FUNDAMENTAL PRINCIPLES AND POLICIES

2. Labor disputes arising from collective bargaining

LEGEND or other concerted activity respecting such terms
BFOQ - Bona Fide Occupational Qualification and conditions.
BLR - Bureau of Labor Relations
CB - Collective Bargaining Q: What matters may properly fall under the term
CBA - Collective Bargaining Agreement labor law?
CE - Certification Election
DOLE - Department of Labor and A: The term labor law covers the following:
Employment 1. Statutes passed by the State to promote the
Ee - Employee welfare of the workers and Ees and regulate their
Er - Employer relations with their Ers.
LA - Labor Arbiter 2. Judicial decisions applying and interpreting the
LC - Labor Code aforesaid statutes.
LLO - Legitimate Labor Organization 3. Rules and regulations issued by administrative
LOA - Leave of Absence agencies, within their legal competence, to
NCMB - National Conciliation and Mediation implement labor statutes.
Board
NLRC - National Labor Relations Commission Q: What is the purpose of labor legislation? (2006
NSD - Night Shift Differential Bar Question)
OFW - Overseas Filipino Worker
OT - Overtime A: The purpose of labor legislation is to afford
PCE - Petition for Certification Election protection to labor, promote full employment, ensure
POEA - Philippine Overseas Employment equal work opportunities regardless of sex, race or
Administration creed and regulate the relations between workers
RAB - Regional Arbitration Branch and Ers. The State shall assure the rights of workers
RD - Regional Director to self-organization, collective bargaining (CB),
RH - Regular Holiday security of tenure and just and humane conditions of
RTWPB - Regional Tripartite Wages and work.
Productivity Boards
RW - Regular Wage Q: What are the classifications of labor laws?
RWD - Regular Working Days
SIL - Service Incentive Leave A:
SLE - Secretary of Labor and Employment 1. Labor Standards That which sets out the
ULP - Unfair Labor Practice minimum terms, conditions and benefits of
UT - Undertime employment that Ers must provide or comply
VA - Voluntary Arbitrator with and to which Ees are entitled as a matter of
VR - Voluntary Recognition legal right.
WD - Wage Distortion th
WRD - Weekly Rest Day e.g. 13 month pay

2. Labor Relations Defines and regulates the

LABOR LAW status, rights and duties, and the institutional
mechanisms, that govern the individual and
Q: What is labor? collective interactions of Ers, Ees or their
representatives. It is concerned with the
A: It is the exertion by human beings of physical or stabilization of relations of Ers and Ees and seeks
mental efforts, or both, towards the production of to forestall and adjust the differences between
goods and services. them by the encouragement of CB and the
settlement of labor disputes through conciliation,
Q: What is labor Law? mediation and arbitration.

A: The law that defines State policies on labor and e.g. Collective Bargaining Negotiations
employment and governs the rights and duties of the
employer (Er) and employees (Ee) with respect to: 3. Social Legislation All laws passed by the State
1. The terms and conditions of employment, and to promote public welfare. It includes statutes

UNIVERSITY OF SANTO TOMAS

1 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
intended to enhance the welfare of the people
even where there is no Er-Ee relationship.
e.g. GSIS Law, SSS Law, Philhealth benefits,
Agrarian Laws
Q: How do the provisions of the law on labor
relations interrelate, if at all, with the provisions
pertaining to labor standards? (2003 Bar Question)
A: The law on Labor Relations provides for rights and
procedures by which workers may obtain from their
Er benefits which are over and above the minimum
terms and conditions of employment set by labor
standards law. Labor Standards law alone does not
guarantee lasting industrial peace. It is assured
through Labor Relations law which enables workers
to obtain better benefits guaranteed by labor
standards laws and by providing for a mechanism to
settle disputes between the Er and his Ees.
Q: Is there any distinction between Labor Legislation
and Social Legislation? Explain.
A: Labor Legislation is sometimes distinguished from
social legislation by the former referring to labor
statutes, like Labor Relations Law and Labor
Standards, and the latter to Social Security Laws.
Labor legislation focuses on the rights of the worker
in the workplace.
Social Legislation are those laws that provide
particular kinds of protection or benefits to society or
segments thereof in furtherance of social justice.
Note: All Labor laws are social legislations, but not all social
legislations are labor laws.
Q: What are the sources of labor laws?
A:
1. Labor Code (LC) and other related special
legislation [including their respective
Implementing Rules and Regulations (IRR)]
2. Contracts
3. Collective Bargaining Agreement (CBA)
4. Company practice
5. Company policies
Q: How does the CBA operate as a source of law?
A: 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.,
vs. Pawis ng Makabayang Obrero (PAMAO-NFL), G.R.
No. 146650, (2003) in citing E. Razon, Inc. vs.
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
Secretary of Labor and Employment, G.R. No. 85867,
(1993)].
Q: What are the requisites before past practices
would be considered as a source of labor law?
A: 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 Wire
and Cable Daily Rated Employees Union vs.
American Wire and Cable Co., Inc., G.R. No.
155059, (2005)].
Note: No passage of time is required for a company policy
to become a source of labor law.
Q: What is a contract of labor?
A: It is a consensual, nominate, principal, and
commutative contract whereby one person, called
the Er, compensates another, called the laborer,
worker or Ee, for the latters service. It is relationship
impressed with public interest in keeping with our
constitutional policy of social justice.
Q: What are the essential characteristics of a
contract of labor?
A:
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
5. Er can control and supervise the conduct of the
Ee.
2
 FUNDAMENTAL PRINCIPLES AND POLICIES
FUNDAMENTAL PRINCIPLES AND POLICIES
CONSTITUTIONAL PROVISIONS
Q: What are the constitutional mandates on Labor
Law?
A:
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.
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.
2. 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.
3. Sec. 10, Art II - The State shall promote social
justice in all phases of national development.
4. Sec. 11, Art II - The State values the dignity of
every human person and guarantees full respect
for human rights.
5. 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
3 FACULTY OF CIVIL LAW
nationalism, and encourage their involvement in
public and civic affairs.
6. 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.
7. Sec. 18, Art. II The State affirms labor as a
primary social economic force. It shall protect the
rights of workers and promote their welfare.
8. Sec. 20, Art. II The State recognizes the
indispensable role of the private sector,
encourages private enterprise and provide
incentives to needed investments.
9. 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.
10. 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.
11. 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.
12. Sec. 10, Art. III No law impairing the obligation
of contracts shall be passed.
13. 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.
14. Sec. 18 (2), Art. III No involuntary servitude in
any form shall exist except as a punishment for a
crime whereof the party shall have been duly
convicted.
15. 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
 Labor Law and Social Legislation
To this end, the State shall regulate the
acquisition, ownership, use, and disposition of
property and its increments.
16. Sec. 2, Art. XIII - The promotion of social justice
shall include the commitment to create
economic opportunities based on freedom of
initiative and self-reliance.
17. 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.
18. 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.
Q: What is the State policy on labor as found in the
Constitution (Sec. 3, Art. XIII)?
A:
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
Q: What are the basic rights of workers guaranteed
by the Constitution (Sec. 3, Art. XIII)?
A: The Right to:
1. Security of tenure
2. Living wage
3. Humane working conditions
4. Share in the fruits of production
5. Self-organization
6. Collective bargaining and negotiation
7. Engage in peaceful concerted activities, including
the right to strike
8. Participate in policy and decision making
processes
Q: What is the principle of non-oppression?
A: The principle mandates capital and labor not to act
oppressively against each other or impair the interest
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
and convenience of the public. The protection to
labor clause in the Constitution is not designed to
oppress or destroy capital [Capili vs. NLRC, G.R. No.
117378, (1997)].
The law in protecting the rights of the Ees authorizes
neither oppression nor self-destruction of the Er
[Pacific Mills Inc. vs. Alonzo, G.R. No. 78090, (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. vs. NLRC
and Edilberto M. Alvarez, G.R. No. 106370, (1994)].
NEW CIVIL CODE AND OTHER LAWS
Q: What are other related laws to labor?
A:
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. 1700 - 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 lockouts,
closed shop, wages, working conditions,
hours of labor and similar subjects.
c. Art. 1701 - Neither capital nor labor shall
act oppressively against the other, or
impair the interest or convenience of the
public.
d. Art. 1702 - In case of doubt, all labor
legislation and all labor contracts shall be
construed in favor of the safety and decent
living for the laborer.
e. Art. 1703 - No contract which practically
amounts to involuntary servitude, under
any guise whatsoever, shall be valid.
f. 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.
4
 FUNDAMENTAL PRINCIPLES AND POLICIES
g. Art. 1705 - The laborer's wages shall be
paid in legal currency.
h. Art. 1706 - Withholding of the wages,
except for a debt due, shall not be made by
the employer.
i. Art. 1707 - The laborer's wages shall be a
lien on the goods manufactured or the
work done.
j. Art. 1708 - The laborer's wages shall not be
subject to execution or attachment, except
for debts incurred for food, shelter,
clothing and medical attendance.
k. Art. 1709 - The employer shall neither seize
nor retain any tool or other articles
belonging to the laborer.
l. 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
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
th
c. 13 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
5 FACULTY OF CIVIL LAW
n. Home Development Mutual Fund Law of
2009
o. The Magna Carta of Women
p. Comprehensive Agrarian Reform Law as
amended by R.A. 9700
LABOR CODE
Q: What is the aim of labor law?
A: The aim of labor law is social justice.
Q: What is social justice?
A: 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 vs. Williams, G.R.
No. 47800, (1940)].
Q: What are the limitations in invoking the principle
of social justice?
A:
1. Not to undermine property rights resulting in
confiscation [Guido vs.Rural Progress Adm, L-
2089, (1949)]
2. May only protect the laborers who come to court
with clean hands [Phil.Long Distance Telephone
Co. vs. NLRC, G.R. 80609, (1988)]
3. Never result to an injustice or oppression of the
Er [Phil.Geothermal Inc. vs. NLRC, G.R. No.
106370, (1994)]
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)
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
UNIVERSITY OF SANTO TOMAS
 Labor Law and Social Legislation
sympathy and compassion to the less privileged
workingman [Fuentes v. NLRC, 266 SCRA 24, (1997)].
However it should be borne in mind that social justice
ceases to be an effective instrument for the
equalization of the social and economic forces by
the State when it is used to shield wrongdoing
[Corazon Jamer v. NLRC, 278 SCRA 632 (1997)].
Q: What agency exercises the rule-making power
granted in the Labor Code?
A: 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.
Note: Such rules and regulations shall become effective 15
days after announcement of their adoption in newspapers
of general circulation.
Q: What are the limitations to the rule-making
power given to the Secretary of Labor and
Employment and other Government agencies?
A: It must:
1. Be issued under the authority of law
2. Not be contrary to law and the Constitution
Q: To whom shall all rights and benefits under the
Labor Code apply?
A: 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 NLRCs
jurisdiction is invoked.
7. As may otherwise be provided by the LC.
Q: What is the test in determining whether a GOCC
is subject to the provisions of the LC?
A: It is determined by the manner of their creation.
Government corporations incorporated under the
Corporation Code are covered by the LC while those
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
created by special (original) charter from Congress
are subject to Civil Service rules.
Art. 3, Declaration of Basic Policy
Q: What is the policy of the State on labor as found
in the LC?
A: It is the policy of the State to:
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. 4, Construction in favor of Labor
Q: What is 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
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 vs. NLRC and Silvestre Germano, G.R.
126703, (1998)].
e.g. An Ee who was validly dismissed may still be
given severance pay.
Q: What is the concept of liberal approach in
interpreting the Labor Code and its IRR?
A: 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.
Q: Are all labor disputes resolved in favor of labor?
6
 FUNDAMENTAL PRINCIPLES AND POLICIES
A: No. The law also recognizes that management has
rights which are also entitled to respect and
enforcement in the interest of fair play [St. Lukes
Medical Center Ees Assn vs. NLRC, G.R. No. 162053,
(2007)].
Art. 166, Policy
Q: What is the policy of the State in relation to
Employees Compensation and State Insurance
Fund?
A: The State shall promote and develop a tax-exempt
Ees compensation program whereby Ees and their
dependents, in the event of work-connected
disability or death, may promptly secure adequate
income benefits and medical related benefits. [Art.
166, LC]
Q: What is the purpose of a Workmens
Compensation Act?
A: The primary purpose of a Workmens
Compensation Act is to provide compensation for
disability or death resulting from occupational
injuries or diseases, or accidental injury to, or death
of Ees.
Art. 211, Declaration of Policy
Q: What are the policy objectives of our Labor
Relations law?
A: 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.
7 FACULTY OF CIVIL LAW
Art. 212, Definitions
Q: Who is an employer?
A: Any person acting in the interest of an Er, directly
or indirectly. The term does not include a labor
organization or any of its officers and agents, except
when acting as an Er. (Art. 212[e], LC)
An Er is defined as any person or entity that employs
the services of others; one for whom work is done
and who pays their wages of salaries; any person
acting in the interest of an Er; refers to the enterprise
where the labor organization operates or seeks to
operate. (Sec.1[s], Rule I, Book V, IRR)
Note: The term employer is not restricted to business
owners alone because it includes any person as long as he
acts in the interest of the Er.
Q: When is a labor organization deemed an
employer?
A: When it is acting as such in relation to persons
rendering services under hire, particularly in
connection with its activities for profit or gain.
Note: The mere fact that respondent is a labor union does
not mean that it cannot be considered an Er for persons
who work for it. Much less should it be exempted from
labor laws [Bautista vs. Inciong, G.R. No. L-52824, (1988)].
Q: Who is an employee?
A: The term employee covers:
1. Any person in the employ of the Er
2. Any individual whose work has ceased as a result
of or in connection with any current labor
dispute or because of any unfair labor practice if
he has not obtained any other substantially
equivalent and regular employment
3. One who has been dismissed from work but the
legality of dismissal is being contested in a forum
of appropriate jurisdiction. (D.O. No. 40-03)
Note: The term shall not be limited to the Ees of a
particular Er unless the LC explicitly states.
Any Ee, whether employed for a definite period or not,
shall, beginning on the first day of service, be considered an
Ee for purposes of membership in any labor union. (Art.
277[c], LC)
Q: What is a labor dispute?
A: A labor dispute includes any controversy or matter
concerning:
1. Terms and conditions of employment, or
UNIVERSITY OF SANTO TOMAS
 Labor Law and Social Legislation
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. (Art. 212[l],
LC)
Q: What are the tests on whether a controversy is a
labor dispute?
A:
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.
Q: What are the kinds of labor disputes?
A:
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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
machinery; non observance of 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
Q: Who are the parties to a labor dispute?
A:
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.
Q: What is an inter-union dispute?
A: 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.
Q: What is an intra-union dispute?
A: 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 unions
constitution and by-laws, or disputes from chartering
or affiliation of union.
Q: What are rights disputes?
A: They are claims for violations of a specific right
arising from a contract, i.e. CBA or company policies.
Q: What are interest disputes?
A: 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.
Q: What are contractnegotiation disputes?
A: These are disputes as to the terms of the CBA.
Q: What are contractinterpretation disputes?
A: These are disputes arising under an existing CBA,
involving such matters as the interpretation and
8
 FUNDAMENTAL PRINCIPLES AND POLICIES
application of the contract, or alleged violation of its
provisions.
Art. 255, Exclusive Bargaining Representation and
Workers Participation in Policy and Decision-
Making
Q: Who shall be the bargaining representative of
the employees for purposes of collective bargaining?
A: 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.
(Art. 255, LC, as amended by Sec. 22 of R.A. No. 6715,
1989)
Q: What is the extent of the workers right to
participate in policy and decision-making processes
in a company?
A: 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: Explain the extent of the workers right to
participate in policy and decision-making process as
provided under Art. XIII, Sec. 13 of the 1987
Constitution. Does it include membership in the
Board of Directors of a corporation? (2008 Bar
Question)
A: No. The Supreme Court 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 corporations Board of Directors.
[Manila Electric Company vs. Quisumbing, G.R. No.
127598, (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 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
9 FACULTY OF CIVIL LAW
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 vs. NLRC, G.R. No. 85985,
(1993)].
Q: What is the principle of codetermination? (2007
Bar Question)
A: It refers to the right of workers to participate in
policy and decision-making process affecting their
rights and benefits [PAL vs. NLRC, G.R. No. 85985
(1993); Art. XIII, Sec. 3, 1987 Constitution].
Q: May an employer solicit questions, suggestions
and complaints from employees who are
represented by a union?
A: No, unless:
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 vs. Manila Diamond Hotel Ees Union,
G.R. No. 158075, (2006)].
Q: Who is a managerial employee?
A: 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.
UNIVERSITY OF SANTO TOMAS
 Labor Law and Social Legislation
Q: Who is a supervisory employee?
A: 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 judgement.
Q: Who are rank-and-file employees?
A: Those persons who are neither Managerial nor
Supervisory Ees are considered rank-and file.
Art. 277, Miscellaneous Provisions
Q: What is the right to security of tenure?
A: The right to security of tenure connotes that no
worker shall be dismissed upon employment without
cause and without due process.
Q: What is the workers right to notice and hearing
prior to dismissal?
A: Art. 277 (b) of the LC provides that:
1. The Er shall furnish the Ee whose employment is
sought to be terminated a written notice
containing a statement of the causes for
termination; and
2. Afford the Ee ample opportunity to be heard and
to defend himself
Note: In connection with dismissals for authorized causes,
the Er must serve a written notice upon the worker and the
DOLE at least 1 month before the intended date of
termination. (Art. 283, LC)
Q: Why is notice and hearing necessary in cases of
employee dismissal?
A: The twin requirement of notice and hearing
constitutes essential elements of due process in cases
of Ee dismissal. The requirement of notice is intended
to inform the Ee concerned of the Ers intent to
dismiss and the reason for the proposed dismissal,
upon the other hand, the requirement of hearing
affords the Ee opportunity to answer his Ers charges
against him and accordingly to defend himself
therefrom before dismissal is effected. Neither of
these two requirements can be dispensed with
without running afoul of the due process
requirement of the 1987 Constitution [Century Textile
Mills, Inc., et al. v. NLRC, et al. G.R. No. 77859, May
25, 1988].
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
Q: May the employer be allowed to dismiss an
employee and let him explain later? Why?
A: No. While the procedure laid down by the law for
the dismissal of an Ee need not be observed to the
letter of the law, at least it must be done in the
natural sequence of notice, hearing and judgment.
Dismissing the Ee and let him explain later is not in
accord with the requirement of due process
[Batangas Laguna Tayabas Bus Co. v. NLRC, et al. G.R.
No. 94429, May 29, 1992].
Q: Under what circumstances may the termination
of employees be suspended by the SLE?
A: The SLE may suspend the effects of the
termination in the event of a prima facie finding by
the appropriate official of the DOLE before whom
such dispute is pending that the termination may
cause a serious labor dispute or is in implementation
of a mass lay-off. (Art. 277(b), as amended by Sec. 33,
R.A 6715)
Q: Who has the burden of proving the existence of a
valid or authorized cause of termination?
A: The Er has the burden of proof in proving that the
termination was for a valid or authorized cause. The
existence of a just or authorized cause for dismissal
cannot be presumed. A contrary rule would
contravene the constitutional policy of affording
protection to the worker. (Art. 277, LC)
Q: Is a labor organization responsible for the
preservation of industrial peace?
A: Yes. The Ministry shall help promote and gradually
develop, with the agreement of labor organizations
and Ers, labor-management cooperation programs at
appropriate levels of the enterprise based on the
shared responsibility and mutual respect in order to
ensure industrial peace and improvement in
productivity, working conditions and the quality of
working life. [Art. 277(g), LC, incorporated by B.P Blg.
130]
Q: How about in establishments where no legitimate
labor organization exists?
A: Labor management committees may be formed
voluntarily by workers and Ers for the purpose of
promoting industrial peace. [Art. 277(h), LC, as
amended by Sec. 33, R.A. 6715]
10
 RECRUITMENT AND PLACEMENT
RECRUITMENT AND PLACEMENT
RECRUITMENT OF LOCAL AND MIGRANT WORKERS
Q: Who is a worker?
A: Any member of the labor force, whether employed
or unemployed. (Art. 13 [a], LC)
Q: What is recruitment and placement?
A:
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)
Q: What are the essential elements in determining
whether one is engaged in recruitment and
placement?
A: It must be shown that:
1. The accused gave the complainant the distinct
impression that she had the power or ability to
send the complainant for work,
2. Such that the latter was convinced to part with
his money in order to be so employed [People vs.
Goce, G.R. No. 113161, (1995)].
Q: Who is deemed engaged in recruitment and
placement?
A: Any person or entity which, in any manner, offers
or promises for a fee employment to 2 or more
persons. (Art. 13[b], LC)
Q: Who may engage in recruitment and placement?
A: 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
11
8. Shipping or manning agents or
representatives
9. Name hires (Sec. 1(i) of Rule II, Omnibus Rules
and Regulations implementing the Migrant
Workers and Overseas Filipinos Act of 1995 as
amended by R.A. 10022)
Q: Who are name hires?
A: They are individual workers who are able to secure
contracts for overseas employment opportunities
with Ers without the assistance or participation of any
agency. [Rule II, Omnibus Rules and Regulations
implementing the Migrant Workers and Overseas
Filipinos Act of 1995 as amended by R.A. 10022]
Q: Is recruitment and placement constituted even if
employment is offered only to one person?
A: Yes, the number of persons dealt with is not an
essential ingredient of the act of recruitment and
placement of workers. 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 "shall be deemed" create that presumption
[People vs. Panis, G.R. L-58674-77, (1986)].
Q: What is a private employment agency?
A: 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)
Q: What is a private recruitment agency?
A: It is any person or association engaged in the
recruitment and placement of workers without
charging any fee, directly or indirectly, from the
workers or Ers.
Q: Who is a seafarer?
A: It 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)]
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Q: What is overseas employment?
A: It is the employment of a worker outside the
Philippines.
Q: Who is an Overseas Filipino Worker (OFW)?
A: 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.(jj), Rule II, Omnibus Rules and Regulations
Implementing Migrant Workers Act as amended by
R.A. 10022 (2010)]
Note: The term OFW is to be used interchangeably with
migrant worker as provided in R.A. 10022.
Q: Who is an Emigrant?
A: 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, LC)
EMPLOYMENT OF NON-RESIDENT ALIENS
Q: What are the requirements in employment of
non-resident aliens?
A: 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
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 Cones application for a
change of admission status from temporary visitor
to pre-arranged employee. A month later, GMC
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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
Secretary of Labor who cancelled Cones
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 Cone would redound to the national
interest. Is the act of the Secretary of Labor valid?
A: Yes. GMCs claim that hiring of a foreign coach is
an Ers 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.
GMCs right to choose who to employ is limited by
the statutory requirement of an employment permit.
[GMC vs. Torres, G.R. No. 9366, (1991)]
PROHIBITION AGAINST TRANSFER OF EMPLOYMENT
Q: Who are required to obtain employment permit?
A: GR: Only non-resident aliens;
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 has 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)
Q: May the non-resident alien transfer employment
after issuance of the employment permit?
A: 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.
Q: What is required for immigrants and resident
aliens?
A: An Alien Employment Registration Certificate.
Q: What is the duration of the employment permit?
A: GR: Minimum of 1 year
12
 RECRUITMENT AND PLACEMENT
XPN: Unless the employment contract,
consultancy services, or other modes of
engagement provides otherwise, which in no
case shall exceed 5 years. [DOLE Department
Order 97-09, Revised Rules for the Issuance of
Employment Permits to Foreign Nationals
(2009)]
Q: May aliens be employed in entities engaged in
nationalized activities?
A: GR: No.
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 [Section 2-A of 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
Q: What are the entities in the private sectors that
can participate in recruitment and placement of
workers?
A:
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)
Q: What are the qualifications for participation in
recruitment and placement of workers?
A:
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
13
b. Corporation
-A minimum paid-up capital of P2 million
Provided, that those with existing licenses shall,
within 4 yrs. from the affectivity 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. (Art. 28, LC)
3. Not otherwise disqualified by law or other
government regulations to engage in the
recruitment and placement of workers for
overseas employment. (Rule I, Part II, POEA
Rules)
4. Payment of registration fees
5. Posting of surety/cash bonds
Q: How will POEA regulate private sector
participation in the recruitment and overseas
placement of workers?
A: By setting up a licensing and registration system.
(Sec. 14, R.A. 10022)
Q: Is a corporation, 70% of the authorized and
voting capital of which is owned and controlled by
Filipino citizens, allowed to engage in the
recruitment and placement of workers, locally or
overseas? Explain briefly. (2002 Bar Question)
A: No. It is because Art. 27 of the LC requires at least
75%.
Q: Who are disqualified to engage in the business of
recruitment and placement of workers?
A:
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;
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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
POEA for violation of R.A. 8042, P.D. 442
as amended and their IRRs as well as these
rules and regulations.
5. Any official or Ee of the DOLE, POEA, OWWA,
DFA and other government agencies directly
involved in the implementation of R.A. 8042
th
and/or any of his/her relatives within the 4 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
Q: What is the rule on recruitment of travel agencies
and sales agencies of airline companies?
A: 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: 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
Q: When may a worker be charged any fee?
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
A: Only when:
1. He has obtained work through recruiters efforts,
and
2. The worker has actually commenced working
Note: 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)
Q: What are the only authorized payments that may
be collected from a hired worker?
A:
1. Placement fee in an amount equivalent to one
months 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
Q: What are prohibited practices in recruitment or
placement?
A:
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 b 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 a
person/entity not to employ any woker who has
not applied 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
14
 RECRUITMENT AND PLACEMENT

12. Granting a loan to an overseas Filipino worker holders of 1. Failure to actually deploy
with interest exceeding eight percent (8%) per authority. without valid reason;
annum, which will be used for payment of legal 2. Failure to reimburse
and allowable placement fees and make the expenses incurred by the
migrant worker issue, either personally or worker in connection
through a guarantor or accommodation party, with his/her
postdated checks in relation to the said loan documentation and
13. Refusing to condone or renegotiate a loan processing for purposes
incurred by an OFW after his employment of deployment;
contract has been prematurely terminated 3. To allow a non-Filipino
through no fault of his or her own citizen to head or
14. For a suspended recruitment/manning agency manage a licensed
to engage in any kind of recruitment activity recruitment/ manning
including the processing of pending workers agency.
applications; and
15. For recruitment/manning agency or a foreign Q: Who are the persons prohibited from engaging
principal/Er to pass on the OFW or deduct from the business of recruiting migrant workers?
his or her salary the payment of the cause of
fees, premium or other insurance related A:
charges, as provided under the compulsory 1. Unlawful for any official or Ee of the:
workers insurance coverage a. DOLE
16. Imposing a compulsory and exclusive b. POEA
arrangement whereby an OFW is required to: c. Overseas Workers Welfare Administration
a. Avail a loan only from specifically designated (OWWA)
institutions, or entities or persons d. DFA
b. To undergo health examinations only from e. Other Government agencies involved in the
specifically designated medical, entities or implementation of this Act
persons, except seafarers whose medical
th
examination cost is shouldered by the ship 2. Their relatives within the 4 civil degree of
owne consanguinity or affinity, to engage, directly or
c. To undergo training of any kind only from indirectly in the business of recruiting migrant
designated institutions, entities or persons, workers. (Sec. 8, R.A. 8042)
except for recommendatory trainings
mandated by principals/shipowners (Sec. 6, LICENSE vs. AUTHORITY
R.A. 8042, Migrant Workers and Overseas
Filipino Act, as amended by R.A. 10022) Q: How does the law regulate the business or
recruitment and replacement?
Q: What are the differences between the prohibited
acts under the Labor Code and R.A. 8042 or the A: By requiring license and authority.
Overseas Filipinos and Overseas Migrant Workers
Act, as amended by R.A. 10022? Q: What is a license?

A: A: It is issued by DOLE authorizing a person or entity

Labor Code R.A. 8042, as amended by RA to operate a private employment agency.
(Art. 38) 10022
Applies to recruitment for Q: What is an authority?
Local recruitment
overseas employment
Illegal recruitment Illegal recruitment under Sec. A: It is a document issued by the DOLE authorizing a
under Art. 38 6 means any recruitment person or association to engage in recruitment and
means any activity committed by non- placement activities as a private recruitment entity.
recruitment licensees/ non-holders of
activity including authority or prohibited acts Q: Who may be issued license and authority?
prohibited acts (same as Art. 34, LC)
under Art. 34 A:
committed by non- Added to the following in the 1. Natural persons Filipino (citizenship requirement)
licensees or non- list of prohibited acts:

UNIVERSITY OF SANTO TOMAS

15 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
2. Artificial persons question of owners of capital
and voting stock (75% Filipino).
Q: Who is a non-licensee / non-holder of authority?
A: 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
Q: Is the license or authority transferable?
A: No, they 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. The law prohibits alienation of
license or authority.
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. (Arts.27-28, LC).
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
Q: What are the elements of illegal recruitment?
A:
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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
not, when undertaken by non-licensee or
non-holder of authority [Art. 13(f), 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 is the offender commits the act against
three or more persons, individually, or as a group
[People vs. Baytic, (2003)] or there are three or
more offenders.
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 him 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 vs.
Domingo, G.R. No. 181475, (2009)].
Q: How does one prove illegal recruitment? `
A: It must be shown that the accused gave the
distinct impression that he had the power or ability to
send complainants abroad for work such that the
latter were convinced to part with their money in
order to be deployed [People vs. Fortuna, 395 SCRA
353 (2003)].
Q: May a licensee or holder of authority be held
liable for illegal recruitment?
A: Yes, 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: What are the kinds of illegal recruitment?
A: 1. Simple Illegal Recruitment
2. Complex Illegal Recruitment
SIMPLE ILLEGAL RECRUITMENT
Q: What is simple illegal recruitment?
16
 RECRUITMENT AND PLACEMENT

A: It is the violation of Arts. 13(b) and 34 of the LC
involving less than three recruiters or victims.
Q: What is complex illegal recruitment?
A: 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;
2. in large Scale
ILLEGAL RECRUITMENT IN LARGE SCALE (SEC. 6, R.A.
10022)
Q: When is illegal recruitment committed in large
scale?
A: When it is committed against three or more
persons individually or as a group.
Q: When is illegal recruitment considered to be
committed by a syndicate?
A: Illegal recruitment is defined by law as any
recruitment activities undertaken by non-licenses or
non-holders of authority [People vs. Senoron, G.R. No.
119160, (1997)]. It is large scale illegal recruitment
when the offense is committed against 3 or more
persons, individually or as a group (Art. 38[b], LC). In
view of the above, Maryrose is guilty of large scale
illegal recruitment. Her defense of good faith and the
Affidavit of Desistance as well as the refund given will
not save her because R.A. 8042 is a special law, and
illegal recruitment is malum prohibitum [People vs.
Saulo, G.R. No. 125903, (2000)].
ILLEGAL RECRUITMENT AS ECONOMIC SABOTAGE
Q: When is illegal recruitment considered as
economic sabotage?
A: When complex illegal recruitment is committed,
such that it is syndicated or done in a large scale.
ILLEGAL RECRUITMENT vs. ESTAFA

A: It is committed by a syndicate if Illegal Recruitment ILLEGAL RECRUITMENT ESTAFA

was carried out by a group of three or more persons Malum in se,
Malum prohibitum, thus:
conspiring or confederating with one another. thus:
1. Criminal intent is NOT
1.criminal intent is
Note: Illegal Recruitment in Large Scale pertains to the necessary
necessary
number of victims while Syndicated Illegal Recruitment 2. it is a crime which involves
2.Same
pertains to the number of recruiters. moral turpitude
It is not required that it be Accused defrauded
Q: While her application for renewal of her license
shown that the recruiter another by abuse of
to recruit workers for overseas employment was
wrongfully represented confidence, or by
still pending Maryrose Ganda recruited Alma and
himself as a licensed means of deceit
her 3 sisters, Ana, Joan, and Mavic, for employment
recruiter
as housemates in Saudi Arabia. Maryrose Note: It is essential that
represented to the sisters that she had a license to Note: It is enough that the the false statement or
recruit workers for overseas employment and victims were deceived as they fraudulent
demanded and received P30,000.00 from each of relied on the misrepresentation representation
them for her services. However, her application for and scheme that caused them constitutes the very
the renewal of her license was denied, and to entrust their money in cause or the only motive
consequently failed to employ the four sisters in exchange of what they later which induces the
Saudi Arabia. The sisters charged Maryrose with discovered was a vain hope of complainant to part
obtaining employment abroad with the thing of value.
large scale illegal recruitment. Testifying in her
defense, she declared that she acted in good faith
Illegal recruitment and estafa cases may be filed
because she believed that her application for the
simultaneously or separately. The filing of charges for
renewal of her license would be approved. She
illegal recruitment does not bar the filing of estafa,
adduced in evidence the Affidavits of Desistance
and vice versa.
which the four private complainants had executed
after the prosecution rested its case. In the said Double jeopardy will not set
affidavits, they acknowledge receipt of the refund
by Maryrose of the total amount of Php 120,000.00 Q: Bugo, by means of false pretenses and fraudulent
and indicated that they were no longer interested to representation, convinced Dado to give the amount
pursue the case against her. Resolve the case with of Php 120,000.00 for processing the latters papers
reasons. (2005 Bar Question) so that he can be deployed to Japan. Dado later on
found out that Bugo had misappropriated,
misapplied and converted the money to her own

UNIVERSITY OF SANTO TOMAS

17 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
personal use 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. Bugos 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 vs. People, G.R. No.
183879, (2010)].
LIABILITIES
LOCAL RECRUITMENT AGENCY
Q. What is the liability of the Local Recruitment
Agency?
A. 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. What is the liability of corporate officers,
directors or partners if the recruitment/ placement
agency is a juridical being?
A. 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 vs. Cuaresma, G.R. Nos. 182978-79,
(2009)].
Q: What are the remedies under the Migrant
Workers Act and how may they be enforced?
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
A:
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
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.
Q: Is compromise agreement on money claims
allowed?
18
 RECRUITMENT AND PLACEMENT
A: Yes. 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.
Q: When shall compromise agreements on money
claims be paid?
A: 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.
Q: Are overtime and leave pay included in the terms
which is the basis in the computation of the
monetary award?
A: No. 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 vs. Gallant Maritime Services & Marlow
Navigation Co., Inc., G.R. No. 167614, (2009)].
FOREIGN EMPLOYER
THEORY OF IMPUTED KNOWLEDGE
Q: What is the theory of imputed knowledge?
A: 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 all
[Leonor vs. Filipinas Compania, 48 OG 243].
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 file before the
NLRC against Sunace, one Perez, the Taiwanese
19
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 Montehermozos
claims arising from the 2-year employment extension
[Sunace vs. NLRC, G.R. No. 161757, (2006)].
SOLIDARY LIABILITY
Q: What is the liability of the private employment
agency and the principal or foreign-based employer?
A: They are jointly and solidarily liable for any
violation of the recruitment agreement and the
contracts of employment.
Note: 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
vs. Cuaresma, G.R. Nos. 182978-79, (2009)].
Q. May the absence of employment contract, special
power of attorney and affidavit of responsibility, as
required by the POEA Rules and Regulations,
absolve the private employment agency and the
principal from liability?
A. No. 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 vs. NLRC, et al.,
G.R. No. 118934 (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
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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.
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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
employment contract, pursuant to law and
jurisprudence prior to the enactment of RA 8042
[Serrano vs. Gallant Maritime Services & Marlow
Navigation Co., Inc., G.R. No. 167614, (2009)].
Q: What is the basis in computing an employees
compensation in case of premature termination of
contract?
A: 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)
Q: What is the basis in computing an employees
compensation in case of premature termination of
contract?
A: 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. However
in Serrano v. Gallant Maritime Services (G.R. No.
167614, 2009), the clause or for three months for
every year of the unexpired term, whichever is less
is 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. vs. Doza, et. al, G.R. No.
175558 (2012)].
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
20
 RECRUITMENT AND PLACEMENT

v. Thenamaris Ships Management and Intermare If the PI is conducted by If the PI is conducted by

Maritime Agencies, Inc., G.R. No. 179532, (2011)]. a prosecution officer and a judge and a prima
a prima facie case is facie case is found to
PENALTIES FOR ILLEGAL RECRUITMENT established exist
Prosecution officer
Information shall be filed
Q: What is the consequence of conviction for illegal within 48 hours from the
in court within 24 hours
recruitment? date of receipt of the
from the termination of
records of the case. (Sec.
the investigation
A: 11)
PENALTIES (Under R.A. 10022) Prescriptive Period for Illegal Recruitment Cases
Offender / Offense Penalty Simple Illegal
Economic Sabotage
Illegal recruitment as Life imprisonment + Recruitment
economic sabotage fine of P2M-P5M Within 20 yrs. from the
Within 5 yrs. from the
time illegal recruitment
time illegal recruitment
Provided: has happened. (Sec.
has happened
1. If person illegally 12,R.A. 8042)
recruited is below 18
years of age or Maximum penalty DIRECT HIRING
2. Illegal recruitment is shall be imposed
committed by a non- Q: What is direct hiring?
licensee/non-holder
12 yrs. and 1 day - 20 yrs. A: It is when an Er hires a Filipino worker for
Any person found guilty
imprisonment; or overseas employment without going through the
of illegal recruitment
Fine: P1M-P2M POEA or entities authorized by the SLE.
6 yrs. and 1 day - 12 yrs.
Any person found guilty
imprisonment; or Q: What is the ban on direct hiring?
of the prohibited acts
Fine of P500K - P1M
Licensee/holder of 2-5 yrs. imprisonment; or A: GR: An Er may only hire Filipino worker for
authority violates Fine: P10K - P50K; overseas employment through POEA or entities
provisions or both authorized by DOLE.
Non-licensee/non- 4-8 yrs. imprisonment; or
holder of authority Fine: P20K - P100K XPNs: Direct hiring by:
violates provisions or both 1. International organizations
Corporation, Penalty imposed upon 2. Name hires
partnership, officer/s responsible for 3. Members of the diplomatic organizations
association, or entity violation 4. Other Ers as may be allowed by DOLE
Penalties prescribed under
RA 10022, Q: Why is direct hiring prohibited?
Alien +
Deportation without A:
further proceedings 1. To ensure the best possible terms and conditions of
Automatic revocation of employment for the worker.
license or authority and all 2. To assure the foreign Er that he hires only qualified
permits and privileges of Filipino workers.
In every case 3. To ensure full regulation of employment in order to
the recruitment or
manning agency, lending avoid exploitation.
institutions, training
school or medical clinic REGULATION AND ENFORCEMENT
PERIODS
SUSPENSION OR CANCELLATION OF LICENSE OR
Mandatory Period for Resolution of Illegal AUTHORITY
Recruitment Cases
The preliminary investigations of cases under R.A. Q. Who has the power to suspend or cancel any
10022 shall be terminated within a period of 30 license or authority to recruit employees for
calendar days from the date of their filing. overseas employment?

UNIVERSITY OF SANTO TOMAS

21 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
A. The Secretary of Labor and Employment
Q: What are the grounds for revocation of License?
A:
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)
Q: What are the grounds for suspension or
cancellation of license?
A:
1. Commission of prohibited acts under Art. 34
2. Publishing job announcements w/o POEAs
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]
Q. What is the degree of proof required for
suspension of license or authority?
A: 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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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:
1. 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).
2. 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. Assn. of Service Exporters vs.
Drilon, G.R. No. 81958, (1988)].
REGULATORY AND VISITORIAL POWERS OF THE
DOLE SECRETARY
Q: What are the regulatory powers of the Secretary
of Labor and Employment?
A:
1. Restrict and regulate the recruitment and
placement activities of all agencies
2. Issue orders and promulgate rules and
regulations
Q: What constitute visitorial power?
A:
1. Access to Ers 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.
Q: What are the 4 instances where the visitorial
power of the Secretary of Labor and Employment
may be exercised under the LC?
A: Power to:
22
 RECRUITMENT AND PLACEMENT
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, LC)
2. Have access to Ers records and premises to
determine violations of any provisions of the LC
on recruitment and placement. (Art. 128, LC)
3. Conduct industrial safety inspections of
establishments. (Art. 165, LC)
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.
Q: Can the Secretary of Labor and Employment issue
search warrants or warrants of arrest?
A: No. 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, (1990)].
REMITTANCE OF FOREIGN EXCHANGE EARNINGS
Q: What is the rule on remittance of foreign
exchange earnings?
A: 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 workers kind of
job. (Rule VIII, Book III, POEA Rules)
XPNs:
1. The workers 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)
Q: What is the effect of failure to remit?
23
A:
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. (Sec. 9, E.O.
857)
PROHIBITED ACTIVITIES
Q: What are the prohibited practices in recruitment/
placement?
A:
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
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
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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)
Q: What are the principal functions of the POEA?
A:
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)
Q: May the POEA, at any time terminate or impose a
ban on employment of migrant workers?
A: Yes, in consultation with the DFA based on the ff.
grounds:
1. In pursuit of the national interest; or
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
2. When public welfare so requires. (Sec. 4 R.A.
10022)
Q: What are the minimum conditions/ provisions of
overseas employment contracts?
A:
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.
Q: What is the rule on deployment of OFWs?
A: 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)
Q: What are the guarantees of the receiving country
for the protection of the rights of OFWs?
A:
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
24
 RECRUITMENT AND PLACEMENT

protection of the rights of OFWs. (Sec. 3, R.A. Q: What are the regulatory and adjudicatory
10022 amending R.A. 8042) functions of the POEA?

Provided, that the receiving country is taking positive, A:

concrete measures to protect the rights of migrant 1. Regulatory It regulates the private sector
workers in furtherance of any of the guarantees. participation in the recruitment and overseas
placement of workers through its licensing and
Note: In the absence of a clear showing that any of the registration system.
guarantees exists in the country of destination of the 2. Adjudicatory
migrant workers, no permit for deployment shall be issued a. Administrative cases involving violations of
by the POEA.
licensing rules and regulations and
registration of recruitment and employment
Q: What is the general rule on repatriation of a agencies or entities
worker? b. Disciplinary action cases and other special
cases which are administrative in character
A: GR: The repatriation of the: involving employers, principals, contracting
1. Worker and the transport of his personal partners and Filipino migrants.
belongings - shall be the primary responsibility of
the agency which recruited or deployed the Q: What are the grounds for disciplinary action of
worker overseas. OFWs?
2. Remains and transport of the personal
belongings of a deceased worker and all costs A: Under R.A. 8042, these are:
attendant thereto - shall be borne by the 1. Prostitution
principal and/or the local agency. 2. Unjust refusal to depart for the worksite
3. Gunrunning or possession of deadly weapons
XPNs: 4. Vandalism or destroying company property
1. If the termination of employment is due 5. Violation of the laws and sacred practices of the
solely to the fault of the worker, the host country and unjustified breach of
principal/ Er or agency shall not be employment contract
responsible for the repatriation of the former 6. Embezzlement of funds of the company or fellow
and/or his belongings. worker entrusted for delivery to relatives in the
2. In cases of war, epidemic, disaster or Phils.
calamities, natural or man-made, and other 7. Creating trouble at the worksite or in the vessel
similar event, and where the principal or 8. Gambling
recruitment agency cannot be identified, the 9. Initiating or joining a strike or work stoppage
Overseas Workers Welfare Administration, in where the laws of the host country prohibits
coordination with appropriate international strikes or similar actions
agencies, shall take charge of the repatriation. 10. Commission of felony punishable by Philippine
(Sec.15, R.A. 8042) laws or by the host country
11. Theft or robbery
Q: What is the rule on mandatory repatriation of 12. Drunkenness
underage migrant workers? 13. Drug addiction or possession or trafficking of
prohibited drugs
A: Upon discovery or being informed of the presence 14. Desertion or abandonment
of migrant workers whose ages fall below the
minimum age requirement for overseas deployment, Q: What is the distinction between the jurisdiction
the responsible officers in the foreign service shall of the LA and POEA?
without delay repatriate said workers and advise the
DFA through the fastest means of communication A:
available of such discovery and other relevant
JURISDICTION
information. The license of a recruitment/manning
Labor Arbiter POEA
agency which recruited or deployed an underage
Original and Original and exclusive
migrant worker shall be automatically revoked and
exclusive jurisdiction over:
shall be imposed a fine of not less than P500,000 but
jurisdiction over all
not more than P1,000,000. (Sec. 9, R.A. 10022)
claims arising out of 1. All cases which are
Er-Ee relationship administrative in character

UNIVERSITY OF SANTO TOMAS

25 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

or by virtue of any relating to licensing and

law or contract registration of recruitment
involving OFWs and employment agencies
including claims for:
2. Disciplinary Action cases
1. Actual and other special cases,
2. Moral which are administrative
3. Exemplary in character, involving Ees,
4. Other forms of principals, contracting
damages. (Sec. partners and Filipino
10, R.A. 8042) migrant workers. (Rule VII,
Book VII, POEA Rules)

Q: A seafarer was prevented from leaving the port

of Manila and refused deployment without valid
reason. His POEA-approved employment contract
provides that the employer-employee relationship
shall commence only upon the seafarers actual
departure from the port in the point of hire. Is the
seafarer entitled to relief under the Migrant
Workers Act, in the absence of an employer-
employee relationship?

A: Yes. Despite the absence of an Er-Ee relationship,

the NLRC has jurisdiction over the seafarers
complaint. The jurisdiction of LAs is not limited to
claims arising from Er-Ee relationships. Sec. 10 of the
Migrant Workers Act provides that the LAs shall have
jurisdiction over 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. Since the present case
involves the employment contract entered into by
petitioner for overseas employment, his claims are
cognizable by the LAs of the NLRC [Santiago vs. CF
Sharp Crew Management,G.R. No. 162419, (2007)].

Q: What matters fall outside the jurisdiction of the

POEA?

A:
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.

2. Torts falls under the provisions of the Civil

Code.

