO TOMAS

179 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
1. The chapter shall acquire legal personality only
for purposes of filing a PCE from the date it was
issued a charter certificate
2. The chapter shall be entitled to all other rights
and privileges of a LLO only upon the
submission of the following documents in
addition to its charter certificate:
a. Names of the chapter’s officers, their
addresses, and the principal office of the
chapter
b. Chapter’s constitution and by-laws
c. Where the chapter’s constitution and by-
laws are the same as that of the federation
or the national union, this fact shall be
indicated accordingly
3. The genuineness and due execution of the
supporting requirements shall be
a. Certified under oath by the secretary or
treasurer of the local/chapter, and
b. Attested to by its president [IRR as
amended by D.O. 40-F-03, Book V, Rule III,
Sec. 2(e)]
Reportorial requirements in affiliation
The report of affiliation of independently registered
labor unions with a federation or national union
shall be accompanied by the following documents
1. Resolution of the labor union's board of
directors approving the affiliation;
2. Minutes of the general membership meeting
approving the affiliation;
3. The total number of members comprising the
labor union and the names of members who
approved the affiliation;
4. The certificate of affiliation issued by the
federation in favor of the independently
registered labor union; and
5. Written notice to the Er concerned if the
affiliating union is the incumbent bargaining
agent (D.O. 40-03, Rule, III, Sec. 7 (2003)).
Effect of affiliation
The labor union that affiliates with a federation is
subject to the laws of the parent body under whose
authority the local union functions. The
Constitution, by-laws and rules of the mother
federation, together with the charter it issues to the
local union, constitutes an enforceable contract
between them and between the members of the
subordinate union inter se. Thus, pursuant to the
Constitution and by-laws, the federation has the
right to investigate and expel members of the local
union (Villar v. Inciong, G.R. No. L-50283-84, April 20,
1983).
Disaffiliation of local union from the federation
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
180
GR: A labor union may disaffiliate from the mother
union to form an independent union only during the
60-day freedom period immediately preceding the
expiration of the CBA.
XPN: Even before the onset of the freedom period,
disaffiliation may still be carried out, but such
disaffiliation must be effected by the majority of the
union members in the bargaining unit.
This happens when there is a substantial shift in
allegiance on the part of the majority of the
members of the union. In such a case, however, the
CBA continues to bind the members of the new or
disaffiliated and independent union to determine
the union which shall administer the CBA may be
conducted (ANGLO-KMU v. Samahan ng
Manggagawang Nagkakaisa sa Manila Bay Spinning
Mills at J.P. Coats, G.R. No.118562, July 5, 1996).
Limitation to disaffiliation
Disaffiliation should be in accordance with the rules
and procedures stated in the Constitution and by-
laws of the federation. A local union may disaffiliate
with its mother federation provided that there is no
enforceable provision in the federation’s
constitution preventing disaffiliation of a local
union (Tropical Hut Employees Union v. Tropical Hut,
G.R. Nos. L-43495-99, January 20, 1990).
A prohibition to disaffiliate in the Federation’s
constitution and by-laws is valid because it is
intended for its own protection.
Locals or chapters who retained status as LLO shall
be allowed to register as independent unions. If they
fail to register, they shall lose their legitimate status
upon the expiration of the CBA.
Q: PSEA is a local union in Skylander Company
which is affiliated with PAFLU. PSEA won the
certification election among the rank and file
employees of the Skylander Company but its
rival union PSEA-WATU protested the results.
Pending the resolution of such controversy,
PSEA disaffiliated with PAFLU and hence
affiliated with NCW which was supported by its
members. May a local union disaffiliate with its
mother federation pending the settlement of the
status as the sole and exclusive bargaining
agent?
A: Yes. The pendency of an election protest does not
bar the valid disaffiliation of the local union which
was supported by the majority of its members.
 LABOR RELATIONS
The right of a local union to disaffiliate with the
federation in the absence of any stipulation in the
Constitution and by-laws of the federation
prohibiting disaffiliation is well settled. Local
unions remain as the basic unit of association, free
to serve their own interest subject to the restraints
imposed by the Constitution and by-laws of national
federation and are free to renounce such affiliation
upon the terms and conditions laid down in the
agreement which brought such affiliation to
existence. In the case at bar, no prohibition existed
under the Constitution and by-laws of the
federation. Hence, the union may freely disaffiliate
with the federation (Philippine Skylanders v. NLRC,
G.R. No. 127374, January 31, 2002).

Independently Registered vs. Unregistered Chartered Local Union

CHARTERED LOCAL UNION

Basis Independently Registered
How to affiliate? By signing contract of affiliation
Would not affect its being an LLO
Effect of and therefore it would continue to
Disaffiliation to the have legal personality and to
union (local) possess all rights and privileges of LLO, unless the local chapter is covered
LLO.
An existing CBA would continue to
Effect of
be valid as the labor organization
Disaffiliation to the
can continue administering the
CBA
CBA.
Labor organization entitled to the
Entitlement to union
union dues and not the federation
dues after
from which the labor organization
Disaffiliation
disaffiliated.
Unregistered
By application with the federation for the
issuance of a charter certificate to be
submitted to the Bureau Labor Relations
Would cease to be an LLO and would no
longer have the legal personality and the
rights and privileges granted by law to
by its duly registered CBA.
The CBA would continue to be valid up to
its expiration date.
Union dues may no longer be collected as
there would no longer be any labor union
that is allowed to collect such union dues
from the Ees.

SUBSTITUTIONARY DOCTRINE UNION DUES AND SPECIAL ASSESSMENTS

Under this doctrine, where there occurs a shift in the
Ees union allegiance after the execution of a CB
contract with the Er, the Ees can change their agent
(labor union) but the CB contract which is still
subsisting continues to bind the Ees up to its
expiration date. They may however, bargain for the
shortening of said expiration date.
NOTE: The Ee cannot revoke the validly executed
CB contract with their Er by the simple expedient of
changing their bargaining agent. The new agent
must respect the contract (Benguet Consolidated Inc.
v. BCI Employees and Worker’s Union-PAFLU, G.R. No.
L-24711, April 30, 1968).
Dues and assessments which the union may
collect
Legitimate labor organizations are authorized to
collect reasonable amount of the following
1. Membership fees
2. Union dues
3. Assessments
4. Fines
5. Contribution for labor education and research,
mutual death and hospitalization benefits,
welfare fun, strike fund and credit and
cooperative undertakings [LC, Art. 277 (a)]
6. Agency fees [LC, Art. 248 (e)]

However, it cannot be invoked to support the Assessments

contention that a newly certified CB agent
automatically assumes all the personal Payments used for a special purpose. Especially if
undertakings of the former agent-like the “no strike required only for a limited time.
clause” in the CBA executed by the latter.
Union dues

These are regular monthly contributions paid by the

members to the union in exchange for the benefits
given to them by the CBA and to finance the
activities of the union in representing the union.

UNIVERSITY OF SANTO TOMAS

181 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Check-off
It is a method of deducting from an Ee’s pay at a
prescribed period, the amounts due the union for
fees, fines and assessments.
Deductions for union service fees are authorized by
law and do not require individual check-off
authorizations.
Nature and purpose of check-off
Union dues are the lifeblood of the union. All unions
are authorized to collect reasonable membership
fees, union dues, assessments, fines and other
contributions for labor education and research,
mutual death and hospitalization benefits, welfare
fund, strike fund and credit and cooperative
undertakings [LC, Art. 277(a)].
Special assessments or extraordinary fees
These are assessments for any purpose or object
other than those expressly provided by the labor
organization’s Constitution and by-laws.
REQUIREMENTS FOR VALIDITY
Requisites of a valid check-off
GR: No special assessments, attorney’s fees,
negotiation fees or any other extraordinary fees
may be checked off from any amount due to an Ee
without individual written authorization duly
signed by the Ee.
The authorization should specify the
1. Amount
2. Purpose &
3. Beneficiary of the deduction.
XPNs:
1. For mandatory activities under the LC
Check-off vs. special assessments
BASIS Check-off
(Union Dues)
By obtaining the individual written
authorization duly signed by the Ee which
must specify
How 1. Amount
approved 2. Purpose
3. Beneficiary
(Agency fees)
Not necessary when
1. For mandatory activities under the LC
2. For Agency Fees
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
182
2. For Agency Fees
3. When non-members of the union avail of the
benefits of the CBA:
a. Non-members may be assessed union dues
equivalent to that paid by union members;
b. Only by board resolution approved by
majority of the members in general
meeting called for the purpose.
Requisites for a valid levy of special assessment
or extraordinary fees
1. Authorization by a written resolution of the
majority of all members at the general
membership meeting duly called for that
purpose;
2. Secretary’s record of the minutes of the
meeting, which must include the
a. List of members present
b. Votes cast
c. Purpose of the special assessments
d. Recipient of such assessments;
3. Individual written authorization to check-off
duly signed by the Ee concerned – to levy such
assessments. [LC, Art. 241 (n)]
Effect of failure to strictly comply with the
requirements set by law
It shall invalidate the questioned special
assessments. Substantial compliance with the
requirements is not enough in view of the fact that
the special assessment will diminish the
compensation of union members (Palacol v. Ferrer-
Calleja,G.R. No. 85333, February 26, 1990).
Jurisdiction over check-off disputes
Being an intra-union dispute, the RD of the DOLE
has jurisdiction over check off disputes.
Special Assessment
By written resolution approved by majority of
all the members at the meeting called for that
purpose.
No exception; written resolution is mandatory
in all instances.
 LABOR RELATIONS
Exception to 3. When non-members of the union avail
such of the benefits of the CBA
requirement a. Said non-members may be assessed
union dues equivalent to that paid by
union members;
b. Only by Board resolution approved by
majority of the members in general
meeting called for the purpose

AGENCY FEES bargaining

unit who
Agency fee receive the
benefits under
It is an amount equivalent to union dues, which a the CBA
non-union member pays to the union because he There must be Can be
benefits from the CBA negotiated by the union. an individual assessed even
written without the
NOTE: Payment by non-union members of agency Need for
authorization written
fees does not amount to unjust enrichment because Written
by individual authorization
the purpose of such dues is to avoid discrimination Authorization
members. of the
between union and non-union members. employee
concerned.
Q: A is employed by XYZ Company where XYZ
Employees Union (XYZ-EU) is the recognized REQUISITES FOR ASSESSMENT
exclusive bargaining agent. Although A is a
member of rival union XYR-MU, he receives the Requisites for assessment of agency fees
benefits under the CBA that XYZ-EU had
negotiated with the company. XYZ-EU assessed 1. The Ee is part of the bargaining unit
A, a fee equivalent to the dues and other fees 2. He is not a member of the union
paid by its members but A insists that he has no 3. He partook of the benefits of the CBA
obligation to pay said dues and fees because he
is not a member of XYZ–EU and he has not issued NOTE: Other than for mandatory activities under
an authorization to allow the collection. Explain the Code, no special assessments, attorney’s fees,
whether his claim is meritorious. (2010 Bar negotiation fees or any other extraordinary fees
Question) may be checked off from any amount due to an Ee
without his authorization. The individual
A: No. The fee exacted from A takes the form of an authorization required under this article shall not
agency fee which is sanctioned by Art. 248 (e), LC. apply to non-members of the recognized CB agent
The collection of agency fees in an amount with regard to assessment of agency fees.
equivalent to union dues and fees from Ees who are
not union members is recognized under the LC. The Union Dues vs. Agency Fees
union may collect such fees even without any
written authorization from the non-union member Union Dues Agency Fee
Ees, if said Ees accept the benefits resulting from the Is deducted from non-
CBA. The legal basis of agency fees is quasi- Is deducted from members of the
contractual (Del Pilar Academy v. Del Pilar Academy members for the bargaining agent
Employees Union, G.R. No. 170112, April 30, 2008). payment of union (union) for the
dues enjoyment of the
CHECK-OFF: UNION DUES vs. AGENCY FEES benefits under the CBA.
May not be deducted
Union dues vs. agency fees from the salaries of May be deducted from
the union members the salary of the Ees
BASIS UNION DUES AGENCY FEES without the written without their written
Collected from Collected by consent of the consent.
union the union workers affected.
From whom members from non-
collected members
belonging to
the same
UNIVERSITY OF SANTO TOMAS
183 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
RIGHT TO COLLECTIVE BARGAINING
Collective bargaining
1. It is the process of negotiation by an
organization or group of workmen, in behalf of
its members, with the Er, concerning wages,
hours of work, and other terms and conditions
of employment, and
2. The settlement of disputes by negotiation
between an Er and the representative of his Ees.
GR: No court or administrative agency or official
shall have the power to set or fix wages, rates of pay,
hours of work, or other terms and conditions of
employment
XPNs: As otherwise provided under the LC:
1. National Wages and Productivity Commission
and RTWPB as to wage fixing (LC, Art. 99 and
122).
2. NCMB and NLRC as to wage distortion (LC, Art.
124).
3. SLE and President of the Philippines as to
certification and assumption of powers over
labor disputes [LC, Art. 236(g)].
Purpose behind this rule
It is to encourage a truly democratic method of
regulating the relations between the Ers and Ees by
means of agreements freely entered into through
CB.
Parties to a collective bargaining
1. Employer
2. Ees, represented by the exclusive bargaining
agent
Jurisdictional preconditions in Collective
Bargaining (Kiok Loy Doctrine)
The mechanics of CB, which is defined as
negotiations towards a collective agreement, is set
in motion only when the following jurisdictional
preconditions are present, namely
1. Possession of the status of majority
representation of Ees representative in
accordance with any of the means of selection
or designation provided for by the LC;
2. Proof of majority representation;
3. A demand to bargain under Art. 250 (a), LC
(Kiok Loy v. NLRC, G.R. No. L-54334, January 22,
1986).
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
184
Commencement of collective bargaining
Bargaining commences within 12 months after the
determination and certification of the Ees exclusive
bargaining representative (certification year).
Procedure in collective bargaining
When a party desires to negotiate an agreement
1. It shall serve a written notice upon the other
party with a statement of proposals
2. Reply by the other party shall be made within
10 days with counter proposals
3. In case of differences, either party may request
for a conference which must be held within 10
calendar days from receipt of request
4. If not settled, NCMB may intervene and
encourage the parties to submit the dispute to a
VA
5. If not resolved, the parties may resort to any
other lawful means (either to settle the dispute
or submit it to a VA).
NOTE: During the conciliation proceeding in the
NCMB, the parties are prohibited from doing any act
which may disrupt or impede the early settlement
of disputes [LC, Art. 250 (d)].
Stages in Collective Bargaining
1. Preliminary process: Sending a written notice
for negotiation which must be clear and
unequivocal
2. Negotiation process.
3. Execution process: The signing of the
agreement
4. Publication for at least 5 days before ratification
5. Ratification by the majority of all the workers in
the bargaining unit represented in the
negotiation (not necessary in case of arbitral
award)
6. Registration process.
7. Administration process: The CBA shall be
jointly administered by the management and
the bargaining agent for a period of 5 years.
8. Interpretation and Application process.
NOTE: Members of Cooperatives cannot invoke the
right to collective bargaining because each member
is considered an owner. (2012 Bar) (Benguet
Electric Cooperative vs. Pura Ferrer-Calleja, G.R. No.
79025, Dec. 29, 1989)
DUTY TO BARGAIN COLLECTIVELY
Duty to bargain collectively
The duty to bargain collectively means the
performance of a mutual obligation to meet and
 LABOR RELATIONS
convene promptly and expeditiously in good faith
for the purpose of negotiating an agreement with
respect to wages, hours of work and all other terms
and conditions of employment including proposals
for adjusting any grievances or questions arising
under such agreement and executing a contract
incorporating such agreements if requested by
either party but such duty does not compel any
party to agree to a proposal or to make any
concession (LC, Art. 252).
When there is a CBA, the duty to bargain collectively
shall also mean that neither party shall terminate
nor modify such agreement during its lifetime.
However, either party can serve a written notice to
terminate or modify the agreement at least 60 days
prior to its expiration date. It shall be the duty of
both parties to keep the status quo and to continue
in full force and effect the terms and conditions of
the existing agreement during the 60-day period
and/or until a new agreement is reached by the
parties (LC, Art. 253).
Commencement of duty of the Er to bargain
collectively
Only after the union requests the Er to bargain. If
there is no demand, the Er cannot be in default.
NOTE: Where a majority representative has been
designated, it is a ULP for the Er, as a refusal to
collectively bargain, to deal and negotiate with the
minority representative to the exclusion of the
majority representative.
Where there is a legitimate representation issue,
there is no duty to bargain collectively on the part of
the Er (Lakas ng mga Manggagawang Makabayan v.
Marcelo Enterprises, G.R. No. L-38258, November 19,
1982).
Restrictions to the duty to bargain collectively
1. Such duty does not compel any party to agree to
a proposal or to make any concession.
2. Parties cannot stipulate terms and conditions of
employment which are below the minimum
requirements prescribed by law.
Q: Does a petition for cancellation of a union’s
certificate of registration involve a prejudicial
question that should first be settled before
parties could be required to collectively
bargain?
A: No. A pending cancellation proceeding is not a
bar to set mechanics for CB. If a certification
election may still be held even if a petition for
cancellation of a union’s registration is pending,
185
more so that the CB process may proceed. The
majority status of the union is not affected by the
cancellation proceedings (Capitol Medical Center v.
Trajano,G.R. No. 155690, June 30, 2005).
Impasse in bargaining
1. Where the subject of a dispute is a mandatory
bargaining subject, either party may bargain to
an impasse as long as he bargains in good faith.
2. Where the subject is non-mandatory, a party
may not insist in bargaining to the point of
impasse. His instance may be construed as
evasion of duty to bargain.
Test of bargaining in good faith
There is no perfect test of good faith in bargaining.
The good faith or bad faith is an inference to be
drawn from the facts and is largely a matter for the
NLRC’s expertise. The charge of bad faith should be
raised while the bargaining is in progress.
NOTE: With the execution of the CBA, bad faith can
no longer be imputed upon any of the parties
thereto. All provisions in the CBA are supposed to
have been jointly and voluntarily incorporated
therein by the parties. This is not a case where
private respondent exhibited an indifferent attitude
towards CB because the negotiations were not the
unilateral activity of petitioner union. The CBA is
good enough that private respondent exerted
“reasonable effort of good faith bargaining”
(Samahang Manggagawa sa Top Form
Manufacturing-United Workers of the Phiippinels v.
NLRC, G.R. No. 113856, September 7, 1998).
Q: Does an employer’s steadfast insistence to
exclude a particular substantive provision in the
negotiations for a CBA constitute refusal to
bargain or bargaining in bad faith?
A: No. This is no different from a bargaining
representative’s perseverance to include one that
they deem of absolute necessity. Indeed, an
adamant insistence on a bargaining position to the
point where the negotiations reach an impasse does
not establish bad faith. Obviously, the purpose of CB
is the reaching of an agreement resulting in a
contract binding on the parties; but the failure to
reach an agreement after negotiations have
continued for a reasonable period does not
establish a lack of good faith. The statutes invite and
contemplate a CB contract, but they do not compel
one. The duty to bargain does not include the
obligation to reach an agreement. While the law
makes it an obligation for the Er and the Ees to
bargain collectively with each other, such
compulsion does not include the commitment to
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
precipitately accept or agree to the proposals of the
other. All it contemplates is that both parties should
approach the negotiation with an open mind and
make reasonable effort to reach a common ground
of agreement (Union of Filipro Employees v. Nestle
Philippines, G.R. Nos. 158930-31, March 3, 2008).
Deadlock
Deadlock is synonymous with impasse or a
standstill which presupposes reasonable effort at
good faith bargaining but despite noble intentions
does not conclude an agreement between the
parties.
Occurrence of deadlock in collective bargaining
A deadlock arises when there is an impasse which
presupposes reasonable effort at good faith in
bargaining which, despite noble intentions, does not
conclude in agreement between the parties.
Remedies in case of deadlock in the
renegotiation of the collective bargaining
agreement
The parties may:
1. Call upon the NCMB to intervene for the
purpose of conducting conciliation or
preventive mediation;
2. Refer the matter for VA or compulsory
arbitration;
3. Declare a strike or lockout upon compliance
with the legal requirements (This remedy is a
remedy of last resort)
Economic exigencies
Economic exigencies cannot justify refusal to
bargain. An Er is not guilty of refusal to bargain by
persistently rejecting the union’s economic
demands where he is operating at a loss, on a low
profit margin, or in a depressed industry, as long as
he continues to negotiate. But financial hardship
constitutes no excuse for refusing to bargain
collectively.
WHEN THERE IS NO CBA
Duty to bargain collectively when there is no
collective bargaining agreement
In the absence of an agreement or other voluntary
arrangement providing for a more expeditious
manner of CB, it shall be the duty of Er and the
representatives of the Ees to bargain collectively in
accordance with the provisions of the LC (LC, Art.
251).
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
186
WHEN THERE IS A CBA
Duty to bargain collectively when there is a
collective bargaining agreement
When there is a CBA, the duty to bargain
collectively, in addition to Art. 252, shall mean that
1. Neither party shall terminate nor modify such
agreement during its lifetime.
2. However, either party can serve a written
notice to terminate or modify the agreement at
least 60 days prior the expiration of its 5th year.
3. It shall be the duty of both parties to keep the
status quo and to continue in full force and effect
the terms and conditions of the existing
agreement during the 60-day period and/or
until a new agreement is reached by the parties
(LC, Art. 253).
CBA is a contract of indefinite period under Art. 253.
“Freedom period” – pertains to the last 60 days of
the 5-year lifetime of a CBA prior to its expiration.
The automatic renewal clause is deemed
incorporated in all CBAs because it is mandated by
law. Pending the renewal of the CBA, the parties are
bound to keep the status quo and to treat the terms
and conditions embodied therein in full force and
effect during the 60-day freedom period and/or
until a new agreement is negotiated and ultimately
concluded and reached by the parties.
As such, the Er cannot discontinue the grant of the
benefits embodied in the CBA which just expired as
it is duty-bound to maintain the status quo by
continuing to give the same benefits until a renewal
thereof is reached by the parties. On the other hand,
the union has to observe and continue to abide by
itds undertakings and commitments under the
expired CBA until the same is renewed.
A CBA is entered into in order to foster stability and
mutual cooperation between labor and capital. An
Er should not be allowed to rescind unilaterally its
CBA with the duly certified bargaining agent it had
previously contracted with, and decide to bargain
anew with a different group if there is no legitimate
reason for doing so and without first following the
proper procedure. If such behavior would be
tolerated, bargaining and negotiations between the
Er and the union will never be truthful and
meaningful, and no CBA forged after arduous
negotiations will ever be honored or be relied upon
(Employees Union of Bayer Phils., FFW v. Bayer
Philippines, Inc., 636 SCRA 472).
 LABOR RELATIONS
Single Enterprise Bargaining
It involves negotiation between one certified labor
union and one Er. Any voluntarily recognized or
certified labor union may demand negotiations with
its Er for terms and conditions of work covering Ees
in the bargaining unit concerned (IRR as amended by
Department Order No. 40-03, s. 2003, Book V, Rule
XVI, Sec. 3).
Multi-employer Bargaining Scheme
It involves negotiation between and among several
certified labor unions and Ers.
Any legitimate labor union and Er may agree in
writing to come together for the purpose of CB
provided that
1. Only legitimate labor unions which are
incumbent exclusive bargaining agents may
participate and negotiate;
2. Only Ers with counterpart legitimate labor
unions which are incumbent bargaining agents
may participate and negotiate; and
3. Only those legitimate labor unions which
pertain to employer units which consent to
multi-Er bargaining may participate (IRR as
amended by Department Order No. 40-03, s.
2003, Book V, Rule XVI, Sec. 5).
COLLECTIVE BARGAINING AGREEMENT
Collective Bargaining Agreement (Law of the
Plant)
It is a contract executed upon request of either the
Er or the exclusive bargaining representative of the
Ees incorporating the agreement reached after
negotiations with respect to wages, hours of work,
terms and conditions of employment, including
proposals for adjusting any grievance or questions
under the agreement.
NOTE: The certification of the CBA by the BLR is not
required to make such contract valid. Once it is duly
entered into and signed by the parties, a CBA
becomes effective as between the parties whether
or not it has been certified by the BLR (Liberty Flour
Mills Employees Association v. Liberty Flour Mills, G.R.
Nos. 58768-70, December 29, 1989).
Nature of a collective bargaining agreement
The CBA is the law between the contracting
parties—the CB representative and the Er-
company. Compliance with a CBA is mandated by
the expressed policy to give protection to labor
187
(Vicente Almario v. Philippine Airlines, Inc., 532 SCRA
614).
Purpose of a collective bargaining agreement
The goal of CB is the making of agreements that will
stabilize business conditions and fix fair standards
of working conditions (P.I. Manufacturing,
Incorporated v. P.I. Manufacturing Supervisors and
Foremen Association, 543 SCRA 614).
Filing for registration of collective bargaining
agreement
Within 30 days from execution of CBA, the parties
thereto shall submit the agreement to the Regional
Office which issued the certificate of registration/
certificate of creation of chartered local of the labor
union-party to the agreement.
Requirements for registration
The application for CBA registration shall be
accompanied by the original and two duplicate
copies of the following requirements
1. CBA
2. A statement that the CBA was posted in at least
two conspicuous places in the establishment
concerned for at least five days before its
ratification
3. Statement that the CBA was ratified by the
majority of the Ees in the bargaining unit.
The following documents must be certified under
oath by the representative of the Er and the labor
union. No other document shall be required in the
registration of the CBA.
In one case, the CBA was not posted for at least five
days in two conspicuous places in the establishment
before ratification, to enable the workers to clearly
inform themselves of its provisions. Moreover, the
CBA submitted to the MOLE (now SOLE) did not
carry the sworn statement of 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. These requirements being
mandatory, non-compliance therewith rendered
the said CBA ineffective (Associated Trade Unions v.
Trajano, G.R. No. L-75321, June 20, 1988).
Ratification of the CBA
G.R. The agreement negotiated by the employees'
EBR should be ratified or approved by the majority
of all the workers in the bargaining unit. The proper
ratifying group is not the majority union but the
majority of all the workers in the bargaining unit
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
represented by the negotiation. A CBA is valid MANDATORY PROVISIONS OF THE CBA
between the parties, but unless it will be ratified, it
shall not be enforceable. Mandatory provisions of the collective
bargaining agreement
XPN. Ratification of the CBA by the employees is not
needed when the CBA is a product of an arbitral 1. Grievance Conclusive arbitration
award by a proper government authority [LC, Art. machinery clause
263 (g)] or a voluntary arbitrator (LC, Art. 262). 2. Voluntary
Arbitration
Zipper clause 3. Wages
4. Hours of work
It is a stipulation in a CBA indicating that issues that 5. Family planning
could have been negotiated upon but not contained 6. Rates of pay
in the CBA cannot be raised for negotiation when 7. Mutual observance clause
the CBA is already in effect. 8. No Strike-No Lockout Clause
9. Labor-Management Council
A CBA is not an ordinary contract but one impressed 10. Drug-free provision
with public interest, only provisions embodied in
the CBA should be so interpreted and complied NOTE: In addition, the BLR requires that the CBA
with. Where a proposal raised by a contracting should include a clear statement of the term of the
party does not find print in the CBA, it is not a part CBA. Er’s duty to bargain is limited to mandatory
thereof and the proponent has no claim whatsoever bargaining subjects; as to other matters, he is free to
to its implementation (SMTFM-UWP v. NLRC, G.R. bargain or not.
No. 113856, September 7, 1998) under the zipper
clause. GRIEVANCE PROCEDURE

60-day freedom period Grievance

During the 60-day freedom period
1. A labor union may disaffiliate from the mother
union to form a local or independent union only
during the 60-day freedom period immediately
preceding the expiration of the CBA.
2. Either party can serve a written notice to
terminate or modify agreement at least 60 days
prior to its expiration period.
3. A PCE may be filed.
There is grievance when a dispute or controversy
arises over the interpretation or implementation of
any provision of the CBA or interpretation or
enforcement of company personnel policies [IRR,
Book V, Rule I, Sec.1 (u)].
In order to be grievable, the violation of the CBA
should be ordinary and not gross in character;
otherwise, they shall be considered as ULP.

Notice Period under Art. 253
The freedom period under Article 253-A & 256 is
different from the other 60-day period mentioned in
Article 253. The latter speaks of the right of the
parties to propose modifications to the existing CBA,
as an exception to the rule that the CBA cannot be
modified during its lifetime. This 60-day period
does not and cannot refer to the representative
status of the incumbent union since the acquisition
or loss of representative status is to be resolved
through CE.
Gross violation of the CBA is defined as flagrant
and/or malicious refusal by a party thereto to
comply with the economic provisions thereof. If
what is violated is a non-economic or a political
provision of the CBA, the same shall not be
considered as ULP and may thus be processed as a
grievable issue in accordance with and following the
grievance machinery laid down in the CBA.
Provisions that must be included in a collective
bargaining agreement
1. Provisions that will ensure the mutual
observance of its terms and conditions.
2. A machinery for adjustment and resolution of
grievances arising from the:
a. Interpretation/implementation of the CBA
and
b. Interpretation/ enforcement of company
personnel policies.

UNIVERSITY OF SANTO TOMAS

2016 GOLDEN NOTES
188
 LABOR RELATIONS
Grievance machinery
It refers to the mechanism for the adjustment and
resolution of grievances arising from the
interpretation or enforcement of company
personnel policies. It is part of the continuing
process of CB.
NOTE: It is a mandatory provision in any CBA. No
collective agreement can be registered in the
absence of such procedure.
Establishment of grievance machinery
Grievance machinery should be established:
1. Agreement by the parties
2. A grievance committee – composed of at least
two representatives each from the members of
the bargaining unit and the Er, unless otherwise
agreed upon by the parties – shall be created
within 10 days from the signing of CBA
NOTE: Although Art. 260, LC mentions “parties to a
CBA”, it does not mean that grievance machinery
cannot be set up in a CBA-less enterprise. In any
workplace where grievance can arise, grievance
machinery can be established.
Grievance procedure
It refers to the internal rules of procedure
established by the parties in their CBA which
usually consists of successive steps starting at the
level of the complainant and his immediate
supervisor and ending, when necessary, at the level
of the top union and company officials and with VA
as the terminal step.
Q: What will happen to grievances submitted to
the grievance machinery which are not settled
within seven calendar days from the date of
their submission?
A: They shall automatically be referred to VA
prescribed in the CBA [LC, Art. 260 (2)].
NOTE: The automatic transmittal to the VA is in the
nature of an appeal.
Either party may serve notice upon the other of its
decision to submit the issue to VA. If the party upon
whom such notice is served fails/refuses to respond
within seven days from receipt, VA/panel
designated in the CBA shall commence arbitration
proceedings. If the CBA does not designate or if the
parties failed to name the VA/panel, the regional
branch of NCMB appoints VA/panel.
Q: How are cases arising from the
189
Interpretation or implementation of collective
bargaining agreements handled and disposed?
(1995 Bar Question)
A: They are disposed through the grievance
machinery and if not resolved by the grievance
machinery, through VA.
VOLUNTARY ARBITRATION
Voluntary arbitration
It refers to the mode of settling labor management
disputes by which the parties select a competent,
trained and impartial third person who shall decide
on the merits of the case and whose decision is final
and executory [NCMB Revised Procedural Guidelines
in the Conduct of Voluntary Arbitration Proceedings,
(2004), Rule II, Sec. 1(d)].
Basis for voluntary arbitration
It is the policy of the State to promote and
emphasize the primacy of free collective bargaining
and negotiations, including voluntary arbitration,
mediation and conciliation, as modes of settling
labor or industrial disputes [LC, Art. 211(a)].
The State shall promote the principle of shared
responsibility between workers and employers and
the preferential use of voluntary modes in settling
disputes, including conciliation, and shall enforce
their mutual compliance therewith to foster
industrial peace (1987 Constitution, Art. XIII, Sec. 3).
The primacy of voluntary arbitration is mandated
by the Philippine Constitution itself and entrenched
in the Labor Code as a matter of basic industrial
relations policy. These legal mandates, in turn, are
formalized recognition of the fundamental tenet
that the best persons to resolve a labor dispute are
the party disputants themselves. (Azucena, 2010)
Voluntary arbitrator
Any person who has been accredited by the NCMB
as such, or any person named or designated in the
CBA by the parties as their voluntary arbitrator, or
one chosen by the parties with or without the
assistance of the NCMB, pursuant to a selection
procedure agreed upon in the CBA or one appointed
by the NCMB in case either of the parties to the CBA
refuses to submit to VA.
A voluntary arbitrator is not an Ee, functionary or
part of the government or of the DOLE, but he is
authorized to render arbitration services provided
under labor laws (Ludo & Luym Corporation v.
Saornido, G.R. No. 140960, January 20, 2003).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Compulsory arbitration vs. Voluntary
arbitration
Compulsory arbitration is a system whereby the
parties to a dispute are compelled by the
government to forego their right to strike and are
compelled to accept the resolution of their dispute
through arbitration by a 3rd party. The essence of
arbitration remains since a dispute is resolved by a
disinterested 3rdparty whose decision is final and
binding on the parties. The 3rdparty is normally
appointed by the government.
Under VA, referral of a dispute by the parties is
made, pursuant to a VA clause in their CBA, to an
impartial 3rdperson for a final and binding
resolution. Ideally, arbitration awards are to be
complied with by both parties without delay, such
that once an award has been rendered by an
arbitrator, nothing is left to be done by both parties
but to comply with the same (Luzon Development
Bank v. Association of Luzon Development Bank
Employees, G.R. No. 120319, October 6, 1995).
Enforcement of decision of a voluntary
arbitrator
Upon motion of any interested party, the voluntary
arbitrator or panel of voluntary arbitrators or the
LA in the region where the movant resides, in case
of the absence or incapacity of the voluntary
arbitrator or panel of voluntary arbitrators, for any
reason, may issue a writ of execution requiring
either the sheriff of the NLRC or regular courts or
any public official whom the parties may designate
in the submission agreement to execute the final
decision, order or award.
NO STRIKE-NO LOCKOUT CLAUSE
No strike-no Lockout clause
It is a clause in the CBA which is an expression of the
firm commitment of the parties that, on the part of
the union, it will not mount a strike during the
effectivity of the CBA, and on the part of the Er, that
it will not stage a lockout during the lifetime thereof.
A strike conducted in violation of this clause is
illegal.
Application of no strike-no Lockout clause in the
collective bargaining agreement
The “no strike-no lockout” clause in the CBA applies
only to economic strikes. It does not apply to ULP
strikes. Hence, if the strike is founded on a ULP of
the Er, a strike declared by the union cannot be
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
190
considered a violation of the no strike clause
(Master Iron Labor Union v. NLRC, G.R. No. 92009,
February 17, 1993).
Effects of acts of violence committed in the
course of strike
1. If pervasive, widespread and regularly
committed, it is illegal, union is responsible.
2. If isolated, sporadic or remote, it is still legal but
the person who committed is responsible.
LABOR MANAGEMENT COUNCIL
Formation of Labor Management Council
Labor-Management Councils or Committees may be
formed voluntarily by workers and Ers in the event
no legitimate labor organization exists for the
purpose of promoting industrial peace.
NOTE: One thing it cannot and must not do is to
replace a union. It can deal with the Er on matters
affecting the employee's rights, benefits and welfare
(Azucena, 2010).
Role of the DOLE in the creation of Labor
Management Councils
The DOLE shall promote the formation of labor-
management councils in organized and unorganized
establishments to enable the workers to participate
in policy and decision-making processes in the
establishment, insofar as said processes will
directly affect their rights, benefits and welfare,
except those which are covered by CB agreements
or are traditional areas of bargaining.
The DOLE shall promote other labor-management
cooperation schemes and, upon its own initiative or
upon the request of both parties, may assist in the
formulation and development of programs and
projects on productivity, occupational safety and
health, improvement of quality of work life, product
quality improvement, and other similar schemes
(IRR, Book V, Rule XXI, Sec. 1).
Selection of representative in the Management
Council
In organized establishments, the workers’
representative to the council shall be nominated by
the exclusive bargaining representative. In
establishments where no LLO exists, the workers’
representative shall be elected directly by the Ees at
large (IRR, Book V, Rule XXI, Sec. 2).
 LABOR RELATIONS
Grievance Machinery vs. Labor Management Hold-over Principle
Council
It shall be the duty of both parties to keep the status
GRIEVANCE LABOR MANAGEMENT quo and to continue in full force and effect the terms
MACHINERY COUNCIL and conditions of the existing agreement during the
60-day period and/or until a new agreement is
Resolves disputes in the Resolves disputes not
reached by the parties. Despite the lapse of the
interpretation and within the provisions of
formal effectivity of the CBA the law still considers
implementation of the the CBA (PHIMCO
the same as continuing in force and effect until a
meaning of the Industries v. PHIMCO
new CBA shall have been validly executed.
provisions of the CBA Industries Labor
and of the company Association, G.R. No. Q: Does the hold-over principle apply to
personnel policies. 170830, August 11, imposed CBA / arbitral award?
2010).
A: Yes. The hold-over principle, i.e., the duty of the
DURATION parties to keep the status quo and to continue in full
force and effect the terms and conditions of the
Duration of a collective bargaining agreement existing CBA until a new agreement is reached by
the parties apply to an imposed CBA. The law does
1. 5 years – Representation aspect (refers to the not provide for any exception nor qualification on
identity and majority status of the union that which economic provisions of the existing
negotiated the CBA as the exclusive agreement are to retain its force and effect.
bargaining representative) Likewise, the law does not distinguish between a
2. 3 years after the execution of the CBA – All CBA duly agreed upon by the parties and an
other provisions which refers to the rest of imposed CBA (General Milling Corporation – ILU v.
the CBA, economic as well as non-economic General Milling Corp., G.R. No. 193723, July 20, 2011).
provisions except representation (LC, Art.
253-A). FOR ECONOMIC PROVISIONS

NOTE: Neither party shall terminate nor modify the
CBA during its lifetime. However, either party can
serve a written notice to terminate or modify the
agreement at least 60 days prior to its expiration
date. It shall be the duty of both parties to keep the
status quo and to continue in full force and effect the
terms and conditions of the existing agreement
during the 60-day period and/or until a new
agreement is reached by the parties (LC, Art. 253,).
Economic provisions of a collective bargaining
agreement
Economic provisions are provisions granting
economic benefits to the Ees such as increases,
vacation and sick leaves, hospitalization and
retirement.
FOR NON-ECONOMIC PROVISIONS

No petition questioning the majority status of the Non-economic provisions of a collective

incumbent bargaining agent shall be entertained by bargaining agreement
the DOLE and no CE shall be conducted outside of
the 60-day freedom period. 1. Coverage of the bargaining unit
2. Union security clauses
Q: What is the automatic renewal clause of 3. Management prerogatives and/or
collective bargaining agreements? (2008 Bar rights/responsibilities of Ees
Question) 4. Grievance machinery and VA
5. No strike – no lock out provision
A: The automatic renewal clause means that
although the CBA has expired, it continues to have Effectivity and retroactivity date of economic
legal effects as between the parties until a new CBA and non-economic provisions of the collective
has been entered into (Pier & Arrastre Stevedoring bargaining agreement
Services, Inc. v. Confessor, G.R. No. 110854, February
13, 1995). The rationale of the such clause to make 1. If the CBA is the very first for the bargaining
it the duty of the parties to keep the status quo and unit, the parties have to decide the CBA
to continue in full effect the terms and conditions of effectivity date.
the existing agreement until a new agreement is 2. Those made within six months after date of
reached by the parties (Principle of CBA Continuity; expiry of the CBA are subject to automatic
LC, Art. 253).

