Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

Office of the Vice President for Academic Affairs
College of Business Administration

INSTRUCTIONAL MATERIALS
FOR
HRMA 30013
LABOR RELATIONS AND NEGOTIATIONS

COMPILED BY:

Perry David L. Solosa

PUP A. Mabini Campus, Anonas Street, Sta. Mesa, Manila 1016

Direct Line: 335-1730 | Trunk Line: 335-1787 or 335-1777 local 000
Website: www.pup.edu.ph | Email: inquire@pup.edu.ph

THE COUNTRY’S 1st POLYTECHNIC U

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 INTRODUCTION

This instructional material aims to enable students grasp the nature and importance of Labor
Law and Legislation in both the capital and labor. Cases were provided for supplemental
readings.

Students are expected to answer all activities/assessments required at the end of each
topic and accomplish the midterm and final exams attached in this instructional material.

Labor activities done across national borders with respect to the Constitutionality rights of
every persons. Labor with relation to business that will create a harmonious relationship
between the employer and the employee.

And gain awareness of the Constitutional Rights of every Filipino worker to enhance
their productivity by being familiar with basis of existing policies and rules and
regulations of Governmental institution pertinent to labor

To guide each employee regardless of their employment status the appreciation of

all employee benefits that is given under the law.

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 COURSE OUTCOMES

At the end of the semester, the student will be able to:

 Understand the labor law and legislation
• Analyze the importance of labor law and legislation
• Enhance productivity by promoting humane working relationship
between capital and labor
• Gain awareness of the Constitutional Rights of employees
• Be a productive worker by familiarization with basis policies of
Government pertinent to labor
• Appreciate employee benefits

TABLE OF CONTENTS
Title Page No.

Lesson I: GENERAL PRINCIPLES 5

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Lesson II: LABOR STANDARDS 9
Lesson III: EMPLOYEE CLASSIFICATION 12
Lesson IV: RECRUITMENT AND PLACEMENT 16

Lesson V: WORKING CONDITIONS AND REST PERIODS 19

Lesson VI: WAGES 26

Lesson VII: SPECIAL WORKERS 35

Lesson VIII: MINORS, HOUSEKEEPERS AND HOMEWORKERS 39

Lesson IX: TERMINATION OF EMPLOYMENT 42

Lesson X: LABOR RELATION 50

Lesson XI LABOR ORGANIZATION 55

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Lesson XII: THE APPROPRIATE BARGAINING UNIT 60

Lesson XIII: COLLECTIVE BARGAINING AGREEMENT 65

Lesson XIV: UNFAIR LABOR PRACTICE 69

Lesson XV: SUMMARY OF JURISDICTION 77

Midterm Examination 85

Final Examination 86

Grading System / References 87

LESSON I GENERAL PRINCIPLES

OVERVIEW: This chapter introduces the fundamental information for the student to
prepare and understanding the nature of Labor Law and Legislation. To this, an
important view of this subject to Human Resource Management

LEARNING OUTCOMES:
After the end of this lesson, you will be able to:

• Define Labor Law

• Know the sources of Labor Law and other relative laws
• Determine the difference between Labor Standard, Labor Relations and
Social Legislation
• Know the interpretation of Labor Law
• Understand general importance of Labor Law
• Identify key concepts in that affects Labor Law

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COURSE MATERIALS:

LABOR LAW—the law governing the rights and duties of the employer and employees:
(1) with respect to the terms and conditions of employment and
(2) with respect to labor disputes arising from collective bargaining respecting such
terms and conditions

- labor law is a regulatory device seeking to regulate the relationship between two factors of
production – ER (capital) and employee (labor)

LAW CLASSIFICATION
(1) Labor Standards (Books 1, 2, 3, 4 & 6)
- provide minimum terms and conditions of employment, below which it cannot be
allowed to fall. (Statutory floor)

CASE: Maternity Children’s Hospital v. Sec. of Labor, 1989

 Labor standards are the minimum requirements prescribed by existing laws, rules and
regulations relating to wages, hours of work, cost-of-living allowance, and other
monetary and welfare benefits, including occupational safety, and health standards.

(2) Labor Relations (Book 5)

- regulate the institutional relationship between the workers organized into a union and
the employers.

(3) Welfare Laws/ Social Legislation (Social Security Act of 1997, RA 8282; Government
Service Insurance System of 1997, RA 8291; Employment Compensation and State
Insurance Fund; National Health Insurance Act of 1995, RA 7875)
- designed to take care of the contingencies which may affect the workers, e.g., where
there is loss of income for reasons beyond control, i.e., sickness, death, accident, etc.

LAW AND WORKER

CASE: Cebu Royal Plant v Deputy Minister of Labor, 1987
 The SC reaffirmed its concern for the lowly worker who, often at the mercy of his
employer must look up to the law for his protection. Fittingly, the law regards him
with tenderness and even favor and always with faith and hope in his capacity to
help in shaping the nation’s future.

MANAGEMENT PREROGATIVE
Rule: Employers are free to regulate, according to their discretion and best judgment, all
aspects of employment, including work assignment, working methods, processes to
be followed, working regulations, transfer of employees, work supervision, lay-off of
workers and the discipline, dismissal and recall of workers.