UNIVERSITY OF SANTO TOMAS

2013 GOLDEN NOTES 26
 LABOR STANDARDS
LABOR STANDARDS
HOURS OF WORK
COVERAGE/ EXCLUSIONS
Q: Who are the employees covered by the
conditions of employment under the Labor Code?
A: GR: The conditions of employment under the LC
apply to Ees in all establishments and undertakings
whether for profit or not.
XPNs:
1. Government Ees
2. Managerial Ees
3. Field personnel
4. The Ers family members who depend on him
for support
5. Domestic helpers and persons in the personal
service of another, and
6. Workers who are paid by results as
determined under DOLE regulations. [Art. 82.
LC]
Q: Who are government employees?
A: They are Ees of the:
1. National Government
2. Any of its political subdivisions
3. Including those employed in GOCCs with original
charters
Q: What law governs government employees?
A: The Civil Service Law, rules and regulations.
Q: Who are managerial employees?
A: Those whose primary duty consists of the
management of the establishment in which they are
employed or a department or subdivision thereof,
and other officers or members of the managerial
staff. [Art. 82(2), LC]
They must meet all of the ff. conditions, namely:
1. Primary duty: management of the establishment
in which they are employed or of a department
or sub-division thereof;
2. Customarily or regularly direct the work of 2 or
more Ees
3. Has the authority to hire or fire other Ees of
lower rank; or their suggestions and
recommendations as to the hiring and firing and
27
as to the promotion or any change of status of
other Ees are given particular weight.
4. Execute under general supervision work along
specialized or technical lines requiring special
training, experience, or knowledge
5. Execute under general supervision special
assignment and tasks; and
6. Do not devote more than 20% of their hours
worked to activities which are not directly and
closely related to the performance of the work
described.
Q: Why are managerial employees not covered by
the conditions of employment under the Labor
Code?
A: They are employed by reason of their special
training, expertise or knowledge and for positions
requiring the exercise of discretion and independent
judgment. Value of work cannot be measured in
terms of hours.
Q: Who are field personnel?
A: They are:
1. non-agricultural Ees
2. who regularly perform their duties
3. away from the principal place of business or
branch office of the Er; and
4. whose actual hours of work in the field cannot be
determined with reasonable certainty.
Q: Who are domestic helpers and persons in the
personal service of another?
A: Those who:
1. perform services in the Ers home which are
usually necessary or desirable for the
maintenance or enjoyment thereof; or
2. minister to the personal comfort, convenience or
safety of the Er as well as the members of his Ers
household.
Q: A house personnel was hired by a ranking
company official to maintain a staff house provided
for the official. The personnel is being paid by the
company itself. Is the house personnel a domestic
servant of the company official?
A: No, the personnel is not a domestic helper but a
regular Ee of the company [Apex Mining vs. NLRC,
G.R. No. 9366, (1991); Remington Industrial Sales
Corporation, G.R. Nos. 169295-96, (2006)].
Q: When do the conditions of employment under
the Labor Code apply?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
A: Only if an Er-Ee relationship exists.
Q: Who determines working conditions?
A: Generally, they are determined by the Er, as he is
usually free to regulate, according to his discretion,
all aspects of employment.
Q: What is the limitation on the employers power
to regulate working conditions?
A: It must be done in good faith and not for the
purpose of defeating or circumventing the rights of
the Ees. Such are not always absolute and must be
exercised with due regard to the rights of labor.
Note: Ones employment, profession, trade or calling is a
property right and the wrongful interference therewith is
an actionable wrong.
Q: What are the 3 groups of employees under the
LC?
A:
1. Managerial Ee - One 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.
2. Supervisory Ee - those who in the interest of the
Er, effectively recommend such managerial
actions if the exercise of such authority is not
merely routinary or clerical in nature but requires
the use of independent judgment.
3. Rank-and-file Ee - all Ees not falling within any of
the above definitions. (Art. 212[m], LC)
NORMAL HOURS OF WORK
Q: What are the normal hours of work of an
employee?
A: GR: The normal hours of work of any Ee shall not
exceed 8 hours a day. (Art. 83, LC)
XPNs:
1. Health Personnel
2. Compressed Workweek
Note: 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. vs. 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,
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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 vs. SSS, 435 SCRA 472].
Q: What is the rationale behind the law on eight-
hour labor?
A: 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.
Q: What are considered hours worked?
A:
1. All time during which an Ee is required to be:
a. On duty, or
b. At the Ers premises, or
c. At a prescribed workplace
2. All time during which an Ee is suffered or
permitted to work. (Sec. 3, Rule I, Book III, IRR)
Q: What are the principles in determining hours
worked?
A:
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
28
 LABOR STANDARDS
b. If the interval is too brief to be utilized
effectively and gainfully in the Ees own
interest. (Sec. 4, Rule I, Book III, IRR)
Q: What are the hours of work of health personnel?
A: 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
th
wage for work on the 6 day. (Art. 83, LC)
Q: Can hospitals require resident physicians to be on
duty beyond the 40-hour workweek limitation?
A: GR: The customary practice of requiring resident
physicians beyond the 40 hrs. 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.
Q: Who are the health personnel covered by the 40-
hour workweek?
A:
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. vs. NLRC, G.R. No. 126383,
(1997)].
Q: When are hours worked compensable?
A: When:
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 vs.
NLRC):
a. Travel from home to work
GR: Normal travel from home to work is not
working time.
29
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.
b. Travel that is all in a days 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.
Q: When are hours not counted to be compensable?
A:
1. Ee ceases to work
2. Ee may rest completely
3. Ee may leave at his will the spot where he
actually stays while working to go somewhere
else (Luzon Stevedoring vs. Luzon Marine)
4. When work is broken/not continuous (NDC vs.
CIR)
5. Assembly time, routinary practice of employees,
proceedings not infected with complexities so as
to deprive employees time to attend to their
personal pursuits (Arica vs. NLRC)
6. Meal time (60 mins.), unless predominantly
spent for the Ers benefit
Note: Activities before work and after work are deemed
performed during work hours, where such activities are
controlled or required by the Er and are pursued
necessarily and primarily for the Ers benefit.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
COMPRESSED WORKWEEK
Q: What is a Compressed Workweek?
A: 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)
Q: When is the implementation of a compressed
workweek valid?
A: 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
5. It is sufficiently proven that the company was
suffering from losses.
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 vs. Hellera, G.R. No. 163147,
(2007)].
Q: Under what conditions may a "compressed
workweek" schedule be legally authorized as an
exception to the "8-hour a day" requirement under
the LC? (2005 Bar Question)
A:
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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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.
Q: What are the requisites for adoption of
compressed workweek?
A:
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.
3. 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)
MEAL BREAK
Q: What is the duration of the meal period?
A: Every Er shall give his Ees not less than 60 minutes
or 1 hour time-off for regular meals.
Q: Is the meal period compensable?
A: Being a time-off, it is not compensable. Ee must be
completely relieved from duty.
Q: When is the meal period considered
compensable?
A: It is compensable where the lunch period or meal
time:
1. Is predominantly spent for the Ers benefit; or
2. Where it is less than 20 mins.
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 vs. 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.
(Sec. 7, Rule I, Book III, IRR)
Q: Are meal periods provided during overtime work
compensable?
A: Yes, 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
30
 LABOR STANDARDS
work. Thus, the 1 hour break for meals during OT
should be treated as compensable.
Q: What are the instances where meal periods
shortened to not less than 20 minutes is
compensable or not compensable?
A:
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)
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
mins. 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.
WAITING TIME
Q: When is an employee considered working while
on call?
A: When Ee is required to remain on call in the Ers
premises or so close thereto that he cannot use the
time effectively and gainfully for his own purpose.
Q: When is waiting time considered working time?
31
A:
1. 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)
Note: The controlling factor is whether waiting time spent
in idleness is so spent predominantly for the Ers benefit or
for the Ee.
Q: When is waiting time not considered working
time?
A: When the Ee is waiting to be engaged: idle time is
not working time; it is not compensable.
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 work is broken or is not
continuous [National Development Co. vs. CIR, 6 SCRA 763
(1962)].
Q: When is idle time considered working time?
A: When the Ee is idle or inactive by reason of
interruptions beyond his control shall be considered
working time.
Q: What are the conditions in order for lectures,
meetings and training programs to be NOT
considered as working time?
A: All of the ff. conditions must be present:
1. Attendance is outside of the Ers regular working
hours
2. Attendance is in fact voluntary and
3. The Ee does not perform any productive work
during such attendance.
OVERTIME WORK, OVERTIME PAY
Q: What is overtime work?
A: Work performed beyond 8 hours within the
workers 24-hour workday.
Note: Express instruction from the Er to the Ee to render
OT work is not required for the Ee to be entitled to OT pay;
it is sufficient that the Ee is permitted or suffered to work.
However, written authority after office hours during rest
days and holidays are required for entitlement to
compensation.
Q: What is a work day?
A: The 24-hour period which commences from the
time the Ee regularly starts to work
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Illustration: If the worker starts to work 8 am
today, the workday is from 8 am today up to
8 am tomorrow.
Note: Minimum normal working hours fixed by law need
not be continuous to constitute the legal working day.
Q: What is the rationale behind the overtime pay?
A: Ee is made to work longer than what is
commensurate with his agreed compensation for the
statutory fixed or voluntarily agreed hours of labor he
is supposed to do [PNB vs. PEMA and CIR, G.R. No. L-
30279, (1982)]. It discourages the Er from requiring
such work thus protecting the health and well-being
of the worker, and also tend to remedy
unemployment by encouraging Ers to employ others
workers to do what cannot be accomplished during
the normal hours of work.
Q: Distinguish overtime pay from premium pay.
A:
OVERTIME PAY PREMIUM PAY
Additional compensation for
Additional work performed within 8 hours
compensation for on days when normally he should
work performed not be working (on non-working
beyond 8 hours days, such as rest days and
on ordinary days special days.)
(within the But additional compensation for
workers 24-hour work rendered in excess of 8
workday) hours during these days is also
considered OT pay.
Q: What are the overtime pay rates?
A:
PAY RATES
OT during a regular working day
Additional compensation of 25% of the regular wage
OT during a holiday or rest day
Rate of the first 8 hours worked on
plus at least 30% of the regular wage (RW):
If done on a special holiday OR 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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
Q: What is the basis of computing the overtime pay
and additional remuneration?
A: Regular wage which includes the cash wage only,
without deduction on account of the facilities
provided by the Er. (Art. 90, LC)
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 compensation. 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: 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 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
32
 LABOR STANDARDS

any labor law because they instead improve upon the
present provisions of pertinent labor laws.
Q: May an employee be compelled to render
overtime work?
A: 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. It is both prohibited by the
statute and by jurisprudence.

A: GR: No. An Ee may not be compelled to render OT

Q: Can the right to overtime pay be waived?
work; it is voluntary.
A: GR: The right to OT pay cannot be waived as it is
XPNs: Compulsory OT work in any of the following
governed by law and not merely by the agreement of
situations:
the parties.
1. Urgent work to be performed on machines
and installations in order to avoid serious
XPNs:
loss or damage to the Er or some other
1. If the waiver is made in exchange for certain
cause of similar nature
valuable benefits and privileges, which may
2. Work is necessary to prevent loss or damage
even exceed the OT Pay, waiver may be
to perishable goods
permitted.
3. In case of imminent danger to the public
2. Compressed workweek
safety due to an actual or impending
emergency in the locality caused by serious
Q: May the overtime rate be subject to stipulation
accidents, fire, flood, typhoon, earthquake,
of the employer and employee?
epidemic or other disaster or calamity
4. Country is at war
A: Generally, the premium for work performed on
5. Completion or continuation of the work
the Ees rest days or on special days or regular
started before the 8th hour is necessary to
holidays are included as part of the regular rate of the
prevent serious obstruction or prejudice to
Ee in the computation of OT pay for any OT work
the business operations of the Er
rendered on said days especially if the Er pays only
6. Any other national or local emergency has
the minimum OT rates prescribed by law. The Ees
been declared
and Er, however, may stipulate in their collective
7. Necessary to prevent loss of life or property.
agreement the payment of OT rates higher than
those provided by law and exclude the premium rates
Note: There should be payment of additional
compensation. Ees refusal to obey the order of the Er in the computation of OT pay. Such agreement may
constitutes insubordination for which he may be subjected be considered valid only if the stipulated OT pay rates
to disciplinary action. will yield to the Ees not less than the minimum
prescribed by law.
Q: The employment contract requires work for more
than 8 hours a day with a fixed wage inclusive of Q: Can there be overtime pay in a compressed
overtime pay. Is that valid? workweek scheme?

A: It depends. A: Any work performed beyond 12 hours a day or 48

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. vs. 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 vs. Minister of Labor,
G.R. No. L-64967, (1985)].
Q: Can undertime (UT) offset overtime?
hours a week shall be subject to overtime premium.
(Department Advisory No. 02, s. of 2004)
NIGHT WORK (R.A. 10151), NIGHT SHIFT
DIFFERENTIAL
Q: What is night work?
A: Any and all work rendered between 6 pm and 6
am [National Rice & Corn Corp. vs. NARIC, 105 Phil
891].
Q: Who is a night worker?
A: Any employed person whose work requires
performance of a substantial number of hours of

UNIVERSITY OF SANTO TOMAS

33 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
night work which exceeds a specified limit. This limit
shall be fixed by the SLE after consulting the workers
representatives/labor organizations and Ers. (Art.
154, Chapter V, LC, as amended by R.A. 10151)
Q: Who are covered by the provisions on night work
under R.A. 10151?
A: 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.
Q: What is night shift differential (NSD)?
A: It is additional compensation of not less than 10%
of an Ees regular wage for every hour worked
between 10 pm to 6 am, whether or not such period
is part of the workers regular shift.
Q: Do workers have the right to undergo health
assessment to avoid health problems associated
with night work?
A: 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.
Note: 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.
Q: Are women allowed to be employed for night
work?
A: Yes, under R.A. 10151 which 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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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
paragraph 1, the length of which shall be
determined by the DOLE after consulting the
labor organizations and Ers.
Note: During the periods referred to in this article:
1. 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.
2. 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.
Q: May a pregnant women and nursing mothers be
allowed to work at night?
A: Yes, but only 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.
Q: What are the facilities required from Ers under
R.A. 10151?
A:
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.
Q: May an Ee waive his right to night shift
differential?
A: GR: No, such waiver is against public policy
[Mercury Drug Co., Inc. vs. Dayao, et al., G.R. No.
L-30452, (1982)].
34
 LABOR STANDARDS

XPN: Higher/better benefits end to be achieved, the worker is a contractor; if the

former controls not only the end but also the manner
PART-TIME WORK and means to be used, the latter is an employee.

Q: Is part-time work prohibited under Philippine Q: What can the contractor furnish?
laws?
A: The contractor may furnish:
A: No, it is not prohibited. The LC merely provides for 1. Both material and labor, or
the maximum number of hours and not the 2. Only labor
minimum. Under Art. 124, as amended by R.A. 6727,
wage proportionate to part-time work is recognized. Q: What are the duties of a contractor who furnishes
both work and the material?
Note: The wage and benefits of a part-time worker are in
proportion to the number of hours worked. For example, if A: This is equivalent to sale; therefore, these are the
an Ee earns P300.00 for an 8-hour work, he shall then get duties:
P150.00 for work done in 4 hours.
1. To deliver
2. To transfer ownership
CONTRACT FOR A PIECE OF WORK 3. To warrant against eviction and hidden defects

Q: Define contract for a piece of work.
A: 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.
Q: What are the remedies of the Er in case of
defects?
A:
1. Ask the contractor to remove the defect or to
execute another work.
2. If the contractor fails or refuses, the Er can ask
another at the contractors expense. If a building
is involved, expenses for correction and
completion may be recovered.

Q: Distinguish contract for piece of work from lease Q: What is the rule on agreements waiving or
of services. limiting the contractors liability?

A: A:
1. In the absence of fraud, the agreement would
CONTRACT FOR PIECE OF
LEASE OF SERVICES ordinarily be valid.
WORK
2. In the absence of prohibitory statute, the validity
The object is the of a limitation is generally upheld, with a view of
The object is services.
resultant work or object. obtaining compensation commensurate to the
The risk is generally risk assumed.
borne by the Er, not by
The risk is borne by the
the worker unless the Q: A asked B to make a radio cabinet. B bound
worker before delivery.
latter is guilty of fault or himself to furnish the material. Before the radio
negligence. cabinet could be delivered, it was destroyed by a
fortuitous event. a) Who suffers the loss? b) Is the
Q: Who is a contractor? contract extinguished?

A: The worker is also called a contractor. He in turn A:

may obtain the services of others, who will work
under him.
Q: What is the test to determine if one is an Ee or an
independent contractor?
A: The right of control test is used. If the person for
whom services are to be performed controls only the
1. B suffers the loss of both the materials and the
work, unless there was mora accipiendi. If there
was mora accipiendi, it is evident that A suffers
the loss.
2. No, and therefore B may be required to do the
work all over again, unless there had been a prior
stipulation to the contrary or unless a re-making
is possible. (Art. 1717, NCC)

UNIVERSITY OF SANTO TOMAS

35 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Note: The law merely refers to the burden of the loss, and XPNs: The laborer was able, willing and ready to
not to the extinguishment of the contract. work but was:
1. Prevented by management;
Q: What is the effect when the employer accepts the 2. Illegally locked out;
work? 3. Illegally suspended;
4. Illegally dismissed
A: 5. Otherwise illegally prevented from working
1. The contractor is generally relieved of liability. [Aklan Electric Coop. vs. NLRC, G.R. No.
2. If the acceptance is made without objection, the 129246, (2000)].
Er may still sue for hidden defects.
Q: To whom does the title on Wages apply?
Q: Where is the place of payment?
A: GR: It applies to all Ees.
A:
1. Where stipulated XPNs:
2. If no stipulation, then at the time and place of 1. Farm tenancy or leasehold;
delivery. 2. Household or domestic helpers, including
family drivers and persons working in the
Q: What is mechanics lien? personal service of another;
3. Home workers engaged in needlework or in
A: One who executed a work on a movable property any cottage industry duly registered in
has a right to retain it by way of pledge until he is accordance with law;
paid. 4. Workers in duly registered cooperatives when
so recommended by the Bureau of
WAGES Cooperative Development and upon approval
of the SLE.
Q: What is a wage? 5. Workers of a barangay micro business
enterprise (R.A. 9178)
A: It is the remuneration or earnings, however
designated, capable of being expressed in terms of WAGE vs. SALARY
money, whether fixed or ascertained on a time, task,
piece, or commission basis, or other method of Q: Distinguish between wage and salary?
calculating the same, payable by an Er to an Ee under
a written or unwritten contract of employment: A:
WAGE SALARY
1. For work done or to be done, or for services (Gaa vs.CA, G.R. No. 44169, Dec. 3, 1985)
rendered or to be rendered; and includes Compensation for Paid to white collared
2. Fair and reasonable value of board, lodging, or manual labor (skilled or workers and denotes a
other facilities customarily furnished by the Er to unskilled) also known as higher degree of
the Ee as determined by SLE. blue collared workers, employment or a
paid at stated times and superior grade of
Q: What is meant by customary? measured by the day, services and implies a
week, month or season. position in the office.
A: It is founded on long-established and constant Considerable pay for a
practice connoting regularity. Out gesture of a larger
lower and less
and more important
responsible character of
Q: What is meant by fair and reasonable value? service
employment.
GR: Not subject to
A: It shall not include any profit to the Er or to any
execution
person affiliated with the Er.
Subject to execution.
XPN: Debts incurred for
Q: What is the No Work, No Pay Principle (fair food, shelter, clothing
days wage for a fair days labor)?
and medical attendance.
A: GR: If there is no work performed by the Ee,
without the fault of the Er, there can be no wage or
pay.

UNIVERSITY OF SANTO TOMAS

2013 GOLDEN NOTES 36
 LABOR STANDARDS
MINIMUM WAGE DEFINED, MINIMUM WAGE
SETTING
Q: What is minimum wage?
A: Statutory minimum wage is the lowest wage rate
fixed by law that an Er can pay his workers.
Q: What is the rationale for fixing a minimum wage?
A: The legislature was entitled to adopt measures to
reduce the evils of the sweating system, the
exploiting of workers at wages so low as to be
insufficient to meet the bare cost of living, thus
making their very helplessness the occasion of a most
injurious competition. The legislature had the right to
consider that its minimum wage requirements would
be an important aid in carrying out its policy of
protection.
There is also an additional and compelling
consideration which recent economic experience has
brought into a strong light. The exploitation of a class
of workers who are in an unequal position with
respect to bargaining power and are thus relatively
defenceless against the denial of a living wage is not
only detrimental to their health and well-being but
casts a direct burden of their support upon the
community. What these workers lose in wages the
taxpayers are called upon to pay. The bare cost of
living must be met [West Coast Hotel v. Parrish, 300
US 79].
Q: Who are exempted from the coverage of fixing a
minimum wage?
A:
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. (Sec.
2, Rule VII, Book III, IRR of LC)
Q: What are the standards or criteria for minimum
wage setting?
37
A: 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
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
Q: What is salary ceiling method?
A: A method of minimum wage adjustment whereby
the wage adjustment is applied to Ees receiving a
certain denominated ceiling. In other words, workers
already being paid more than the existing minimum
wage are also to be given a wage increase [ECOP vs.
NWCP, G.R. No. 96169, (1991)].
Q: What is a floor wage method?
A: It involves the fixing of a determinate amount to
be added to the prevailing statutory minimum wage
rates.
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: 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
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
denominated salary ceiling. The Wage Order granted
additional benefits not contemplated by R.A. No.
6727. [MBTC vs. NWPC Commission, G.R. No. 144322,
(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?
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 vs. NWPC Commission, G.R.
NO. 144322, (2007)].
MINIMUM WAGE OF WORKERS PAID BY RESULTS
Q: Who are workers paid by results?
A: They are:
1. paid based on the work completed; and
2. not on the time spent in working
3. Including those who are paid on piecework,
takay, pakiaw, or task basis if their output
rates are in accordance with the standards
prescribed.
WORKERS PAID BY RESULTS
Q: What is the application of wage orders to
workers paid by results?
A: All workers paid by result, including those who are
paid on piece work, takay or task basis, shall be
entitled to receive not less than the prescribed daily
minimum wage or a proportion thereof for working
less than 8 hours.
Q: What is the minimum wage of workers paid by
results?
A:
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.
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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
and the applicable legal minimum rate.
APPRENTICES/LEARNERS/PERSONS WITH DISABILITY
Q: What is the minimum wage rate for
apprentices/learners and persons with disability?
A: The wage or salary rate shall not be less than 75%
of the applicable minimum wage.
COMMISSION
Q: What is a commission?
A: 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.
Q: Are commissions included in the computation of
the basic salary?
A:
1. If the commission is comprised of a pre-
determined percentage of the selling price of the
goods included in the basic salary
2. 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 excluded from basic salary
DEDUCTIONS FROM WAGES
Q: What is the rule on wage deductions?
A: GR: Deductions from wages are strictly prohibited
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 (Art.
113, LC). 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.
38
 LABOR STANDARDS

3. Deductions for SSS, Medicare and Pag-ibig and is not due to an error in the construction/
premiums application of a doubtful or difficult question of
4. Taxes withheld pursuant to the Tax Code law.
5. Deductions under Art. 114 of the LC for loss
or damage to tools, materials or equipment FACILITIES vs. SUPPLEMENTS
6. Deductions made with the written
authorization of the Ee for payment to a Q: Distinguish between facilities and supplement
third person. (Sec 13, Rule VIII, Book III of the
IRR) A:
7. Deductions as disciplinary measures for FACILITIES SUPPLEMENT
habitual tardiness (Opinion dated March 10, Extra remuneration or
1975 of the Labor Secretary) Items of expenses special privileges or
8. Agency fees under Art. 248(e)of the LC necessary for the laborers benefits given to or
9. Deductions for value of meals and facilities and his familys existence received by the laborers
freely agreed upon and subsistence over and above their
10. In case where the Ee is indebted to the Er ordinary earnings or
where such indebtedness has become due Note: Does not include tools wages [Atok Big Wedge
and demandable. (Art. 1706, NCC) of trade or articles / services
Mining Co. vs. Atok Big
primarily for the benefit of
11. In court awards, wages may be subject of Wedge Mutual Benefit
the Er or necessary to the
execution or attachment, but only for debts conduct of the Ers business. Assoc., G.R. No. L-7349,
incurred for food, shelter, clothing, and (1955)].
medical attendance. (Art. 1703, NCC) Forms part of the wage Independent of wage
12. Salary deduction of a member of a legally Deductible from wage Not wage deductible
established cooperative. (R.A. 6938, Art. 59, For the benefit of the Granted for the
LC) worker and his family. convenience of the Er.

Q: Are deductions for absences allowed?
A: Yes. Deductions for unpaid absences are allowed.
If the Ee is monthly paid, the equivalent daily rate
should be determined first before making the
deduction.
NON-DIMINUTION OF BENEFITS
Q: What is the concept of non-diminution of
benefits?
A: 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.
Q: When is non-diminution of benefits applicable?
A: 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
Q: What is the criterion in determining whether an
item is a supplement or facility?
A: 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 vs. Cebu
Seamens Assn., G.R. No. L-12444, (1963)].
Q: When can the cost of facilities furnished by the
employer be charged against an employee?
A: In order that the cost be charged against the Ee,
the latters acceptance of such facilities must be
voluntary.
Q: What are the requirements for deducting values
for facilities?
A:
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 vs. NLRC, G.R. No.
118506, (1997)]
Q: Are food and lodging, or the electricity and water
consumed by a hotel worker, considered facilities?

UNIVERSITY OF SANTO TOMAS

39 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

A: No. These are supplements. Considering, 3. Should a WD exist, there is no legal requirement
therefore, that hotel workers are required to work that, in the rectification of that distortion by a re-
different shifts and are expected to be available at adjustment of the wage rates of the differing
various odd hours, their ready availability is a classes of Ees, the gap which had previously or
necessary matter in the operations of a small hotel. historically existed be restored in precisely the
Furthermore, granting that meals and lodging were same amount. In other words, correction of a
provided and indeed constituted facilities, such WD may be done by re-establishing a substantial
facilities could not be deducted without the Er or significant gap (as distinguished from the
complying first with certain legal requirements. historical gap) between the wage rates of the
[Mabeza vs. NLRC, G.R. No. 118506, (1997)] differing classes of Ees.
4. The re-establishment of a significant difference in
WAGE DISTORTION/RECTIFICATION wage rates may be the result of the resort to
grievance procedures or CB negotiations. [Metro
Q: What is Wage Distortion (WD)? Transit Org., Inc. vs. NLRC, G.R. No. 116008,
(1995)]
A: A situation where an increase in wage results in
the elimination or severe contraction of intentional Q: Distinguish the process for correction of wage
quantitative differences in wage or salary rates distortion of organized establishments and
between and among the Ee-groups in an unorganized establishments?
establishment as to effectively obliterate the
distinctions embodied in such wage structure based A:
on skills, length of service or other logical bases of Organized Unorganized
differentiation. Establishment Establishment
(with union) (without union)
Q: What are the elements of wage distortion? The Er and the union The Er and the workers
shall negotiate to shall endeavor to correct
A: correct distortion. the distortion.
1. An existing hierarchy of positions with Any dispute shall be
corresponding salary rates. Any dispute shall be
resolved through a
2. A significant change or increase in the salary rate settled through the
grievance procedure
of a lower pay class without a corresponding NCMB.
under the CBA.
increase in the salary rate of a higher one; If it remains unresolved,
3. The elimination of the distinction between the 2 If it remains unresolved
it shall be dealt with
groups or classes; and within 10 days it shall be
through voluntary
4. The WD exists in the same region of the country referred to the NLRC.
arbitration.
[Alliance Trade Unions vs. NLRC, G.R. No. 140689, The dispute will be The NLRC shall conduct
(2004)]. resolved within 10 days continuous hearings and
from the time the decide the dispute within
Q: Is the employer legally obliged to correct wage dispute was referred to 20 days from the time the
distortion? voluntary arbitration. same was referred.

A: The Er and the union shall negotiate to correct the
distortions. If there is no union, the Er and the
workers shall endeavor to correct such distinctions.
Q: What are the basic principles in wage distortion?
A:
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.
Q: Can the issue of wage distortion be raised in a
notice of strike?
A: No. WD is non-strikeable [Ilaw at Buklod ng
Manggagawavs. NLRC, G.R. No. 91980, (1991)]. WD is
neither a deadlock in collective bargaining nor ULP.
DIVISOR TO DETERMINE DAILY RATE
Q: How is the estimated equivalent monthly rate
(EEMR) of daily-paid employees computed?
A:
1. For those who are required to work every day
including Sundays or rest days, special days and
regular holidays.

UNIVERSITY OF SANTO TOMAS

2013 GOLDEN NOTES 40
 LABOR STANDARDS
EEMR = (Applicable daily rate x 393.50
days)/12
Where 393.50:
= 298 ordinary working days
= 24 for 12 regular holidays x 200%
= 67.60 for 52 rest days x 130%; and
= 3.90 for 3 special days x 130%
2. For those who do not work and are not
considered paid on Sundays or rest days.
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
Q: What is the right to weekly rest day (WRD)?
A: Every Er shall give his Ees a rest period of not less
than 24 consecutive hours after every 6 consecutive
normal work days. (Sec. 3, Rule III, Book III, IRR)
Q: What is the scope of weekly rest day?
A: It shall apply to all Ers whether operating for profit
or not, including public utilities operated by private
persons. (Sec. 1, Rule III, Book III, IRR)
Q: Who determines the weekly rest day?
A: GR: Er shall determine and schedule the WRD of
his Ee.
41
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.
[Sec. 4(1), Rule III, Book III, IRR]
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:
a. serious prejudice to the operations of
the undertaking and
b. the Er cannot normally be expected to
resort to other remedial measures. [Sec.
4(2) , Rule III, Book III, IRR]
Q: When should employees be informed of the
schedule of their weekly rest days?
A: 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.
(Sec. 5, Rule III, Book III, IRR)
EMERGENCY REST DAY WORK
Q: Can an employee be compelled to work on his
rest day?
A: GR: No.
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
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

performance or quality of work is dependent same day is the

thereon. scheduled rest day Excess of 8 hrs:+ 30% of
hourly rate on said date.
Q. What is the rule when an employee volunteers
(M.C. No. 10, Series of
to work on his rest day under other circumstances?
2004)
A: He shall express it in writing subject to additional Ee is only entitled to his
compensation. (Sec. 6[2], Rule III, Book III, IRR) basic rate. No PP is
required.
Q: What is premium pay?
Work performed on a
Reason: Work performed
A: It is the additional compensation for work Special Working Holiday
is considered work on
rendered by the Ee on days when normally he should
not be working such as special holidays and WRDs. ordinary working days.
(Sec. 7, Rule III, Book III,
Q: Can the employer and employee agree on the IRR)
rate of premium pay other than that provided by
law? Note: Holiday work provided under Art. 93 pertains to
special holidays or special days.
A: Yes. Nothing shall prevent the Er and his Ee or their
representatives from entering into any agreement Q: Jose applied with Mercure Drug Company for the
with terms more favorable to the Ees; Provided, it position of Sales Clerk. Mercure Drug Company
shall not be used to diminish any benefit granted to maintains a chain of drug stores that are open every
the Ees under existing laws, agreements and day till late at night. Jose was informed that he had
voluntary Er practices. (Sec. 9, Rule III, Book III, IRR) to work on Sundays and holidays at night as part of
the regular course of employment. He was
Q: What are the rates of compensation for rest day, presented with a contract of employment setting
Sunday or holiday work? forth his compensation on an annual basis with an
express waiver of extra compensation for work on
A: Sundays and holidays, which Jose signed. Is such a
RATES OF ADDITIONAL waiver binding on Jose? Explain. (1996 Bar Question)
INSTANCES
COMPENSATION
A: No, the waiver is not binding on Jose. Rights may
Work on a scheduled
+ 30% premium pay of be waived, unless the waiver is contrary to law, public
rest day order, public policy, morals and customs. The waiver
100% RW (Sec. 7, Rule III,
Book III, IRR) in this case is void.

Work performed on HOLIDAY PAY/PREMIUM PAY

Sundays and Holidays by + 30% premium pay of
an Ee who has no 100% RW (Sec. 7, Rule III,
regular workdays and Book III, IRR)
rest days
Work on a Sunday + 30% premium pay of
(If Ees scheduled rest 100% RW (Sec. 7, Rule III,
day) Book III, IRR)
1st 8 hrs: + 30% PP of
100% RW
Work performed on any
Excess of 8 hrs: + 30% of
Special Holiday
hourly rate on said date.
(M.C. No. 10, Series of
2004)
Work performed on a 1st 8 hrs: + 50% PP of
Special Holiday and 100% RW
Q: What is holiday pay?
A: 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
preceding the regular holiday.
Q: What are the classes of special days?
A:
1. National Special Public Holiday
GR: Non-working days
XPN: Otherwise declared by the President

UNIVERSITY OF SANTO TOMAS

2013 GOLDEN NOTES 42
 LABOR STANDARDS

2. Local Special Public Holiday Regular working called legal holidays. The following are considered
day regular holidays:

NATIONAL SPECIAL DAYS DATE REGULAR HOLIDAYS DATE

All Saints Day November 1 New Years Day January 1
Last Day of the Year December 31 According to their
Maundy Thursday
Ninoy Aquino Day August 21 respective dates in
Good Friday the calendar
According to its
Chinese New Year respective date in the After the
calendar determination of
Other days declared by Eidl Fitr approximate dates
law of the Islamic
1. Special Non-working November 2 holidays in
days accordance with the
2. Special Public Islamic calendar
Holidays Eidl Adha (Hijra) or the lunar
3. Special National calendar, or upon
Holiday Islamic astronomical
4. Special Holiday ( for calculations
all schools) Araw ng Kagitingan April 9
a. Edsa Revolution February 25 Labor Day May 1
Anniversary Independence Day June 12
LOCAL SPECIAL DAYS
Last Monday of
Those declared by: National Heroes Day
e.g. Manila day (in August
1. Law, or
Manila only) Bonifacio Day November 30
2. Ordinance
(Proclamation 295, s. of 2011 of President Benigno Christmas Day December 25
Aquino III) Rizal Day December 30

NATIONAL SPECIAL DAYS DATE Q: What are Muslim holidays?

All Saints Day November 1
Last Day of the Year December 31 A: Muslim holidays are those observed in specified
Ninoy Aquino Day August 21 Muslim areas. All private corporations, offices,
Other days declared by agencies and entities or establishments operating
law within the designated Muslim provinces and cities are
1. Special Non-working November 2 required to observe Muslim holidays.
days December 24
2. Special Public Holidays Q: When shall Eidl Fitr and/or Eidl Adha be
3. Special National declared a national holiday?
Holiday
4. Special Holiday ( for all A: The proclamation declaring a national holiday for
schools) the observance of Eidl Fitr and/or Eidl Adha shall be
a. Edsa Revolution February 25 issued:
Anniversary 1. After the approximate date of the Islamic holiday
LOCAL SPECIAL DAYS has been determined in accordance with the:
Those declared by: a. Islamic Calendar (Hijra) or
e.g. Manila day (in b. Lunar Calendar or
1. Law, or
Manila only) c. Upon astronomical calculations
2. Ordinance
(R.A. 9849, 2009) d. Whichever is possible or convenient
2. The Office of Muslim Affairs shall inform the
Q: What are regular holidays (RH)? Office of the President on which day the holiday
shall fall. (Proclamation 295, s. of 2011 of
A: They are compensable whether worked or President Benigno Aquino III)
unworked subject to certain conditions. They are also

UNIVERSITY OF SANTO TOMAS

43 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

Q: Can a Christian employee working within the A: Yes. But Ee shall be compensated twice his regular
Muslim area be compelled to work during Muslim rate.
holiday?
Q: What are the rates of compensation for regular
A: No. All workers, Muslims and Christians, working holidays on employees regular workday and rest
within the Muslim area are entitled to holiday pay on day?
Muslim holidays [SMC vs. CA, G.R. 146775, (2002)].
A:
Q: Can a Muslim Ee working outside the Muslim FORMULA TO COMPUTE WAGES ON
area be compelled to work during the observance of REGULAR HOLIDAYS
the MH? (M.C.No.10, Series of 2004)
RH on Ees regular
A: GR: No. Muslim Ees shall be excused from work RH on Ees rest day
during Mulsim holidays without diminution of salary workday
or wages. If unworked
100% 100%
XPN: Those who are permitted or suffered to
work on Muslim holidays are entitled to at least e.g. Php 300 RW e.g. Php 300 RW
100% basic pay + 100% as premium of their basic
If worked (1st 8 hrs)
pay [SMC vs. CA, G.R. 146775, (2002)].
200% 200% + 30% of 200%
Note: RH falling within temporary or periodic shutdown
and temporary cessation of work are compensable. e.g. 300(RW) e.g 600 (200% of RW)
However, if the temporary or periodic shutdown and
+ 300 X 0.3
cessation of work is due to business reverses, the Er may
not pay the Regular holidays during such period. 600 = Total Wage (TW) 180

Q: Distinguish regular holiday from special holiday. 600 + 180 = 780 (TW)
If worked (OT)(excess of 8 hrs)
A:
REGULAR HOLIDAY SPECIAL HOLIDAY 230%
If Unworked 230% + 30% of hourly
Regular pay 200% + 30% of hourly rate rate on said date
(subject to certain on said date
No Pay
conditions for daily paid
Ees) Q: What is an important condition that should be
If worked met in order to avail/receive the single holiday pay?
+ 30% premium pay of
2x regular pay (200%)
100% RW A: The Ee should not have been absent without pay
on the working day preceding the RH.
Q: What are retail establishments?
Q: Distinguish between monthly paid and daily paid
A: They are engaged in the sale of goods to end users employees.
for personal or household use. (e.g. Grocery)
A:
Q: What are service establishments? Monthly Paid Ees Daily Paid Ees
One whose wage or salary is One whose wage or
A: They are engaged in the sale of services to being paid everyday of the salary is being paid
individuals for their own or household use. (e.g. TV month, including rest days, only on those days
repair shop) Sundays, regular or special he actually worked,
days, although he does not except in cases of
Q: Is an exercise of profession retail or service? regularly work on these days. regular or special
days, although he
A: It is neither retail nor service. Not excluded from benefit of does not regularly
holiday pay. work on these days.
Q: May an employer require an employee to work
on Regular holidays?

UNIVERSITY OF SANTO TOMAS

2013 GOLDEN NOTES 44
 LABOR STANDARDS

Q: What is the effect if a legal holiday falls on a COVERAGE, EXCLUSIONS

Sunday?
Q: Who are entitled to holiday pay?
A: A legal holiday falling on a Sunday creates no legal
obligation for the Er to pay extra to the Ee who does A: GR: All Ees are entitled. (Sec.1, Rule IV, Book III,
not work on that day, aside from the usual holiday IRR)
pay to its monthly paid Ee [Wellington vs.Trajano,
G.R. 114698, (1995)]. XPNs:
1. Government Ees and any of its political
Q: Discuss the concept of absences. subdivisions, including GOCCs (with original
charter)
A: 2. Retail and service establishments regularly
ABSENCES employing less than 10 workers
LOA with pay on the day LOA without pay on the 3. Domestic helpers and persons in the personal
immediately preceding day immediately service of another
4. Ee engaged on task or contract basis or purely
RH. preceding a RH.
commission basis
GR: An Ee may not be 5. Members of the Family of the Er who are
paid the required HP dependent on him for support
if he has not worked 6. Managerial Ee and other members of the
on such Regular managerial staff
holiday. 7. Field personnel and other Ee whose time and
performance are unsupervised by the Er
8. Ee paid fixed amount for performing work
GR: All covered Ees are XPNs: Where the day irrespective of the time consumed in the
entitled to HP. immediately performance thereof. (Sec. 1, Rule IV, Book III,
preceding the holiday IRR)
is a:
1. Non-working day in TEACHERS, PIECE WORKERS, TAKAY, SEAFARERS,
the establishment or SEASONAL WORKERS
2. The scheduled rest
Q: What are the holiday pays of certain employees?
day of the Ee.
A:
Q: What is the effect in case there is a temporary or EMPLOYEES RULE
periodic shutdown and temporary cessation of 1. RH during semestral
work? Private school
vacations
teachers (Faculty
- Not entitled to holiday pay
A: members of
2. RH during Christmas
TEMPORARY OR PERIODIC SHUTDOWN and colleges and
vacation
universities)
TEMPORARY CESSATION OF WORK - Entitled to holiday pay
(Sec. 7, Rule IV, Book III, IRR) Holiday pay shall not be less
Instances Rule: Ee paid by: than his average daily earnings
1. results or for the last 7 actual work days
1. Yearly inventory, or
RH falling within 2. output preceding the Regular holiday.
2. when the repair or (Piece work Provided: Holiday pay shall not
the period shall be
cleaning of machineries payment) be less than the statutory
compensated.
is undertaken minimum wage rate.
Due to business reverses May not be paid the required
RH may not be paid Seasonal Workers Holiday pay during off-season
(cessation as authorized by
by the Er where they are not at work.
the SLE)
Workers having no
Shall be entitled to holiday pay
regular work days
Seafarers Shall be entitled to holiday pay

UNIVERSITY OF SANTO TOMAS

45 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

Q: Are the school faculty who according to their absence (at least)
contracts are paid per lecture hour entitled to 390%
unworked holiday pay? Worked and day is (+30% of
Same
Rest Day each 3
A: 100%)
1. If during RH No. Art. 94 of the LC is silent with
respect to faculty members paid by the hour who Q: What is the concept of successive Regular
because of their teaching contracts are obliged to holidays?
work and consent to be paid only for work actually
done (except when an emergency or a fortuitous A:
event or a national need calls for the declaration ENTITLED TO
of special holidays). Regular holiday specified as MAUNDY GOOD
WED HOLIDAY
such by law are known to both school and faculty THURS FRIDAY
PAY
members as "no class days" certainly the latter do
not expect payment for said unworked days, and Worked RH RH Yes. Both
this was clearly in their minds when they entered LOA
RH RH Yes. Both
into the teaching contracts [Jose Rizal College vs. w/pay
NLRC, G.R. No. 65482, (1987)]. LOA w/o
RH RH No. Both
pay
2. If during special public holidays Yes. The law and
Yes. Only to
the IRR governing holiday pay are silent as to LOA w/o
payment on Special Public Holidays. It is readily Worked RH holiday pay
pay
apparent that the declared purpose of the holiday on Friday
pay which is the prevention of diminution of the
monthly income of the Ees on account of work Q: What are the conditions so that an employee may
interruptions is defeated when a regular class day be entitled to 2 successive holiday pays?
is cancelled on account of a special public holiday
st
and class hours are held on another working day A: On the day immediately preceding the 1 RH, he
to make up for time lost in the school calendar. must be:
Otherwise stated, the faculty member, although 1. Present (worked), or
forced to take a rest, does not earn what he 2. On LOA with pay. (Sec. 10, Rule IV, Book III, IRR)
should earn for that day. Be it noted that when a
special public holiday is declared, the faculty Q: What if the conditions are not met?
member paid by the hour is deprived of expected
st
income, and it does not matter that the school A: He must work on the 1 regular holiday to be
nd
calendar is extended in view of the days or hours entitled to holiday pay on the 2 regular holiday.
lost, for their income that could be earned from (Sec. 10, Rule IV, Book III, IRR)
other sources is lost during the extended days.
Similarly, when classes are called off or shortened LEAVES
on account of typhoons, floods, rallies, and the
like, these faculty members must likewise be paid, SERVICE INCENTIVE LEAVE
whether or not extensions are ordered [Jose Rizal
College vs. NLRC, G.R. No. 65482, (1987)]. Q: What is Service Incentive Leave (SIL)?

Q: What is the concept of double holiday pay? A: It is 5-days leave with pay for every Ee who has
rendered at least 1 year of service. It is commutable
A: There are 2 RHs falling on the same day. to its money equivalent if not used or exhausted at
the end of the year.
MAUNDY
WED THURSDAY & ARAW RATE Q: What is meant by at least 1 year of service?
NG KAGITINGAN
Present unworked 200% A: Service for not less than 12 months, whether
LOA w/pay unworked 200% continuous or broken reckoned from the date the Ee
300% started working, including authorized absences and
LOA w/ pay worked paid regular holidays unless the working days in the
(at least)
Authorized worked 300% establishment as a matter of practice or policy, or

UNIVERSITY OF SANTO TOMAS

2013 GOLDEN NOTES 46
 LABOR STANDARDS
that provided in the employment contract is less than
12 months, in which case said period shall be
considered as one year. (Sec. 3, Rule V, Book III, IRR)
Q: Who are entitled to Service Incentive Leave?
A: GR: Applies to every Ee who has rendered at least
1 year of service. (Art. 95[a])
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 a task 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. (Art. 95[b], LC)
Q: Are teachers of private schools on contract basis
entitled to Service Incentive Leave?
A: Yes. 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 vs.
Ople, G.R. No. 70203, (1987)].
Q: Are part-time workers entitled to the full benefit
of the yearly 5-day Service Incentive Leave?
A: Yes. Art. 95 of the LC speaks of the number of
months in a year for entitlement to said benefit
(Bureau of Working Conditions Advisory Opinion to
Phil. Integrated Exporters, Inc.).
Q: Are piece-rate workers entitled to the full benefit
of the yearly 5 day Service Incentive Leave?
47
A: Yes. 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 purely commission basis are not
automatically exempted from the grant of SIL, unless,
they fall under the classification of field personnel
[Serrano vs. Severino Santos, G.R. No. 187698,
(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.)
Q: Do employees with salaries above minimum
wage entitled to Service Incentive Leave?
A: Yes. The difference between the minimum wage
and the actual salary received by the Ees cannot be
th
deemed as their 13 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 vs. CA, G.R. No. 151966,
(2005)].
Q: Explain the entitlement of terminated Ees to
Service Incentive Leave.
A:
1. Illegally dismissed Ees - entitled to SIL until actual
reinstatement [Integrated Contractor and
Plumbing Works, Inc. vs. NLRC, G.R.No. (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 vs. CA, G.R. No. 151966, (2005)].
Q: Is Service Incentive Leave commutable to its
monetary equivalent if not used or exhausted at the
end of the year?
A: Yes. It is aimed primarily at encouraging workers to
work continuously and with dedication to the
company.
Q: What is the basis for cash conversion?
A: 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 Workers Statutory Monetary Benefit).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Q. What is the exemption to the application of
Service Incentive Leave to employees?
A. 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, under the
coverage of the provision granting SIL to
workers [Murillo vs. Sun Valley Realty, Inc., G.R. No. L-
67272 (1988)].
MATERNITY LEAVE
Q: What is maternity leave benefit?
A: A covered female Ee 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 caesarian delivery.
Q: What are the conditions for availment of
maternity leave benefit?
A:
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 caesarian 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,
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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.
Q: What are the requirements in order that
maternity benefits may be claimed?
A:
1. There is childbirth, abortion or miscarriage
2. She has paid at least three monthly contributions
PATERNITY LEAVE
Q: What is the concept of paternity leave benefits?
A: 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.
Q: What is paternity leave?
A: 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.
Q: What are the conditions for entitlement to
paternity leave?
A: 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
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 straight five 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 expressly provides
48
 LABOR STANDARDS
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
th
miscarriage. Based on the facts, it is already the 5
delivery of the woman.
PARENTAL LEAVE
Q: What is parental leave?
A: Leave benefits granted to a solo parent to enable
him/her to perform parental duties and
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)
Q: What are the conditions for entitlement of
parental leave?
A:
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
Q: Who are considered a solo parent entitled to
parental leave?
A: 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 final
conviction of the offender; Provided, That the
mother keeps and raises the child;
2. Parent left solo or alone with the responsibility of
parenthood due to:
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
49
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,
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)
LEAVES FOR VICTIMS OF VIOLENCE AGAINST
WOMEN CHILDREN (R.A. 9262)
Q: What is the leave for victims of violence against
women or otherwise known as battered woman
leave?
A: 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)
SPECIAL LEAVE BENEFIT FOR WOMEN
Q: What is the special leave benefit for women?
A: 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)
SERVICE CHARGES
Q: What are service charges?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
A: These are charges collected by hotels, restaurants
and similar establishments at the rate of 85% for
covered Ees equally distributed among them, and
15% for the management to answer for losses and
breakages.
Q: Who are covered employees?
A: 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 (Sec. 2, Rule VI, Book III, IRR)
Q: When is the share of employee distributed and
paid to them?
A: Not less than once every 2 weeks or twice a month
at intervals not exceeding 16 days.
Q: Distinguish between service charge and tips?
A: Service charges are collected by the management
from the customers. Tips are voluntary payments
made by the customers to the Ees for excellent
service.
Q: What happens if the service charge is abolished?
A: The share of the covered Ees shall be considered
integrated in their wages on the basis of the average
monthly share of each Ees for the past 12 months
immediately preceding the abolition.
Note: Service charges form part of the award in illegal
dismissal cases.
th
13 MONTH PAY
th
Q: What is 13 month pay or its equivalent?
A: Additional income based on wage required by P.D.
th
851 Requiring all Ers to pay their Ees a 13 month pay
which is equivalent to 1/12 of the total basic salary
earned by an Ee within a calendar year.
Note: The absence of an express provision in the CBA
th
obligating the Er to pay the members of a union 13 month
pay is immaterial. Notwithstanding therefore the absence
th
of any contractual agreement, the payment of a 13 month
pay being a statutory grant, compliance with the same is
mandatory and is deemed incorporated in the CBA.
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
th
Q: Is 13 month pay legally demandable?
A: Yes. It is a statutory obligation, granted to covered
Ees, hence, demandable as a matter of right. (Sec 1,
P.D. 851)
Q: Who are covered by P.D. 851?
A: All rank-and-file Ees regardless of the amount of
basic salary that they receive in a month, if their Ers
th
are not otherwise exempted from paying the 13
th
month pay. Such Ees are entitled to the 13 month
pay regardless of said designation of employment
status, and irrespective of the method by which their
wages are paid.
Provided, that they have worked for at least 1 month,
during a calendar year. (Revised Guidelines on the
th
Implementation of the 13 Month Pay Law)
Q: Who are NOT covered by P.D. 851?
A:
1. Government Ees
2. Household helpers
3. Ees paid purely on commission basis
th
4. Ees already receiving 13 month pay
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
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 ruled in Jackson Building-Condominium Corp.
vs. NLRC (G.R. No. 112546, 1996), interpreting
th
P.D.851, as follows: Ees are entitled to the 13 month
pay benefits regardless of their designation and
irrespective of the method by which their wages are
paid.
th
Note: An Er may give to his Ees of the required 13
Month pay before the opening of the regular school year
and the other half on or before Dec. 24.
th
Q: In what form is the 13 month pay given?
A: It is given in the form of:
1. Christmas Bonus
2. Midyear Bonus
50
 LABOR STANDARDS
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.
th
Q: What are not proper substitutes for 13 month
pay?
A:
1. Free rice
2. Electricity
3. Cash and stock dividends
4. Cost-of-living Allowance (Sec. 3)
Q: Concepcion Textile Co. included the OT pay,
night-shift differential pay, and the like in the
th
computation of its Ees 13 month pay.
Subsequently, with the promulgation of the decision
of the SC in the case of SMC vs. Inciong (103 SCRA
139) holding that these other monetary claims
should not be included in the computation of the
th
13 Month Pay, Concepcion Textile Co. sought to
recover under the principle of solutio indebiti the
th
overpayment of the Ees 13 month pay, by debiting
th
against future 13 month payments whatever
excess amounts it had previously made.
(1) Is the Company's action tenable?
th
(2) With respect to the payment of the 13 month
pay after the SMC ruling, what arrangement, if any,
must the Company make in order to exclude from
th
the 13 month pay all earnings and remunerations
other than the basic pay? (1994 Bar Question)
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. vs. NLRC,
et al., G.R. No. 85073, (1993)]. After the 1981 SMC
ruling, the High Court decided the case of Philippine
Duplicators Inc. vs. NLRC, GR 110068, (1993).
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. Sales commissions, however,
should be included based on the settled rule as
earlier enunciated in Songco vs. NLRC (G.R. No. L-
50999, 1990).
th
Q: Are all employers required to pay 13 month pay
under P.D. 851?
A: GR: Yes. It applies to all Ers,
XPNs:
1. Distressed Ers:
a. Currently incurring substantial losses or
51
b. In the case of non-profit institutions and
organizations, where their income,
whether from donations, contributions,
grants and other earnings from any
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;
2. The Government and any of its political
subdivisions, including GOCCs, except those
corporations operating essentially as private
subsidiaries of the Government;
th
3. Ers already paying their Ees 13 month pay or
more in a calendar year of its equivalent at the
time of this issuance:
Its equivalent shall include:
a. Christmas bonus
b. Mid-year bonus
c. Profit-sharing payments and
d. Other cash bonuses amounting to not less
than 1/12th of the basic salary
It shall not include:
a. cash and stock dividends,
b. COLA
c. all other allowances regularly enjoyed by
the Ee, as well as non-monetary benefits.
4. Ers of household helpers and persons in the
personal service of another in relation to such
workers; and
5. Ers of those who are paid on a purely
commission, boundary, or task basis, and those
who are paid a fixed amount for performing a
specific work, irrespective of the time
consumed in the performance thereof, except
where the workers are paid on a piece-rate
basis in which case the Er shall be covered by
this issuance insofar as such workers are
concerned. (Sec 3, P.D. 851)
Q: What are the options of covered employers?
A:
th
1. Pay 1/2 of the 13 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
th
13 month pay may be the subject of agreement.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

Q: How are claims adjudicated? Agricultural Commercial and Industrial Workers

th
A: Non-payment of the 13 month pay provided by
P.D. 851 and the rules of NLRC shall be treated as
money claims cases.
th
Q: Are the following employees entitled to 13
Month Pay?
a. Employees who are paid by results
b. Employees with multiple Employers
c. Private school teachers
d. Resigned or separated Employees
A:
th
1. Ee paid by results entitled to 13 month pay.
Note: Ees paid a fixed or guaranteed wage plus
th
commission are also entitled to the mandated 13
month pay, based on their total earnings during the
calendar year, i.e. on both their fixed or guaranteed
wage and commission
Union vs. NLRC, G.R. No. 107994, (1995)].
th
Q: Is 14 month pay legally demandable?
th
A: No. The granting of 14 month pay is a
management prerogative and is not legally
demandable. It is basically a bonus and is gratuitous
in nature [Kamaya Point Hotel vs. NLRC, G.R. No.
75289, (1989)].
th
Q: What is Commission in relation to 13 Month
Pay?
A:
1. The salesmans commissions, comprising a pre-
determined percent of the selling price of the
goods sold by each salesman, were properly
included in the term basic salary for purposes of
th
computing their 13 month pay.