UNIVERSITY OF SANTO TOMAS

191 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
retroaction to the day immediately following
the date of expiry.
3. Those not made within six months, the parties
may agree to the date of retroaction.
NOTE: This rule applies only if there is an existing
agreement. If there is no existing agreement, there
is no retroactive effect because the date agreed
upon shall be the start of the period of agreement.
Retroactivity does not apply if the provisions were
imposed by the SLE by virtue of arbitration. It
applies only if the agreement was voluntarily made
by the parties.
Q: May the economic provisions of an existing
CBA be extended beyond the 3 year period as
prescribed by law in the absence of a new
agreement?
A: Yes. Under the principle of hold over, until a new
CBA has been executed by and between the parties,
they are duty bound to keep the status quo and must
continue in full force and effect the terms and
conditions of the existing agreement. The law does
not provide for any exception or qualification as to
which of the economic provisions of the existing
agreement are to retain force and effect. Therefore,
it must be encompassing all the terms and condition
in the said agreement (New Pacific Timber v. NLRC,
G.R. No. 124224, March 17, 2000).
Q: Mindanao Terminal Company and
respondent union has an existing CBA which
was about to expire. Negotiations were held
regarding certain provisions of the CBA which
resulted in a deadlock. The union thereafter
filed a notice of strike. During the conference
called by the NCMB, the company and the union
were able to agree on all of the provisions of the
CBA except for one. The unresolved provision
was subsequently settled, however no CBA was
signed. Thus, in the records of the Mediation
Arbiter, all issues were settled before the lapse
of the six month period after the expiration of
the old CBA. Does the signing of the CBA by the
parties determine the date it was entered into?
A: No. The signing of the CBA does not determine
the date it was entered into. In the present case,
there was already a meeting of the minds between
the company and the union prior to the end of the
six month period after the expiration of the old CBA.
Hence, such meeting of the minds is sufficient to
conclude that an agreement has been reached
within the six month period as provided under Art.
253-A, LC (Mindanao Terminal and Brokerage
Services Inc., v. Confessor, G.R. No. 111809, May 5,
1997).
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
192
Q: When is the effectivity of an arbitral award
concluded beyond six months from the
expiration of the old CBA?
A: The CBA arbitral award granted six months from
the expiration of the last CBA shall retroact to such
time agreed upon by both the Er and the union.
Absent such agreement as to retroactivity, the
award shall retroact to the 1st 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 SLE’s determination of the date of
retroactivity as part of his discretionary powers
over arbitral award shall control (Manila Electric
Company v. Quisumbing, G.R. No. 127598, Feb. 22,
2000).
Q: PAL was suffering from a worsened financial
condition resulting to a retrenchment which
downsized its labor force by more than 1/3
thereby affecting numerous union members.
Hence, the union went on strike. The PAL offered
that shares of stock be transferred to its Ees but
the union refused. Thus, PAL claimed it has no
alternative left but to close. PALEA then
proposed that the CBA be suspended for 10
years provided they remain the certified
bargaining agent. PAL agreed and resumed
operations. Is the agreement to suspend the CBA
for 10 years abdicated the worker’s right to
bargain?
A: No. The primary purpose of a CBA is to stabilize
labor-management relations in order to create a
climate of a sound and stable industrial peace. The
assailed agreement was the result of the voluntary
CB negotiations undertaken in the light of severe
financial situation faced by PAL (Rivera v. Espiritu,
G.R. No. 135547, January 23, 2002).
Q: Is the agreement in conflict with Art. 253-A,
LC?
A: No. There is no conflict between the agreement
and Art. 253-A, LC for the latter has a two-fold
purpose namely: a) to promote industrial stability
and predictability and b) to assign specific time
tables wherein negotiations become a matter of
right and requirement. In so far as the first purpose,
the agreement satisfies the first purpose. As regard
the second purpose, nothing in Art. 253-A prohibits
the parties from waiving or suspending the
mandatory timetables and agreeing on the remedies
to enforce the same (Rivera v. Espiritu, G.R. No.
135547, January 23, 2002).
 LABOR RELATIONS
Q: Does the agreement violate the five year
representation limit as provided under Art. 253-
A, LC?
A: No. Under the said article, the representation
limit of the exclusive bargaining agent applies only
when there is an existing CBA in full force and effect.
In this case, the parties agreed to suspend the CBA
and put in abeyance the limit on representation
(Rivera v. Espiritu, G.R. No. 135547, January 23,
2002).
Q: What is the effect of an amended or extended
term of the collective bargaining agreement on
the exclusive representation status of the
collective bargaining agent and the right of
another union to ask for certification as
exclusive bargaining agent?
A: While the parties may agree to extend the CBA’s
original five-year term together with all other CBA
provisions, any such amendment or term in excess
of five years will not carry with it a change in the
union’s exclusive bargaining status. By express
provision of Art. 253-A of the LC, the exclusive
bargaining status cannot go beyond the five years
and the representation status is a legal matter not
for the workplace parties to agree upon. Despite an
agreement for a CBA with a life of more than five
years, either as an original provision or by
amendment, the bargaining union’s exclusive
bargaining status is effective only for five years and
can be challenged within 60 days prior to the
expiration of the CBA’s first five years (FVC Labor
Union-Philippine Transport and General Workers
Organization v. Sama-samang Nagkakaisang
Manggagawa sa FVC-Solidarity of Independent and
General Labor Organizations, G.R. 176249, November
27, 2009).
Q: ABC Company and U labor union have been
negotiating for a new collective bargaining
agreement but failed to agree on certain
economic provisions of the existing agreement.
In the meantime, the existing collective
bargaining agreement expired. The company
thereafter refused to pay the employees their
midyear bonus, saying that the collective
bargaining agreement which provided for the
grant of midyear bonus to all company
employees had already expired. Are the
employees entitled to be paid their midyear
bonus? Explain your answer. (2010 Bar
Question)
A: Yes. The parties are duty-bound to maintain the
status quo and to continue in full force and effect the
terms and conditions of the existing CBA until a new
agreement is reached by the parties (Art. 253, LC).
193
Furthermore, Art. 253-A provides for an automatic
renewal clause of a CBA. Although a CBA has
expired, it continues to have legal effects as between
the parties until a new CBA has been entered into.
UNION SECURITY
UNION SECURITY CLAUSES; CLOSED SHOP,
UNION SHOP, MAINTENANCE OF MEMBERSHIP
SHOP, ETC.
Union security
Union security is a generic term, which is applied to
and comprehends “closed shop,” “union shop,”
“maintenance of membership,” or any other form of
agreement which imposes upon Ees the obligation
to acquire or retain union membership as a
condition affecting employment.
Union security clause
A stipulation in CBA whereby the management
recognizes that the memberships of Ees in the union
which negotiated said agreement should be
maintained and continued as a condition for
employment or retention of employment. The
obvious purpose is to safeguard and ensure the
continued existence of the union.
Closed shop
A closed shop may be defined as an enterprise in
which, by agreement between the Er and his Ees or
their representatives, no person may be employed
in any or certain agreed departments of the
enterprise unless he or she is, becomes, and, for the
duration of the agreement, remains a member in
good standing of a union entirely comprised of or of
which the Ees in interest are a part.
Union shop
There is union shop when all new regular Ees are
required to join the union within a certain period as
a condition for their continued employment.
Closed shop vs. Union shop
CLOSED SHOP UNION SHOP
Er cannot hire any Ee Er can hire even those
unless they are who are not members
members of the union. of the union but it
requires that after a
certain period they
must become
members of the union.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Maintenance of membership shop
There is maintenance of membership shop when
Ees, who are union members as of the effective date
of the agreement, or who thereafter become
members, must maintain union membership as a
condition for continued employment until they are
promoted or transferred out of the bargaining unit
or the agreement is terminated.
Requisites for termination on account of
enforcement of a union security clause in a
collective bargaining agreement
In terminating the employment of an Ee by
enforcing the union security clause, the Er needs
only to determine and prove that
1. The union security clause is applicable;
2. The union is requesting for the enforcement of
the union security provision in the CBA; and
3. There is sufficient evidence to support the
decision of the union to expel the Ee from the
union.
These requisites constitute just cause for
terminating an Ee based on the union security
provision of the CBA (Gen. Milling Corporation v.
Casio, G.R. No. 149552 March 10, 2010).
ULP IN COLLECTIVE BARGAINING
Forms of unfair labor practice in bargaining
1. Failure to meet and convene
2. Evading the mandatory subjects of bargaining
3. Bad faith in bargaining, including failure to
execute the CBA if requested
4. Gross violation of the CBA
5. Surface Bargaining
6. Blue sky bargaining
NOTE: Violations of CBA, except those which are
gross in character, shall no longer be treated as ULP
but a grievance under CBA (Silva v. NLRC, G.R. No.
110226, June 19, 1997).
BARGAINING IN BAD FAITH
Boulwareism
Boulwareism is a violation of good faith in
bargaining. It includes the failure to execute the CBA
(Bad Faith Bargaining).
Occurrence of boulwareism
It occurs when Er directly bargains with the Ee
disregarding the union; the aim was to deal with the
labor union through Ees rather than with the Ees
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
194
thru the union. Er submits its proposals and adopts
a take-it-or-leave-it stand.
REFUSAL TO BARGAIN
Occurrence of refusal to bargain
This occurs when the Er refuses or fails to meet and
convene with the majority of his Ees. To bargain in
good faith, an Er must not only meet and confer with
the union which represents his Ees, but must also
recognize the union for the purpose of CB (Azucena,
2010).
Effect of refusal of management to give counter-
proposals to the union’s demands
The failure of the Er to submit its counter-proposals
to the demands of the bargaining union does not, by
itself, constitute refusal to bargain (Philippine
Marine Radio Officers Association v. CIR, 102 Phil
373). However, when the Er refuses to submit an
answer or reply to the written bargaining proposals
of the certified bargaining union, ULP is committed.
NOTE: While the law does not compel the parties to
reach an agreement, it contemplates that both
parties will approach the negotiation with an open
mind and make a reasonable effort to reach a
common ground of agreement (Kiok Loy v. NLRC,
G.R. No. 54334, January 22, 1986).
INDIVIDUAL BARGAINING
When individual bargaining is considered as
unfair labor practice
When the Er attempts to negotiate with individual
workers rather than with the certified bargaining
agent is considered as ULP (Insular Life Assurance
Co.,Ltd., Employees Assoc.-NATU v. Insular Life
Assurance Co., Ltd., G.R. No. L-25291, January 30,
1971).
NOTE: There is no legal prohibition for an Ee to
bargain with his Er.
BLUE SKY BARGAINING
Blue-sky bargaining
It is defined as making exaggerated or unreasonable
proposals. Demands which the Er has no capacity to
give.
Whether or not the union is engaged in blue-sky
bargaining is determined by the evidence presented
by the union as to its economic demands. Thus, if the
union requires exaggerated or unreasonable
 LABOR RELATIONS
economic demands, then it is guilty of ULP
(Standard Chartered Bank v. Confessor, G.R. No.
114974, June 16, 2004).
SURFACE BARGAINING
Surface bargaining
It is the act of “going through the motions of
negotiating” without any legal intent to reach an
agreement (Standard Chartered Bank v. Confessor,
G.R. No. 114974, June 16, 2004).
A concrete example is the withholding of the Er of
the audited financial statement requested by the
union.
Surface bargaining is a question of intent of the
party concerned and usually such intent can only be
inferred from the totality of the challenged party’s
conduct both at and away from the bargaining table.
Featherbedding/make work activities
It refers to the practice of the union or its agents in
causing or attempting to cause an Er to pay or
deliver or agree to pay or deliver money or other
things of value, in the nature of an exaction, for
services which are not performed or not to be
performed, as when a union demands that the Er
maintain personnel in excess of the latter’s
requirements, including the demand for fee for
union negotiations [LC, Art. 249 (d)]. It is a form of
an extortion committed by the union against the Er.
NOTE: It is not featherbedding if the work is
performed no matter how unnecessary or useless it
may be.
Sweetheart Contract
It is when a labor organization asks for or accepts
negotiations or attorney’s fees from Ers as part of
the settlement of any issue in CB or any other
dispute.
The resulting CBA is considered as a “sweetheart
contract” – a CBA that does not substantially
improve the employees’ wages and benefits and
whose benefits are far below than those provided by
law. It is an incomplete or inadequate CBA.
UNFAIR LABOR PRACTICE (ULP)
NATURE OF ULP
ILO Convention No. 98, Right to Organize and
Collective Bargaining Convention, frowns upon
anti-union discrimination and interference.
195
Article 2.1 states that, “Workers' and Employers'
organizations shall enjoy adequate protection
against any acts of interference by each other or
each other's agents or members in their
establishment, functioning or administration.”
Acts considered as Unfair Labor Practice (ULP)
The act complained of must have a proximate and
causal connection with:
1. Exercise of the Right to Self-organization
2. Exercise of the Right to CB
3. Compliance with CBA
Not all illegal acts are ULP; only those enumerated
in the LC are ULP.
Q: The Collective Bargaining Agreement (CBA)
between Libra Films and its union, Libra Films
Employees' Union (LFEU), contains the
following standard clauses:
1. Maintenance of membership;
2. Check off for union dues and agency
fees; and
3. No strike, no lock-out.
While Libra Films and LFEU are in re-
negotiations for an extension of the CBA, LFEU
discovers that some of its members have
resigned from the union, citing their
constitutional right to organize (which includes
the right NOT to organize). LFEU demands that
Libra Films institute administrative
proceedings to terminate those union members
who resigned in violation of the CBA's
maintenance of membership clause. Libra Films
refuses, citing its obligation to remain a neutral
party. As a result, LFEU declares a strike and
after filing a notice of strike and taking a strike
vote, goes on strike. The union claims that Libra
Films grossly violated the terms of the CBA and
engaged in unfair labor practice.
Are LFEU's claims correct? Explain. (2015 Bar
Question)
A: LFEU’s claim that Libra Films committed ULP
based on its violation of the CBA is not correct. For
violation of a CBA to constitute ULP, the violation
must be violation of its economic provisions.
Moreover, said violation must be gross and flagrant.
Based on the allegation of the union, what was
violated was the maintenance of membership clause
which was a political or representational provision;
hence, no ULP was committed. (BPI Employees
Union-Davao City v. BPI, 702 SCRA 42).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
ULP OF EMPLOYERS
Unfair labor practice committed by employers
Only the officers and agents of corporations,
associations or partnerships who have actually
participated in or authorized or ratified ULPs are
criminally liable.
1. Interference, restraint, coercion
2. Yellow dog condition
3. Contracting out of services
4. Company unionism or captive unionism
5. Discrimination for or against union
membership
6. Discrimination because of testimony
7. Violation of duty to bargain
8. Payment by the Er of negotiation fees
9. Gross violation of CBA
1st ULP: Interference
It is the act of Er to interfere with, restrain or coerce
Ees in the exercise of their right to self-organization.
Test of interference
Whether the Er has engaged in a conduct which, it
may reasonably be said, tends to interfere with the
free exercise of the Ees right to self-organization.
It is not necessary that there be a direct evidence
that an Ee was in fact intimidated or coerced by
statement of threats of the Er if there is a reasonable
inference that anti-union conduct of the Er does
have an adverse effect on self-organization and CB.
(The Insular Life Assurance-NATU v. The Insular Life
Co. Ltd, G.R. No.L-25291, January 30, 1971).
Interference in the Ee’s right to self-
organization
a. Interference is always ULP
The judicial dictum is that any act of
interference by the Er in the exercise by Ees of
their right to self-organization constitutes ULP.
In Hacienda Fatima v. National Federation of
Sugarcane Workers – Food and General Trade,
The SC upheld the factual findings of the NLRC
and CA that from the Er’s refusal to bargain to
its acts of economic inducements resulting in
the promotion of those who withdrew from the
union, the use of armed guards to prevent the
organizer to come in, and the dismissal of union
officials and members, once cannot but
conclude that the Er did not want a union in its
hacienda – a clear interference in the right of
the workers to self- organization; hence, the Er
was held guilty of ULP
b. Formation of union I never a valid ground to
dismiss
c. It is ULP to dismiss a union officer or an Ee for
his union activities
Totality of Conduct Doctrine
It states that the culpability of Er’s remarks is to be
evaluated not only on the basis of their implications,
but against the background of and in conjunction
with collateral circumstances.
Under this doctrine, expressions of opinion by an Er,
though innocent in themselves, frequently were
held to be culpable because of:
1. The circumstances under which they were
uttered;
2. The history of the particular Er’s labor relations
or anti-union bias, and;
3. Their connection with an established collateral
plan of coercion or interference (The Insular
Life Assurance-NATU v. The Insular Life Co. Ltd,
G.R. No.L-25291, January 30, 1971).
An expression which might be permissibly uttered
by one Er, might, in the mouth of a more hostile Er,
be deemed improper and consequently actionable
as a ULP.
Q: Phil. Marine Officers Guild (PMOG) is a union
representing some of Philsteam’s officers and
Cebu Seamen’s Association (CSA) is another
union representing some of Philsteam’s officers.
PMOG sent a letter to Philsteam requesting for
CB but the company asked the former to first
prove that it represents the majority.
Simultaneously, Philsteam interrogated its
captains, deck officers and engineers while CSA
likewise sent its demands to Philsteam. The
company recognized CSA as representing the
majority and entered into a CBA, hence PMOG
declared a strike. PMOG was subjected to
vilification. Philsteam’s purchasing agent made
a statement that PMOG was a “money-asking”
union and that CSA is a good union. Philsteam's
pier superintendent did not disavow the
statements. Is the company guilty of ULP?
A: Yes. An Er is not denied of the privilege from
interrogating its Ees as to their union affiliation,
provided:
a. The same is for a legitimate purpose, and;
b. Assurance is given by the Er that no reprisals
would be taken against unionists.