CASES: Great Pacific Employees Union v. Great Pacific Life Assurance, 1999
• (Management) prerogative flowed from the established rule that labor laws do not
authorize substitution of judgment of the employer in the conduct of his business.

Duncan Association etc. v. Glaxo Wellcome Phils, Inc, 2004s

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 • Glaxo’s policy of prohibiting an employee from having a relationship with an
employee of a competitor company is a valid exercise of management prerogative...
The challenged company policy does not violate the equal protection clause of the
Constitution... Glaxo does not impose an absolute prohibition against relationships
between its employees and those of competitor companies. 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.

Limitations:
CASES: DOLE Phils. V. Pawis ng Makabayang Obrero, 2003
 The exercise of management prerogative is not unlimited. It is subject to the
limitations found in law, a CBA, or the general principles of fair play and justice.

Great Pacific Employees Union v. Great Pacific Life Assurance, 1999;

Valiao v. CA, 2004
Requisites for valid exercise of management prerogatives:
 The employer can exercise this prerogative without fear of liability so long as:
1. it is done in good faith;
2. for the advancement of his interest; and,
3. not for the purpose of defeating or circumventing the rights of the employees
under special laws or valid agreements

QUITCLAIMS
Rule: Quitclaims, waivers or releases are looked upon with disfavor and are commonly
frowned upon as contrary to public policy and ineffective to bar claims for the
measure of a worker’s legal rights. (Phil. Employ Services and Resources, Inc. v.
Paramio, 2004)

 Deeds of release of quitclaim cannot bar employees from demanding benefits to which
they are legally entitled or from contesting the legality of their dismissal, and their
acceptance of those benefits would not amount to estoppel. (EMCO Plywood
Corporation v. Abelgas, 2004)

Requisites for validity of waiver/compromise agreement

1. clear and unequivocal language showing intention of a party to give up a right or
benefit w/c legally pertains to him
2. compliance with labor standards, particularly amounts involved in the employee’s
money claims
3. relative equality in the bargaining positions of the parties
4. voluntariness, especially on the part of the employee

CASE: Periquet v. NLRC, 1990

 Not all waivers and quitclaims are invalid as against public policy.
 It is only where there is clear proof that the waiver was wangled from an
unsuspecting or gullible person, or the terms of the settlement are unconscionable on
its face, that the law will step in to annul the questionable transaction.
 Where it is shown that the person making the waiver did so (1) voluntarily, (2) with
full understanding of what he was doing, and (3) the consideration for the quitclaim is
credible and reasonable, the transaction must be recognized as valid and binding.

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SOURCES OF LAW
A. The Constitution
B. Statutory Sources (Labor Code, IRR, and related special legislation)
C. Contract – Art. 1305- 1306
D. Collective Bargaining Agreement – like any other contract in civil law which gives rise
to obligations between parties

E. Past Practices – practices observed by employers which grant benefits to

employees, but which are not embodied in law or a formal instrument
Requisites: 1. must have been done over a long period of time and must have been
shown to be consistent and deliberate
2. must have been instituted by the employer voluntarily and without
compulsion of law

CASES: Davao Fruits Corp. v. Associated Labor Union, 1993

 Benefits being enjoyed by employees arising from an established company
practice favorable to them cannot be diminished, discontinued, or removed by
their employer by virtue of Sec. 10 of the Rules and Regulations Implementing
PD 851, and Art. 100, LC, which prohibit the diminution or elimination by the
employer of the employees’ existing benefits.

American Wire and Cable Daily Rated Employees Union v. American Wire and
Cable Co. Inc, 2005
 To be considered regular practice, the giving of the bonus should have been
consistent and deliberate. The downtrend in the grant of the two bonuses over
the years demonstrates that there is nothing consistent about it.

F. Company Policies – written or oral policies of the employer with respect to labor
management relations are generally valid and binding unless contrary to law or are
grossly oppressive.

LABOR AND THE CONSTITUTION

 Constitutional foundations of labor law are found in

 Art. II, Section 10, Section 18
 Art. XIII, Section 3

 7 Cardinal Rights of Workers

Right to
(1) Self-Organization
(2) Collective Bargaining and negotiations
(3) Peaceful concerted activities including the right to strike in accordance with law
(4) Security of Tenure
(5) Humane conditions of work
(6) Living Wage
(7) Participate in policy and decision-making processes affecting their rights and benefits
as may be provided by law

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Nature of Constitutional Provisions
Social Justice and Protection to Labor
- the purpose of the law is to place the workingman on an equal plane with management –
with all its power and influence – in negotiating for the advancement of his interests and the
defense of his rights.

CASE: Philippine Airlines, Inc. v. Santos, 1993

 The sympathy of the court is on the side of the laboring classes not only because the
Constitution imposes such sympathy, but because of the one-sided relation between
labor and capital. The constitutional mandate for the protection of labor is as explicit
as it is demanding.

Limits of Use
- protection should be equally and evenly extended to all groups as a combined
force in our social and economic life

CASE: PLDT Co, NLRC, 1988

 The policy of social justice is not intended to countenance wrongdoing simply
because it is committed by the underprivileged.
 Only those with clean hands and blameless motives may invoke social justice and
not merely because they happen to be poor.

Agabon v. NLRC
 The constitutional policy to provide full protection to labor is not meant to be a sword
to oppress employers. The commitment of the courts to the cause of labor does not
prevent them from sustaining the employer when it is in the right.