2. The so-called commission paid to or received by

2. Those with Multiple Ers Government Ees
medical representatives of BoieTakeda Chemicals
working part time in a private enterprise,
or by the rank-and-file Ees of Phil. Fuji Xerox
including private educational institutions, as well
were excluded from the term basic salary
as Ees working in 2 or more private firms,
because these were paid as productivity bonuses.
whether full or part time basis, are entitled to
th Such bonuses closely resemble profit sharing,
the required 13 month pay from all their private
payments and have no clear, direct, necessary
Ers regardless of their total earnings from each or
relation to the amount of work actually done by
all their Ers.
each individual Ee.
3. Private School Teachers, including faculty
SEPARATION PAY
members of universities and colleges entitled
regardless of the number of months they teach
Q: What is the meaning of separation pay?
or are paid within a year, if they have rendered
service for at least 1 month within a year.
A: Separation pay refers to the amount due to the Ee
who has been terminated from service for causes
4. Resigned or Separated Ees - If resigned or
authorized by law such as the installation of labor-
separated from work before the time of payment
th saving losses or the closing or cessation of operation
of 13 month pay, entitled to monetary benefits
of the establishment or undertaking.
in proportion to the length of time he started
working during the calendar year up to the time
Q: What is the purpose for providing separation
of resignation or termination of service. (Pro-
th pay?
rated 13 month pay)
th A: Separation pay is intended to provide the Ee with
Q: When does pro-ration of 13 month pay apply?
the wherewithal during the period he is looking for
another employment [Gabuay v. Oversea Paper
A: GR: Pro-ration of this benefit applies only in cases
Supply, G.R. No. 148837, (2004)].
of resignation or separation from work; computation
should be based on length of service and not on the
Q: When is an employee entitled to separation pay?
actual wage earned by the worker [Honda Phils. vs.
Samahan ng Manggagawasa Honda, G.R. No. A:
145561, (2005)].
1. When the termination of employment is due to
causes authorized by law (Art. 284, LC)
XPN: Ees who are paid a guaranteed minimum
th 2. When the severance of employment is caused by
wage or commissions earned are entitled to 13
a disease, particularly when the Ee is found to be
Month Pay based on total earnings [Philippine

UNIVERSITY OF SANTO TOMAS

2013 GOLDEN NOTES 52
 LABOR STANDARDS
suffering from any disease and whose continued
employment is prohibited by law or is prejudicial
to his health and of his co-Ees. (Art. 284, LC)
3. When the termination from service has been
declared illegal, but his reinstatement to his
former position is no longer feasible for some
valid reason [Gabuay v. Oversea Paper Supply,
G.R. No. 148837, (2004)].
4. In case of pre-termination of employment
contract in job-contracting arrangement [D.O 18-
02, Rules Implementing Art. 106 109, LC]
5. Where separation pay is awarded as a measure
of social or compassionate justice [PLDT v. NLRC,
G.R. No. L-80609, (1988)].
RETIREMENT PAY
Q: What is retirement?
A: 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 with the
former [Soberano v. Secretary of Labor, G.R. No. L-
43753-56 and G.R. No. L-50991, (1980); Ariola v.
Philex Mining Corp, 446 SCRA 152 (2005)].
Q: Who are covered by the LC provisions on
retirement?
A: 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. (Sec.1, Rule II, Book VI, IRR)
Q: Who are NOT covered by the LC provisions on
retirement?
A:
1. Ees of the National Government and its political
subdivisions, including GOCCs (if they are
covered by the Civil Service Law)
2. Domestic helpers and persons in the personal
service of another
3. Ees of retail, service, and agricultural
establishments or operations employing not
more than 10 Ees (Sec.2, Rule II, Book VI, IRR)
Q: What are the kinds of retirement schemes?
A:
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);
53
3. One that is voluntarily given by the Er, expressly
as announced company policy or impliedly as in
the failure to contest the Ees claim for
retirement benefits [Marilyn Odchimar Gertach
v. Reuters Limited, Phils., G.R. No. 148542
(2005)].
Q: Can Art. 287 of the LC (on retirement) as
amended by R.A. 7641 be applied retroactively?
A: Yes, provided:
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 vs. NLRC, G.R.
No. 115019, (1997)].
Q: Are the provisions of the retirement plan binding
as part of the employment contract?
A: Yes. 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
Devt Corporation vs. NLRC, G.R. No. 138826, (2000)].
Note: 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. 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.
Again, it has been held that "pension and retirement plans
create a contractual obligation in which the promise to pay
benefits is made in consideration of the continued faithful
service of the Ee for the requisite period [Brion vs. South
Phil. Union Mission of the Seventh Day Adventist Church,
307 SCRA 497, (1999)].
Q: ALPAP, the exclusive bargaining representative of
all commercial airline pilots of PAL, assailed that
PAL's act of unilaterally retiring an airline pilot under
a special retirement plan is an act of illegal dismissal
or union busting. Is a special retirement plan
different from those contemplated under the LC as
agreed upon by the parties valid?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
A: Yes. A pilot who retires after 20 years of service or
after flying 20,000 hours would still be in the prime of
his life and at the peak of his career, compared to one
who retires at the age of 60 years old. Based on this
peculiar circumstance that PAL pilots are in, the
parties provided for a special scheme of retirement
different from that contemplated in the LC.
Conversely, the provisions of Art. 287 of the LC could
not have contemplated the situation of PAL's pilots.
Rather, it was intended for those who have no more
plans of employment after retirement, and are thus
in need of financial assistance and reward for the
years that they have rendered service [PAL vs. Airline
Pilots Assn of the Phils., G.R. No. 143686, (2002)].
ELIGIBILITY
Q: What is retirement age?
A: It is the age of retirement that is specified in the:
1. CBA;
2. Employment contract;
3. Retirement plan [Sec. 3, Rule II, Book VI, IRR]; OR
4. Optional retirement age for underground mining
Ees
Q: In the absence of a retirement plan or other
applicable agreement, what is the retirement age?
A:
1. Optional Upon reaching 60 years old provided
that Ee has rendered 5 years of service.
Note: 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 [R.A. 7641; Capili vs. NLRC,
G.R. No. 117378, (1997)].
2. Compulsory 65 years old, regardless of years of
service (Sec. 4, Rule II, Book VI, IRR)
Note: 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 vs.
NLRC, G.R. No. 87653, (1992)].
Q: Is compulsory retirement age below 60 allowed?
A: Yes. 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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
governed by such CBA [Pantranco North Express vs.
NLRC, G.R. No. 95940, (1996)].
Q: What is the rule for extension of service of retiree
upon his reaching the compulsory retirement age?
A: 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
vs. NLRC, G.R. No. 89885, (1990)].
AMOUNT
Q: In the absence of an applicable agreement or
retirement plan, how are retirement benefits
computed?
A: A retiree is entitled to a retirement pay equivalent
to at least month salary for every year of service, a
fraction of at least 6 months being considered as 1
whole year. (R.A. 7641)
Q: What comprises month salary or retirement
pay?
A: 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)
th
3. 1/12 of the 13 month pay
4. All other benefits as may be agreed upon by the
Er and Ee. (Sec.5.2, Rule II, Book VI, IRR)
Note: Under Sec. 26 of R.A. No. 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.
Q: In 1955, Hilaria was hired as a grade school
teacher at the Sta. Catalina College. In 1970, she
applied for and was granted a 1 year leave of
absence (LOA) without pay due to the illness of her
mother. After the expiration in 1971 of her LOA, she
had not been heard from by Sta. Catalina. In the
meantime, she was employed as a teacher at the
San Pedro Parochial School during SY 80-81 and at
the Liceo de San Pedro, during SY 1981-1982. In
1982, she applied anew at Sta. Catalina which hired
st
her. On Mar 22, 1997, during the 51
Commencement Exercises of Sta. Catalina, Hilaria
was awarded a Plaque of Appreciation for 30 yrs. of
service and Php 12,000 as gratuity pay. On May 31,
54
 LABOR STANDARDS

1997, Hilaria reached the compulsory retirement age by foreign- officials for the qualify for the
of 65. Sta. Catalina pegged her retirement benefits based Ers for duration of their retirement or life
at Php 59,038.35. However, amount of Php 12,000 employment tenure. insurance benefit
representing the gratuity pay, which was given to abroad may be administered by
her, was deducted from her retirement benefits. covered by the Note: Any person, the System shall
SSS on a whether elected be subject to
Should the gratuity pay be deducted from the voluntary or appointed, in compulsory
retirement benefits? the service of an
basis. coverage.
Er is a covered Ee
if he receives
A: No. Gratuity pay is separate and distinct from 2. Compulsory compensation for
retirement benefits. It is paid purely out of upon all self- such service.
generosity. employed
persons
Q: What is the difference between gratuity pay and earning Php 1,
retirement benefits? 800 or more
per annum.
A:
GRATUITY PAY RETIREMENT BENEFITS RETIREMENT BENEFITS OF WORKERS PAID BY
It is paid to the RESULTS/ RETIREMENT BENEFITS OF PART-TIME
beneficiary for the past WORKERS
Are intended to help the
services or favor
Ee enjoy the remaining Q: How shall we determine the amount of
rendered purely out of
years of his life, releasing retirement benefits of workers paid by results and
the generosity of the
him from the burden of part-time workers?
giver or grantor. It is not
worrying for his financial
intended to pay a worker A: The 15-day salary of workers paid by results and
support, and are a form
for actual services part-time workers shall be determined from their
of reward for his loyalty
rendered or for actual average daily salary which is the average daily salary
to the Er [(Sta. Catalina
performance. It is a for the last 12 months reckoned from the date of
College and Sr. Loreta
money benefit or bounty their retirement, divided by the number of actual
Oranza, vs. NLRC and
given to the worker, the working days in that particular period. [Sec. 5.2 and
Hilaria Tercera, G.R. No.
purpose of which is to 5.3 of the Rules Implementing the New Retirement
144483, (2003)].
reward Ees who have Law]
rendered satisfactory
service to the company.
TAXABILITY
RETIREMENT PAY UNDER RA 7641 VIS--VIS
Q: Are retirement benefits under R.A 7641 taxable?
RETIREMENT BENEFITS UNDER SSS AND GSIS LAWS
A: No. Retirement benefits under R.A 7641 are tax
Q: What is retirement pay under the LC in relation to
exempt provided that such benefits provided by the
retirement benefits under SSS and GSIS laws? (1997
retirement plan be equal or less than the minimum
Bar Question)
requirement provided by law.
A:
Q: What are the requirements for tax exemption
Revised under R.A. 7641?
Employees
Social Government A:
Compensation
Security Law Service
Act 1. That there be no CBA or other applicable
Insurance Act
employment contract providing for retirement
Compulsory Compulsory for Compulsory upon benefits for an Ee; or
upon all E e s all permanent all Ers and their 2. Even if there is a CBA or other applicable
not over 60 Ees below 60 Ees not over 60 employment contract providing for retirement
years of age years of age years of age; benefits for an Ee, that the same is below the
and their Ers. upon Provided, that an requirements set forth by law.
appointment to Ee who is over 60
1. Filipinos permanent years of age and
recruited in status, and for paying
the Philippines all elective contributions to

UNIVERSITY OF SANTO TOMAS

55 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
WOMEN WORKERS
PROVISIONS AGAINST DISCRIMINATION
Q: What are the discriminatory acts against women
Ee?
A:
1. Discrimination with respect to the terms and
conditions of employment solely on account of
sex
a. Payment of lesser compensation to a female
Ee as against a male Ee for work of equal
value
b. Favoring a male Ee with respect to
promotion, training opportunities, study and
scholarship grants on account of gender.
(Art. 135, LC)
c. Favoring a male applicant with respect to
hiring where the particular job can equally
be handled by a woman
d. Favoring a male Ee over a female Ee with
respect to the dismissal of personnel.
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. (Art. 136, LC)
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. vs. NLRC, G.R. No.
118978, (1997)].
1. Dismissing, discriminating or otherwise prejudice
a woman Ee by reason of her being married. (Art.
136, LC)
2. Art. 137 of the LC
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])
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
Q: What is the state policy on non-discrimination
against women?
A: 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. (Sec. 2, R.A. 9710 or the Magna Carta of Women)
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.
(Sec. 12, R.A. 9710)
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
(ART. 136, LC)
Q: What is the no-spouse employment policy?
A: Policy banning spouses from working in the same
company.
Q: Does it violate provisions of the LC?
A: 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
(BFOQ)
56
 LABOR STANDARDS
Q: What is the bona fide occupational qualification
rule?
A: There must be a finding of any BFOQ to justify an
Ers 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
vs.Simbol, G.R. No. 164774, (2006)].
Q: What is the importance of the bona fide
occupational qualification Rule?
A:
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 Glaxos 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: The prohibition against personal or marital
relationships with Ees of competitor companies upon
Glaxos 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 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 vs.GlaxoWellcome Phil.
Inc., G.R. No. 162994, (2004)].
57
PROHIBITED ACTS (ART. 137, Labor Code)
Q: What are the prohibited acts under Art. 137 of
the LC?
A: 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.
Q: At any given time, approximately 90% of the
production workforce of a semiconductor company
are females. 75% of the female workers are married
and of child-bearing years. It is imperative that the
Company must operate with a minimum number of
absences to meet strict delivery schedules. In view
of the very high number of lost working hours due
to absences for family reasons and maternity leaves,
the company adopted a policy that it will employ
married women as production workers only if they
are at least 35 years old. Is the policy in violation of
any law? (1998 Bar Question)
A: Yes, it violates Art. 140 of the LC which provides
that no Er shall discriminate against any person in
respect to the terms and conditions of employment
on account of his age.
Q: Who are covered under this Title?
A: 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
4. Shall be considered as an Ee of such
establishment for purposes of labor and social
legislation.
ANTI-SEXUAL HARASSMENT ACT
(R.A. 7877)
Q: What is the policy of the State in enacting the
Anti-Sexual Harassment law?
A: The State shall:
1. Value the dignity of every individual
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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. (Sec. 2, R.A.
7877)
Q: Who may be held liable for Sexual Harassment?
A: 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.(Sec. 3, R.A. 7877)
Q: How is Sexual Harassment committed?
A: Generally, Sexual Harrasment is committed when
a person demands, requests, or otherwise requires
any sexual favor from another, regardless of whether
the demand, request or requirement for submission
is accepted by the latter.
Q: Under the Sexual Harassment Act, does the
definition of Sexual Harassment require a
categorical demand or request for sexual favor?
A: No. 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 respondents acts result in creating
an intimidating, hostile or offensive environment for
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
the employee [Domingo vs.Rayala, G.R. No. 155831,
(2008)].
Q: When is Sexual Harassment committed?
A: 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;
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.
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.
Q: What are the duties of the employer or head of
office in a work-related, education or training
environment?
A:
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.
Towards this end, the Er or head of office shall:
58
 LABOR STANDARDS
1. Promulgate appropriate rules and regulations in
consultation with the jointly approved by the Ees
or students or trainees, through their duly
designated representatives, prescribing the
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
Q: What is the liability of the employer, head of
office, educational or training institution?
A: 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. (Sec.
5, R.A. 7877)
Q: Can an independent action for damages be filed?
A: Yes. 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)
Q: What is the three-fold liability rule in Sexual
Harassment cases?
A: 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.
Q: When does the action prescribe?
A: Any action shall prescribe in 3 years.
59
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, 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, because 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. [Sec. 3(a)(3), R.A.
No. 7877, Anti-Sexual Harassment Act]
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 applicants
feelings and it is a chauvinistic disdain of her honor,
justifying the finding of Sexual Harassment
[Villaramavs. NLRC, G.R. No. 106341 (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 mens
comfort room. After seeing that no one else was
around, Mr. Barak placed his arm over Pedritos
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? Im alone, and Im sure you want to
stay longer with the company.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Is Mr. Barak liable for Sexual Harassment committed
in a work-related or employment environment?
(2000 Bar Question)
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 MINOR WORKERS
Q: What are the rules on employment of minor
workers?
A: 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.
XPN:
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
childs safety, health and morals
b. Employment does not impair the childs
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 childs employment or participation in
public entertainment or information through
cinema, theater, radio or television is
essential provided:
a. Employment contract is concluded by
the childs parents or legal guardian,
b. With the express agreement of the child
concerned, if possible, and
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
c. The approval of DOLE, the following
must be complied with:
i. The employment does not involve
advertisement or commercials
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
C. Above 18 no prohibition
Q: What is the duty of the employer before engaging
minor into work?
A: The Er shall first secure a work permit from the
DOLE which shall ensure observance of the
requirements. (Sec. 12, R.A. 7160)
Q: Is there a rule regarding the issuance of work
certificates/ permits to children at least 15 but
below 18 years of age?
A: The issuance of a DOLE Certificate to youth aged
15 to below 18 years of age is not required by law. No
employer shall deny opportunity to any such youth
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 employer, job provider, government authority,
or his/her representative when seeking employment
or anytime during employment. (DOLE Department
Advisory No. 01-08)
Q: What is a non-hazardous work?
A: 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.
Q: What are hazardous workplaces?
A:
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
60
 LABOR STANDARDS
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.
Q: What are the prohibitions on the employment of
children in certain advertisements?
A: 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
Q: A spinster school teacher took pity on one of her
pupils, a robust and precocious 12-year old boy
whose poor family could barely afford the cost of his
schooling. She lives alone at her house near the
school after her housemaid left. In the afternoon,
she lets the boy do various chores as cleaning,
fetching water and all kinds of errands after school
hours. She gives him rice and Php 30.00 before the
boy goes home at 7 every night. The school principal
learned about it and charged her with violating the
law which prohibits the employment of children
below 15 years of age. In her defense, the teacher
stated that the work performed by her pupil is not
hazardous, and she invoked the exception provided
in the Department Order of DOLE for the
engagement of persons in domestic and household
service. Is her defense tenable? (2004 Bar Question)
A: No, her defense is not tenable. 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
61
parents or guardian, the provisions of the alleged DO
of DOLE to the contrary notwithstanding. A mere DO
cannot prevail over the express prohibitory provisions
of the LC.
Q: Determine whether the following minors should
be prohibited from being hired and from performing
their respective duties indicated hereunder: (2006
Bar Question)
1. A 17-year old boy working as miner at the
Walwadi Mining Corporation.
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.
2. An 11-year old boy who is an accomplished singer
and performer in different parts of the country.
A: 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:
1. The Er shall ensure the protection, health safety
and morals of the child
2. The Er shall institute measures to prevent the
childs 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.
3. A 15-year old girl working as a library assistant in
a girls' high school.
A: 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
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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.
4. A 16-year old girl working as model promoting
alcoholic beverages.
A: 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.
5. A 17-year old boy working as a dealer in a casino.
(2006 Bar Question)
A: 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)
Q: What is child labor?
A: 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.
Q: Who is a working child?
A: Any child engaged as follows:
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
childs family are employed; or
b. In public entertainment or information
Q: When may the State intervene in behalf of the
child?
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
A:
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.
Q: What is the limitation on the hours of work of a
working child?
A: If the child is:
1. Below 15 years of age not more than 20 hours
a week and not more than 4 hours a day
- Not allowed to work between 8:00 pm
6:00 am
2. At least 15 years of age but below 18 years of
age will not exceed 8 hours a day or 40 hours a
week
- Not allowed to work between 10:00 pm
6:00 am
Q: What are the 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 or exposing of a child
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.
Q: Who can file a complaint for unlawful acts
committed against children?
A:
1. Offended party
2. Parents or guardians
62
 LABOR STANDARDS

3. Ascendants or collateral relatives within the
rd
3 degree of consanguinity
4. Officer, social worker or representative of a
licensed child-caring institution
5. Officer or social worker of DSWD
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
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.
Q: What are the examples of persons performing
work occasionally or sporadically and not on an
occupational basis?

Q: Which courts have jurisdiction over offenses A:

punishable under R.A. 9231? 1. A janitress doing irregular laundry work for a
household during rest day;
A: The Family Courts shall have original jurisdiction 2. A construction worker doing casual gardening job
over all cases involving offenses punishable under for a household; or
this Act. 3. A hospital nurse or a student doing baby-sitting
job.
EMPLOYMENT OF HOUSEHELPERS
Q: What is the employable age for a kasambahay?
Q: Who are the kasambahay covered by R.A. 10361,
otherwise known as the Domestic Workers Act or A: 15 years old and above.
Batas Kasambahay?
Note: The employment of children 15 but below 18 years of
A: All kasambahay engaged in domestic work, age may be made under the following conditions:
whether on a live-in or live-out arrangement, such as,
1. They shall not be allowed to work for more than 8
but not limited to, the following:
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
1. General househelp 6 a.m. of the following day;
2. Nursemaid or Yaya 3. They shall not be allowed to do hazardous work; and
3. Cook 4. They shall not be denied access to education and
4. Gardener training.
5. Laundry person
6. Working children or domestic workers 15 years The consent of the parent/guardian of working children is
and above but below 18 years of age; or required in the employment contract.
7. Any person who regularly performs domestic
work in one household on an occupational basis Q: Who is the employer of a kasambahay?
(live-out arrangement). [Sec. 3(d), R.A. 10361]
A: An Er is any person who engages and controls the
Q: Who are not covered by the Batas Kasambahay? services of a kasambahay and is party to the
employment contract.
A: The following are not covered:
Q: Under the law, who are included in the
1. Service providers employers household to be provided direct service
2. Family drivers by the kasambahay?
3. Children under foster family arrangement; and
4. Any other person who performs work A: Immediate family members or other occupants of
occasionally or sporadically and not on an the house who are directly and regularly provided
occupational and regular basis. services by the kasambahay.

Q: Who are children under foster family Q: How can an employer hire a kasambahay?
arrangement?
A: An Er can hire directly or through private
A: Children under foster family arrangement are employment agencies registered with the DOLE
those who are living with a family or household of regional offices. The Er, whether the kasambahay is
relative/s and are provided access to education and hired directly or through POEA, shall shoulder the
expenses for hiring. The kasambahay shall not be

UNIVERSITY OF SANTO TOMAS

63 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

charged of any cost of the recruitment, placement, or
finders 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.
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.
Q: Is the employer required to register the
kasambahay?

Q: Are there pre-employment requirements?
A: Yes. Before entering into an employment contract,
the Er has the option to require the following from a
kasambahay:
A: Yes. 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.

1. Medical certificate or health certificate issued by Note: The registration of the kasambahay is free of charge.
a local government health officer;
2. Barangay and police clearance; Q: What are the mandatory benefits of the
3. NBI clearance; and kasambahay?
4. Duly authenticated birth certificate or, if not
available, voters identification card, baptismal A:
record, or passport showing the kasambahays 1. Monthly minimum wage;
age. 2. Daily rest period of 8 (total) hours;
3. Weekly rest period of 24 (uninterrupted) hours
Note: Requirements are mandatory when the employment 4. 5 days annual service incentive leave with pay;
of the kasambahay is facilitated through a private 5. 13th month pay;
employment agency. 6. SSS benefit;
7. PhilHealth benefit; and
It is not a requirement for a kasambahay to be trained and 8. Pag-IBIG benefit
certified by TESDA prior to employment. However, the
kasambahay is encouraged to undergo competency
Q: What are the other rights and privileges of the
assessment and be certified by TESDA. Training is not a
requirement for competency assessment. kasambahay?

Q: Is a contract necessary before entering into an A:

employment for domestic work? 1. Freedom from Ers interference in wage
disposal;
A: Yes. The Er and the kasambahay shall enter into a 2. Standard of treatment;
contract of employment written in a language or 3. Board, lodging, and medical attendance;
dialect understood by them. 4. Right to privacy;
5. Access to outside communication;
Note: The contract need not be notarized. The Punong 6. Access to education and training;
Barangay or his/her designated officer may attest to the 7. Right to be provided a copy of the employment
contract and serve as witness to its execution. contract;
8. Right to Certificate of Employment;
Q: What should be the contents of the employment 9. Right to form, join, or assist labor organization;
contract? 10. Right to terminate employment based on just
cause; and
A: 11. Right to exercise religious beliefs and cultural
1. Duties and responsibilities of the kasambahay; practices.
2. Period of employment;
3. Compensation; Q: What are the basic necessities of the
4. Authorized deductions; kasambahay?

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2013 GOLDEN NOTES 64
 LABOR STANDARDS
A:
1. At least 3 adequate meals a day, taking into
consideration the kasambahays 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.
Q: How much is the monthly minimum wage of a
kasambahay?
A: For those employed in:
1. National Capital Region Php 2,500.00
2. Cities and 1st class municipalities Php 2,000.00
3. Other municipalities Php 1,500.00 (Sec. 24,
R.A. 10361)
Note: 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, R.A. 10361). The RTWPB
shall coordinate with TESDA on the wage review and
adjustment based on the kasambahays competency level,
in line with the thrust to professionalize the domestic
service sector.
Q: In what form and when will the wage of a
kasambahay be paid?
A: In cash, at least 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, R.A. 10361)
Payment of wages by means of promissory note, voucher,
coupon, token, ticket, chit, or anything other than the cash
wage is prohibited.
Q: Is the kasambahay entitled to daily rest period?
A: Yes. He/she is entitled to a total daily rest period
of at least 8 hours.
Q: Can the employer require the kasambahay to
work beyond 16 hours at any given workday in
return for an equivalent hourly rate?
A: No. 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
65
rest period. The Er shall respect the preferred weekly rest
day of the kasambahay on religious grounds. (Sec. 21, R.A.
10361)
Q: When can the kasambahay avail of the five-day
annual Service Incentive Leave?
A: 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.
Q: What other agreements may the employer and
the kasambahay enter into relative to the
kasambahays weekly rest day and Service Incentive
Leave?
A:
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.
th
Q: When will a kasambahay be entitled to the 13
month pay?
A: After 1 month of service.
th
Q: How is the 13 month pay computed and when is
it paid?
th
A: In computing the 13 month 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.
Q: When will a kasambahay be covered by SSS,
PhilHealth, and Pag-IBIG?
A: After 1 month of service.
Q: Is the employer liable under the SSS, PhilHealth,
and Pag-IBIG laws in case the kasambahay refuses
membership with those agencies?
A: Membership under the SSS, PhilHealth, and Pag-
IBIG is mandatory and non-negotiable.
Q: Supposing that in exchange for non-membership,
the kasambahay agrees with the employer to receive
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
the premiums and contributions in addition to
his/her salary, is this allowed?
A: No. 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,
including criminal prosecution, if he fails or refuses to
comply with his/her obligations.
Q: Who will pay the SSS premium, and PhilHealth
and Pag-IBIG contributions of the kasambahay?
A: GR: The Er.
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.
Q: Does the law have provisions protecting
employers of kasambahay?
A: Yes. They include:
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.
Q: Can the kasambahay terminate the contract at
any time?
A: Yes, on the following grounds:
1. Verbal or emotional abuse of the kasambahay by
the Er or any member of the household;
2. Inhuman 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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
6. Other causes analogous to the foregoing. (Sec.
33, R.A. 10361)
Q: Can the employer also terminate the contract at
any time?
A: Yes, on the following grounds:
1. Misconduct or willful disobedience by the
kasambahay of the lawful order of the Er in
connection with the formers 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 Ers 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, R.A. 10361)
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,
R.A. 10361)
Q: If the duration of the domestic service is not
determined in the contract, can a kasambahay or
the employer terminate the contract anytime?
A: Yes. 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.
Q: What are the entitlements of a kasambahay
unjustly dismissed by the employer?
A:
1. Outright payment of earned wage; and
2. Indemnity benefit in the form of wage
equivalent to 15 days work.
Q: What are the liabilities of a kasambahay who
leaves his/her employer without justifiable reason?
66
 LABOR STANDARDS
A:
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.
Q: Can the employer inspect the belongings of the
kasambahay before he/she leaves the household in
case of termination of employment?
A: No. However, the Er and the kasambahay can
agree in their employment contract that an
inspection can be made before he/she leaves the
household.
Q: If there is non-payment or underpayment of
wage and other labor-related concerns, where can
the kasambahay seek assistance?
A: The kasambahay can go to a Kasambahay Desk
Officer situated in their respective barangays or the
nearest DOLE field/provincial/regional office.
Q: Can the employer demand from a private
employment agency the replacement of a
kasambahay?
A: Yes, within 1 month from the day the kasambahay
reported for work, the Er may demand a
replacement based 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.
Q: What will happen in case the private
employment agency fails to provide a qualified
replacement after one month from receipt of the
employers request?
A: The Er shall be entitled to a refund of 75% of the
fees paid to the private employment agency.
Q: What are the declared responsibilities of the
private employment agency under the law?
67
A:
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;
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.
Q: What are the specific acts declared unlawful
under the law?
A:
1. Employment of children below 15 years of age;
2. Withholding of the kasambahays wages;
3. Interference in the disposal of the kasambahays
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.
Q: What other remedies for unlawful acts are
available under the law?
A: The aggrieved party may file the appropriate civil
or criminal action before the regular courts.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Q: Does the law afford remedy for abused or
exploited kasambahay?
A: 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: Erlinda worked as a cook, preparing the lunch and
merienda of the Ees of Remington Industrial Sales
Corp. She worked at the premises of the company.
When Erlinda filed an illegal dismissal case, Mr. Tan,
the managing director of Remington Corp., claimed
that Erlinda was a domestic helper and not a regular
Ee of the corporation. Mr. Tan argued that it is only
when the househelper or domestic servant is
assigned to certain aspects of the business of the Er
that such househelper or domestic servant may be
considered as such an Ee. Is Erlinda a domestic or
househelper?
A: No, Erlinda is clearly not a househelper. A
househelper or domestic servant under the IRR of
the LC is one who is employed in the Ers home to
minister exclusively to the personal comfort and
enjoyment of the Ers family. A househelper,
domestic servant or laundrywoman in a home or in a
company staffhouse is different in the sense that in a
corporation or a single proprietorship engaged in
business or industry or any agricultural or similar
pursuit, service is being rendered in the staffhouses
or within the premises of the business of the Er. In
such instance, they are Ees of the company or Er in
the business concerned, entitled to the privileges of a
regular Ee. The mere fact that the househelper or
domestic servant is working within the premises of
the business of the employer and in relation to or in
connection with its business, as in its staffhouses for
its guest or even for its officers and Ees, warrants the
conclusion that such househelper or domestic servant
is and should be considered a regular Ee and not a
househelper. (Remington Industrial vs. Castaneda,
G.R. Nos. 169295-96, Nov.20, 2006)
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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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 NBCs top
executives and clients [Traders Royal Bank vs. NLRC,
G.R. No. 127864, (1999)].
EMPLOYMENT OF HOMEWORKERS
Q: Who are homeworkers?
A: 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.
Q: Who is the employer of a homeworker?
A: 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:
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.
Q: What is the duty of the employer in case he
contracts with another the performance of his
work?
A: It shall be the duty of the Er to provide in such
contract that the Ees or homeworkers of the
contractor and the latters subcontractor shall be paid
in accordance with the LC.
Q: What is the liability of the employer if the
contractor or subcontractor fails to pay the wages or
earnings of his Ees?
A: 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.
68
 LABOR STANDARDS
Q: Can homeworkers form labor organizations?
A: Yes. 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.
Q: What are the prohibitions against homework?
A: No homework shall be performed on:
1. Explosives, fireworks and similar articles;
2. Drugs and poisons; and
3. Other articles, the processing of which requires
exposure to toxic substances. (Sec. 13, Rule XIV,
Book III, IRR)
Q: Can the Er make deductions on homeworkers
earnings?
A: GR: No Er, contractor or subcontractor shall make
any deduction from the homeworkers earnings
for the value of materials which have been lost,
destroyed, soiled or otherwise damage.
XPNs: Unless the ff. conditions are met:
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
homeworkers earnings in a week.
Q: Distinguish househelpers from homeworkers.
A:
HOUSEHELPERS HOMEWORKERS
Performs in or about his
own home any processing
or fabrication of goods or
Minister to the personal materials, in whole or in
needs and comfort of his part, which have been
Er in the latters home furnished directly or
indirectly, by an Er and
sold thereafter to the
latter.
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
69
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. (Art. 155, LC)
APPRENTICES AND LEARNERS
Q: Who is an apprentice?
A: Any worker who is covered by a written
apprenticeship agreement with an individual Er or
any of the entities recognized under the LC.
Q: What is apprenticeship?
A: 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.
Q: What is an apprenticeable occupation?
A: A highly technical occupation which requires more
than 3 months of practical training with theoretical
instruction officially endorsed by a tripartite body and
approved for apprenticeship by the Authority.
Q: What is on the job training (OJT)?
A: It is practical work experience through actual
participation in productive activities given to or
acquired by an apprentice.
Q: What are highly technical industries?
A: Those which are engaged in the application of
advanced technology.
Q: What are related theoretical instructions?
A: Technical information based on apprenticeship
standards approved by the Bureau.
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 vs. NLRC, G.R. No. 114337, (1995)].
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Q: What are the qualifications of an apprentice?
A:
1. At least 15 years of age
Note: 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.
Q: When is an occupation deemed hazardous?
A:
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.
Q: Who may employ apprentices?
A:
1. Only Ers in highly technical industries and
2. Only in apprenticeable occupations approved by
SLE
Q: What is the employment status of apprentices?
A: They are contractual workers whose length of
service depends on the term provided for in the
apprenticeship agreement. Thus, the employer is not
obliged to employ the apprentice after the
completion of his training.
Q: What are the conditions for employment of an
apprentice?
A:
1. Should be an apprenticeable trade as determined
by TESDA
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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 vs. NLRC
248 SCRA 654 (1995)]
Note: One of the objectives of Title II (Training and
Employment of Special Workers) of the Labor Code is to
establish apprenticeship standards for the protection of
apprentices. An apprenticeship program should first be
approved by the Department of Labor and Employment
(DOLE) before an apprentice may be hired, otherwise a
person hired will be considered a regular employee.
[Century Canning Corp. vs. CA, 530 SCRA 501 (2007)]
Q: What is the period of apprenticeship?
A: Must not exceed 6 months:
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. (Sec. 19, Rule VI, Book II, IRR)
Q: What is the status of an apprentice hired after such
term?
A: He is deemed a regular Ee. He cannot be hired as a
probationary Ee since the apprenticeship is deemed the
probationary period.
Q: How much is the compensation of an apprentice?
A: GR: It starts at not less than 75% of the statutory
st
minimum wage for the 1 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;
3. as requisite for graduation or
4. as requisite for board examination.
Note: 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.
70
 LABOR STANDARDS
Q: What are the rules regarding apprenticeship
agreements?
A: 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. (Sec. 18, Rule VI,
Book II, IRR)
Q: Who signs the apprenticeship agreement?
A: Every apprenticeship agreement shall be signed
by:
1. The Er or his agent, or
2. An authorized representative of any of the
recognized organizations, associations or groups,
and
3. The apprentice.
Q: Who will sign if the apprentice is a minor?
A: 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.
Q: What are the rules on working scholars?
A: 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. The student is not
considered an Ee. (Sec. 14, Rule IX, Book III, IRR)
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. Victor
filed a civil case for damages against him,
impleading Gomburza College due to the latter's
alleged liability as his employer. Under the
circumstances, could Gomburza College be held
71
liable by Victor Monteverde as Padillas employer?
(1997 Bar Question)
A: 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."
Q: Who may terminate an Apprenticeship
agreement?
A:
1. Either party may terminate an agreement after
the probationary period but only for a valid
cause.
2. It may be initiated by either party upon filing a
complaint or upon DOLEs own initiative.
Q: Who may appeal the decision of the authorized
agency of the DOLE? What is the period of appeal?
A: 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.
Q: What is Exhaustion of Administrative Remedies
(EAR)?
A: It is a condition precedent to the institution of
action. (Sec. 32b, Rule VI, Book II, IRR)
Q: How is the principle of Exhaustion of
Administrative Remedies applied in case of breach
of apprenticeship agreement?
A: Exhaustion of Administrative Remedies is a
condition precedent to the institution of an action for
enforcing application of agreement.
Q: Who shall settle differences arising out of
apprenticeship agreement?
A: The plant apprenticeship committee shall have the
initial responsibility for settling differences arising out
of Apprenticeship agreement. (Sec. 32b, Rule VI, Book
II, IRR)
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

Q: What is the procedure for the termination of Q: Who may employ learners?
apprenticeship?
A: Only Ers in semi-skilled and other industrial
A: The party terminating shall: occupations which are non-apprenticeable.
1. Serve a written notice on the other at least 5
days before actual termination, Q: What is the status of learners who have been
2. Stating the reason for such decision; and allowed or suffered work during the first 2 months,
3. A copy of said notice shall be furnished the if training is terminated by the Er before the end of
Apprenticeship Division concerned. the stipulated period through no fault of the
Learner?
Q: Who are learners?
A: They are deemed regular Ees. (Sec. 4, Rule VII,
A: Book II, IRR)
1. They are persons hired as trainees in semi-skilled
and other industrial occupations DISTINCTIONS BETWEEN LEARNERSHIP AND
2. Which are non-apprenticeable and APPRENTICESHIP
3. Which may be learned through practical training
on the job in a relatively short period of time Q: Distinguish learnership from apprenticeship.
4. Which shall not exceed 3 months A:
5. Whether or not such practical training is Learnership Apprenticeship
supplemented by theoretical instructions. (Sec. Nature
1a, Rule VII, Book II, IRR) Training on the job in
semi-skilled and other Training in trades which
Q: When may learners be employed? industrial occupation or are apprenticeable, that
trades which are non- is, practical training on
A: apprenticeable and which the job supplemented
1. When no experienced worker is available may be learned thru by related theoretical
2. It is necessary to prevent curtailment of practical training on the instruction for more
employment opportunities; and job in a relatively short than 3 months.
3. Employment does not create unfair competition period of time.
in terms of labor costs or impair or lower working Duration of training
standards. Min: 3 months
Max: 3 months
Max: 6 months
Q: What are the contents of a learnership Commitment to employ
agreement? With commitment to
employ the learner as a
A: Any Er desiring to employ learners shall enter into regular Ee if he desires No commitment to hire
a learnership agreement with them, which upon completion of
agreement shall include: learnership
1. The names and addresses of the learners;
In case of pretermination of contract
2. The duration of the learnership period,
Considered a regular Ee if
which shall not exceed 3 months;
pre-termination occurs
3. The wages or salary rates of the learners
after 2 months of training Worker not considered
which shall begin at not less than 75% of the
and the dismissal is as regular Ee.
applicable minimum wage; and
without fault of the
4. A commitment to employ the learners if they
Learner.
so desire, as regular Ees upon completion of
Coverage
the Learnership.
Highly technical
Semi-skilled/Indus-trial
industries and only in
Q: What is the qualification of a learner? occupations
industrial occupation
A: Must be at least 15 years of age. There is a list of learnable
No list
trades by TESDA
Note: Those below 18 years of age shall not work in Written agreement
hazardous occupations. Requires learnership Requires apprenticeship
agreement agreement

UNIVERSITY OF SANTO TOMAS

2013 GOLDEN NOTES 72
 LABOR STANDARDS
PERSONS WITH DISABILITY (R.A. 7277 as amended
by R.A. 9442)
DEFINITION
Q: Who are persons with disability?
A: Those whose earning capacity is impaired by:
1. Physical deficiency
2. Age
3. Injury
4. Disease
5. Mental deficiency
6. Illness
Q: What is the duration of the employment period
of persons with disability?
A: There is no minimum or maximum duration. It
depends on the agreement but it is necessary that
there is a specific duration stated.
Q: May persons with disability be hired as
apprentices or learners?
A: Yes, if their disability is not such as to effectively
impede the performance of job operations in the
particular occupations for which they are hired. (Art.
81, LC)
Q: Can persons with disability acquire the status of a
regular Ee?
A: Yes, if work is usually or necessarily desirable to
the business. [Bernardo vs. NLRC, G.R No. 122917,
(1999)]
Q: Who may employ persons with disability?
A: 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.
Q: When can persons with disability be employed?
A:
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. (Art. 79,
LC)
73
Q: Does the mere fact that a worker has a disability,
make him a disabled worker?
A: No, 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, (1999)].
RIGHTS OF PERSONS WITH DISABILITY
Q: What are the rights and privileges of disabled
workers?
A: Disabled workers shall have the following rights:
1. Equal opportunity for employment
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
4. Vocational rehabilitation (means to develop the
skills and potentials of disabled workers and enable
them to compete in the labor market)
5. Vocational guidance and counselling
PROHIBITIONS ON DISCRIMINATION AGAINST
PERSONS WITH DISABILITY
Q: What is the prohibition on discrimination against
disabled workers?
A: No disabled person shall be denied access to
opportunities for suitable employment. A qualified
disabled employee shall be subject to the same terms
and conditions of employment and the same
compensation, privileges, benefits, fringe benefits,
incentives or allowances as a qualified able-bodied
person.
Note: 5% of all casual emergency and contractual positions
in the Departments of Social Welfare and Development;
Health; Education, Culture and Sports; and other
government agencies, offices or corporations engaged in
social development shall be reserved for disabled persons.
(R.A. 7277)
INCENTIVES FOR EMPLOYERS
Q: What are the incentives provided to employers
who are employing disabled workers?
A:
1. Entitled to an additional deduction, from their
gross income, equivalent to 25% of the total amount
paid as salaries and wages to disabled persons:
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

Provided, however, That such entities present proof

as certified by the DOLE that disabled 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 improvements or modifications. (Sec. 8, R.A.
7277)

Q: Distinguish persons with disability from differently

abled?

A:
Persons with disability Differently Abled
Refers to all suffering from
restriction of different
Earning capacity is abilities as a result of mental,
impaired by age, or physical or sensory
physical or mental impairment to perform an
deficiency or injury. activity in the manner or
within range considered
normal for a human being.
Covers all activities or
Covers only workers.
endeavors.
Basis: loss/impairment Basis: range of activity which
of earning capacity. is normal for a human being.
Restriction due to
Loss due to injury or
impairment of
physical or mental
mental/physical/ sensory
defect or age.
defect.
If hired, entitled to
75% of minimum
wage. If qualified, entitled to all
terms and conditions as
Subject to definite qualified able-bodied person.
periods of
employment.
Employable only when No restrictions on
necessary to prevent employment.
curtailment of
employment Must get equal opportunity
opportunity. and no unfair competition.