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 LABOR RELATIONS
Nonetheless, any Er who engages in interrogation
does so with notice that he risks a finding of unfair
labor practice if the circumstances are such that his
interrogation restrains or interferes with Ees in the
exercise of their rights to self-organization.
Moreover, the pier superintendent participated in
the solicitation of membership for CSA when he did
nothing to show that the statement “money-asking”
union is not intended to represent PHILSTEAM’s
opinion. Thus, the company, through its supervisory
official, made it appear to the Ees that the
purchasing agent was speaking for or on behalf of
the company, when he made the remarks
derogatory to PMOG and favorable to CSA.
PHILSTEAM thereby interfered with the Ees’ right
to self-organization (Philsteam and Navigation v.
Philippine Marine Officers Guild, G.R. Nos. L-20667
and L-20669, October 29, 1965).
NOTE: Interrogating an Ee as to his union affiliation
is not per se ULP, but circumstances may make it as
such.
Other examples of acts of interference:
1. Outright and unconcealed intimidation;
2. Intimidating expressions of opinion by Er, and;
3. An Er who interfered with the right to self-
organization before a union is registered can be
held guilty of ULP (Samahan ng mga
Manggagawa sa Bandolino-LMLC v. NLRC, G.R.
No. 125195, July 17, 1997).
NOTE: It is the prerogative of the company to
promote, transfer or even demote its Ees to other
positions when the interests of the company
reasonably demands it, unless there are
circumstances which directly point to interference
by the company with the Ees right to self-
organization, the transfer of an Ee should be
considered as within the bounds allowed by law
(Rubberworld Phils. v. NLRC, G.R. No. 75704, July 19,
1989).
In order that interrogation would not be deemed
coercive:
a. The Er must communicate to the Ee the purpose
of questioning;
b. Assure him that no reprisal would take place
c. Obtain Ee participation voluntarily;
d. Must be free from Er hostility to union
organization, and;
e. Must not be coercive in nature
2nd ULP: Yellow dog condition
197
It is to require, as a condition of employment, that a
person or an Ee shall not join a labor organization
attempt to organize one during their period of
employment nor shall withdraw from one to which
he belongs.
Yellow dog contract
It is a promise exacted from workers as condition of
employment that they are not to belong to or
attempts to foster a union during their period of
employment. Once employed, he promises that he
will never join a union.
Validity of yellow dog contract
Yellow dog contracts are null and void because
1. It is contrary to public policy for it is
tantamount to involuntary servitude.
2. It is entered into without consideration for Ees
in waiving their right to self-organization.
3. Ees are coerced to sign contracts
disadvantageous to their family.
This is one of the cases of ULP that may be
committed in the absence of an Er-Ee relationship.
Three usual provisions under a yellow dog
contract
1. A representation by the Ee that he is not a
member of a labor union.
2. A promise by the Ee not to join a labor union.
3. A promise by the Ee that upon joining a labor
union, he will quit his employment.
3rd ULP: “Contracting out” as a form of ULP
It is to contract out services or functions being
performed by union members when such act will
interfere with, restrain or coerce Ees in the exercise
of their rights to self-organization.
Contracting out services
GR: Contracting out services by the ER is not ULP
per se.
XPNs: The following are prohibited for being
contrary to law or public policy:
A. Contracting out of jobs, works or services when
not done in good faith and not justified by the
exigencies of the business such as the following:
1. Contracting out of jobs, works or services
when the same results in the termination or
reduction of regular Ees and reduction of
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
work hours or reduction or splitting of the
bargaining unit.
2. Contracting out of work with a “Cabo”.
3. Taking undue advantage of the economic
situation or lack of bargaining strength of
the contractor’s Ees, or undermining their
security of tenure or basic rights, or
circumventing the provisions of regular
employment, in any of the following
instances:
I. Requiring them to perform functions
which are currently being performed
by the regular Ees of the principal;
and
II. Requiring them to sign, as a
precondition to employment or
continued employment, an
antedated resignation letter; a blank
payroll; a waiver of labor standards
including minimum wages and social
or welfare benefits; or a quitclaim
releasing the principal, contractor or
from any liability as to payment of
future claims.
4. Contracting out of a job, work or service
through an in-house agency.
5. Contracting out of a job, work or service
that is necessary or desirable or directly
related to the business or operation of the
principal by reason of a strike or lockout
whether actual or imminent.
6. Contracting out of a job, work or service
being performed by union members when
such will interfere with, restrain or coerce
employees in the exercise of their rights to
self-organization as provided in Art. 248 (c)
of the LC, as amended.
7. Repeated hiring of Ees under an
employment contract of short duration or
under a Service Agreement of short
duration with the same or different
contractors, which circumvents the Labor
Code provisions on Security of Tenure.
8. Requiring Ees under a subcontracting
arrangement to sign a contract fixing the
period of employment to a term shorter
than the term of the Service Agreement,
unless the contract is divisible into phases
for which substantially different skills are
required and this is made known to the Ees
at the time of engagement.
9. Refusal to provide a copy of the Service
Agreement and the employment contracts
between the contractor and the Ees
deployed to work in the bargaining unit of
the principal’s certified bargaining agent to
the sole and exclusive bargaining agent
(SEBA).
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198
10. Engaging or maintaining by the principal of
subcontracted Ees in excess of those
provided for in the applicable Collective
Bargaining Agreement (CBA) or as set by
the Industry Tripartite Council (ITC).
B. Contracting out of jobs, works or services
analogous to the above when not done in good
faith and not justified by the exigencies of the
business (D.O. 18-A, Sec. 7).
NOTE: Consistent with the authority of the
Secretary of Labor and Employment to restrict or
prohibit the contracting out of labor to protect the
rights of workers, it shall be mandatory for all
persons or entities, including cooperatives, acting
as contractors, to register with the Regional Office
of DOLE where it principally operates. Failure to
register shall give rise to the presumption that the
contractor is engaged in labor-only contracting
(D.O. 18-A, Sec. 14).
Q: Company "A" contracts out its clerical and
janitorial services. In the negotiations of its CBA,
the union insisted that the company may no
longer engage in contracting out these types of
services, which services the union claims to be
necessary in the company's business, without
prior consultation. Is the union's stand valid or
not? For what reasons? (2001 Bar Question)
A: The union's stand is not valid. It is part of
management prerogative to contract out any work,
task, job, or project except that it is ULP to contract
out services or functions performed by union
members when such will interfere with, restrain or
coerce Ees in the exercise of their rights to self-
organization [LC, Art. 248 (c)].
Examples when an Er’s contracting out of work
are itself a ULP:
a. Motivated by a desire to prevent his Ees from
organizing and selecting a collective bargaining
representative
b. Rid himself of union men
c. Escape his statutory duty to bargain collectively
with his employee’s bargaining representative.
When Er’s contracting out is not ULP:
a. For business reasons such as decline in
business, the inadequacy of his equipment, or
the need to reduce cost, even if the Er’s estimate
of his cost is based on a projected increase
attributable to unionization.
Q: The Secretary of Labor imposed upon the
management the duty to consult the union
before implementing a job contracting out that
would last for six months or more. Is this valid?
 LABOR RELATIONS
A: No. A balance already exists in the parties’
relationship with respect to contracting out. The
company has its legally defined and protected
management prerogatives while the workers are
guaranteed their own protection through labor
provisions and recognition of limits to the exercise
of management prerogatives. The Secretary’s added
requirement only introduces an imbalance in the
parties’ collective bargaining relationship. (Manila
Electric Company v. Quisumbing and MEWA, G.R. No.
127598, January, 27, 1999).
Run-away shop
It is an industrial plant moved by its owners from
one location to another to escape labor regulations
or State laws, but the term is also used to describe a
plant removed to a new location in order to
discriminate against Ees at the old plant because of
their union activities. (Complex Electronics
Employees Association v. NLRC, G.R. No. 121315, July
19, 1999).
It may also be the place where the Er transferred his
business in case of strike.
Resorting to run-away shop is ULP
Where a plant removal is for business reasons but
the relocation is hastened by anti-union motivation,
the early removal is ULP. It is immaterial when the
relocation is accompanied by a transfer of title to a
new Er who is an alter ego of the original Er.
4th ULP: Company-domination of union
Par. (d) of Art. 248 considers it ULP to initiate,
dominate, assist or otherwise interfere with the
formation or administration of any labor
organization, including the giving of financial or
other support to it or its organizers or supporters.
Such union is called “company union” as its
formation, function or administration has been
assisted by any act defined as ULP under LC Labor
organization in which, in whole or in part, is Er-
controlled or Er-dominated.
Forms of company unionism
1. Initiation of the company union idea by:
a. Outright formation by Er or his
representatives
b. Ees formation on outright demand or
influence by Er and
c. Managerially motivated formation by Ees
2. Financial support to the union by:
a. Er defrays union expenses
199
b. Pays attorney's fees to the attorney who
drafted the Constitution or by-laws of the
union.
3. Er encouragement assistance - Immediately
granting of exclusive recognition as bargaining
agent without determining whether the union
represents the majority of the employees
4. Supervisory assistance- Soliciting membership,
permitting union activities during work time or
coercing Ees to join the union by threats of
dismissal or demotion
Act of company-domination of union
This is to initiate, dominate, assist or otherwise
interfere with the formation or administration of
any labor organization including giving of financial
or other support to it or its organizers or
supporters.
Reason why company unionism/captive
unionism is a form of ULP
It is considered ULP because the officers will be
beholden to the Ers and they will not look after the
interest of whom they represent.
5th ULP: Discrimination as a form of ULP
It is to discriminate in regard to wages, hours of
work and other terms and conditions of
employment in order to encourage or discourage
membership in any labor organization.
Discrimination occurs when a union member,
involved in union activity, is treated differently from
a non-union worker. Antiunion animus is found
when the Er’s conduct is not motivated, or at least is
not entirely motivated by legitimate and substantial
business reasons but by a desire to penalize or
reward Ees for union activity or lack of it.
Discrimination, not the same as Differentiation
or Classification
It is a common management practice to classify jobs
and grant them varying levels of pay or benefits
package. These are valid differentiations that
recognize differences in job requirements or
contributions. They are not necessarily
discrimination classifiable as ULP.
Discriminatory discharge of an employee
The underlying reason for the discharge must be
established in order to determine whether such act
is discriminatory or not.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
The fact that a lawful cause for discharge is available
is not a defense where the Ee is actually discharged
because of his union activities. If the discharge is
actually motivated by lawful reason, the fact that the
Ee is engaged in union activities at the time will not
lie against the Er and prevent him from the exercise
of business judgment to discharge an Ee for cause
(Phil. Metal Foundries Inc. v. CIR, G.R. Nos. L-34948-
49, May 15, 1979).
Even assuming that business conditions justify the
dismissal Ees, it is ULP of Er to dismiss permanently
only union members and not non-unionists. (Manila
Pencil Co. Inc. v. CIR, G.R. No. L-16903, August 31,
1965).
The non-regularization of long-time Ees because of
their affiliation with the union while now Ees were
immediately regularized was declared an act of
discrimination (Manila Railroad Co. v. Kapisanan ng
mga Manggagawa sa Manila Railroad Co., G.R. No. L-
25316, February 28, 1979)
Q: Jobo has 3 hotels, the Taal Vista Lodge, Manila
Hotel and the Pines Hotel. Among the 3, Pines
Hotel had more Ees and the only one with a labor
organization. When the bonus was distributed
among the 3 hotels, Pines Hotel employees
received the least amount compared to the Ees
of Manila Hotel and Taal Vista Lodge. Did the
company commit ULP?
A: Yes. In this case, Pines Hotel Ees who were the
most numerous "would receive, a lesser bonus than
the Ees of the Manila Hotel and Taal Vista Lodge
where neither is there any existing labor
organization nor the complainant union has any
member." The fact that management granted
Christmas bonus to its Ees, the same should have
been distributed pro rata among all its Ees
regardless of their place of work (Manila Hotel Co. v.
Pines Hotel Employees’ Association, G.R. No.L-30139,
September 28, 1972).
Q: Can an Er discriminate against an Ee without
committing ULP?
A: Yes. The Er is not guilty of ULP if it merely
complies in good faith with the request of the
certified union for the dismissal of Ees expelled
from the union pursuant to the union security
clause in the CBA (Soriano v. Atienza, G.R. No. L-
68619, March 16, 1989).
Q: A profit sharing scheme was introduced by
the company for its managers and supervisors,
who are not members of the union, and hence do
not enjoy the benefits of the CBA. The
respondent union wanted to participate with
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200
the scheme but was denied by the company due
to the CBA. Subsequently the company
distributed the profit sharing to the manager,
supervisors and other non-union member
employees. As a result the union filed a notice of
strike alleging ULP. Is the non-extension of the
profit sharing scheme to union members
discriminatory and an ULP?
A: No. There can be no discrimination when the Ees
are not similarly situated. The situation of union
members is different and distinct from non-union
members because only union members enjoy the
benefit under the CBA. The profit sharing scheme
was extended to those who do not enjoy the benefits
of the CBA. Hence, there is no discrimination and
ULP is not committed (Wise and Co., Inc. v. NLRC, G.R.
No. L-87672, October 13, 1989).
Valid Discrimination: Union Security Clause
There is a form of encouragement of union
membership which is not considered ULP. This is
where the Management and Union enter into a CBA
containing a union security clause, which essentially
requires membership in the union so that an
employee may retain his job and the union’s
existence is assured. In a sense, there is
discrimination when certain employees are obliged
to join a particular union. However, it is
discrimination favoring unionism, thus it is valid.
Q: Is dismissal of an Ee pursuant to a union
security clause a form of ULP?
A: No. Union security clauses in the CBA, if freely
and voluntarily entered into, are valid and binding;
thus, the dismissal of an Ee by the company
pursuant to a labor union’s demand in accordance
with a union security agreement does not constitute
ULP (Malayang Samahan ng mga Manggagawa sa M.
Greenfield v. Ramos, G.R. No. 113907, February 28,
2000).
A union member who is employed under an
agreement between the union and his Er is bound
by the provisions thereof since it is a joint and
several contract of the members of the union
entered into by the union as their agent (Manalang
v. Artex Dev’t., G.R. No. L-20432, October 30, 1967).
Q: Is notice and hearing required in case an Ee is
dismissed pursuant to a union security clause?
A: Yes. Although a union security clause in a CBA
may be validly enforced and dismissal pursuant
thereto may likewise be valid, this does not erode
the fundamental requirement of due process. The
reason behind the enforcement of union security
 LABOR RELATIONS
clauses which is the sanctity and inviolability of
contracts cannot erode one’s right to due process.
Notwithstanding the fact that the dismissal was at
the instance of the federation and that it undertook
to hold the company free from any liability resulting
from such dismissal, the company may still be held
liable if it was remiss in its duty to accord the would-
be dismissed Ees their right to be heard on the
matter.
Indirect Discrimination
What is prohibited to be done directly shall not be
allowed to be accomplished indirectly. It is ULP for
an Er to dismiss or discriminate against an Ee for
having filed charges or for having given or being
about to give testimony. Although it seems that it
refers only to the one who filed the charges, the
legislative intent is to assure absolute freedom of
employee to establish labor organizations and
unions, thus, in addition, dismissal of a laborer on
account of union activities of his brother, wife or
husband, is considered ULP.
6th ULP: Discrimination because of testimony
Under par. (f) of Art. 245 of LC, it is ULP for an Er to
dismiss, discarge or otherwise prejudice or
discriminate against an Ee for having given or about
to give testimony under the LC.
The law protects not only the Ee’s right to form, join,
or assist labor organizations but also their right to
testify on matters covered by the Code. It shields the
Ee’s rights from indirect assault from the Er.
Er’s reprisal against a testifying Ee is ULP because,
furthermore, it violates the right to engage in
concerted activity, a right included in the right to
self-organize.
It must be underscored that Art. 248(f) is the only
ULP that need not be related to the exercised by the
Ees of their right to self-organization and collective
bargaining.
ULP was committed by Er when it dismissed the
worker who had testified in the hearing of a
certification election case despite its prior request
for the Ee not to testify in the said proceeding
accompanied with a promise of being reinstated if
he followed said request. (Itogon-Suyoc Mines, Inc. v.
Baldo, G.R. No. L-17739, December 24, 1964)
Q: Mabeza and her co-employees were asked by
the company to sign an affidavit attesting to the
latter’s compliance with pertinent labor laws.
Mabeza signed the affidavit but refused to swear
201
to its veracity before the City prosecutor.
Mabeza then filed a LOA which was denied by
management. After sometime, she attempted to
return to work but the company informed her
not to report for work and continue with her
unofficial leave. Did the company commit ULP?
A: Yes. The act of compelling an Ee to sign an
instrument indicating the Er’s compliance with
Labor laws which the company might have violated
together with the act of terminating or coercing
those Ees to cooperate is an act of ULP. This is
analogous with Art. 248(f) of the LC which provides
“to dismiss, discharge or otherwise prejudice or
discriminate against an Ee for having given or being
about to give testimony under this Code.” For in not
giving a positive testimony in favor of the Er,
Mabeza reserved not only her right to dispute the
claim but also to work for better terms and
conditions of employment. (Mabeza v. NLRC, G.R No.
118506, April 18, 1997).
7th ULP: Violation of the Duty to Bargain
When the act constitutes violation of the duty to
bargain collectively as prescribed in the LC it is
considered ULP in bargaining.
Art. 248 enunciates three (3) CBA-related ULP, to
wit:
1. To violate the duty to bargain collectively as
prescribed in the LC
2. To pay negotiation or attorney’s fees to the
union or its officers or agents as part of the
settlement of any issue in collective bargaining
or any other dispute
To violate a collective bargaining agreement
NOTE: A company’s refusal to make counter-
proposal, if considered in relation to the entire
bargaining process, may indicate bad faith and this
is especially true where the union’s request for a
counter proposal is left unanswered (Kiok Loy v.
NLRC, G.R. No. L-54334, January 22, 1986).
Examples of ULP in bargaining:
1. Delaying negotiations by discussing unrelated
matters
2. Refusal to accept request to bargain
3. Rejecting a union’s offer to prove its majority
claim
4. Shutdown to avoid bargaining
5. Engaging in surface bargaining
Q: Balmar Farms Employees Association (BFEA)
is affiliated with Associated Labor Union (ALU).
ALU won in the certification election held in the
company; thus, ALU sent its proposal for a CBA,
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
but the company refused to act on it alleging that
BFEA is the sole and exclusive bargaining
representative and that BFEA through its
president had sent a letter informing the
company of its disaffiliation with ALU. Is the
company guilty of ULP for refusing to bargain
collectively?
A: Yes. ALU is the certified exclusive bargaining
representative after winning the certification
election. The company merely relied on the letter of
disaffiliation by BFEA’s president without proof and
consequently refusing to bargain collectively
constitutes ULP. Such refusal by the company to
bargain collectively with the certified exclusive
bargaining representative is a violation of its duty to
collectively bargain which constitutes ULP (Balmar
Farms v. NLRC, G.R. No.73504, October 15, 1991).
Q: The Kilusang Kabisig, a newly-formed labor
union claiming to represent a majority of the
workers in the Microchip Corp., proceeded to
present a list of demands to the management
for purposes of Collective Bargaining. The
Microchips Corp., a multinational corp. engaged
in the production of computer chips for export,
declined total with the union leaders, alleging
that they had not as yet presented any proof of
majority status. The Kilusang Kabisig then
charged Microchip Corp. with ULP, and declared
a "wildcat" strike wherein means of ingress and
egress were blocked and remote and isolated
acts of destruction and violence were
committed. Is the company guilty of an ULP
when it refused to negotiate with the Kilusang
Kabisig? (1997 Bar Question)
A: No. It is not ULP to refuse to bargain with a union
which has not presented any proof of its majority
status. Only the labor organization designated or
selected by the majority of the employees in an
appropriate CB unit
the exclusive representative of the Ees in such unit
for the purpose of collective bargaining. It is not a
ULP for an Er to ask a union requesting to bargain
collectively that such union first show proof of its
being a majority union [Philippine Diamond Hotel
and Resort, Inc. (Manila Diamond Hotel) v. Manila
Diamond Hotel Employees Union, G.R. No. 158075,
June 30, 2006].
8th ULP: Paid negotiation
It is the act of the Er to pay negotiation or attorney’s
fees to the union or its officers or agents as part of
the settlement of any issue in CB or any other
dispute.
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
It is also prohibited for union officers or agents from
asking for or accepting such payments.
9th ULP: Violation of the CBA
Only when the violation is gross – There must be a
flagrant and/or malicious refusal to comply with the
economic provision of the CBA.
All the ULP acts must have a relation to the Ees
exercise of their right to self-organization. Anti-
union or anti-organization motive must be proved
because it is a definitional element of ULP.
If violation is not gross, it is not ULP but a grievance
under CBA. The “grossly violate” phrase is an
amendment by R.A. 6715.
Q: A complaint for ULP was filed by a prosecutor
of the CIR against Alhambra company, upon the
charges of the union that 15 of its members
employed as drivers and helpers are
discriminated for being deprived of the benefits
under the CBA with no justifiable reason other
than union membership. Is the company guilty
of ULP?
A: Yes. The refusal to extend the benefits and
privileges under the CBA to Ees constitutes ULP.
Failure on the part of the company to live up in good
faith to the terms of the CBA is a serious violation of
the duty to collectively bargain which again
amounts to ULP. The 15 drivers and helpers are
found to be Ees of the company, hence, the benefit
and privileges under the CBA should be extended to
them (Alhambra Industries v. CIR, G.R. No. L-25984,
October 30, 1970).
Reliefs available in ULP cases
The following reliefs may be availed of:
is
1. Civil liability
Recovery of civil liability in the administrative
proceedings shall bar recovery under the Civil
Code (LC, Art. 247).
2. Criminal liability
No criminal prosecution under this Title may be
instituted without a final judgment finding that
a ULP was committed (LC, Art. 247).
3. Cease and desist order: To support such order,
the record must show that:
a. The restrained misconduct was an issue in
the case;
202
 LABOR RELATIONS
b. That there was a finding of fact of said
misconduct; and
c. Such finding of fact was supported by
evidence.
If the act complained of happened so long a time
that there is no longer any threat or probability
of recurrence, a cease and desist order will not
be justified.
4. Affirmative order
The order may usually direct the full
reinstatement of the discharged employees to
their substantially equivalent position without
prejudice to their seniority and other rights and
privileges.
5. Court may order the Er to bargain
6. CBA may be imposed upon an Er who refused to
bargain with the union of its Ees
7. Strike by union members
NOTE: ULP cases are not subject to compromise in
view of the public interest involve. The relation
between capital and labor is not merely contractual.
They are impressed with public interest that labor
contracts must yield to common good.
Q: Is the commission of ULP by an Er subject to
criminal prosecution? (2005 Bar Question)
A: Yes. ULPs are not only violations of the civil rights
of both labor and management but are also criminal
offenses against the State which shall be subject to
prosecution and punishment (LC, Art.247; See also
B.P.Blg.386 as amended by R.A. 6715). However, the
criminal aspect can only be filed when the decision
of the labor tribunals, finding the existence of ULP,
shall have become final and executory.
Furnishing financial report by the Er
Upon written request of an LLO, the Er should
furnish the Ee its annual audited financial
statements, including the balance sheet and the
profit and loss statement, within 30 calendar days
from the date of receipt of the request, after the
union has been duly recognized by the Er or
certified as the sole and exclusive bargaining
representative of the Ees in the bargaining unit, or
within 60 calendar days before the expiration of the
existing CBA, or during the CB negotiation.
Instance when Er’s refusal to furnish financial
information is NOT an unfair labor practice
While the refusal to furnish the requested
information is in itself an unfair labor practice and
203
also supports the interference of surface bargaining,
however, if the union failed to put its request in
writing, management cannot be held liable for ULP
(Standard Chartered Bank Employees Union v.
Confesor, G.R. No. 114974, June 16, 2004).
Instance when violation of the CBA is
constitutive of ULP
When there is gross violation of the CBA it is
considered as ULP. Gross violation shall be
understood as the flagrant and malicious refusal to
comply with economic provisions of the CBA.
ULP OF LABOR ORGANIZATIONS
ULP of labor organizations
Only the officers, members of governing boards,
representatives or agents or member of labor
associations or organizations who have actaully
participated in or authorized or ratified the ULPs
are crminally liable.
It shall be ULP for labor organizations, its officers,
agents or representatives
1. To restrain or coerce Ees in the exercise of their
rights to self-organization; however, a labor
organization shall have the right to prescribe its
own rules with respect to the acquisition or
retention of membership
2. To cause or attempt to cause an Er to
discriminate against an Ee, including
discrimination against an Ee with respect to
whom membership in such organization has
been denied or to terminate an Ee on any
ground other than the usual terms and
conditions under which membership or
continuation of membership is made available
to other members
3. To violate the duty, or refuse to bargain
collectively with the Er, provided it is the
representative of the Ees
4. To cause or attempt to cause an Er to pay or
deliver or agree to pay or deliver any money or
other things of value, in the nature of an
exaction, for services which are not performed
or not to be performed, including the demand
for fee for union negotiations
5. To ask for or accept negotiations or attorney's
fees from Ers as part of the settlement of any
issue in Collective Bargaining or any other
dispute or
6. To violate a CBA (LC, Art. 248)
Interference by a labor organization not ULP
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Interference by a labor organization in the exercise
of the right to organize is not considered ULP
because it is in itself a function of self-organizing.
Examples of interference which does not
amount to ULP
1. Union campaigns for membership even
among members of another union
2. Filing by a union of a petition, at the
appropriate time, to dislodge an incumbent
bargaining union
3. A bargaining union, through a union security
clause, requires an incoming employee to join
the union, or
4. When the occasion arises, persuades a non-
striking employee to join a strike.
NOTE: These are acts of interference but not ULP.
They are instead manifestations of union dynamics
and democracy whose ultimate beneficiaries will be
the workers themselves.
Union cannot coerce Ees to join a strike
A union violates the law when, to restrain or coerce
non-strikers from working during the strike, it
1. Assaults or threatens to assault them
2. Threatens them with the loss of their jobs
3. Blocks their ingress to or egress from the plant
4. Damages non-strikers’ automobiles or forces
them off the highway
5. Physically preventing them from working
6. Sabotages the Er’s property in their presence,
thereby creating an atmosphere of fear or
violence
7. Demonstrates loudly in front of a non-striker’s
residence with signs and shouts accusing the
non-striker of “scabbing”
8. Holding the non-striker up to ridicule
9. Seeking public condemnation of the non-striker
Union-induced discrimination
This pertains to the arbitrary use of union security
clause. A union member may not be expelled from
the union, and consequently from his job, for
personal and impetuous reasons or for causes
foreign to the closed shop agreement (Manila
Mandarin Employees Union v. NLRC, G.R. No. 76989,
September 29, 1987).
The broad rule is that the union has the right to
determine its membership and to prescribe the
conditions for the acquisition and retention thereof.
Consequently, admission to membership may not
be compelled. However, this rule is qualified.
UNIVERSITY OF SANTO TOMAS
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204
Thus, labor unions are not entitled to arbitrarily
exclude qualified applicants for membership and a
closed-shop applicant’s provision will not justify the
employer in discharging, or a union in insisting
upon the discharge of an Ee whom the union thus
refuses to admit to membership without any
reasonable ground thereof (Salunga v. CIR, G.R. No.
L-22456, September 27, 1967).
Aspects of ULP
Under the Labor Code, ULP has two aspects
1. Civil aspect
2. Criminal aspect.
NOTE: Civil aspect – LA together with claim for
damages arising from termination (ex:
reinstatement)
Criminal aspect – Regular courts. Commenced only
upon final decision by LA that party commits ULP.
No simultaneous filing is allowed. There must be a
final decision first by the Labor Arbiter.
Persons who may be criminally liable for ULP
1. On the part of the employer – only the officers
and agents of corporations, associations or
partnerships who have actually participated in,
authorized or ratified unfair labor practices,
shall be held criminally liable.
2. On the part of the union – only officers,
members of governing boards, representatives
or agents or members of labor associations or
organizations who have actually participated
in, authorized or ratified the unfair labor
practices shall be held criminally liable.
Burden of proof in ULP cases
In ULP cases, it is the union which has the burden of
proof to present substantial evidence to support its
allegations of ULP committed by the Er. It is not
enough that the union believed that the Er
committed acts of unfair labor practice when the
circumstances clearly negate even a prima facie
showing to warrant such a belief.
Duty of Union to Bargain Collectively
It is ULP for a duly certified sole and exclusive
bargaining union, its officers, agents or
representatives to refuse or violate the duty to
bargain collectively with the Er. This is the
counterpart provision of Art. 248(g) respecting the
violation by the Er of its duty to bargain collectively.
 LABOR RELATIONS
This is to ensure that the union will negotiate with
management in good faith and for the purpose of
concluding a mutally beneficial agreement
regarding the terms and conditions of their
employment relationship.
Anti-featherbedding Doctrine
Art. 249(d) it is ULP for a labor organization, its
officers, agents or representatives to cause or
attempt to cause an Er to pay or deliver or agree to
pay or deliver any money or other things of value, in
the nature of an exaction, for services which are not
performed or not be performed, including the
demand for fee or union negotiation.
This practice of the union is commonly known as
“featherbedding” as it unduly and unncessarily
maintains or increases the number of Ees used or
the amount of the consumed work on a specific job.
This is done by the Ees to unduly secure their jobs
in the face of technological advances or as required
by minimum health and safety standards, among
other justifications. These featherbedding practices
have been found to be wasteful and without
legtimate justifications.
A union commits ULP under this provision by
causing or attempting to cause an Er to pay or agree
to pay for standby services. Payments for “standing-
by” or for the substantial equivalent of “standing-
by” are not payments for “services performed”
within the meaning of the law. When an Er received
a bona-fide offer of competent performance of
relevant services, it remains for the Er, through free
and fair negotiation, to determine whether such
offer should be accepted and what compensation
should be paid for the work done.
Demand or Acceptance of Negotation fees or
Attorney’s fees
Under Art. 249(e) it is ULP for a labor organization,
its officers, agents or representatives to ask for or
accept negotiation fees or attorney’s fees from Ers
as part of the settlement of any issue in collective
bargaining or any other dispute.
Violation of CBA
Under 249(f) it is ULP for a labor organization, its
officers, agents or representatives to violate CBA.
NOTE: Under Art. 261 of LC, violation of CBA is
generally considered merely as a grievable issue. It
becomes ULP only if the violation is gross in
character which means that there is flagrant and/or
malicious refusal to comply with the economic
205
stipulations in CBA. This principle applies not only
to the Er but to the labor organization as well.
Criminal Liability for ULPs of Labor Organizaton
Art. 249 is explicit in its provision on who should be
held liable for ULPs committed by labor
organizations. It states that only the officers,
members of governing boards, representatives or
agents or members of labor association or
organizations who have actually participated in
authorized or ratified ULP shall be held criminally
liable.
RIGHT TO PEACEFUL
CONCERTED ACTIVITIES
Constitutional basis of strikes, lockouts and
other concerted activities
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
(1987 Constitution, Art. XIII, Sec. 3).
NOTE: The law does not look with favor upon
strikes and lockouts because of their disturbing and
pernicious effects upon the social order and the
public interests; to prevent or avert them and to
implement Sec. 6, Art. XIV of the Constitution, the
law has created several agencies, namely: the BLR,
the DOLE, the Labor Management Advisory Board,
and the CIR (Luzon Marine Dev’t Union v. Roldan, G.R.
No. L-2660, May 30, 1950).
Concerted action
It is an activity undertaken by two or more
employees or by one on behalf of others.
Not all concerted actions are strikes
They may only be protest actions – they do not
necessarily cause work stoppage by the protesters.
A strike in contrast is always a group action
accompanied by work stoppage.
Q: Union X staged a strike in front of Company B
because of a CBA deadlock. During the strike,
Company hired replacement workers. Upon
resuming their employment, the strikers found
that Company B obliged to reinstate the
returning workers? (2012 Bar Question)
A: Yes, because workers are entitled to such
retention every time during a valid strike.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Q: As a result of a bargaining deadlock between
Lazo Corporation and Lazo Employees Union,
the latter staged a strike. During the strike,
several employees committed illegal acts.
Eventually, its members informed the company
of their intention to return to work. (2014 Bar
Question)
a. Can Lazo Corporation refuse to admit the
strikers?
b. Assuming the company admits the strikers,
can it later on dismiss those employees who
committed illegal acts?
c. If due to prolonged strike, Lazo Corporation
hired replacements, can it refuse to admit
the replaced strikers?
A:
a. No. The Commission of illegal acts during a
strike does not automatically bring about loss of
employment status. Due process must be
observed by the employer before any dismissal
can be made. (Stanford Marketing Corp. v.
Julian, 423 SCRA 633)
b. No. The employer may be considered as having
waived its right to dismiss employees who
committed illegal acts during the strike
(Reformist Union of R.B. Liner v. NLRC, 266 SCRA
713).
c. No. Sec. 3, Art. XIII of the Constitution
guarantees workers the right to strike in
accordance with law, and prolonged strike is
not prohibited by law. With Art. 212 (o)
defining strike as “any temporary stoppage of
work as a result of an industrial or labor
dispute, it is the prerogative of strikers to cut
short or prolong a strike. By striking, the
employees have not abandoned their
employment. Rather, they have only ceased
temporarily from rendering work. The striking
employees have not lost their right to go back to
their positions, because the declaration of a
strike is not a renunciation of their
employment, much less their employee-
employer relationship.
Q: The Alliance of Independent Labor Unions
(AILU) is a legitimate labor federation which
represents a majority of the appropriate
bargaining unit at the Lumens Brewery (LB).
While negotiations were ongoing for a renewal
of the collective bargaining agreement (CBA), LB
handed down a decision in a disciplinary case
that was pending which resulted in the
termination of the AILU's treasurer and two
other members for cause. AILU protested the
decision, claiming that LB acted in bad faith and
asked that LB reconsider. LB refused to
reconsider. AILU then walked out of the
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
206
negotiation and declared a strike without a
notice of strike or a vote. AILU members locked
in the LB management panel by barricading the
doors and possible exits (including windows
and fire escapes). LB requested the DOLE to
assume jurisdiction over the dispute and to
certify it for compulsory arbitration.
The Secretary of Labor declined to assume
jurisdiction, finding that the dispute was not one
that involved national interest. LB then
proceeds to terminate all of the members of the
bargaining agent on the ground that it was
unlawful to: (1) barricade the management
panel in the building, and (2) participate in an
illegal
strike.
a. Was AILU justified in declaring a strike
without a strike vote and a notice of strike?
Why or why not?
b. Was the Secretary of Labor correct in
declining to assume jurisdiction over the
dispute?
c. Was LB justified in terminating all those
who were members of AILU on the two
grounds cited? (2015 Bar Question)
A:
a. No. Firstly, a Notice of Strike is always required
by Art. 263(c) of the Labor Code before a strike
may be staged – be it grounded on bargaining
deadlock or unfair Labor Practice. Secondly,
the Supreme Court already held in Sukothai
that while AILU may not exhaust the 15-day
cooling-off period in case of dismissal from
employment of its officers who were duly
elected in accordance with the Union
constitution and by-laws and the dismissal
constitutes union busting and a threat to AILU’s
existence, still, Art. 263 (f) requires that a strike
vote be undertaken through a secret ballot and
approved by a majority of the total union
membership in the bargaining unit. Devoid of
a notice of strike and a strike vote, AILU’s strike
is therefore illegal.
b. The refusal of the Secretary to assume
jurisdiction is valid. Par. (g) of Art. 263 (old) of
the Labor Code leaves it to his sound discretion
to determine if national interest is involved.
Assumption power is full and complete. It is
also plenary and discretionary (Philtranco
Service Enterprises, Inc. v. Philtranco Workers
Union-AGLO, G.R. No. 180962, February 26,
2014). Thus, if in his opinion national interest
is not involved, then the company cannot insist
that he assume jurisdiction.
 LABOR RELATIONS
c. If dismissal is based on illegal strike:
The company has to file a complaint for illegal
strike first. Once the strike is declared by final
judgment to be illegal, it can dismiss the union
officers. As to members, their dismissal must be
based on their having committed illegalities on
the occasion of their illegal strike. Since the
company prematurely and indiscriminately
dismissed the AILU members then their
dismissal is illegal.
If dismissal is based on the unlawful acts of
barricading to lock the AILU members:
Yes. Article 264 (a) of the Labor Code
authorizes the employer to declare the loss of
employment status of “ANY WORKER” or union
officer who knowingly participates in the
commission of illegal acts during a strike.
FORMS OF CONCERTED ACTIVITIES
Forms of concerted activities
1. Strike
2. Lockout
3. Picketing
4. Boycott
5. Other Concerted Activities
a. Collective Letter
b. Publicity
c. Placards and Banners
d. Speeches Music and Broadcasts
BOYCOTT
It is an attempt, by arousing a fear of loss, to coerce
others, against their will to withhold from one
denominated “unfriendly to labor” their beneficial
business intercourse.
A boycott may be said to include any activity on the
part of a labor organization whereby it is sought
through concerted action, other than by reason of
lawful competition, to obtain withdrawal of public
patronage from one in business (Burke v. Adams
Dairy, Inc., 352 U.S. 969).
Lawfulness of boycott
Ees may lawfully exert economic pressure on their
Er by means of a boycott, provided they act
peaceably and honestly. They have a right to
persuade the public by any lawful means to refuse
to patronize the Er. Union members are entitled to
advise the public of the existence of their
controversy with the Er and may request their
friends and the public generally to assist them by
207
not patronizing the Er. In so doing, there is no
element of threat or coercion or unlawful
interference with another’s business (51A, C.J.S. Sec.
286).
Boycott may be lawful or unlawful depending on the
means and methods employed, and the ends
intended to be accomplished.
Kinds of Boycott
Primary boycott – applied directly and alone to the
offending person by withdrawing from him, all
business relations on the part of the organization
that initiated the boycott.
Secondary Boycott – is a combination not merely
to refrain from dealing with a person, or to advise or
by peaceable means persuade his customers to
refrain, but to exercise coercive pressure upon such
customers, actual or prospective, in order to cause
them to withhold or withdraw patronage from him
through fear of loss or damage to themselves should
they deal with him.
Slowdown
It is a method by which one’s Ees, without seeking a
complete stoppage of work, retard production and
distribution in an effort to compel compliance by
the Er with the labor demands made upon him.
Q: Does an “overtime boycott” or “work
slowdown” by the Ees constitute a strike and
hence a violation of the CBA’s “No strike, no
lockout” clause?
A: Yes. The concept of a slowdown is a "strike on the
installment plan." It is a willful reduction in the rate
of work by concerted action of workers for the
purpose of restricting the output of the Er, in
relation to a labor dispute; as an activity by which
workers, without a complete stoppage of work,
retard production or their performance of duties
and functions to compel management to grant their
demands.
Such a slowdown is generally condemned as
inherently illicit and unjustifiable, because while the
Ees "continue to work and remain at their positions
and accept the wages paid to them," they at the same
time "select what part of their allotted tasks they
care to perform of their own volition or refuse
openly or secretly, to the Er's damage, to do other
work;" in other words, they "work on their own
terms" (Interphil Laboratories Employees Union-
FFW v. Interphil Laboratories, Inc., G.R. No. 142824,
December 19, 2001).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Q: The Ees wrote and published a letter to the
bank president, demanding his resignation on
the grounds of immorality, nepotism, favoritism
and discrimination in the appointment and
promotion of bank Ees. The bank dismissed the
Ees for the alleged libelous letter. Are the Ees
engaged in a concerted activity?
A: Yes. Assuming that they acted in their individual
capacities when they wrote the letter, they were
nonetheless protected, for they were engaged in a
concerted activity, in their right of self-organization
that includes concerted activity for mutual aid and
protection. Any interference made by the company
will constitute as ULP.
The joining in protests or demands, even by a small
group of Ees, if in furtherance of their interests as
such is a concerted activity protected by the
Industrial Peace Act. It is not necessary that union
activity be involved or that Collective Bargaining be
contemplated (Republic Savings Bank v. CIR, G.R. No.
L-20303, September 27, 1967).
Q: May the grievances of the Ees be published in
newspapers and on placards and banners?
A: Members of a labor union may, without
authorization by statute, make known the facts of a
labor dispute, for freedom of speech is guaranteed
by the Constitution. Striking Ees, too, have a right to
acquaint the public with the fact of the existence of
the strike setting forth their claims in a controversy
over terms and conditions of employment by sign,
handbill or newspaper, advertisement as a
legitimate means of economic coercion (31 Am. Jur.,
Sec. 274).
It is generally conceded that a striker having the
right to apprise the public of the fact of the strike
and solicit its support may inscribe his grievances
upon placards and banners to be seen at a distance
and to be read by many at the same time and that he
may carry such placards or banners upon a public
street, provided the inscription is not libelous or
otherwise unlawful (31 Am. Jur., Sec. 278).
PICKETING
It is the act of marching to and fro the Ers premises
which is usually accompanied by the display of
placard and other signs, making known the facts
involved in a labor dispute, in the hope of being able
to persuade peacefully other workers not to work in
the establishment, and customers not to do business
there.
The right to picket as a means of communicating the
facts of a labor dispute is a phase of the freedom of
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
208
speech guaranteed by the Constitution. Picketing if
peacefully carried out, cannot be curtailed even in
the absence of Er-Ee relationship (PAFLU v. Cloribel,
G.R. No. L-25878, March 28, 1969).
Constitional provisions protect the right to
picket
The right to picket is guaranteed under the freedom
of speech and of expression and to peaceably
assemble to air grievances under Sec. 4, Art. III.
REQUISITES FOR LAWFUL PICKETING
Requisites for lawful picketing
The following are the requisites
1. It should be peacefully carried out;
2. There should be no act of violence, coercion or
intimidation;
3. The ingress to (entrance) or egress from (exit)
the company premises should not be
obstructed;
4. Public thoroughfares should not be impeded.
Effect of the absence of Employee-Employer
relationship on picketing
If peacefully carried out, picketing cannot be
prohibited even in the absence of Ee-Er relationship
(PAFLU v. CFl, G.R.L-49580, January 17, 1983).
Right to picket not an absolute right
While peaceful picketing is entitled to protection as
an exercise of free speech, the courts are not
without power to confine or localize the sphere of
communication or the demonstration to the parties
to the labor dispute, including those with related
interests, and to insulate establishments or persons
with no industrial connection or having interest
totally foreign to the context of the dispute
(Liwayway Pub., Inc. v. Permanent Concrete Workers
Union, G.R. No. L-25003, October 23, 1981).
The right to peaceful picketing shall be exercised by
the workers with due respect for the rights of
others. No person engaged in picketing shall
commit any act of violence, coercion or
intimidation. Stationary picket, the use of means
like placing of objects to constitute permanent
blockade or to effectively close points of entry or
exit in company premises are prohibited by law.
 LABOR RELATIONS
Strike vs. picketing certification is a prohibited activity and thus illegal
(Solidbank Corporation v. Ernesto U. Gamier/ Solid
STRIKE PICKETING Bank Union, G.R. No. 159460, November 15, 2010).
To withhold or to stop To march to and from
work by concerted the employer’s NOTE: The fact that the conventional term “strike”
action of Ees as a result premises, usually was not used by the striking employees to describe
of an industrial or accompanied by the their common course of action is inconsequential,
labor dispute. The display of placards and since the substance of the situation and not its
work stoppage may be other signs making appearance will be deemed controlling (Toyota
accompanied by known the facts Motor Phils. Corp. Workers Association v. NLRC, 537
picketing by the involved in a labor SCRA 174). It shall comprise not only concerted
striking employees dispute. It is a strike work stoppages, but also slowdowns, mass leaves,
outside of the company activity separate and sit downs, attempt to damage, destroy or sabotage
compound. different from actual plant equipment and facilities, and similar activities
stoppage of work. (Samahang Manggagawa sa Sulpicio Lines v. Sulpicio
Focuses on stoppage of Focuses on publicizing Lines, Inc., G.R. No. 140992, March 25, 2004).
work the labor dispute and
its incidents to inform Purpose of a strike
the public of what Is
happening in the A strike is a coercive measure resorted to by
company struck laborers to enforce their demands. The idea behind
against. a strike is that a company engaged in a profitable
business cannot afford to have its production or
NOTE: A strike conducted by a union which activities interrupted, much less, paralyzed (Phil.
acquired its legal personality after the filing of its Can Co. v. CIR, G.R. No. L-3021, July 13, 1950).
notice of strike and the conduct of the strike vote is
illegal. Elements of strike

STRIKE 1. Existence of an Er-Ee relationship

It means any temporary stoppage of work by the
concerted action of Ees as a result of an industrial or
labor dispute [IRR, Book V, Rule I, Sec. 1(uu)].
The term strike shall comprise not only concerted
work stoppages, but also slowdowns, mass leaves,
sit-downs, attempts to damage, destroy or sabotage
plant equipment and facilities and similar activities.
Thus, the fact that the conventional term “strike”
was not used by the striking employees to describe
their common course of action is inconsequential,
since the substance of the situation and not its
appearance, will be deemed to be controlling.
The right to strike, while constitutionally
recognized, is not without legal constrictions. Art.
264(a) of the LC, as amended, provides that 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. The court has consistently
ruled that once the Secretary of Labor assumes
jurisdiction over a labor dispute, such jurisdiction
should not be interfered with by the application of
the coercive processes of a strike or lockout. A strike
that is undertaken despite the issuance by the
Secretary of Labor of an assumption order and/or
2. Existence of a labor dispute and the utilization
by labor of the weapon of concerted refusal to
work as a means of persuading, or coercing
compliance with the working men’s demands
3. Employment relation is deemed to continue
although in a state of belligerent suspension
4. Temporary work stoppage
5. Work stoppage is done through concerted
action
6. The striking group is a legitimate labor
organization; in case of a bargaining deadlock,
it must be the Ees’ sole bargaining
representative
Different forms of strike
1. Legal Strike – One called for a valid purpose
and conducted through means allowed by law.
2. Illegal Strike – One staged for a purpose not
recognized by law, or if for a valid purpose,
conducted through means not sanctioned by
law.
3. Economic Strike – One staged by workers to
force wage or other economic concessions from
the employer which he is not required by law to
grant (Consolidated Labor Association
of the Phil. vs. Marsman, G.R. No. L-17038, July
31, 1964).
4. ULP Strike – One called to protest against the
employer’s acts of unfair practice enumerated

UNIVERSITY OF SANTO TOMAS

209 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
in Art. 248 of the LC, as amended, including
gross violation of the CBA and union busting.
5. Slow Down Strike – One staged without the
workers quitting their work but by merely
slackening or by reducing their normal work
output.
6. Mass leaves – One whom the Ees
simultaneously filed leaves of absence based on
various reasons such as, inter alia, vacation and
sick leaves.
7. Wild-Cat Strike – One declared and staged
without filing the required notice of strike and
without the majority approval of the total union
membership.
8. Sit Down Strike – One where the workers stop
working but do not leave their place of work.
9. Overtime boycott – One involving the act of
workers in refusing to render overtime work in
violation of the CBA resorted to as it means to
coerce the Er to yield to their demands.
10. Boycott of Products – On which involves the
concerted refusal to patronize an Er’s goods and
services and to persuade others to a like refusal.
Strike-breaker (Fink)
Any person who obstructs, impedes, or interferes
with by force, violence, coercion, threats, or
intimidation any peaceful picketing affecting wages,
hours or conditions of work or in the exercise of the
right of self-organization or CB [LC, Art. 212 (r)].
Strike area
It means the establishment, warehouses, depots,
plants or offices, including the sites or premises
used as runaway shops, of the Er struck against, as
well as the immediate vicinity actually used by
picketing strikers in moving to and fro before all
points of entrance to and exit from said
establishment [Sec. 1 (vv), Rule I, Book V, IRR].
LOCKOUT
It means any temporary refusal of an Er to furnish
work as a result of an industrial or labor dispute [LC,
Art. 212 (p)]. It is an Er’s act of excluding Ees who
are union members from the plant.
Lockout consist of ff:
1. Shutdowns
2. Mass Retrenchment and dismissals initiated by
the Er
3. Er’s act of excluding Ees who are union
members
Lockout amounting to ULP
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
210
A lockout, actual or threatened, as a means of
dissuading the Ees from exercising their rights is
clearly an ULP. However, to hold an Er guilty, the
evidence must establish that the purpose was to
interfere with the Ees exercise of their rights.
Express statutory recognition of the workers’
right to strike and the employer’s right to
lockout
The LC provides that workers shall have the right to
engage in concerted activities for purposes of CB for
their mutual benefit and protection. The right of
LLOs to strike and picket and of Ers to lockout,
consistent with the national interest, shall continue
to be recognized and respected. However, no labor
union may strike and no Er may declare a lockout on
grounds involving inter-union and intra-union
disputes.
Right to strike or lockout not absolute
The exercise of these rights is subject to reasonable
restrictions pursuant to the police power of the
State. It has been held that the right to strike,
because of the more serious impact upon the public
interest, is more vulnerable to regulation that the
right to organize and select representatives for
purposes of CB [National Federation of Sugar
Workers (NFSW) v. Ovejera, et al. G.R. No. L-59743,
May 31, 1982].
Strike cannot be converted into a lockout
A strike cannot be converted into a pure and simple
lockout by the mere expedient of filing before the
trial court a notice of offer to return to work during
the pendency of the labor dispute between the
union and the Er (Rizal Cement Workers Union v. CIR,
G.R. No. L-18442, November 30, 1962).
Instances where a strike or lockout CANNOT be
declared
1. Violations of CBAs, except flagrant and/or
malicious refusal to comply with economic
provisions
2. Inter-union disputes
3. Intra-union disputes
4. Failure to file a notice of strike or lockout or lack
of necessary strike or lockout vote obtained and
reported to the Board.
5. After assumption of jurisdiction by the
Secretary has been declared
6. After certification or submission of the
dispute to compulsory or voluntary
arbitration
7. There is already a pending case involving the
same grounds for the strike or lockout
 LABOR RELATIONS
8. Labor standards cases such as wage orders
(IRR, as amended by D.O. 40-03, Book V, Rule
XXII, Sec. 5)
WHO MAY DECLARE A STRIKE OR LOCKOUT
Declaration of a strike or lockout
The following may declare a strike or lockout:
1. Any certified or duly recognized bargaining
representative may declare a strike in cases of
bargaining deadlocks and ULP. The Er may
declare a lockout in the same cases.
2. In the absence of a certified or duly recognized
bargaining representative, any LLO in the
establishment may declare a strike but only on
grounds of ULP [IRR as amended by D.O. 40-03,
Book V, Rule XXII, Sec. 6].
A strike conducted by a minority union is patently
illegal because no labor dispute which will justify
the conduct of a strike may exist between the
employer and a minority union.
Grounds for declaration of strike or lockout
1. Collective Bargaining Deadlock – economic
2. ULP act – political
NOTE: It is possible to change an economic strike
into a ULP strike (Consolidated Labor Ass’n of the
Phils. v. Marsman and Co., G.R. No. L-17038, July 31,
1964).
Conversion Doctrine
It is when a strike starts as economic and later, as it
progresses, it becomes a ULP, or vice versa.