INTERPRETATION OF LABOR LAWS

 2 provisions of law govern the interpretation of labor laws:

- Art. 4, Labor Code
- Art. 1702, Civil Code
 Both provisions are of the tenor that labor laws (as well as labor contracts) should be
liberally construed in favor of labor

ACTIVITIES / ASSESSMENT:
1. In your own definition what is Labor Law?
2. What are the sources of labor law?
3. Differentiate and give examples each:
a. Labor Standard
b. Labor Relations
c. Social Legislation
4. What is the interpretation of Labor Law? Explain briefly.
5. What are the importance of labor law?
6. Give and identify key concepts in that affects Labor Law and explain briefly
each.

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 LESSON II LABOR STANDARDS

OVERVIEW: This chapter, you will learn the importance of the employer and
employee relationship. The importance of work relationship and the rights of a
contractual employee.

LEARNING OUTCOMES:
After the end of this lesson, you will be able to:

• Know the importance of work relationship between the employer and

employee
• Know the importance of employer and employee relationship
• Determine the difference between labor only contracting from legitimate
contracting
• Rights of contractual employees

COURSE MATERIALS:

WORK RELATIONSHIP

Employer
- includes any person acting directly or indirectly in the interest of an employer in
relation to an employee [Art.97 (b)]

Employee
- includes any individual employed by an employer. [Art. 97 (c)]
- Also, it includes 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. [Art. 212 (f)]

EMPLOYER-EMPLOYEE RELATIONSHIP
• The existence of an employer-employees relation is a question of law and being
such, it cannot be made the subject of agreement. (Tabas v. California
Manufacturing Co. 1990)

• It has long been established that in administrative and quasi-judicial proceedings,

substantial evidence is sufficient as a basis for judgment on the existence of
employer-employee relationship. No particular form of evidence is required to prove
the existence of such. (Domasig v NLRC, 1996)

Jurisprudential Tests
(1) Four-fold Test
(a) Does the employer have the power over the selection and engagement of the
EE?
(b) Does the employer pay wages?

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(c) Does the employer have the power to discipline and dismiss the employee?
(d) Does the employer have control over the employee’s conduct? (Control Test)

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 i. control over both the results to be achieved and the means to be used to
achieve such results
ii. does not require the actual exercise of control but only the mere existence
of the right to control

 The so-called ―control test‖ is the most important element. The greater the
supervision and control the hirer exercises, the more likely the worker is deemed an
employee. The less control the hirer exercise, the more likely the worker is
considered an independent contractor. Applying the control test, Sonza is not an
employee but an independent contractor. ABS-CBN did not exercise control over the
means and methods of performance of Sonza’s work. (Sonza v. ABS-CBN
Broadcasting Corp., 2004)

(2) Economic Relations Test

- In addition to the standard right of control, the existing economic conditions
prevailing between the parties, like the inclusion of the employee in the payrolls,
had been considered in determining the existence of employer-employee
relations. (Sevilla v. CA, 1988)
- Rationale: The application of a strict test such as the four-fold test may result in
the mischief of an injustice to the employee.

CONTRACTING ARRANGEMENTS (Arts. 106-109) (DO 18-02 is the present administrative

regulation implementing these provisions. It only enumerates what it prohibits and does not
itemize what it allows.)

Prohibited Contracting
 Labor-only contracting
 Arrangements that violate public policy (e.g., contracting with a “cabo”, contracting
because of a strike or lockout, contracting that terminates employment of regular
employees or reducing their working hours, etc.)
 Contracting between the principal and the contractor that are exploitative of the
contractual workers per Sec. 6 (c) of the DO

Labor-only contracting
Elements:
1. the contractor or subcontractor merely recruits, supplies or place workers to
perform a job, work or service for a principal (essential element), and
2. any of these are present (confirming elements):
(a) - The contractor or subcontractor does not have substantial capital or
investment which relates to the job, work or service to be performed and
- the employees recruited, supplied or placed by such contractor or
subcontractor are performing activities which are directly related to the main
business of the principal; or
(b) The contractor does not exercise the right to control over the performance of
the work of the contractual employee

Substantial capital or investment

- capital stock, tools, equipment, implements, machineries actually and directly
used by the contractor in the performance or completion of the job.
- Substantial capital need not be coupled with investment. If one has capital
although without investment in tools and equipment, it is not a labor-only
contracting (Neri v. NLRC, 1993)

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 Control — right to determine not only the end to be achieved but also the means to be
used

Legitimate contracting
 The principal agrees to put out 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
 Job contractor must be properly registered in accordance with DO 18-02 (if not
registered, he is presumed by law as labor-only contractor)

Liability
Labor-only Contracting
› principal is directly responsible to the employees as if such employees had been
directly hired by him
› contractor is merely an agent of the principal hence there is employer-employee
relationship between the principal and the employees
› the law creates an employer-employee relationship between the principal and the
employee for a limited purpose – to ensure that employees are paid their wages.
The principal becomes solidarily liable with the job contractor only for the
payment of the employees’ wages (including sick leaves and other benefits
provided by law) whenever the contractor fails to pay the same.