UNIVERSITY OF SANTO TOMAS

2013 GOLDEN NOTES 74
 TERMINATION OF EMPLOYMENT

TERMINATION OF EMPLOYMENT security guards to safeguard the persons and

belongings of hotel guests, among others. The
EMPLOYER-EMPLOYEE RELATIONSHIP security guards filled up Baron application form and
submitted the executed forms directly to the
Q: What determines the existence of an Security Department of Baron. The pay slips of the
employment relationship? security guards bore Baron's logo and showed that
Baron deducted the amounts for SSS premiums,
A: It is determined by law and not by contract [Insular medicare contributions and withholding taxes from
Life Assurance Co. Ltd. vs. NLRC, G.R. No. 119930, the wages of the secutiry guards. The assignments of
(1998)]. security guards, who should be on duty or on call,
promotions, suspensions, dismissals and award
Note: Taxi or jeepney drivers under the boundary system citations for meritorious services were all done upon
are Ees of the taxi or jeepney owners/operators; so also approval by Baron's chief security officer. After the
the passenger bus drivers and conductors [Jardin vs. NLRC
expiration of the contract with ASIA, Baron did not
and Goodman Taxi, G.R. No. 119268, (2000)].
renew the same and instead executed another
contract for security services with another agency.
Q: The employment contract stipulates that there is
ASIA placed the affected security guards on "floating
no employer-employee relationship between the
status" on "no work no pay" basis. Having been
parties. Is that valid?
displaced from work, the ASIA security guards filed a
case against the Baron for illegal dismissal, OT pay,
A: No.The existence of an Er-Ee relation is a question
minimum wage differentials, vacation leave and sick
of law and being such, it cannot be made the subject th
leave benefits, and 13 month pay. Baron denied
of agreement [Tabas vs. California Manufacturing
liability alleging that ASIA is the employer of the
Co., G.R. No. L-80680, (1989)].
security guards and therefore, their complaint for
illegal dismissal and payment of money claims
Q: Banco de Manila and the Ang Husay Janitorial
should be directed against ASIA. Nevertheless,
and Pest Control Agency entered into an
Baron filed a Third Party Complaint against ASIA.
Independent Contractor Agreement with the usual
stipulations specifically, the absence of employer-
Is there an employer-employee relationship
employee relationship, and the relief from liability
between the Baron, on one hand, and the ASIA
clauses. Can the bank, as a client, and the agency, as
security guards, on the other hand? Explain briefly.
an independent contractor, stipulate that no
(1999 Bar Question)
employer-employee relationship exists between the
bank and the employees of the Agency who may be
A: As a general rule, the security guards of a private
assigned to work in the Bank? Reason.
security guard agency are the Ees of the latter and
not of the establishment that has entered into a
A: Yes, they can stipulate provided that the
contract with the private security guard agency for
relationship is job contracting. However the
security services. But under the facts in the question,
stipulation cannot prevail over the facts and the laws.
Baron Hotel appear to have hired the security guards,
The existence of Er-Ee relationship is determined by
to have paid their wages, to have the power to
facts and law and not by stipulation of the parties.
promote, suspend or dismiss the security guards and
the power of control over them, namely, the security
It is axiomatic that the existence of an Er-Ee
guards were under orders of Baron Hotel as regard
relationship cannot be negated by expressly
their employment. Because of the above-mentioned
repudiating it in the management contract and
circumstances, Baron Hotel is the Er of the security
providing therein that the Ee is an independent
guards.
contractor when the terms of the agreement clearly
show otherwise. For, the employment status of a
Q: Assuming that ASIA is the employer, is the act of
person is defined and prescribed by law and not by
ASIA in placing the security guards on "floating
what the parties say it should be. In determining the
status" lawful? Why?
status of the management contract, the "four-fold
test" on employment has to be applied [Insular Life
A: It is lawful for a private security guard agency to
Assurance Co.. Ltd. vs. NLRC, G.R. No. 119930,
place its security guard on a "floating status" if it has
(1998)].
no assignment to give to said security guards. But if
the security guards are placed on a "floating status"
Q: ASIA executed a 1-year contract with the Baron
Hotel for the former to provide the latter with 20

UNIVERSITY OF SANTO TOMAS

75 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
for more than 6 months, the security guards may
consider themselves as having been dismissed.
Q: Lacson was one of more than 100 employees who
were terminated from employment due to the
closure of LBM Construction Corporation. LBM was a
sister company of Lastimoso Construction, Inc. and
RL Realty & Devt 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 & Devt 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. vs. NLRC, G.R. No. 108734,
(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.
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
FOUR- FOLD TEST
Q: What factors determine the existence of an
employer-employee relationship?
A: The fourfold test:
1. Selection and engagement of the employee;
2. Payment of wages;
3. Power of dismissal; and
4. Power of control (Azucena, Vol. I, p.158)
Q: What is control test?
A: Under the control test, 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. vs.Servana (542 SCRA 578)].
Q: What kind of control should be exercised by the
employer?
A: Not all forms of control are indicative of Er-Ee
relationship. Where the degree of control is both the
result and the means, there is an employer-employee
relationship. Where the control is merely to results,
there is only an independent contractor relationship.
If there is a degree of control for compliance with a
government regulation that is not the control
referred to. (Insular life vs. NLRC)
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 vs. NLRC, G.R. No. 170087, (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 latters employment
[Francisco vs. NLRC, G.R. No. 170087, (2006)].
Q: Genesis entered into a Careers 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 employer-
employee relationship. It further provides that the
agent must comply with three requirements: (1)
76
 TERMINATION OF EMPLOYMENT
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 employer-employee relationship
exists and that he was illegally dismissed. Is he an
employee of the Insurance Company?
A: 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
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 EmoLifes insurance agent. This agreement
is supplemented by the companys 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 vs. ManuLife Insurance Company, G.R. No.
167622, (2010)].
Q: What is the two-tiered test?
A:
1. The putative Ers power to control the Ee with
respect to the means and methods by which the
work is to be accomplished; and
2. The underlying economic realities of the activity
or relationship.
77
Q: What is the proper standard for economic
dependence?
A: 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 Ers business
2. The extent of the workers investment in
equipment and facilities;
3. The nature and degree of control exercised by
the Er;
4. The workers 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 vs. NLRC, G.R. No. 170087,
(2006)]
Q: When should the four-fold test and the two-
tiered test be properly applied?
A: Present Phililippine 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.
But the latter test is used if and only if there is going
to be harshness in the results because of the strict
application of the four-fold test [Francisco vs. NLRC,
G.R. No. 170087, (2006)].
KINDS OF EMPLOYMENT
PROBATIONARY EMPLOYMENT
Q: What is probationary employment?
A: 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. (Sec 6, Rule I,
Book VI, IRR)
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Q: What are the characteristics of probationary
employment?
A:
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.
Q: What are the rules on probationary employment?
A:
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.
Q: What is the period of probationary employment?
A: GR: It shall not exceed 6 months.
XPNs:
1. Covered by an Apprenticeship or Learnership
agreement stipulating a different period
2. Voluntary agreement of parties (especially
when the nature of work requires a longer
period)
3. The Er gives the Ee a second chance to pass
the standards set. [Mariwasa
Manufacturing, Inc. vs. Leogardo, Jr., G.R.
No. 74246, (1989)].
4. When the same is required by the nature of
the work, e.g. the probationary period set
for professors, instructors and teachers is 3
consecutive years of satisfactory service
pursuant to DOLE Manual of Regulations for
Private Schools.
5. When the same is established by company
policy.
Note: Period of probation shall be reckoned from the date
the Ee actually started working. (Sec.6 [b], Rule I, Book VI,
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
IRR) 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.
Q: May the employer and employee validly agree to
extend the probationary period beyond six months?
A: Yes. 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. vs. Leogardo, Jr., G.R. No. 74246,
(1989)].
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. vs. Hon. Leogardo, G.R.
No. 74246, (1989)].
Q: When is the extension of probationary period
allowed?
A: Extension is allowed only when:
1. Nature of the job requires a longer period, or
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.
Q: Is double or successive probation allowed?
A: No. 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 vs. NLRC, G.R. No. 109114, (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 employee. 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 Clarions
cost-cutting measures. Is Miclat considered as a
regular employee and hence entitled to its benefits?
78
 TERMINATION OF EMPLOYMENT
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., vs. NLRC, G.R. No. 148372, (2005)].
Q: What is the obligation of the employer to his
probationary employees?
A: 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 Alciras
performance, Middleby terminated his services.
Alcira contends that he was already a regular
employee when he was terminated. According to
Alciras computation, since Art. 13 of the NCC
provides that 1 month is composed of 30 days, 6
th
months totaling 180 days, then his 180 day would
fall 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
th
to the same calendar date of the 6 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 vs. NLRC, G.R. No. 149859,
(2004)].
Note: In Mitsubishi Motors vs. 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.
79
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)
Q: What is the purpose of the probation period?
A: To afford the Er an opportunity to observe the
fitness of a probationary Ee at work.
Q: In what instances is a probationary employee
deemed a regular employee?
A:
1. If he is allowed to work after a probationary
period. (Art. 281, LC)
2. If no standards, under which he will qualify as a
regular Ee, are made known to him at the time of
his engagement. (Sec. 6 [d], Rule I, Book VI, IRR)
Q: What are the grounds for terminating
probationary employment?
A:
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 vs. NLRC, G.R. No. 72222,
(1989)] (see Art. 281, LC)
Note: If Pre-termination of probationary contract is due to
the valid causes, the employer 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 vs. NLRC, G.R. No. 87333, (1991)].
Q: What are the limitations on the employers
power to terminate a probationary employment
contract?
A:
1. The power must be exercised in accordance with
the specific requirements of the contract;
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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 Ers 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
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. vs. NLRC, G.R. No. L-
53453, (1986)]
Q: What are the requirements for probationary
employment of private school teachers?
A: The probationary employement of academic
teching personnel shall not be more than a period of
6 consecutive semesters or 9 consecutive trimesters
of satisfactory service, as the case may be. (Sec. 117 of
the Manual of Regulations for Provate Higher Education)
Note: An academic teaching personnel, who does not
possess the minimum academic qualifications under Secs.
35 and 36 of the Manual of Regulations for Provate Higher
Education shall be considered as a part-time Ee, and
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
therefore can not avail of the status and privileges of a
probationary employment. A part-time Ee can not acquire a
regular permanent status, and hence, may be terminanted
when a qualified etacher becomes available. (Manual of
Regulations for Provate Higher Education)
Q: Colegio de San Agustin (CSA) hired the Gela Jose
as a grade school classroom teacher on a
probationary basis for SY 84 85. Her contract was
renewed for SYs 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, the Gela cannot claim any vested right to a
permanent appointment since she had not yet
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 vs. NLRC, G.R No. 87333, (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 employer. 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 [ Bibosovs.VictoriaMilling,G.R.No.L-
44360, (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.
80
 TERMINATION OF EMPLOYMENT
3. The filing of the complaint for illegal
dismissal effectively negates the Ers theory
of abandonment [Rizada vs. NLRC, G.R. No.
96982, (1999)].
4. The order to go home and not to return to
work constitutes dismissal from
employment.
5. The 8 probationary Ees 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 attorneys
fees.
REGULAR EMPLOYMENT
Q: What is regular employment?
A:
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,
theprovisions of written agreements to the
contrary notwithstanding and regardless of the
oral agreements of the parties. (Sec. 5 [a], Rule I,
Book VI, IRR)
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. (Sec. 5 [b], Rule I, Book VI, IRR)
Note: Regularization is not a management prerogative;
rather, it is the nature of employment that determines it. It
is a mandate of the law. [PAL vs. Pascua,G.R. No. 143258,
(2003)]
Regular employment does not mean permanent
employment. A probationary Ee becomes a regular Ee after
6 months. 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. vs. Catapang, G.R. No. 164736,
(2005)]
Q: What is the test to determine Regular
Employment?
A:
1. The primary standard of determining regular
employment is the reasonable connection
between the particular activity performed by the
81
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 vs. NLRC, G.R. No. 70705, ( 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 vs. NLRC,
G.R. No. 108889, (1998)]
2. Also, the performance of a job for at least a year
is sufficient evidence of the jobs 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. vs. Catapang, G.R. No. 164736,
(2005)].
Note: 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. vs.
NLRC, G.R. No. 114733,(1997)].
Q: Is the mode of compensation determinative of
regular employment?
A: No, 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 vs. NLRC, G.R. No. 123938, (1998)].
Q: When does Art. 280 not apply?
A: It does not apply in case of OFWs.
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 vs. Esso Eastern Maritime
Ltd., G.R. No. 158324, (2005)].
Q: Moises was employed by La Tondea 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 Tondea dismissed
Moises and claimed that Moises was contracted on
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
a casual basis specifically to paint certain company
buildings and that its completion terminated
Moises employment. Can Moises be considered as a
regular employee?
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
Tondeas business of manufacturing liquors;
otherwise, there would be no need for the regular
maintenance section of the companys engineering
department [De Leon vs. NLRC, G.R. No. 70705,
(1989)].
Q: Honorio Dagui was hired by Doa 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 Doa Aurora 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
employee?
A: Yes. The jobs assigned to Dagui as maintenance
man, carpenter, plumber, electrician and mason were
directly related to the business of the Tanjangcos 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 Doa 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. vs. NLRC, G.R. No. 114733, (1997)].
Q: A total of 43 employees who are deaf-mutes
were hired and re-hired on various periods by Far
East Bank and Trust Co. as money sorters and
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
counters through a uniformly worded agreement
called Employment Contract for Handicapped
Workers. The company disclaimed that these
employes were regular employees 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
employees be considered as regular employees?
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 vs. NLRC, G.R. No.
122917, (1999)].
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
82
 TERMINATION OF EMPLOYMENT
between labor and capital [Magsalin & Coca-Cola vs.
N.O.W.M., G.R. No. 148492, (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
employee 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
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 vs.
NLRC, G.R. No. 147816, (2003)].
PROJECT EMPLOYMENT
Q: What is project employment?
A: 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 (Sec. 5[a], Rule I, Book VI, IRR). 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.
83
Repeated hiring on a project-to-project basis is considered
necessary and desirable to the business of the Er. The Ee is
regular [Maraguinot vs. NLRC, G.R. No. 120969, (1998)].
Q: What are the indicators of project employment?
A: Either one or more of the following circumstances,
among others, may be considered as indicators that
an Ee is a project Ee. [Hanjin vs. Ibaez, G.R. No.
170181, (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 Ees 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
Q: What are the requisites in determining whether
an employee is a project employee?
A:
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 vs. NLRC, G.R. No. 114734, (2000)]
3. The Ee must have been dismissed every after
completion of his project or phase
4. Report to the DOLE of Ees dismissal on account
of completion of contract [Policy Inst. No. 20;
D.O. 19 (1997)]
Q: The employer hires the employees whereby their
employment would automatically expire upon the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
completion of a project. When the employer
proceeded to serve notices of termination of
employment when the project was about to be
completed, the employees filed a notice of strike for
mass termination. Is the action of the employees
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 Ees 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, (2011)].
Q: What is a project?
A: 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 vs. NLRC,
G.R. No. 125792, (1998)].
Q: Can a project employee or a member of a work
pool acquire the status of a regular employee?
A: Yes, when the following concur:
1. There is a continuous rehiring of project Ees
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, (2012)].
Note: The length of time during which the Ee was
continuously re-hired is not controlling, but merely 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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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 vs.
NLRC, G.R. No. 120969, (1998)].
Q: What is the day certain rule?
A: 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.
Q: Are project Ees entitled to separation pay?
A: GR: Project Ees are not entitled to separation pay
if they are terminated as a result of the completion
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 vs. NLRC, G.R. No.
81077, (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
companys 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 employee in the
companys 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 employee?
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 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 dept 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
84
 TERMINATION OF EMPLOYMENT
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. vs. Puente, G.R. No. 153832,
(2005)]
SEASONAL EMPLOYMENT
Q: What is seasonal employment?
A: Employment where the job, work or service to be
performed is seasonal in nature and the employment
is for the duration of the season. (Sec.5 [a], Rule I,
Book VI, IRR)
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 vs. NLRC, G.R. No.
79869, (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 vs. NLRC, G.R. No. 78969, (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 vs.
National Federation of Sugarcane Workers-Food and
General Trade, G.R. No. 149440, (2003)].
Q: Are seasonal employees entitled to separation
pay?
A: When the business establishment is sold which
effectively terminates the employment of the
Seasonal Ees, the latter would be entitled to
separation pay.
Q: Can seasonal employees be considered as regular
employees?
A: Yes. 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
85
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 vs.
Pancho, G.R. No. 151827, (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 vs. NLRC, G.R. No.
78969, (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 employees as seasonal employees?
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 vs. NLRC, G.R. No. 73806, (1990)].
CASUAL EMPLOYMENT
Q: What is casual employment?
A:
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 (Art. 281,
LC).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

But despite the distinction between regular and answers.

casual employment, every Ee shall be entitled to the
same rights and privileges, and shall be subject to the A:
same duties as may be granted by law to regular Ees PROJECT EMPLOYEE CASUAL EMPLOYEE
during the period of their actual employment. Employed for a specific Engaged to perform a
project or undertaking job, work or service
2. An Ee is engaged to perform a job, work or service the completion or which is incidental to the
which is merely incidental to the business of the Er, termination of which is business of the Er and
and such job, work or service is for a definite period determined at the time the definite period of his
made known to the Ee at the time of engagement of his engagement. employment is made
(Sec. 5 [b], Rule I, Book VI, IRR) known to him at the
time of his engagement.
Q: Can casual employee become a regular His work need not be His continued
employee? incidental to the employment after the
business of the Er and lapse one year makes
A: If he has rendered at least 1 year of service, his employment may him a regular Ee.
whether such service is continuous or broken, he is exceed one year without
considered as regular Ee with respect to the activity necessarily making him a
in which he is employed and his employment shall regular Ee.
continue while such activity exists. Job is coterminous with No termination report
a specific project or required.
A casual Ee is only casual for 1 year, and it is the phase thereof. It is
passage of time that gives him a regular status. required that a
[KASAMMA-CCO vs. CA, G.R. No. 159828, (2006)] termination report be
submitted at the nearest
The purpose is to give meaning to the constitutional employment office upon
guarantee of security of tenure and right to self- completion of the
organization [Mercado vs. NLRC, G.R. No. 79868, project or phase.
(1991)].
FIXED TERM EMPLOYMENT
Q: Yakult Phils. is engaged in the manufacture of
cultured milk. The workers were hired to cut cogon Q: What is the nature of term employment?
grass and weeds at the back of the factory building
used by Yakult. They were not required to work on A: A contract of employment for a definite period
fixed schedule and they worked on any day of the terminates by its own terms at the end of such period
week on their own discretion and convenience. The [Brent School vs. Zamora, G.R. No. L-48494, (1990)].
services of the workers were terminated by Yakult
on less than 1-year after. May casual or temporary
Q: What is the decisive determinant in term
Ees be dismissed by the employer before the employment?
expiration of the 1-year period of employment?
A: It is the day certain agreed upon by the parties for
A: Yes, the usual business or trade of Yakult Phils. is
the commencement and the termination of their
the manufacture of cultured milk. The cutting of the employment relation.
cogon grasses in the premises of its factory is hardly
necessary or desirable in the usual business of the Q: What is a fixed term employment?
Yakult.
A: It is an employment where a fixed period of
The workers are casual Ees. Nevertheless, they may employment was agreed upon:
be considered regular Ees if they have rendered
services for at least 1 year. When, as in this case, 1. Knowingly and voluntarily by the parties,
they were dismissed from their employment before 2. Without any force, duress or improper
the expiration of the 1-year period they cannot pressure being brought to bear upon the Ee
lawfully claim that their dismissal was illegal [Capule,
and
et al. vs. NLRC, G.R. No. 90653, (1990)]. 3. Absent any other circumstances vitiating his
consent, or
Q: How is the project worker different from a casual
or contractual worker? Briefly explain your

UNIVERSITY OF SANTO TOMAS

2013 GOLDEN NOTES 86
 TERMINATION OF EMPLOYMENT
4. Where it satisfactorily appears that the Er
and Ee dealt with each other on more or less
equal terms with no moral dominance
whatever being exercised by the former over
the latter [Brent School, Inc. vs. Zamora, G.R.
No. 48494, (1990)].
Note: A fixed-period Ee does not become a regular Ee
because his employment is coterminous with a specific
period of time.
Ee hired on a fixed-term is regular if job is necessary and
desirable to the business of Er [Philips Semiconductor vs.
Fadriquela, G.R. No. 141717, (2004)].
Q: Is term employment a circumvention of the law
on security of tenure?
A: No, it is not a circumvention of the law if it follows
the requisites laid down by the Brent ruling [Romares
vs. NLRC, G.R. No. 122327, (1998)].
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 employee
and could not be dismissed without valid cause. Is
he a regular employee?
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. vs. Zamora,
G.R. No. 48494, (1990)].
Q: In the abovementioned facts, will Rene
automatically become a regular employee if he is
rehired by the school for another definite period of
employment?
A: 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
87
the work is usually necessary and desirable to the
business of the Er.
Q: Does the Reasonable Connection Rule applies
in fixed term employment for a fixed- term
employee be eventually classified as regular
employee?
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 employees are holding
administrative positions as dean, dept heads and
institute secretaries. In the implementation of the
Reorganization, Retrenchment and Restructuring
program effective Jan. 1, 1984, Dean Jose and other
employees were retired but subsequently rehired.
Their appointment to their administrative positions
as dean, dept 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 employees
illegally dismissed?
A: No. Petitioners were dismissed by reason of the
expiration of their contracts of employment.
Petitioners' appointments as dean, dept 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 vs. NLRC, G.R. No. 101013, (1993)].
JOB CONTRACTING
ARTS. 106 109, LABOR CODE
Q: What is job contracting (independent
contracting/ subcontracting)?
A: "Contracting" or "subcontracting" is an
arrangement whereby a principal agrees to put out or
farm out with a contractor the performance or
completion of a specific job, work or service within a
definite or predetermined period, regardless of
whether such job, work or service is to be performed
or completed within or outside the premises of the
principal. (DO 18-A)
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Q: What are the conditions that must be met in
order to be considered as legitimate job contracting
or subcontracting?
A: The following conditions must be met:
1. The contractor must be registered in accordance
with these Rules and carries a distinct and
independent business and undertakes to perform
the job, work or service on its own responsibility,
according to its own manner and method, and
free from control and direction of the principal in
all matters connected with the performance of
the work except as to the results thereof;
2. The contractor has substantial capital and/or
investment; and
3. The Service Agreement ensures compliance with
all the rights and benefits under Labor Laws. (Sec.
4, DO 18-A)
Q: When is there labor-only contracting?
A: There is labor-only contracting when:
1. The contractor does not have substantial capital
or investments in the form of tools, equipment,
machineries, work premises, among others, and
the Ees recruited and placed are performing
activities which are usually necessary or desirable
to the operation of the company, or directly
related to the main business of the principal
within a definite or predetermined period,
regardless of whether such job, work or service is
to be performed or completed within or outside
the premises of the principal; or
2. The contractor does not exercise the right to
control over the performance of the work of the
Ee. (Sec. 6, DO 18-A)
Q: What are the factors to consider in determining
whether contractor is carrying on an independent
business?
A:
1. Nature and extent of work
2. Skill required
3. Term and duration of the relationship
4. Right to assign the performance of specified
pieces of work
5. Control and supervision of worker
6. Power of Er to hire, fire and pay wages
7. Control of the premises
8. Duty to supply premises, tools, appliances,
materials and labor
9. Mode, manner and terms of payment [Vinoya vs.
NLRC, G.R. No. 126286, (2000)].
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
Note: Individuals with special skills, expertise or talent
enjoy the freedom to offer their services as independent
contractors. An individual like an artist or talent has a right
to render his services without any one controlling the
means and methods by which he performs his art or craft
[Sonza vs. ABS-CBN, G.R. No. 138051, (2004)].
Q: SMC and Sunflower Cooperative entered into a 1-
yr Contract of Services, to be renewed on a month
to month basis until terminated by either party.
Pursuant to the contract, Sunflower engaged private
respondents to render services at SMCs Bacolod
Shrimp Processing Plant. The contract was deemed
renewed by the parties every month after its
expiration on Jan. 1, 94 and respondents continued
to perform their tasks until Sep. 11, 95. In July 95,
private respondents filed a complaint before the
NLRC, praying to be declared as regular employees
of SMC, with claims for recovery of all benefits and
privileges enjoyed by SMC rank and file employees.
Respondents subsequently filed an Amended
Complaint to include illegal dismissal as additional
cause of action following SMCs closure of its
Bacolod Shrimp Processing Plant on which resulted
in the termination of their services. SMC filed a
Motion for Leave to File Attached Third Party
Complaint to implead Sunflower as 3 -Party
rd
Defendant. Are private respondents employees of
the independent cooperative contractor (Sunflower)
or of the SMC?
A: The contention of SMC holds no basis. Using the
substantial capital doctrine and the right of control
test, the Court found that the Sunflower had no
substantial capital in the form of tools, equipment,
machineries, work premises and other materials to
qualify itself as an independent contractor. The lot,
building, machineries and all other working tools
utilized by private respondents in carrying out their
tasks were owned and provided by SMC. In addition,
the shrimp processing company was found to have
control of the manner and method on how the work
was done. Thus, the complainants were deemed Ees
not of the cooperative but of the shrimp processing
company. Since respondents who were engaged in
shrimp processing performed tasks usually necessary
or desirable in the aquaculture business of SMC, they
should be deemed regular Ees of the latter and as
such are entitled to all the benefits and rights
appurtenant to regular employment [SMC vs.
Prospero Aballa, et al., G.R. No. 149011, (2005)].
Q: What are the conditions of permissible job
contracting?
88
 TERMINATION OF EMPLOYMENT
A:
1. The labor contractor must be duly licensed by
the appropriate Regional Office of the DOLE
2. There should be a written contract between the
labor contractor and his client-Er that will assure
the Ees at least the minimum labor standards
and benefits provided by existing laws.
Note: The Ees of the contractor or subcontractor shall be
paid in accordance with the provisions of the LC. (Art. 106,
LC)
Q: Who are the parties in contracting and
subcontracting?
A:
1. Contractor/subcontractor any person or entity,
including a cooperative, engaged in a legitimate
contracting or subcontracting arrangement.
2. Contractual Ee One who is employed by a
contractor or subcontractor to perform or
complete a job, work, or service pursuant to a
service agreement with a principal. (D.O. 18-A)
3. Principal Any Er who puts out or farms out a job,
service, or work to a contractor or subcontractor.
Q: Describe the relationship arising from contractual
arrangements.
A: There is a trilateral relationship between the
principal, contractor and Ee. There exists a
contractual relationship between the principal and
the contractor or subcontractor to its Ees.
DEPARTMENT ORDER NO. 18-A
Q: What are the rights of a contractual employee?
A: They shall be entitled to all the rights and
privileges as provided for in the LC, as amended, to
include the following:
1. Safe and healthful working conditions;
2. Service Incentive Leave, rest days, OT pay,
th
holiday pay, 13 month pay and separation pay;
3. Retirement benefits under SSS or retirement
plans of the contractor;
4. Social security and welfare benefits;
5. Self-organization, CBA and peaceful concerted
actions; and
6. Security of tenure (Sec. 8, DO 18-A)
Q: What are the effects of termination of
contractual employee to separation pay and other
benefits?
89
A:
1. If caused by the pre-termination of the Service
Agreement not due to authorized causes under
Art. 283 of LC The right of Ee to unpaid wages
and other unpaid benefits including unremitted
legal mandatory contributions shall be borne by
the party at fault, without prejudice to the
solidary liability of the parties to the Service
Agreement.
2. If the termination results from the expiration of
the service agreement or completion of the phase
of the job The Ee may opt for payment of
separation benefits as may be provided by law or
the Service Agreement, without prejudice to
his/her entitlement to the completion bonuses
or other emoluments, including retirement
benefits whenever applicable.
Q: When is the principal deemed the employer of
the contractual employee?
A: When:
1. There is labor-only contracting
2. The contracting arrangement falls within the
prohibited acts
Q: May the employer or indirect employer require
the contractor or subcontractor to furnish a bond
equal to the cost of labor under contract to answer
for the wages due to employees in case the
contractor or subcontractor fails to pay the same?
A: Yes. The Er or indirect Er may require the
contractor or subcontractor to furnish a bond that
will answer for the wages due to the Ees.
Q: What is the liability of the principal?
A: The principal shall be solidarily liable with the
contractor in the event of any violation of any
provision of the LC, including the failure to pay
wages. This will not prevent the principal from
claiming reimbursement from the contractor.
Q: Why is labor-only contracting prohibited?
A: It gives rise to confusion as to who is the real Er of
the workers and who is liable to their claims. It also
deprives workers of the opportunity to become
regular Ees.
Q: What are the bases of the State in prohibiting
labor-only contracting?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

A: another, Arnold was not free from the control

1. The Constitution, which provides that the State and direction of SMPC because all work activities
shall protect labor and promote its welfare, and and schedules were fixed by the company.
shall guarantee basic labor rights including just Therefore, Arnold is not a job contractor. He is
and humane terms and conditions of engaged in labor-only contracting.
employment and the right to self-organization. 2. SMPC is liable for the claims of the workers hired
2. Art. 106 of the LC, which allows the SLE to by Arnold. A finding that Arnold is a labor-only
distinguish between labor-only contracting and contractor is equivalent to declaring that there
job contracting to prevent any violation or exist an Er-Ee relationship between SMPC and
circumvention of the LC. workers hired by Arnold. This is so because
Arnold is considered a mere agent of SMPC [Lim
Q: Distinguish between job contracting and labor- vs. NLRC, G.R. No. 124630,(1999)].
only contracting.
Q: What are the grounds for cancellation of
A: registration of contractors or subcontractors?
LABOR-ONLY
JOB CONTRACTING
CONTRACTING A:
No Er-Ee relationship 1. Misrepresentation of facts in the application;
exist between the Er and 2. Submission of a falsified or tampered application
Er is treated as direct Er of the contractor's Ees or supporting documents to the application for
the person recruited in all except when the registration;
instances contractor or 3. Non-submission of Service Agreement between
subcontractor fails to the principal and the contractor when required
pay the wages of the Ees to do so;
Liability is limited (shall be 4. Non-submission of the required semi-annual
solidarily liable with Er report;
only when the Er fails to Liability extends to all 5. Findings through arbitration that the contractor
comply with requirements those provided under has engaged in labor-only contracting and/or the
as to unpaid wages and the Labor Standards law prohibited activities;
other labor standards 6. Non-compliance with labor standards and
violations) working conditions;
Permissible, subject only 7. Findings of violation of Sec. 8 (Rights of
Prohibited by Law Contractor's Employees) or Sec. 9 (Required
to certain conditions
The contractor has Contracts);
Has no substantial 8. Non-compliance with SSS, the HDMF, Pag-ibig,
substantial capital or
capital or investment Philhealth, and ECC laws; and
investment
9. Collecting any fees not authorized by law and
Q: SMPC entered into a contract with Arnold for the other applicable rules and regulations (Sec. 23,
milling of lumber as well as the hauling of waste DO 18-A).
wood products. The company provided the
equipment and tools because Arnold had neither DEPARTMENT CIRCULAR NO. 01-12
tools and equipment nor capital for the job. Arnold,
on the other hand, hired his friends, relatives and Q: Are the rules provided under D.O. No. 18-A
neighbors for the job. Their wages were paid by applicable to companies or firms in:
SMPC to Arnold, based on their production or the 1. Business Process Outsourcing (BPO) or
number of workers and the time used in certain Knowledge Process Outsourcing (KPO); and
areas of work. All work activities and schedules 2. Construction Industries
were fixed by the company.
A:
1. Is Arnold a job contractor? Explain briefly. 1. No. D.O. 18-A contemplates generic or focused
2. Who is liable for the claims of the workers hired singular activity in one contract between the
by Arnold? Explain briefly. (2002 Bar Question) principal and the contractor and does not
contemplate information-technology enabled
A: services involving entire business processes.
1. No. In the problem given, Arnold did not have These companies engaged in business processes
sufficient capital or investment for one. For may hire Ees in accordance with the applicable

UNIVERSITY OF SANTO TOMAS

2013 GOLDEN NOTES 90
 TERMINATION OF EMPLOYMENT

laws and maintain these employees based on FACTOR TEST Independent Labor-only
businesses requirements, which may or may not Contractor contractor
be for different clients of the BPOs at different
periods of the Ees employment. [3.2, No separate
Department Circular No. 01-12] business
2. No. Licensing and the exercise of the regulatory The business of
independent
powers over the construction industry is lodged an independent
with the Philippine Contractors Accreditation and distinct
contractor is
Board (PCAB) under the Construction Industry from the
Nature of entirely
Authority of the Philippines (CIAP) pursuant to principal. May
business separate and
P.D. 1746 and not with the DOLE or any of its be a cabo or
regional offices. [4.1, Department Circular No. distinct from the
an in-house
01-12] business of the
agency
principal
prohibited
EFFECTS OF LABOR-ONLY CONTRACTING
under DO 18-02
Q: What are the effects of finding that there is labor-
only contracting? Has substantial
The only
capital or
Substantial investment is
A: A finding that a contractor is a labor-only investment. No
capital OR bringing
contractor is equivalent to declaring that there is an substantial
Er-Ee relationship between the principal and the Ees investment individuals to
capital or
of the labor-only contractor [Assoc. Anglo-American work
investment.
Tobacco Corp. vs. Clave, G.R. No. 50915, (1990)].
Control as to
Note: The principal is considered the direct Er of the Control as to
contractual Ees for purposes of enforcing the provisions of only RESULTS
Control BOTH results
the LC and other social legislations. but not the
and means
means
The contractor/subcontractor is deemed only to be the
agent of the principal.
VALID in VOID in
EFFECT:
The principal is solidarily liable with the contractor/ Philippine law Philippine law
subcontractor in the event of any violation of any provision
of the LC, including failure to pay wages.
Note: DO 18-A prohibits job contracting of functions
TRILATERAL RELATIONSHIP IN JOB CONTRACTING performed by regular Ees.

Q: What is trilateral relationship? Q: What does substantial capital or investment

A: In legitimate contracting or subcontracting
arrangement there exists:
1. Er-Ee relationship between the contractor and the
Ees it engaged to perform the specific job, work or
service being contracted; and
2. Contractual relationship between the principal and
the contractor. (Sec. 5, DO 18-A)
Q: How do you determine the relationship of the
parties if it is independent contracting or labor-only
contracting?
A: Thru the use of the Factor Test. This considers the
nature of the business, substantial capital and the
control exercised.
mean?
A: It refers to paid-up capital stocks/shares of at least
Three Million Pesos (Php 3,000,000.00) in the case of
corporations, partnerships and cooperatives; in the
case of single proprietorship, a net worth of at least
Three Million Pesos (Php 3,000,000.00). (D.O. 18-A)
Note: The law does not require both substantial capital and
investment in the form of tools, equipment, machineries,
etc. This is clear from the use of conjunction or. If the
contention was to require the contractor to prove that he
has both capital and requisite investment, then the
conjunction and should have been used [Virginia Neri vs.
NLRC, G.R. No. 97008, (1993)].
Q: What does the right to control mean?

UNIVERSITY OF SANTO TOMAS

91 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
A: It refers to the right reserved to the person for
whom the services of the contractual workers are
performed, to determine not only the end to be
achieved, but also the manner and means to be used
in reaching that end. (D.O. 18-A)
DISMISSAL FROM EMPLOYMENT
Q: What is substantive due process (Security of
Tenure)?
A: In cases of regular employment, the Er shall not
terminate the services of an Ee except for a just cause
or when authorized by the LC on Termination of
Employment. (Art. 279, LC)
No worker shall be dismissed except for a just or
authorized cause provided by law and after due
process.
JUST CAUSES
Q: What are the Just causes for termination (Art.
282, LC)?
A:
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.
Note: The burden of proving that the termination was for a
valid or authorized cause shall rest on the Er. (Art. 277[b],
LC)
Q: What is Serious Misconduct?
A: 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 vs.
Pehid, G.R. No. 166152, (2005)].
Q: What are the elements of serious misconduct?
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
A:
1. It must be serious or of such a grave and
aggravated character;
2. Must relate to the performance of the Ees
duties;
3. Ee has become unfit to continue working for the
Er [Philippine Aeolus Automotive United Corp. vs.
NLRC, G.R. No. 124617, (2000)].
Q: Give some examples of serious misconduct.
A:
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 vs. NLRC, G.R. No. 11753, (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 vs. NLRC, G.R.
No. 121035, (2000)].
92
 TERMINATION OF EMPLOYMENT
Q: When is willful disobedience of the employers
lawful orders a just cause for termination?
A: Two requisites must concur:
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 vs. NLRC, G.R. No. 124966,
(1998)].
Q. Is refusal to a promotion by an employee an act
of insubordination or willful disobedience?
A. 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.
vs. CA, G.R. No. 152057, (2003)].
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. vs. NLRC, G.R. No. 75907, (1992)]
Q: Escobins group were security guards based in
Basilan. They were placed in floating status and
93
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: 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
Escobins group since they are heads of families
residing in Basilan and they were not given
transportation money or assurance of availability of
work in Manila [Escobin vs. NLRC, G.R. No. 118159.
(1998)].
Q: When is negligence a just cause for termination?
A: When it is gross and habitual.
Q: When is there Gross Negligence?
A: Gross negligence implies a want or absence of or
failure to exercise slight care of diligence of the entire
absence of care it evinces thoughtless disregard of
consequences without exerting any effort to avoid
them. However, such neglect must not only be gross
but habitual in character [Judy Phils. vs. NLRC, G.R.
No. 111934, (1998)].
Q: When is there habitual neglect of duties?
A: Habitual Neglect implies repeated failure to
perform ones duties over a period of time,
depending upon the circumstance [JGB and
Associates vs. NLRC, GR No. 10939, (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. vs. NLRC,
G.R. No. 111934, (1998)].
Q: Does the failure in performance evaluations
amount to gross and habitual neglect of duties?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
A: As a general concept poor performance is
equivalent to inefficiency and incompetence in the
performance of official duties. The fact that an
employees 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 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. vs.
Bea, G.R. 143023, (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
vs. Leogardo, G.R. No. L-63316, (1984)] This ground is
considered analogous to those enumerated under
Art. 282. [Skippers United Pacific vs. Magud, G.R. No.
166363, (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 Gamidos act of
sleeping on the job constitute a valid cause of
dismissal?
A: 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. Gamidos single act of sleeping further shows
that the alleged negligence or neglect of duty was
neither gross nor habitual [VH Manufacturing vs.
NLRC, G.R. No. 130957,(2000)].
Q: Give some forms of neglect of duty.
A:
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
vs. NLRC, GR No. 110388, (1995)].
Q: When is loss of trust and confidence a Just cause
for termination?
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
A:
1. It applies only to cases involving:
a. Ees occupying positions of trust and
confidence (confidential and managerial
Ees) 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
b. Ees routinely charged with the care and
custody of the employers 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 vs. NLRC, G.R. No.
118506, (1997)].
2. The loss of trust and confidence must be based
on willful breach.
Note: 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
vs. NLRC, G.R. No. 119536, (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
vs. NLRC, G.R. No. 131653, (2001)].
4. It must be substantial and founded on clearly
established facts sufficient to warrant the Ees
separation from employment [Sulpicio Lines Inc.
vs. Gulde, G.R. No. 149930, (2002)].
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 vs. NLRC, G.R. No.
115491, (1998)].
Q: What are the guidelines for the doctrine of loss of
confidence to apply?
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 TERMINATION OF EMPLOYMENT
A:
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 Ers 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 dully committed by the employee which must be
established by substantial evidence [Dela Cruz vs. NLRC,
G.R. No. 119536, (1997)].
Q: Mabeza, a chambermaid at Hotel Supreme was
terminated from employment because of her refusal
to sign an affidavit attesting to their employers
(Ers) 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 vs. NLRC,
G.R. No. 118506, (1997)].
Q: Abelardo Abel was first hired by Philex Mining
Corp. in January 1988. He was later assigned to the
companys 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 companys
95
mine site at Benguet. His co-worker Lupega,
executed an affidavit known as the Subsidence
Area Anomaly. The incidents in Lupegas affidavit
supposedly took place when Abel was still a
Contract Claims Asst. at the companys legal dept.
An investigation was promptly launched by the
companys 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 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 Abels
responsibilities to monitor the performance of the
companys contractors in relation to the scope of
work contracted out to them.
nd
The 2 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 companys 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 vs. Philex Mining Corp., G.R. No. 178976,
(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.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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, (2012)].
Q: What is abandonment as a just cause for
termination?
A: It means the deliberate, unjustified refusal of an
employee to resume his employment.
Q: What are the requirements for a valid finding of
abandonment?
A: 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 s. NLRC, G.R. No. 144483,
(2003)].
Q: How is abandonment proven?
A: To prove abandonment, 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 s. NLRC, G.R. No. 144483, (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: Mejilas acts such as surrendering the shops 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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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 vs. NLRC, G.R. No. 121605, (2000)].
Q: The employees averred that they were underpaid
and filed a complaint for money claims against the
employer 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 employees 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
employee moved to file a joint 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
employee 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
employee 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 employee 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 Ers 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 securitys 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, (2011)].
Q: What are the guidelines to determine the validity
of termination?
A: Validity of termination per se is determined by
compliance with two-notice rule, hearing, just or
authorized cause. This is more or propriety of
96
 TERMINATION OF EMPLOYMENT
dismissal as penalty as oppose to reprimand,
suspension, etc.
Q: When is "commission of a crime or offense" a just
cause for termination of an employee?
A: It refers to an offense by the Ee against the person
of his employer 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.
Q: What is required for an act to be included in
analogous cases of just causes of termination?
A: Must be due to the voluntary and/or willful act or
omission of the Ee [Nadura vs. Benguet Consolidated,
G.R. No. L-17780, (1962)], e.g.:
1. Violation of company rules and regulations
2. Drunkenness
3. Gross inefficiency
4. Illegally diverting employers products
5. Failure to heed an order not to join an illegal
picket
6. Violation of safety rules and code of
discipline
Note: 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 vs. NLRC, G.R. No.
97239, (1993)]
Past offenses
Stellar Industrial Service Inc. vs. NLRC: 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.
Chua-Qua vs. Clave: The school failed to show that Chua
took advantage of her position to court her student
Qua. 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.
Q: What is the doctrine of incompatibility?
97
A: 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 Chauffeurs League vs. Bachrach
Motor Co., G.R. No. L-47071, (1940)].
AUTHORIZED CAUSES
Q: What are the authorized causes of termination by
the employer?
A:
1. Installation of labor-saving devices
(automation/robotics)
2. Redundancy (superfluity in the performance of a
particular work) 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. vs. NLRC, G.R. No. 82249,
(1991)].
Note: The redundancy should not have been created
by the Er.
3. Reorganization
Note: 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 employee on the ground
of redundancy [DOLE Phil., Inc. vs. NLRC, G.R. No. L-
55413, (1983)].
4. Retrenchmentcutting of expenses and includes
the reduction of personnel; It is a management
prerogative, a means to protect and preserve the
Ers 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 Ees or otherwise laid-off.
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 vs. TP Phils Cement
Corp., et al, G.R. No. 149090, (2005)].
5. Closing or cessation of operation of the
establishment or undertaking must be done in
good faith and not for the purpose of
circumventing pertinent labor laws.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
6. Disease must be incurable within 6 months and
the continued employment is prohibited by law
or prejudicial to his health as well as to the
health of his co-Ees with a certification from the
public health officer that the disease is incurable
within 6 months despite due to medication and
treatment
Q: What are other authorized causes?
A:
1. Total and permanent disability of Ee
2. Valid application of union security clause
3. Expiration of period in term of employment
4. Completion of project in project employment
5. Failure in probation
6. Relocation of business to a distant place
7. Defiance of return-to work-order
8. Commission of Illegal acts in strike
9. Violation of contractual agreement
10. Retirement
Q: What are the procedural steps required in
termination of an employee for authorized causes?
A:
1. Written Notice to DOLE 30 days prior to the
intended day of termination.
Purpose: To enable it to ascertain the verity of
the cause of termination.
2. Written notice to Ee concerned 30 days prior the
intended date of termination.
3. Payment of separation pay - Serious business
losses do not excuse the Er from complying with
the clearance or report required in Art. 283 of
the LC and its IRR before terminating the
employment of its workers. In the absence of
justifying circumstances, the failure of the Er to
observe the procedural requirements under Art.
284 of the LC taints their actuations with bad
faith if the lay-off was temporary but then
serious business losses prevented the
reinstatement of respondents, the Ers should
have complied with the requirements of written
notice.
Q: What are the requisites of a valid Redundancy?
A:
1. Written notice served on both the Ees and the
DOLE at least 1 month prior to separation from
work
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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
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.
Is there redundancy even though Ong was the only
one occupying his position?
A: Redundancy in an Ers personnel does not
necessarily or even ordinarily refer to duplication of
work. The characterization of Ongs 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 employees that are necessary for
the operation of its business [Wiltshire File Co., Inc.
vs. NLRC, G.R. No. 82249, (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 vs. NLRC,
G.R. No. 131108, (1999)].
Retrenchment is a means of last resort because in the
normal course of business losses are expected. Employer
must have taken all measures necessary to prevent losses
and it is the last measure when you touch the work force.
Q: What are the requisites of a valid retrenchment?
A:
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
98
 TERMINATION OF EMPLOYMENT
4. Proof of expected or actual losses
5. The employer used fair and reasonable criteria in
ascertaining who would be retained among the
Ees, such as status, efficiency, seniority, physical
fitness, age, and financial hardship of certain
workers [FASAP v. PAL, G.R. No. 178083, (2009)].
Q: What are the criteria in selecting employees to be
retrenched?
A: 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. vs.
National Labor Union, G.R. No. 115414,
(1998)]
Q: What is the last in first out (LIFO) rule?
A: It applies inthe 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 vs. NLRC, G.R. No. 106256, (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: In Asian Alcohol Corp., the SC stated that with
regard the policy of "first in,last out" in choosing
which positions to declare as redundantor 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 employees after incurring deficits amounting to
9.1 million pesos. Aside from retrenching its
employees, 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
99
the retrenchment done by the Society not valid for
its failure to follow the criteria laid down by law?
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. vs. National Labor
Union, G.R. No. 115414, (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
employees 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. vs. NLRC, G.R.
No. 131108, (1999)].
Q: Differentiate redundancy from retrenchment
A: Redundancy does not involve losses or the closing
or cessation of operations of the establishment.
On the other hand, retrenchment involves losses,
closures or cessation of operations of establishment
or undertaking not due to serious business losses or
financial reverses.
Q: What are the requisites of a valid closure?
A:
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
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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
Q: What is the test for the validity of closure or
cessation of establishment or undertaking?
A: 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. vs. Dr. Meris, G.R. No. 155098, (2005)].
Q: When is separation pay required in case of
closure?
A: Only where closure is neither due to serious
business losses nor due to an act of Government
[North Davao Mining Corp vs. NLRC, G.R. No. 112546,
Mar. 13, 1996; NFL vs. NLRC, G.R. No. 127718,
(2000)].
Note: Closure contemplated is a unilateral and voluntary
act on the part of the Er to close the business
establishment.
When the closure of the business is due to serious
business loss- there is no obligation to pay separation
pay.
Where closure of business is by compulsion of law
(e.g.: the land where the building is situated was
declared covered by the Comprehensive Agrarian
Reform Law) - closure of business is NOT attributed to
Ers will thus, no obligation to pay.
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 its employees. It posted the
notice of closure on the corporate bulletin board.
Does the written notice posted by Galaxie on the
bulletin board sufficiently comply with the notice
requirement under Art. 283 of the LC?
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 employer should indemnify the
Ee, in the form of nominal damages, for the violation
of his right to statutory due process [Galaxie Steel
Workers Union vs. NLRC, G.R. No. 165757, (2006)].
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
Are Galaxie employees entitled to separation pay?
A: 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 employer
to pay separation benefits [Galaxie Steel Workers
Union vs. NLRC, G.R. No. 165757, (2006)].
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 companys 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: 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
employer 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 vs. NLRC,
G.R. No. 90519, (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?
100
 TERMINATION OF EMPLOYMENT

A: The determination to cease operations is a the filling up of vacancies in the facilities of the buyer
prerogative of management that is usually not [MDII Supervisors & Confidential Ees Assn (FFW) vs.
interfered with by the State as no business can be residential Assistant on Legal Affairs, G.R. Nos. L-
required to continue operating at a loss simply to 45421-23, (1977)].
maintain the workers in employment. That would be
a taking of property without due process of law which Q: What is the difference between closure and
the Er has a right to resist. But where it is manifest retrenchment?
that the closure is motivated not by a desire to avoid
further losses but to discourage the workers from A:
organizing themselves into a union for more effective CLOSURE RETRENCHMENT
negotiations with management, the State is bound to It is the reversal of Is the reduction of
intervene. The losses of less than Php 2,000 for a fortune of the Er personnel for the
corporation capitalized at Php 3 million cannot be whereby there is a purpose of cutting down
considered serious enough to call for the closure of complete cessation of on costs of operations in
the company [Carmelcraft Corp. vs. NLRC, G.R. No. business operations to terms of salaries and
90634-35, (1990)]. prevent further wages resorted to by an
financial drain upon Er because of losses in
Q: Is the transferee of the closed corporation an Er who cannot pay operation of a business
required to absorb the employees of the old anymore his Ees since occasioned by lack of
corporation? business has already work and considerable
stopped. reduction in the volume
A: GR: There is no law requiring a bona fide purchaser of business.
of assets of an on-going concern to absorb in its In the case of
employ the Ees of the latter except when the retrenchment, however,
transaction between the parties is colored or clothed for the closure of a
with bad faith. [Sundowner Devt Corp. vs. Drilon, G.R. One of the business or a
No. 82341, (1989)] prerogatives of department due to
management is the serious business losses
XPNs: decision to close the to be regarded as an
1. Where the transferee was found to be merely entire establishment authorized cause for
an alter ego of the different merging firms or to close or abolish terminating Ees, it must
[Filipinas Port Services, Inc. vs. NLRC, G.R. No. a department or be proven that the
97237, (1991)]. section thereof for losses incurred are
2. Where the transferee voluntarily agrees to do economic reasons, substantial and actual or
so [Marina Port Services, Inc. vs. Iniego, G.R. such as to minimize reasonably imminent;
No. 77853, (1990)]. expenses and reduce that the same increased
capitalization. through a period of
Q: Marikina Dairy Industries, Inc. decided to sell its time; and that the
assets and close operations on the ground of heavy condition of the
losses. The unions alleged that the financial losses company is not likely to
were imaginary and the dissolution was a scheme improve in the near
maliciously designed to evade its legal and social future.
obligations to its employees. The unions want the LC provides for the
buyers of the corporations assets restrained to Does not obligate the
payment of separation
operate unless the members of the unions are hired Er for the payment of
package in case of
to operate the plant under the terms and conditions separation package if
retrenchment to
specified in the collective bargaining agreements. there is closure of
prevent losses.
business due to
Is the buyer of a companys assets required to serious losses.
absorb the employees of the seller?
Q: When is disease a ground for dismissal?
A: There is no law requiring that the purchaser of a
companys assets should absorb its Ees and the most A: Where the Ee suffers from a disease, and:
that can be done for reasons of public policy and 1. His continued employment is prohibited by law
social justice was to direct that buyers of such assets or prejudicial to his health or to the health of his
to give preference to the qualified separated Ees in co-Ees. (Sec.8, Rule I, Book VI, IRR)