Economic strike vs. ULP strike

BASIS ECONOMIC STRIKE ULP STRIKE

Voluntary strike, because the
employee will declare a strike to
As to nature
compel management to grant its
demands
The CB agent of the appropriate
Who will initiate bargaining unit can declare an
economic strike
30 days from the filing of the notice
As to the cooling-off of strike before the intended date
period of actual strike subject to the 7-day
strike ban
No exception - mandatory
As to the exception to the
NOTE: Notice of strike and strike
cooling-off period
vote may be dispensed with; they
may strike immediately
Involuntary strike, the LO is forced to
go on strike because of the ULP
committed against them by the Er. It
is an act of self-defense since the Ees
are being pushed to the wall and
their only remedy is to stage a strike.
Either the CB agent or the LLO in
behalf of its members
15 days from the filing of the notice
of strike
The cooling-off period may be
dispensed with, and the union may
take immediate action in case of
dismissal from employment of their
officers duly elected in accordance
with the union’s constitution and by-
laws, which may constitute union-
busting where the existence of the
union is threatened. It must still
observe the mandatory 7-day strike
ban period before it can stage a valid
strike

Q: Does a strike staged by resigned employees
fall under the ambit of concerted actions
protected by law?
A: No. Resigned employees’ mass action is not a
strike because Ees who go on strike do not quit their
employment. Ordinarily, the relationship of Er and
Ee continues until one of the parties’ acts to sever
the relationship or they mutually act to accomplish
that purpose. As they did not assume the status of
211
strikers, their “protest retirement/resignation” was
not a concerted activity which was protected by law
(Enrique v. Zamora, G.R. No. L-51382, December 29,
1986).
Q: PHIMCO argues that the strike staged by its
employees was illegal as they committed the
prohibited acts under Art. 264(e) of the LC such
as blocking the ingress and egress of the
company premises. The employees, on the other
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
hand, submit that the picket was peaceful and no
human barricade blocked the company
premises. May a peaceful picketing of employees
be held illegal?
A: Yes. Despite the validity of the purpose of a strike
and compliance with the procedural requirements,
a strike may still be held illegal where the means
employed are illegal. The means become illegal
when they come within the prohibitions under Art.
264(e) of the LC. Protected picketing does not
extend to blocking ingress to and egress from the
company premises, and, the fact that the picket was
moving, was peaceful and was not attended by
actual violence may not free it from taints of
illegality if the picket effectively blocked entry to
and exit from the company premises (PHIMCO
Industries, Inc. v. PHIMCO Industries Labor
Association, G.R. No. 170830, August 11, 2010).
NOTE: Even if the purpose of a strike is valid, the
strike may still be held illegal where
the means employed are illegal. Thus, the
employment of violence, intimidation, restraint or
coercion in carrying out concerted activities which
are injurious to the right to property renders
a strike illegal. And so is picketing or the
obstruction to the free use of property or the
comfortable enjoyment of life or property, when
accompanied by intimidation, threats, violence, and
coercion as to constitute nuisance (Soriano Aviation
v. Employees Association of A. Soriano Aviation, G.R.
No. 166879, August 14, 2009).
Penalty of outright dismissal against the striking
employees too severe for a one-day absence
from work
The penalty of dismissal against the striking Ees,
who only staged a one-day walkout, is too severe. It
is not in accordance with settled and authoritative
doctrine and legal principles that a mere finding of
the illegality of a strike does not automatically
warrant a wholesale dismissal of the strikers from
their employment and that a premature or
improvident strike should not be visited with a
consequence so severe as dismissal where a penalty
less punitive would suffice (Automotive Engine
Rebuilders, Inc. v. Progresibong Unyon ng mga
Manggagawa ng AER, G.R. No. 160138, July 13, 2011).
Q: Because of financial problems, the company
decided to temporarily shutdown its operations
at the dyeing and finishing division. It notified
the DOLE of the shutdown. Raymund Tomaroy,
with 16 members of the union, staged a picket in
front of the company’s compound, carrying
placards. They demanded (deleted “a”)
resumption of work and 13th month pay. The
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
212
company filed a petition to declare the strike
illegal. The union argues that they did not stage
a strike; for considering that the dyeing and
finishing division of the company was shutdown,
it could not have caused a work stoppage. Was
the action of the union a strike?
A: Yes. The concerted efforts of the members of the
union and its supporters caused a temporary work
stoppage. The allegation that there can be no work
stoppage because the operation in the division had
been shut down is of no consequence. It bears
stressing that the other divisions were fully
operational (Bukluran ng Manggagawa sa Clothman
Knitting Corp. v. CA, G.R. No. 158158, January 17,
2005).
REQUISITES FOR A VALID STRIKE
AND VALID LOCKOUT
Requisites of a lawful strike/lockout
The requirements for a valid strike or lockout are
as follows:
1. It must be based on a valid and factual
ground;
2. A strike or lockout notice shall be filed with the
NCMB at least 15 days before the intended date
of the strike or lockout if the issues raised are
unfair labor practices, or at least 30 days
before the intended date thereof if the issue
involves bargaining deadlock.
NOTE: The failure of the union to serve the
company a copy of the notice of strike is a clear
violation of Section 3, Rule XXII, Book V of the
Rules Implementing the LC. The Constitutional
precepts of due process mandate that the other
party be notified of the adverse action of the
opposing party (Filipino Pipe and Foundry Corp.
v. NLRC, G.R. No. 115180, November 16, 1999).
3. In cases of dismissal from employment of union
officers duly elected in accordance with the
union constitution and by-laws, which may
constitute union-busting where the existence of
the union is threatened, the 15-day cooling-off
period shall not apply and the union may take
action immediately after the strike vote is
conducted and the result thereof submitted to
the DOLE.
4. Notice of conduct of strike vote 24 hours before
the intended strike vote is filed with the DOLE
(compliance with the 24-hour prior notice
rule).
5. A strike must be approved by a majority vote of
the members of the union and a lockout must be
approved by a majority vote of the members of
 LABOR RELATIONS
the Board of Directors of the Corporation or
Association or of the partners in a partnership,
obtained by secret ballot in a meeting called for
that purpose.
6. A strike or lockout vote shall be reported to the
NCMB-DOLE Regional Branch at least 7 days
before the intended strike or lockout subject to
the cooling-off period.
7. In the event the result of the strike/lockout
ballot is filed within the cooling-off period, the
7-day requirement shall be counted from the
day following the expiration of the cooling-off
period (NSFW vs. Ovejera, G.R. No. 59743, May
31, 1982).
In case of dismissal from employment of union
officers which may constitute union-busting, the
time requirement of 15 days for the filing of the
Notice of Strike shall be dispensed with but the
strike vote requirement, being mandatory in
character, shall “in every case” be complied
with. Simply stated, the 7-day strike ban cannot
be dispensed with.
It will be adding insult to injury to ask the
unionists to cool off while their union is being
busted.
The purpose of the 7-day strike ban is to give
the DOLE an opportunity to verify whether the
projected strike really carries the imprimatur of
the majority of the union members in addition
to the cooling-off period before the actual strike
(Lapanday Workers’ Union, et.al. v. NLRC, G.R.
Nos. 95494-97, September 7, 1995).
8. The dispute must not be the subject of an
assumption of jurisdiction by the President or
the SLE, a certification for compulsory
arbitration, or submission to compulsory or
voluntary arbitration or a subject of a pending
case involving the same grounds for the strike
or lockout.
Cooling-off period
It is the period of time given by the NCMB to mediate
and conciliate the parties. It is the span of time
allotted by law for parties to settle their disputes in
a peaceful manner before staging a strike or lockout.
The principles of improved offer and reduced offer
balloting apply during the cooling-off period.
Cooling-off and waiting period may be done
simultaneously.
Q: Johnny is the duly elected President and
principal union organizer of the Nagkakaisang
Manggagawa ng Manila Restaurant (NMMR), a
legitimate labor organization. He was
213
unceremoniously dismissed by management for
spending virtually 95% of his working hours in
union activities. On the same day Johnny
received the notice of termination, the labor
union went on strike.
Management filed an action to declare the strike
illegal, contending that
1. The Union did not observe the “cooling-off
period” mandated by the LC; and
2. The Union went on strike without
complying with the strike-vote
requirement under the LC.
Rule on the foregoing contentions with reasons.
(2009 Bar Question)
A:
1. Yes. The conduct of a strike action without
observing the cooling-off period is a violation of
one of the requirements of law. (delete “which
must be observed.”) The cooling-off periods
required by Art. 263 (c) and (f) of the LC are to
enable the DOLE to exert efforts to amicably
settle the controversy and for the parties to
review and reconsider their respective
positions during the cooling-off periods. But the
LC also provides that if the dismissal constitutes
union busting, the union may strike
immediately.
2. Yes. The conduct of the strike action without a
strike vote violates Art. 263 (f) – “In every case,
the union or the Er shall furnish the DOLE the
results of the voting at least 7_days before the
intended strike” to enable the DOLE and the
parties to exert the last effort to settle the
dispute without strike action.
Q: NFSW, the bargaining agent of Central
Azucarera de la Carlota (CAC) rank and file
employees, filed a notice of strike based on non-
payment of the 13th month pay and 6 days
thereafter they held the strike. A day after the
commencement of the strike, a report of the
strike-vote was filed by NFSW with DOLE. CAC
filed a petition to declare the strike illegal due to
non-compliance with the 15-day cooling off
period and the strike was held before the lapse
of 7 days from the submission to the DOLE of the
result of the strike vote. Was the strike held by
NFSW legal?
A: No. The cooling-off period in Art. 264(c), LC and
the 7-day strike ban after the strike-vote report
prescribed in Art. 264(f) of the LC were meant to be
mandatory. The law provides that “the labor union
may strike” should the dispute “remain unsettled
until the lapse of the requisite number of days from
the filing of the notice”, this clearly implies that the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
union may not strike before the lapse of the cooling-
off period. The cooling-off period is for the MOLE to
exert all efforts at mediation and conciliation to
effect a voluntary settlement.
The mandatory character of the 7-day strike ban is
manifest in the provision that “in every case” the
union shall furnish the DOLE with the results of the
voting “at least 7 days before the intended strike.”
This period is to give time to verify that a strike vote
was actually held (NFSW v. Ovejera, G.R. No. L-59743,
May 31, 1982).
Purpose of giving notice of the conduct of a
strike vote to the NCMB at least 24 hours before
the meeting for the said notice
1. Inform the NCMB of the intent of the union to
conduct a strike vote;
2. Give the NCMB ample time to decide on
whether or not there is a need to supervise the
conduct of the strike vote to prevent any acts of
violence and/or irregularities;
3. Ample time to prepare for the deployment of
the requisite personnel (Capitol Medical Center
v. NLRC, G.R. No. 147080, April 26, 2005).
Legality of no strike/lockout clause
A no strike/lockout clause is legal but it is applicable
only to economic strikes, not ULP strikes. As a
provision in the CBA, it is a valid stipulation
although the clause may be invoked by an Er only
when the strike is economic in nature or one which
is conducted to force wage or other concessions
from the Er that are not mandated to be granted by
the law itself. It would be inapplicable to prevent a
strike which is grounded on ULP (Panay Electric Co.
v. NLRC, G.R. No. 102672, October 4, 1995);
(Malayang Samahan ng mga Manggagawa sa
Greenfield v. Ramos, G.R. No. 113907, February 28,
2000).
Preventive mediation case
It involves labor disputes which are the subject of a
formal or informal request for conciliation and
mediation assistance sought by either or both
parties or upon the initiative of the NCMB [IRR, Book
V, Rule I, Sec. 1 (mm)].
NOTE: The regional branch may treat the notice as
a preventive mediation case upon agreement of the
parties.
Legal basis for the conversion of a notice of
strike to preventive mediation
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
214
It is in pursuance of the NCMB’s duty under the
Rules Implementing the Labor Code to exert “all
efforts at mediation and conciliation to enable the
parties to settle the dispute amicably” and in line
with the state policy of favoring voluntary modes of
settling labor disputes. And a strike mounted by the
union after the NCMB dropped the notice of strike
from its docket of notice of strikes and during the
pendency of preventive mediation proceedings
would be illegal (San Miguel Corporation v. NLRC et
al., G.R. No. 119293, June 10 ,2003).
Duty to declare that the notice of strike or
lockout has been converted into preventive
mediation case
Upon the recommendation of the conciliator or
mediator handling the labor dispute, the Director of
the Regional Branch of the NCMB which has
jurisdiction over the labor dispute has the duty to
declare and inform the parties that the issues raised
or the actual issues involved are not proper subjects
of a Notice of Strike or Lockout has been converted
into a Preventive Mediation Case without prejudice
to further conciliation or upon the request of either
or both parties.
Contents of the notice of strike or lockout
1. Name and addresses of Er
2. Union involved
3. Nature of the industry to which the Er belongs
4. Number of union members
5. Workers in the bargaining unit
6. Other relevant date
7. In case of bargaining deadlocks: unresolved
issues, written proposals of the union, counter-
proposals of the Er and proof of request for
conference to settle differences
8. In case of ULP: The acts complained of, and the
efforts taken to resolve the dispute
NOTE: NCMB shall inform the concerned party in
case notice does not conform to the requirements.
Action taken by the NCMB on the notice of strike
of strike or lockout
1. Upon receipt of notice, the regional branch of
the NCMB shall exert all efforts at mediation
and conciliation to enable the parties to settle
the dispute amicably. It shall also encourage the
parties to submit the dispute to voluntary
arbitration.
2. The regional branch of the NCMB may, upon
agreement of the parties, treat a notice as a
preventive mediation case.
3. During the proceedings, the parties shall not do
any act which may disrupt or impede the early
 LABOR RELATIONS
settlement of the dispute. They are obliged, as
part of their duty to bargain collectively in good
faith and to participate fully and promptly in
conciliation meetings called by the regional
branch of the NCMB.
4. A notice, upon agreement of the parties, may be
referred to alternative modes of dispute
resolution, including voluntary arbitration.
Q: Was the strike held by the union legal based
on the fact that the notice of strike only
contained general allegations of ULP?
A: No. In cases of ULP, the notice of strike shall as far
as practicable, state the acts complained of and the
efforts to resolve the dispute amicably (Tiu v. NLRC,
G.R. No. 123276, August 18, 1997).
Q: Fil Transit Employees Union filed a notice of
strike with the Bureau of Labor Relations
because of alleged ULP of the company. Because
of failure to reach an agreement the union went
on strike. Several employees were dismissed
because of the strike. The union filed another
notice of strike alleging ULP, massive dismissal
of officers and members, coercion of employees
and violation of workers’ rights to self-
organization. The DOLE after assuming
jurisdiction over the dispute, ordered all
striking employees including those who were
dismissed to return to work. The company
however countered that no strike vote had been
obtained before the strike was called and the
Examples of strike and their illegality
EXAMPLE OF STRIKE
1. Sit-down strike – Characterized by a temporary
work stoppage of workers who seize or occupy
property of the Er or refuse to vacate the premises
of the Er.
2. Wildcat strike – A work stoppage that violates
the labor contract and is not authorized by the
union membership.
3. Slowdown – Strike on an installment plan; an
activity by which workers, without complete
stoppage of work, retard production or their
performance of duties and functions to compel
management to grant their demands.
4. Sympathetic strike – Work stoppages of workers
of one company to make common cause with
other strikers or other companies without
demands or grievances of their own against the
Er.
215
result of the strike vote was not reported to
DOLE. Was the strike held by the union illegal for
failure to hold a strike vote?
A: Yes. There is no evidence to show that a strike
vote had in fact been taken before a strike was
called. Even if there was a strike vote held, the strike
called by the union was illegal because of non-
observance by the union of the mandatory 7-day
strike ban counted from the date the strike vote
should have been reported to the DOLE (First City
Interlink Transportation Co., Inc. v. Confessor, G.R. No.
106316, May 5, 1997).
Effect of non-compliance with the requisites of a
strike: The strike may be declared illegal.
Tests in determining the legality of strike
The following must concur:
1. Purpose test – The strike must be due to either
bargaining deadlock and/or the ULP
2. Compliance with the procedural and
substantive requirements of the law. (See
requisites of a valid strike)
3. Means employed test – It states that a strike may
be legal at its inception but eventually be
declared illegal if the strike is accompanied by
violence which is widespread, pervasive and
adopted as a matter of policy and not mere
violence which is sporadic and which normally
occurs in a strike area.
REASON FOR ITS ILLEGALITY
Amounts to a criminal act because of the Ees trespass
on the premises of the Er.
It fails to comply with certain requirements of the law,
to wit: notice of strike, vote and report on strike vote.
Ees work on their own terms; while the Ees continue to
work and remain in their positions and accept wages
paid to them, they at the same time select what part of
their allotted tasks they care to perform on their own
volition or refuse openly or secretly.
There is no labor dispute between the workers who are
joining the strikers and the latter’s Er.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
5. Secondary strike – Work stoppages of workers
of one company to exert pressure on their Er so
that the latter will in turn bring pressure upon the
Er of another company with whom another union
has a labor dispute.
6. General strike (cause oriented strike) – A type of
political sympathetic strike and therefore there is
neither a bargaining deadlock nor any ULP. e.g.
Welga ng bayan.
7. Quickie strikes – Brief and unannounced
temporary work stoppage.
Q: A is a member of the labor union duly
recognized as the sole bargaining
representative of his company. Due to a
bargaining deadlock, 245 members of the 500-
strong union voted on March 13, 2010 to stage a
strike. A notice of strike was submitted to the
NCMB on March 16, 2010. Seven days later the
workers staged a strike. In the course of which,
A had to leave to attend to his wife who just gave
birth. The union members later intimidated and
barred other employees from entering the work
premises, thus paralyzing the business
operations of the company. A was dismissed
from employment as a consequence of the
strike.
a. Was the strike legal? Explain.
b. Was A’s dismissal valid? Why or why not?
(2010 Bar Question)
A:
a. No. First, the union failed to satisfy the required
majority vote of the union membership
approving the conduct of a strike [LC, Art. 263
(f); D.O. No. 40-03, Rule XII, Sec. 10]. Second, the
strike was illegal due to the non-observance of
the 30-day cooling off period by the union [LC,
Art. 263 (c)].
b. No. A, as an ordinary striking worker, may not
be declared to have lost his employment status
by mere participation in an illegal strike, unless
there is proof that he knowingly participated in
the commission of illegal acts during the strike
(LC, Art. 264; Arellano University Employees and
Workers Union v. Court of Appeals, 502 SCRA
219).
Q: Two unions, joined a welga ng bayan. The
unions, led by their officers, staged a work
stoppage which lasted for several days,
prompting FILFLEX and BIFLEX Corporations to
file a petition to declare the work stoppage
illegal for failure to comply with procedural
requirements. Did the employees commit an
illegal work stoppage?
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
216
There is no labor dispute involved.
It is a political rally.
Failure to comply with notice requirements and etc.
A: Yes. Ees, who have no labor dispute with their Er
but who, on a day they are scheduled to work, refuse
to work and instead join a welga ng bayan commit
an illegal work stoppage. There being no showing
that the two unions notified the corporations of
their intention, or that they were allowed by the
corporations, to join the welga ng bayan, their work
stoppage is beyond legal protection [BIFLEX Phils.
Inc. Labor Union (NAFLU) vs. FILFLEX Industrial and
Manufacturing Corp., G.R. No. 155679, December 19,
2006].
Enjoinment of strike
GR: No strikes arising from a labor dispute may be
enjoined.
XPNs:
1. Assumption order by SLE [LC, Art. 263(g)].
2. Enjoining or restraining any actual or
threatened commission of any unlawful act in
any labor dispute [LC, Art. 218(e)].
REQUISITES FOR LAWFUL PICKETING
The requisites for a valid strike/lockout are
NOT applicable to picketing.
The most important requirement for legal picketing
is that it should be peacefully conducted.
The requisites for lawful picketing are:
1. The picket should be peacefully carried out;
2. There should be no act of violence, coercion or
intimidation attendant thereto;
3. The ingress to (entrance) or egress from (exit)
the company premises should not be
obstructed; and
4. Public thoroughfares should not be impeded
Right to picket is protected by the Constitution
and the law
Unlike a strike which is guaranteed under the
Constitutional provision on the right of workers to
 LABOR RELATIONS
conduct peaceful concerted activities under Sec. 3,
Art. XIII thereof, the right to picket is guaranteed
under the freedom of speech and of expression and
to peaceably assemble to air grievances under Sec.
4, Art. III (Bill of Rights) thereof.
Effect of the use of foul language during the
conduct of the picket
In the event the picketers employ discourteous nd
impolite language in their picket, such may NOT
result in, or give rise to libel or action for damages.
Picketing vs. Strike
a. To strike is to withhold or to stop work by the
concerted action of employees as a result of an
industrial or labor dispute. The work stoppage
may be accompanied by picketing by the
striking employees outside of the company
compound.
b. While a strike focuses on stoppage of work,
picketing focuses on publicizing the labor
dispute and its incidents to inform the public of
what is happening in the company being
picketed.
c. A picket simply means to march to and fro in
front of the employer’s premises, usually
accompanied by the display of placards and
other signs making known the facts involved in
the labor dispute. It is but one strike activity
separate and different from the actual stoppage
of work.
While the right of employees to publicize their
dispute falls within the protection of freedom of
expression and the right to peaceably assemble to
air grievances, these rights are by no means
absolute. Protected picketing does not extend to
blocking ingress to and egress from the company
premises. That the picket was moving, was peaceful
and was not attended by actual violence may not
free it from taints of illegality if the picket effectively
blocked entry to and exit from the company
premises [PHIMCO Industries, Inc. vs. PHIMCO
Industries Labor Association (PILA), G.R. No. 170830,
August 11, 2010]
When picket considered a strike
In distinguishing between a picket and a strike, the
totality of the circumstances obtaining in a case
should be taken into account.
Petitioners contend that what the conducted was
mere picketing and not a strike. In disagreeing with
this contention, the High Court emphasized that it is
not an issue in this case that there was a labor
dispute between the parties as petitioners had
217
notified the respondent of their intention to stage a
strike, and not merely to picket. Petitioners’
insistence to stage a strike is evident in the fact that
an amended notice of strike was filed even as
respondent moved to dismiss the first notice. The
basic elements of a strike are present in this case:
106 members of petitioner Union, whose respective
applications for leave of absence on September 21,
1999 were disapproved, opted not to report for
work on said date, and gathered in front of the
company premises to hold mass protest action.
Petitioners deliberately absented themselves and
wore red ribbons and carried placards with slogans
such as: “YES KAMI SA STRIKE, PROTESTA KAMI,
SAHOD, KARAPATAN NG MANGGAGAWA
IPAGLABAN, CBA-WAG BABOYIN, STOP UNION
BUSTING.” They marched to and fro in front of the
company’s premises during working hours. Thus,
petitioners engaged in a concerted activity which
already affected the company’s operations. The
mass concerted activity obviously constitutes a
strike. Moreover, the bare fact that petitioners were
given a Mayor’s permit is not conclusive evidence
that their action/activity did not amount to a strike.
The Mayor’s description of what activities
petitioners were allowed to conduct is
inconsequential. To repeat, what is definitve of
whether the action staged by petitioners is a strike
and not merely a picket is the totality of the
circumstances surrounding the situation.
Petitioner Union in the 2011 case of Leyte
Geothermal Power Progressive Employees Union –
ALU-TUCP vs. Philippine National Oil Company –
Energy Development Corporation [G.R. No. 170351,
March 30, 2011] contends that there was no
stoppage of work; hence, they did not strike.
Euphemistically, petitioner union avers that it “only
engaged in picketing,” and maintains that “without
any work stoppage, [its officers and members] only
engaged in protest activity.” The SC, however, ruled
that it was a strike and not picketing or protest
activity that petitioner union staged. It found the
following circumstances in support of such finding:
1. Petitioner union filed a Notice of Strike on
December 28, 1998 with the DOLE grounded on
respondent’s purported ULP, i.e., “refusal to
bargain collectively, union-busting and mass
termination.” On even date, petitioner union
declared and staged a strike.
2. The SOLE intervened and issued a Return-to-
work Order dated January 4, 1999, certifying
the labor dispute to the NLRC for compulsory
arbitration. The Order indicated the following
facts: (1) filing of notice of strike; (2) staging of
the strike and taking control over the
respondent’s facilities of its Leyte Geothermal
Project on the same day petitioner union filed
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
the notice of strike; (3) attempts by the NCMB
to forge a mutually acceptable solution proved
futile; (4) in the meantime, the strike continued
with no settlement in sight placing in jeopardy
the supply of much needed power supply in the
Luzon and Visayas grids.
3. Petitioner union itself, in its pleadings, used the
word “strike.”
4. Petitioner union’s asservations are belied by
the factual findings of the NLRC, as affirmed by
the CA thus: “The failure to comply with the
mandatory requisites for the conduct of strike
is both admitted and clearly shown on record.
Hence, it is undisputed that no strike vote was
conducted; likewise, the cooling-off period was
not observed and that the 7-day strike ban after
the submission of the strike vote was not
complied with since there was no strike vote
taken.”
In fine, petitioner union’s bare contention that it did
not hold a strike cannot trump the factual findings
of the NLRC that petitioner union indeed struck
against respondent. In fact, and more importantly,
petitioner union failed to comply with the
requirements set by law prior to holding a strike.
[Santa Rosa Coca-Cola Plant Employees Union vs.
Coca-Cola Bottlers Phils., Inc. G.R. Nos. 164302-03,
January 24, 2007]
ASSUMPTION OF JURISDICTION BY THE DOLE
SECRETARY OR CERTIFICATION OF THE LABOR
DISPUTE TO THE NLRC FOR COMPULSORY
ARBITRATION
When DOLE Secretary may assume or certify a
labor dispute
Art. 263(g) of the Labor Code provides that when in
the opinion of the DOLE Secretary, the labor dispute
causes or will likely cause a strike or lockout in an
industry indispensable to the national interest, he is
empowered to either:
1. He may assume jurisdiction over the labor
dispute and decide it himself; or
2. He may certify it to the NLRC for compulsory
arbitration, in which case, it will be the NLRC
which shall hear and decide it.
This power may be exercised by the DOLE Secretary
even before the actual staging of a strike or lockout
since Art. 263(g) does not require the existence of a
strike or lockout but only of a labor dispute
involving national interest.
What constitutes a national interest case?
The LC vests in the DOLE Secretary the discretion to
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
218
determine what industries are indispensable to the
national interest. Accordingly, upon the
determination by the DOLE Secretary that such
industry is indispensable to the national interest, he
has authority to assume jurisdiction over the labor
dispute in the said industry or certify it to the NLRC
for compulsory arbitration.
Past issuances of the DOLE Secretary have not made
nor attempted to mention specifically what the
industries indispensable to the national interest are.
It was only in Department Order No. 40-H-13, Series
of 2013, that certain industries were specifically
named, thus:
“Section 16. Industries Indispensable to the
National Interest – For the guidance of the workers
and employers in the filing of petition for
assumption of jurisdiction, the following
industries/services are hereby recognized as
deemed indispensable to the national interest:
a) Hospital sector;
b) Electric power industry;
c) Water supply services, to exclude small water
supply services such as bottling and refilling
stations;
d) Air traffic control; and
e) Such other industries as may be recommended
by the National Tripartite Industrial Peace
Council (TIPC).”
Obviously, the above enumerated industries are
NOT exclusive as other industries may be
considered indispensable to the national interest
based on the appreciation and discretion of the
DOLE Secretary or as may be recommended by
TIPC.
Industries considered as indispensable to the
national interest
1. Public utilities
2. Companies engaged in the generation or
distribution of energy
3. Banks
4. Schools
5. Hospitals; and
6. Export-oriented industries
Extent of the power of the President or the
Secretary of Labor and Employment to issue
assumption and certification orders
The power to issue assumption and certification
orders is an extraordinary authority strictly limited
to national interest cases and granted to the
President or to the SLE, “which can justifiably rest
 LABOR RELATIONS
on his own consideration of the exigency of the
situation in relation to the national interest.”
Under the LC, as amended, the SLE is vested with the
discretionary power to decide not only the question
of whether to assume jurisdiction over a given labor
dispute or certify the same to the NLRC, but also the
determination of the industry indispensable to
national interest.
The President shall not be precluded from
intervening at any time and assuming jurisdiction
over any labor dispute involving industries
indispensable to national interest in order to settle
or terminate the same.
Under the LC, as amended, the SLE may suspend the
effects of the termination pending resolution of the
dispute in the event of a prima facie finding by the
appropriate official of the DOLE before whom such
dispute is pending that the termination may cause a
serious labor dispute or is an implementation of a
mass lay-off.
When a dispute is assumed by the President or
SLE, or certified to the NLRC for compulsory
arbitration
The assumption or certification shall have the effect
of automatically enjoining the intended or