Legitimate Contracting
› In legitimate contracting, there exists a trilateral relationship --Parties: principal,
contractor/ subcontractor, contractual workers
› A contract for a specific job exists between the principal and the contractor/
subcontractor and a contract of employment exists between the contractor and its
workers.
› Principal employer and job contractor are solidarity liable for all the rightful claims
(includes wages, sick leave, other benefits provided by law, separation pay and
back wages in case of illegal dismissal) of the employees.
› Principal employee may be held solidary liable if found that he conspired with the
contractor in the illegal dismissal.

Rights of Contractual Employees

— same with other employees of the principal or of the contractor/ subcontractor (e.g.,
sick leave, rest day, overtime pay, holiday pay, social security benefits, self-org,
collective bargaining, security of tenure)

ACTIVITIES / ASSESSMENT:

1. What is the importance of a work relationship? Briefly discuss.

2. Enumerate and discuss the key factors of a valid employer and employee
relationship?
3. What is the difference between labor only contracting from legitimate
contracting? explain briefly.
4. What the rights of a contractual employee?

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Page 14 of 92
 LESSON III EMPLOYEE CLASSIFICATION

OVERVIEW: This chapter teaches the classification of different kinds of employee

and its nature. Importance of each classification that is unique from each other and
the advantages and disadvantages of each. And the procedural for termination of
employees.

LEARNING OUTCOMES:
After the end of this lesson, you will be able to:

• Classify the different kinds of employee

• The definition of its classification of employee
• Importance of each classification of employee
• Know the Special Rule for Private School Teachers
• Know the affects and differences of each employee
• Know the grounds for termination of an employee

COURSE MATERIALS:

CLASSIFICATION OF EMPLOYEE:

(1) REGULAR
(a) Employee engaged to perform activities which are usually necessary and
desirable in the usual business or trade of the employer (Art. 280, 1st par.);

Hacienda Fatima v. National Federation of Sugarcane Workers, 2003

• Primary standard of determining a regular employment is the reasonable
connection between the particular activity performed by the employee in relation to
the usual business or trade of the employer.
• 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.
• The test is whether it is usually necessary or desirable in the usual business or
trade of the employer.

(b) A casual employee who has rendered at least 1 year of service, whether
continuous or broken, shall be considered a regular employee with respect to the
activity in which he is employed and his employment shall continue while such
activity exists (Art. 280, 2nd par.)
› It is not the nature of his work but the passage of time that gives him a regular
status.
› IMPORTANT: the one-year period in Art. 280, 2 nd par. applies only to casual
employees.

(c) A project or work pool employee who has been:

1. continuously re-hired (as opposed to intermittently) by the same employer, for the
same tasks or nature of tasks; and
2. these tasks are vital, necessary and indispensable to the usual business or trade
of the employer. (Maraguinot v. NLRC, 1998)
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 (d) Regular seasonal employees
Manila v. CIR, 1963; Tacloban Sagkahan Rice, et al v. NLRC, 1990
› Those called to work from time to time
› The nature of their relationship is such that during off-season they are
temporarily laid off.
› Strictly speaking, they are not separated from service but are merely considered
as on leave of absence without pay until re-employed.
› Their employment relationship is never severed but only suspended. As such
those employees can be considered as in the regular employment of the
employer.
› they are regular employees because of the nature of their work and not because
of the length of time they have worked

(e) A probationary employee who is allowed to work after the probationary period (Art.
281, last sentence).

(f) All learners who has been allowed or suffered to work during the first 2 months shall
be deemed regular employees if training is terminated by the employer before the
end of the stipulated period through no fault of the learner [Art. 75(d)].

Special Rule for Private School Teachers

UST, et al v. NLRC, (1990),
The following are the legal requisites for their acquisition of permanent employment or
security of tenure:
1. the teacher is a full-time teacher,
2. the teacher must have rendered 3 consecutive years of service; and 3.
such service must have been satisfactory.

(2) CASUAL (Art. 280, 2nd par.)— activity performed is not usually necessary or desirable in
the usual business or trade of the employer (not regular); not project; not seasonal.
› He is uniquely regular because his ―regularness‖ attaches only to the particular
activity that he has been doing while still a casual.

(AM Oreta & Co., Inc v. NLRC, 1989)

• What determines regularity or casualness is not the employment contract, written or
otherwise, but the nature of the job. If the job is usually necessary or desirable to the
main business of the employer, then employment is regular.

(3) PROJECT (Art. 280, 1st par.) — those workers hired

(1) for a specific project or undertaking; and
(2) the completion or termination of such project or undertaking has been determined at
the time of engagement of the employee.
› the period is not the determining factor, so that even if the period is more than 1
year, employee does not necessarily become regular
› The 2nd paragraph of Art. 280, providing that an employee, who has rendered
service for at least 1 year, shall be considered a regular employee, pertains to
casual employees and not to project employees. (Palomares v. NLRC, 1997)

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 • Under Policy Instruction No. 20 of the Secretary of Labor, project employees are
those employed in connection with a particular project. Non-project or regular
employees are those employed without reference to any particular project.

• In Maraguinot v. NLRC (1998), it was held that a project or work pool employee
becomes regular when:
(1) continuously re-hired (as opposed to intermittently) by the same employer, for
the same tasks or nature of tasks; and
(2) these tasks are vital, necessary and indispensable to the usual business or trade
of the employer.
› The length of time during which the employee was continuously rehired is not
controlling, but merely serves as a badge of regular employment.