UNIVERSITY OF SANTO TOMAS

101 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
2. With a certification by competent public health
authority that the disease is incurable within 6
months despite due medication and treatment
[Solis vs. NLRC, GR No. 116175, (1996)].
Note: The requirement for a medical certification cannot be
dispensed with; otherwise, it would sanction the unilateral
and arbitrary determination by the Er of the gravity or
extent of the Ees illness and thus defeat the public policy
on the protection of labor [Manly Express vs.Payong, G.R.
No. 167462, (2005)].
Termination of services for health reasons must be
effected only upon compliance with the above
requisites. The requirement for a medical certificate
under Art. 284 of the LC cannot be dispensed with;
otherwise, it would sanction the unilateral and
arbitrary determination by the Er of the gravity or
extent of the Ees illness and thus defeat the public
policy on the protection of labor [Sy et. al vs. CA, G.R.
No. 142293, (2003)].
Q: What is the procedure in terminating an
employee on the ground of disease?
A:
1. The Er shall not terminate his employment
unless:
a. There is a certification by a competent public
health authority
b. That the disease is of such nature or at such
a stage that it cannot be cured within a
period of 6 months even with proper
medical treatment.
2. If the disease or ailment can be cured within the
period, the Er shall not terminate the Ee but shall
ask the Ee to take a leave. The Er shall reinstate
such Ee to his former position immediately upon
the restoration of his normal health. (Sec. 8, Rule
I, Book VI, IRR)
Q: Is an employee suffering from a disease entitled
to reinstatement?
A: Yes, provided he presents a certification by a
competent public health authority that he is fit to
return to work [Cebu Royal Plant vs. Deputy Minister,
G.R. No. L-58639, (1987)].
Q: Is the requirements of a medical certificate
mandatory?
A: Yes, it is only where there is a prior certification
from a competent public authority that the disease
afflicting the Ee sought to be dismissed is of such
nature or at such stage that it cannot be cured within
6 months even with proper medical treatment that
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES 102
the latter could be validly terminated from his job
[Tan vs. NLRC, G. R. No. 116807, (1997)].
Note: Termination from work on the sole basis of actual
perceived or suspected HIV status is deemed unlawful. (Sec.
35, R.A. 8504 HIV/AIDS Law)
Q: Anna Ferrer has been working as a book keeper
at Great Foods, Inc., which operates a chain of high-
end restaurants throughout the country, since 1970
when it was still a small eatery at Binondo. In the
early part of the year 2003, Anna, who was already
50 years old, reported for work after a week-long
vacation in her province. It was the height of the
SARS scare, and management learned that the first
confirmed SARS death case in the Phils, a
balikbayan nurse from Canada, is a townmate of
Anna. Immediately, a memorandum was issued by
management terminating the services of Anna on
the ground that she is a probable carrier of SARS
virus and that her continued employment is
prejudicial to the health of her co-Ees. Is the action
taken by the employer justified? (2004 Bar
Question)
A: The Ers act of terminating the employment of
Anna is not justified. There is no showing that said Ee
is sick with SARS, or that she associated or had contact
with the deceased nurse. They are merely town
mates. Furthermore, there is no certification by a
competent public health authority that the disease is
of such a nature or such a stage that it cannot be
cured within a period of 6 months even with proper
medical treatment. (Implementing Rules, Book VI, Rule
1, Sec. 8, LC)
Q: Discuss the rules on separation pay with regard to
each cause of termination.
A:
CAUSE OF
SEPARATION PAY
TERMINATION
Equivalent to at least 1
month pay or at least 1
Automation
month pay for every year of
service, whichever is higher
Equivalent to at least 1
month pay or at least 1
Redundancy
month pay for every year of
service, whichever is higher
Equivalent to 1 month pay
Retrenchment or at least month pay for
every year or service
Closures or Equivalent to at least 1
cessation of month pay or at least 1
operation not due month pay for every year of
 TERMINATION OF EMPLOYMENT
to serious service (if due to severe
business financial losses, no
losses/financial separation pay
reverses
Equivalent to at least 1
month pay or at least
Disease
month pay for every year of
service, whichever is higher
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.
Q: What is the purpose of the two notices served to
the Ee and the DOLE 1 month prior to termination?
A:
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
verity of the alleged cause of termination [Phil.
Telegraph & Telephone Corp. vs. NLRC, G.R. No.
147002, (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 vs. NLRC,
G.R. No.115394, (1995)].
Q: DAP Corp. ceased its operation due to the
termination of its distribution agreement with Intl
Distributors Corp. which resulted in its need to cease
its business operations and to terminate the
employment of its employees. Marcial et al. filed a
complaint for illegal dismissal and for failure to give
the employees written notices regarding the
termination of their employment. On the other
hand, DAP claims that their employees actually
knew of the termination therefore the written
notices were no longer required. Are written notices
dispensed with when the employees have actual
knowledge of the redundancy?
A: The Ees actual knowledge of the termination of a
companys 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
103
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. vs. CA, G.R.
No. 165811, (2005)].
DUE PROCESS
TWIN NOTICE REQUIREMENT
Q: What are the two-fold requirements of a valid
dismissal for a just cause?
A:
1. Substantive it must be for a just cause
2. Procedural there must be notice and hearing
Q: What are the twin requirements of procedural
due process [Art. 277(b), LC]?
A:
1. Notice Twin-notice rule
a. First notice Necessity of first notice to inform
the worker of the violation and preparation for
the defense
b. Last notice to give the worker a notice of the
Ers final decision
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
If ample opportunity to be heard is given,
there is NO violation.
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.
Q: What is the purpose of notice and hearing?
A:
1. The requirement of notice is intended to inform
the Ee concerned of the Ers intent to dismiss him
and the reason for the proposed dismissal.
2. On the other hand the requirement of Hearing
affords the Ee the opportunity to answer his Ers
charges against him and accordingly to defend
himself there from before dismissal is effected
[Salaw vs. NLRC, G.R. No. 90786, (1991)].
Note: Failure to comply with the requirement of the 2
notices makes the dismissal illegal. The procedure is
mandatory [Loadstar Shipping Co. Inc. vs. Mesano, G.R.
No. 138956, (2003)]. And for non-compliance with the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
due process requirements in the termination of a
persons employment, a company is sanctioned to pay
a certain amount as damages [King of Kings
vs. Mamac, G.R. No. 166208, (2007)].
Q: Should there exist a valid and just cause, may the
employer depart from giving the employee 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. vs. Bravo, G.R. No.
177647, (2008)].
Q: What is the procedure to be observed by the
employer for the termination of employment based
on any of the just causes for termination?
A:
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.
Note: 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. vs. Bungabong, G.R. No. 154315,
(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, provide for
his evidence and present the evidence offered
against him.
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.
Note: Single notice of termination does not comply with
the requirements of the law [Aldeguer & Co., Inc. vs.
Honeyline Tomboc, G.R. No. 147633, (2008)].
Q: To whom should notice be given?
A: 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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
affected and the DOLE at least one month before the
intended date of termination.
Q: Romeo has been an employee 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. Romeos 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 Companys 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 vs. Yeo
Han Guan, G.R. No. 169191, (2011)].
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 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.
104
 TERMINATION OF EMPLOYMENT
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
ones 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 vs.
Regualos, G.R. No. 179428, (2011)].
HEARING; MEANING OF OPPORTUNITY TO BE
HEARD
Q: What is included in the opportunity to be heard?
A: 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.
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 vs. Mamac, G.R. No. 166208, (2007)].
105
Q: The illegal dismissal case was referred to the
Labor Arbiter. 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 vs. NLRC, 419 SCRA 354, (2004)].
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. vs.
Zialcita, 495 SCRA 387, (2006)].
The essence of due process is simply an opportunity to be
heard, or as applied to administrative proceedings, an
opportunity to explain ones side or an opportunity to seek
a reconsideration of the action or ruling complained of
[PLDT vs. Bolso, 530 SCRA 550, (2007)].
Q: Who has the burden of proof in termination
cases?
A: The burden of proof rests 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 is not justified, consonant with the
constitutional guarantee of security of tenure.
Note: 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.
Q: What is the degree of proof required?
A: In administrative or quasi-judicial proceedings,
substantial evidence is considered sufficient in
determining the legality of an Ers dismissal of an Ee
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
[Pangasinan III Electric Cooperative, Inc. vs. NLRC,
G.R. No. 89878, (1992)].
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 LAs 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, 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&Ts 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. vs.
Phil. Telegraph and Telephone Company, G.R. No.
152048, (2009)].
Q: What are the guidelines in determining whether
the penalty imposed on employee is proper?
A:
1. Gravity of the offense
2. Position occupied by the Ee
3. Degree of damage to the Er
4. Previous infractions of the same offense
5. Length of service [ALU-TUCP vs. NLRC, G.R. No.
120450, (1999); PAL vs. PALEA, G.R. No.L-24626,
(1974)]
Q: Felizardo was dismissed from Republic Flour
Mills-Selecta ice cream Corporation for dishonesty
and theft of company property for bringing out a
pair of boots, 1 piece aluminum container and 15
pieces of hamburger patties. Is the penalty of
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
dismissal commensurate with the offense
committed?
A: There is no question that the Er has the inherent
right to discipline its Ees which includes the right to
dismiss. However this right is subject to the police
power of the State. As such, the Court finds that the
penalty imposed upon Felizardo was not
commensurate with the offense committed
considering the value of the articles he pilfered and
the fact that he had no previous derogatory record
during his 2 years of employment in the company.
Moreover, Felizardo was not a managerial or
confidential Ee in whom greater trust is reposed by
management and from whom greater fidelity to duty
is correspondingly expected [ALU-TUCP vs. NLRC, G.R.
No. 120450, (1999)].
Q: Is hearing an indispensible part of due process?
A: No. Art. 277(b) of the LC provides that, in cases of
termination for a just cause, an Ee must be given
ample opportunity to be heard and to defend
himself. Thus, the opportunity to be heard afforded
by law to the Ee is qualified by the word ample
which ordinarily means considerably more than
adequate or sufficient. In this regard, the phrase
ample opportunity to be heard can be reasonably
interpreted as extensive enough to cover actual
hearing or conference. To this extent, Sec. 2(d), Rule I
of the IRR of Book VI of the LC requiring a hearing and
conference during which the Ee concerned is given
the opportunity to respond to the charge is in
conformity with Art. 277(b).
Significantly, Sec. 2(d), Rule I of the IRR of Book VI of
the LC itself provides that the so-called standards of
due process outlined therein shall be observed
substantially, not strictly. This is a recognition that
while a formal hearing or conference is ideal, it is not
an absolute, mandatory or exclusive avenue of due
process [Perez vs. PT&T, G.R. No. 152048, (2009)].
Q: If the dismissal is for just or authorized cause but
the requirement of due process of notice and
hearing were not complied with, should the
dismissal be held illegal?
A: No, in Agabon vs. NLRC (G.R. No. 158693, 2004), it
was held that when dismissal is for just or authorized
cause but due process was not observed, the
dismissal should be upheld.
The Er, however, should be held liable for non-
compliance with the procedural requirements of due
process in the form of damages.
106
 TERMINATION OF EMPLOYMENT

Procedural Due Process under Art. 282-284 of the LC Process

as applied in the Agabon Case a.) Without Reinstatement +
Art. 282 Art. 283 Art. 284 Just or Full
The Er must give The Er must Er may Authorized Termination Backwages
the Ee a notice give the Ee and terminate the Cause INVALID
specifying the the DOLE services of his Note: If
b.) With Due
grounds for written notices Ee. Reinstatement not
Process
which dismissal 30 days prior to possible
Separation Pay
is sought a the effectivity
hearing or an of his a.) Without Reinstatement +
opportunity to separation. Just or Full
be heard and Authorized Termination Backwages
after hearing or Cause INVALID
Note: If
opportunity to b.) Without
Reinstatement not
be heard, a Due Process
possible
notice of the Separation Pay
decision to Liable for
dismiss. a.) With Just noncompliance
The Worker is an There is no or Authorized With procedural
Termination
requirement inactive party hearing Cause requirements
VALID
under Art. 277 in the cause for requirement in b.) Without
(b) of notice termination. diseases but Due Process Note: Separation
AND hearing ONLY notice there is notice Pay if for
applies only in with DOLE AND requirement to Authorized Cause
Art. 282 notice to worker, but NO
because the Er worker is notice to DOLE Note: The Agabon ruling was modified by JAKA Food
is accusing the required. No Processing vs. Pacot [G.R. No. 515378, (2005)] where it was
worker that the need for a held that:
latter hearing
1. If based on just cause (Art. 282, LC) but the Er failed to
committed an because due comply with the notice requirement, the sanction to
act or omission process is be imposed upon him should be tempered because
constituting a found in LC the dismissal process was, in effect, initiated by an act
cause for (Art. 283) not in imputable to the Ee; and
termination of Constitution 2. If based on authorized causes (Art. 283, LC) but the Er
his according to failed to comply with the notice requirement, the
employment. Agabon. sanction should be stiffer because the dismissal
process was initiated by Ers exercise of his
Note: in Art. 277 management prerogative.
(b) in relation
to Art. 283, if the RELIEFS FOR ILLEGAL DISMISSAL
closure of
business will Q: What is the Twin Remedies Rule?
result in a mass
layoff and serious A: In case where the worker is illegally terminated, his
labor remedies are:
dispute, the SLE
can
1. Reinstatement without loss of seniority rights
enjoin the Er as
regards
2. Full backwages
mass termination
Note: Full backwages means no deduction
Possible
Effect Liability of ER 3. Separation pay in lieu of reinstatement
Situations
4. Damages, including Attorneys fees
a.) With Just NO Liability
or Authorized Termination Q: Does the offer to reinstate the illegally dismissed
Note: Separation
Cause VALID employee affect the liability of the erring employer?
Pay if for
b.) With Due Authorized Cause

UNIVERSITY OF SANTO TOMAS

107 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
A: No. At any rate, sincere or not, the offer of
reinstatement could not correct the earlier illegal
dismissal of the Ee. The Er incurred liability under the
LC from the moment an Ee was illegally dismissed,
and the liability did not abate as a result of the Er's
repentance [Ranara vs.NLRC, 212 SCRA 631 (1992)].
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 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 PALs letter of acceptance of their
retirement and or resignation and that they submit
an application for employment as new employees
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.
Q: What does the term full backwages mean?
A: 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 vs. CA, G.R. 147806,
(2002)].
Q: When can separation in lieu of reinstatement
be awarded?
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
A:
1. Doctrine of Strained Relations (applies to
confidential and managerial Ees only)
2. In case of position has been abolished (applies to
both managerial and rank and file Ees)
Note: Moral and exemplary damages may also be awarded.
Q: What is the prescriptive period for filing an action
for illegal dismissal?
A: 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 vs. NLRC, 303 SCRA 26 (1999)].
REINSTATEMENT
PENDING APPEAL (ART. 223, LC)
Q: What is reinstatement?
A: 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.
Q: What are the forms of reinstatement?
A:
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 vs. Ortega, G.R. No. 160871, (2006)].
Q: Is an illegally dismissed employee 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:
108
 TERMINATION OF EMPLOYMENT
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).
Note: In such cases, it would be more prudent to order
payment of separation pay instead of reinstatement
[Quijano vs. Mercury Drug Corporation, G.R. No. 126561,
(1998)].
Q: What is an order of reinstatement?
A: Reinstatement means restoration to a state or
condition from which one had been removed or
separated. The person reinstated assumes the
position he had occupied prior to his dismissal.
Reinstatement presupposes that the previous
position from which one had been removed still
exists, or that there is an unfilled position which is
substantially equivalent or of similar nature as the
one previously occupied by the Ee.
An order for reinstatement entitles an employee to
receive his accrued backwages from the moment the
reinstatement order was issued up to the date when
the same was reversed by a higher court without fear
of refunding what he had received [Pfizer vs. Velasco,
G.R. 177467, (2011)].
Q: Distinguish Arts. 223 from 279 of the LC.
A:
Art. 223 Art. 279
May be availed of as
Presupposes that the
soon as the LA renders a
judgment has already
judgment declaring that
become final and
the dismissal of the Ee is
executory. Consequently,
illegal and ordering said
there is nothing left to be
reinstatement. It may be
done except the
availed of even pending
execution thereof.
appeal
Note: An award or order for reinstatement is self-
executory. It does not require the issuance of a writ of
execution [Pioneer Texturizing Corp. vs. NLRC, G.R. No.
118651, (1997)].
109
Q: What is the rule on wages during reinstatement
pendency of appeal?
A: Dismissed Ee whose case was favorably decided
by the LA is entitled to receive wages pending appeal
upon reinstatement, which is immediately executory.
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.
After the LAs decision is reversed by a higher
tribunal, the Ee may be barred from collecting the
accrued wages, if it is shown that the delay in
enforcing the reinstatement pending appeal was
without fault on the part of the Er.
The test is two-fold: (1) there must be actual delay or
the fact that the order of reinstatement pending
appeal was not executed prior to its reversal; and (2)
the delay must not be due to the Ers unjustified act
or omission. If the delay is due to the Ers unjustified
refusal, the Er may still be required to pay the salaries
notwithstanding the reversal of the LAs decision
[Garcia vs. PAL, G.R. No. 164856, (2009)].
Q: PAL dismissed Garcia, for violating PALs Code of
Discipline for allegedly sniffing shabu in PALs
Technical Center Tool Room Section. Garcia then
filed for illegal dismissal and damages where the LA
ordered PAL to immediately reinstate Garcia. On
appeal, the NLRC reversed the decision and
dismissed Garcias complaint for lack of merit.
Garcias motion for reconsideration was denied by
the NLRC. It affirmed the validity of the writ and the
notice issued by the LA but suspended and referred
the action to the Rehabilitation Receiver for
appropriate action. May Garcia collect wages during
the period between the LAs order of reinstatement
pending appeal and the NLRC decision overturning
that of the LA?
A: Art. 223(3) of 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.
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.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Q: May the Court order the reinstatement of a
dismissed employee even if the prayer of the
complaint did not include such relief?
A: Yes. So long as there is a finding that the Ee was
illegally dismissed, the court can order the
reinstatement of an Ee even if the complaint does not
include a prayer for reinstatement, unless, of 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. vs. Moldez, G.R. No.
1161158, (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. vs.
Garcia et. al, G.R. No. 167291, (2011)].
Q: A complaining employee obtained a favourable
decision in an illegal dismissal case. The Labor
Arbiter ordered her immediate reinstatement. The
employer opted payroll reinstatement pending
appeal. The NLRC reversed the decision of the LA
ruled that the dismissal was valid. The employer
stopped the payroll reinstatement. The employee
elevated the case to the CA, and eventually to the
SC. The SC upheld the dismissal. Is the employee
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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
payroll reinstatement of the Ee [Bago v. NLRC, G.R.
No. 170001, (2007)].
Q: Can the employer demand that the employee
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 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, (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 Intl Inc. vs.
ELA, G.R. No. 83523, (1989)].
Q: What is the strained relations rule?
A: 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 vs. NLRC,
G.R. No. 82511, (1992)].
Note: Under the circumstances where the employment
relationship has become so strained to preclude a
harmonious working relationship and that all hopes at
reconciliation are naught after reinstatement, it would be
more beneficial to accord the Ee backwages and separation
pay.
Q: What must be proven before the strained
relations rule can be applied to a particular case?
A:
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
110
 TERMINATION OF EMPLOYMENT
be generated as to adversely affect the
efficiency and productivity of the Ee concerned
[Globe Mackay Cable & Wire Corp. vs. NLRC G.R.
No. 82511, (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 cases 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 vs.
NLRC, G.R. No. 85894, (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. vs. NLRC, G.R. No. 82511,
(1992)].
SEPARATION PAY IN LIEU OF REINSTATEMENT
Q: How can separation pay be viewed?
A: 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 Ers 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: Respondents are licensed drivers of public utility
jeepneys owned by Moises Capili. 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
Labor Arbiter a complaint for illegal dismissal
praying not for reinstatement but for separation
pay. Are the respondents entitled to separation
pay?
111
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 vs. NLRC,
G.R. 117378, (1997)].
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 employee 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.
Prescinding 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 Ers 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. vs. NLRC, G.R. No. 127395,
(1998)].
Q: Does separation pay apply in cases of legal
dismissal?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
A: No. 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 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 vs. Amkor
Technology Philippines, Inc., G.R. No. 177026, (2009)].
BACKWAGES
Q: What are backwages?
A: It is 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. Michaels
Institute vs. Santos, G.R. No. 145280, (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 formers unlawful
act or bad faith [Tomas Claudio Memorial College
Inc., vs. CA, G.R. No. 152568, (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 employee up to the date of:
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
1. Actual reinstatement, or if reinstatement is no
longer feasible
2. Finality of judgment awarding backwages
[Buhain vs. CA, G.R. 143709, (2002)]
Note: 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 vs.
NLRC, G.R. No. 111651, Mar. 15, 1996; Buenviaje vs. CA,
G.R. No. 147806, (2002)].
COMPUTATION
Q: What is included in the computation of
backwages?
A: They cover the following:
1. Transportation and emergency allowances
2. Vacation or SIL and sick leave
th
3. 13 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. vs. Flores, G.R. No. L-63555, (1993)].
Q: How are the backwages of a probationary
employee who fails to qualify as a regular employee
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
the parties [Robinsons Galleria vs. Ranchez, G.R. No.
177937, (2011)].
Q: Is an employee 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
112
 TERMINATION OF EMPLOYMENT
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 vs. NLRC, G.R. No. 74531, (1988)].
Q: What are the circumstances that prevent award
of backwages?
A:
1. Dismissal for cause
2. Death, physical or mental incapacity of the
employee
3. Business reverses
4. Detention in prison
LIMITED BACKWAGES
Q: What is the rule on backwages for dismissed
employees?
A: 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
employees is clear, plain 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 employee, which period
113
shall depend on the attending circumstances
of the case. [Victory Liner, Inc. v. Race, G.R.
No. 164820 (2008)].
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, (2005)].
PREVENTIVE SUSPENSION
Q: What is preventive suspension?
A: 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 offenders co-workers
by the continued service of the Ee.
Q: What is the duration of preventive suspension?
A: 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 Ees 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
Doctors 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?
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-
Ees is present and they were merely implicated by
the Macatubal [Manila Doctors Hospital vs. NLRC,
G.R. No 64897, (1985)].
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
CONSTRUCTIVE DISMISSAL
Q: What is constructive dismissal?
A: Constructive dismissal 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 employer becomes unbearable to the
employee leaving the latter with no other option but
to quit [The University of Immaculate Conception vs.
NLRC, G.R. No. 181146, (2011)].
Q: What are the reliefs entitled to illegally or
constructively dismissed employees?
A: 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
conjunctively [Robinsons Galleria vs. Ranchez, G.R.
No. 177937, (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 employee 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
Reynaldos 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 Ees 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
vs. Geminilou Trucking Service, G.R. No. 179174,
(2008)].
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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 employee. 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
employee 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. vs. Flores, G.R. No. 82829,
(1993)]
Q: Quinanola was transferred from the position of
Executive Secretary to the Executive Vice President
and General Manager to the Production Dept 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. Quinanolas 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 employees
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. vs. NLRC, G.R. No. 83239, (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
114
 TERMINATION OF EMPLOYMENT

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. vs. NLRC, G.R. No. 119080, (1998)]
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.,
vs. Leynes, G.R. No. 177816, (2011)

Q: Does the validity of suspending operation excuse

the employer 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. Employees Assn. vs.
Manila Mining Corp., G.R. Nos. 178222-23, (2010)].

Q: Under what circumstances is the award of

financial assistance proper?

A: 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
the grant of separation pay to Ee is proper. [Luna vs.
Allado Construction Co., Inc., G.R. No. 175251,
(2011)]

Q: What is a floating status? When is an employee 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
employer shall reinstate the employee 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

UNIVERSITY OF SANTO TOMAS

115 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
MANAGEMENT PREROGATIVE
Q: What is Management Prerogative?
A: GR: It is the right of an Er to regulate, according to
his own discretion and judgment, all aspects of
employment, including:
1. Hiring
2. Work assignments
3. Working methods
4. Time, place and manner of work
5. Tools to be used
6. Processes to be followed
7. Supervision of workers
8. Working regulations
9. Transfer of Ees
10. Work supervision
11. Lay-off of workers
12. Discipline
13. Dismissal
14. Recall of workers
XPNs: Otherwise limited by law, contract, and
principles of fair play and justice.
Note: So long as a companys prerogatives are exercised in
good faith for the advancement of the Ers interest and not
for the purpose of defeating or circumventing the rights of
the Ees under special laws or under valid agreements, the
Supreme Court will uphold them.
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 employees 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 employees? (2005 Bar
Question)
A: Yes, because 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
Ers full consciousness that despite its not being
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
bound by law or contract to grant it, it just the same
granted the benefit.
Q: Is the exercise of management prerogative
unlimited?
A: No. It is circumscribed by limitations found in:
1. Law,
2. CBA, or
3. General principles of fair play and justice
Furthermore, a line must be drawn between
management prerogatives regarding business
operations per se and those which affect the rights of
Ees. In treating the latter, management should see to
it that its Ees are at least properly informed of its
decisions and modes of actions. Such management
prerogative may be availed of without fear of any
liability so long as it is exercised in good faith for the
advancement of the Ers interest and not for the
purpose of defeating or circumventing the rights of
employees under special laws or valid agreement and
are not exercised in a malicious, harsh, oppressive,
vindictive or wanton manner or out of malice or spite
[PAL vs. NLRC, G.R. No. 85985, (1993); San Miguel
Brewery Sales vs. Ople, G.R. No. 53515, (1989); Punzal
vs.ETSI Technologies Inc (518 SCRA 66)].
Note: It must be established that the prerogative being
invoked is clearly a managerial one.
Q: Is withholding an employees salary a valid
exercise of management prerogative?
A: No. Any withholding of an Ees 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. vs. Diaz, G.R. 185814, (2010)].
Q: May a MERALCO employee invoke the remedy of
writ of habeas data available where his employer
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 therefor are vague or doubtful.
Employment constitutes a property right under the
116
 MANAGEMENT PREROGATIVE

context of the due process clause of the Constitution. is not motivated by discrimination, bad faith, or
The writ of habeas data directs the issuance of the effected as a form of punishment or demotion
writ only against public officials or employees, or without sufficient cause. This privilege is inherent in
private individuals or entities engaged in the the right of Ers to control and manage their
gathering, collecting or storing of data or information enterprises effectively.
regarding an aggrieved partys person, family or
home; and that MERALCO (or its officers) is clearly Note: The right of Ees to security of tenure does not give
not engaged in such activities [MERALCO vs. Lim, G.R. them vested rights to their positions to the extent of
No. 184769, (2010)]. depriving management of its prerogative to change their
assignments or to transfer them [Endico vs. Quantum Foods
Distribution Center, G.R. No. 161615, (2009)].
DISCIPLINE
Q: May the employer exercise his right to transfer an
Q: Discuss briefly the employer's right to discipline
employee and compel the latter to accept the same
his employees.
if said transfer is coupled with or is in the nature of
promotion?
A: The Er has the prerogative to instill discipline in his
Ees and to impose reasonable penalties, including
A: No. There is no law that compels an Ee to accept
dismissal, on erring Ees pursuant to company rules
promotion. Promotion is in the nature of a gift or a
and regulations [San Miguel Corporation vs. NLRC,
reward which a person has a right to refuse. When an
G.R. No. 87277, (1989)].
Ee refused to accept his promotion, he was exercising
his right and cannot be punished for it. While it may
An Er has the prerogative to prescribe reasonable
be true that the right to transfer or reassign an Ee is
rules and regulations necessary for the proper
an Ers exclusive right and the prerogative of
conduct of its business, to provide certain disciplinary
management, such right is not absolute [Dosch vs.
measures in order to implement said rules and to
NLRC and Northwest Airlines, G.R. No. 51182, (1983)].
assure that the same would be complied with. An
employer enjoys a wide latitude of discretion in the
Q: Who has the burden of proving that the transfer
promulgation of policies, rules and regulations on
was reasonable?
work-related activities of the Ees. This is inherent in
its right to control and manage its business effectively
A: The Er must be able to show that the transfer is
[San Miguel Corp. vs.NLRC, 551 SCRA 410].
not unreasonable, inconvenient or prejudicial to the
Ee; nor does it involve a demotion in rank or a
Q: Is the power of the employer to discipline his
diminution of his salaries, privileges and other
employees absolute?
benefits. Should the Er fail to overcome this burden
of proof, the Ees transfer shall be tantamount to
A: No. While management has the prerogative to
constructive dismissal. [Blue Dairy Corporation vs.
discipline its Ees and to impose appropriate penalties
NLRC, 314 SCRA 401 (1999)]
on erring workers, pursuant to company rules and
regulations, however, such management prerogative
Q: What are the limitations on management
must be exercised in good faith for the advancement
prerogatives?
of the Ers interest and not for the purpose of
defeating or circumventing the rights of the Ees
A:
under special laws and valid agreements. [PLDT vs.
1. Such that the Er must be motivated by good faith
Teves, G.R. No. 143511, (2010)].
2. The contracting out should not be resorted to
circumvent the law or must not have been the
TRANSFER OF EMPLOYEES
result of malicious or arbitrary actions [MERALCO
v. Quisumbing, G.R. no. 127598. (2000)].
Q: Discuss briefly the employers right to transfer
and reassign Ees. PRODUCTIVITY STANDARD

A: 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 another
provided there is no demotion in rank or diminution
of salary, benefits and other privileges and the action
Q: May an employer 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

UNIVERSITY OF SANTO TOMAS

117 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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 Ers interest [Leonardo vs. NLRC, G.R. No.
125303, (2000)].
GRANT OF BONUS
Q: What is a bonus?
A: It is an amount granted and paid to an Ee for his
industry and loyalty which contributed to the success
of the Ers business and made possible the realization
of profits.
Q: Can bonus be demanded?
A: GR: 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. vs. NLRC, G.R.
No. 100701, (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.
Q: The projected bonus for the employees 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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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. vs.NLRC, G.R. No. 100701, (2001)].
CHANGE OF WORKING HOURS
Q: Discuss briefly the employers right to change
working hours.
A: Well-settled is the rule that management retains
the prerogative, whenever exigencies of the service
so require, to change the working hours of its Ees.
Q: May the normal hours fixed in Art. 83 of the LC be
reduced by the employer? Explain.
A: 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 shift consisting of
less than 8 hours. And following the principle of a
fair days wage for a fair days 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
employees affected. An Er is not allowed to withdraw
a benefit which he has voluntarily given.
RULE ON MARRIAGE BETWEEN EMPLOYEES OF
COMPETITOR-EMPLOYEES
Q: Is the stipulation in the employment contract
prohibiting an employee from marrying another
employee 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 employees personal
decision does not detract the employer from
exercising management prerogatives to ensure
maximum profit and business success. It does not
impose an absolute prohibition against relationships
between its employees and those of competitor
companies. Its employees 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 employee and
the company that may arise out of such relationships.
118
 MANAGEMENT PREROGATIVE

It is alos 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)

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 is 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 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 restitute 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 vs. Solidbank, G.R. No. 163269, April 19,
2006)].

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119 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
SOCIAL AND WELFARE LEGISLATION (P.D. 629)
Q: What is Social Legislation?
A: 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)
Q: What is the policy objective in the enactment of
the Social Security System Law?
A: 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. (Sec. 2, R.A. 8282)
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)].
Q: Are the SSS premiums considered as taxes?
A: No. 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)].
Q: Are benefits received under SSS Law part of the
estate of a member?
A: No. 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)].
Q: Who is an employer?
A: Any person, natural or juridical, domestic or
foreign, who carries into the Phils. any trade,
business, industry, undertaking or activity of any kind
and uses the services of another person who is under
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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)
Q: Who is an employee?
A: Any person who performs services for an Er in
which either or both mental and physical efforts are
used and who receives compensation for such
services, where 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)
Q: What is employment?
A: GR: Any service performed by an Ee for his Er.
XPNs:
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 Ee if he is employed
when such vessel is outside the Phils;
3. Service performed in the employ of the Phil.
Government or instrumentality or agency
thereof;
4. Service performed in the employ of a foreign
government or international organization, or
their wholly-owned instrumentality:
5. 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)
Q: What is a contingency?
A: The retirement, death, disability, injury or sickness
and maternity of the member.
COVERAGE
Q: Who are covered by SSS?
A:
1. Compulsory Coverage
a. All Ees not over 60 years of age and their Ers;
b. Domestic helpers whose income is not less
than P 1000/month and not over 60 years of
age and their Ers;
Limitations:
120
 SOCIAL AND WELFARE LEGISLATION
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
d. 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)
2. Voluntary
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)
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
d. Self-employed who realizes no income for a
certain month
3. By agreement
121
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.
Q: Are seafarers covered by the SSS Law?
A: Yes. 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 [Ben Sta. Rita
v. Court of Appeals, G.R. No. 119891, (1995)].
Note: 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." (Ibid.)
Q: When is the compulsory coverage deemed
effective?
A:
1. Employer on the first day of operation
2. Employee on the day of his employment
3. Compulsory coverage of self-employed upon
his registration with the SSS
Q: What is the effect of separation of an employee
from his employment under compulsory coverage?
A:
1. His Ers 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.
(Sec. 11, R.A. 8282)
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Note: The above provision recognizes the once a member,
always a member rule.
Q: What is the effect of interruption of business or
professional income?
A: 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. (Sec. 11-A, R.A. 8282)
Q: What is a self-employed individual?
A: 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, including:
1. All self-employed professionals;
2. Partners and single proprietors of business;
3. Actors and actresses, directors, scriptwriters
and news correspondents who do not fall
within the definition of the term Ee in Sec. 8
of this Act;
4. Professional athletes, coaches, trainers and
jockeys; and
5. Individual farmers and fishermen. [Sec. 8(s),
RA 8282]
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.
Q: How are contributions of the self-employed to
the SSS determined?
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
A: The contribution shall be determined in
accordance with Sec. 18 of the SSS Law, provided
that:
1. The monthly earnings declared as 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]
Q: How much is the monthly pension?
A:
1. 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)
2. 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. (Sec. [b], R.A. 8282)
Q: What is an average monthly credit?
A: An average monthly credit is the result obtained
by:
1. Dividing the sum of the last 60 monthly salary
credits immediately preceding the semester of
contingency by 60; or
2. 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.
Q: What is an average daily salary credit?
122
 SOCIAL AND WELFARE LEGISLATION
A: An average salary credit is 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.
Q: May the monthly pension be suspended?
A: Yes. The monthly pension and 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. [Sec.
13-A (b), RA 8282]
EXCLUSIONS FROM COVERAGE
Q: Enumerate the kinds of employment which are
excluded from compulsory coverage under the SSS
Law.
A: Under Section 8(j) of R.A. 1161, as amended, the
following services or employments are excluded from
coverage:
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;
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
123
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.
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
Q: What are the Benefits under the SSS Act?
A:
1. Sickness Benefits
2. Permanent Disability Benefits
3. Maternity Leave Benefit
4. Retirement Benefit
5. Death and funeral Benefits
Q: Are the Benefits provided for in the SSS Law
transferable?
A: 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. (Sec.15, R.A. 1161, as
amended)
Q: What are the reportorial requirements of the
employer and self-employed?
A:
1. Er - 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
SICKNESS BENEFITS
Q: What is sickness benefit?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
A: It is a daily allowance paid to a covered Ee who
becomes sick and is confined in a hospital for more
than 3 days or elsewhere with the Commissions
approval.
Q: What are the requirements to be entitled for
sickness benefit?
A: 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
Commissions 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.
Q: May the requirement of notification be dispensed
with?
A: Yes. Notification is not necessary when:
1. Confinement is in a hospital; or
2. The employee became sick or was injured
while working or within the premises of the
employer.
Q: Who will pay the sickness benefits and how much
is the benefit?
A:
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.
The following requisites must be complied with in
order to avail of sickness benefits:
a. 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;
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
b. Not paid for more than 240 days on account of
the same confinement; and
c. 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:
i. is in a hospital
ii. 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)
Note: The law does not require that sickness must be
related to the duties of the beneficiaries.
Q: When will compensable confinement commence?
A:
1. Begins on the 1st day of sickness
2. Payment of such allowances shall be promptly
made by the Er:
th
a. every regular payday or on the 15 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)
Q: What are the requirements in order that Er may
claim reimbursement of the sickness benefit?
A:
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
th
confinement starting from the 10 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)
124
 SOCIAL AND WELFARE LEGISLATION
Q: When will reimbursement be made by SSS?
A: 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)
Q: When is the employer or the unemployed
member not entitled to reimbursement?
A:
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
Q: What is a permanent disability benefit?
A: It is a cash benefit paid to a member who
becomes permanently disabled, either partially or
totally.
Q: What disabilities are deemed permanent total
disability?
A: Under Sec. 13-A (d) of the SSS Law, the following
disabilities are deemed permanent total:
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;
4. Brain injury resulting to incurable imbecility or
insanity; and
5. Such cases as determined and approved by the
SSS.
Q: Among the persons entitled to permanent
disability benefits are the dependents of the
covered employee. Who are these dependent?
A: The dependents shall be the following:
1. The legal spouse entitled by law to receive
support from the member;
2. The legitimate, legitimated or legally
adopted and illegitimate child who is:
a. Unmarried
125
b. Not gainfully employed and has not
reached the age of 21 years of age;
or
c. 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; and
3. The parent who is receiving regular support
from the member. [Sec. 8 (e), RA 8282]
Q: Compare death benefits with permanent total
disability benefits
A:
Death Benefits PTD Benefits
Requisite
at least 36 monthly contributions
Benefits payable to whom
Primary Beneficiaries Member
Failure to make 36 monthly payments
Benefits shall be in lump sum equivalent to the
monthly pension times the number of monthly
contributions paid to SSS or 12 times the monthly
pension, whichever is higher.
Q: What is the effect of the death of the PTD
pensioner?
A:
1. Primary beneficiaries are entitled to receive
monthly pension as of the date of disability.
2. No primary beneficiaries and he dies within 60
months from the start of his monthly pension -
secondary beneficiaries shall be entitled to a lump
sum benefit equivalent to the total monthly
pensions corresponding to the balance of the 5-
year guaranteed period excluding the dependents
pension. (Sec. 13-A [c], R.A. 8282)
Q: What is the effect of retirement or death to
partial disability pension?
A: Disability pension shall cease upon his retirement
or death. (Sec 13-A [j], R.A. 8282)
Q: What is the difference of compensability under
the Labor Law and the Social Security Law?
A: The claims are different as to their nature and
purpose [Ortega vs. Social Security Commission, G.R.
No. 176150, (2008)].
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

LABOR LAW SOCIAL SECURITY LAW RETIREMENT BENEFIT

Purpose
Governs compensability Benefits are intended to Q: What is a retirement benefit?
of : provide insurance or
1. work-related protection against the A: It is a cash benefit paid to a member who can no
disabilities hazards or risks of longer work due to old age.
2. when there is loss disability, sickness, old
of income due to age or death, inter alia, Q: What are the types of retirement benefits?
work-connected irrespective of whether
or work- they arose from or in the A:
aggravated injury course of the 1. Monthly Pension - Lifetime cash benefit paid to a
or illness. employment. retiree who has paid at least 120 monthly
Nature contributions to the SSS prior to the semester of
A disability is total and Disability may be retirement.
permanent if as a result permanent total or 2. Lump Sum Amount - Granted to a retiree who
of the injury or sickness permanent partial. has not paid the required 120 monthly
the Ee is unable to contributions.
perform any gainful
occupation for a Q: Who are entitled to retirement benefits?
continuous period
exceeding 120 days A:
regardless of whether he 1. A member who
loses the use of any of a. is at least 60 years old
his body parts. b. has paid at least 120 monthly contributions
prior to the semester of retirement; and
MATERNITY LEAVE BENEFIT c. already separated from employment or has
ceased to be self-employed,
Q: What is the maternity benefit?
2. A member who is at least 65 years old, shall be
A: The maternity benefit is a daily cash allowance entitled for as long as he lives to the monthly
granted to a female member who was unable to work pension; (Sec 12-B [a], R.A. 8282)
due to childbirth or miscarriage.
3. A member
Q: What are the qualifications for entitlement to the a. At least 60 years old at retirement; and
maternity benefit? b. Does not qualify for pension benefits under
paragraph (a) above - entitled to a lump
A: sum benefit equal to the total contributions
1. She has paid at least three monthly contributions paid by him and on his behalf;
within the 12-month period immediately c. Must be separated from employment and is
preceding the semester of her childbirth or not continuing payment of contributions to
miscarriage. the SSS on his own. (Sec. 12-B [b], R.A. 8282)
2. She has given the required notification of her
pregnancy through her Er if employed, or to the Q: What happens when the retirement pensioner is
SSS if separated, voluntary or self-employed re-employed or resumes self-employment?
member.
A: The monthly pension of a retirement pensioner
Q: Is the voluntary or self-employed member also who resumes employment and is less than 65 years
entitled to the maternity benefit? old will be suspended. He and his Er will again be
subject to compulsory coverage. (Sec. 12-B [c], R.A.
A: Yes, A voluntary or a self-employed member is 8282)
entitled to the maternity benefit provided that she
meets the qualifying conditions as mentioned in the Q: Are the children of a retiree member entitled to
preceding question. the dependent's pension?

A: Yes (Sec. 12[A], R.A. 8282). However, only 5 minor

children, beginning from the youngest, are entitled to

UNIVERSITY OF SANTO TOMAS

2013 GOLDEN NOTES 126
 SOCIAL AND WELFARE LEGISLATION
the dependents pension. No substitution is allowed.
Where there are more than 5 legitimate and
illegitimate children, the legitimate ones will be
preferred.
Q: For how long will the dependent child receive
the pension?
A: Until the child reaches 21 years of age, gets
married, gets employed and earns Php 300 a month
or more, or dies.
However, the dependent's pension is granted for life
to children who are over 21 years old, provided they
are incapacitated and incapable of self-support due
to physical or mental defect which is congenital or
acquired during minority.
DEATH AND FUNERAL BENEFITS
Q: When is a beneficiary entitled to death benefits?
A:
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)
Q: Who are primary beneficiaries?
A:
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.
Q: Who are secondary beneficiaries?
127
A:
1. Dependent parents
2. In the absence of the foregoing, any other person
designated by the covered employee as
secondary beneficiary. [Sec. 8(k), R.A. 8282]
Q: Who are considered dependents?
A:
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.
3. The parent who is receiving regular support from
the member.
Q: How long shall the primary beneficiaries be
entitled to the death benefits consisting of monthly
pension and dependents pension?
A:
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.
Q: What is the funeral benefit?
A: 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
Q: What is meant by dependent for support?
A: 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, (1996)].
If a wife who is already separated de facto from her
husband cannot be said to be "dependent for
support" upon the husband, absent any showing to
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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, (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 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,
(2008)].
Q: What is compensation?
A: 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. (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 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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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.
Q: How are disputes settled?
A:
DISPUTE SETTLEMENT
Disputes involving:
1. Coverage
2. Benefits
3. Contributions
4. Penalties
Social 5. Any other matter related
Security thereto.
Commission
(SSC) Note: Disputes within the mandatory
period of 20 days after the submission of
evidence. (Sec. 5a, R.A. 8282)
Decision, in the absence of appeal, shall be
final and executory 15 days after date of
notification. (Sec. 5b, R.A. 8282)
Decisions of SSC shall be appealable
to:
1. CA questions of law and fact (Sec.
CA / SC
5c, R.A. 8282)
2. SC questions of law. (Sec. 5c,
R.A. 8282)
SSC may, motu proprio or on motion
of any interested party, issue a writ of
Execution execution to enforce any of its
of decision decisions or awards, after it has
become final and executory. (Sec. 5d
R.A. 8282)
Q: Can the SSC validly re-evaluate the findings of the
RTC, and on its own, declare the latters decision to
be bereft of any basis?
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 Alices marriage on the one
hand and the invalidity of Bailon and Teresitas
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, (2006)].
128
 SOCIAL AND WELFARE LEGISLATION
Q: Due to the delinquency incurred by ABC Co.
incurred on its premium and loan amortizations, SSS
suggested settling its obligation either through
instalment 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 suit
in court. SSS moved for dismissal contending that
the SSC, and not regular courts, has the jurisdiction
to entertain a controversy arising from the non-
implementation of a dacion en pago agreed upon by
the parties as a means of settlement of ABCs
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 ABCs 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)].
GSIS LAW (R.A. 8291)
Q: What are the purposes behind the enactment of
the GSIS Law?
A: 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
Q: Who are considered employers under the GSIS
Act?
A:
1. National Government
129
2. Its political subdivisions, branches, agencies,
instrumentalities
3. GOCCs, and financial institutions with original
charters
4. Constitutional Commissions and the Judiciary
(Sec. 2[c], R.A. 8291)
Q: Who is an employee or member?
A: 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)
Q: What is compensation?
A: 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?
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
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

from the term service with compensation for the EXCLUSIONS FROM COVERAGE
purpose of computing the number of years of service
in government [GSIS v. CSC, G. R. Nos. 98395 and Q: Who are excluded from the coverage of the GSIS
102449, (1995)]. Law?