impending strike or lockout.
Extent of the powers of the President during
strikes/lockouts
1. May determine the industries, which are in his
opinion indispensable to national interest
2. May intervene at any time and assume
jurisdiction over any such labor dispute in
order to settle or terminate the same [LC, Art.
263(g)].
NOTE: The decision of the President or SOLE is final
and executory after receipt thereof by the parties.
Different rule on strikes and lockouts in
hospitals, clinics and medical institutions
As a general rule, strikes and lockouts in hospitals,
clinics and similar medical institutions should be
avoided.
In case a strike or lockout is staged, it shall be the
duty of the striking union or locking-out employer
to provide and maintain an effective skeletal
workforce of medical and other health personnel
whose movement and services shall be unhampered
and unrestricted as are necessary to insure the
proper and adequate protection of the life and
219
health of its patients, most especially in emergency
cases, for the duration of the srike or lockout.
The DOLE Secretary may immediately assume,
within 24 hours from knowledge of the occurrence
of such a strike or lockout, jurisdiction over the
same or certify it to the NLRC for compulsory
arbitration.
Issues that the SLE may resolve when he
assumes jurisdiction over a labor dispute
1. Issues submitted to the SLE for resolution and
such issues involved in the labor dispute itself
(St. Scholastica’s College v. Torres, G.R. No.
100158, June 2, 1992).
2. SLE may subsume pending labor cases before
LAs which are involved in the dispute and
decide even issues falling under the exclusive
and original jurisdiction of LAs such as the
declaration of legality or illegality of strike (Int’l.
Pharmaceuticals v. SLE, G.R. Nos. 92981-83,
January 9, 1992).
Power of SLE is plenary and discretionary (St. Luke’s
Medical Center v. Torres, G.R. No. 99395, June 29,
1993).
Some principles on assumption/certification
power of the DOLE Secretary:
a. Prior notice and hearing are NOT required in
the issuance of the assumption or certification
order
b. The DOLE Secretary may seek the assistance of
law enforcement agencies like the Philippine
National Police to ensure compliance with the
provision thereof as well as with such orders as
he may issue to enforce the same
Return-to-work order
It is always part of the assumption/certification
order even if not expressly stated therein.
The moment the DOLE Secretary assumes
jurisdiction over a labor dispute involving national
interest or certifies it to the NLRC for compulsory
arbitration, such assumption/certification has the
effect of automatically enjoining the intended or
impending strike or, if one has already been
commenced, of automatically prohibiting its
continuation. The mere issuance of an
assumption/certification order automatically
carries with it a return-to-work order, even if the
directive to return to work is not expressly stated
therein. It is thus not necessary for the DOLE
Secretary to issue another order directing the
strikers to return to work.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
It is errors for striking workers to continue with
their strike aleeging absence of a return-to-work
order since Art 263(g) is clear that once an
assumption/certification order is issued, strikes are
enjoined or, if one has already taken place, all
strikers should immediately return to work.
No necessity for the SLE to issue a return-to-
work order in an assumption order
It is not necessary for the SLE to issue a return-to-
work order in an assumption order. The mere
issuance of an assumption order automatically
carries with it a return-to-work order although not
expressly stated therein (TSEU-FFW v. CA, G.R. Nos.
143013-14, December 18, 2000).
Nature of a return-to-work order
A return-to-work order is a valid statutory part and
parcel of the assumption of jurisdiction and
certification orders given the predictable prejudice
the strike could cause not only to the parties but
more especially to the national interest. Stated
otherwise, the assumption of jurisdiction and the
certification to the NLRC has the effect of
automatically enjoining the strike or lockout,
whether actual or intended, even if the same has not
been categorically stated or does not appear in the
assumption or certification order. It is not a matter
of option or voluntariness but of obligation. It must
be discharged as a duty even against the worker’s
will. The worker must return to his job together
with his co-workers so that the operation of the
company can be resumed and it can continue
serving the public and promoting its interest. It is
executory in character and shall be strictly complied
with by the parties even during the pendency of any
petition questioning their validity precisely to
maintain the status quo while the determination is
being made (Union of Filipro Employees vs. Nestle
Philippines, Inc., GR No. 88710-13, December 19,
1990).
A return-to-work order may be validly issued
pending determination of the legality of the
strike
Where the return-to-work order is issued pending
the determination of the legality of the strike, it is
not correct to say that it may be enforced only if the
strike is legal and may be disregarded if illegal.
Precisely, the purpose of the return to work order is
to maintain the status quo while the determination
is being made (Sarmiento v. Tuico, G.R. Nos. 75271-
73, June 27, 1988).
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
220
Return-to-work order does not violate the
constitutional provision against involuntary
servitude
A return-to-work order is not offensive to the
constitutional provision against involuntary
servitude. It must be discharged as a duty even
against the worker’s will. The worker must return
to his job together with his co-workers so that the
operation of the company can be resumed and it can
continue serving the public and promoting its
interest. It is executory in character and should be
strictly complied with by the parties even during the
pendency of any petition questioning its validity in
order to maintain the status quo while the
determination is being made.
Some principles on return-to-work order
a. The issue of legality of strike is immaterial in
enforcing the return-to-work order
b. Upon assumption/certification, the parties
should revert to the status quo ante litem which
refers to the state of things as it was before the
labor dispute or the state of affairs existing at
the time of filing of the case. It is the last actual,
peaceful and uncontested status that preceded
the actual controversy
c. To implement the return-to-work order, the
norm is actual reinstatement. However, payroll
reinstatement in lieu of actual reinstatement
may properly be resorted to when special
circumstances exist that render actual
reinstatement impracticable or otherwise not
conducive to attaining the purposes of the law.
Ex.: Where the teachers ordered to return to
work could not be given back their academic
assignments since the return-to-work order of
the DOLE Secretary was issued in the middle of
the first semester of the academic year. The SC
affirmed the validity of the payroll
reinstatement order of the NLRC and ruled that
the NLRC did not commit grave abuse of
discretion in providing for the alternative
remedy of payroll reinstatement. It observed
that the NLRC was only trying its best to work
out a satisfactory ad hoc solution to a serious
problem. (University of Santo Tomas vs. NLRC,
G.R. No. 89920, October 18, 1990)
NATURE OF ASSUMPTION ORDER OR
CERTIFICATION ORDER
A police power measure
The power to issue assumption/certification orders
is an extraordinary authority granted to the
President and to his alter ego, the DOLE Secretary,
the exercise of which should be strictly limited to
 LABOR RELATIONS
national interest cases. It is in the nature of a police
power measure. This is done for the promotion of
the common good considering that a prolonged
strike or lockout can be inimical to the national
economy.
Nature of the power of the SLE in assuming
jurisdiction
The assumption of jurisdiction is in the nature of a
police power measure. This is done for the
promotion of the common good considering that a
prolonged strike or lockout can be inimical to the
national economy. The SLE acts to maintain
industrial peace. Thus, his certification for
compulsory arbitration is not intended to impede
the worker’s right to strike but to obtain a speedy
settlement of the dispute (Philtread Workers Union
v. Confesor, G.R. No. 117169, March 12, 1997).
The provision under the LC does not interfere with
the workers right to strike but merely regulates it,
when in the exercise of such right national interest
will be affected. The LC vests upon the SOLE the
discretion to determine what industries are
indispensable to national interest.
NOTE: The underlying principle embodied in Art.
264 (g), LC on the settlement of labor disputes is
that assumption and certification orders are
executory in character and are strictly complied
with by the parties even during the pendency of any
petition questioning their validity. This
extraordinary authority given to the Secretary of
Labor is aimed at arriving at a peaceful and speedy
solution to labor disputes, without jeopardizing
national interests.
Q: A notice of strike was filed by the PSBA
Employees Union-FFW, alleging union-busting,
coercion of Employees and harassment on the
part of PSBA. The conciliation being ineffective,
the strike pushed through. A complaint for ULP
and for a declaration of illegality of the strike
with a prayer for preliminary injunction was
filed by PSBA against the union.
While the cases were pending, a complaint was
filed in the RTC of Manila by some PSBA students
against PSBA and the union, seeking to enjoin
the union and its members from picketing and
from barricading themselves in front of the
school’s main gate. A TRO was then issued by the
RTC, which the union opposed on the ground
that the case involves a labor dispute over which
the RTC had no jurisdiction. The Acting SLE later
on assumed jurisdiction over the labor dispute
and ordered the striking Employees to return to
work.
221
a. Was the SLE correct in ordering the striking
Employees to return to work?
b. Does the RTC have jurisdiction to decide the
case filed by the PSBA students?
A:
a. Yes. In the opinion of the Acting SLE, the labor
dispute adversely affected the national interest,
affecting as it did 9,000 students. He is
authorized by law to assume jurisdiction over
the labor dispute, after finding that it adversely
affected the national interest. This power is
expressly granted by Art. 263 (g) of the LC, as
amended by B.P. Blg. 227.
b. No. The RTC was without jurisdiction over the
subject matter of the case filed by some PSBA
students. It is a labor dispute which the labor
agencies have exclusive jurisdiction. The rule
that regular courts have no jurisdiction over
labor disputes and to issue injunctions against
strikes is well-settled (PSBA v. Noriel, G.R. No.
80648, August 15, 1988).
Q: Members of the union learned that a
redundancy program would be implemented by
PLDT. They thus filed a notice of strike on the
ground of ULP. However, the Secretary of Labor,
recognizing that PLDT’s operations is impressed
with public and national interest as
communication plays a vital role in furtherance
of trade, commerce, and industry specially at
this time of globalized economy where
information is vital to economic survival,
enjoined the strike and issued a “qualified”
return-to-work order where all striking
employees except those who were terminated
due to redundancy were ordered to return to
work. Was the “qualified” return-to-work order
valid?
A: No. When the SLE exercises the powers granted
by Art. 263(g) of the LC, he is, indeed, granted great
breadth of discretion. However, the application of
this power is not without limitation, lest the SLE
would be above the law. As Art. 263(g) is clear and
unequivocal in stating that all striking or locked out
Ees shall immediately return to work and the Er
shall immediately resume operations and readmit
all workers under the same terms and conditions
prevailing before the strike or lockout, then the
unmistakable mandate must be followed by the SLE
(PLDT v. Manggagawa ng Komunikasyon sa
Pilipinas, G.R. No. 162783, July 14, 2005).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
EFFECT OF DEFIANCE OF ASSUMPTION OR
CERTIFICATION ORDERS
Effect of defiance to the return to work order
It shall be considered an illegal act committed in the
course of the strike or lockout and shall authorize
the SLE or the NLRC, as the case may be, to enforce
the same under pain or loss of employment status or
entitlement to full employment benefits from the
locking-out Er or backwages, damages and/or other
positive and/or affirmative reliefs, even to criminal
prosecution against the liable parties (New Rules of
Procedure of the NLRC, Rule IX, Sec. 6; St.
Scholastica’s College v. Torres, G.R. No. 100158, June
2, 1992).
Effect of a defiance of assumption or
certification orders of the SLE
The defiance by the union, its officers and members
of the SLE’s assumption of jurisdiction or
certification order constitutes a valid ground for
dismissal [LC, Art. 263(g)].
NOTE: The SOLE may cite the defiant party in
contempt pursuant to the power vested in him
under the provisions of the LC.
Justifications for the dismissal of a defiant
Employee
1. A strike that is undertaken after the issuance by
the SLE of an assumption or certification order
becomes a prohibited activity and thus illegal.
The striking union officers and members, as a
result, are deemed to have lost their
employment status for having knowingly
participated in an illegal strike.
2. From the moment an Ee defies a return-to-work
order, he is deemed to have abandoned his job.
3. By staging a strike after the assumption or
certification for compulsory arbitration, the Ee
forfeit their right to be re-admitted to work,
having, in effect, abandoned their employment
(Steel Corporation of the Philippnes v. SCP
Employees Union, G.R. Nos. 169829-30, August
16, 2008).
NOTE: Once the SLE assumes jurisdiction over a
labor dispute or certifies it to the NLRC for
compulsory arbitration, such jurisdiction should
not be intered with by the application of the
coercive process of a strike or lockout.
The workers defying a return-to-work order issued
in connection with the asusmption or certification
by the SOLE may, in fact, be subjected not only to
immediate disciplinary action such as dismissal or
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
222
loss of employment status but to criminal
prosecution as well. Defiant strikers could be validly
replaced.
All defiant strikers, regardless of whether they
are officers or ordinary members, are deemed
dismissed
Once the DOLE Secretary assumes jurisdiction over
a labor dispute or certifies it to the NLRC for
compulsory arbitration, such jurisdiction should
not be interfered with by the application of the
coercive processes of a strike or lockout. Any
defiance thereof is a valid ground for the loss of
employment status.
Period of defiance of the return-to-work order,
not material
The length of time within which the return-to-work
order was defied by the strikiers is not significant in
determining their liability for the legal
consequences thereof. The following cases are
illustrative of this rule:
a. University of San Agustin Employees’ Union-FFW
vs. CA [G.R. No. 169632, March 28, 2008] – The
period of defiance was less than 9 hours from
8:45 a.m. to 5:25 p.m. on September 19, 2003.
b. Federation of Free Workers vs. Inciong [G.R. No.
L-49983, April 20, 1992] – The period of defiance
was only 9 days
Some principles on defiance of the assumption
or certification order
a. The assumption/certification order may be
served at any time of the day or night.
b. No practice of giving 24 hours to strikers within
which to return to work. There is no law or
jurisprudence recognizing this practice.
c. The defiant strikers could be validly replaced.
d. The refusal to acknowledge receipt of the
assumption/certification orders and other
processes is an apparent attempt to frustrate
the ends of justice, hence, invalid. The union
cannot be allowed to thwart the efficacy of the
said orders issued in the national interest
through the simple expediency of refusing to
acknowledge receipt thereof.
Q: Several employees and members of Union A
were terminated by Western Phone Co. on the
ground of redundancy. After complying with the
necessary requirements, the Union staged a
strike and picketed the premises of the
company. The management then filed a petition
for the SLE to assume jurisdiction over the
dispute. Without the benefit of a hearing, the SLE
 LABOR RELATIONS
issued an Order to assume jurisdiction and for
the parties to revert to the status quo ante litem.
a. Was the order to assume jurisdiction legal?
Explain.
b. Under the same set of facts the Secretary
instead issued an Order directing all
striking workers to return to work within 24
hours, except those who were terminated
due to redundancy. Was the order legal?
Explain.
A:
a. Yes. The SLE has plenary power to assume
jurisdiction under Art. 263[g],_LC: “When in his
opinion, there exists a labor dispute causing or
likely to cause a strike or lockout in an industry
indispensable to the national interest, the SLE
may assume jurisdiction over the dispute and
decide it or certify it to the NLRC for
compulsory arbitration.” This extraordinary
authority given to the SLE is aimed at arriving
at a peaceful and speedy solution to labor
disputes without jeopardizing national
interests (Steel Corportaion v. SCP Employees
Union, G.R. Nos. 169829-30, April 16, 2008). Such
assumption shall have the effect of
automatically enjoining an impending strike or
lockout or an order directing immediate return
to work and resume operations, if a strike
already took place, and for the employer to re-
admit all employees under the same terms and
conditions prevailing before the strike or
lockout [LC, Art. 263(g); D.O. No. 40-G-03, Rule
XXII, Sec. 15].
b. No. The order will be inconsistent with the
established State policy of enjoining the parties
from performing acts that undermines the
underlying principles emodied in Art. 263(g),
LC. In this case, exempting the employees
terminated due to redundancy from those who
are required to return-to-work, the SLE comes
short of his duty under Art. 263(g), LC to
maintain status quo or the terms and conditions
prevailing before the strike.
ILLEGAL STRIKE
Illegal Strike
A strike is illegal if declared and staged:
1. Contrary to specific prohibition of law, such as
strike by Ees performing governmental
functions.
2. In violation of a specific requirement of law.
3. For an unlawful purpose, such as inducing the
Er to commit ULP against non-union Ees,
compelling the dismissal of an employee,
223
forcing recognition of the union, or for trivial
purposes or circumventing contracts and
judicial orders.
4. Through unlawful means in the pursuit of its
objective, such as widespread terrorism of non-
strikers;
5. In violation of an existing injunction or
temporary restraining order;
6. Contrary to an existing agreement, such as a no-
strike clause or conclusive arbitration clause
7. Based on non-strikeable or invalid grounds
such as: Inter-union/intra-union disputes,
simple violation of CBA (in contrast to gross
violation thereof which is deemed ULP),
violation of labor standards, legislated wage
orders (wage distortion).
8. Without first having bargained collectively
9. Without submitting the issues to the grievance
machinery or voluntary arbitration or failing to
exhaust the steps provided therein
10. While conciliation and mediation proceeding is
on-going at NCMB
11. Based on issues already brought to voluntary or
compulsory arbitration
12. During the pendency of a case involving the
same ground/s cited in the notice of strike
13. In defiance of an assumption or certification or
return-to-work order.
14. After the conversion of the notice of strike into
a preventive mediation case.
15. By a minority union.
16. By an illegitimate union.
17. By dismissed employees.
18. In violation of the company code of conduct
which prohibits “inciting or participating in
riots, disorders, alleged strikes, or concerted
actions detrimental to the compay’s interest,”
the penalty for which is dismissal.
19. As protest rallies in front of government offices
such as in the following cases:
Toyota Motor Phils. Corp. Workers Association
vs. NLRC, G.R. Nos. 158786 & 158789, October 19,
2007 – the SC ruled that protest rallies staged by
the Ees from February 21 to 23, 2001 in front of
the offices of the BLR and the DOLE Secretary
constitute illegal strike and not legitimate
exercise of their right to peaceably assemble
and petition the government for redress of
grievances. It was illegal for having been
undertaken without satisfying the mandatory
pre-requisites for a valid strike under Art. 263
of the LC.
The ruling in Toyota was cited in Solidbank
Corporation vs. Gamier, G.R. No. 159460,
November 15, 2010 as basis in declaring the
protest action of the Ees of Solidbank which
staged in front of the Office of the DOLE
Secretary in Intramuros, Manila, as constitutive
of illegal strike since it paralyzed the operations
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
of the bank. The protest action in this case was
conducted because of the CBA deadlock.
20. As welga ng bayan which is in the nature of a
general strike as well as an extended sympathy
strike.
Good Faith Strike Doctrine
Strike declared in good faith – A strike may be
considered legal when the union believed that the
respondent company committed unfair labor acts
and the circumstances warranted such belief in
good faith although subsequently such allegation of
unfair labor practices are found out as not true
(PICEWO-FFW v. People’s Industrial and Commercial
Corp., 112 Scra 440).
It must be stressed, however, that with the
enactment of R.A. 6715 which took effect on March
21, 1989, the rule now is that such requirements as
the filing of a notice of strike, strike vote, and notice
given to the DOLE are mandatory in nature. Thus,
even if the union acted in good faith in the belief that
the company was committing an unfair labor
practice, if no notice of strike and a strike vote were
conducted, the said strike is illegal. Claim of good
faith is not a valid excuse (defense) to dispense with
the procedural steps for a lawful strike (Grand
Boulevard Hotel v. Dacanay, G.R. No. 153665, 18 July
2003; Poquiz, Vol. II).
Strike may be declared illegal on the ground of
non-compliance with the strict and mandatory
requirements for a valid conduct of a strike
The requirements of law and its implementing rules
are mandatory and failure of a union to comply
renders the strike illegal (Magdala Multipurpose &
Livelihood Cooperative v. Kilusang Manggagawa ng
LGS, G.R. Nos. 191138-39, October 19, 2011).
Employees who staged an illegal strike are not
entitled to backwages
Contemplating two causes for the dismissal of an
Ee—(a) unlawful lockout, and (b) participation in
an illegal strike—the third paragraph of Art. 264(a)
authorizes the award of full backwages only when
the termination of employment is a consequence of
an unlawful lockout. On the consequences of an
illegal strike, the provision distinguishes between a
union officer and a union member participating in
an illegal strike. A union officer who knowingly
participates in an illegal strike is deemed to have
lost his employment status, but a union member
who is merely instigated or induced to participate in
the illegal strike is more benignly treated. Part of the
explanation for the benign consideration for the
union member is the policy of reinstating rank-and-
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
224
file workers who are misled into supporting illegal
strikes, absent any finding that such workers
committed illegal acts during the period of the
illegal strikes.
As a general rule, backwages are granted to
indemnify a dismissed Ee for his loss of earnings
during the whole period that he is out of his job.
Considering that an illegally dismissed Ee is not
deemed to have left his employment, he is entitled
to all the rights and privileges that accrue to him
from the employment. That backwages are not
granted to Ees participating in an illegal strike
simply accords with the reality that they do not
render work for the Er during the period of the
illegal strike under the principle of a fair day’s wage
for a fair day’s labor.
With respect to backwages, the principle of “fair
day’s wage for a fair day’s labor” remains as the
basic factor in determining the award thereof. If
there is no work performed by the employee there
can be no wage or pay 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. However, for this
exception to apply, it is required that the strike be
legal (Danilo Escario v. NLRC, G.R. No. 160302,
September 27, 2010).
Q: X was dismissed for joining an illegal strike
but was reinstated because he is only a member
of the union who did not commit any illegal act.
Is X entitled for backwages for the period of
strike?
A: No. Conformably with the long honored principle
of “a fair day’s wage for a fair day’s labor”, Ee’s
dismissed for joining illegal strike are not entitled to
backwages for the period of the strike even if they
are reinstated by virtue of their being merely
members of the striking union who did not commit
any illegal act during the strike (Escario v. NLRC, G.R.
124055, June 8, 2000).
LIABILITY OF UNION OFFICERS vs.
LIABILITY OF ORDINARY WORKERS
Participation in lawful strike
An employee who participates in a lawful strike is
NOT deemed to have abandoned his employment.
Such participation should not constitute sufficient
ground for the termination of his employment even
if a replacement has already been hired by the Er
during the lawful strike.
Participation in illegal strike
 LABOR RELATIONS
1. Distinction in the liability between union
officers and ordinary union members.
a. Union officers – the mere finding or
declaration of illegality of the strike will
result in the termination of all union
officers who knowingly participated in the
illegal strike. Unlike ordinary members, it is
not required, for purposes of termination,
that the officers should commit an illegal
act during the strike. However, absent any
showing that the Ees are union officers,
they cannot be dismissed solely on the
illegality of the strike. To illustrate how the
“knowing participation” of union officers
may be ascertained, the following were
taken into account in Abaria vs. NLRC, G.R.
No. 154113, December 7, 2011: (1) Their
persistence in holding picketing activities
despite the declaration by the NCMB that
their union was not duly registered as a
legitimate labor organization and
notwithstanding the latter from the
federation’s legal counsel informing them
that their acts constituted disloyalty to the
national federation; and (2) Their filing of
notice of strike and conducting a strike vote
despite the fact that their union has no legal
personality to negotiate with their Er for
collective bargaining purposes
b. Ordinary union members – the mere
finding or declaration of illegality of a strike
will not result in termination of ordinary
union members. For an ordinary union
member to suffer termination, it must be
shown by clear evidence that he has
committed illegal acts during the strike.
Reason for the distinction – union officers
have the duty to guide their members to respect
the law. If instead of doing so, the officers urged
the members to violate the law, their dismissal
from the service is just a penalty for their
unlawful act. Their responsibility as main
players in an illegal strike is greater than that of
an ordinary union member’s and, therefore,
limiting the penalty of dismissal only to the
former for their participation in an illegal strike
is in order.
Some principles on illegality of a strike:
a. The fact that the Ees are signatories to the CBA
does not itself sufficiently establish their status
as union officers during the illegal strike.
Neither could their active roles during the
bargaining negotiations be considered as
evidence of their being union officers.
b. Only the union officers during the period of
illegal strike are liable. If the Ees acted as union
officers after the strike, they may not be held
225
liable and, therefore, could not be terminated in
their capacity as such.
c. Shop stewards are union officers. Hence, they
should be terminated upon the the declaration
of the illegality of the strike.
d. Union officers may be dismissed despite the fact
that the illegal strike was staged only for 1 day
or even for less than 10 hours. This holds true
in cases of defiance of the
assumption/certification order issued in
national interest cases.
e. If the dispositive portion of the decision failed
to mention the names of union officers, resort
should be made to the text of the decision.
f. No wholesale dismissal of strikers allowed. The
Er cannot unceremoniously dismiss a hundred
of its Ees in the absence of clear and convincing
proof that these people were indeed guilty of
the acts charged and then, afterwards, go to
court to seek validation of the dismissal it
whimsically executed.
Participation in the commission of illegal acts
during a strike
1. The legality or illegality of strike is immaterial
as far as liability for commission of illegal acts
during the strike is concerned. As long as the
union officer or member commits an illegal act
in the course of the strike, be it legal or illegal,
his employment can be validly terminated
2. The term “illegal acts” under Art. 264(a) may
encompass a number of acts that violate
existing labor or criminal laws, such as:
a. Violation of Art. 264(e) of the LC which
provides that “(n)o person engaged in
picketing shallcommit any act of violence,
coercion or intimidation or obstruct the
free ingress to or egress from the Er’s
premises for lawful purposes, or obstruct
public thoroughfares.”
b. Commission of crimes and other unlawful
acts in carrying out the strike.
c. Violation of any order, prohibition, or
injunction issued by the DOLE Secretary or
NLRC in connection with the assumption of
jurisdiction or certification order under
Art. 263(g) of the LC.
This enumeration is not exclusive as
jurisprudence abounds where the term “illegal
acts” has been interpreted and construed to
cover other breaches of existing laws.
Liability foe illegal acts should be determined
on an individual basis. For this purpose, the
individual identity of the union members who
participated in the commission of illegal acts
may be proved through affidavits and
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
photographs. Simply referring to them as Rule on reinstatement of striking workers
“strikers,” or “complainants in this cases” is not
enough to justify their dismissal. Striking Ees are entitled to reinstatement,
regardless of whether or not the strike was the
3. Some principles on commission of illegal acts in consequence of the Er’s ULP because while out on
the course of the strike: strike, the strikers are not considered to have
a. Only members who are identified as having abandoned their employment, but rather have only
participated in the sommission of illegal ceased from their labor; the declaration of a strike is
acts are liable. Those who did not not a renunciation of employment relation.
participate should not be blamed therefor.
b. To effectively hold ordinary union Persons not entitled to reinstatement
members liable, those who participated in
the commissions of illegal acts must not 1. Union officers who knowingly participate in the
only be identified but the specific illegal illegal strike
acts they eah committed should be 2. Any striker or union who knowingly
described with particularity. participates in the commission of illegal acts
c. If violence was committed by both Er and during the strike
Ees, the same cannot be cited as a ground to
declare the strike illegal. NOTE: Those union members who have joined an
illegal strike but have not committed any illegal act
Basis Union Officer Ordinary shall be reinstated but without backwages.
worker
The responsibility for the illegal acts committed
May be Cannot be during the strike must be on an individual and not
declared to terminated on a collective basis (First City Interlink
have lost his Transportation Co., Inc. v. Confesor, G.R. No. 106316,
employment May 5, 1997).
status
NOTE: The LC Rule in strikes in hospitals
protects
ordinary, 1. It shall be the duty of the striking Ees or locking-
rank-and-file out Er to provide and maintain an effective
Knowingly union skeletal workforce of medical and health
participating members who personnel for the duration of the strike or
in an illegal participated in lockout.
strike such a strike 2. SLE may immediately assume jurisdiction
from losing within 24 hours from knowledge of the
their jobs occurrence of such strike or lockout certify it to
provided that the NLRC for compulsory arbitration.
they did not
commit illegal Q: More or less 1400 employees of the company
acts during the staged a mass walk-out, allegedly without
strike. anybody leading them as it was a simultaneous,
immediate and unanimous group action and
decision, to protest the non-payment of their
Knowingly May be May be salaries and wages. The SLE who found the
participating terminated terminated strike to be illegal granted the clearance to
in the terminate the employment of those who were
commission instigators in the illegal strike. Was the decision
of illegal acts of the Secretary in granting the clearance
during strike correct?