• An employment ceases to be coterminous with specific projects when the

employee is continuously rehired due to the demands of the employer’s business
and reengaged for many more projects without interruption. (Chua v. CA, 2004)
• BUT in CE Construction Corp v Cioco (2004), it was held that the re-hiring of the
construction workers on a project-to-project basis did not confer upon them
regular employment status. The re-hiring was based on practical consideration
that experienced construction workers are more preferred.

Work pool
(Ocampo v. NLRC, 1990)
• It was stressed that contract workers are not regular employees, their services
being needed only when there are projects to be undertaken.
• The rationale of this rule is that if a project has already been completed, it would
be unjust to maintain these employees in the payroll while they are doing nothing
except waiting for another project.
• In effect, these stand-by workers would be collecting payment for work not done.
This can only lead to a coddling of labor at the expense of management which is
not fair by any standard

(Aguilar Corp. v. NLRC, 1997)

• However, members of a work pool from which a construction company draws its
project employees, if considered employees of the construction company while in
the work pool, are non-project employees, or employees for an indefinite period.
• If they are employed in a particular project, the completion of the project or any
phase thereof will not mean severance of the employer - employee relationship.

(4) SEASONAL (Art. 280, 1st par.)— one whose work or services to be performed is
seasonal in nature and the employment is for the duration of the season.

(5) FIXED TERM

— As held in Brent School v. Zamora (1990), it is valid when:
(1) a fixed period of employment was agreed upon knowingly and voluntarily by the
parties; or
(2) where it satisfactorily appears that the employer and employee dealt with each other
on more or less equal terms with no moral dominance whatever being exercised by
the former over the latter; or
(3) it was not intended to defeat workers’ rights (otherwise, it will not be considered valid
where it is apparent that periods have been imposed to preclude acquisition of
tenurial security of employee)

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(6) PROBATIONARY (Art. 281)
General Rule: probationary employment should not exceed 6 months
› A probationary employee allowed to work beyond the probationary period is deemed
regular even without formal appointment
› Abbreviation of probationary period is allowed since there is no provision prohibiting the
same
› Lengthening of period is valid only under the following circumstances:
(a) if covered by an apprenticeship agreement stipulating a longer period
(b) voluntary agreement of the parties, esp. when it is a company policy or when the
nature of the work requires a longer period. (Buiser v. Leogardo, 1984) (this is a
recognition of the exercise of managerial prerogatives in requiring a longer period
of probationary employment)
(c) the employer gives the employee a second chance to pass the probation
standards (Mariwasa Mfg., Inc., v. Leogardo, 1989)

Grounds for Termination

(1) for just or authorized cause; or
(2) when he fails to qualify as a regular employee in accordance with reasonable
standards made known by the employer to employee at the time of his
engagement [Orient Express Placement Phils. v. NLRC (1997)]
* The employer is not required to finish the entire period of probation. He may
preterminate services as long as there is compliance with the abovementioned
grounds.

ACTIVITIES / ASSESSMENT:

1. What are the different classifications of employee?

2. Briefly explain each classification according to its nature.
3. What are the importance of each classifications of employee? Briefly explain
each.
4. In your own words explain the Special Rule for Private School Teachers.
5. Explain the differences of each employee
6. Explain the grounds for termination of an employee. Explain each in your own
words.

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 LESSON IV RECRUITMENT AND PLACEMENT

OVERVIEW: This chapter teaches the basic rule of recruitment and placement, know
the different agencies that are involve in such nature. What constitute illegal
recruitment and where to file the case of illegal recruitment.

LEARNING OUTCOMES:
After the end of this lesson, you will be able to:

• Be familiarize to the basic rule of recruitment and placement

• Know employment agencies
• Prohibited employment entities
• Know what constitute illegal recruitment
• Differentiate illegal recruitment committed by way of syndicate or by large
scale
• Know the venue to file case against illegal recruitment and its prescription

COURSE MATERIALS:

RECRUITMENT AND PLACEMENT [Art. 13 (b)]

Basic rule: any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or
procuring workers, and includes referrals, contact services, promising or advertising for
employment, locally or abroad, for profit or not.

Proviso: PROVIDED, that any person or entity which, in any manner, offers or promises,
for a fee, employment to two or more persons shall be deemed engaged in recruitment
and placement.

Acts No. of Consideration

Worker
Basic rule canvassing, enlisting, contracting, At least 1 for profit or not
transporting, utilizing,
hiring, or procuring workers, and includes
referrals, contact services, promising or
advertising for employment
Proviso offers or promises employment 2 or more for a fee

• The number of persons dealt with is not the basis of determining whether or not an act
constitutes recruitment and placement. Any of the acts in Art. 13 (b) will constitute
recruitment and placement.