Q: What is the penalty in case of delayed remittance A:

or non-remittance of contributions?
A: 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).
COVERAGE
Q: State briefly the compulsory coverage of the
GSIS. (2009 Bar Question)
A: The following are compulsorily covered by the GSIS
pursuant to Sec. 3 of RA 8291:
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.
Q: Who are the government Ees subject to coverage
under the GSIS?
A: GR: All Ees receiving compensation who have not
reached the compulsory retirement age, irrespective
of employment status.
1. Ees who have separate retirement schemes
(members of the Judiciary, Constitutional
Commissions and others similarly situated)
2. Contractual Ees who have no Er-Ee with the
agencies they serve
3. Uniformed members of the AFP, BJMP, whose
coverage by the GSIS has ceased effective June
24, 1997
4. Uniformed members of the PNP whose coverage
by the GSIS has ceased effective February 1,
1996. (Sec. 2.4, Rule II, IRR, R.A. 8291)
Q: For the purpose of benefit entitlement, how are
the members classified?
A:
1. Active members
a. Still in the service and are paying integrated
premiums.
b. Covered for the entire package benefits and
privileges being extended by GSIS.
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

XPNs: 3. Retired Members

1. Uniformed members of the: a. Former active members who have retired
a. AFP; and from the service and are already enjoying
b. PNP. the corresponding retirement benefits
2. Contractuals who have no Er and Ee applied for
relationship with the agencies they serve. b. Not entitled to any loan privilege, except
stock purchase loan (Sec. 2.2, Rules II, IRR,
Q: Who are covered by life insurance, retirement R.A. 8291)
and other social security protection?
BENEFITS
A: GR: All members of the GSIS shall have life
insurance, retirement, and all other social security Q: What are the Benefits provided under the GSIS
protections such as disability, survivorship, Act?
separation, and unemployment benefits. (Sec. 3, R.A.
8291) A:
1. Separation
XPNs: Members of: 2. Unemployment or involuntary separation
1. The judiciary; and 3. Retirement
2. Constitutional commissions 4. Permanent disability
5. Temporary disability
Note: They shall have life insurance only. 6. Survivorship
7. Funeral

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2013 GOLDEN NOTES 130
 SOCIAL AND WELFARE LEGISLATION
8. Life Insurance
9. Such other benefits and protection as may be
extended to them by the GSIS such as loans.
Q: Who shall be compulsorily covered with life
insurance?
A: G.R.: All Ees
XPN: All members of the Armed Forces of the
Philippines and the Philippine National Police
(PNP)
Q: What are the reportorial requirements of the Er?
A: Er must report to GSIS the names, employment
status, positions, salaries of the employee and such
other matter as determined by the GSIS.
SEPARATION BENEFITS
Q: When will a member be entitled to separation
benefits?
A: A member who has rendered a minimum of 3
years creditable service shall be entitled to separation
benefit upon resignation or separation under the
following terms:
1. A member with at least 3 years but less than 15
years: Cash payment equivalent to 100% of the
AMC 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
basic monthly pension, payable monthly for
life upon reaching the age of 60.
Q: What are the effects of separation from service
with regard to membership?
A: A member separated from the service shall
continue to be a member and shall be entitled to
whatever benefits he has qualified to.
Note: A member separated for a valid cause shall
automatically forfeit his benefits, unless the terms of
resignation or separation provide otherwise.
131
In the case of forfeiture, the separated employee shall be
entitled to receive only of the cash surrender value of his
insurance.
UNEMPLOYMENT BENEFITS
Q: What are the conditions for entitlement to
unemployment benefits?
A:
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.
Q: What will consist of an unemployment benefit?
A: It will consists of cash payment equivalent to 50%
of the average monthly compensation
Note: A member who has rendered at least 15 years of
service will be entitled to separation benefits instead of
unemployment benefits.
RETIREMENT BENEFITS
Q: What are the conditions in order to be entitled to
Retirement Benefits?
A:
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. (Sec. 13-A, R.A.
8291)
Q: What is the rule in case of extension of service in
order to be entitled for Retirement Benefit?
A: Rabor v. CSC (G.R. No. 111812, May 1995), 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.
Q: What is the reason for compulsory retirement?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
A: The compulsory retirement of government officials
and Ees upon their reaching the age of 65 years is
founded on public policy which aims by it to maintain
efficiency in the government service and at the same
time give to 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)].
Q: What are the options of the retiree with regard
to his or her retirement benefits?
A: 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.
(Sec. 13[a], R.A. 8291)
PERMANENT DISABILITY BENEFITS
Q: What is disability?
A: Any loss or impairment of the normal functions of
the physical and/or mental faculty of a member,
which reduces or eliminates his/her capacity to
continue with his/her current gainful occupation or
engage in any other gainful occupation.
Q: What is total disability?
A: Complete incapacity to continue with present
employment or engage in any gainful occupation due
to the loss or impairment of the normal functions of
the physical and/or mental faculties of the member.
Q: What are the conditions in order to be entitled
for permanent disability benefits?
A: The permanent disability was not due to any of the
following:
1. Grave misconduct
2. Notorious negligence
3. Habitual intoxication
4. Willful intention to kill himself or another
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
Q: What are the two types of permanent disability?
A:
1. Permanent Total Disability (PTD) - accrues or
arises when recovery from any loss or
impairment of the normal functions of the
physical and/or mental faculty of a member
which reduces or eliminates his capacity to
continue with his current gainful occupation or
engage in any other gainful occupation is
medically remote. [Section 2 (q) and (s) R.A.
8291]
2. Permanent Partial Disability (PPD) - accrues or
arises upon the irrevocable loss or impairment of
certain portion/s of the physical faculties, despite
which the member is able to pursue a gainful
occupation. (Sec. 2[u], R.A. 8291)
Q: What are the benefits which an employee is
entitled to in case of a PTD?
A:
1. A member is entitled to the monthly income
benefit for life equivalent to the BMP when:
a. He is in the service at the time of the disability
or
b. If separated from service
c. He has paid at least 36 monthly contributions
within 5 years immediately preceding his
disability
d. He has paid a total of at least 180 monthly
contribution prior his disability
e. He is not receiving old-age retirement pension
benefits
2. If the member does not satisfy the conditions
above but has rendered at least 3- years-service, he
shall be advanced the cash payment equivalent to
100% of his average monthly compensation for each
year of service he has pad contributions but not less
than Php 12,000.00 which should have been his
separation benefit (he shall no longer receive
separation benefits)
Q: What are the benefits which an employee is
entitled to in case of a PPD?
A: A member is entitled to cash payment in
accordance with the schedule of disabilities to be
prescribed by GSIS, if he satisfies the given conditions
of either (1) or (2) of Sec. 16(a).
Q: When will the payment of these benefits be
suspended?
132
 SOCIAL AND WELFARE LEGISLATION
A:
1. In case a member is re-employed; or
2. Member recovers from disability as determined
by the GSIS; or
3. Fails to present himself for medical examination
when required by the GSIS. (Sec. 16 [c], R.A.
8291)
TEMPORARY DISABILITY BENEFITS
Q: When does temporary total disability arise?
A: It accrues or arises when the impaired physical
and/or mental faculties can be rehabilitated and/or
restored to their normal functions. (Sec 2[t], R.A.
8291)
Q: What benefits are given for temporary disability?
A:
1. Member is entitled to 75% of his current daily
compensation for each day or fraction thereof of
th
total disability benefit, to start at the 4 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: A member cannot enjoy the temporary total
disability benefit and sick leave pay simultaneously.
An application for disability must be filed with the GSIS
within 4 years from the date of the occurrence of the
contingency.
SURVIVORSHIP BENEFITS
Q: Who are entitled to survivorship benefits?
A: 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 childrens pension not exceeding
50% of the basic monthly pension
133
Q: Under what conditions are the primary
beneficiaries entitled to the basic monthly pension?
A: Upon the death of a member, the primary
beneficiaries shall be entitled to:
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. [Sec. 21 (a), R.A.
8291]
Q: After the end of the guaranteed 30 months, are
the beneficiaries still entitled to any survivorship
benefits?
A: Yes. 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 childrens pension equivalent to 10%
of the basic monthly pension for every
dependent child not exceeding 5, counted from
the youngest and without substitution;
3. When the survivors are the dependent spouse
and the dependent children, the dependent
spouse shall receive the basic survivorship
pension for life or until he/she remarries, and the
dependent children shall receive the dependent
childrens pension. (Sec. 21[b], R.A. 8291)
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Note: The dependent children shall be entitled to the claim for death benefits with the GSIS? Why? (1991
survivorship pension as long as there are dependent Bar Question)
children and, thereafter, the surviving spouse shall receive
the basic survivorship pension for life or until he or she
A: The beneficiaries of a member of the GSIS are
remarries.
entitled to the benefits arising from the death of
said member. Death benefits are called survivorship
Q: When are secondary beneficiaries entitled to
benefits under the GSIS Law. Not being a beneficiary,
survivorship benefits?
Bella is not entitled to receive survivorship benefits.
She is not a beneficiary because she is a common-
A: In the absence of primary beneficiaries, the
law wife and not a legal dependent spouse.
secondary beneficiaries shall be entitled to:
Q: Is the cause of death of Gary (cardiac arrest due
1. The cash payment equivalent to 100% of his
to accidental electrocution in his house)
average monthly compensation for each year of
compensable? Why?
service he paid contributions, but not less than
Php 12,000.00: Provided, That the member is in
A: Yes. To be compensable under the GSIS Law, the
the service at the time of his death and has at
death need not be work connected.
least 3 years of service; or
2. In the absence of secondary beneficiaries, the
Q: Abraham, a policeman, was on leave for a
benefits under this paragraph shall be paid to his
month. While resting in their house, he heard two
legal heirs. (Sec. 21[c], R.A. 8291)
of his neighbors fighting with each other.
Abraham rushed to the scene intending to pacify
Q: What are the benefits that the beneficiaries are
the protagonists. However, he was shot to death by
entitled to upon the death of the pensioner?
one of the protagonists. Eva Joy, a housemaid, was
Abraham's surviving spouse whom he had
A:
abandoned for another woman years back. When
1. Upon the death of an old-age pensioner or a
she learned of Abraham's death, Eva Joy filed a
member receiving the monthly income benefit
claim with the GSIS for death benefits. However,
for permanent disability, the qualified
her claim was denied because: (a) when Abraham
beneficiaries shall be entitled to the survivorship
was killed, he was on leave; and (b) she was not
pension.
the dependent spouse of Abraham when he died.
2. When the pensioner dies within the period
Resolve with reasons whether GSIS is correct in
covered by the lump sum, the survivorship
denying the claim. (2005 Bar Question)
pension shall be paid only after the expiration of
such period.
A: Yes, because under the law, a dependent is one
who is a legitimate spouse living with the Ee.
Q: Gary Leseng was employed as a public school
(Art. 167 [i], LC) In the problem given, Eva Joy had
teacher at the Marinduque High. On April 27, 1997, a
been abandoned by Abraham who was then living
memorandum was issued by the school principal
already with another woman at the time of his death.
designating Gary to prepare the model dam project,
which will be the official entry of the school in the
Moreover, Abraham was on leave when he was killed.
search for Outstanding Improvised Secondary Science
The 24-hour duty rule does not apply when the
Equipment for Teachers. Gary complied with his
policeman is on vacation leave [ECC v. CA, G.R. No.
superior's instruction and took home the project to
121545, (1996)]. Taking together jurisprudence and
enable him to finish before the deadline. While
the pertinent guidelines of the ECC with respect to
working on the model dam project, he came to
claims for death benefits, namely:
contact with a live wire and was electrocuted. The
death certificate showed that he died of cardiac
1. That the Ee must be at the place where his work
arrest due to accidental electrocution.
requires him to be;
2. That the Ee must have been performing his
Bella (Garys common-law wife) and Jobo (his only
official functions; and
son) filed a claim for death benefits with the GSIS
3. That if the injury is sustained elsewhere, the Ee
which was denied on the ground that Garys death
must have been executing an order for the Er, it is
did not arise out of and in the course of
not difficult to understand then why Eva Joy's
employment and therefore not compensable
claim was denied by the GSIS [Tancinco v. GSIS,
because the accident occurred in his house and not
G.R. No. 132916, (2001)].
in the school premises. Is Bella entitled to file a

UNIVERSITY OF SANTO TOMAS

2013 GOLDEN NOTES 134
 SOCIAL AND WELFARE LEGISLATION
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.
FUNERAL BENEFITS
Q: What comprises the Funeral Benefit?
A: The funeral benefit, in the amount Php 20,000,
which is intended to defray the expenses incident to
the burial and funeral of the deceased member,
pensioner, or retiree under R.A. 660, R.A. 1616, P.D.
1146, and R.A. 8291. It is payable to the members of
the family of the deceased, in the order which they
appear:
1. Legitimate spouse
2. Legitimate child who spent for the funeral
services, or
3. any other person who can show unquestionable
proof of his having borne the funeral expenses of
the deceased.
Q: When will it be paid?
A: Upon the death of:
1. An active member
2. A member who has been separated from the
service but is entitled to future separation or
retirement benefits
3. A member who is a pensioner (excluding
survivorship pensioners)
4. A retiree who is at the time of his retirement was
of pensionable age, at least 60 years old, who
opted to retire under RA 1616 (An act further
amending Sec.12, C.A. 186, as amended, by
prescribing two other modes of retirement and
for other purposes).
LIFE INSURANCE
Q: What are the classes of life insurance coverage
under the GSIS Law?
A:
1. Compulsory Life Insurance
2. Optional Life Insurance
Note: The plans may be endowment or ordinary life.
135
Q: When does compulsory life insurance coverage
take effect?
A: All Ees including the members of the Judiciary and
the Constitutional Commissioners except for
Members of the AFP, the PNP, BFP and BJMP, shall,
under such terms and conditions as may be
promulgated by the GSIS, be compulsorily covered
with life insurance, which shall automatically take
effect as follows:
1. Those employed after the effectivity of this Act,
their insurance shall take effect on the date of
their employment;
2. For those whose insurance will mature after the
effectivity of this Act, their insurance shall be
deemed renewed on the day following the
maturity or expiry date of their insurance;
3. For those without any life insurance as of the
effectivity of this Act, their insurance shall take
effect following said effectivity.
Q: When may a member obtain optional Life
Insurance coverage?
A:
1. A member may at any time apply for himself
and/or his dependents an insurance and/or pre-
need coverage embracing:
a. Life
b. Memorial plans
c. Health
d. Education
e. Hospitalization
f. Other plans as maybe designed by GSIS
2. Any Er may apply for group insurance coverage
for its Ees.
Q: What is the prescriptive period to claim the
benefits?
A: GR: 4 years from the date of contingency
XPNs: Life insurance and retirement (Sec. 28, 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.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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)
BENEFICIARIES
Q: Who are the considered beneficiaries?
A:
1. Primary beneficiaries
a. The legal dependent spouse until he/she
remarries, and
b. The dependent children (Sec. 2[g] , R.A.
8291)
2. Secondary beneficiaries
a. The dependent parents, and
b. Subject to the restrictions on dependent
children, the legitimate descendants (Sec.
2[h] , R.A. 8291)
Q: Who are considered dependents?
A:
1. Legitimate spouse dependent for support upon
the member or pensioner;
2. Legitimate, legitimated, legally adopted child,
including the illegitimate child,
a. who is unmarried,
b. not gainfully employed,
c. not over the age of majority, or if over the
age of majority, incapacitated and incapable
of self-support due to a mental or physical
defect acquired prior to age of majority; and
3. Parents dependent upon the member for
support. (Sec. 2[f])
LIMITED PORTABILITY LAW (R.A. 7699)
Q: What is the Limited Portability Rule?
A: 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. (Sec. 3, R.A.
7699)
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. (Sec. 4, R.A. 7699)
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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
Q: Discuss briefly the Employees Compensation
Program.
A: 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.
COVERAGE
Q: Who are subject to coverage under the
Employees Compensation Program?
A: 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.
Q: When does compulsory coverage take effect?
A:
1. Employer on the first day of operation
2. Employee on the day of his employment
Q: What is an occupational disease?
136
 SOCIAL AND WELFARE LEGISLATION
A: 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 one wholly
due to causes and conditions which are normal and
constantly present and characteristic of the particular
occupation.
Q: What is compensable sickness?
A: 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. (Art. 167(l), LC)
Q: Discuss briefly the theory of Increased Risk.
A: The term sickness as defined in Art. 167(l) of the
LC is a 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, (1984); Panotes vs.
ECC, G.R. No. L-64802, (1984)].
Q: May an illness not listed by the Employees
Compensation Commission as an occupational
disease be compensable?
A: Where the illness is not listed by the Employees
Compensation Commission as an occupational
disease, it must be established that the risk of
contracting the same is increased by working
conditions.
Q: What defenses may be interposed by the State
Insurance Fund against a claim for compensation
made by a covered Ee or his dependents?
A: The following defenses may be set up:
1. Injury is not work-connected or the sickness is
not occupational
137
2. Disability or death was occasioned by the Ees
intoxication, wilful intention to injure or kill
himself or another, or his notorious negligence
(Art. 172, LC)
3. No notice of sickness, injury or death was given
to the Er (Art. 206, LC)
4. Claim was filed beyond 3 years from the time the
cause of action accrued (Art. 201, LC, 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.
1. Is the disability suffered by Abraham Dino
compensable?
2. If Abraham Dino recovers compensation from
the SIF, can he still recover from Abraham Julius
damages in the criminal case? Why?
A:
1. Yes. The injury was sustained by Abraham Dino in
his place of work and while in the performance
of his official functions.
2. 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 employers 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. (Rule
1, Section 5, ECC Rules; Art.169, LC)
Q: What is the Going and Coming Rule? Is this rule
absolute?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
A: 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 Workmens
Compensation Act.
XPNs:
1. Where the Ee is proceeding to or from his
work on the premises of the Er;
2. Proximity Rulewhere 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.
Q: Who are entitled to benefits under the
Employees Compensation Program?
A: The covered Ee, his dependents, and in case of his
death, his beneficiaries.
Q: Who are the dependents of the employee?
A:
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. (Art.167(i), LC, as amended by
P.D. 1921)
Q: Who are included in the term beneficiaries?
A: "Beneficiaries" means the dependent spouse until
he remarries and dependent children, who are the
primary beneficiaries. In their absence, the
dependent parents and subject to the restrictions
imposed on dependent children, the illegitimate
children and legitimate descendants who are the
secondary beneficiaries: Provided, that the
dependent acknowledged natural child shall be
considered as a primary beneficiary when there are
no other dependent children who are qualified and
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
eligible for monthly income benefit. (Art. 167, LC, as
amended by Sec. I, P.D. 1921)
Q: What are the benefits which may be enjoyed
under the State Insurance Fund?
A:
1. Medical Benefits
2. Disability Benefits
3. Death Benefits
4. Funeral Benefits
MEDICAL BENEFIT (MEDICAL SERVICES)
Q: What are the conditions of entitlement to
medical services?
A: 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
Q: What are disability benefits?
A: They are income benefits in case of temporary
total disability, permanent total disability and
permanent partial disability
Q: What are the disabilities that are considered total
and permanent?
A: The following disabilities shall be deemed total and
permanent:
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. (Art.192(c), LC)
Q: May a permanent partial disability be converted
to permanent total disability after the employees
retirement? Why?
138
 SOCIAL AND WELFARE LEGISLATION
A: Yes. This is in line with the social justice provision
in the Constitution. A persons disability may not
manifest itself fully at one precise moment in time
but rather over a period of time. And disability should
not be understood more on its medical significance
but on the loss of earning capacity.
Q: May permanent total disability arise although the
employees does not lose the use of any part of his
body?
A: Yes. 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, (1999)]
DEATH BENEFIT
Q: What are the conditions for entitlement to death
benefits?
A: 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;
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.
Q: For how long are the primary beneficiaries
entitled to the death benefits?
A:
1. Dependent Spouseuntil he or she remarries.
2. Dependent Childrenuntil they get married, or
find gainful employment, or reach 21 years of
age.
3. Dependent Child suffering from physical or
mental defectuntil such defect disappears.
Q: If an employee suffers disability or dies before he
is duly reported for coverage to the System (SSS or
GSIS), who will be liable for the benefits?
A: The Er shall be liable (Sec.1, Rule X; Sec.1, Rule XI;
Sec. 1, Rule XII; Sec. 1, Rule XIII; ECC Rules)
Q: What are the rules regarding employers liability
in case of death or injury?
A:
1. If the cause of the death or personal injury arose
out of and in the course of employment, the Er is
liable.
139
2. If the cause was due to the Ees own notorious
negligence, or voluntary act or drunkenness, the
Er shall not be liable.
3. If the cause was partly due to the Ees lack of sue
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
Q: What is the funeral benefit?
A: A funeral benefit of Php 10, 000.00 shall be paid
upon the death of a covered Ee or permanently
totally disabled pensioner.
Q: Who are required to make contributions to the
State Insurance Fund?
A: 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. (Art.183(c),
LC)
Q: When does the right to compensation or benefit
for loss or impairment of an employees earning
capacity due to work-related illness or injury arise?
A: It 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, (1988)].
Q: Does recovery from the State Insurance Fund bar
a claim for benefits under the SSS Law? Why?
A: No, 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, Republic Act No. 1161, as amended. 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, (1990)].
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
LABOR RELATIONS LAW
RIGHT TO SELF-ORGANIZATION
Q: What is the right to self-organization?
A: 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: Art. 243 of 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, Art. 22- 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.
Q: What are the constitutional provisions that
protect the right to self-organization?
A:
1. Sec. 18, Art. IIthe State affirms labor as a
primary social economic force. It shall protect the
rights of the workers and promote their welfare.
2. Sec. 3, Art. XIIIthe 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.
3. Sec. 8, Art. IIIthe 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.
Q: What is the extent of the right to self-
organization?
A: 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)
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
WHO MAY UNIONIZE FOR PURPOSES OF COLLECTIVE
BARGAINING
Q: Who are the workers with a right to self-
organization for purposes of collective bargaining?
A:
1. All persons employed in commercial, industrial
and agricultural enterprises
2. Workers in religious, charitable, medical, or
educational institutions, whether operating for
profit or not
3. Supervisors
4. Security Guards
5. Workers of Cooperatives
Q: What is the right of supervisory employees in
self-organization?
A: 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.
Q: Who are the employees eligible to join a labor
organization for mutual aid and protection?
A: 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 [Art. 243]
Note: The reason for this rule is that the abovementioned
workers have no Ers to collectively bargain with.
Q: When is an employee considered eligible to join a
labor organization?
A: 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. [Art. 277 (c), LC as
amended by Sec. 33, R.A. No. 6715]
Note: Organizations of workers and Ers shall have the right
to establish and join federations and 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]
140
 LABOR RELATIONS LAW
WHO CANNOT FORM, JOIN, AND ASSIST LABOR
ORGANIZATIONS
Q: Who are the persons/employees not allowed to
form unions?
A:
1. Managerial Ees
2. High level or Managerial Government Ees (Sec. 3,
E.O. 180)
2. Ees of International organizations with
immunities Managerial Ees (Art. 212, LC) - 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: However, 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
3. Members of the AFP including the police officers,
policemen, firemen, and jail guards. (Sec. 4, E.O.
180)
4. Confidential Ees
5. Ees of cooperatives who are its members.
However they may form workers association.
6. Non-Ees
7. Government Ees, including GOCCs with original
charters
Note: Government Ees are governed by the Civil
Service Commission.
8. 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. [Art. 269 of LC; D.O.
No. 9 (1997), Rule II, Sec. 2]
Q: Who are classified as confidential employees
expressly excluded from the CBA of rank-and-file
bargaining unit?
A: Confidential Ees are defined as those who
1. assist or act in a confidential capacity,
2. to persons who 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
141
responsibilities relating to labor relations [Tunay na
Pagkakaisa ng Manggawa sa Asia Brewery vs. Asia
Brewer, Inc., G.R. No. 162025, (2010)].
Note: An important element of the confidential Ee rule is
the Ees 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 Ers 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, (1997)].
Q: What is the rationale behind the exclusion of
confidential employees from the rank-and-file
bargaining unit?
A: 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 might
not be assured of their loyalty in view of evident
conflict of interests and the union can also become
company-denominated 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, (2011)]
Q: Are Human Resource Assistant and Personnel
Assistant considered confidential employees?
A: Yes. As Human Resource Assistant, the scope of
ones 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
petitioners 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 [San Miguel Foods Inc.
v. San Miguel Corporation Supervisors and Exempt
Union, G.R. No. 146206, (2011)].
Q: May aliens exercise the right to self-organization?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
A: 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. (Art. 269, LC)
Q: A, an employee of XYZ Cooperative, owns 500
shares in the cooperative. He has been asked to 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, (1988)].
BARGAINING UNIT
Q: What is a bargaining unit?
A: 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
Q: What are the factors considered in determining
the appropriateness of a bargaining unit?
A:
1. Will of the Ees (Globe Doctrine)
2. Affinity and unity of the Ees interest, such as
substantial similarity of work and duties, or
similarity of compensation and working
conditions (Substantial Mutual Interest Doctrine
/ Community of Interest Rule)
3. Prior CB history (CB History Doctrine)
4. Similarity of employment status (Employment
Status Doctrine)
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
Q: What is the Globe Doctrine?
A: In defining the appropriate bargaining unit, the
determining factor is the desire of the workers
themselves.
Q: What is the Substantial Mutual Interest Doctrine?
A: 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,
(1996)].
Q: What is the Collective Bargaining History
Doctrine?
A: In determining the appropriate bargaining unit,
prior CB history and affinity of the Ees may be
resorted to.
Q: What is the Employment Status Doctrine?
A: The determination of the appropriate bargaining
unit is based on the employment status of the Ees.
Q: What are the factors considered in determining
the Substantial Mutual Interest Doctrine?
A:
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
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
142
 LABOR RELATIONS LAW
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, (1992)].
Q: Is the bargaining history a decisive factor in the
determination of appropriateness of bargaining
unit?
A: No. 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 units 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, (1958)].
Q: What is one-union, one-company policy?
A: 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. L-74262, (1987)].
XPNs:
1. Supervisory Ees who are allowed to form
their own unions apart from the rank-and-
file Ees and
2. Craft Unit
3. Plant Unit
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.
Note: Two companies cannot be treated into a single
bargaining unit even if their businesses are related.
143
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 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, (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 employees labor union
on the ground that A and her colleagues have
remained to be members of rank-and-file employees
labor union. Is the petition meritorious? Explain.
(2010 Bar Question)
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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. (Art. 245-A, LC as
amended by R.A. 9481)
VOLUNTARY RECOGNITION
Q: What are the three methods of determining the
bargaining representative?
A:
1. Voluntary recognition (VR)
2. Certification election with or without run-off
election
3. Consent election
Q: What is voluntary recognition?
A: 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. [Sec. 1 (bbb), Rule I, Book V,
IRR]
Q: When is voluntary recognition proper?
A: VR is proper only in cases where there is only one
legitimate labor organization existing and operating
in a bargaining unit.
REQUIREMENTS
Q: What are the requirements for voluntary
recognition?
A: 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,
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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.
Q: What are the three conditions to voluntary
recognition?
A: VR requires three concurrent conditions:
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 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
th
period which means the last 60 days of the 5 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.
Q: Where and when to file the petition for Voluntary
Recognition?
A: Within 30 days from such recognition, Er shall
submit a notice of VR with the Regional Office which
issued the recognized labor unions certificate of
registration or certificate of creation of a chartered
local.
Q: What are the effects of recording of fact of
voluntary recognition?
A:
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.
144
 LABOR RELATIONS LAW
CERTIFICATION ELECTION
Q: What is certification election?
A: 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. [Sec. 1 (h), Rule I, Book V, IRR]
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 the exclusive
bargaining representative of the Ees for the purpose of
bargaining with the Er.
Q: What is the nature of certification election?
A: 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,
(1977)].
Q: What is the purpose of a certification election?
A: It is a means of determining the workers 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.
Q: Who may file a petition for certification election
(PCE)?
A:
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. [Sec. 1, Rule VIII, Book V, IRR as amended
by D.O. 40-F-03]
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/chapters officers and members, but
145
shall attach to the petition the charter certificate it issued
to its local/chapter. [Sec. 1, Rule VIII, Book V, IRR as
amended by D.O. 40-F-03]
Q: In registration of federation or national union,
should the 20% membership requirement be
complied with?
A: No. 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. Art. 237, LC merely requires for
proof of affiliation of at least 10 local chapters and
the names and addresses of the companies where
they operate. 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, (2007)].
Q: Can an employer file a petition for certification
election?
A: Yes, when requested to bargain collectively (Art.
258). 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.
Winning Union = majority of the valid votes cast,
assuming that there is a valid election
Valid election - majority of eligible voters cast their
votes
Consequences of selection of a bargaining agent - Ers
duty to bargain collectively
Q: What is the Employer as bystander doctrine?
A: 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 Ers
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
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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 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 Ers
only right in the proceeding is to be notified or
informed thereof [Republic v. Kawashima Textile, G.R.
No. 160352, (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: No. A labor organization composed of both rank-
and-file and supervisory Ees is not a labor
organization at all. It cannot, for any guise or
purpose, be a legitimate labor organization. Not
being one, an organization which carries a mixture of
rank-and-file and supervisory Ees cannot possess any
of the rights of a legitimate labor organization,
including the right to file a petition for CE for the
purpose of CB. It becomes necessary, therefore,
anterior to the granting of an order allowing a CE, to
inquire into the composition of any labor organization
whenever the status of the labor organization is
challenged on the basis of Art. 245 of the LC [Republic
vs. Kawashima Textile, G.R. No. 160352, (2008)].
Q: What are the issues involved in a certification
proceeding?
A: Certification proceedings directly involve two
issues:
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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
known as 12-month bar. After that period, a PCE may be
filed again.
Q: Can the five-year representation status of a
bargaining agent be extended?
A: No. While the parties may agree to extend the
CBAs 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 unions exclusive CB status. Under Art. 253-A, LC,
the exclusive bargaining status cannot go beyond five
years and the representation status is a legal matter
not for the workplace parties to agree upon. In other
words, despite an agreement for a CBA with a life of
more than five years, either as an original provision or
by amendment, the bargaining unions exclusive
bargaining status is effective only for five years and
can be challenged within 60 days prior to the
expiration of the CBAs 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 (2009).
IN AN UNORGANIZED ESTABLISHMENT
Q: What is an unorganized establishment?
A: 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.
Q: What are the requirements for certification
election in unorganized establishments?
A: The certification election shall be automatically
conducted upon the filing of a PCE by a LLO.
IN AN ORGANIZED ESTABLISHMENT
Q: What are the requisites for certification election
in an Organized Establishment?
A: 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;
146
 LABOR RELATIONS LAW

2. Such petition is verified; the Court held that the mere filing of a PCE within the
3. The petition is supported by the written consent freedom period is sufficient basis for the issuance of
of at least 25% of all the Ees in the bargaining an order for the holding of a CE, subject to the
unit [Art. 256, (LC), [TUPAS-WFTU v. Laguesma, submission of the consent signatures within a
G.R. No. 102350, (1994)]. reasonable period from such filing [Port Workers
Union of the Phils. v. Laguesma, G.R. Nos. 94929-30,
Q: Can an employer voluntarily recognize a union in (1992)].
case there are other legitimate labor organizations
in a bargaining unit? Q: What is the effect of employees withdrawal of
his signature in the petition for certification
A: No. An Er cannot ignore the existence of an LLO at election?
the time of its VR of another union. The Er and the
voluntarily recognized union cannot, by themselves, A: If the withdrawal was made before the filing of the
decide whether the other union represented an petition, then the withdrawal is presumed to be
appropriate bargaining unit [Sta. Lucia East voluntary unless there is convincing proof to the
Commercial Corporation v. Hon. Secretary of Labor, contrary. If the withdrawal was made after the filing
G.R. 162355,(2009)]. of the petition, the withdrawals are deemed
involuntary. Thus, withdrawals made after the filing
Q: In the petition for certification election, when of the petition will not affect the PCE.
should the 25% consent signature be filed?
Q: Distinguish the requisites for a petition for
A: Ideally, the signature should be filed together with certification election between organized and
the petition. However, it may be filed after the unorganized establishments.
petition within a reasonable period of time.
A:
Q: What is the effect if the petition for certification Art. 256. ORGANIZED Art. 257. UNORGANIZED
election was not accompanied by the requisite 25% Bargaining agent
consent signatures? Present None
Petition filed
A: Under the Implementing Rules, absence or failure Has to be a verified
to submit the written consent of at least 25% of all No need to be verified
petition
the Ees in the bargaining unit to support the petition Freedom Period
is a ground for denying the said petition. The No PCE except within 60
Supreme Court said that the Mediator-Arbiter may Not applicable. No
days before the
still have the discretion to grant or deny the petition. freedom period. Petition
expiration of the CBA.
Even if there is no 25% consent signature submitted can be filed anytime.
(See Art. 253 & 253-A)
together with the petition, it is within the discretion Substantial support rule
of the Med-Arbiter whether to grant or deny the Must be duly supported
petition [Port Workers Union v. Bienvenido Laguesma, by 25% of all the
G.R. Nos. 94929-30, (1992)]. If the petition, however, No substantial support
members of the
is accompanied by the 25% consent signatures, then rule.
appropriate bargaining
the holding of the CE becomes mandatory [California unit.
Manufacturing Corp. v. Laguesma, G.R. No. 97020, Why? Intention of law is
(1992)]. to bring in the union, to
Percentage base: all
implement policy behind
members of an
Q: Should the consent signatures of at least 25% of Art. 211(a).
appropriate bargaining
the employees in the bargaining unit be submitted unit.
simultaneously with the filing of the petition for
certification election? Note: The approval of the PCE in an unorganized bargaining
unit is NEVER appealable, the reason being that the law
A: No, the administrative rule requiring the favors unionized than not unionized.
simultaneous submission of the 25% consent
signatures upon the filing of PCE should not be strictly Q: May an employee intervene in the petition for
applied to frustrate the determination of the certification election?
legitimate representative of the workers. Accordingly,

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147 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

A: Yes, for the purpose of protecting his individual

right. [Sec. 1, Rule VIII, Book V, IRR as amended by A: Yes. Because the objective in a CE is to ascertain
D.O. 40-F-03, s. 2008] the majority representation of the bargaining
representative, if the Ees desire to be represented at
Q: Where is a petition for certification election filed? all by anyone. Hence, no union is one of the choices
in a CE.
A: It shall be filed with the Regional Office.
[Implementing Rules, as amended by D.O. 40-F-03, s.
Alternative Answer: No. A no union cannot win in
2008]
a CE. The purpose of a CE is to select an exclusive
Q: Who shall hear and resolve the petition for bargaining agent and a no union vote would precisely
certification election? mean that the voter is not choosing any of the
contending unions. If the no-union votes constitute a
A: The Mediator-Arbiter.
majority of the valid votes cast, this fact will all the
Q: When shall a petition for certification election be more mean that no union won in CE. A one-year bar
filed? will consequently stop the holding of another CE to
allow the Er to enjoy industrial peace for at least one
A: The proper time to file the PCE depends on year.
whether the certified bargaining unit has a CBA or
not: Q: In what instance may a petition for certification
election be filed outside the freedom period of a
1. If it has no CBA, the petition may be filed anytime current collective bargaining agreement? (1997 Bar
outside the 12-month bar (certification year). Question)
2. If it has CBA, it can be filed only within the last 60
th
days of the 5 year of the CBA. A: As a general rule, in an establishment where there
is a CBA in force and effect, a PCE may be filed only
Note: At the expiration of the freedom period, the Er shall during the freedom period of such CBA. But to have
continue to recognize the majority status of the incumbent that effect, the CBA should have been filed and
bargaining agent where no PCE is filed. registered with the DOLE. [Art. 231, 253-A and 256,
LC]
Q: Distinguish Union Election from Certification
Election. Thus, a CBA that has not been filed and registered
with the DOLE cannot be a bar to a CE and such
A: election can be held outside the freedom period of
CERTIFICATION such CBA.
UNION ELECTION
ELECTION
Held pursuant to the Alternative Answer: A PCE may be filed outside the
The process is ordered
unions constitution and freedom period of a current CBA if such CBA is a new
and supervised by DOLE
by-laws CBA that has been prematurely entered into,
All Ees whether union or meaning, it was entered into before the expiry date
non-union members of the old CBA. The filing of the PCE shall be within
Right to vote is enjoyed
who belong to the the freedom period of the old CBA which is outside
only by union members
appropriate bargaining the freedom period of the new CBA that had been
unit can vote prematurely entered into.
The winner in a CE is an
entity, a union, which Q: Are probationary employees entitled to vote in a
Winners of union becomes the certification election? Why? (1999 Bar Question)
election become officers representative of the
and representatives of whole bargaining unit A: Yes, in a CE, all rank-and-file Ees in the
the union only that includes even the appropriate bargaining unit are entitled to vote. This
members of the principle is clearly stated in Art. 255, LC which
defeated unions. states that the "labor organization designated or
selected by the majority of the Ees in such unit shall
Note: Both in CE and union election, the prescribed be the exclusive representative of the Ees in such unit
procedures should be followed. for the purpose of CB." [Airtime Specialists, Inc. v.
Ferrer-Calleja, G.R. No. 80612-16, (1989)].
Q: Can a "no-union" win in a certification election?
(2006 Bar Question)

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2013 GOLDEN NOTES 148
 LABOR RELATIONS LAW
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 [NUWHRAIN-Manila Pavilion Hotel
Chapter v. Secretary, G.R. No. 181531, (2009)].
Q: What is direct certification?
A: 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.
Q: Is direct certification still allowed?
A: No. 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 unions 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, (1998)].
Q: Does the failure of an independent union to
prove its affiliation with a federation affect its right
to file a petition for certification election as an
independent union?
A: No, 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,
(1998)].
Q: May illegally dismissed employees of the
company participate in the certification election?
A: Yes, 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
149
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,
(1992)].
Q: Can employees whose services were terminated
still entitled to vote during the certification election?
A: Yes, 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.
Q: How should protest be made during certification
elections?
A: 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, (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, (1990)].
RUN-OFF ELECTION
Q: What is a run-off election?
A: An election conducted when:
1. A CE which provides for three or more choices
results in none of the contending unions receiving
a majority of the valid votes cast, and
2. There are no objections or challenges which if
sustained can materially alter the results, provided
3. The total number of votes for all the contending
unions is at least 50% of the number of votes cast.
[Sec. 1, Rule X, Book V, IRR]
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
winner provided they get the majority votes of the
total votes cast.
REQUIREMENTS
Q: What are the requirements for a run-off election?
A:
1. An election was conducted with three or more
choices
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

2. None of the contending union obtained the Election the sole and filed by a union
required majority vote of 50% + 1 of the valid votes exclusive or Er. A Med-
cast bargaining Arbiter grants
3. There are no objections or challenges that can alter agent of all the the petition and
the results materially Ees in an an election
4. The number of votes received by all contending appropriate officer is
unions when added together amounts to at least 50% bargaining unit designated by
of the total votes cast for the purpose regional
of CB. director to
Q: Who are the choices in a run-off election? supervise the
election.
nd
A: The unions receiving the highest and 2 highest
number of the votes cast. [Sec.2, Rule X, Book V, IRR] Note: Med-
Arbiter may
Note: No Union shall not be a choice in the Run-off determine if
Election. there is an Er-Ee
relationship and
Q: When should the notice for run-off election be if the voters are
eligible.
posted?
To determine
the issue of
A: The notice should be posted by the Election Officer
majority
at least five days before the actual date. [Sec. 1, Rule
representation
X, Book V, IRR]
of all the
workers in the
RE-RUN ELECTION
appropriate CB
unit mainly for
Q: What is a Re-run Election?
the purpose of Held by
determining the agreement of
A: An election that takes place when:
administrator the unions with
1. One choice receives a plurality of the vote and the Consent
of the CBA or without the
remaining choices results in a tie; or Election
when the participation of
2. All choices received the same number of votes.
contracting the Med-
Note: In both instances, the no union is also a choice. union suffered Arbiter.
massive
CONSENT ELECTION disaffiliation
and not for the
Q: What is a consent election? purpose of
determining the
A: An election voluntarily agreed upon by the parties, bargaining
with or without the intervention by the DOLE. [Sec.1 agent for
(h), Rule I, Book V, IRR] purpose of CB.
Takes place
Note: To afford an individual Ee-voter an informed choice between the
where a local/chapter is the petitioning union, the unions who
local/chapter shall secure its certificate of creation at least received the
five working days before the date of the consent election. two highest
[Sec.1, Rule VIII, Book V, IRR as amended by DO 40-F-03] number of
votes in a CE
Q: Distinguish certification election, consent Run-Off
with three or
election, run-off election, and re-run election. Election
more choices,
where not one
A: of the unions
Participation of obtained the
Purpose Mediator- majority of the
Arbiter valid votes cast,
Certification To determine Requires PCE provided the

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2013 GOLDEN NOTES 150
 LABOR RELATIONS LAW

total union 1. The chapter shall acquire legal personality only

votes is at least for purposes of filing a PCE from the date it was
50% of the issued a charter certificate
votes cast.
Takes place in 2. The chapter shall be entitled to all other rights
two instances: and privileges of a LLO only upon the submission
1. If one choice of the following documents in addition to its
receives a charter certificate:
plurality of a. Names of the chapters officers, their
the vote and addresses, and the principal office of the
the chapter
remaining b. Chapters constitution and by-laws
choices c. Where the chapters constitution and by-
Re-run results in a laws are the same as that of the federation
Election tie; or or the national union, this fact shall be
2. If all choices indicated accordingly
received the
same number 3. The genuineness and due execution of the
of votes. supporting requirements shall be:
a. Certified under oath by the secretary or
In both treasurer of the local/chapter, and
instances, the b. Attested to by its president [Sec.2(e), Rule III,
no union is also Book V, IRR, as amended by D.O. 40-F-03]
a choice.
Q: What are the reportorial requirements in
Note: Petition for cancellation of registration is not a bar to affiliation?
a PCE. No prejudicial question shall be entertained in a PCE.
(D.O. 40-03) A: The report of affiliation of independently
registered labor unions with a federation or national
AFFILIATION AND DISAFFILIATION OF THE LOCAL union shall be accompanied by the following
UNION FROM THE MOTHER UNION documents:
1. Resolution of the labor union's board of directors
Q: What is an Affiliate? approving the affiliation;
2. Minutes of the general membership meeting
A: Affiliate refers to: approving the affiliation;
1. An independent union affiliated with a federation, 3. The total number of members comprising the
national union; or labor union and the names of members who
2. A local chapter which was subsequently granted approved the affiliation;
independent registration but did not disaffiliate from 4. The certificate of affiliation issued by the
its federation. federation in favor of the independently
registered labor union; and
Q: What is the purpose of affiliation? 5. Written notice to the Er concerned if the
affiliating union is the incumbent bargaining
A: The purpose of affiliation is to foster the free and agent. [D.O. 40-03, Rule, III, Sec. 7, (2003)]
voluntary organization of a string and united labor
movement. (Art. 211 [c], LC) Q: What is the effect of affiliation?

Q: How is a local chapter created?
A: 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.
A: 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-

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151 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

laws, the federation has the right to investigate and A: Yes. The pendency of an election protest does not
expel members of the local union [Villar v. Inciong, bar the valid disaffiliation of the local union which
G.R. No. L-50283-84, (1983)]. was supported by the majority of its members.

Q: May a local union disaffiliate from the The right of a local union to disaffiliate with the
federation? federation in the absence of any stipulation in the
Constitution and by-laws of the federation prohibiting
A: GR: A labor union may disaffiliate from the mother disaffiliation is well settled. Local unions remain as
union to form an independent union only during the the basic unit of association, free to serve their own
60-day freedom period immediately preceding the interest subject to the restraints imposed by the
expiration of the CBA. Constitution and by-laws of national federation and
are free to renounce such affiliation upon the terms
XPN: Even before the onset of the freedom and conditions laid down in the agreement which
period, disaffiliation may still be carried out, but brought such affiliation to existence. In the case at
such disaffiliation must be effected by the bar, no prohibition existed under the Constitution
majority of the union members in the bargaining and by-laws of the federation. Hence, the union may
unit. freely disaffiliate with the federation [Philippine
Skylanders v. NLRC, G.R. No. 127374, (2002)].
Note: This happens when there is a substantial shift in
allegiance on the part of the majority of the members of Q: Distinguish between an independently registered
the union. In such a case, however, the CBA continues to and unregistered chartered local union.
bind the members of the new or disaffiliated and
independent union to determine the union which shall
A:
administer the CBA may be conducted [ANGLO-KMU v.
Samahan ng Manggagawang Nagkakaisa sa Manila Bay CHARTERED LOCAL UNION
Spinning Mills at J.P. Coats, G.R. No.118562, (1996)] Independently
Unregistered
Registered
Q: What is the limitation to disaffiliation? How to affiliate?
By application with the
A: Disaffiliation should be in accordance with the federation for the
rules and procedures stated in the Constitution and By signing contract of issuance of a charter
by-laws of the federation. A local union may affiliation certificate to be
disaffiliate with its mother federation provided that submitted to the Bureau
there is no enforceable provision in the federations Labor Relations
constitution preventing disaffiliation of a local union Effect of Disaffiliation to the union (local)
[Tropical Hut Employees Union v. Tropical Hut, G.R. Would cease to be an
Nos. L-43495-99, (1990)]. Would not affect its LLO and would no longer
being an LLO and have the legal
Note: A prohibition to disaffiliate in the Federations therefore it would personality and the
constitution and by-laws is valid because it is intended for continue to have legal rights and privileges
its own protection. personality and to granted by law to LLO,
possess all rights and unless the local chapter
Locals or chapters who retained status as LLO shall be
allowed to register as independent unions. If they fail to
privileges of LLO. is covered by its duly
register, they shall lose their legitimate status upon the registered CBA.
expiration of the CBA. Effect of Disaffiliation to the CBA
An existing CBA would
Q: PSEA is a local union in Skylander company which continue to be valid as The CBA would continue
is affiliated with PAFLU. PSEA won the certification the labor organization to be valid up to its
election among the rank and file employees of the can continue expiration date.
Skylander company but its rival union PSEA-WATU administering the CBA.
protested the results. Pending the resolution of such Entitlement to union dues after Disaffiliation
controversy, PSEA disaffiliated with PAFLU and Labor organization Union dues may no
hence affiliated with NCW which was supported by entitled to the union longer be collected as
its members. May a local union disaffiliate with its dues and not the there would no longer
mother federation pending the settlement of the federation from which be any labor union that
status as the sole and exclusive bargaining agent? the labor organization is allowed to collect such
disaffiliated. union dues from the Ees.

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2013 GOLDEN NOTES 152
 LABOR RELATIONS LAW
SUBSTITUTIONARY DOCTRINE
Q: What is the Substitutionary Doctrine?
A: 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
Workers Union-PAFLU, G.R. No. L-24711, (1968)].
It cannot be invoked to support the contention that a newly
certified CB agent automatically assumes all the personal
undertakings of the former agent-like the no strike clause
in the CBA executed by the latter.
UNION DUES AND SPECIAL ASSESSMENTS
Q: What are the dues and assessments which the
union may collect?
A: 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 [Art. 277 (a), LC]
6. Agency fees [Art. 248 (e), LC]
Q: What are union dues?
A: 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.
Q: What is check-off?
A: It is a method of deducting from an Ees pay at a
prescribed period, the amounts due the union for
fees, fines and assessments.
Note: Deductions for union service fees are authorized by
law and do not require individual check-off authorizations.
Q: What is the nature and purpose of check-off?
153
A: 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. [Art. 277(a), LC]
Q: What are special assessments or extraordinary
fees?
A: These are assessments for any purpose or object
other than those expressly provided by the labor
organizations Constitution and by-laws.
REQUIREMENTS FOR VALIDITY
Q: What are the requisites of a valid check-off?
A: GR: No special assessments, attorneys 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:
1. Amount
2. Purpose &
3. Beneficiary of the deduction.
XPNs:
1. For mandatory activities under the LC
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.
Q: What are the requisites for a valid levy of special
assessment or extraordinary fees?
A:
1. Authorization by a written resolution of the
majority of all members at the general
membership meeting duly called for that
purpose;
2. Secretarys record of the minutes of the meeting,
which must include the:
a. List of members present
b. Votes cast
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

c. Purpose of the special assessments AGENCY FEES

d. Recipient of such assessments;
Q: What is an agency fee?
3. Individual written authorization to check-off duly
signed by the Ee concerned to levy such A: It is an amount equivalent to union dues, which a
assessments. non-union member pays to the union because he
benefits from the CBA negotiated by the union.
Q: What is the effect of failure to strictly comply
with the requirements set by law? Note: Payment by non-union members of agency fees does
not amount to unjust enrichment because the purpose of
A: It shall invalidate the questioned special such dues is to avoid discrimination between union and
non-union members.
assessments. Substantial compliance with the
requirements is not enough in view of the fact that
the special assessment will diminish the Q: A is employed by XYZ Company where XYZ
compensation of union members [Palacol v. Ferrer- Employees Union (XYZ-EU) is the recognized
Calleja, G.R. No. 85333, (1990)]. exclusive bargaining agent. Although A is a member
of rival union XYR-MU, he receives the benefits
Q: Who has jurisdiction over check-off disputes? under the CBA that XYZ-EU had negotiated with the
company. XYZ-EU assessed A, a fee equivalent to the
A: Being an intra-union dispute, the RD of the DOLE dues and other fees paid by its members but A
has jurisdiction over check off disputes. insists that he has no obligation to pay said dues and
fees because he is not a member of XYZEU and he
Q: Distinguish check-off from special assessments. has not issued an authorization to allow the
collection. Explain whether his claim is meritorious.
A: (2010 Bar Question)
Check-off Special Assessment
A: No. the fee exacted from A takes the form of an
How approved
agency fee which is sanctioned by Art. 248 (e), LC.
(Union Dues)
The collection of agency fees in an amount equivalent
By obtaining the individual
By written resolution to union dues and fees from Ees who are not union
written authorization duly
approved by majority of members is recognized under the LC. The union may
signed by the Ee which
all the members at the collect such fees even without any written
must specify:
meeting called for that authorization from the non-union member Ees, if said
1. Amount
purpose. Ees accept the benefits resulting from the CBA. The
2. Purpose
legal basis of agency fees is quasi-contractual [Del
3. Beneficiary
Pilar Academy v. Del Pilar Academy Employees Union,
Exception to such requirement
G.R. No. 170112, (2008)].
(Agency fees)
Not necessary when: REQUISITES FOR ASSESSMENT
1. For mandatory activities
under the LC Q: What are the requisites for assessment of agency
2. For Agency Fees fees [Art. 248 (e), LC]?
3. When non-members of
the union avail of the A:
benefits of the CBA: 1. The Ee is part of the bargaining unit
a. Said non-members No exception; written 2. He is not a member of the union
may be assessed resolution is mandatory 3. He partook of the benefits of the CBA
union dues equivalent in all instances.
to that paid by union Note: Under Art. 241 (o), LC, other than for mandatory
members; activities under the Code, no special assessments,
b. Only by Board attorneys fees, negotiation fees or any other extraordinary
resolution approved fees may be checked off from any amount due to an Ee
by majority of the without his authorization. The individual authorization
members in general required under this article shall not apply to non-members
meeting called for the of the recognized CB agent with regard to assessment of
agency fees.
purpose
Q: Distinguish union dues from agency fees.

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2013 GOLDEN NOTES 154
 LABOR RELATIONS LAW

A: A: The mechanics of CB, which is defined as

Union Dues
Is deducted from
members for the
payment of union dues
May not be deducted
from the salaries of the
union members without
the written consent of
the workers affected.
Agency Fee
Is deducted from non-
members of the
bargaining agent (union)
for the enjoyment of the
benefits under the CBA.
May be deducted from
the salary of the Ees
without their written
consent.
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, (1986)].

RIGHT TO COLLECTIVE BARGAINING Q: When should bargaining commence?

Q: What is collective bargaining? A: Bargaining commences within 12 months after the

A:
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.
Note: 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. [Art. 99 and 122,
LC]
2. NCMB and NLRC as to wage distortion. [Art. 124,
LC]
3. SLE and President of the Philippines as to
certification and assumption of powers over
labor disputes. [Art. 236(g), LC]
Q: What is the purpose behind this rule?
determination and certification of the Ees exclusive
bargaining representative (certification year).
Q: What is the procedure in collective bargaining?
A: 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. (Art.
250 [d], LC)

A: 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.
Q: Who are the parties to a collective bargaining?
A:
1. Er
2. Ees, represented by the exclusive bargaining
agent
Q: What are the jurisdictional preconditions in
Collective Bargaining? (Kiok Loy Doctrine)
Q: What are the stages in collective bargaining?
A:
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.