A: No. A mere finding of the illegality of a strike

(Samahang Manggagawa Sa Sulpicio Lines, Inc.–
Naflu et al. v. Sulpicio Lines, Inc., G.R. No. 140992,
March 25, 2004).
should not be automatically followed by wholesale
dismissal of the strikers from their employment.
While it is true that administrative agencies
exercising quasi-judicial functions are free from the
rigidities of procedure, it is equally well-settled that
avoidance of technicalities of law or procedure in

UNIVERSITY OF SANTO TOMAS

2016 GOLDEN NOTES
226
 LABOR RELATIONS
ascertaining objectively the facts in each case
should not, however, cause denial of due process
(Bacus v. Ople, G.R. No. L-56856, October 23, 1984).
Q: Two days after the union struck, the SLE
ordered the striking workers to return to work
within 24 hours. But the striking union failed to
return to work and instead they continued their
pickets. As a result, violence erupted in the
picket lines. The service bus ferrying non-
striking workers was stoned causing injuries to
its passengers. Threats, defamation, illegal
detention, and physical injuries also occurred.
The company was directed to accept back all
striking workers, except the union officers, shop
stewards, and those with pending criminal
charges. Was the SLE correct in not including the
union officers, shop stewards and those with
pending criminal charges in the return-to-work
order?
A: No. To exclude union officers, shop stewards and
those with pending criminal charges in the directive
to the company to accept back the striking workers
without first determining whether they knowingly
committed illegal acts would be tantamount to
dismissal without due process of law (Telefunken
Semiconductors Ees Union-FFW v. SLE, G.R. No.
122743 & 127215, December 12, 1997).
Employees who abandoned a legal strike but
were refused reinstatement can be awarded
backwages
Provided the following requisites are present:
1. The strike was legal
2. There was an unconditional offer to return to
work as when the strikers manifested their
willingness to abide by the CIR back-to-work
order and even sought the aid of competent
authorities to effect their return
3. The strikers were refused reinstatement such
as when they have not been re-admitted to their
former position (Philippine Marine Officers'
Guild v. Compañia Maritima et al., G.R. Nos. L-
20662 and L-20662, March 27, 1971).
NOTE: No backwages will be awarded to union
members as a penalty for their participation in the
illegal strike. As for the union officers, for knowingly
participating in an illegal strike, the law mandates
that a union officer may be terminated from
employment and they are not entitled to any relief
(Gold City Integrated Port Services, Inc. v. NLRC ,G.R.
No. 86000, September 21, 1990).
227
LIABILITY OF EMPLOYER
Liability for reinstatement of strikers
a. Reinstatement (without backwages) of
ordinary rank-and-file union members who did
not participate in the commission of illegal acts
during the conduct of the illegal strike may be
ordered
b. Strikers who committed illegal acts during and
in the course of a strike may be terminated.
They are not entitled to be reinstated.
Additionally, they may be held criminally liable
therefor.
c. Strikers who failed to report for work without
proper justification and despite the order
reinstating them to their job are deemed to
have forfeited their right to reinstatement.
d. Er who fails to reinstate strikers who were
ordered reinstated by the Labor Arbiter is liable
to pay them backwages reckoned from the
labor Arbiter’s issuance of the reinstatement
order up to its reversal by the NLRC.
Separation pay in lieu of reinstatement in strike
cases
In strike cases, the award of separation pay in lieu
of reinstatement Is proper only when the strikers
did not participate in the commission of illegal acts
in the course thereof.
Backwages in strike cases
If the strike is illegal, no backwages should be paid.
Thus, in Arellano University Employees and Workers
Union vs. CA, G.R. No. 139940, September 19, 2006,
where the strike was declared illegal, petitioner
union members who were found not to have
participated in the commission of illegal acts during
the strike were ordered reinstated to their former
positions but without backwages. If reinstatement
is no longer possible, they should receive separation
pay of 1 month for every year of service in
accordance with existing jurisprudence. With
respect to the union officers, their mere
participation in the illegal strike warrants their
dismissal.
Entitlement of strikers to their backwages or
strike duration pay
GR: Strikers are not entitled to their backwages or
strike duration pay even if such strike was legal.
XPN:
1. Where the strikers voluntarily and
unconditionally offered to return to work, but
the Er refused to accept the offer – Ers are
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
entitled to backwages from the date their offer
was made
2. When there is a return-to-work order and the
Ees are discriminated against other Ees,
workers are entitled to backwages from the
date of discrimination
3. In case of a ULP strike, in the discretion of the
authority deciding the case
4. When the Ees were illegally locked out and thus
compel them to stage a strike.
Q: By reason of a deadlock in collective
bargaining, the union, after the lapse of the
cooling-off period, declares a strike. The strike
is peaceful but fruitless; the management is
adamant. So after 60 days, the strikers abandon
their strike and offer to return to work. Is the
company bound to re-admit them? Why?
A: Yes. By going on strike, the Ees are not deemed
to have abandoned their work; they are merely
utilizing a weapon given to them by law to seek
better terms and conditions of employment and to
protect their rights. An Er who refuses to re-admit
the strikers, excepting those who have forfeited
their employment status because of illegal acts
committed in the course of the strike would be
discriminating against them for having exercised
their right to engage in a concerted action; it
commits a ULP (Cromwell Commercial Employees
and Laborers Union v. CIR, et al., G.R. No. L-19778,
September 30, 1964).
Mere participation of an Ee in a lawful strike
shall not constitute sufficient ground for
termination of his employment
If by reason of the prolonged strike, the company
was compelled to hire replacements this would not
constitute as sufficient reason for it not to re-admit
the strikers. Under Art. 264 of the LC, mere
participation of an Ee in a lawful strike shall not
constitute sufficient ground for termination of his
employment, even if a replacement had been hired
by the Er during such lawful strike. A contrary rule
would enable the Er to dismiss an Ee by the simple
expedient of hiring a replacement.
The illegal acts of a re-admitted striker is
deemed to have been condoned
If an employer knowingly re-admits to work a
striker who committed illegal acts during a strike, it
cannot later on seek the dismissal of the employee
by reason of such acts.
UNIVERSITY OF SANTO TOMAS
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228
WAIVER OF ILLEGALITY OF STRIKE
Voluntary reinstatement constitutes a waiver of
the illegality of the strike
In Citizens’ Labor Union vs. Standard Vacuum Oil Co.,
G.R. No. L-7478, May 6, 1955, the act of the Er in
inviting the workers to return to their posts without
making any reference to the pending case involving
the issue of the illegality of the strike or imposing
any condition or alteration of the terms of their
employment was deemed a waiver of its right to
consider the strikers as wrongdoers. More so in this
case when such invitation was accepted by the
strikers. By said act, the parties may be said to have
both abandoned their original positions and come
to a virtual compromise to resume unconditionally
their former relations.
Instance when there is a waiver of the illegality
of a strike by the employer
When an Er accedes to the peaceful settlement
brooked by the NLRC by agreeing to accept all Ees
who had not yet returned to work, it waives the
issue of the illegality of the strike (Reformist Union
v. NLRC, G.R. No. 120482, January 27, 1997).
Effect of compliance with the return-to-work
order to the legality of strike
GR: A return-to-work order does not have the effect
of rendering the issue of the legality of the strike as
moot and academic (Insurefco Paper Pulp and
Project Workers Union v. Insular Sugar Refining
Corp., 95 Phil. 761).
XPN: Er may be considered to have waived its right
to proceed against the striking Es for alleged
commission of illegal acts during the strike when,
during a conference before the Chairman of the
NLRC, it agreed to reinstate them and comply with
the return-to-work order issued by the SOLE
(TASLI-ALU v. Court of Appeals, G.R. No. 145428, July
7, 2004).
Defiance of Return-to-work order
Not only union officers but also union members who
defy a return-to-work order are subject to dismissal.
They are deemed to have participated in an illegal
act (St. Scholastica’s College v. Ruben Torres, G.R. No.
100158, June 29, 1992).
 LABOR RELATIONS
INJUNCTIONS
Injunction
It is an order or a writ that commands a person to
do or not to do a particular act. It may be a positive
(mandatory) or a negative (prohibitory) command.
Injunction in picketing, strike or lockout cases
1. Prohibition on injunction against the
conduct of strikes and lockouts – As a general
rule, strikes and lockouts that are validly
declared enjoy the protection of the law and
cannot be enjoined unless illegal acts are
committed or threatened to be committed in
the course thereof. In the case of strikes, this
policy applies even if the strike appears to be
illegal in nature. The rationale for this policy ids
the protection extended to the right to strike
under the Constitution and the law. It is
basically treated as a weapon that the law
guarantees to Ees for the advancement of their
interest and for their protection.
2. Exceptions when the strike itself may be
enjoined – In some cases, injunctions issued to
enjoin the conduct of the strike itself and not
only the commission of illegal acts in the course
thereof, were held to be valid.
a. In San Miguel Corporation vs. NLRC, G.R. No.
119293, June 10, 2003 – The SC ruled that
injunction may be issued not only against
the commission of illegal acts in the course
of the strike but against the strike itself
because the notice of strike filed by the
union has been converted into a preventive
mediation case. Having been so converted,
a strike can no longer be staged based on
said notice. Upon such conversion, the legal
effect is that there is no more notice of
strike to speak of.
b. In San Miguel Corporation vs. NLRC, G.R. No.
99266, March 2, 1999 – the SC ruled that the
NLRC committed grave abuse of discretion
when it denied the petition for injunction to
restrain the union from declaring a strike
based on non-strikeable grounds.
3. Regular courts are prohibited from issuing
injunction against strikes or lockouts – The
cases cited above involve the issuance of
restraining order or injunction by the NLRC
pursuant to the exercise of its injunctive power.
In contrast, regular courts are absolutely
prohibited to grant any injunctive relief in cases
of strikes or lockouts.
229
Injunction in picketing cases
1. GR: Injunction cannot be issued against the
conduct of picketing by the workers. Under our
constitutional set up, picketing is considered
part of the freedom of speech duly guaranteed
by the Constitution.
2. XPNS (Picketing may be enjoined by the
NLRC):
a. When carried out through illegal means;
b. Involves the use of violence and other
illegal acts;
c. Affects the rights of third parties and
injunction becomes necessary to protect
such rights.
Q: Company C, a toy manufacturer, decided to
ban the use of cell phones in the factory
premises. In the pertinent Memorandum,
management explained that too much texting
and phone-calling by employees disrupted
company operations. Two employee-members
of Union X were terminated from employment
due to violation of the memorandum-policy. The
union countered with a prohibitory injunction
case (with prayer for the issuance of a
temporary restraining order) filed with the RTC
challenging the validity and constitutionality of
the cell phone ban. The company filed a motion
to dismiss, arguing that the case should be
referred to the grievance machinery pursuant to
an existing CBA with Union X, and eventually to
Voluntary Arbitration. Is the company correct?
Explain. (2010 Bar Question)
A: No. The RTC has jurisdiction to hear and decide
the prohibitory injunction case filed by Union X
against Company C to enjoin the latter from
implementing the memorandum-policy against the
use of cell phones in the factory. The issue in this
case is the validity and constitutionality of the cell
phone ban being implemented by Company C. The
issue, therefore, does not involve the interpretation
of the memorandum-policy, but its intrinsic validity.
(Haliguefla v. PAL 602 SCRA 297).
REQUISITES FOR LABOR INJUNCTIONS
Injunction in labor disputes
GR: No temporary or permanent injunction or
restraining order in any case involving or growing
out of labor disputes shall be issued by any court
(LC, Art. 254).
XPNs:
1. Injunction power of the NLRC (LC, Art. 218)
2. Prohibited activities during a strike or lockout
(LC, Art. 264)
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
3. Assumption or certification power of the SOLE
in national interest cases [LC, Art. 263(g)]
Requisites in issuing an injunction in labor cases
[LC, Sec. 218(e)]
1. There is an actual or threatened commission of
any or all prohibited or unlawful acts in any
labor dispute
2. There is a need to enjoin or restrain such acts or
to require the performance of a particular act
3. If not restrained or performed forthwith, may
cause grave or irreparable damage to any party
or render ineffectual any decision in favor of
such party [LC, Sec. 218(e)].
Provided, that no temporary or permanent
injunction in any case involving or growing out of a
labor dispute as defined in this Code shall be issued
except after hearing the testimony of witnesses,
with opportunity for cross-examination, in support
of the allegations of a complaint made under oath,
and testimony in opposition thereto, if offered, and
only after a finding of fact by the Commission, to the
effect:
1. That prohibited or unlawful acts have been
threatened and will be committed and will be
continued unless restrained, but no
injunction or temporary restraining order
shall be issued on account of any threat,
prohibited or unlawful act, except against the
person or persons, association or
organization making the threat or
committing the prohibited or unlawful act or
actually authorizing or ratifying the same
after actual knowledge thereof;
2. That substantial and irreparable injury to
complainant’s property will follow;
3. That as to each item of relief to be granted,
greater injury will be inflicted upon
complainant by the denial of relief than will
be inflicted upon defendants by the granting
of relief;
4. That complainant has no adequate remedy at
law; and
5. That the public officers charged with the duty
to protect complainant’s property are unable
or unwilling to furnish adequate protection.
NOTE: "Labor dispute" includes any controversy or
matters concerning terms or conditions of
employment or the association or representation of
persons in negotiating, fixing, maintaining, changing
or arranging the terms and conditions of
employment, regardless of whether the disputants
stand in the proximate relation of Er and Ee (LC, Sec.
212).
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
230
Injunction in picketing
GR: Injunction is not available in picketing because
picketing is part of the freedom of speech duly
protected by the Constitution.
XPNs:
1. Where picketing is carried out through the use
of illegal means
2. Where picketing involves the use of violence
and other illegal acts
3. Where picketing affects the rights of third
parties (Er) and injunction become necessary
to protect such rights.
INNOCENT BYSTANDER RULE
Innocent bystander
They are the third party in a picketing who has no
existing connection or interest with the picketing
union (MSF Tire & Rubber v. CA, G.R. No. 128632,
August 5, 1999).
NOTE: While peaceful picketing is entitled to
protection as an exercise of free speech, the courts
are not without power to confine or localize the
sphere of communication or the demonstration to
the parties to the labor dispute, including those with
related interest, and to insulate establishments or
persons with no industrial connection or having
interest totally foreign to the context of the dispute.
Thus, the right may be regulated at the instance of
third parties or "innocent bystanders" if it appears
that the inevitable result of it is to create an
impression that a labor dispute with which they
have no connection or interest exists between them
and the picketing union or constitute an invasion of
their rights (Ibid.).
Required proof to be established by an innocent
bystander before a court enjoins a labor strike
The innocent by stander must show:
1. Compliance with the grounds specified in Rule
58 of the Rules of Court, and
2. That it is entirely different from, without any
connection whatsoever to, either party to the
dispute and, therefore, its interests are totally
foreign to the context thereof (MSF Tire &
Rubber v. CA, G.R. No. 128632, August 5, 1999).
When injunction on picketing is allowed
through the regular courts and not through the
NLRC
In situations where the picket affects not only the Er
but also the business operations of other
establishments owned by third parties, an
 LABOR RELATIONS
injunction may be secured by the latter from the
regular courts to enjoin the picket under the
“Innocent Bystander Rule.” Under this rule, the
third party Ers or “innocent bystanders” who have
no ER-Ee relationship with the picketing strikers,
may apply for injunction with the regular courts
(not with the NLRC) to enjoin the conduct of the
picket.
Because of the absence of such Er-Ee relationship,
the NLRC cannot entertain such application for
injunction from “innocent bystanders.” Only the Er
of the picketers can apply for injunctive relief from
the NLRC.
Q: May the RTC take cognizance of the complaint
which is incidental to a labor dispute?
A: No. The RTC has no jurisdiction to act on labor
cases or various incidents arising therefrom,
including the execution of decisions, awards or
orders where the subject matter of the 3rd party
claim is only incidental to a labor case.
A party, by filing its 3rd party claim with the deputy
sheriff, submits itself to the jurisdiction of the NLRC
acting through the LA.
The broad powers granted to the LA and to the
NLRC by Arts. 217, 218 and 224 of the LC can only
be interpreted as vesting in them jurisdiction over
incidents arising from, in connection with or
relating to labor disputes, as the controversy under
consideration, to the exclusion of the regular courts.
The RTC, being a co-equal body of the NLRC, has no
jurisdiction to issue any restraining order or
injunction to enjoin the execution of any decision of
the latter (Deltaventures v. Cabato, G.R. No. 118216,
March 9, 2000).
Q: Liwayway Publication Inc. is a second sub-
lessee of a part of the premises of the Permanent
Concrete Products, Inc. It has a bodega for its
newsprint in the sublet property which it uses
for its printing and publishing business. The
daily supply of newsprint needed to feed its
printing plant is taken from its warehouse. The
employees of the Permanent Concrete Products
Inc. declared a strike against their company. The
union members picketed, stopped and
prohibited Liwayway’s trucks from entering the
compound to load newsprint from its bodega.
Does the lower court have jurisdiction to issue a
writ of preliminary injunction considering that
there was a labor dispute between Permanent
Concrete Products, Inc. and the union?
231
A: Yes. Liwayway Publication Inc. is not in any way
related to the striking union except for the fact that
it is the sub-lessee of a bodega in the company’s
compound.
The business of Liwayway is exclusively the
publication of magazines which has absolutely no
relation or connection whatsoever with the cause of
the strike of the union against their company, much
less with the terms, conditions or demands of the
strikers. Liwayway is merely a 3rd person or an
innocent by-stander (Liwayway Pub., Inc. v.
Permanent Concrete Workers Union, G.R. No. L-
25003, October 23, 1981).
Q: The employer filed with the RTC a complaint
for damages with preliminary mandatory
injunction against the union, the main purpose
of which is to disperse the picketing of the
members of the union. The union filed a motion
to dismiss on the ground of lack of jurisdiction.
The RTC denied the motion to dismiss and
enjoined the picketing, it said that mere
allegations of Employer-Employee relationship
does not automatically deprive the court of its
jurisdiction and even the subsequent filing of
charges of ULP, as an afterthought, does not
deprive it of its jurisdiction. Was the issuance by
the RTC of the injunction proper?
A: No. The concerted action taken by the members
of the union in picketing the premises of the
department store, no matter how illegal, cannot be
regarded as acts not arising from a labor dispute
over which the RTCs may exercise jurisdiction
(Samahang Manggagawa ng Liberty Commercial v.
Pimentel, G.R. No. L-78621, December 2, 1987).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
LABOR DISPUTES
A labor dispute includes any controversy or matter
concerning:
1. Terms and conditions of employment, or
2. The association or representation of persons
in negotiating, fixing, maintaining, changing
or arranging the terms and conditions of
employment
3. Regardless of whether the disputants stand in
the proximate relation of Er and Ee [LC,
Art.212(l)].
Tests on whether a controversy is a labor
dispute
1. As to nature – It depends on whether the
dispute arises from Er-Ee relationship,
although disputants need not be proximately
Er or Ee of another.
2. As to subject matter – The test depends on
whether it concerns terms or conditions of
employment or association or representation
of persons in negotiating, fixing, maintaining
or changing terms or conditions of
employment.
Kinds of labor disputes
1. Labor standard disputes
a. Compensation – E.g. Underpayment of
minimum wage; stringent output quota;
illegal pay deductions
b. Benefits – E.g. Non-payment of holiday pay,
OT pay or other benefits
c. Working Conditions – E.g. Unrectified work
hazards
2. Labor relations disputes
a. Organizational right disputes/ Unfair Labor
Practice (ULP) – E.g. Coercion, restraint or
interference in unionization efforts;
reprisal or discrimination due to union
activities; company unionism; ULP, strike
or lockout; union members’ complaint
against union officers
b. Representation disputes – E.g. Uncertainty
as to which is the majority union;
determination of appropriate CB unit;
contests for recognition by different sets of
officers in the same union
c. Bargaining disputes – E.g. Refusal to
bargain; bargaining in bad faith; bargaining
deadlock; economic strike or lockout
d. Contract administration or personnel policy
disputes – E.g. Non-compliance with CBA
provision (ULP if gross non-compliance with
economic provisions); disregard of
grievance machinery; non observance of
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
232
unwarranted use of union security clause;
illegal or unreasonable personnel
management policies; violation of no-
strike/no-lockout agreement
e. Employment tenure disputes – E.g. Non-
regularization of Ees; non-absorption of
labor-only contracting staff; illegal
termination; non-issuance of employment
contract
Parties to a labor dispute
1. Primary parties are the Er, Ees and the union.
2. Secondary parties are the voluntary
arbitrator, agencies of DOLE, NLRC, SLE and
the Office of the President.
Inter-union dispute
Any conflict between and among legitimate labor
unions involving representation questions for the
purposes of CB or to any other conflict or dispute
between legitimate labor unions.
Intra-union dispute
Any conflict between and among union members,
grievances arising from any violation of the rights
and conditions of membership, violation of or
disagreement over any provision of the union’s
constitution and by-laws, or disputes from
chartering or affiliation of union.
Internal union dispute
It includes all disputes or grievances arising from
any violation of or disagreement over any provision
of the constitution and by-laws of a union, including
any violation of the rights and conditions of union
membership provided for in this LC [LC, Art. 212,
(q)].
Rights disputes
They are claims for violations of a specific right
arising from a contract, i.e. CBA or company policies.
Interest disputes
They involve questions on “what should be included
in the CBA.” Strictly speaking, the parties may
choose a voluntary arbitrator to decide on the terms
and conditions of employment, but this is
impracticable because it will be a value judgment of
the arbitrators and not of the parties.
Contract–negotiation disputes
These are disputes as to the terms of the CBA.
 PROCEDURE AND JURISDICTION
Contract–interpretation disputes
These are disputes arising under an existing CBA,
involving such matters as the interpretation and
application of the contract, or alleged violation of its
provisions.
Instances when a person or entity is considered
as participating or interested in a labor dispute
1. If relief is sought against him or it, and
2. He or it is engaged in the same industry,
trade, craft, or occupation in which such
dispute occurs, or
3. Has a direct or indirect interest therein, or
4. Is a member, officer, or agent of any
association composed in whole or in part of
Ees or Ers engaged in such industry, trade,
craft, or occupation.
PROCEDURE AND JURISDICTION
LABOR ARBITER
JURISDICTION
Nature of jurisdiction of Labor Arbiters
LAs only have original and exclusive jurisdiction.
They have no appellate jurisdiction.
Cases falling under the jurisdiction of Labor
Arbiters
Exclusive and original jurisdiction to hear and
decide the following cases involving all workers:
1. ULP cases
2. Termination disputes
3. If accompanied with a claim for reinstatement,
those that workers file involving wages, rates of
pay, hours of work and other terms and
conditions of employment
4. Claims for actual, moral, exemplary and other
forms of damages arising from Er-Ee relations
5. Cases arising from any violation of Art. 264, LC
including questions involving the legality of
strikes and lockouts except claims for
Employment Compensation, Social Security,
Philhealth and maternity benefits, all other
claims arising from Er-Ee relations, including
those of persons in domestic or household
service, involving an amount exceeding P5000
regardless of whether accompanied with a
claim for reinstatement
6. Monetary claims of overseas contract workers
arising from Er-Ee relations under the Migrant
Worker’s Act of 1995 as amended by RA 10022
233
7. Wage distortion disputes in unorganized
establishments not voluntarily settled by the
parties pursuant to RA 6727
8. Enforcement of compromise agreements when
there is non-compliance by any of the parties
pursuant to Art. 227 of the LC, as amended; and
9. Other cases as may be provided by law
NOTE: Although the provision speaks of exclusive
and original jurisdiction of LAs, the cases
enumerated may instead be submitted to a
voluntary arbitrator by agreement of the parties
under Art. 262 of the LC. The law prefers voluntary
over compulsory arbitration.
Exceptions to the original and exclusive
jurisdiction of Labor Arbiters
The following cases are the exceptions when the
Labor Arbiters may not exercise their original and
exclusive jurisdiction:
1. In assumed cases. When the DOLE Secretary or
the President exercises his power under Article
263(g) of the Labor Code to assume jurisdiction
over national interest cases and decide them
himself.
2. In certified cases. When the NLRC exercises its
power of compulsory arbitration over similar
national interest cases that are certified to it by
the DOLE Secretary pursuant to the exercise by
the latter of his certification power under the
same article263 (g).
3. In cases arising from CBA. When the cases arise
from the interpretation or implementation of
collective bargaining agreements and from the
interpretation or enforcement of company
personnel policies which shall be disposed of by
the Labor Arbiter by referring the same to the
grievance machinery and voluntary arbitration,
as may be provided in said agreements.
4. In cases submitted for voluntary arbitration.
When the parties agree to submit the case to
voluntary arbitration before a Voluntary
Arbitrator or panel of Voluntary Arbitrators
who, under Articles 261 and 262 of the Labor
Code, are also possessed of original and
exclusive jurisdiction to hear and decide cases
mutually submitted to them by the parties for
arbitration and adjudication.
Nature of the cases which the labor arbiter may
resolve
The cases that the LA can hear and decide are
employment related. Where no Er-Ee relationship
exists between the parties and no issue is involved
which may be resolved by reference to the LC, other
labor statutes, or any CBA, it is the RTC that has
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
jurisdiction (Lapanday Agricultural Dev’t. Corp v. CA,
G.R. No. 112139, January 31, 2000).
The LA has jurisdiction over controversies involving
Ers and Ees only if there is a “reasonable causal
connection” between the claim asserted and the Er-
Ee relations. Absent such link, the complaint is
cognizable by the regular court (Eviota v. CA, G.R. No.
152121, July 29, 2003).
Labor arbiters exercise concurrent jurisdiction
with the NLRC
With respect to contempt cases, LAs exercise
concurrent jurisdiction with the NLRC.
Extent of the jurisdiction of the labor arbiter if
there are unresolved matters arising from the
interpretation of the CBA
GR: LAs have no jurisdiction over unresolved or
unsettled grievances arising from the interpretation
or implementation of the CBA and those arising
from the interpretation or enforcement of company
personnel policies.
XPN: Actual termination disputes
NOTE: Where the dispute is just in the
interpretation, implementation or enforcement
stage of the termination, it may be referred to the
grievance machinery set up by the CBA or by
voluntary arbitration. Where there was already
actual termination, i.e., violation of rights, it is
already cognizable by the LA (Maneja v. NLRC, G.R.
No. 124013, June 5, 1998).
Usage of the word “may” in the provisions of the
Grievance Procedure allow the alternative
submission of the case before the labor arbiter
The use of the word “may” shows the intention of
the parties to reserve the right to submit the illegal
termination dispute to the jurisdiction of the LA,
rather than to a voluntary arbitrator. Petitioner
validly exercised his option to submit his case to a
LA when he filed his complaint before the proper
government agency. Voluntary arbitration is
mandatory in character only if there is a specific
agreement between the parties to that effect. In the
case at bar, however, the use of the word “may”
shows the intention of the parties to reserve the
right of recourse to LAs (Vivero v. CA, G.R. No.
138938, October 24, 2000).
Cases which do not fall under the jurisdiction of
the Labor Arbiters
1. Foreign governments (JUSMAG-Phils. v. NLRC,
G.R. No. 108813, December 15, 1994).
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
234
2. International agencies (Lasco v. NLRC, G.R. Nos.
109095-109107, February 23, 1995).
3. Intra-corporate disputes which fall under P.D.
902-A and now falls under the jurisdiction of
the regular courts pursuant to the new
Securities Regulation Code (Nacpil v. IBC,G.R.
No. 144767, March 21, 2002).
4. Executing money claims against government
(Dept. of Agriculture v. NLRC, G.R. No. 104269,
November 11, 1993).
5. Cases involving GOCCs with original charters
which are governed by civil service law, rules or
regulations (1987 Constitution, Art. IX-B, Sec.
2(1)).
6. Local water district (Tanjay Water District v.
Gabaton, G.R. No. L-63742, April 17, 1989) except
where NLRC jurisdiction is invoked
(Zamboanga City Water District v. Buat, G.R. No.
104389, May 27, 1994).
7. The aggregate money claim does not exceed
P5000 and without claim for reinstatement
(Rajah Humabon Hotel, Inc. v. Trajano, G.R. Nos.
100222-23 September 14,1993).
8. Claim of Ee for cash prize under the Innovation
Program of the company, although arising from
Er-Ee relationship, is one requiring application
of general civil law on contracts which is within
the jurisdiction of the regular courts (SMC v.
NLRC, G.R. No. 80774, May 31, 1988).
9. Cause of action based on quasi-delict or tort
which has no reasonable connection with any of
the claims enumerated in Art.217, LC (Ocheda v.
CA, G.R. No. 85517, October 16, 1992).
10. Complaint arising from violation of training
agreement (Singapore Airlines v. Pano, G.R. No.
L-47739, June 22 1983).
Q: Lincoln was in the business of trading
broadcast equipment used by television and
radio networks. He employed Lionel as his
agent. Subsequently, Lincoln set up Liberty
Communications to formally engage in the same
business. He requested Lionel to be one of the
incorporators and assigned to him 100 Liberty
shares. Lionel was also given the title Assistant
Vice-President for Sales and Head of Technical
Coordination. After several months, there were
allegations that Lionel was engaged in “under
the table dealings” and received “confidential
commissions” from Liberty’s clients and
suppliers. He was, therefore, charged with
serious misconduct and willful breach of trust,
and was given 48 hours to present his
explanation on the charges. Lionel was unable to
comply with the 48-hour deadline and was
subsequently barred from entering company
premises. Lionel then filed a complaint with the
Labor Arbiter claiming constructive dismissal.
Among others, the company sought the
dismissal of the complaint alleging that the case
 PROCEDURE AND JURISDICTION
involved an intra-corporate controversy which
was within the jurisdiction of the Regional Trial
Court (RTC).
If you were the Labor Arbiter assigned to the
case, how would you rule on the company’s
motion to dismiss? (2014 Bar Question)
A: I will deny the motion to dismiss. "Corporate
officers" in the context of Presidential Decree No.
902-A are those officers of the corporation who are
given that character by the Corporation Code or by
the corporation's by-laws. Section 25 of the
Corporation Code enumerates three specific officers
that in law are considered as corporate officers – the
president, secretary and the treasurer. Lincoln is
not one of them. There is likewise no showing that
his position as Assistant Vice-President is a
corporate officer in the company's by-laws. The
Labor Arbiter therefore, has jurisdiction over the
case (Art. 217(a)(2), Labor Code).
Q: Mario comes from a family of coffee bean
growers. Deciding to incorporate his fledgling
coffee venture, he invites his best friend, Carlo,
to join him. Carlo is hesitant because he does not
have money to invest but Mario suggests a
scheme where Carlo can be the Chief Marketing
Agent of the company, earning a salary and
commissions. Carlo agrees and the venture is
formed. After one year, the business is so
successful that they were able to declare
dividends. Mario is so happy with Carlo's work
that he assigns 100 shares of stock to Carlo as
part of the latter's bonus.
LABOR ARBITER vs. REGIONAL DIRECTOR
Powers of the Secretary of Labor and Employment vs. Regional Director vs. Labor Arbiter
Visitation and Enforcement Power
of Secretary of Labor and Regional Director
Employment
a) Inspection of establishments; and
Adjudication of Ee’s claims for
b) Issuance of orders to compel
wages and benefits
compliance with labor standards,
wage orders and other labor laws
Enforcement of labor legislation in
Limited to monetary claims
general
235
Much later on, it is discovered that Carlo had
engaged in unethical conduct which caused
embarrassment to the company. Mario is forced
to terminate Carlo but he does so without giving
Carlo the opportunity to explain.
Carlo filed a case against Mario and the company
for illegal dismissal. Mario objected on the
ground that the Labor Arbiter had no
jurisdiction over the case as it would properly
be considered as an intra-corporate controversy
cognizable by the RTC. Further, Mario claimed
that because Carlo's dismissal was a corporate
act, he cannot be held personally liable.
As the Labor Arbiter assigned to this case, how
would you resolve the jurisdiction question.
(2015 Bar Question)
A: The Labor Arbiter has jurisdiction over Carlo’s
illegal dismissal complaint as he was hired by Mario
on a “salary and commission” basis. In Grepalife v.
Judico (180 SCRA 445) it was held that a worker
who is paid on a salary plus commission basis is an
employee. While regular courts have jurisdiction
over Mario’s corporate act of severing ties with
Carlo, the Labor Arbiter, pursuant to Art. 217 A-(2)
of the Labor Code, has jurisdiction over Carlo’s
illegal dismissal complaint.
Labor Arbiter
LA exercises original and exclusive
jurisdiction on cases involving :
a. ULP ;
b. termination disputes ;
c. wages ;
d. rates of pay;
e. hours of work ;
f. other terms of employment, claims
for damages arising from Er-Ee
relationship, legality of strikes and
lockouts, and
g. all other claims arising from Er-Ee
relationship involving an amount
exceeding Php 5,000.00
All other claims arising from Er-Ee
relations
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION

LA decides case within 30 calendar

Proceeding is an offshoot of routine
inspections
Initiated by sworn complaints
days after submission of the case by
filed by any interested party
the parties for decision
Jurisdictional requirements:

1) Complaint arises from Er-Ee 1) All other claims arising from Er-
relationship Ee relations

2) Claimant is an Ee or person 2) Including those of persons in

No jurisdictional requirements
Appealable to SLE (In case
compliance order is issued by
Regional Office)
employed in domestic or
household service or a HH
3) Complaint does NOT
include a claim for
reinstatement
4) Aggregate money claim of
EACH claimant does not
exceed P5,000
Appealable to NLRC
domestic or household service
3) Involving an amount exceeding
P5,000
4) Whether or not accompanied with
a claim for reinstatement
Appealable to NLRC

Q: FASAP, the sole and exclusive bargaining
representative of the flight attendants, flight
stewards and pursers of PAL, and respondent
PAL entered into a CBA incorporating the terms
and conditions of their agreement for the years
‘01-‘05. Sec. 144, Part A of the CBA provides that
compulsory retirement shall be 55 y.o. for
females and 60 y.o. for males. FASAP filed an
action with the RTC claiming that the CBA
provision is discriminatory and hence
unconstitutional. RTC issued a TRO. The
appellate court ruled that the RTC has no
jurisdiction over the case at bar. Does the RTC
have jurisdiction over the petitioners' action
challenging the legality of the provisions on the
compulsory retirement age contained in the
CBA?
Constitution and CEDAW (Halaguena vs. PAL
Incorporated, G.R. No. 172013, October 2, 2009).
REINSTATEMENT PENDING APPEAL
Effect of perfection of an appeal on execution
The perfection of an appeal shall stay the execution
of the decision of the LA on appeal, except execution
for reinstatement pending appeal.
NOTE: Art. 223 of LC is clear that an award by the
LA for reinstatement shall be immediately
executory even pending appeal and the posting of a
bond by the employer shall not stay the execution
for reinstatement (Pioneer Texturizing Corp. v.
NLRC, G.R. No. 118651, October 16, 1997).

A: Yes. The subject of litigation is incapable of
pecuniary estimation, exclusively cognizable by the
RTC, pursuant to Sec. 19(1) of BP Blg. 129, as
amended. Being an ordinary civil action, the same is
beyond the jurisdiction of labor tribunals.
Not every controversy or money claim by an Ee
against the Er or vice-versa is within the exclusive
jurisdiction of the LA. Actions between Ees and Er
where the Er-Ee relationship is merely incidental
and the cause of action precedes from a different
source of obligation is within the exclusive
jurisdiction of the regular court. Here, the Er-Ee
relationship between the parties is merely
incidental and the cause of action ultimately arose
from different sources of obligation, i.e., the
Ministerial duty of Labor Arbiter to implement
reinstatement orders
Unless there is a restraining order, it is ministerial
upon the LA to implement the order of
reinstatement and it is mandatory on the Er to
comply therewith (Garcia v. PAL, G.R. No. 164856,
January 20, 2009).
NOTE: Reinstatement pending appeal, applicable
only to the reinstatement order issued by the Labor
Arbiter; writ of execution required when
reinstatement is ordered by the NLRC on appeal, or
subsequently by the Court of Appeals or Supreme
Court,as the case may be.

UNIVERSITY OF SANTO TOMAS

2016 GOLDEN NOTES
236
 PROCEDURE AND JURISDICTION
Two (2) options of employer
To implement the reinstatement aspect of a Labor
Arbiter’s decision, there are only two (2) options
available to the employer, to wit
1. Actual reinstatement - The employee should be
reinstated to his position which he occupies
prior to his illegal dismissal under the same
terms and conditions prevailing prior to his
dismissal or separation or, if no longer
available, to a substantially equivalent
position:or
2. Payroll reinstatement - The employee should be
reinstated in the payroll of the company
without requiring him to report back to his
work.
Duty of the employer to notify employee
ordered reinstated
It is required that in case the decision of the Labor
Arbiter includes an order of reinstatement, it should
contain:
a. A statement that the reinstatement aspect is
immediately executor; and
b. A directive for the employer to submit a report
of compliance within ten (10) calendar days
from receipt of the decision.
NOTE: Disobedience of this directive clearly
denotes a refusal to reinstate. The employee need
not file a motion for the issuance of the writ of
exrcution since the Labor Arbiter is mandated
thereafter to motu proprio issue the writ. With the
new rules in place, there is hardly any difficulty in
determining the employer’s intransigence in
immediately complying with the order.
Instances when writ of execution of Labor
Arbiter’s reinstatement order still required
Under the 2011 NLRC Rules of Procedure, there are
two (2) instances when a writ of execution should
still be issued immediately by the Labor Arbiter to
implement his order of reinstatement, even pending
appeal, viz:
1. When the employer disobeys the prescribed
directive to submit a report of compliance
within ten (10) calendar days from receipt of
the decision; or
2. When the employer refused to reinstate the
dismissed employee.
The Labor Arbiter shall motu proprio issue a
corresponding writ to satisfy the reinstatement
237
wages as they accrue until actual reinstatement or
reversal of the order of reinstatement.
Jurisdiction of NLRC vs. Jurisdiction of LA
1. The NLRC has exclusive appellate jurisdiction
on all cases decided by the LA.
2. The NLRC does not have original jurisdiction on
the cases over which the LA have original and
exclusive jurisdiction.
3. The NLRC cannot have appellate jurisdiction if
a claim does not fall within the exclusive
original jurisdiction of the LA.
REQUIREMENTS TO PERFECT APPEAL
FROM LA TO NLRC
a. Filed within the reglementary period of 10
calendar days from receipt if it involves a
decision, award, or order of the LA, or 5
calendar days from receipt if it involves a
decision or resolution of the RD
b. Verified by the appellant himself in accordance
with Sec. 4, Rule 7 of the Rules of Court, as
amended.
c. In the form of a memorandum of appeal which
shall state the grounds relied upon and
arguments in support thereof, the relief prayed
for, and with a statement of the date the
appellant received the appealed decision,
resolution or order
d. In three (3) legibly typewritten or printed
copies
e. Accompanied by (i) proof of payment of the
required appeal fee; (ii) posting of a cash or
surety bond as provided in Sec. 6 of this Rule;
(iii) a certificate of non-forum shopping; and
(iv) proof of service upon the other parties
(NLRC 2011 Rules of Procedure, Rule VI, Sec. 4).
NOTE: Mere notice of appeal without
complying with the aforementioned requisites
shall not stop the running of the period for
perfecting an appeal.
Grounds for filing an appeal
The appeal may be entertained only on any of the
following grounds:
1. If there is prima facie evidence of abuse of
discretion on the part of the LA or RD;
2. If the decision, award or order was secured
through fraud or coercion, including graft and
corruption;
3. If made purely on questions of law; and/or
4. If serious errors in the findings of facts are
raised which, if not corrected, would cause
grave or irreparable damage or injury to the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
appellant (NLRC 2011 Rules of Procedure, Rule
VI, Sec. 2).
Perfection of appeal, mandatory and
jurisdictional
The perfectionof appeal within the period and in the
manner prescribed by the law is jurisdictional and
non-compliance with the legal requirements is fatal
and has the effect of rendering the judgment final
and executor, hence , unacceptable
Posting of an appeal bond required to perfect an
appeal from a LA’s decision involving monetary
award
In case the decision of the LA or the RD involves a
monetary award, an appeal by the Er may be
perfected only upon the posting of a bond (NLRC
2011 Rules of Procedure, Rule VI, Sec. 6).
Forms of the appeal bond
It shall either be in the form of cash deposit or
surety bond equivalent in amount to the monetary
award, exclusive of damages and attorney's fees
(NLRC 2011 Rules of Procedure Rule VI, Sec. 6).
Issuance of a surety bond
It shall be issued by a reputable bonding company
duly accredited by the Commission or the SC, and
shall be accompanied by original or certified true
copies of the following:
1. A joint declaration under oath by the Er, his
counsel, and the bonding company, attesting
that the bond posted is genuine, and shall be in
effect until final disposition of the case;
2. An indemnity agreement between the Er-
appellant and bonding company;
3. Proof of security deposit or collateral securing
the bond: provided, that a check shall not be
considered as an acceptable security;
4. A certificate of authority from the Insurance
Commission;
5. Certificate of registration from the SEC;
6. Certificate of authority to transact surety
business from the Office of the President;
7. Certificate of accreditation and authority from
the SC; and
8. A notarized board resolution or secretary's
certificate from the bonding company showing
its authorized signatories and their specimen
signatures (NLRC 2011 Rules of Procedure, Rule
VI, Sec. 6).
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
238
NOTE: The appellant shall furnish the appellee with
a certified true copy of the said surety bond with all
the above-mentioned supporting documents.
Period within which a cash or surety bond shall
be valid and effective
From the date of deposit or posting, until the case is
finally decided, resolved or terminated, or the
award satisfied. This condition shall be deemed
incorporated in the terms and conditions of the
surety bond, and shall be binding on the appellants
and the bonding company (NLRC 2011 Rules of
Procedure, Rule VI, Sec. 6).
Effect if the bond is verified to be irregular or not
genuine
The Commission shall cause the immediate
dismissal of the appeal, and censure or cite in
contempt the responsible parties and their
counsels, or subject them to reasonable fine or
penalty (NLRC 2011 Rules of Procedure, Rule VI, Sec.
6).
NOTE: The appellee shall verify the regularity and
genuineness of the bond and immediately report
any irregularity to the NLRC.
Reduction of bond
GR: Bond cannot be reduced.
XPN: On meritorious grounds, and only upon the
posting of a bond in a reasonable amount in relation
to the monetary award.
NOTE: The mere filing of a motion to reduce bond
without complying with the requisites in the
preceding paragraphs shall not stop the running of
the period to perfect an appeal (NLRC 2011 Rules of
Procedure, Rule VI, Sec. 6).
Q: Company A, within the reglementary period,
appealed the decision of a Labor Arbiter
directing therein statement of an employee and
awarding backwages. However, A’s cash bond
was filed beyond the ten day period. Should the
NLRC entertain the appeal? Why? (2001 Bar
Question)
A: No. The NLRC should not entertain the appeal, as
the same was not perfected due to failure to file a
bond. “An appeal may be perfected only upon the
posting of cash or surety bond, issued by reputable
bonding company duly accredited by the
Commission the amount equivalent to the monetary
award in the judgment appealed from” (Aba v. NLRC,
G.R No. 122627, July 28, 1999).
 PROCEDURE AND JURISDICTION
Motion for reconsideration (MR) of the NLRC
decision required before certiorari may be
availed
A motion for reconsideration is required to enable
NLRC to correct its mistakes. If no MR is filed,
NLRC’s decision becomes final and executory.
Remedy in case of denial of the MR
If the motion is denied, the aggrieved party may file
a petition for certiorari not later than 60 days from
notice of the judgment, order or resolution. In case
a motion for reconsideration or new trial is timely
filed, whether such motion is required or not, the 60
day period shall be counted from notice of the denial
of said motion. No extension of time to file the
petition shall be granted except for compelling
reason and in no case exceeding 15 days (Rules of
Court, Rule 65, Sec. 4).
Effect if no service of summons was made
In the absence of service of summons or a valid
waiver thereof, the hearings and judgment
rendered by the LA is null and void.
Compulsory arbitration
The process of settlement of labor disputes by a
government agency which has the authority to
investigate and make an award binding on all the
parties.
Labor Arbiter conducts compulsory arbitration
Under the LC, it is the LA who is clothed with the
authority to conduct compulsory arbitration on
cases involving termination disputes (PAL v. NLRC,
G.R. No. 55159, December 22, 1989).
Rules on venue of filing cases
1. All cases which the LAs have authority to decide
may be filed in the Regional Arbitration Branch
(RAB) having jurisdiction over the workplace of
the complainant /petitioner.
NOTE: Workplace is understood to be the place
or locality where the Ee is regularly assigned
when the cause of action arose. It shall include
the place where the Ee is supposed to report
back after a temporary detail, assignment or
travel.
In case of field Ees, as well as ambulant or
itinerant workers, their workplace is where
they are:
a. Regularly assigned
239
b. Supposed to regularly receive their salaries
and wages
c. Receive their work instructions from
d. Reporting the results of their assignment to
their Er
2. Where 2 or more RABs have jurisdiction over
the workplace, the first to acquire jurisdiction
shall exclude others.
3. Improper venue when not objected to before
filing of position papers shall be deemed
waived.
4. Venue may be changed by written agreement of
the parties or when the NLRC or the LA so
orders, upon motion by the proper party in
meritorious cases.
5. For Overseas Contract Workers where the
complainant resides or where the principal
office of the respondent Er is located, at the
option of the complainant.
NOTE: The Rules of Procedure on Venue is
merely permissive, allowing a different venue
when the interest of substantial justice
demands a different one (Dayag v. Canizares,
GR. No. 124193, March 6, 1998).
NATIONAL LABOR RELATIONS COMMISSION
It is an administrative body with quasi-judicial
functions and the principal government agency that
hears and decides labor-management disputes; it is
attached to the DOLE solely for program and policy
coordination only.
Allocation of the powers and functions of the
NLRC
1. En Banc
a. Promulgating rules and regulations and
governing the hearings and disposition of
cases before any of its divisions and regional
branches.
b. Formulating policies affecting its
administration and operations.
c. On temporary or emergency basis, to allow
cases within the jurisdiction of any division
to be heard and decided by any other
division whose docket allows the additional
workload and such transfer will not expose
litigants to unnecessary additional expense.
2. Division (8 Divisions with 3 members)
a. Adjudicatory;
b. All other powers, functions and duties;
c. Exclusive appellate jurisdiction over cases
within their respective territorial
jurisdiction.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Individual Commissioner does not
adjudicatory power
The law lodges the adjudicatory power on each of
the eight divisions, neither on the individual
commissioners nor on the whole commission. The
“division” is a legal identity, not the person who sits
in it. Hence, an individual commissioner has no
adjudicatory power, although of course, he can
concur or dissent in deciding a case.
JURISDICTION
Kinds of jurisdiction of the NLRC
have
A: The NLRC has no jurisdiction. As to PNN, there is
no employer-employee relationship between itself
and NNN; hence, the NLRC cannot hear and resolve
their dispute (Reasonable Causal Connection Rule).
As to Anya, the injunctive power of the NLRC is
ancillary in nature; hence, it requires a principal
case, which is absent. Besides, the dispute between
her and PNN is not resolvable solely through the
application of the Labor Code, other labor statutes,
CBA or employment contract.
Jurisdiction of Labor Arbiter vs. NLRC (2015
Bar)