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 • The proviso merely lays down a rule of evidence:
fee + promise or offer of employment + 2 or more persons = individual dealing with
them shall be deemed (presumption) engaged in the act of recruitment and placement.
(Ppl v Panis, 1986)

EMPLOYMENT AGENCIES
Document issued by DOLE for
Entity Act
operation
Private fee-charging Engaged in License
employment agency recruitment and [Art. 13(d)]
[Art. 13(c)] placement for a fee
Private recruitment Engaged in Authority
entity [Art. recruitment and [Art. 13(f)]
13(e)] placement without
charging

PROHIBITED ENTITIES
Private recruitment – except as provided in Ch. II, of this title, no person or entity, other
than the public employment offices and the POEA for overseas employment shall engage in
the recruitment and placement of workers. (Art. 16)

Ban on direct hiring – No employer may hire a Filipino worker for overseas employment
except through the Boards and entities authorized by the DOLE. Direct hiring by members of
the diplomatic service, officials, and employees of international organizations and such other
employers as may be allowed by the DOLE is exempt from this provision. (Art. 18)

Travel Agencies prohibited to recruit – 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. (Art. 26)

TECHNIQUES OF REGULATION
Licensing
Citizenship requirement – limited to Filipino citizens or Corporations, partnerships or
entities 75% of which is Filipino-owned

Capitalization – applicants for authority to hire or renewal of license to recruit are

required to have such substantial capitalization as determined by the Secretary of
Labor.

Non-Transferability – no license or authorization may be used, directly or indirectly by

any person other than the grantee
- license or authority may not be transferred, conveyed, or assigned
- transfer of business address, appointment or designation of agent, including
establishment of additional officers shall be subject to prior approval of the DOLE.

Registration Fees and Bonds – requisites for issuance of license/ authority

Suspension and/or Cancellation – power is lodged in the Secretary of Labor

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ILLEGAL RECRUITMENT
Any of these acts constitutes illegal recruitment [Art. 38 of the Labor Code, as amended by
Sec. 6, RA 8042 (Migrant Workers and Overseas Filipinos Act of 1995)]:

• Doer: A non-licensee or non-holder of authority

(a) commission of any of the recruitment activities in Art. 13 (b), Labor Code

• Doer: Whether a non-licensee or non-holder of authority or a licensee or holder of

authority
(a) commission of the prohibited practices under Art. 34 of the Labor Code;
(b) failure to deploy its recruits without valid reason;
(c) failure to reimburse documentation and processing expenses incurred by the worker
who is not deployed without his fault

Illegal recruitment committed by a syndicate

Elements:
(1) any of the abovementioned acts of illegal recruitment (take note of the doer); and
(2) carried out by a group of 3 or more persons conspiring or confederating with one
another.

Illegal recruitment committed in large scale

Elements:
(1) any of the abovementioned acts of illegal recruitment (take note of the doer); and
(2) committed against 3 or more persons individually or as a group.

• Illegal recruitment, when committed by a syndicate or in large scale, shall be considered

an offense involving economic sabotage.

Venue
A criminal action arising from illegal recruitment shall be filed with the RTC of the province
or city where the offense was committed or where the offended party actually resides at
the time of the commission of the offense. (Sec. 9, RA 8042)

Prescriptive period (Sec. 12, RA 8042) Illegal

recruitment: 5 yrs.
If involving economic sabotage: 20 yrs.

ACTIVITIES / ASSESSMENT:

1. What is the basic rule of recruitment and placement? Explain briefly.

2. What are the employment agencies that engage in recruitment and placement?
3. What are prohibited employment entities? Explain each.
4. What constitute an illegal recruitment practice?
5. Differentiate illegal recruitment committed by way of syndicate from an illegal
recruitment by large scale. Explain.
6. Illustrate the procedure in filing a case of illegal recruitment.

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Page 22 of 92
 LESSON V WORKING CONDITIONS AND REST PERIODS

OVERVIEW: In this chapter you will understand the importance of working conditions
and rest periods for employees, its exemption. And normal hours of work, when it is
compensable. The rule in night differential and overtime work and the different kinds
of leave and its advantages.

LEARNING OUTCOMES:
After the end of this lesson, you will be able to:

• Know the nature and requirements of alien employment

• Know the working conditions and rest periods and its exemption
• Familiarize the normal hours of work
• Understand the rules on compensable hours of work
• Analyze the rule in night differential and overtime work
• Have a in depth understanding of premium pay on a rest day and holiday pay
• Different kinds of leave and its nature

COURSE MATERIALS:

ALIEN EMPLOYMENT

ALIEN EMPLOYMENT REGISTRATION CERTIFICATE (AERC)

The ff. should secure AERC:
(1) All foreign nationals seeking admission to the Philippines for the purpose of employment
(2) All nonresident foreign nationals already working in the Philippines.
(3) Nonresident foreign nationals admitted to the Philippines on nonworking visas and who
wish to seek employment; and
(4) Missionaries or religious workers who intend to engage in gainful employment
 The AERC may be issued after a determination of the non-availability of a person in the
Philippines who is competent, able and willing at the time of the application to perform
the services for which the alien is desired. (Art. 40)

WORKING CONDITIONS AND REST PERIODS

Coverage (Art. 82): this Title (Title I: Working Conditions and Rest Periods) shall apply to
employees in all establishments and undertakings whether for profit or not

Exempt:
(1) Government employees
- These refer only to employees of government agencies, instrumentalities or political
subdivisions and of government corps. that are not incorporated under the
Corporation Code
- Those incorporated under the Corp. Code are covered by the Labor Code; and
thus, are not exempt

(2) Managerial Employees

- those whose primary duty consists of the management of the establishment in
which they are employed

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 - also, the other officers or members of the managerial staff [cf. definition of
managerial employees in labor relations (Art. 212 (m)]

(3) Members of the employer’s family dependent on him for support

(4) Domestic helpers (cf. Arts. 141-152)

(5) Persons in the personal service of another

(6) Field personnel regularly performing duties away from office

- refer to non-agricultural employees who regularly perform their duties away from
the principal place of business and whose actual hours of work in the field cannot
be determined with reasonable certainty
- Field personnel are employees whose time and performance is unsupervised by
the employer. (Salazar v. NLRC, 1996)

(7) Workers paid by results, as determined by the Sec. of Labor

- their pay is dependent on the unit of product finished, not on the time spent working
- 2 categories:
(1) those who are paid piece rates which are prescribed in Piece Rate Orders of
DOLE (they are not covered by the rules on hours of work and overtime pay)
(2) those who are paid output rates which are prescribed by the employer and not
yet approved by DOLE.