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155 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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.
DUTY TO BARGAIN COLLECTIVELY
Q: What is the meaning of the duty to bargain
collectively?
A: The duty to bargain collectively means the
performance of a mutual obligation to meet and
convene promptly and expeditiously in good faith for
the purpose of negotiating an agreement with
respect to wages, hours of work and all other terms
and conditions of employment including proposals for
adjusting any grievances or questions arising under
such agreement and executing a contract
incorporating such agreements if requested by either
party but such duty does not compel any party to
agree to a proposal or to make any concession. (Art.
252, LC)
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. [Art. 253,
LC]
Q: What are the restrictions to the duty to bargain
collectively?
A:
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 unions
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 unions registration is pending, 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,
(2005)].
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
Q: May either party bargain to an impasse?
A: It depends:
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.
Q: When does the duty of the employer to bargain
collectively arise?
A: 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, (1982)].
Q: What is the test of bargaining in good faith?
A: 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
NLRCs 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, (1998)].
Q: Does an employers 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
representatives 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
156
 LABOR RELATIONS LAW
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 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,
(2008)].
Q: What is a deadlock?
A: 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.
Q: In case of deadlock in the renegotiation of the
collective bargaining agreement, what are the
actions that may be taken by the parties?
A: 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.)
Q: May economic exigencies justify refusal to
bargain?
A: No. An Er is not guilty of refusal to bargain by
persistently rejecting the unions 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.
157
WHEN THERE IS ABSENCE OF A CBA
Q: What is the duty to bargain collectively when
there is no collective bargaining agreement?
A: 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. [Art. 251,
LC]
WHEN THERE IS A CBA
Q: What is the duty to bargain collectively when
there is a collective bargaining agreement?
A: 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
th
days prior the expiration of its 5 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. (Art.
253, LC)
Note: CBA is a contract of indefinite period under Art. 253.
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, (2010)].
Q: What is a single enterprise bargaining?
A: 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. (Sec. 3, Rule XVI, Book
V, Rules to Implement the LC, as amended by
Department Order No. 40-03, Series of 2003)
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Q: What is a multi-employer bargaining scheme?
A: 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.
(Sec. 5, Rule XVI, Book V, Rules to Implement the
LC, as amended by Department Order No. 40-03,
Series of 2003)
COLLECTIVE BARGAINING AGREEMENT
Q: What is a collective bargaining agreement?
A: 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,
(1989)].
Q: What is the nature of a collective bargaining
agreement?
A: The CBA is the law between the contracting
partiesthe CB representative and the Er-company.
Compliance with a CBA is mandated by the expressed
policy to give protection to labor [Vicente Almario v.
Philippine Airlines, Inc., 532 SCRA 614, (2007)].
Q: What is the purpose of a collective bargaining
agreement?
A: The goal of CB is the making of agreements that
will stabilize business conditions and fix fair standards
of working conditions [P.I. Manufacturing,
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
Incorporated v. P.I. Manufacturing Supervisors and
Foremen Association, 543 SCRA 614 (2008)].
Q: When should a collective bargaining agreement
be filed for registration?
A: 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.
Q: What are the requirements for registration?
A: 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.
Note: 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.
Q: What is a zipper clause?
A: It is a stipulation in a CBA indicating that issues
that could have been negotiated upon but not
contained in the CBA cannot be raised for negotiation
when the CBA is already in effect.
A CBA is not an ordinary contract but one impressed
with public interest, only provisions embodied in the
CBA should be so interpreted and complied with.
Where a proposal raised by a contracting party does
not find print in the CBA, it is not a part thereof and
the proponent has no claim whatsoever to its
implementation (SMTFM-UWP v. NLRC, G.R. No.
113856, (1998).
Q: What may be done during the 60-day freedom
period?
A:
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.
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 LABOR RELATIONS LAW

3. A PCE may be filed. Q: When should grievance machinery be

established?
MANDATORY PROVISIONS OF THE CBA
A:
Q: What are the mandatory provisions of the 1. Agreement by the parties
collective bargaining agreement? 2. A grievance committee composed of at least
two representatives each from the members of
A: the bargaining unit and the Er, unless otherwise
1. Grievance machinery agreed upon by the parties shall be created
2. Voluntary Arbitration within 10 days from the signing of CBA
3. Wages
4. Hours of work Note: Although Art. 260, LC mentions parties to a CBA, it
5. Family planning does not mean that a grievance machinery cannot be set up
6. Rates of pay in a CBA-less enterprise. In any workplace where grievance
can arise, a grievance machinery can be established.
7. Mutual observance clause
8. No Strike-No Lockout Clause
9. Labor-Management Council Q: What is a grievance procedure?

Note: In addition, the BLR requires that the CBA should
include a clear statement of the term of the CBA. Ers duty
to bargain is limited to mandatory bargaining subjects; as to
other matters, he is free to bargain or not.
GRIEVANCE PROCEDURE
Q: What is grievance?
A: 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. [Sec.1
(u), Rule I, Book V, IRR]
Q: What provisions must the parties include in a
collective bargaining agreement?
A:
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. [Art. 260(1), LC]
Q: What is grievance machinery?
A: 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. [Art. 260 (2), LC]
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 Interpretation
or implementation of collective bargaining
agreements handled and disposed? (1995 Bar
Question)

A: It refers to the mechanism for the adjustment and A: They are disposed through the grievance
resolution of grievances arising from the machinery and if not resolved by the grievance
interpretation or enforcement of company personnel machinery, through VA.
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.

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159 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

VOLUNTARY ARBITRATION A: The State shall promote the principle of shared

Q: What is voluntary arbitration?
A: 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. [Sec.1 (d), Rule II, NCMB Revised
Procedural Guidelines in the Conduct of Voluntary
Arbitration Proceedings, (2004)]
Q: Who is a voluntary arbitrator?
A: 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.
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. [Sec. 3, Art. XIII, 1987 Constitution]
Q: How is the decision of a voluntary arbitrator
enforced?
A: 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. [Art. 262-A, LC]
NO STRIKE-NO LOCKOUT CLAUSE

Note: A voluntary arbitrator is not an Ee, functionary or Q: What is a no strike-no Lockout clause?
part of the government or of the DOLE, but he is authorized
to render arbitration services provided under labor laws A: It is a clause in the CBA which is an expression of
[(Ludo & Luym Corporation v. Saornido, G.R. No. 140960,
the firm commitment of the parties that, on the part
(2003)].
of the union, it will not mount a strike during the
effectivity of the CBA, and on the part of the Er, that
Q: What is the difference between compulsory and
it will not stage a lockout during the lifetime thereof.
voluntary arbitration?
Q: When does the no strike-no Lockout clause in the
A: Compulsory arbitration is a system whereby the
collective bargaining agreement apply?
parties to a dispute are compelled by the government
to forego their right to strike and are compelled to
A: The no strike-no lockout clause in the CBA
accept the resolution of their dispute through
rd applies only to economic strikes. It does not apply to
arbitration by a 3 party. The essence of arbitration
ULP strikes. Hence, if the strike is founded on a ULP
remains since a dispute is resolved by a disinterested
rd of the Er, a strike declared by the union cannot be
3 party whose decision is final and binding on the
rd considered a violation of the no strike clause [Master
parties. The 3 party is normally appointed by the
Iron Labor Union v. NLRC, G.R. No. 92009, (1993)].
government.
Q: Will acts of violence committed in the course of
Under VA, referral of a dispute by the parties is made,
strike render the strike illegal?
pursuant to a VA clause in their CBA, to an impartial
rd
3 person for a final and binding resolution. Ideally,
A: It depends upon the acts of violence committed.
arbitration awards are to be complied with by both
1. If pervasive, widespread and regularly
parties without delay, such that once an award has
committed, it is illegal, union is responsible.
been rendered by an arbitrator, nothing is left to be
2. If isolated, sporadic or remote, it is still legal but
done by both parties but to comply with the same
the person who committed is responsible.
[Luzon Development Bank v. Association of Luzon
Development Bank Employees, G.R. No. 120319,
(1995)].

Q: What is the basis for voluntary arbitration and its

rationale?

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2013 GOLDEN NOTES 160
 LABOR RELATIONS LAW

LABOR MANAGEMENT COUNCIL DURATION

Q: When may a Labor Management Council be Q: What is the duration of a collective bargaining
formed? agreement?

A: Labor-Management Councils or Committees may A:

be formed voluntarily by workers and Ers in the event
no legitimate labor organization exists for the
purpose of promoting industrial peace. (Art. 277, LC)
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, p.
418]
Q: What is the role of the DOLE in the creation of
Labor Management Councils?
A: 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.
(Sec. 1, Rule XXI, Book V, IRR]
Q: How is the representative in the Management
Council selected?
A: 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. (Sec. 2, Rule XXI, Book V, IRR)
GRIEVANCE MACHINERY LABOR MANAGEMENT
COUNCIL
Resolves disputes in the Resolves disputes not
interpretation and within the provisions of
implementation of the the CBA [PHIMCO
meaning of the Industries v. PHIMCO
provisions of the CBA Industries Labor
and of the company Association (2010)].
personnel policies.
1. Representation aspect (refers to the identity and
majority status of the union that negotiated the
CBA as the exclusive bargaining representative) -
five years.
2. All other provisions (refers to the rest of the CBA,
economic as well as non-economic provisions
except representation) - three years after the
execution of the CBA
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. [Art. 253, LC]
No petition questioning the majority status of the
incumbent bargaining agent shall be entertained by the
DOLE and no CE shall be conducted outside of the 60-day
freedom period.
Q: What is the automatic renewal clause of
collective bargaining agreements? (2008 Bar
Question)
A: Although a CBA has expired, it continues to have
legal effects as between the parties until a new CBA
has been entered into [Pier & Arrastre Stevedoring
Services, Inc. v. Confessor, G.R. No. 110854, (1995)].
The law makes it a duty of the parties to keep the
status quo and to continue in full effect the terms and
conditions of the existing agreement until a new
agreement is reached by the parties. [Art. 253, LC].
Q: What is the hold-over principle?
A: 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. Despite the
lapse of the formal effectivity of the CBA the law still
considers the same as continuing in force and effect
until a new CBA shall have been validly executed.
Q: Does the hold-over principle apply to imposed
CBA / arbitral award?

UNIVERSITY OF SANTO TOMAS

161 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
A: YES. The hold-over principle, i.e., the duty of the
parties to keep 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 apply to an imposed CBA. The law does not
provide for any exception nor qualification on which
economic provisions of the existing agreement are to
retain its force and efe. Likewise, the law does not
distinquish between a CBA duly ageed upon by the
parties and an imposed CBA [General Milling
Corporation ILU v. General Milling Corp., (2011)].
FOR ECONOMIC PROVISIONS
Q: What are the economic provisions of a collective
bargaining agreement?
A: Provisions granting economic benefits to the Ees
such as increases, vacation and sick leaves,
hospitalization and retirement.
FOR NON-ECONOMIC PROVISIONS
Q: What are the non-economic provisions of a
collective bargaining agreement?
A:
1. Coverage of the bargaining unit
2. Union security clauses
3. Management prerogatives and/or rights/
responsibilities of Ees
4. Grievance machinery and VA
5. No strike no lock out provision
Q: What is the effectivity and retroactivity date of
economic and non-economic provisions of the
collective bargaining agreement?
A:
1. If the CBA is the very first for the bargaining unit,
the parties have to decide the CBA effectivity
date.
2. Those made within six months after date of
expiry of the CBA are subject to automatic
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.
Art. 253-A on 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.
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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, (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, (1997)].
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
st
shall retroact to the 1 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
SLEs determination of the date of retroactivity as
part of his discretionary powers over arbitral award
162
 LABOR RELATIONS LAW
shall control [Manila Electric Company v. Quisumbing,
G.R. No. 127598, Feb. 22 and (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 workers 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, (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, (2002)].
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, (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?
163
A: While the parties may agree to extend the CBAs
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 unions
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 unions exclusive
bargaining status is effective only for five years and
can be challenged within 60 days prior to the
expiration of the CBAs 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, (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).
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.
Q: Define union security.
A: 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.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

Q: What is union security clause? 3. there is sufficient evidence to support the

A: 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.
Q: Define closed shop.
A: 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.
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 (2010)].
CHECK-OFF; UNION DUES, AGENCY FEES
Q: What is the difference between union dues and
agency fees?
A: Union dues are collected from union members
while agency fees are collected by the union from
non-members belonging to the same bargaining unit
who receive the benefits under the CBA.
Q: What are the rules in case of check-off?

Q: Define union shop. A:

UNION DUES AGENCY FEES
A: There is union shop when all new regular Ees are There must be an Can be assessed even
required to join the union within a certain period as a individual written without the written
condition for their continued employment. authorization by authorization of the
individual members. employee concerned.
CLOSE SHOP UNION SHOP
Er cannot hire any Ee Er can hire even those ULP IN COLLECTIVE BARGAINING
unless they are members who are not members of
of the union. the union but it requires Q: What are the forms of unfair labor practice in
that after a certain bargaining?
period they must
become members of the A:
union. 1. Failure to meet and convene
2. Evading the mandatory subjects of bargaining
Q: Define maintenance of membership. 3. Bad faith in bargaining, including failure to
execute the CBA if requested
A: There is maintenance of membership shop when 4. Gross violation of the CBA
Ees, who are union members as of the effective date 5. Surface Bargaining
of the agreement, or who thereafter become 6. Blue sky bargaining
members, must maintain union membership as a
condition for continued employment until they are Note: Violations of CBA, except those which are gross in
promoted or transferred out of the bargaining unit or character, shall no longer be treated as ULP but a grievance
the agreement is terminated. under CBA. [Art. 261, LC]; [Silva v. NLRC, G.R. No. 110226,
(1997)].
Q: What are the requisites for termination on
account of enforcement of a union security clause in BARGAINING IN BAD FAITH
a collective bargaining agreement?
Q: What is boulwarism?
A: In terminating the employment of an Ee by
enforcing the union security clause, the Er needs only A: Boulwarism is known as bad faith in bargaining. It
to determine and prove that: includes the failure to execute the CBA.
1. the union security clause is applicable;
2. the union is requesting for the enforcement of Q: When does boulwarism occur?
the union security provision in the CBA; and

UNIVERSITY OF SANTO TOMAS

2013 GOLDEN NOTES 164
 LABOR RELATIONS LAW
A: 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 thru
the union. Er submits its proposals and adopts a take-
it-or-leave-it stand.
REFUSAL TO BARGAIN
Q: When is there Refusal to bargain?
A: 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, p. 360)
Q: What is the effect of refusal of management to
give counter-proposals to the unions demands?
A: 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, (1957)]. 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, (1986)].
INDIVIDUAL BARGAINING
Q: When is individual bargaining considered as
unfair labor practice?
A: 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, (1971)].
BLUE SKY BARGAINING
Q: What is blue-sky bargaining?
A: It is defined as making exaggerated or
unreasonable proposals.
Note: 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
165
requires exaggerated or unreasonable economic demands,
then it is guilty of ULP [Standard Chartered Bank v.
Confessor, G.R. No. 114974, (2004)].
SURFACE BARGAINING
Q: What is Surface bargaining?
A: It is the act of going through the motions of
negotiating without any legal intent to reach an
agreement [Standard Chartered Bank Employees
Union v. Confesor, (2004)].
Note: 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 partys conduct both at
and away from the bargaining table.
Q: What is featherbedding/make work activities?
A: 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 latters requirements, including the
demand for fee for union negotiations. [Art. 249 (d),
LC]
Note: It is not featherbedding if the work is performed no
matter how unnecessary or useless it may be.
Q: What is the sweetheart doctrine?
A: It is when a labor organization asks for or accepts
negotiations or attorneys fees from Ers as part of the
settlement of any issue in CB or any other dispute.
Note: 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.
UNFAIR LABOR PRACTICE (ULP)
NATURE OF ULP
ILO Convention No. 95: Right to Organize and
Collective Bargaining Convention, Article 2-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.
Q: When are acts considered as Unfair Labor
Practice?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

A: The act complained of must have a proximate and 3. Their connection with an established collateral
causal connection with: plan of coercion or interference [The Insular Life
1. Exercise of the Right to Self-organization Assurance-NATU v. The Insular Life Co. Ltd, G.R.
2. Exercise of the Right to CB No.L-25291, (1971)].

Note: Not all illegal acts are ULP. Only those enumerated in Note: An expression which might be permissibly uttered by
the LC are ULP. one employer, might, in the mouth of a more hostile
employer, be deemed improper and consequently
ULP OF EMPLOYERS actionable as a ULP.

Q: What are the unfair labor practice that may be Q: Phil. Marine Officers Guild (PMOG) is a union
committed by employers? representing some of Philsteams officers and Cebu
Seamens Association (CSA) is another union
A: representing some of Philsteams officers. PMOG
1. Interference sent a letter to Philsteam requesting for CB but the
2. Yellow dog condition company asked the former to first prove that it
3. Contracting out represents the majority. Simultaneously, Philsteam
4. Company unionism interrogated its captains, deck officers and
5. Discrimination for or against union membership engineers while CSA likewise sent its demands to
6. Discrimination because of testimony Philsteam. The company recognized CSA as
7. Violation of duty to bargain representing the majority and entered into a CBA.
8. Paid negotiation Hence PMOG declared a strike. PMOG was
9. Gross violation of CBA subjected to vilification and Philsteams pier
superintendent participated in the solicitation of
Q: What is interference? membership for CSA. Is the company guilty of ULP?

A: The act of Er to interfere with, restrain or coerce
Ees in the exercise of their right to self-organization.
Q: What is the test of interference?
A: Whether the Er has engaged in conduct which, it
may reasonably be said, tends to interfere with the
free exercise of the Ees right to self-organization.
Note: Direct evidence that an Ee was in fact intended or
coerced by the statements of threats of the Er is not
necessary if there is a reasonable interference that the 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, (1971)].
Q: What is the totality of conduct doctrine?
A: It states that the culpability of Ers 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 ULP because of:
1. The circumstances under which they were
uttered
2. The history of the particular Ers labor relations
or anti-union bias
A: Yes. Although the company is free to make
interrogations as to its Ees union, the same should
be for a legitimate purpose and must not interfere
with the exercise of self-organization otherwise it is
considered as ULP. Moreover, Philsteams supervisory
Ees statement that PMOG is a money-making
union, which is made to appear to be said in behalf of
the union and the participation of the companys pier
superintendent in soliciting membership for the
competing union, is ULP for interfering with the
exercise of the right to self-organization. [Philsteam
and Navigation v. Philippine Marine Officers Guild,
G.R. Nos. L-20667 and L-20669, (1965)]
Q: What are other examples of acts of interference?
A:
1. Outright and unconcealed intimidation
2. Intimidating expressions of opinion by Er
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, (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 demand 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

UNIVERSITY OF SANTO TOMAS

2013 GOLDEN NOTES 166
 LABOR RELATIONS LAW
allowed by law. [Rubberworld Phils. v. NLRC, G.R. No.
75704, (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
e. Must not be coercive in nature
Q: What is a yellow dog condition?
A: It is to require as a condition of employment that a
person or an Ee shall not join a labor organization or
shall withdraw from one to which he belongs.
Q: What is a yellow dog contract?
A: 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.
Q: Is yellow dog contract valid?
A: No. It is 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.
Note: This is one of the cases of ULP that may be
committed in the absence of an Er-Ee relationship.
Q: What are the 3 usual provisions under a yellow
dog contract?
A:
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.
Q: What is contracting out as a form of ULP?
A: It is to contract out services or functions being
performed by union members when such will
interfere with, restrain or coerce Ees in the exercise
of their rights to self-organization.
Q: Does it mean that an Employer cannot contract
out work?
167
A: GR: Contracting out services 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 employees and reduction of
work hours or reduction or splitting of the
bargaining unit.
(2) Contracting out of work with a Cabo.
(3) Taking undue advantage of the economic
situation or lack of bargaining strength of the
contractors employees, or undermining their
security of tenure or basic rights, or circumventing
the provisions of regular employment, in any of
the following instances:
(i) Requiring them to perform functions which
are currently being performed by the regular
employees of the principal; and
(ii) Requiring them to sign, as a precondition to
employment or continued employment, an
antedated resignation letter; a blank payroll; a
waiver of labor standards including minimum
wages and social or welfare benefits; or a
quitclaim releasing the principal, contractor or
from any liability as to 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 employees under an
employment contract of short duration or under a
Service Agreement of short duration with the
same or different contractors, which circumvents
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
the Labor Code provisions on Security of Tenure.
(8) Requiring employees under a subcontracting
arrangement to sign a contract fixing the period of
employment to a term shorter than the term of
the Service Agreement, unless the contract is
divisible into phases for which substantially
different skills are required and this is made
known to the employee at the time of
engagement.
(9) Refusal to provide a copy of the Service
Agreement and the employment contracts
between the contractor and the employees
deployed to work in the bargaining unit of the
principals certified bargaining agent to the sole
and exclusive bargaining agent (SEBA).
(10) Engaging or maintaining by the principal of
subcontracted employees in excess of those
provided for in the applicable Collective
Bargaining Agreement (CBA) or as set by the
Industry Tripartite Council (ITC).
B. Contracting out of jobs, works or services
analogous to the above when not done in good
faith and not justified by the exigencies of the
business [Sec. 7, D.O. 18-A].
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 the Department of Labor and
Employment (DOLE) where it principally operates. Failure
to register shall give rise to the presumption that the
contractor is engaged in labor-only contracting [Sec. 14,
D.O. 18-A].
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 an 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. (Art. 248[c] of the LC).
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
Q: What is a run-away shop?
A: It is an industrial plant moved by its owners from
one location to another to escape labor regulations or
State laws or to discriminate against Ees at the old
plant because of their union activities. It may also be
the place where the Er transferred his business in
case of strike.
Q: Is resorting to run-away shop ULP?
A: Yes. 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
that the relocation is accompanied by a transfer of
title to a new Er who is an alter ego of the original Er.
Q: What is a company union?
A: Any labor organization whose formation, function
or administration has been assisted by any act
defined as ULP [Art. 212(i), LC].
Q: What are the forms of company unionism?
A:
1. Initiation of the company union idea by:
a. Outright formation by Er or his
representatives
b. Ee 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
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
Q: What is meant by the act of company-domination
of union?
A: 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.
168
 LABOR RELATIONS LAW
Q: Why is company unionism/captive unionism a
form of ULP?
A: 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.
Q: What is meant by discrimination as a form of
ULP?
A: 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.
Q: When is a discharge of an employee
discriminatory?
A: The underlying reason for the discharge must be
established in order to determine whether such an
act is discriminatory or not.
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 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,
(1979)].
Q: Jobo has 3 hotels, the Taal Vista Lodge, Manila
Hotel and the Pines Hotel. Among the 3, Pines Hotel
had more employees 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 employees 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 employees 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, (1972)].
Q: Can an employer discriminate against an
employee without committing ULP?
169
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, (1989)]
Q: A profit sharing scheme was introduced by the
company for its managers and supervisors, who are
not members of the union, hence do not enjoy the
benefits of the CBA. The respondent union wanted
to participate with 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, (1989)].
Q: Is dismissal of an employee 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 unions 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, (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 Devt,
G.R. No. L-20432, (1967)].
Q: Is notice and hearing required in case an
employee 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
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
behind the enforcement of union security clauses
which is the sanctity and inviolability of contracts
cannot erode ones 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.
Q: Mabeza and her co-employees were asked by the
company to sign an affidavit attesting to the latters
compliance with pertinent labor laws. Mabeza
signed the affidavit but refused to swear 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 Ers 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 condition [Mabeza
v. NLRC, G.R No. 118506, (1997)].
Q: When can ULP be committed in bargaining?
A: When the act constitutes violation of the duty to
bargain collectively as prescribed in the LC.
Note: A companys 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
unions request for a counter proposal is left unanswered
[Kiok Loy v. NLRC, G.R. No. L-54334, (1986)].
Q: What are the examples of ULP in bargaining?
A:
1. Delaying negotiations by discussing unrelated
matters
2. Refusal to accept request to bargain
3. Rejecting a unions offer to prove its majority
claim
4. Shutdown to avoid bargaining
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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, 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 BFEAs 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, (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 to talk 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. Was the company guilty of an ULP
when it refused to negotiate with the Kilusang
Kabisig? (1997 Bar Question)
A: No. It is not ULP not 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 is 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)].
Q: What is meant by paid negotiation as a form of
ULP?
170
 LABOR RELATIONS LAW
A: It is the act of the Er to pay negotiation or
attorneys fees to the union or its officers or agents as
part of the settlement of any issue in CB or any other
dispute.
Q: When is the violation of CBA considered as ULP?
A: Only when the violation is gross There must be a
flagrant and/or malicious refusal to comply with the
economic provision of the CBA.
Note: 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, (1970)].
Q: What are the reliefs available in ULP cases?
A: The following reliefs may be availed of:
1. Civil liability
Note: Recovery of civil liability in the administrative
proceedings shall bar recovery under the Civil Code
(Art. 247, LC)
2. Criminal liability
Note: No criminal prosecution under this Title may be
instituted without a final judgment finding that a ULP
was committed. (Art. 247, LC)
3. Cease and desist order
4. Affirmative order
5. Court may order the Er to bargain
171
6. CBA may be imposed
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 an ULP by an employer
subject to criminal prosecution? (2005 Bar
Question)
A: Yes, because 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. (Art. 247
LC; 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.
Q: When is an employer required to furnish financial
report?
A: 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 (Sec. 242(c), LC).
Q: When is employers refusal to furnish financial
information NOT an unfair labor practice?
A: While the refusal to furnish the requested
information is in itself an unfair labor practice and
also supports the interference of surface bargaining,
however, if the union failed to put its request in
writing in Art. 242(c) of the LC, management cannot
be held liable for ULP [Standard Chartered Bank
Employees Union v. Confesor, (June 2004)].
Q: When is the violation of the CBA constitutive of
ULP?
A: Only when there is gross violation. Gross violation
shall be understood as the flagrant and malicious
refusal to comply with economic provisions of the
CBA.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
ULP OF LABOR ORGANIZATIONS
Q: What are the ULP of labor organizations?
A: It shall be ULP for a 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 (Art. 248, LC).
Q: Is interference by a labor organization an ULP?
A: No, because interference by a labor organization in
the exercise of the right to organize is itself a function
of self-organizing.
Q: What are examples of interference which does
not amount to ULP?
A:
1. Union campaigns for membership even among
members of another union
2. Filing by a union of a petition to dislodge an
incumbent bargaining union
3. A bargaining union, through a union security
clause, requires an incoming employee to join
the union.
Q: May a union coerce employees to join a strike?
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
A: No. 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 Ers property in their presence,
thereby creating an atmosphere of fear or
violence
7. Demonstrates loudly in front of a non-strikers
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
Q: What is a case of union-induced discrimination?
A: 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, (1987)].
Labor unions are not entitled to arbitrarily exclude
qualified applicants for membership and a closed-
shop applicants 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,
(1967)].
Q: What are the aspects of ULP?
A: Under Art. 247, 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.
Q: Who may be criminally liable for ULP?
A:
1. On the part of the employer, only the officers and
agents of corporations, associations or
partnerships who have actually participated in,
172
 LABOR RELATIONS LAW
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.
Q: Who has the burden of proof in ULP cases?
A: 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 employer. It is
not enough that the union believed that the
employer committed acts of unfair labor practice
when the circumstances clearly negate even a prima
facie showing to warrant such a belief.
RIGHT TO PEACEFUL CONCERTED ACTIVITIES
Q: What is the constitutional basis of strikes,
lockouts and other concerted activities?
A: 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
(Sec. 3, Art. XIII, 1987 Constitution).
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 Devt Union v. Roldan, G.R. No.
L-2660, (1950)]
Q: What is a concerted action?
A: It is an activity undertaken by two or more
employees or by one on behalf of others.
Q: Are all concerted actions strikes?
A: Not all concerted activities 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.
173
FORMS OF CONCERTED ACTIVITIES
Q: What are the forms of concerted activities?
A:
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
Q: What is a strike?
A: It means any temporary stoppage of work by the
concerted action of Ees as a result of an industrial or
labor dispute. (Sec.1 [uu], Rule I, Book V, IRR)
The term strike shall comprise not only concerted
work stoppages, but also slowdowns, mass leaves,
sitdowns, 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 certification is a prohibited activity and
thus illegal [Solidbank Corporation v. Ernesto U.
Gamier/ Solid Bank Union, G.R. No. 159460, (Nov.
2010)].
Note: 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
controllin [Toyota Motor Phils. Corp. Workers Association v.
NLRC, 537 SCRA 174 (2007)]. It shall comprise not only
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
concerted work stoppages, but also slowdowns, mass Q: Distinguish between an economic strike and a
leaves, sit downs, attempt to damage, destroy or sabotage ULP strike.
plant equipment and facilities, and similar activities
[Samahang Manggagawa sa Sulpicion Lines v. Sulpicio
A:
Lines, Inc., G.R. No. 140992, (2004)].
ECONOMIC
ULP STRIKE
STRIKE
Q: What is the purpose of a strike?
As to nature
A: A strike is a coercive measure resorted to by Voluntary strike Involuntary strike; the LO is
laborers to enforce their demands. The idea behind a because the forced to go on strike because
strike is that a company engaged in a profitable employee will of the ULP committed against
business cannot afford to have its production or declare a strike them by the Er. It is an act of
activities interrupted, much less, paralyzed [Phil. Can to compel self-defense since the Ees are
Co. v. CIR, G.R. No. L-3021, (1950)]. management to being pushed to the wall and
grant its their only remedy is to stage a
Q: What are the elements of a strike? demands strike.
Who will initiate
A: The CB agent of
1. Existence of an Er-Ee relationship the appropriate
Either the CB agent or the LLO
2. Existence of a labor dispute bargaining unit
in behalf of its members
3. Employment relation is deemed to continue can declare an
although in a state of belligerent suspension economic strike
4. Temporary work stoppage As to the cooling-off period
5. Work stoppage is done through concerted action 30 days from
6. The striking group is a legitimate labor notice of strike
organization; in case of a bargaining deadlock, it before the
15 days from the filing of the
must be the Ees sole bargaining representative intended date of
notice of strike
actual strike
Q: What are the different forms of strike? subject to the 7-
day strike ban
A: As to the exception to the cooling-off period
1. Legal Strike-one called for a valid purpose and The cooling-off period may be
conducted through means allowed by law. dispensed with, and the union
2. Illegal Strike-one staged for a purpose not may take immediate action in
recognized by law, or if for a valid purpose, No exception case of dismissal from
conducted through means not sanctioned by law. mandatory employment of their officers
3. Economic Strike- one staged by workers to force duly elected in accordance
Note: notice of with the unions constitution
wage or other economic concessions from the
strike and strike
employer which he is not required by law to and by-laws, which may
vote may be
grant [Consolidated Labor Association constitute union busting
dispensed with;
of the Phil. vs. Marsman, G.R. No. L-17038, they may strike where the existence of the
(1964)] immediately union is threatened. It must
4. ULP Strike-one called to protest against the still observe the mandatory 7-
employers acts of unfair practice enumerated in day strike ban period before it
Art. 248 of the LC, as amended, including gross can stage a valid strike
violation of the CBA and union busting.
5. Slow Down Strike-one staged without the Q: What is a lockout?
workers quitting their work but by merely
slackening or by reducing their normal work A: It means any temporary refusal of an Er to furnish
output. work as a result of an industrial or labor dispute. (Art.
6. Wild-Cat Strike-one declared and staged without 212 [p])
filing the required notice of strike and without
the majority approval of the recognized Q: When does lockout amount to ULP?
bargaining agent.
7. Sit Down Strike-one where the workers stop A: A lockout, actual or threatened, as a means of
working but do not leave their place of work. dissuading the Ees from exercising their rights is
clearly an ULP. However, to hold an Er guilty, the

UNIVERSITY OF SANTO TOMAS

2013 GOLDEN NOTES 174
 LABOR RELATIONS LAW

evidence must establish that the purpose was to The right to peaceful picketing shall be exercised by
interfere with the Ees exercise of their rights. the workers with due respect for the rights of
others. No person engaged in picketing shall commit
Q: Is there any express statutory recognition of the any act of violence, coercion or
workers right to strike and the employers right to intimidation. Stationary picket, the use of means like
lockout? placing of objects to constitute permanent blockade
or to effectively close points of entry or exit in
A: Yes. Art. 263(b) of the LC provides that workers company premises are prohibited by law.
shall have the right to engage in concerted activities
for purposes of CB for their mutual benefit and Q: Distinctions between strike and picketing.
protection. The right of LLOs to strike and picket and
of Ers to lockout, consistent with the national STRIKE PICKETING
interest, shall continue to be recognized and To withhold or to stop To march to and from
respected. However, no labor union may strike and work by concerted action the employers premises,
no Er may declare a lockout on grounds involving of Ees as a result of an usually accompanied by
inter-union and intra-union disputes. industrial or labor the display of placards
dispute. The work and other signs making
Q: Is the right to strike or lockout absolute? Explain. stoppage may be known the facts involved
accompanied by in a labor dispute. It is a
A: No, the exercise of these rights is subject to picketing by the striking strike activity separate
reasonable restrictions pursuant to the police power employees outside of the and different from actual
of the State. It has been held that the right to strike, company compound. stoppage of work.
because of the more serious impact upon the public Focuses on stoppage of Focuses on publicizing
interest, is more vulnerable to regulation that the work the labor dispute and its
right to organize and select representatives for incidents to inform the
purposes of CB [National Federation of Sugar public of what Is
Workers (NFSW) v. Ovejera, et al. G.R. No. L-59743, happening in the
(1982)]. company struck against.

Q: What is picketing?
A: 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.
The right to picket as a means of communicating the
facts of a labor dispute is a phase of the freedom of
speech guaranteed by the Constitution. If peacefully
carried out, it cannot be curtailed even in the absence
of Er-Ee relationship [PAFLU v. Cloribel, G.R. No. L-
25878, (1969)].
Note: A strike conducted by a union which acquired its legal
personality AFTER the filing of its notice of strike and the
conduct of the strike vote is ILLEGAL.
Q: Who is a strike-breaker?
A: 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. (Art. 212 [r], LC)
Q: What is a strike area?

Q: Is the right to picket an absolute right?
A: No, 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, (1981)].
A: 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)
Q: What is a boycott?
A: It is an attempt, by arousing a fear of loss, to
coerce others, against their will to withhold from one

UNIVERSITY OF SANTO TOMAS

175 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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].
Q: Is a boycott lawful?
A: 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 not patronizing the
Er. In so doing, there is no element of threat or
coercion or unlawful interference with anothers
business. [51A, C.J.S. Sec. 286, pp. 64-85]
Q: What is a slowdown?
A: It is a method by which ones 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 employees constitute a strike and hence a
violation of the CBAs 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,
(2001)].
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
Q: The employees 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 employees. The bank dismissed the employees
for the alleged libelous letter. Were the employees
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, (1967)].
Q: May the grievances of the employees 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,
p. 968)
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 libellous or otherwise
unlawful. (31 Am. Jur., Sec. 278, p. 971)
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
176
 LABOR RELATIONS LAW
relationship or they mutually act to accomplish that
purpose. As they did not assume the status of
strikers, their protest retirement/resignation was
not a concerted activity which was protected by law
[Enrique v. Zamora, G.R. No. L-51382, (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 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, (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, (2009)].
Q: Is the penalty of outright dismissal against the
striking employees severe for a one-day absence
from work?
A: Yes. 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
177
Rebuilders, Inc. v. Progresibong Unyon ng mga
Manggagawa ng AER G.R. No. 160138, (2011)].
WHO MAY DECLARE A STRIKE OR LOCKOUT?
Q: Who may declare a strike or lockout?
A:
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. [Sec. 6, Rule XXII, Book V,
Implementing Rules, as amended by D.O. 40-03]
Note: 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.
Q: On what grounds may a strike or lockout be
declared?
A:
1. Collective Bargaining Deadlock economic
2. ULP political
Note: It is possible to change an economic strike into a ULP
strike [Consolidated Labor Assn of the Phils. v. Marsman
and Co., G.R. No. L-17038, (1964)].
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
companys compound, carrying placards. He
th
demanded a resumption of work and 13 month
pay. The 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 shut down, 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, (2005)].
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
Q: What is conversion doctrine?
A: It is when a strike starts as economic and later, as
it progresses, it becomes a ULP, or vice versa.
Q: Can a strike be converted into a lockout?
A: No, 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, (1962)].
Q: What are the instances where a strike or lockout
cannot be declared?
A:
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
without 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.
8. Labor standards cases such as wage orders. [Sec.
5, Rule XXII, Book V, Implementing Rules, as
amended by D.O. 40-03]
Q: When does a deadlock in collective bargaining
arise?
A: 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.
Q: What is an internal union dispute?
A: 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. (Art. 212 [q], LC)
Q: What is a labor dispute?
A: Any controversy or matter concerning terms or
conditions or representation of persons in
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
negotiating, fixing, maintaining, changing or arranging
the terms and conditions of employment, regardless
of whether or not the disputants stand in the
proximate relation of employers and employees.
[Gold City Integrated Port Services, Inc. v. NLRC, G.R.
No. 103560, (1995)]
Q: When is a person or entity considered as
participating or interested in a labor dispute?
A:
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.
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 Liwayways 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?
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 companys
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
rd
strikers. Liwayway is merely a 3 person or an
innocent by-stander [Liwayway Pub., Inc. v.
Permanent Concrete Workers Union, G.R. No. L-
25003, (1981)].
178
 LABOR RELATIONS LAW
REQUISITES FOR A VALID STRIKE
REQUISITES FOR A VALID LOCKOUT
Q: What are the requisites of a lawful strike /
lockout?
A: 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, (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 is filed with the DOLE.
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
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
179
period [NSFW vs. Ovejera, G.R. No. 59743,
(1982)].
In case of dismissal from employment of union
officers which may constitute union busting, the
time requirement 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.
Note: The purpose of the 7 day strike ban is to give
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, (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 nor a subject of a pending
case involving the same grounds for the strike or
lockout.
Q: What is a cooling-off period?
A: 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.
Note: 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 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)
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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 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.
3. 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
th
notice of strike based on non-payment of the 13
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
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,
(1982)].
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
Q: What is the purpose of giving notice of the
conduct of a strike vote to the NCMB at least 24
hours before the meeting for the said purpose?
A:
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, (2005)].
Q: Is a no strike/lockout clause legal?
A: Yes, 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, (1995);
Malayang Samahan ng mga Manggagawa sa
Greenfield v. Ramos, G.R. No. 113907, (2000)].
Q: What is a preventive mediation case?
A: 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. (Sec. 1 [mm], Rule
I, Book V, IRR)
Note: The regional branch may treat the notice as
preventive mediation case upon agreement of the parties.
Q: Give the legal basis for the conversion of a notice
of strike to preventive mediation.
A: It is in pursuance of the NCMBs 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, (2003)].
180
 LABOR RELATIONS LAW
Q: Who has the duty to declare that the notice of
strike or lockout has been converted into preventive
mediation case?
A: 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.
Q: What are the contents of the notice of strike or
lockout?
A:
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 with the requirements.
Q: What action will the NCMB take on the notice of
strike of strike or lockout?
A:
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
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
181
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, (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 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,
(1997)].
Q: What is the effect of non-compliance with the
requisites of a strike?
A: The strike may be declared illegal.
Q: What are the tests in determining the legality of
strike?
A: The following must concur:
1. Purpose test the strike must be due to either
bargaining deadlock and/or the ULP
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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 which normally occur
in a strike area.
Q: Give examples of strike and explain their legality.
A:
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.
Illegal Amounts to a criminal act because of the
Ees trespass on the premises of the Er
2. Wildcat strike A work stoppage that violates
the labor contract and is not authorized by the
union.
Illegal Because it fails to comply with certain
requirements of the law, to wit: notice of strike,
vote and report on strike vote
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
Illegal 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 on their allotted
tasks they care to perform on their own volition
or refuse openly or secretly
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
Illegal There is no labor dispute between the
workers who are joining the strikers and the
latters Er
5. Secondary strike Work stoppages of workers of
one company to exert pressure on their Er so
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
that the latter will in turn bring pressure upon
the Er of another company with whom another
union has a labor dispute
Illegal There is no labor dispute involved.
Note: A strike can validly take place only in the
presence of and in relation to a labor dispute between
Er and Ee.
6. Welga ng bayan (Cause Oriented Strikes) A
political strike and therefore there is neither a
bargaining deadlock nor any ULP
Illegal It is a political rally
7. Quickie strikes- brief and unannounced
temporary work stoppage
Illegal- failure to comply with notice
requirements and etc.
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.
1. Was the strike legal? Explain.
2. Was As dismissal valid? Why or why not?
(2010 Bar Question)
A:
1. No. First, the union failed to satisfy the required
majority vote of the union membership
approving the conduct of a strike/ (Art. 263 [f],
LC; Sec. 11, Rule XXII, Department Order No. 40-
03). Second, the strike was illegal due to the non-
observance of the 30-day cooling off period by
the union. (Art. 263 [c], LC)
2. 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.
(Art. 264, LC; Arellano University Employees and
Workers Union v. Court of Appeals, 502 SCRA
219)
182
 LABOR RELATIONS LAW
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 the employees
committed an illegal work stoppage?
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, (2006)].
Q: May a strike be enjoined?
A: GR: No strikes arising from a labor dispute may be
enjoined.
XPNs:
1. Art. 263(g)- Assumption order by SLE
2. Art. 218(e)-Enjoining or restraining any
actual or threatened commission of any
unlawful act in any labor dispute
REQUISITES FOR LAWFUL PICKETING
Q: What constitional provisions protect the right to
picket?
A: The right to picket is guaranteed under the
freedom of speech and of expression and to peacably
assemble to air grievances under Sec. 4, Art. III.
Q: What are the requisites for lawful picketing?
A: 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.
Q: What is the effect of the absence of Employee-
Employerr relationship on picketing?
183
A: If peacefully carried out, picketing cannot be
prohibited even in the absence of Ee-Er relationship
[PAFLU v. CFl, G.R.L-49580,(1983)].
ASSUMPTION OF JURISDICTION BY THE SECRETARY
OF LABOR OR CERTIFICATION OF THE LABOR
DISPUTE TO THE NLRC FOR COMPULSORY
ARBITRATION
Q: What is the power of the SLE to assume
jurisdiction over a labor dispute or certify it to the
NLRC for compulsory arbitration?
A: The SLE may assume jurisdiction over a labor
dispute, or certify it to the NLRC for compulsory
arbitration, if, in his opinion, it may cause or likely to
cause a strike or lockout in an industry indispensable
to the national interest. The President may also
exercise the power to assume jurisdiction over a
labor dispute.
Q: What is the effect of such assumption or
certification of labor dispute to the NLRC?
A: The following are the effects: (a) on intended or
impending strike or lockout automatically enjoined
even if a Motion for Reconsideration is filed; (b) on
actual strike or lockout strikers or locked out Ees
should immediately return to work and Er should
readmit them back; and (c) on cases filed or may be
filed all shall be subsumed/absorbed by the
assumed or certified case except when the order
specified otherwise. The parties to the case should
inform the SLE of pendency thereof.
Q: What is the extent of the power of the President
or the Secretary of Labor and Employment to issue
assumption and certification orders?
A: 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 on his own
consideration of the exigency of the situation in
relation to the national interest.
Pursuant to Art. 263(g) of 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
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
dispute involving industries indispensable to national
interest in order to settle or terminate the same.
Under Art. 277(b) of 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 in the
implementation of a mass lay-off.
Q: When a dispute is assumed by the President or
SLE, or certified to the NLRC for compulsory
arbitration, may a strike or lockout be validly
declared on account of the same dispute?
A: No. The assumption or certification shall have the
effect of automatically enjoining the intended or
impending strike or lockout.
Q: What is the nature of a return-to-work
order?
A: 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 workers
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].
Q: What are the industries which are considered as
indispensable to the national interest?
A:
1. Public utilities
2. Companies engaged in the generation or
distribution of energy
3. Banks
4. Schools
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
5. Hospitals; and
6. Export oriented industries
Q: What does the phrase under the same terms
and conditions contemplates?
A: GR: It contemplates only actual reinstatement.
This is in keeping with the rationale that any work
stoppage or slowdown in that particular industry can
be inimical to the national economy.
XPN: Payroll reinstatement in lieu of actual
reinstatement but there must be showing of
special circumstances rendering actual
reinstatement impracticable, or otherwise not
conducive to attaining the purpose of the law in
providing for assumption of jurisdiction by the SLE
in a labor dispute that affects the national interest
[Manila Diamond Hotel Ees Union v. SLE, G.R. No.
140518, (2004)].
Q: What are issues that the Secretary of Labor and
Employment may resolve when he assumes
jurisdiction over a labor dispute?
A:
1. Issues submitted to the SLE for resolution and
such issues involved in the labor dispute itself [St.
Scholasticas College v. Torres, G.R. No. 100158,
(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 [Intl.
Pharmaceuticals v. SLE, G.R. Nos. 92981-83,
(1992)].
Note: Power of SLE is plenary and discretionary [St. Lukes
Medical Center v. Torres, G.R. No. 99395, (1993)].
Q: Is it necessary for the Secretary of Labor and
Emplyment to issue a return-to-work order in an
assumption order?
A: No, 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, (2000)].
Q: What is the extent of the powers of the President
during strikes/lockouts?
A:
1. May determine the industries, which are in his
opinion indispensable to national interest
184
 LABOR RELATIONS LAW
2. May intervene at any time and assume
jurisdiction over any such labor dispute in order
to settle or terminate the same. (Art. 263[g], LC)
Note: The decision of the President or SLE is final and
executory after receipt thereof by the parties.
Q: May a return to work order be validly issued
pending determination of the legality of the strike?
A: Yes. 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, (1988)].
Q: Does a return-to-work order violate the
constitutional provision against involuntary
servitude?
A: 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
workers 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.
NATURE OF ASSUMPTION ORDER OR CERTIFICATION
ORDER
Q: What is the nature of the power of the Secretary
of Labor and Employment under Art. 263(g) of the
LC?
A: 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 workers right to strike
but to obtain a speedy settlement of the dispute
[Philtread Workers Union v. Confesor, G.R. No.
117169, (1997)].
Art. 263(g), LC does not interfere with the workers
right to strike but merely regulates it, when in the
185
exercise of such right national interest will be
affected. The LC vests upon the SLE 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 schools 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. Was the SLE
correct in ordering the striking Employees to return
to work?
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.
Q: Does the RTC have jurisdiction to decide on the
case filed by the PSBA students?
A: 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 regular
courts have no jurisdiction over labor disputes and to
issue injunctions against strikes is well-settled [PSBA
v. Noriel, G.R. No. 80648, (1988)].
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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
PLDTs 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, (2005)].
EFFECT OF DEFIANCE OF ASSUMPTION OR
CERTIFICATION ORDER
Q: What is the effect of defiance to the return to
work order?
A: 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 [(Sec. 6, Rule IX,
of the New Rules of Procedure of the NLRC; St.
Scholasticas College v. Torres, G.R. No. 100158,
(2002)].
Q: What is the effect of a defiance of assumption or
certification orders of the Secretary of Labor and
Employment?
A: The defiance by the union, its officers and
members of the SLEs assumption of jurisdiction or
certification order constitutes a valid ground for
dismissal [Art. 263(g), LC].
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
Note: The SLE may cite the defiant party in contempt
pursuant to the power vested in him under the provisions
of the LC.
Q: What are the justifications for the dismissal of a
defiant Employee?
A:
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 readmitted to work,
having, in effect, abandoned their employment
[Steel Corporation of the Philippnes v. SCP
Employees Union, G.R. Nos. 169829-30, (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 SLE
may, in fact, be subjected not only to immediate
disciplinary action such as dismissal or loss of employment
status but to criminal prosecution as well. Defiant strikers
could be validly replaced.
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 Secretary
of Labor and Employment to assume jurisdiction
over the dispute. Without the benefit of a hearing,
the Secretary issued an Order to assume jurisdiction
and for the parties to revert to the status quo ante
litem.
1. Was the order to assume jurisdiction legal?
Explain.
2. 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.
186
 LABOR RELATIONS LAW
A:
1. 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,
(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. [Art.
263(g), LC; Sec. 15, Rule XXII, Department Order
No. 40-G-03]
2. 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
Q: When is a strike illegal?
A: A strike is illegal where:
1. It is contrary to specific prohibition of law, such
as strike by Ees performing governmental
functions;
2. Violates a specific requirement of law;
3. Declared for an unlawful purpose, such as
inducing the Er to commit ULP against non-union
Ees;
4. Employs unlawful means in the pursuit of its
objective, such as widespread terrorism of non-
strikers;
5. Declared in violation of an existing injunction;
6. Contrary to an existing agreement, such as a no
strike clause or conclusive arbitration clause
Q: What is good faith strike doctrine?
187
A: A strike may be considered legal where the union
believed that the company committed ULP and the
circumstances warranted such belief in good faith,
although subsequently such allegations of ULP are
found out as not true [Bacus v. Ople, GR No. L-56856,
(1984), Peoples Industrial and Commercial Ees and
Organization (FFW) v. Peoples Industrial and
Commercial Corp., G.R. No.37687, (1982)].
Q: What is the effect of the good faith of strikers on
the legality of strike?
A: GR: A strike grounded on ULP is illegal if no such
acts actually exist.
XPN: Even if no ULP acts are committed by the Er,
if the Ees believe in GF that ULP acts exist so as to
constitute a valid ground to strike, then the strike
held pursuant to such belief may be legal. Where
the union believed that the Er committed ULP and
the circumstances warranted such belief in good
faith, the resulting strike may be considered legal
although, subsequently, such allegations of ULP
were found to be groundless [NUWHRAIN-Interim
Junta v. NLRC, G.R. No. 125561, (1998)].
Q: May a strike be declared illegal on the ground of
non-compliance with the strict and mandatory
requirements for a valid conduct of a strike?
A: Yes. 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, (2011)].
Q: Are employees who staged an illegal strike
entitled to backwages?
A: No. Contemplating two causes for the dismissal of
an Ee(a) unlawful lockout, and (b) participation in
an illegal strikethe 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. 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
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

principle of a fair days wage for a fair days labor ceased from their labor; the declaration of a strike is
[Danilo Escario v. NLRC, G.R. No. 160302, (2010)]. not a renunciation of employment relation.