1. Exclusive Original Jurisdiction LA NLRC

a. Certified labor disputes causing or likely to LA can hear NLRC
cause a strike or lockout in an industry and resolve reviews
indispensable to national interest, certified cases under decisions
to it by the SLE or the President for Art. 217 (old) rendered
compulsory arbitration of the Labor by the LA;
b. Injunction in ordinary labor disputes to Code, money decisions or
enjoin or restrain any actual or threatened claims under orders
commission of any or all prohibited or Sec. 7 of R.A. rendered
unlawful acts or to require the performance 10022; and by the RD
of a particular act in any labor dispute referred wage under Art.
which, if not restrained or performed Jurisdiction distortion 129 of the
forthwith, may cause grave or irreparable disputes in Labor Code;
damage to any party unorganized and
c. Injunction in strikes or lockouts under Art. establishments, conducts
264 of the LC as well as the compulsory
d. Contempt cases enforcement of arbitration
compromise in certified
2. Exclusive Appellate Jurisdiction agreements cases.
a. All cases decided by the LA under Art. pursuant to the
217(b) of the LC and Sec. 10 of R.A.8042 2011 NLRC
(Migrant Worker’s Act); and Rules of
b. Cases decided by the Regional Offices of Procedure, as
DOLE in the exercise of its adjudicatory amended
function under Art.129 of the LC over Issuance of Labor Arbiter NLRC can
monetary claims of workers amounting to Labor cannot issue an issue an
not more than P5000 and not accompanied Injunction injunctive writ. injunctive
by claim for reinstatement.
Composition of the NLRC
Q: Philippine News Network (PNN) engages the
services of Anya, a prominent news anchor from 1. Chairman
a rival station, National News Network (NNN). 2. 23 Members
NNN objects to the transfer of Anya claiming that a. 8 members each of whom shall be chosen
she is barred from working in a competing only from among the nominees of the
company for a period of three years from the workers and Er organization respectively.
expiration of her contract. Anya proceeds to sign b. The Chairman and the 7 remaining
with PNN which then asks her to anchor their members shall come from the public sector,
nightly newscast. NNN sues Anya and PNN with the latter to be chosen preferably from
before the National Labor Relations Commission among the incumbent LAs.
(NLRC), asking for a labor injunction. Anya and c. Upon assumption into office, the members
PNN object claiming that it is a matter nominated by the workers and Ers
cognizable by a regular court and not the NLRC. organization shall divest themselves of any
Is NNN's remedy correct? Why or why not? affiliation with or interest in the federation
(2015 Bar Question) or association to which they belong.

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2016 GOLDEN NOTES
240
 PROCEDURE AND JURISDICTION
There is no need for the Commission on
Appointments to confirm the positions in the NLRC.
Such requirement has no constitutional basis
(Calderon v. Carale, GR. No. 91636, April 23, 1992).
Adjudication of cases by the NLRC
1. The NLRC adjudicates cases by division. A
concurrence of 2 votes is needed for a valid
judgment.
NOTE: Whenever the required membership in a
division is not complete and the concurrence of
the Commissioners to arrive at judgment or
resolution cannot be obtained, the Chairman
shall designate such number of additional
Commissioners from the other divisions as may
be necessary.
2. It shall be mandatory for the division to meet for
purposes of consultation.
NOTE: The conclusion of a division on any case
submitted to it for decision should be reached in
consultation before the case is assigned to a
member for the writing of the opinion.
3. A certification that a consultation has been
conducted, signed by the presiding
commissioner of the division, shall be issued
(copy attached to the record of case and served
upon the parties).
Qualifications of the Chairman and the
Commissioners
1. Member of the Philippine Bar
2. Engaged in the practice of law in the Philippines
for at least 15 years
3. At least 5 years of experience or exposure in
handling labor management relations
4. Preferably a resident of the region where he is to
hold office
Qualifications of an Executive Labor Arbiter
1. Member of the Philippine Bar
2. Engaged in the practice of law in the Philippines
for at least 10 years
3. At least 5 years of experience or exposure in
handling labor management relations
Terms of office of the Chairman, Commissioners
and Labor Arbiters
They shall hold office during good behavior until
they reach the age of 65 unless removed for causes
as provided by law or become incapacitated to
241
discharge the function of his office.
Provided, however, that the President of the
Philippines may extend the services of the
Commissioners and LAs up to the maximum age of
70 years upon the recommendation of the
Commission en banc.
Q: Some disgruntled members of Bantay
Labor Union filed with the Regional Office of the
DOLE a written complaint against their union
officers for mismanagement of union funds. The
RD did not rule in the complainants' favor. The
latter elevated the RD’s decision to the NLRC. The
union officers moved to dismiss on the ground of
lack of jurisdiction. Are the union officers
correct? Why? (2001 Bar Question)
A: Yes. The union officers are correct in claiming
that the NLRC has no jurisdiction over the appealed
ruling of the RD. In Barles v. Bitonio (G.R. No. 120220,
June 16, 1999), the SC ruled that “Appellate authority
over decisions of the RD involving examination of
union account is expressly conferred on the BLR
under the Rule of Procedure on Mediation-
Arbitration.”
Sec. 4. Jurisdiction of the BLR—(b) The BLR
shall exercise appellate jurisdiction over all
cases originating from the RD involving
complaints for examination of union books of
accounts.
Q: Company "A" and Union "B" could not resolve
their negotiations for a new CBA. After
conciliation proceedings before the NCMB
proved futile, B went on strike. Violence during
the strike prompted A to file charges against
striker-members of B for their illegal acts. The
SLE assumed jurisdiction, referred the strike to
the NLRC and issued a return-to-work order.
The NLRC directed the parties to submit their
respective position papers and documentary
evidence. At the initial hearing before the NLRC,
the parties agreed to submit the case for
resolution after the submission of the position
papers and evidence.
Subsequently, the NLRC issued an arbitral award
resolving the disputed provisions of the CBA and
ordered the dismissal of certain strikers for
having knowingly committed illegal acts during
the strike. The dismissed employees elevated
their dismissal to the CA claiming that they were
deprived of their right to due process and that
the affidavits submitted by A were self-serving
and of no probative value. Should the appeal
prosper? State the reason(s) for your answer
clearly. (2001 Bar Question)
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
A: No. The SC, in many cases, has ruled that
decisions made by the NLRC may be based on
position papers. In the question, it is stated that the
parties agreed to submit the case for resolution
after the submission of position papers and
evidence. Given this fact, the striker-members of B
cannot now complain that they were denied due
process. They are in estoppel. After voluntarily
submitting a case and encountering an adverse
decision on the merits, it is too late for the loser to
question the jurisdiction or power of the court. A
party cannot adopt a posture of double dealing
(Marquez vs. Secretary of Labor, G.R. No. 80685,
March 16, 1989).
Barangay conciliation not available in labor
cases
Labor cases are not subject to barangay conciliation
since ordinary rules of procedure are merely
suppletory in character vis-à-vis labor disputes
which are primarily governed by labor laws
(Montoya v. Escayo, G.R. No. 82211-12, March 21,
1989).
Powers of the NLRC
1. Rulemaking power – Promulgation of rules and
regulations:
a. Governing disposition of cases before any
of its division/regional offices.
b. Pertaining to its internal functions
c. As may be necessary to carry out the
purposes of the LC.
2. Power to issue compulsory processes
(administer oaths, summon parties, issue
subpoenas)
3. Power to investigate matters and hear disputes
within its jurisdiction (adjudicatory power –
original and appellate jurisdiction over cases)
4. Contempt power
5. Ocular Inspection
6. Power to issue injunctions and restraining
orders
EFFECT OF NLRC REVERSAL OF LABOR
ARBITER’S ORDER OF REINSTATEMENT
Dismissed employees may collect wages during
the period between the Labor Arbiter’s order of
reinstatement pending appeal and the NLRC’s
decision overturning that of the LA’s
The LC provides that the decision of the LA
reinstating a dismissed or separated Ee, insofar as
the reinstatement aspect is concerned, shall
immediately be executory, pending appeal.
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242
Even if the order of reinstatement of the LA is
reversed on appeal, it is obligatory on the part of the
Er to reinstate and pay the wages of the dismissed
Ee during the period of appeal until reversal by the
higher court. On the other hand, if the Ee has been
reinstated during the appeal period and such
reinstatement order is reversed with finality, the Ee
is not required to reimburse whatever salary he
received for he is entitled to such, more so if he
actually rendered services during the period (Pfizer
v. Velasco, G.R. No. 177467, March 9, 2011).
Effect of reversal of reinstatement order
1. Actually reinstated: The Bergonlo Rule
After reversal of Labor Arbiter’s decision, the
employer’s duty to reinstate the dismissed
employee in the actual service or in the payroll
is effectively terminated. The employee, in turn
is not required to return the wages that he had
received prior to the reversal of the LA’s
decision (Bergonlo Jr. v. South East Asian
Airlines, April 21, 2014)
2. Payroll reinstatement: The Wenphil Rule
The period for computing the backwages due to
the dismissed employees during the period of
appeal should end on the date that a higher
court reversed the labor arbitration ruling of
illegal dismissal (Wenphil Corporation v. Abing,
April 7. 2014)
REMEDIES
Availability of judicial review of the NLRC’s
decision
Judicial review of NLRC’s decision is available
through a petition for certiorari (Rule 65) which
should be initially filed with the CA in strict
observance of the doctrine on the hierarchy of
courts as the appropriate forum for the relief
desired. The CA is procedurally equipped to resolve
unclear or ambiguous factual finding, aside from the
increased number of its component divisions (St.
Martin Funeral Home v. NLRC, G.R. No. 130866,
September 16, 1998).
Injunction or a temporary restraining order
(TRO)
The power of the NLRC to enjoin or restrain any
actual or threatened commission from any or all
prohibited or unlawful acts under Art. 218 of LC can
only be exercised in labor disputes.
 PROCEDURE AND JURISDICTION
NOTE: A restraining order is generally regarded as
an order to maintain the subject of controversy in
status quo until the hearing of an application for a
temporary injunction (BF Homes v. Reyes, G.R. No. L-
30690, November 19, 1982).
Persons authorized to issue a TRO
1. President [LC, Art.263(g)]
2. Secretary of Labor [LC, Art.263(g)]
3. NLRC (LC, Art.218)
NOTE: Art. 218 of the LC limits the grant of
injunctive power to the NLRC. The LA is excluded
statutorily. Hence, no NLRC Rules can grant him that
power.
Procedure for issuance of restraining
order/injunction
1. Filing of a verified petition
2. Hearing after due and personal notice has been
served in such manner as the Commission shall
direct to:
a. All known persons against whom relief is
sought
b. Also the President or other public officials
of the province or city within which the
unlawful acts have been threatened or
commercial charged with the duty to
protect the complainant’s property.
3. Reception at the hearing of the testimonies of
the witnesses with opportunity for cross-
examination, in support of the allegations of the
complaint made under oath as well as
testimony in opposition thereto.
4. Finding of fact of the Commission to the effect
that:
a. Prohibited or unlawful acts have been
threatened and will be committed, or have
been and will be continued unless
restrained, but no injunction or TRO shall
be issued on account of any threat,
prohibited or unlawful act, except against
the persons, association or organization
making the threat or committing the
prohibited or unlawful act or actually
authorizing or ratifying the same after
actual knowledge thereof.
b. The substantial and irreparable injury to
the complainant’s property.
NOTE: Irreparable Injury- an injury which
cannot be adequately compensated in damages
due to the nature of the injury itself or the
nature of the right or property injured or when
there exist no pecuniary standard for the
measurement of damages.
243
c. That as to each item of relief to be granted,
greater injury will be inflicted upon the
complainant by the denial of the relief than
will be inflicted upon the defendants by the
granting of the relief.
d. That complainant has no adequate remedy
at law
Adequate remedy – one that affords relief
with reference to the matter in controversy
and which is appropriate to the particular
circumstances of the case if the remedy is
specifically provided by law (PAL v. NLRC,
GR. No. 120567, March 20, 1998).
e. That public officers charged with the duty
to protect complainant’s property are
unable or unwilling to furnish adequate
protection.
5. Posting of a bond.
CERTIFIED CASES
Certified cases
These are cases certified or referred to the
Commission for compulsory arbitration under Art.
263(g) of the LC dealing about national interest
cases.
A national interest dispute may be certified to the
NLRC even before a strike is declared since Art.
263(g) of the LC does not require the existence of a
strike, but only of an industrial dispute [Government
Service Insurance System Employees Association
(GSISEA), et al. v. Court of Industrial Relations, G.R.
No. L-18734, December 30, 1961].
Effects of certification of labor disputes
The certification of a labor dispute to the NLRC has
the following effects.
1. On intended or impending strike or lockout
- upon certification, the intended or impending
strike is automatically enjoined,
notwithstanding the thing of any motion for
reconsideration of the certification order or the
non-resolution of any such motion which may
have been duly submitted to the DOLE
Secretary.
2. On actual strike or lockout - If a work
stoppage has already taken place at the time of
the certification, all striking or locked out
employees shall immediately return to work
and the employer shall immediately resume
operations and readmit all workers under the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
same terms and conditions prevailing before
the strike or lockout.
3. On cases already filed or may be file - All
cases between the same parties, except where
the certification order specifies otherwise the
issues submitted for arbitration which are
already filed or may be filed and are relevant to
or are proper incidents of the certified case,
shall be considered subsumed or aborted by the
certified case, and shall be decided by the
appropriate Division of the Commission.
4. On other pending cases - The parties to a
certified case, under pain of contempt, shall
inform their counsels and the Division
concerned of all cases pending with the
Regional Arbitration Braches and the Voluntary
Arbitrators relative or incident to the certified
case before it.
5. On which Division should take cognizance of
the certified case in case entity has several
workplaces in different regions - Whenever
a certified labor dispute involves a business
entity with several workplaces located
indifferent regions, the Division having
territorial jurisdiction over the principal office
of the company shall acquire jurisdiction to
decide such labor dispute; unless the
certification order provides otherwise.
NOTE: Same effect of certification to the NLRC as in
cases assumed directly by DOLE Secretary. The
effects described above are also applicable when the
DOLE Secretary directly assumes jurisdiction over a
labor dispute affecting industries imbued with
national interest and decides it himself
Function of the NLRC in certified cases
When sitting in a compulsory arbitration certified to
by the SLE, the NLRC is not sitting as a judicial court
but as an administrative body charged with the duty
to implement the order of the SLE. As an
implementing body, its authority does not include
the power to amend the Secretary’s order (UST v.
NLRC and UST Faculty Union, G. R. No. 89920, October
18, 1990).
Effect of defiance from the certification order
Non-compliance with the certification order of the
SLE shall be considered as an illegal act committed
in the course of the strike or lockout and shall
authorize the Commission to enforce the same
under pain of immediate disciplinary action,
including dismissal or loss of employment status or
payment by the locking-out Er of backwages,
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2016 GOLDEN NOTES
244
damages and/or other affirmative relief, even
criminal prosecution against the liable parties
(NLRC 2011 Rules, Rule VIII, Sec. 4).
Procedure in deciding certified cases
1. Unless there is a necessity to conduct a
clarificatory hearing, the Commission shall
resolve all certified cases within 30 calendar
days from receipt by the assigned
Commissioner of the complete records, which
shall include the position papers of the parties
and the order of the SLE denying the motion for
reconsideration of the certification order, if
such motion has been filed.
2. Where a clarificatory hearing is needed, the
Commission shall, within five days from receipt
of the records, issue a notice to be served on the
parties through the fastest means available,
requiring them to appear and submit additional
evidence, if any.
3. Notwithstanding the necessity for a
clarificatory hearing, all certified cases shall be
resolved by the Commission within 60 calendar
days from receipt of the complete records.
4. No motion for postponement or extension shall
be entertained (NLRC 2005 Rules, Rule VIII, Sec.
5).
BUREAU OF LABOR RELATIONS
MEDIATOR-ARBITERS
JURISDICTION (ORIGINAL AND APPELLATE)
Coverage of the BLR’s jurisdiction and functions
The BLR no longer handles all labor management
disputes; rather its functions and jurisdiction are
largely confined to:
1. Union matters
2. Collective bargaining registry and
3. Labor education.
Jurisdiction over labor management problems or
disputes is also exercised by other offices
1. DOLE Regional Offices
2. Office of the Secretary of Labor
3. NLRC
4. POEA
5. OWWA
6. SSS-ECC
7. RTWPB
8. NWPC
9. Regular courts over intra-corporate disputes.
Mediator-arbiter
 PROCEDURE AND JURISDICTION
An officer in the Regional Office or Bureau
authorized to hear, conciliate and decide
representation cases or assist in the disposition of
intra or inter-union disputes.
Kinds of cases that fall within BLR’s jurisdiction
The BLR has original and exclusive jurisdiction
over:
1. Inter-union disputes
2. Intra-union disputes
3. Other related labor relations disputes
Coverage of inter/intra-union disputes
They shall include:
1. Conduct or nullification of election of union and
workers’ association officers
2. Audit/accounts examination of union or
workers’ association funds
3. Deregistration of CBAs
4. Validity/invalidity of union affiliation or
disaffiliation
5. Validity/invalidity of acceptance/ non-
acceptance for union membership
6. Validity/invalidity of voluntary recognition
7. Opposition to application for union or CBA
registration
8. Violations of or disagreements over any
provision of the constitution and by-laws of
union or workers’ association
9. Disagreements over chartering or registration
of labor organizations or the registration of
CBAs;
10. Violations of the rights and conditions of
membership in a union or workers’ association;
11. Violations of the rights of LLO, except
interpretation of CBAs;
12. Validity/invalidity of impeachment/
expulsion/suspension or any disciplinary
action meted against any officer and member,
including those arising from non-compliance
with the reportorial requirements under Rule
V;
13. Such other disputes or conflicts involving the
rights to self-organization, union membership
and CB –
a. Between and among LLO and
b. Between and among members of a union or
workers’ association (IRR as amended by
D.O. 40-F-03, Book V, Rule XI, Sec. 1).
Coverage of the phrase “other related labor
relations disputes”
1. Any conflict between
a. A labor union and the Er; or
b. A labor union and a group that is not a LO; or
245
c. A labor union and an individual who is not a
member of such union
2. Cancellation of registration of unions and
worker’s associations filed by individual/s
other than its members, or group that is not a
LO.
3. A petition for Interpleader involving labor
relations (IRR as amended by D.O. 40-F-03, Book
Vi, Rule XI, Sec. 2).
Filing a complaint or petition involving
intra/inter-union disputes
A legitimate labor organization or its members may
file a complaint or petition involving intra/inter-
union disputes (D.O. 40-03, Rule XI, Sec. 5).
Filing a complaint or petition if the issue
involves the entire membership
The complaint must be signed by at least 30% of the
entire membership of the union.
Filing a complaint or petition if the issue
involves a member only
Only the affected member may file the complaint
(D.O. 40-03, Rule XI, Sec. 5).
GR: Redress must first be sought within the union
itself in accordance with its constitution and by-
laws.
XPNs:
1. Futility of intra-union remedies;
2. Improper expulsion procedure;
3. Undue delay in appeal as to constitute
substantial injustice;
4. The action is for damages;
5. Lack of jurisdiction of the investigating body;
action for the administrative agency is patently
illegal, arbitrary and oppressive;
6. Issue is purely a question of law;
7. Where the administrative agency had already
prejudged the case; and
8. Where the administrative agency was
practically given the opportunity to act on the
case but it did not.
Appeal of a decision in inter/intra-union
dispute
A decision in an inter/intra-union dispute may be
appealed.
Rules on appeal in intra/inter-union disputes
1. Formal Requirements
a. Under oath
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
b. Consist of a memorandum of appeal
c. Based on either of the following grounds:
i. Grave abuse of discretion
ii. Gross violation of the rules
iii. With supporting arguments and
evidence
2. Period – Within 10 days from receipt of decision
(D.O. 40-03, Rule XI, Sec. 16).
3. To whom appealable
a. BLR – If the case originated from the Med-
Arbiter/Regional Director.
b. SLE – If the case originated from the BLR.
4. Where Filed – Regional Office or to the BLR,
where the complaint originated. Records are
transmitted to the BLR or Sec. within 24 hours
from the receipt of the memorandum of appeal
(D.O. 40-03, Rule XI, Sec. 17).
Extent of authority of the Bureau of Labor
Relations
1. It may hold a referendum election among the
members of a union for the purpose of
determining whether or not they desire to be
affiliated with a federation.
2. But the BLR has no authority to:
a. Order a referendum among union members
to decide whether to expel or suspend
union officers.
b. Forward a case to the Trade Union
Congress of the Philippines for arbitration
and decision.
Administrative functions of the Bureau of Labor
Relations
1. Regulation of the labor unions
2. Keeping the registry of labor unions
3. Maintenance of a file of the CBA
4. Maintenance of a file of all settlements or final
decisions of the SC, CA, NLRC and other
agencies on labor disputes
Effects of filing or pendency of inter/intra-union
dispute and other labor relations disputes
1. The rights relationships and obligations of the
party-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
the decision rendered therein. Thereafter, they
shall be governed by the decision ordered.
2. The filing or pendency of any inter/intra union
disputes is not a prejudicial question to any
petition for certification election, hence it shall
not be a ground for the dismissal of a petition
for certification of election or suspension of the
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
246
proceedings for the certification of election
(Rule XI, DO 40-03, Rule XI, Sec. 3).
NATIONAL CONCILIATION AND
MEDIATION BOARD (NCMB)
NATURE OF PROCEEDINGS
NCMB is not a quasi-judicial agency
NCMB is not a quasi-judicial agency. Not being a
quasi-judicial agency, NCMB’s ruling cannot be
elevated to, and cognizable by, the Court of Appeals.
Rule 43 of the Rules of Court applies only to awards,
judgments, final orders or resolutions of or
authorized by any quasi - judicial agency in the
exercise of its quasi-judicial functions. Hence,
NCMB’s decision, not having been rendered by a
quasi-judicial body, cannot be elevated to the Court
of Appeals uder said rule.
Alternative modes of settlement of labor dispute
1. Voluntary Arbitration
2. Conciliation
3. Mediation
Nature of the proceedings
The proceedings are non-litigious.
All labor disputes are required to be submitted
to mandatory conciliation-mediation
GR: All issues arising from labor and employment
shall be subject to mandatory conciliation-
mediation. The LA or the appropriate DOLE agency
or office that has jurisdiction over the dispute shall
entertain only endorsed or referred cases by the
duly authorized officer [LC as amended by R.A.
103960, Art. 228(a)].
XPNs:
1. Grievance machinery and Voluntary
Arbitration, in which case, their agreement will
govern
2. When excepted by the SLE (Ibid.)
NOTE: Any or both parties involved in the dispute
may pre-terminate the conciliation-mediation
proceedings and request referral or endorsement to
the appropriate DOLE agency or office which has
jurisdiction over the dispute, or if both parties so
agree, refer the unresolved issues to voluntary
arbitration [LC as amended by R.A. 103960, Art.
228(a)].
Arbitration
 PROCEDURE AND JURISDICTION
facilitating other assisting them
It is the submission of a dispute to an impartial procedural niceties, towards voluntarily
person for determination on the basis of evidence carrying messages reaching their own
and arguments of the parties. The arbiter’s decision back and forth mutually
or award is enforceable upon the disputants. It may between the parties, acceptable
be voluntary by agreement, or compulsory which is and generally being a settlement of the
required by statutory provision (Luzon Dev’t Bank v. good fellow who tries dispute
Ass’n of Luzon Dev’t Bank Employees, G.R. No. 120319 to keep things calm
October 6, 1995). and forward-looking
in a tense situation
Court cannot fix resort to voluntary arbitration It is the process where It is when a 3rd
a disinterested 3rd party studies each
Resort to VA dispute should not be fixed by the court party meets with side of the dispute
but by the parties relying on their strengths and management and then makes
resources. labor, at their request proposals for the
or otherwise, during a disputants to
Parties to labor relations cases labor dispute or in CB consider. The
conferences, and by mediator cannot
1. Employee’s organization cooling tempers, aids make an award nor
2. Management in reaching an render a decision
3. The public agreement

NOTE: Er and Ees are active parties while the public Legal basis of conciliation and mediation
and the State are passive parties (Poquiz, 2006).
The State shall promote xxx the preferential use
Tripartism of voluntary modes of settling disputes including
conciliation and shall ensure mutual compliance
It is the representation of 3 sectors in policy-making by the parties thereof in order to foster industrial
bodies of the government. These are: peace (1987 Constitution, Art. 13, Sec. 3).
1. The public or the government
2. The employers NOTE: A similar provision is echoed in the
3. The workers Declaration of Policy under Art. 211(a) of the LC,
as amended.
Workers cannot insist that they be represented
in the policy making in the company Persons who can avail of conciliation and
mediation services of the NCMB
Such kind of representation in the policy-making
bodies of private enterprises is not ordained, not Any party to a labor dispute, either the union or
even by the Constitution. What is provided for is management, may seek the assistance of NCMB or
workers participation in policy and decision- any of its Regional Branches by means of formal
making process directly affecting their rights, request for conciliation and preventive
benefits, and welfare. mediation. Depending on the nature of the
problem, a request may be filed in the form of
CONCILIATION vs. MEDIATION consultation, notice of preventive mediation or
notice of strike/lockout.
CONCILIATION MEDIATION
Where to file a request for conciliation and
Conceived of as a mild Mild intervention mediation
form of intervention by a neutral third
by a neutral third party An informal or formal request for conciliation and
party mediation service can be filed at the NCMB
The conciliator- The conciliator- Central Office or any of its Regional Branches.
Mediator, relying on mediator, whereby There are at present 14 regional offices of the
his persuasive he starts advising NCMB which are strategically located all over the
expertise, who takes the parties or country for the convenient use of prospective
an active role in offering solutions clients.
assisting parties by or alternatives to
trying to keep the problems with
disputants talking, the end in view of