- Piece-rate employees are entitled to these benefits:

a. Holiday pay
b. Applicable statutory minimum daily rate
c. Night differential pay
d. Service incentive leave
e. Meal and rest periods
f. Overtime pay (conditional)
g. Premium pay (conditional)
h. 13th month pay
i. other benefits granted by law, individual or Collective Bargaining Agreement or
company policy

HOURS OF WORK (Arts. 83-84)

Normal Hours—shall not exceed 8 hours

Hours Worked (hence compensable) — shall include:

(1) all time during which an employee is required to be on duty or to be at a prescribed
workplace, and
(2) all time during which an employee is suffered or permitted to work
(3) also, rest period of short duration during working hours shall be counted as hours
worked

MEAL PERIODS (Art. 85)

Rule: Employer should give his employees not less than 60 mins. time-off for regular
meals (this is not compensable. Less than a 60-min meal time is compensable.)

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RULES ON COMPENSABLE HOURS OF WORK
(Book III, Rule I of the IRR)

Compensable working time Not compensable working time

If waiting is an integral part of
the work or the employee is
Waiting Time
required or engaged by the
employer to wait
If required to remain on call in If employee is not required to
the employer premises or close leave word at his home or with
Employee is on
thereto that he cannot use his company officials where he may
call
time effectively for his own be reached
purpose
If all these conditions are met:
1. attendance is outside of the
Attendance at
employee’s regular working
lectures,
hours;
meetings,
2. voluntary attendance; and
training
3. the employee does not
programs
perform any productive work
during such attendance
If meal period of not less than 20
mins. is given by the employer in
the following cases:
- Non-manual work or does
not involve strenuous
physical exertion;
- establishment regularly
operates not less than 16
Meal and rest
hrs/day
periods
- actual or impending
emergencies or urgent work
is to be performed on
machineries to avoid serious
loss to employer
- work is necessary to prevent
serious loss of perishable
goods
Rest periods or
coffee breaks If 5-20 mins only

NIGHT SHIFT DIFFERENTIAL (Art. 86)

Rule: not less than 10% of regular wage for every hour of work performed from 10pm-
6am*

*If 10pm-6am is overtime work, the 10% should be based on overtime rate

Does not apply to

(1) Government employees
(2) Retail businesses with less than 5 workers
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 (3) Domestic helpers
(4) Managerial Employees
(5) Field personnel

OVERTIME WORK (Arts. 87-89) — work performed beyond 8 hours

Premium rate

Overtime on a
 normal workday - 25% of reg. rate/hr
 holiday/rest day - 30% of holiday/rest day rate/hr
 special day - 30% of rate/hr of a special day

Emergency OT work (Art. 89; Book III, Rule I)

1. country is at war / national or local emergency
2. necessary to prevent loss of life/ property or in case of imminent danger to public
safety
3. urgent work to be performed on machines to avoid serious loss or damage to
employer
4. necessary to prevent loss or damage to perishable goods
5. completion of work started before the 8 th hour and is necessary to prevent serious
obstruction or prejudice to business
6. necessary to avail of favorable weather or environmental condition

Offsetting
• Undertime work on any particular day shall not be offset by overtime work on any other
day. (Art. 88)

Proof
• Entitlement to overtime pay must first be established by proof that said overtime work
was actually performed, before an employee may avail of said benefit. (Lagatic v.
NLRC, 1998)

Waiver
• As a rule, the right to overtime pay cannot be waived. The right is intended for the
benefit of the laborers and employees. BUT when the alleged waiver is in
consideration of benefits and privileges which may even exceed the overtime pay, the
waiver may be permitted.
Computation
• For purposes of computing overtime and other additional remunerations, the ―regular
wage‖ of an employee shall include the cash wage only, w/o deduction of facilities
provided by the employer. (Art. 90)

WEEKLY REST PERIODS (Arts. 91-93)

Rule: not less than 24 consecutive hours after every 6 consecutive normal work days

Premium Pay on a rest day (Art. 93)

Work performed on a
 Scheduled rest day - 30% of reg. wage

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 Sundays (only if it is his established rest day; - 30% of reg. wage
or if he has no reg. workdays and rest days)

 Special holiday, not rest day - 30% of reg. wage

 Special holiday and rest day - 50% of reg. wage

For special day: NO WORK, NO PAY

Authorized Work on a Rest day

1. Actual impending emergency
2. Urgent work to be performed on machinery
3. Abnormal pressure of work and employer cannot resort to other measures
4. Prevent loss/ damage to perishable goods
5. Nature of work requires continuous operation
6. Analogous circumstances