Q: X was dismissed for joining an illegal strike but Q: Who are not entitled to reinstatement?
was reinstated because he is only a member of the
union who did not commit any illegal act. Is X A:
entitled for backwages for the period of strike? 1. Union officers who knowingly participate in the
illegal strike
A: No. Conformably with the long honored principle 2. Any striker or union who knowingly participates
of a fair days wage for a fair days labor, Ees in the commission of illegal acts during the strike
dismissed for joining illegal strike are not entitled to
backwages for the period of the strike even if they Note: Those union members who have joined an illegal
are reinstated by virtue of their being merely strike but have not committed any illegal act shall be
members of the striking union who did not commit reinstated but without backwages.
any illegal act during the strike [Escario v. NLRC, G.R.
160302, (2010)]. The responsibility for the illegal acts committed during the
strike must be on an individual and not on a collective basis
LIABILITY OF UNION OFFICERS; LIABILITY OF [First City Interlink Transportation Co., Inc. v. Confesor, G.R.
No. 106316, (1997)].
ORDINARY WORKERS
Q: What is the rule in strikes in hospitals?
Q: What are the effects of an illegal strike?
A:
A:
1. It shall be the duty of the striking Ees or locking-
Union Officer Ordinary worker
out Er to provide and maintain an effective
May be Cannot be
skeletal workforce of medical and health
declared to terminated
personnel for the duration of the strike or
have lost his
lockout.
employment Note: The LC
protects ordinary, 2. SLE may immediately assume jurisdiction within
status
rank-and-file 24 hours from knowledge of the occurrence of
Knowingly union members such strike or lockout certify it to the NLRC for
participating in who participated compulsory arbitration.
an illegal strike in such a strike
from losing their Q: More or less 1400 employees of the company
jobs provided that staged a mass walk-out, allegedly without anybody
they did not leading them as it was a simultaneous, immediate
commit illegal acts
and unanimous group action and decision, to
during the strike.
protest the non-payment of their salaries and
wages. The Secretary of Labor and Employment
Knowingly May be May be
who found the strike to be illegal granted the
participating in terminated terminated
clearance to terminate the employment of those
the
who were instigators in the illegal strike. Was the
commission of
decision of the Secretary in granting the clearance
illegal acts
correct?
during strike
A: No, a mere finding of the illegality of a strike
[Art. 264, LC; Samahang Manggagawa Sa Sulpicio
should not be automatically followed by wholesale
Lines, Inc.Naflu et al. v. Sulpicio Lines, Inc., G.R. No.
dismissal of the strikers from their employment.
140992, (2004)]
While it is true that administrative agencies exercising
quasi-judicial functions are free from the rigidities of
Q: What is the rule on reinstatement of striking procedure, it is equally well-settled that avoidance of
workers? technicalities of law or procedure in ascertaining
objectively the facts in each case should not,
A: Striking Ees are entitled to reinstatement, however, cause denial of due process [Bacus v. Ople,
regardless of whether or not the strike was the G.R. No. L-56856, (1984)].
consequence of the Ers ULP because while out on
strike, the strikers are not considered to have
abandoned their employment, but rather have only

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 LABOR RELATIONS LAW
Q: Two days after the union struck, the Secretary of
LE 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, (1997)].
Q: Can employees who abandoned a legal strike but
were refused reinstatement be awarded
backwages?
A: Yes, 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. Compaia Maritima et al., G.R. Nos. L-20662
and L-20662 (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, (1990)].
LIABILITY OF EMPLOYER
Q: Are strikers entitled to their backwages or strike
duration pay?
189
A: GR: No, 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
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 back wages 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 readmit 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 readmit 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 have 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, ( 1964)].
Q: If by reason of the prolonged strike, the company
was compelled to hire replacements, would this
constitute as sufficient reason for it not to readmit
the strikers? Why?
A: No. 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.
Q: If an employer knowingly readmits to work a
striker who committed illegal acts during a strike,
can it later on seek the dismissal of the employee by
reason of such acts? Why?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
A: The Er can no longer seek the dismissal of the Ee
on the ground that he committed illegal acts during
the strike. By readmitting him to work, the Er is
deemed to have condoned the illegal acts.
WAIVER OF ILLEGALITY OF STRIKE
Q: When is there a waiver of the illegality of a strike
by the employer?
A: When an Er accedes to the peaceful settlement
brokered 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, (1997)].
Q: Does the compliance with the return-to-work
order operate as a waiver of the strikes illegality?
A: 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 SLE [TASLI-ALU v. Court of Appeals,
G.R. No. 145428, (2004)].
INJUNCTIONS
Q: What is an injunction?
A: 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.
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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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
Q: Is injunction in labor disputes prohibited?
A: 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. (Art.
254, LC)
XPNs:
1. Injunction power of the NLRC (Art. 218, LC)
2. Prohibited activities during a strike or
lockout (Art. 264, LC)
3. Assumption or certification power of the SLE
in national interest cases [Art. 263(g), LC]
Q: What are the requisites in issuing an injunction in
a labor case?
A:
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 [Sec. 218, LC]
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 [Sec.
212, LC].
Q: Is injunction available in picketing?
A: GR: No, because picketing is part of the freedom of
speech duly protected by the Constitution.
190
 LABOR RELATIONS LAW

XPNs: incidents arising from, in connection with or relating

1. Where picketing is carried out through the
use of illegal means
2. Where picketing involves the use of violence
and other illegal acts
3. Where picketing affects the rights of third
parties and injunction become necessary to
protect such rights.
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,
(2000)].

INNOCENT BYSTANDER RULE
Q: Who are innocent bystanders?
A: They are the third party in a picketing who has no
existing connection or interest with and the picketing
union [MSF Tire & Rubber v. CA, G.R. No. 128632,
(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.
(Ibid.)
Q: What must be established by an innocent
bystander before a court enjoins a labor strike?
A: The innocent by stander must show:
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
dispense 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-Employeee 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, (1987)].

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, (1999)].

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
rd
the subject matter of the 3 party claim is only
incidental to a labor case.
rd
A party, by filing its 3 party claim with the deputy
sheriff, it submitted 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

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 Labor Law and Social Legislation
PROCEDURE AND JURISDICTION
LABOR ARBITER
JURISDICTION
Q: What is the distinction between the jurisdiction
of the labor arbiter and the National Labor Relations
Commission?
A:
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.
Q: What is the nature of jurisdiction of labor
arbiters?
A: It is original and exclusive. LAs have no appellate
jurisdiction.
Q: What are the cases falling under the jurisdiction
of labor arbiters?
A: 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
Workers Act of 1995 as amended by RA 10022
7. Wage distortion disputes in unorganized
establishments not voluntarily settled by the
parties pursuant to RA 6727
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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.
Q: What is the nature of the cases which the labor
arbiter may resolve?
A: The cases that an 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
jurisdiction [Lapanday Agricultural Devt. Corp v. CA,
G.R. No. 112139, (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, (2003)]
Q: Do labor arbiters exercise concurrent jurisdiction
with the NLRC?
A: Yes, with respect to contempt cases.
Q: What is the extent of the jurisdiction of the labor
arbiter if there are unresolved matters arising from
the interpretation of the CBA?
A: 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,
(1998)].
Q: Does the use of the word may in the provisions
of the Grievance Procedure allow the alternative
submission of the case before the labor arbiter?
192
 PROCEDURE AND JURISDICTION

A: Yes. The use of the word may shows the the claims enumerated in Art.217, LC [Ocheda v.
intention of the parties to reserve the right to submit CA, G.R. No. 85517, (1992)].
the illegal termination dispute to the jurisdiction of 10. Complaint arising from violation of training
the LA, rather than to a voluntary arbitrator. agreement [Singapore Airlines v. Pano, G.R. No.
Petitioner validly exercised his option to submit his L-47739, (1983)]
case to a LA when he filed his complaint before the
proper government agency. In other words, the CA is LABOR ARBITER vs. REGIONAL DIRECTOR
correct in holding that voluntary arbitration is
mandatory in character if there is a specific Q: What are the differences between the powers of
agreement between the parties to that effect. It must the Secretary of Labor and Employment, Regional
be stressed however that, in the case at bar, the use Director and Labor Arbiter?
of the word may shows the intention of the parties
to reserve the right of recourse to LAs [Vivero v. CA, A:
G.R. No. 138938, (2000)]. Art. 128
Visitation and
Q: Who has the exclusive appellate jurisdiction over Enforcement Art. 129
Art. 217(a)(6)
all cases decided by Labor Arbiters? Power of Regional
Labor Arbiter
Secretary of Director
A: The NLRC. Labor and
Employment
Q: What are the cases which do not fall under the LA exercises
jurisdiction of the labor arbiters? original and
exclusive
A: LAs have no jurisdiction over the following: jurisdiction on
cases involving :
1. Foreign governments [JUSMAG-Phils. v. NLRC,
G.R. No. 108813, (1994)] a. ULP ;
2. International agencies [Lasco v. NLRC, G.R. Nos. b. termination
109095-109107, (1995)] disputes ;
3. Intra-corporate disputes which fall under P.D. c. wages ;
902-A and now falls under the jurisdiction of the d. rates of pay;
a) Inspection of
regular courts pursuant to the new Securities e. hours of
establishments;
Regulation Code [Nacpil v. IBC, G.R. No. 144767, work ;
and
(2002)] f. other terms of
Adjudication
4. Executing money claims against government employment,
b)issuance of of Ees claims
[Dept. of Agriculture v. NLRC, G.R. No. 104269, claims for
orders to compel for wages and
(1993)] damages
compliance with benefits
5. Cases involving GOCCs with original charters arising from
labor standards,
which are governed by civil service law, rules or Er-Ee
wage orders and
regulations (Art. IX-B, Sec.2, No.1, 1987 relationship,
other labor laws
Constitution) legality of
6. Local water district [Tanjay Water District v. strikes and
Gabaton, (1989)] except where NLRC jurisdiction lockouts, and
is invoked [Zamboanga City Water District v. g. all other
Buat, G.R. No. 104389, (1994)] claims arising
7. The aggregate money claim does not exceed from Er-Ee
P5000 and without claim for reinstatement relationship
[Rajah Humabon Hotel, Inc. v. Trajano, G.R. Nos. involving an
100222-23, (1993)] amount
8. Claim of Ee for cash prize under the Innovation exceeding Php
Program of the company, although arising from 5,000.00
Er-Ee relationship, is one requiring application of Enforcement of Limited to All other claims
general civil law on contracts which is within the labor legislation monetary arising from Er-
jurisdiction of the regular courts [SMC v. NLRC, in general claims Ee relations
G.R. No. 80774, (1988)]
9. Cause of action based on quasi-delict or tort
which has no reasonable connection with any of

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 Labor Law and Social Legislation

LA decides case
Initiated by
within 30 A: Yes. The subject of litigation is incapable of
Proceeding is an sworn
calendar days pecuniary estimation, exclusively cognizable by the
offshoot of complaints
after submission RTC, pursuant to Sec. 19(1) of BP Blg. 129, as
routine filed by any
of the case by amended. Being an ordinary civil action, the same is
inspections interested
the parties for beyond the jurisdiction of labor tribunals.
party
decision
Jurisdictional Not every controversy or money claim by an Ee
requirements: against the Er or vice-versa is within the exclusive
jurisdiction of the LA. Actions between Ees and Er
1) Complaint where the Er-Ee relationship is merely incidental and
arises from the cause of action precedes from a different source
1) All other
Er-Ee of obligation is within the exclusive jurisdiction of the
claims arising
relationship regular court. Here, the Er-Ee relationship between
from Er-Ee
the parties is merely incidental and the cause of
relations
2) Claimant is action ultimately arose from different sources of
an Ee or obligation, i.e., the Constitution and CEDAW
2) Including
person [Halaguena vs. PAL Incorporated, G.R. No. 172013,
those of persons
employed in (2009)].
in domestic or
domestic or
household
No jurisdictional household REINSTATEMENT PENDING APPEAL
service
requirements service or a
HH Q: What is the effect of perfection of an appeal on
3) Involving an
3) Complaint execution?
amount
does NOT
exceeding P5,000
include a A: The perfection of an appeal shall stay the
claim for execution of the decision of the LA on appeal, except
4) Whether or
reinstatement execution for reinstatement pending appeal.
not accompanied
with a claim for
4) Aggregate Note: The provision of Art. 223 of LC is clear that an award
reinstatement by the LA for reinstatement shall be immediately executory
money claim
of EACH even pending appeal and the posting of a bond by the
claimant does employer shall not stay the execution for reinstatement
[Pioneer Texturizing Corp. v. NLRC, G.R. No. 118651,
not exceed
(1997)].
P5,000
Appealable to SLE
Q: May dismissed employees collect their wages
(In case
Appealable to Appealable to during the period between the Labor Arbiters order
compliance order
NLRC NLRC of reinstatement pending appeal and the NLRC
is issued by
decision overturning that of the LA?
Regional Office)
A: Yes. Art. 223(3) of the LC provides that the
Q: FASAP, the sole and exclusive bargaining decision of the LA reinstating a dismissed or
representative of the flight attendants, flight separated Ee, insofar as the reinstatement aspect is
stewards and pursers of PAL, and respondent PAL concerned, shall immediately be executory, pending
entered into a CBA incorporating the terms and appeal.
conditions of their agreement for the years 01-05.
Sec. 144, Part A of the CBA provides that compulsory Even if the order of reinstatement of the LA is
retirement shall be 55 for females and 60 for males. reversed on appeal, it is obligatory on the part of the
They filed an action with the RTC claiming that the Er to reinstate and pay the wages of the dismissed Ee
CBA provision is discriminatory and hence during the period of appeal until reversal by the
unconstitutional. The RTC issued a TRO. The higher court. On the other hand, if the Ee has been
appellate court ruled that the RTC has no jurisdiction reinstated during the appeal period and such
over the case at bar. Does the RTC have jurisdiction reinstatement order is reversed with finality, the Ee is
over the petitioners' action challenging the legality not required to reimburse whatever salary he
of the provisions on the compulsory retirement age received for he is entitled to such, more so if he
contained in the CBA?

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 PROCEDURE AND JURISDICTION

actually rendered services during the period [Pfizer v. Q: Is the posting of an appeal bond required for the
Velasco, G.R. No. 177467, (2011)]. perfection of an appeal from a Labor Arbiters
decision involving monetary award?
Unless there is a restraining order, it is ministerial
upon the LA to implement the order of reinstatement A: Yes. In case the decision of the LA or the RD
and it is mandatory on the Er to comply therewith involves a monetary award, an appeal by the Er may
[Garcia v. PAL, G.R. No. 164856, (2009)]. be perfected only upon the posting of a bond. (Sec.6,
Rule VI, NLRC 2011 Rules of Procedure)
REQUIREMENTS TO PERFECT APPEAL TO NLRC
Q: What are the forms of the appeal bond?
Q: How is an appeal from Labor Arbiter to National
Labor Relations Commission perfected?
A: It shall either be in the form of cash deposit or
surety bond equivalent in amount to the monetary
A:
award, exclusive of damages and attorney's fees.
1. The appeal is perfected:
(Sec. 6, Rule VI, NLRC 2011 Rules of Procedure)
a. Filed within the reglementary period of 10
calendar days from receipt if it involves a
Q: Who may issue a surety bond?
decision, award, or order of the LA, or 5
calendar days from receipt if it involves a
A: It shall be issued by a reputable bonding company
decision or resolution of the RD
duly accredited by the Commission or the SC, and
b. Verified by the appellant himself in
shall be accompanied by original or certified true
accordance with Sec. 4, Rule 7 of the Rules
copies of:
of Court, as amended
c. In the form of a memorandum of appeal
1. A joint declaration under oath by the Er, his
which shall state the grounds relied upon
counsel, and the bonding company, attesting
and the arguments in support thereof, the
that the bond posted is genuine, and shall be in
relief prayed for, and with a statement of
effect until final disposition of the case.
the date the appellant received the appealed
decision, resolution or order
2. An indemnity agreement between the Er-
d. In 3 legibly typewritten or printed copies
appellant and bonding company;
e. Accompanied by (i) proof of payment of the
required appeal fee; (ii) posting of a cash or
3. Proof of security deposit or collateral securing
surety bond as provided in Sec. 6 of this
the bond: provided, that a check shall not be
Rule; (iii) a certificate of non-forum
considered as an acceptable security;
shopping; and (iv) proof of service upon the
other parties (Sec. 4, Rule VI, NLRC 2011
4. A certificate of authority from the Insurance
Rules of Procedure)
Commission;
Note: Mere notice of appeal without complying with the
aforementioned requisites shall not stop the running of the 5. Certificate of registration from the SEC;
period for perfecting an appeal.
6. Certificate of authority to transact surety
Q: What are the grounds for filing an appeal? business from the Office of the President;

A: The appeal may be entertained only on any of the 7. Certificate of accreditation and authority from
following grounds: the SC; and

1. If there is prima facie evidence of abuse of 8. A notarized board resolution or secretary's

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 appellant.
(Sec.2, Rule VI, NLRC 2011 Rules of Procedure)
certificate from the bonding company showing
its authorized signatories and their specimen
signatures. [Sec. 6, Rule VI, NLRC 2011 Rules of
Procedure]
Note: The appellant shall furnish the appellee with a
certified true copy of the said surety bond with all the
above-mentioned supporting documents.

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195 FACULTY OF CIVIL LAW
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Q: What is the period within which a cash or surety
bond shall be valid and effective?
A: 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. [Sec. 6, Rule VI, NLRC 2011
Rules of Procedure]
Q: What is the effect if the bond is verified by the
NLRC to be irregular or not genuine?
A: 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. (Sec.6,
Rule VI, NLRC 2011 Rules of Procedure)
Note: The appellee shall verify the regularity and
genuineness of the bond and immediately report any
irregularity to the NLRC.
Q: May the bond be reduced?
A: GR: No.
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. (Sec. 6, Rule VI, NLRC 2011 Rules of Procedure)
Q: Company A, within the reglementary period,
appealed the decision of a Labor Arbiter directing
the reinstatement 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 for failure to file a
bond. In ABA vs. NLRC,( G.R. No.122627, 1999), the SC
ruled: "An appeal bond is necessary...the appeal
may be perfected only upon the posting of cash or
surety bond issued by a reputable bonding
company duly accredited by the Commission in the
amount equivalent to the monetary award in the
judgment appealed from."
Q: Is a motion for reconsideration (MR) of the NLRC
decision required before certiorari may be availed
of?
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
A: Yes. A motion for reconsideration is required to
enable NLRC to correct its mistakes. If no MR is filed,
NLRCs decision becomes final and executory.
Q: What is the remedy in case of denial of the MR?
A: 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. (Sec. 4, Rule
65, Rules of Court)
Q: What is the effect if no service of summons was
made?
A: In the absence of service of summons or a valid
waiver thereof, the hearings and judgment rendered
by the LA is null and void.
Q: What is compulsory arbitration?
A: 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.
Q: Can the Labor Arbiter conduct compulsory
arbitration?
A: Yes. Under the LC, it is the LA who is clothed with
the authority to conduct compulsory arbitration on
cases involving termination disputes [Art.217, P.D.
442, as amended]. [PAL v. NLRC, G.R. No. 55159,
(1989)]
Q: What are the rules on venue of filing cases?
A:
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
b. Supposed to regularly receive their salaries and
wages
196
 PROCEDURE AND JURISDICTION
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, (1998)]
NATIONAL LABOR RELATIONS COMMISSION
Q: What is the NLRC?
A: 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.
Q: How are the powers and functions of the NLRC
allocated?
A:
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
197
cases within their respective territorial
jurisdiction.
Q: Does an individual Commissioner have
adjudicatory power?
A: No. 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 entity, 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
Q: What are the two kinds of jurisdiction of the
NLRC?
A:
1. Exclusive Original Jurisdiction
a. Certified labor disputes causing or likely to
cause a strike or lockout in an industry
indispensable to national interest, certified
to it by the SLE or the President for
compulsory arbitration
b. Injunction in ordinary labor disputes to
enjoin or restrain any actual or threatened
commission of any or all prohibited or
unlawful acts or to require the performance
of a particular act in any labor dispute which,
if not restrained or performed forthwith,
may cause grave or irreparable damage to
any party
c. Injunction in strikes or lockouts under Art.
264 of the LC
d. Contempt cases
2. Exclusive Appellate Jurisdiction
a. All cases decided by the LA under Art. 217(b)
of the LC and Sec. 10 of R.A.8042 (Migrant
Workers Act); and
b. Cases decided by the Regional Offices of
DOLE in the exercise of its adjudicatory
function under Art.129 of the LC over
monetary claims of workers amounting to
not more than P5000 and not accompanied
by claim for reinstatement.
Q: What is the composition of the NLRC?
A:
1. Chairman
2. 23 Members
a. 8 members each shall be chosen only from
among the nominees of the workers and Er
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
organization respectively.
b. The Chairman and the 7 remaining members
shall come from the public sector, with the
latter to be chosen preferably from among
the incumbent LAs.
c. Upon assumption into office, the members
nominated by the workers and Ers
organization shall divest themselves of any
affiliation with or interest in the federation or
association to which they belong.
Note: 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, (1992)]
Q: How does the NLRC adjudicate cases?
A:
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).
Q: What are the qualifications of the Chairman and
the Commissioners?
A:
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
Q: What are the qualifications of an Executive Labor
Arbiter?
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
A:
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
Q: What is the term of office of the Chairman,
Commissioners and Labor Arbiters?
A: 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 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. Not satisfied, the
complainants elevated the RDs 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,
1999), the SC ruled:
Appellate authority over decisions of the RD
involving examination of union accounts 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.
The language of the law is categorical. Any
additional explanation on the matter is
superfluous."
Q: Company "A" and Union "B" could not resolve
their negotiations for a new CBA. After
conciliation proceedings b efor e th e NCM B
p r oved f u t i l e , 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
198
 PROCEDURE AND JURISDICTION
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)
A: The appeal should not prosper. 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,
(1989)].
Q: Is barangay conciliation available in labor cases?
A: No. Labor cases are not subject to barangay
conciliation since ordinary rules of procedure are
merely suppletory in character vis--vis labor disputes
which are primarily governed by labor laws [Montoya
v. Escayo, G.R. No. 82211-12, (1989)].
Q: What are the powers of the NLRC?
A:
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)
199
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 ARBITERS
ORDER OF REINSTATEMENT
Q: May dismissed employees collect their wages
during the period between the Labor Arbiters order
of reinstatement pending appeal and the NLRC
decision overturning that of the LA?
A: Yes. Art. 223 (3) of 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.
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, (2011)].
REMEDIES
Q: Is judicial review of the NLRCs decision available?
A: Yes, through petitions 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, (1998)].
Q: What is an injunction or a temporary restraining
order (TRO)?
A: Orders which may require, forbid, or stop the
doing of an act. The power of the NLRC to enjoin or
restrain the Commission from any or all prohibited or
unlawful acts under Art. 218 of Labor Code can only
be exercised in labor disputes.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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 (1982)]
Q: Who may issue a TRO?
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.

A: c. That as to each item of relief to be granted,

1. President (Art.263[g], LC) greater injury will be inflicted upon the
2. Secretary of Labor (Art. 263[g], LC) complainant by the denial of the relief than
3. NLRC (Art.218, LC) will be inflicted upon the defendants by the
granting of the relief.
Note: Art. 218 of the LC limits the grant of injunctive power
to the NLRC. The LA is excluded statutorily. Hence, no NLRC d. That complainant has no adequate remedy
Rules can grant him that power. at law

Q: What is the procedure for the issuance of Note: Adequate remedy one that affords relief
restraining order/injunction? with reference to the matter in controversy and
which is appropriate to the particular
A: circumstances of the case if the remedy is
specifically provided by law. [PAL v. NLRC, GR. No.
1. Filing of a verified petition
120567, (1998)]

2. Hearing after due and personal notice has been

e. That public officers charged with the duty to
served in such manner as the Commission shall
protect complainants property are unable
direct to:
or unwilling to furnish adequate protection.
a. All known persons against whom relief is
sought
5. Posting of a bond.
b. Also the President or other public officials of
the province or city within which the
CERTIFIED CASES
unlawful acts have been threatened or
commercial charged with the duty to protect
Q: What are certified cases?
the complainants property.
A: These are cases certified or referred to the
3. Reception at the hearing of the testimonies of
Commission for compulsory arbitration under Art.
the witnesses with opportunity for cross-
263 (g) of the LC dealing about national interest
examination, in support of the allegations of the
cases.
complaint made under oath as well as testimony
in opposition thereto.
A national interest dispute may be certified to the
NLRC even before a strike is declared since Art. 263
4. Finding of fact of the Commission to the effect
(g) of the LC does not require the existence of a
that:
strike, but only of an industrial dispute [Government
a. Prohibited or unlawful acts have been
Service Insurance System Employees Association
threatened and will be committed, or have
(GSISEA), et al. v. Court of Industrial Relations, G.R.
been and will be continued unless
No. L-18734, (1961)].
restrained, but no injunction or TRO shall be
issued on account of any threat, prohibited
Q: What is the function of the NLRC in certified
or unlawful act, except against the persons,
cases?
association or organization making the
threat or committing the prohibited or
A: When sitting in a compulsory arbitration certified
unlawful act or actually authorizing or
to by the SLE, the NLRC is not sitting as a judicial court
ratifying the same after actual knowledge
but as an administrative body charged with the duty
thereof.
to implement the order of the SLE. As an
implementing body, its authority did not include the
b. The substantial and irreparable injury to the
power to amend the Secretarys order [UST v. NLRC
complainants property.
and UST Faculty Union, G. R. No. 89920, (1990)].

UNIVERSITY OF SANTO TOMAS

2013 GOLDEN NOTES 200
 PROCEDURE AND JURISDICTION

Q: What is the effect of defiance from the 3. Labor education.

certification order?
Note: Jurisdiction over labor management problems or
A: Non-compliance with the certification order of the disputes is also exercised by other offices:
SLE shall be considered as an illegal act committed in 1. DOLE Regional Offices
2. Office of the Secretary of Labor
the course of the strike or lockout and shall authorize
3. NLRC
the Commission to enforce the same under pain of
4. POEA
immediate disclipinary action, including dismissal or 5. OWWA
loss of employment status or payment by the locking- 6. SSS-ECC
out Er of backwages, damages and/or other 7. RTWPB
affirmative relief, even criminal prosecution against 8. NWPC
the liable parties. (Sec. 4, Rule VIII, NLRC 2011 Rules) 9. Regular courts over intra-corporate disputes.

Q: What is the procedure in deciding certified cases? Q: Who is a mediator-arbiter?

A: A: An officer in the Regional Office or Bureau

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.
authorized to hear, conciliate and decide
representation cases or assist in the disposition of
intra or inter-union disputes.
Q: What kinds of cases fall within BLRs jurisdiction?
A: The BLR has original and exclusive jurisdiction
over:
1. Inter-union disputes
2. Intra-union disputes
3. Other related labor relations disputes
Q: What is the coverage of inter/intra-union
disputes?
A: They shall include:

3. Notwithstanding the necessity for a clarificatory 1. Conduct or nullification of election of union and
hearing, all certified cases shall be resolved by workers association officers
the Commission within 60 calendar days from 2. Audit/accounts examination of union or workers
receipt of the complete records. association funds
3. Deregistration of CBAs
4. No motion for postponement or extension shall 4. Validity/invalidity of union affiliation or
be entertained. [Sec. 5, Rule VIII, NLRC 2005 disaffiliation
Rules] 5. Validity/invalidity of acceptance/ non-acceptance
for union membership
BUREAU OF LABOR RELATIONS 6. Validity/invalidity of voluntary recognition
MEDIATOR-ARBITERS 7. Opposition to application for union or CBA
registration
JURISDICTION (ORIGINAL AND APPELLATE) 8. Violations of or disagreements over any provision
of the constitution and by-laws of union or
Q: What is covered by the BLRs jurisdiction and workers association
functions? 9. Disagreements over chartering or registration of
labor organizations or the registration of CBAs;
A: The BLR no longer handles all labor management 10. Violations of the rights and conditions of
disputes; rather its functions and jurisdiction are membership in a union or workers association;
largely confined to: 11. Violations of the rights of LLO, except
interpretation of CBAs;
1. Union matters 12. Validity/invalidity of impeachment/
2. Collective bargaining registry and expulsion/suspension or any disciplinary action
meted against any officer and member, including
UNIVERSITY OF SANTO TOMAS
201 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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. [Sec.1, Rule XI, Book V,
IRR as amended by D.O. 40-F-03]
Q: What is covered by the phrase other related
labor relations disputes?
A:
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
c. A labor union and an individual who is not a
member of such union
2. Cancellation of registration of unions and
workers associations filed by individual/s other
than its members, or group that is not a LO.
3. A petition for Interpleader involving labor
relations. [Sec. 2, Rule XI, Book V, IRR as
amended by D.O. 40-F-03]
Q: Who may file a complaint or petition involving
intra/inter-union disputes?
A: A legitimate labor organization or its members.
[Sec. 5, Rule XI, D.O. 40-03]
Q: What if the issue involves the entire
membership?
A: The complaint must be signed by at least 30% of
the entire membership of the union.
Q: What if the issue involves a member only?
A: Only the affected member may file the complaint.
[Sec. 5, Rule XI, D.O. 40-03]
Note:
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;
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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.
Q: May a decision in an inter/intra-union dispute be
appealed from?
A: Yes.
Q: Within what period may an appeal to a decision
of the Mediator-Arbiter or Regional Director in an
inter/intra-union dispute be filed?
A: The decision may be appealed by any of the parties
within 10 days from receipt thereof. (Sec. 16, Rule XI,
D.O. 40-03)
Q: To whom is the decision appealable?
A: The decision is appealable to the:
1. BLR: if the case originated from the Med-Arbiter
or RD;
2. SLE: if the case originated from the BLR.
Q: What is the extent of the Bureau of Labor
Relations authority?
A:
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.
Q: What are the administrative functions of the
Bureau Labor Relations?
A:
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
202
 PROCEDURE AND JURISDICTION
Q: What are the effects of filing or pendency of
inter/intra-union dispute and other labor relations
disputes?
A:
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, the
rights, relationships and obligations of the party-
litigants against each other and other parties-in-
interest 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
proceedings for the certification of election. (Sec.
3, Rule XI, DO 40-03)
Q: State the rules on appeal in intra/inter-union
disputes.
A:
1. Formal Requirements
a. Under oath
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.
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).
[Rule XI, D.O. 40-03]
203
NATIONAL CONCILIATION AND MEDIATION BOARD
(NCMB)
NATURE OF PROCEEDINGS
Q: What are the alternative modes of settlement of
labor dispute under Art. 211 of the LC?
A:
1. Voluntary Arbitration
2. Conciliation
3. Mediation
Q: What is the nature of the proceedings?
A: The proceedings are non-litigious.
Q: Are all labor disputes required to be submitted to
mandatory conciliation-mediation?
A: 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 [Art. 228 (a), as amended by R.A. 10396]
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." (Art. 228 (b), as amended by R.A.
10396)
Q: What is arbitration?
A: It is the submission of a dispute to an impartial
person for determination on the basis of evidence
and arguments of the parties. The arbiters decision
or award is enforceable upon the disputants. It may
be voluntary (by agreement) or compulsory (required
by statutory provision) [Luzon Devt Bank v. Assn of
Luzon Devt Bank Employees, G.R. No. 120319,
(1995)].
Q: Can the court fix resort to voluntary arbitration?
A: Resort to VA dispute, should not be fixed by the
court but by the parties relying on their strengths and
resources.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation

Q: Who are the parties to labor relations cases? situation

It is the process It is when a 3rd
A: where a party studies each
1. Employees organization disinterested 3rd side of the dispute
2. Management party meets with then makes
3. The public management and proposals for the
labor, at their disputants to
Note: Er and Ees are active parties while the public and the request or otherwise, consider. The
State are passive parties. [Poquiz, 2006, p.3] during a labor mediator cannot
dispute or in CB make an award nor
Q: What is the concept of tripartism? conferences, and by render a decision
cooling tempers, aids
A: It is the representation of 3 sectors. These are: in reaching an
1. The public or the government agreement
2. The employers
3. The workers Q: What is the legal basis of conciliation and
in policy-making bodies of the govt. mediation?

Q: Can workers insist that they be represented in
the policy making in the company?
A: No. Such kind of representation in the policy-
making bodies of private enterprises is not ordained,
not even by the Constitution. What is provided for is
workers participation in policy and decision-making
process directly affecting their rights, benefits, and
welfare.
A: Sec. 3, Art. 13 of the Constitution provides:
The State shall promote xxx the preferential use of
voluntary modes of setting disputes including
conciliation and shall ensure mutual compliance by
the parties thereof in order to foster industrial
peace.
Note: A similar provision is echoed in the Declaration of
Policy under Art. 211 (a) of the LC, as amended.

CONCILIATION vs. MEDIATION Q: Who can avail of conciliation and mediation

services of the NCMB?
Q: What is conciliation and mediation?
A: Any party to a labor dispute, either the union or
A: management, may seek the assistance of NCMB or
CONCILIATION MEDIATION any of its Regional Branches by means of formal
Is conceived of as a Is a mild request for conciliation and preventive mediation.
mild form of intervention by a Depending on the nature of the problem, a request
intervention by a neutral third party may be filed in the form of consultation, notice of
neutral third party preventive mediation or notice of strike/lockout.
The conciliator- The conciliator-
Mediator, relying on mediator, whereby Q: Where can a request for conciliation and
his persuasive he starts advising mediation be filed?
expertise, who takes the parties or
an active role in offering solutions or A: An informal or formal request for conciliation
assisting parties by alternatives to the and mediation service can be filed at the NCMB
trying to keep problems with the Central Office or any of its Regional Branches.
disputants talking, end in view of There are at present 14 regional offices of the
facilitating other assisting them NCMB which are strategically located all over the
procedural niceties, towards voluntarily country for the convenient use of prospective
carrying messages reaching their own clients.
back and forth mutually acceptable
between the parties, settlement of the PREVENTIVE MEDIATION
and generally being a dispute
good fellow who Q: What is a preventive mediation case?
tries to keep things
calm and forward- A: Refers to the potential labor dispute which is
looking in a tense the subject of a formal or informal request for
conciliation and mediation assistance sought by

UNIVERSITY OF SANTO TOMAS

2013 GOLDEN NOTES 204
 PROCEDURE AND JURISDICTION
either or both parties or upon the initiative of the
NCMB to avoid the occurrence of an actual labor
dispute.
Q: Who may file a notice for preventive mediation?
A: 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. (Sec. 3, Rule IV of
the NCMB Manual of Procedure)
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, (2010)].
Q: What are the valid issues for a notice of strike
/ lockout or preventive mediation?
A: 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
ground 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.
Q: What advantage can be derived from
conciliation and mediation services?
205
A: 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 a wider latitude of possible approaches to the
problem.
Q: Are the parties bound by the agreement
entered into by them?
A: Yes, 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.
Q: Is conciliation and mediation service still
possible during actual strike or lockout?
A: Yes, 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 by
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.
Q: When the dispute has already been assumed
or certified to the NLRC, is it also possible to
remand the same to conciliation and mediation
services?
A: Yes, 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.
Q: What benefit can the parties have in appearing
during conciliation conferences?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
A: 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 observe a norm of
conduct usually followed in like forum.
DOLE REGIONAL DIRECTORS
JURISDICTION
Q: What are the money claims falling under the
jurisdiction of the DOLE Regional Directors?
A: 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 ff. requisites, it is the LA
who shall have the jurisdiction over the claims arising from
Er-Ee relations, except claims for Ees 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.
Q: What is the adjudicatory power of the Regional
Director?
A: The RD or any of his duly authorized hearing officer
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.
DOLE SECRETARY
VISITORIAL AND ENFORCEMENT POWERS
Q: What are the three kinds of powers of the SLE?
A:
1. Visitorial powers
2. Enforcement powers
3. Appellate or power to review
Q: What constitutes Visitorial power?
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
A:
1. Access to Ers 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 LC, wage order,
or rules and regulation issued pursuant thereto.
Q: Give four instances where the Visitorial power of
the SLE may be exercised under the LC.
A: 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 Ers 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.
Q: What is Enforcement power?
A: 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
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:
206
 PROCEDURE AND JURISDICTION
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, (1998)]
Q: What are the violations under Art. 128 of the LC?
A:
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.
Q: What are the limitations to other courts?
A: 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
Q: What are the instances when Enforcement power
may not be used?
A:
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
Q: Does the SLE 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?
A: No. The visitorial and enforcement powers of the
SLE comes into play only in cases when the
relationship of Er-Ee still exists. The SLEs 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
207
[Peoples Broadcasting v. The Secretary of the
Department of Labor and Employment, G.R. No.
179652, (2009)].
POWER TO SUSPEND EFFECTS OF TERMINATION
Q: Does the SLE have the power to suspend the
effects of termination?
A: Yes, under Art. 277(b) of the LC, 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.
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.
ASSUMPTION OF JURISDICITION
Q: When can the SLE assume jurisdiction over a
labor dispute?
A: 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
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 lockoutit
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, (2010)].
Q: What is the effect of the assumption or
certification?
A: 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
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
readmits all workers under the same terms and
conditions prevailing before the strike or lockout.
Q: May assumption of jurisdiction be exercised
without the necessity of prior notice or hearing
given to any of the party disputants?
A: Yes. The rationale for the SLEs 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].
APPELLATE JURISDICTION
Q: What are the cases within the appellate
jurisdiction of the SLE?
A:
1. Appeal from and adverse decision of the POEA
[Sec. 1, Part VII, Rule V, 2003 POEA Rules and
Regulations; Eastern Mediterranean Maritime
Ltd. And Agemar Manning Agency Inc., v. Surio
et. al., G.R. No. 154213, (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. (Art. 259, LC)
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, ( 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
inappealable. (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 inappealable.
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 decision on the matter
shall be final and inappealable (Ibid.)
SLE has no appellate jurisdiction over decisions of RD
involving petitions for examinations of union accounts. It is
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
the BLR which exercises appellate jurisdiction in such case
[Barles v. Bitonio, G.R. No. 120270, (1999)].
VOLUNTARY ARBITRATION POWERS
Q: What powers may the SLE exercise with regard to
voluntary arbitration?
A: The SLE may authorize any official to act as
Voluntary Arbitrator upon the written request and
agreement of the parties to a labor dispute [Art. 212
(n), LC]. He shall also approve, upon recommendation
of the NCMB the guidelines in administering the
Voluntary Arbitration Fund [Art. 276 (f), LC].
GRIEVANCE MACHINERY AND VOLUNTARY
ARBITRATION
Q: What is a grievance?
A: 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.
Q: What is grievance machinery?
A: 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.
Q: What is grievance procedure?
A: 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 as 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
Q: What are the cases falling under the jurisdiction
of the Grievance Machinery?
A: Any grievance arising from:
208
 PROCEDURE AND JURISDICTION
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,
(2010)].
VOLUNTARY ARBITRATOR
JURISDICTION
Q: What falls under the jurisdiction of Voluntary
Arbitrators?
A: 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, (2003)].
Q: What cases are within the jurisdiction of VA?
A: Original and exclusive jurisdiction over:
1. All unresolved grievances arising from the:
a. Implementation or interpretation of the CBA
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 an 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,
(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
209
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.
(Art. 262, LC)
Q: May the NLRC and DOLE entertain
disputes/grievances/matters under the exclusive
and original jurisdiction of the voluntary arbitrator?
A: No. 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.
Q: Who has jurisdiction over actual termination
disputes and complaints for illegal dismissal filed by
workers pursuant to the union security clause?
A: The LA and not the grievance machinery.
PROCEDURE
Q: How is arbitration initiated?
A:
1. Submission Agreement Where the parties
define the disputes to be resolved
2. Demand notice Invoking collective agreement
arbitration clause
Q: Who is a voluntary arbitrator (VA)?
A:
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. [Art.
212 [n], LC]
Q: What are the powers of a voluntary arbitrator?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
A:
1. Hold hearings
2. Receive evidence
3. Take whatever action necessary to resolve the
dispute including efforts to effect a voluntary
settlement between parties. [Art. 262-A, LC]
Q: How is a voluntary arbitrator /panel chosen?
A:
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. [Art.260(3), LC]
Q: Who will designate the voluntary arbitrator
/panel in case the parties fail to select one?
A: 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, (1998)]
Q: May Labor Arbiters be designated as voluntary
arbitrators?
A: Yes. 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, (1998)].
Q: What is the effect of the award of voluntary
arbitrator?
A: 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.
Q: Are both the employer and the bargaining
representative of the employees required to go
through the grievance machinery in case a grievance
arises?
A: Yes, because 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.
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
Q: What is the nature of the power of a voluntary
arbitrator?
A: 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
Q: Are decisions of voluntary arbitrators
appealable?
A: 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. (Art. 262-A, LC)
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, (2010)].
XPN: Appeal to the CA via Rule 43 of the Rules of
Court within 15 days from the date of receipt of
VAs decision [Luzon Devt Bank v. Assn of Luzon
Devt Bank Ees, G.R. No. 120319, (1995)].
Note: A VA by the nature of his functions acts in quasi-
judicial capacity. There is no reason why the VAs
decisions involving interpretation of law should be
beyond the SCs 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 certiorari [Continental Marble
Corporation v. NLRC, G.R. No. L-43825, (1988)].
Q: PSSLU had an existing CBA with Sanyo Phils., Inc.
which contains 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.
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 PROCEDURE AND JURISDICTION
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, (1992)].
Q: X was employed as 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 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,
(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,
211
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
Darbys 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, (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
employees favor.
On appeal, the CA ruled in favor of RPN because it
considered Apalisoks 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 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
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
respective counsels. The VA had jurisdiction over the
parties controversy [Apalisok v. RPN, G.R. No.
138094, (2003)].
COURT OF APPEALS
RULE 65, RULES OF COURT
Q: What is the remedy of a party aggrieved by a
decision of the NLRC?
A: 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, (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 certification of non-forum shopping as
provided in the third paragraph of section 3, Rule 46.
Q: Within what period should the petition for
certiorari be filed with the Court of Appeals?
A: 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 petitioners 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, (2000)]
Art. 224 of the LC, which requires that copies of final
decisions, orders or awards be furnished not only the
partys 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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
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, (2001)].
Q: Company A was sold to Company B with the
undertaking that Company B will absorb the
formers 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
outright 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
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 interes of substantial
justice. (Ibid.)
SUPREME COURT
RULE 45, RULES OF COURT
Q: How does a party appeal from a judgment, or
final order or resolution, of the Court of Appeals?
A: A party desiring to appeal may file with the
Supreme Court a verified petition for review on
212
 PROCEDURE AND JURISDICTION

certiorari under Rule 45 within fifteen (15) days from Compensation not later than Mar. 31,
notice of the judgment, final order or resolution claims accruing prior 1975 before the
appealed from [Sea Power Shipping Enterprises, Inc. to the effectivity of appropriate regional offices
v. CA, G.R. No. 138270, (2001)]. the LC and between of the DOLE. (Art. 291, LC)
Nov. 1, 1974-Dec.
Note: Rule 45, Sec. 1, Rules of Court: 31, 1974
After 3 years from the date
Filing of petition with Supreme Court.A party desiring to of submission of the annual
appeal by certiorari from a judgment, final order or
financial report to the DOLE
resolution of the Court of Appeals, the Sandiganbayan, the
Court of Tax Appeals, the Regional Trial Court or other or from the date the same
courts, whenever authorized by law, may file with the should have been
Union funds
Supreme Court a verified petition for review on certiorari. submitted as required by
The petition may include an application for a writ of law, whichever comes
preliminary injunction or other provisional remedies and earlier. (Sec. 5, Rule II, Book
shall raise only questions of law, which must be distinctly VII, Omnibus Rules
set forth. The petitioner may seek the same provisional Implementing the LC)
remedies by verified motion filed in the same action or
4 years. It commences to
proceeding at any time during its pendency.
run from the date of formal
Illegal Dismissal
dismissal [Mendoza v.
Q: Give the policy of the Supreme Court regarding Cases
NLRC, G.R. No. 122481,
appeals in labor cases.
(1998)].
A: The Supreme Court is very strict regarding appeals
Q: When does promissory estoppel arise?
filed outside the reglementary period for filing the
same. To extend the period of the appeal is to delay
A: It may arise from the making of a promise, even
the case, a circumstance which could give the
though without consideration, if it was intended that
employer the chance to wear out the efforts and
the promise should be relied upon. If in fact it was
meager resources of the worker that the latter is
relied on, a refusal to enforce it would virtually
constrained to give up for less than what is due him
sanction the perpetration of fraud or would result in
[Firestone Tire and Rubber Co. of the Philippines v.
other injustice. It presupposes the existence of a
FirestoneTire and Rubber Co. Employees Union, G.R.
promise on the part of one against whom estoppel is
No. 75363, (1992)].
claimed. The promise must be plain and
unambiguous and sufficiently specific so that the
PRESCRIPTION OF ACTIONS
court can understand the obligation assumed and
enforce the promise according to its terms.
Q: Give the rules as regards the prescriptive period
provided for in the LC.
Note: In order to make out a claim of promissory estoppel,
a party bears the burden of establishing the following
A: elements: (1) a promise was reasonably expected to induce
SUBJECT PRESCRIPTIVE PERIOD action or forbearance; (2) such promise did, in fact, induce
1 year from accrual of such such action or forbearance; and (3) the party suffered
ULP; otherwise forever detriment as a result.
ULP
barred
(Art. 290, LC) Q: What are the acts considered as criminal
GR: 3 years from the time violations of the LC?
the cause of action accrued;
otherwise forever barred A: Except as otherwise provided in the LC, or unless
Money Claims (Art. 291, LC) the acts complained of hinge on a question of
interpretation or implementation of ambiguous
XPN: Promissory Estoppel provisions of an existing CBA, any violation of the
provisions of the LC declared to be unlawful or penal
Within one year from the in nature shall be punished with a fine of not less
All money claims date of effectivity, in than Php 1,000.00 nor more than Php 10,000.00 or
accruing prior to the accordance with IRR; imprisonment of not less than three months nor
effectivity of the LC otherwise, they shall more than three years, or both such fine and
forever be barred imprisonment at the discretion of the court. (Art. 288,
Workmens Dec. 31, 1974 shall be filed LC)

UNIVERSITY OF SANTO TOMAS

213 FACULTY OF CIVIL LAW
 Labor Law and Social Legislation
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. (Art. 41, LC)
2. Violation of the provisions on learnership (Art. 77,
LC)
3. In cases of unlawful withholding of wages, the
culpable party may be assessed attorneys fees
equivalent to ten percent of the amount of wages
recovered (Art. 111, LC).
4. It shall be unlawful for any person to demand or
accept, in any judicial or administrative proceedings
for the recovery of wages, attorneys fees which
exceed ten percent of the amount of wages
recovered (Art. 111, LC).
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 workers
consent. (Art. 116, LC)
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. (Art. 117, LC)
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. (Art. 118, LC)
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.
(Art. 119, LC)
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
UNIVERSITY OF SANTO TOMAS
2013 GOLDEN NOTES
orders issued in accordance with this Article. [Art. 128
(4), LC]
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. (Art. 135, LC)
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. (Art.
136, LC)
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 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 (Art. 241, LC)
14. Unfair labor practice of Ers (Art. 248, LC)
15. Unfair labor practice of labor organizations (Art.
249 in relation to Art. 247, LC)
16. Violation of the provision on retirement benefits
(Art. 287, LC)
Note: In addition to the penalty prescribed under Art. 288,
any alien found guilty shall be summarily deported upon
completion of service of sentence. (Art. 288, LC).
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.
(Art. 289, LC)
214