UNIVERSITY OF SANTO TOMAS

247 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
PREVENTIVE MEDIATION
Preventive mediation case
Preventive mediation case refers to the potential
labor dispute which is the subject of a formal or
informal request for conciliation and mediation
assistance sought by either or both parties or
upon the initiative of the NCMB to avoid the
occurrence of an actual labor dispute.
How to initiate preventive mediation
Preventive mediation proceeding may be initiated
in two (2) ways:
1. By filing a notice or request of preventive
mediation, as distinguished from a notice of
strike/lockout, or
2. By conversion of the notice of strike/lockout
into a preventive mediation case.
Authority to convert a notice of strike/lockout
into a preventive mediation case
The NCMB has the authority to convert a notice of
strike/lockout filed by the union/employer into a
preventive mediation case under any of the
following circumstances:
1. When the issues raised in the notice of
strike/lockout are not strikeble in character.
2. When the party which filed the notice of
strike/lockout voluntarily asks for the
conversion.
3. When both parties to a labor dispute mutually
agree to have it subjected to preventive
mediation proceeding.
Such authority is in pursuance of the NCMB’s duty
to enable the parties to settle their dispute amicably
and in line with the State policy of favoring
voluntary modes of settling labor disputes.
Conversion of a notice of strike or notice of
lockout into a preventive mediation case results
in its dismissal
Once the notice of strike is converted into a
preventive mediation case, the notice is deemed
dropped from the dockets as if no notice of strike
has been filed. Since there is no more notice of strike
to speak about, any strike subsequently staged by
the union after the conversion is deemed not to have
complied with the requirements of a valid strike and
therefore illegal.
The same rule applies in the case of lockout by an
employer.
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
248
Persons who may file a notice for preventive
mediation
Any certified or duly recognized bargaining
representative may file a notice or declare a strike
or request for preventive mediation in cases of
bargaining deadlocks and ULPs. The Er may file a
notice or declare a lockout or request for preventive
mediation in the same cases. In the absence of a
certified or duly recognized bargaining
representative, any LLO in the establishment may
file a notice, request preventive mediation or
declare a strike, but only on grounds of ULP (NCMB
Manual of Procedure, Rule IV, Sec. 3).
NOTE: Only a certified or duly recognized
bargaining agent may file a notice or request for
preventive mediation. If the notice was filed not by
the Union but by its individual members, the NCMB
had no jurisdiction to entertain it.
Moreover, the notice or request for preventive
mediation cannot be filed by the Federation on
behalf of its local/chapter. A local union does not
owe its existence to the federation with which it is
affiliated. It is a separate and distinct voluntary
association owing its creation to the will of its
members. Mere affiliation does not divest the local
union of its own personality; neither does it give the
mother federation the license to act independently
of the local union. It only gives rise to a contract of
agency, where the former acts in representation of
the latter. Hence, local unions are considered
principals while the federation is deemed to be
merely their agent (Insular Hotel Employees Union-
NFL v. Waterfront Insular Hotel Davao, G.R. Nos.
174040-41, September 22, 2010).
Valid issues for a notice of strike/lockout or
preventive mediation
A notice of strike or lockout maybe filed on
ground of ULP acts, gross violation of the CBA, or
deadlock in CBAs. A complaint on any of the
above grounds must be specified in the NCMB
Form or the proper form used in the filing of
complaint.
In case of preventive mediation, any issue may be
brought before the NCMB Central Office or its
regional offices for conciliation and possible
settlement through a letter. This method is more
preferable than a notice of strike/lockout because
of the non-adversarial atmosphere that pervades
during the conciliation conferences.
Advantages that can be derived from
conciliation and mediation services
 PROCEDURE AND JURISDICTION
Conciliation and mediation is non-litigious/non-
adversarial, less expensive, and
expeditious. Under this informal set-up, the
parties find it more expedient to fully ventilate
their respective positions without running
around with legal technicalities and, in the course
thereof, afford them wider latitude of possible
approaches to the problem.
Parties are bound by the agreement entered
into
The parties are bound to honor any agreement
entered into by them. It must be pointed out that
such an agreement came into existence as a result
of painstaking efforts among the union,
management, and the Conciliator-
Mediator. Therefore, it is only logical to assume
that the Conciliator assigned to the case has to
follow up and monitor the implementation of the
agreement.
Conciliation and mediation service still
possible during actual strike or lockout
It is possible to subject an actual strike or actual
lockout to continuing conciliation and mediation
services. In fact, it is at this critical stage that such
conciliation and mediation services be fully given
a chance to work out possible solution to the labor
dispute. With the ability of the Conciliator-
Mediator to put the parties at ease and place them
at a cooperative mood, the final solutions of all the
issues involved may yet be effected and settled.
Possibility of remanding the dispute already
been assumed or certified to the NLRC to
conciliation and mediation
The parties are not precluded from availing the
services of an NCMB Conciliator-Mediator as the
duty to bargain collectively subsists until the final
resolution of all issues involved in the
dispute. Conciliation is so pervasive in
application that, prior to a compulsory arbitration
award, the parties are encouraged to continue to
exhaust all possible avenues of mutually resolving
their dispute, especially through conciliation and
mediation services.
Benefits that the parties can have in appearing
during conciliation conferences
Generally speaking, any party appearing during
scheduled conciliation conferences has the
advantage of presenting its position on the labor
controversy. The issue raised in the complaint can
be better ventilated with the presence of the
concerned parties. Moreover, the parties can
249
observe a norm of conduct usually followed in like
forum.
DOLE REGIONAL DIRECTORS
JURISDICTION
Jurisdiction of the DOLE Regional Directors
The Dole Regional Directors have original and
exclusive jurisdiction over the following cases:
1. Labor standards enforcement cases under
Article 128;
2. Small money claims cases arising from labor
standards violations in the amount not
exceeding P5,000.00 and not accompanied with
a claim or reinstatement under Article 129;
3. Occupational safety and health violation;
4. Registration of unions and cancellation thereof,
cases filed against unions and other labor
relations related cases;
5. Complaints against private recruitment and
placement agencies for local employment; and
6. Cases submitted to them for voluntary
arbitration in their capacity as Ex- Officio
Vouluntary Arbitrators under Department
Order No. 83 - 07, Series of 2007.
Money claims falling under the jurisdiction of
the DOLE Regional Directors
Under Art. 129 of the LC, the RDs or any of the duly
authorized hearing officers of DOLE have
jurisdiction over claims for recovery of wages,
simple money claims and other benefits, provided
that:
1. The claim must arise from Er-Ee relationship;
2. The claimant does not seek reinstatement; and
3. The aggregate money claim of each employee
does not exceed Php 5,000.00.
NOTE: In the absence of any of the above requisites,
it is the LA who shall have the jurisdiction over the
claims arising from Er-Ee relations, except claims
for Ee’s compensation, SSS, Philhealth, and
maternity benefits, pursuant to Art.217 of the LC.
The proceedings before the Regional Office shall be
summary and non-litigious in nature.
Adjudicatory power of the Regional Director
The RD or any of his duly authorized hearing
officers is empowered through summary
proceeding and after due notice, to hear and decide
cases involving recovery of wages and other
monetary claims and benefits, including legal
interests.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
DOLE SECRETARY
VISITORIAL AND ENFORCEMENT POWERS
Powers of the SLE
1. Visitorial powers
2. Enforcement powers
3. Appellate or power to review
Visitorial power
It constitutes:
1. Access to Er’s records and premises at any time
of the day or night, whenever work is being
undertaken
2. To copy from said records
3. Question any Ee and investigate any fact,
condition or matter which may be necessary to
determine violations or which may aid in the
enforcement of the LC and of any wage order, or
rules and regulation issued pursuant thereto.
Instances where the visitorial power of the SLE
may be exercised under the LC
Power to:
1. Inspect books of accounts and records of any
person or entity engaged in recruitment and
placement, require it to submit reports
regularly on prescribed forms and act in
violations of any provisions of the LC on
recruitment and placement (Art. 37).
2. Have access to Er’s records and premises to
determine violations of any provisions of the LC
on recruitment and placement (Art. 128).
3. Conduct industrial safety inspections of
establishments (Art. 165).
4. Inquire into the financial activities of LLO and
examine their books of accounts upon the filing
of the complaint under oath and duly supported
by the written consent of at least 20% of the
total membership of the LO concerned.
Enforcement power
It is the power of the SLE to:
1. Issue compliance orders
2. Issue writs of execution for the enforcement of
their orders, except in cases where the Er
contests the findings of the labor officer and
raise issues supported by documentary proof
which were not considered in the course of
inspection
3. Order stoppage of work or suspension of
operation when non-compliance with the law
or implementing rules and regulations poses
grave and imminent danger to health and safety
of workers in the workplace
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
250
4. Require Ers to keep and maintain such
employment records as may be necessary in aid
to the visitorial and enforcement powers
5. Conduct hearings within 24 hours to determine
whether:
a. An order for stoppage of work or
suspension of operations shall be lifted or
not; and
b. Er shall pay the concerned Ees their
salaries in case the violation is attributable
to his fault (As amended by RA 7730; (Guico
v. Secretary, G.R. No. 131750, November 16,
1998).
Violations under Art. 128 of the LC
1. Obstruct, impede, delay or otherwise render
ineffective the orders of the SLE or his
authorized representatives
2. Any government employee found guilty of, or
abuse of authority, shall be subject to
administrative investigation and summary
dismissal from service.
Limitations to other courts
In relation to enforcement orders issued under Art.
128 of the LC, no inferior court or entity shall:
1. Issue temporary or permanent injunction or
restraining order; or
2. Assume jurisdiction over any case
Instances when Enforcement power may not be
used
1. Case does not arise from the exercise of
visitorial power
2. When Er-Ee relationship ceased to exist at the
time of the inspection
3. If Er contests the finding of the Labor
Regulation Officer and such contestable issue is
not verifiable in the normal course of inspection
SLE does not have the power to determine the
existence of an employer-employee relationship
in the exercise of its visitorial and enforcement
powers under Art. 128 of the LC
The visitorial and enforcement powers of the SLE
come into play only “in cases when the relationship
of Er-Ee still exists.” The SLE’s power does not apply
in two instances, namely: (a) where the Er-Ee
relationship has ceased; and (b) where no such
relationship has ever existed. The question of Er-Ee
relationship becomes a battle of evidence, the
determination of which should be comprehensive
and intensive and therefore best left to the
specialized quasi-judicial body that is the NLRC
 PROCEDURE AND JURISDICTION
(People’s Broadcasting v. The Secretary of the
Department of Labor and Employment, G.R. No.
179652, May 8, 2009).
POWER TO SUSPEND EFFECTS
OF TERMINATION
SLE has the power to suspend the effects of
termination
The SLE may suspend the effects of the termination
pending resolution of the dispute in the event of a
prima facie finding by the appropriate official of the
DOLE before whom such dispute is pending that the
termination may cause serious labor dispute or is in
implementation of a mass layoff [LC, Art. 277(b)].
NOTE: Art. 277 (b) of LC is applicable on suspension
of the effects of termination if there is a showing
that the termination may cause serious labor
dispute within the company while Art. 263 (g) of LC
on assumption of jurisdiction is applicable in cases
of strike in establishments affecting national
interest, not just the company.
Reinstatement Pending Resolution Of The
Termination Dispute
Suspension of the effects of termination will
necessarily result in the immediate reinstatement of
the terminated employees. An order of
reinstatement pending resolution of the case may
thus be issued by the SLE pursuant to this power.
ASSUMPTION OF JURISDICTION
SLE can assume jurisdiction over a labor dispute
When there is a labor dispute causing or likely to
cause a strike affecting national interest, the SLE, on
his own initiative or upon petition by any of the
Power of SLE under Art 277 (b)
Involves only the issue of termination employment
which may cause a serious labor dispute or is in
implementation of a mass lay-off
Requires the conduct of preliminary determination
of the existence of prima facie evidence that the
termination may cause a serious labor dispute or is
in implementation of a mass lay-off to be conducted
by appropriate official of DOLE before whom the
termination dispute is pending.
251
parties, may either assume jurisdiction or certify the
dispute to the NLRC for compulsory arbitration.
NOTE: Art. 263(g) of the LC is both an extraordinary
and a preemptive power to address an
extraordinary situation (a strike or lockout in an
industry indispensable to the national interest). As
the term “assume jurisdiction” connotes the intent
of the law is to give the SLE full authority to resolve
all matters within the dispute that gave rise to or
which arose out of the strike or lockout—it includes
and extends to all questions and controversies
arising from or related to the dispute, including
cases over which the Labor Arbiter has exclusive
jurisdiction (Bagong Pagkakaisa ng Manggagawa
ng Triumph International v. Secretary of the
Department of Labor and Employment, G.R. No.
167401, July 5, 2010).
Effect of the assumption or certification
It automatically enjoins the intended or impending
strike or lockout as specified in the assumption or
certification order. If one has already taken place at
the time of the assumption or certification, all
striking or locked out Ees shall immediately return
to work and the Er shall immediately resume
operations and readmit all workers under the same
terms and conditions prevailing before the strike or
lockout.
Assumption of jurisdiction can be exercised
without the necessity of prior notice or hearing
given to any of the party disputants
The rationale for the SLE’s assumption of
jurisdiction can justifiably rest on his own
consideration of the exigency of the situation in
relation to the national interests (Capitol Medical
Center v. Trajano, G.R. No. 155690, June 30, 2005).
Power of SLE under Art 263 (g) /Assumption of
Jurisdiction
Applicable to all labor disputes, irrespective of the
grounds therefor, provided such labor disputes will
cause or likely to cause strikes or lockouts in
industries indespensible to the natonal interest
Does not require such preliminary prima facie
determination. In fact, prior notice and hearing are
not required before the SLE may issue an assumption
or certification order.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
“serious labor dispute” contemplated may or may
not involve a strike or lockout.
May be exercised in cases of termination of
employment for as long any of the two (2) grounds
mentioned in Article 277(b) exists, irrespective of
the nature of the business of the employer.
Remedy: immediate reinstatement pending
resolution of the termination case
APPELLATE JURISDICTION
Cases within the appellate jurisdiction of the SLE
1. Appeal from and adverse decision of the POEA
(2003 POEA Rules and Regulations, Rule V, Part
VII, Sec. 1; Eastern Mediterranean Maritime Ltd.
And Agemar Manning Agency Inc., v. Surio et. al.,
G.R. No. 154213, August 23, 2012).
2. Appeal the order or results of a certification
election on the ground that the Rules and
Regulations or parts thereof established by the
SLE for the conduct of election have been
violated (LC, Art. 259).
3. A review of cancellation proceedings decided
by the BLR in the exercise of its exclusive and
original jurisdiction (Abbott Laboratories
Philippines, Inc. v. Abbott Laboratories
Employees Union, G.R. No.131374, January 26,
2000).
NOTE: The SLE has no jurisdiction over decisions of
the BLR rendered in the exercise of its appellate
power to review the decision of the RD in a petition
to cancel the union's certificate of registration, said
decisions being final and unappealable (Ibid.)
Secs. 7 to 9 of Rule II, Book V of the IRR of the LC
provides for two situations:
a. The first situation involves a petition for
cancellation of union registration which is filed
with a Regional Office. A decision of a Regional
Office cancelling a union's certificate of
registration may be appealed to the BLR whose
decision on the matter shall be final and
unappealable.
b. The second situation involves a petition for
cancellation of certificate of union registration
which is filed directly with the BLR. A decision
of the BLR cancelling a union's certificate of
registration may be appealed to the SLE whose
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
252
Labor dispute referred to will cause or likely to cause
a strike or lockout.
May only be exercised in industries indespensible to
the national interest.
Remedy: automatic return to work of the strikers or
locked-out employees, if the strike or lock-out is on-
going at the time of the issuance of the assumption/
certification order of the enjoining of the strike or
lockout, if one has not taken place, pending the
resolution of the issues raised in the notice of strike or
lockout.
decision on the matter shall be final and
unappealable (Ibid.)
SLE has no appellate jurisdiction over decisions of
RD involving petitions for examinations of union
accounts. It is the BLR which exercises appellate
jurisdiction in such case (Barles v. Bitonio, G.R. No.
120270, June 16, 1999).
VOLUNTARY ARBITRATION POWERS
Powers of SLE regarding voluntary arbitration
The SLE may authorize any official to act as
Voluntary Arbitrator upon the written request and
agreement of the parties to a labor dispute [LC, Art.
212 (n)]. He shall also approve, upon
recommendation of the NCMB the guidelines in
administering the Voluntary Arbitration Fund [LC,
Art. 276 (f)].
GRIEVANCE MACHINERY AND VOLUNTARY
ARBITRATION
Grievance
Any question by either the Er or the union regarding
the interpretation or application of the CBA or
company personnel policies or any claim by either
party that the other party is violating any provision
of the CBA or company personnel policies.
Grievance machinery
It refers to the mechanism for the adjustment and
resolution of grievances arising from the
interpretation or implementation of a CBA and
those arising from the interpretation or
enforcement of company personnel policies. It is
part of the continuing process of CB.
Grievance procedure
 PROCEDURE AND JURISDICTION
It is the internal rules of procedure established by
the parties in their CBA with voluntary arbitration
as the terminal step, which are intended to resolve
all issues arising from the implementation and
interpretation of their CBA.
It refers to the system of grievance settlement at the
plant level as provided in the CBA. It usually consists
of successive steps starting at the level of the
complainant and his immediate supervisor and
ending, when necessary, at the level of the top union
and company officials.
SUBJECT MATTER OF GRIEVANCE
Cases falling under the jurisdiction of the
Grievance Machinery
Any grievance arising from:
1. The interpretation or implementation of the
CBA; and
2. The interpretation or enforcement of company
personnel policies
NOTE: Art. 217(c) of the LC requires LAs to refer
cases involving the implementation of CBAs to the
grievance machinery provided therein and to
voluntary arbitration. Likewise, Art. 260 of the LC
clarifies that such disputes must be referred first to
the grievance machinery and, if unresolved within
seven days, they shall automatically be referred to
voluntary arbitration (Miguela Santuyo v. Remerco
Garments Manufacturing, Inc., G.R. No. 174420,
March 22, 2010).
VOLUNTARY ARBITRATOR
JURISDICTION
Jurisdiction of the Voluntary Arbitrators
Generally, the arbitrator is expected to decide only
those questions expressly delineated by the
submission agreement. Nevertheless, the arbitrator
can assume that he has the necessary power to
make a final settlement since arbitration is the final
resort for the adjudication of the disputes (Ludo and
Luym Corp. v. Saornido, G.R. No. 140960, January 20,
2003).
Cases within the jurisdiction of VA
Original and exclusive jurisdiction over
1. All unresolved grievances arising from the:
a. Implementation or interpretation of the
CBA
253
b. Interpretation or enforcement of company
personnel policies
NOTE: Under Art. 217, it is clear that a LA has
original and exclusive jurisdiction over
termination disputes. However, under Art. 261,
a VA has original and exclusive jurisdiction over
grievances arising from the interpretation or
enforcement of company policies. As a general
rule then, termination disputes should be
brought before a LA, except when the parties
unmistakably express that they agree to submit
the same to voluntary arbitration (Negros Metal
Corporation v. Armelo Lamayo, G.R. No. 186557,
August 25, 2010).
2. Wage distortion issues arising from the
application of any wage orders in organized
establishments
3. Those arising from interpretation and
implementation of productivity incentive
programs under R.A. 6971
4. Violations of CBA provisions which are not
gross in character are no longer treated as ULP
and shall be resolved as grievances under the
CBA
NOTE: Gross violation of CBA provisions shall
mean flagrant and/or malicious refusal to
comply with the economic provisions of such
agreement.
5. Any other labor disputes upon agreement by
the parties including ULP and bargaining
deadlock (LC, Art. 262).
NLRC and DOLE cannot entertain
disputes/grievances/matters under the
exclusive and original jurisdiction of the
voluntary arbitrator
They must immediately dispose and refer the same
to the grievance machinery or voluntary arbitration
provided in the CBA.
The parties may choose to submit the dispute to
voluntary arbitration proceedings before or at the
stage of compulsory arbitration proceedings.
Jurisdiction over actual termination disputes
and complaints for illegal dismissal
The Labor Arbiter has jurisdiction over actual
termination disputes and complaints for illegal
dismissal filed by workers pursuant to the union
security clause and not the grievance machinery.
PROCEDURE
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
How to initiate arbitration
1. Submission Agreement – Where the parties
define the disputes to be resolved
2. Demand notice – Invoking collective
agreement arbitration clause
Voluntary arbitrator (VA)
1. Any person accredited by the NCMB as such
2. Any person named or designated in the CBA by
the parties to act as their VA
3. One chosen with or without the assistance of
the NCMB, pursuant to a selection procedure
agreed upon in the CBA
4. Any official that may be authorized by the SLE
to act as VA upon the written request and
agreement of the parties to a labor dispute (LC,
Art. 262).
Powers of a voluntary arbitrator
1. Hold hearings
2. Receive evidence
3. Take whatever action necessary to resolve the
dispute including efforts to effect a voluntary
settlement between parties (LC, Art. 262-A).
Procedure for choosing voluntary
arbitrator/panel
1. The parties in a CBA shall designate in advance
a VA/panel, preferably from the listing of
qualified VAs duly accredited by the NCMB, or
2. Include in the agreement a procedure for the
selection of such VA or panel of VAs, preferably
from the listing of qualified VAs duly accredited
by the NCMB [LC, Art.260 (3)].
Who will designate the voluntary arbitrator
/panel in case the parties fail to select one
It is the NCMB that shall designate the VA panel
based on the selection procedure provided by the
CBA (Manila Central Line Free Workers Union v.
Manila Central Line Corp., G.R. No. 109383, June 15,
1998).
Labor Arbiters can be designated as voluntary
arbitrators
There is nothing in the law that prohibits LAs from
also acting as voluntary arbitrators as long as the
parties agree to have him hear and decide their
dispute (Manila Central Line Free Workers Union v.
Manila Central Line Corp., G.R. No. 109383, June 15,
1998).
Effect of the award of voluntary arbitrator
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254
The decision or award of the voluntary arbitrator
acting within the scope of its authority shall
determine the rights of the parties and their
decisions shall have the same legal effects as
judgment of the courts. Such matters on fact and law
are conclusive.
Both the employer and the bargaining
representative of the employees are required to
go through the grievance machinery
It is but logical, just and equitable that whoever is
aggrieved should initiate settlement of grievance
through the grievance machinery. To impose
compulsory procedure on Ers alone would be
oppressive of capital.
Nature of power of the voluntary arbitrator
Arbitrators by the nature of their functions act in a
quasi-judicial capacity (BP 129, as amended by R.A.
9702); where a question of law is involved or there
is abuse of discretion, courts will not hesitate to pass
upon review of their acts.
REMEDIES
Decisions of voluntary arbitrators appealable
GR: Decisions of VA are final and executory after 10
calendar days from receipt of the copy of the award
or decision by the parties (LC, Art. 262-A).
NOTE: Art. 262-A deleted the word “unappealable”
from Art. 263. It makes the voluntary arbitration
award final and executory after 10 calendar days
from receipt of the copy of the award or decision by
the parties. Presumably, the decision may still be
reconsidered by the VA on the basis of a motion for
reconsideration duly filed during that period (Albert
Teng v. Alfredo Pahagac, G.R. No. 169704, November
17, 2010).
XPN: Appeal to the CA via Rule 43 of the Rules of
Court within 15 days from the date of receipt of VA’s
decision (Luzon Dev’t Bank v. Ass’n of Luzon Dev’t
Bank Ee’s, G.R. No. 120319, October 6, 1995).
NOTE: A VA by the nature of his functions acts in
quasi-judicial capacity. There is no reason why the
VA’s decisions involving interpretation of law
should be beyond the SC’s review. Administrative
officials are presumed to act in accordance with law,
yet the SC will not hesitate to pass upon their work
where a question of law is involved or where a
showing of abuse of authority or discretion in their
official acts is properly raised in petitions for
 PROCEDURE AND JURISDICTION
certiorari (Continental Marble Corporation v. NLRC,
G.R. No. L-43825, May 9, 1988).
Q: PSSLU had an existing CBA with Sanyo Phils.,
Inc. with a union security clause which provides
that: “all members of the union covered by this
agreement must retain their membership in
good standing in the union as condition of
his/her continued employment with the
company.” On account of anti-union activities,
disloyalty and for joining another union, PSSLU
expelled 12 employees from the union. As a
result, PSSLU recommended the dismissal of
said Ees pursuant to the union security clause.
Sanyo approved the recommendation and
considered the said Ees dismissed. Thereafter,
the dismissed Ees filed with the Arbitration
Branch of the NLRC a complaint for illegal
dismissal.
Does the voluntary arbitrator have jurisdiction
over the case?
A: No. The VA has no jurisdiction over the case.
Although the dismissal of the Ees concerned was
made pursuant to the union security clause
provided in the CBA, there was no dispute
whatsoever between PSSLU and Sanyo as regards
the interpretation or implementation of the said
union security clause. Both PSSLU and Sanyo are
united and have come to an agreement regarding
the dismissal of the Ees concerned. Thus there is no
grievance between the union and management
which could be brought to the grievance machinery.
The dispute is between PSSLU and Sanyo. The
dispute therefore, does not involve the
interpretation or implementation of a CBA (Sanyo
Philippines Workers Union-PSSLU v. Canizares, G.R.
No. 101619, June 8, 1992).
Q: X was employed as a telephone operator of
Manila Midtown Hotel. She was dismissed from
her employment for committing the following
violations of offenses subject to disciplinary
actions, namely: falsifying official documents
and culpable carelessness-negligence or failure
to follow specific instructions or established
procedures. X then filed a complaint for illegal
dismissal with the Arbitration branch of the
NLRC. The Hotel challenged the jurisdiction of
the Labor Arbitrator on the ground that the case
falls within the jurisdictional ambit of the
grievance procedure and voluntary arbitration
under the CBA.
Does the LA have jurisdiction over the case?
A: Yes. The LA has jurisdiction. The dismissal of X
does not call for the interpretation or enforcement
255
of company personnel policies but is a termination
dispute which comes under the jurisdiction of the
LA. The dismissal of X is not an unresolved
grievance. Neither does it pertain to interpretation
of company personnel policy (Maneja v. NLRC, G.R.
No. 124013, June 5, 1998).
Q: Sime Darby Salaried Employees Association-
ALU (SDSEA-ALU) wrote petitioner Sime Darby
Pilipinas (SDP) demanding the implementation
of a performance bonus provision identical to
the one contained in their own CBA with SDP.
Subsequently, SDP called both respondents
SDEA and SDEA-ALU to a meeting wherein SDEA
explained that it was unable to grant the
performance bonus. In a conciliation meeting,
both parties agreed to submit their dispute to
voluntary arbitration. Their agreement to
arbitrate stated, among other things, that they
were "submitting the issue of performance
bonus to voluntary arbitration."
Does the voluntary arbitrator have the power to
pass upon the question of whether to grant the
performance bonus and to determine the
amount thereof?
A: Yes. In their agreement to arbitrate, the parties
submitted to the VA “the issue of performance
bonus.” The language of the agreement to arbitrate
may be seen to be quite cryptic. There is no
indication at all that the parties to the arbitration
agreement regarded “the issue of performance
bonus” as a two-tiered issue, only one tier of which
was being submitted to arbitration. Possibly, Sime
Darby’s counsel considered that issue as having
dual aspects and intended in his own mind to
submit only one of those aspects to the VA, if he did,
however, he failed to reflect his thinking and intent
in the arbitration agreement (Sime Darby Phils. v.
Magsalin, G.R. No. 90426, December 15, 1989).
Q: Apalisok, production chief for RPN Station,
was dismissed due to her alleged hostile,
arrogant, disrespectful, and defiant behavior
towards the Station Manager. She informed RPN
that she is waiving her right to resolve her case
through the grievance machinery provided in
the CBA. The voluntary arbitrator resolved the
case in the employee’s favor.
On appeal, the CA ruled in favor of RPN because
it considered Apalisok’s waiver to file her
complaint before the grievance machinery as a
relinquishment of her right to avail herself of
the aid of the voluntary arbitrator. The CA said
that the waiver had the effect of resolving an
otherwise unresolved grievance, thus the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
decision of the VA should be set aside for lack of
jurisdiction. Is the ruling of the CA correct?
A: No. Art. 262 of the LC provides that upon
agreement of the parties, the VA can hear and decide
all other labor disputes.
The Ees waiver of her option to submit her case to
grievance machinery did not amount to
relinquishing her right to avail herself of voluntary
arbitration.
Contrary to the finding of the CA, voluntary
arbitration as a mode of settling the dispute was not
forced upon RPN. Both parties indeed agreed to
submit the issue of validity of the dismissal of
petitioner to the jurisdiction of the VA by the
Submission Agreement duly signed by their
respective counsels. The VA had jurisdiction over
the parties’ controversy (Apalisok v. RPN, G.R. No.
138094, May 29, 2003).
COURT OF APPEALS
RULES OF COURT, RULE 65
Remedy of a party aggrieved by a decision of the
NLRC
File a petition for certiorari (Rule 65) which should
be initially filed with the CA in strict observance of
the doctrine on the hierarchy of courts as the
appropriate forum for the relief desired. The CA is
procedurally equipped to resolve unclear or
ambiguous factual finding, aside from the increased
number of its component divisions (St. Martin
Funeral Home v. NLRC, G.R. No. 130866, September
16, 1998).
NOTE: Rule 65, Section 1, Rules of Court:
Petition for Certiorari - When any tribunal, board or
officer exercising judicial or quasi-judicial functions
has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and
there is no appeal, or any plain, speedy, and
adequate remedy in the ordinary course of law, a
person aggrieved thereby may file a verified
petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered
annulling or modifying the proceedings of such
tribunal, board or officer, and granting such
incidental reliefs as law and justice may require.
The petition shall be accompanied by a certified true
copy of the judgment, order or resolution subject
thereof, copies of all pleadings and documents
relevant and pertinent thereto, and a sworn
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256
certification of non-forum shopping as provided in
the third paragraph of section 3, Rule 46.
Period when the petition for certiorari should be
filed with the Court of Appeals
Under Sec. 4, Rule 65 (as amended by A.M. No. 00-2-
03-SC) of the Rules of Civil Procedure, the petition
must be filed within 60 days from notice of the
judgment or from notice of the resolution denying
the petitioner’s motion for reconsideration. This
amendment is effective September 1, 2000, but
being curative may be given retroactive application
(Narzoles v. NLRC, G.R. No. 141959, September 29,
2000).
Art. 224 of the LC, which requires that copies of final
decisions, orders or awards be furnished not only
the party’s counsel of record but also the party
himself applies to the execution thereof and not to
the filing of an appeal or petition for certiorari. The
period within which a petition for certiorari against
a decision of the NLRC may be filed should be
computed from the date counsel of record of the
party receives a copy of the decision or resolution,
and not from the date the party himself receives a
copy thereof (Ginete v. Sunrise Manning Agency, G.R.
No. 142023, June 21, 2001).
Q: Company A was sold to Company B with the
undertaking that Company B will absorb the
former’s employees. However, they were not
hired by Company B or given separation pay by
Company A. They thus filed an action for illegal
dismissal but was denied. When the case
reached the CA via a petition for certiorari, the
same was dismissed outrightly considering that
the verification and certification against forum
shopping was signed only by 3 out of the 228
petitioners. Was the CA correct?
A: Yes. While litigation is not a game of
technicalities, and that the rules of procedure
should not be enforced strictly at the cost of
substantial justice, still it does not follow that the
Rules of Court may be ignored at will and at random
to the prejudice of the orderly presentation,
assessment and just resolution of the issues. The
Rules of Court provide that a petition for certiorari
must be verified and accompanied by a sworn
certification of non-forum shopping. Failure to
comply with these mandatory requirements shall be
sufficient ground for the dismissal of the
petition. Considering that only 3 of the 228 named
petitioners signed the requirement, the CA
dismissed the case against them, as they did not
execute a Verification and Certification against
forum shopping. It does not involve a failure to
attach the Annexes. Rather, the procedural infirmity
 PROCEDURE AND JURISDICTION
consists of omission – the failure to sign a
Verification and Certification against forum
shopping (Ramirez et. al. v. Mar Fishing Co., Inc. et.
al., G.R. No. 168208, June 13, 2012).
XPN: The Court may recognize the merits of a case
by considering the special circumstances or
compelling reasons that justifies the relaxation of
the rule requiring verification and certification of
non-forum shopping in the interest of substantial
justice (Ibid.).
SUPREME COURT
RULES OF COURT, RULE 45
How to appeal from a judgment, or final order or
resolution, of the Court of Appeals
A party desiring to appeal may file with the Supreme
Court a verified petition for review on certiorari
under Rule 45 within fifteen (15) days from notice
of the judgment, final order or resolution appealed
from (Sea Power Shipping Enterprises, Inc. v. CA, G.R.
No. 138270, June 28, 2001).
NOTE: Rule 45, Sec. 1, Rules of Court:
Filing of petition with Supreme Court.—A party
desiring to appeal by certiorari from a judgment,
final order or resolution of the Court of Appeals, the
Sandiganbayan, the Court of Tax Appeals, the
Regional Trial Court or other courts, whenever
authorized by law, may file with the Supreme Court
a verified petition for review on certiorari. The
petition may include an application for a writ of
preliminary injunction or other provisional
remedies and shall raise only questions of law,
which must be distinctly set forth. The petitioner
may seek the same provisional remedies by verified
motion filed in the same action or proceeding at any
time during its pendency.
Policy of the Supreme Court regarding appeals
in labor cases
The Supreme Court is very strict regarding appeals
filed outside the reglementary period for filing the
same. To extend the period of the appeal is to delay
the case, a circumstance which could give the
employer the chance to wear out the efforts and
meager resources of the worker that the latter is
constrained to give up for less than what is due him
(Firestone Tire and Rubber Co. of the Philippines v.
Firestone Tire and Rubber Co. Employees Union, G.R.
No. 75363, August 4, 1992).

PRESCRIPTION OF ACTIONS

Rules as regards to the prescriptive period provided for in the LC

SUBJECT PRESCRIPTIVE PERIOD

1 year from accrual of such ULP; otherwise forever barred

ULP
(LC, Art. 290)

GR: 3 years from the time the cause of action accrued;

otherwise forever barred (LC, Art. 291)

Money Claims
XPN: Promissory Estoppel

All money claims accruing prior to the Within one year from the date of effectivity, in accordance
effectivity of the LC with IRR; otherwise, they shall forever be barred

Workmen’s Compensation claims accruing Dec. 31, 1974 shall be filed not later than Mar. 31, 1975
prior to the effectivity of the LC and before the appropriate regional offices of the DOLE (LC, Art.
between Nov. 1, 1974-Dec. 31, 1974 291)

After 3 years from the date of submission of the annual

Union funds financial report to the DOLE or from the date the same should
have been submitted as required by law, whichever comes

UNIVERSITY OF SANTO TOMAS

257 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
earlier (Omnibus Rules Implementing the LC, Book VII, Rule II,
4 years. It commences to run from the date of formal
Illegal Dismissal Cases
dismissal [Mendoza v. NLRC, G.R. No. 122481, (1998)].
Promissory estoppel
It may arise from the making of a promise, even
though without consideration, if it was intended
that the promise should be relied upon. If in fact it
was relied on, a refusal to enforce it would virtually
sanction the perpetration of fraud or would result in
other injustice. It presupposes the existence of a
promise on the part of one against whom estoppel
is claimed. The promise must be plain and
unambiguous and sufficiently specific so that the
court can understand the obligation assumed and
enforce the promise according to its terms.
NOTE: In order to make out a claim of promissory
estoppel, a party bears the burden of establishing
the following elements: (1) a promise was
reasonably expected to induce action or
forbearance; (2) such promise did, in fact, induce
such action or forbearance; and (3) the party
suffered detriment as a result.
Acts considered as criminal violations of the LC
Except as otherwise provided in the LC, or unless
the acts complained of hinge on a question of
interpretation or implementation of ambiguous
provisions of an existing CBA, any violation of the
provisions of the LC declared to be unlawful or
penal in nature shall be punished with a fine of not
less than Php 1,000.00 nor more than Php 10,000.00
or imprisonment of not less than three months nor
more than three years, or both such fine and
imprisonment at the discretion of the court (LC, Art.
288).
1. Prohibition against transfer of employment -
After the issuance of an employment permit, the
alien shall not transfer to another job or change
his employer without prior approval of the SLE
(LC, Art. 41).
2. Violation of the provisions on learnership (LC,
Art. 77).
3. In cases of unlawful withholding of wages, the
culpable party may be assessed attorney’s fees
equivalent to ten percent of the amount of
wages recovered (LC, Art. 111).
4. It shall be unlawful for any person to demand or
accept, in any judicial or administrative
proceedings for the recovery of wages,
attorney’s fees which exceed ten percent of the
amount of wages recovered (LC, Art. 111).
UNIVERSITY OF SANTO TOMAS
2016 GOLDEN NOTES
258
Sec. 5).
5. It shall be unlawful for any person, directly or
indirectly, to withhold any amount from the
wages of a worker or induce him to give up any
part of his wages by force, stealth, intimidation,
threat or by any other means whatsoever
without the worker’s consent (LC, Art. 116).
6. It shall be unlawful to make any deduction from
the wages of any employee for the benefit of the
Er or his representative or intermediary as
consideration of a promise of employment or
retention in employment (LC, Art. 116).
7. It shall be unlawful for an Er to refuse to pay or
reduce the wages and benefits, discharge or in
any manner discriminate against any Ee who
has filed any complaint or instituted any
proceeding under this Title or has testified or is
about to testify in such proceedings (LC, Art.
118).
8. It shall be unlawful for any person to make any
statement, report, or record filed or kept
pursuant to the provisions of this Code knowing
such statement, report or record to be false in
any material respect (LC, Art. 119).
9. It shall be unlawful for any person or entity to
obstruct, impede, delay or otherwise render
ineffective the orders of the SLE or his duly
authorized representatives issued pursuant to
the authority granted under this Article, and no
inferior court or entity shall issue temporary or
permanent injunction or restraining order or
otherwise assume jurisdiction over any case
involving the enforcement orders issued in
accordance with this Article [LC, Art. 128 (4)].
10. It shall be unlawful for any employer to
discriminate against any woman Ee with
respect to terms and conditions of employment
solely on account of her sex (LC, Art. 135).
11. It shall be unlawful for an Er to require as a
condition of employment or continuation of
employment that a woman employee shall not
get married, or to stipulate expressly or tacitly
that upon getting married, a woman employee
shall be deemed resigned or separated, or to
actually dismiss, discharge, discriminate or
otherwise prejudice a woman Ee merely by
reason of her marriage (LC, Art. 136).
12. It shall be unlawful for any Er:
a. to deny any woman Ee the benefits
provided for in this Chapter or to discharge
any woman employed by him for the
purpose of preventing her from enjoying
 PROCEDURE AND JURISDICTION
any of the benefits provided under this
Code;
b. to discharge such woman on account of her
pregnancy, or while on leave or in
confinement due to her pregnancy; or
c. to discharge or refuse the admission of such
woman upon returning to her work for fear
that she may again be pregnant.

13. Violations of rights and conditions of

membership in a labor organization (LC, Art.
241)
14. Unfair labor practice of Ers (LC, Art. 248)
15. Unfair labor practice of labor organizations (LC,
Art. 249 in relation to Art. 247)
16. Violation of the provision on retirement
benefits (LC, Art. 287)

NOTE: In addition to the penalty prescribed under

Art. 288, any alien found guilty shall be summarily
deported upon completion of service of sentence.
(LC, Art. 288).

If the offense is committed by a corporation, trust,

firm, partnership, association or any other entity,
the penalty shall be imposed upon the guilty officer
or officers of such corporation, trust, firm,
partnership, association or entity (LC, Art. 289).

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259 FACULTY OF CIVIL LAW