HOLIDAY PAY (Art. 94)

Premium Pay
 If worked 200% of reg. ratee

 If unworked 100%
(compare this with a special day)
 If also a rest day 230%

 Double holiday, unworked 200%

 Double holiday, worked 300%

Who cannot avail

Those who are not covered (Book III, Rule IV)
 Government employees
 Retail and service establishments employing less than 10 workers
 Domestic helpers and those in the personal service of others
 Managerial employees
 Field personnel

Those who are covered but (Book III, Rule IV)

- are absent without pay on the day preceding the holiday unless he works on the
regular holiday
- In case the holiday is preceded by a non-working day or rest day, employees who
are absent on the day preceding that nonworking day or rest day

Legal/ Regular Holidays (EO 203, Jun 20, 1987)

1. New Year’s Day - Jan 1
2. Holy Thursday - movable date
3. Good Friday - movable date
4. Araw ng Kagitingan - Apr 9
5. Labor Day - May 1
6. Independence Day - Jun 12

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7. National Heroes Day - last Sun of Aug
8. Bonifacio Day - Nov 30
9. Christmas Day - Dec 25
10. Rizal Day - Dec 30

Nationwide Special Days

1. All Saints Day - Nov 1
2. Last day of the year - Dec 31

Muslim Holidays
- dates shall be determined by the Office of the President
- Both Muslims and Christians working within the Muslim areas may not report for
work on these days.

LEAVES
Note: These are the leaves required by law
- Mandatory/ statutory benefits:
 Service Incentive Leave (SIL)
 Paternity Leave and
 Maternity Leave
- The grant of vacation leave (VL) or sick leave (SL) depends on voluntary employer policy
or collective bargaining.

(1) Service Incentive Leave (Art. 95)

- 5 days with pay for employees who has rendered at least 1 year* of service
*1 year = 12 months service, continuous or broken, from time employee started working
 Commutable to its money equivalent if not used at the end of the year (Book III, Rule
V, IRR)

 Does not apply to

1. Those who are already enjoying the benefit
2. Those enjoying vacation leave with pay for 5 days
3. Those employed in establishments employing less than 10 employees
4. Or in establishments exempted by the Sec. of Labor
5. Government employees
6. Domestic helpers and those in the personal service of another
7. Managerial Employees
8. Field personnel including those in contract basis

(2) Paternity Leave [RA 8187(Jul 8, 1996)]

- 7 days with full pay to married male employees in the public and private sectors

Conditions for entitlement

1. The claimant, a married male employee, is employed at the time of delivery of his
child
- ―delivery‖ shall include childbirth or any miscarriage
2. He is cohabiting with his spouse at the time she gives birth or suffers a miscarriage;
3. He has applied for paternity leave; and
4. His wife has given birth or suffered a miscarriage (available for the first 4 deliveries
only)

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 - ―Wife‖ refers to the woman who is legally married to the male employee

(3) Maternity Leave [Art. 133, as amended by RA 7332 and RA 8282, amending RA 1161
(SSS law)]
- 100% of average daily salary credit for 60 days, or 78 days in case of caesarian
delivery

Pre-requisite:
- that the female member has paid at least 3 monthly contributions in the 12-month
period preceding the semester of her childbirth or miscarriage

Conditions
1. The employee notified her employer of her pregnancy and the probable date of
childbirth, which notice shall be transmitted to the SSS
2. Full payment shall be advanced by the employer within 30 days from the filing of
maternity leave application
3. Payment of daily maternity benefits is a bar to the recovery of sickness benefits for
the same period for which daily maternity benefits have been received
4. Maternity benefits shall be paid only for the first 4 deliveries or miscarriages
5. SSS shall immediately reimburse the employer 100% of the maternity benefits; and
6. ER shall pay damages to SSS if the employee did not have the required
contributions having been remitted for her by her employer or if employer did not
notify the SSS of the time of employee’s pregnancy

(4) Vacation Leave and Sick Leave

- depends on voluntary employer policy or on a collective bargaining agreement -
these are voluntary benefits.

ACTIVITIES / ASSESSMENT:

1. What is an alien employment?

2. What are the exemptions in working conditions and rest periods? Explain each.
3. What are normal hours of work?
4. State the rules on compensable hours of work. Explain each.
5. What is the rule in night differential and overtime work? Explain.
6. What are the modes of premium pay on a rest day and holiday pay?
7. Give the kinds of leave and its nature. Explain each.

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 LESSON VI
WAGES

OVERVIEW: This chapter focuses on wages and its modes of payment, meaning
and differentiate of facilities and supplements, difference between wage and salary
and the forms of renumeration.

LEARNING OUTCOMES:
After the end of this lesson, you will be able to:

• Know the importance of wages

• Nature of payment of wages
• Know the difference between facilities and supplements
• Differentiate between wage from salary
• Clearly understand the prohibition on wages
• Identify other forms of remuneration

COURSE MATERIALS:

WAGES [Art. 97(f)]

› the remuneration of earnings, however designated,
› capable of being expressed in terms of money,
› whether fixed or ascertained on a time, task, piece, or commission basis, or other
method of calculating the same,
› which is payable by an employer to an employee under a written or unwritten contract
of employment
› for work done or to be done, or for services rendered or to be rendered
› and includes the reasonable value, as determined by the Sec. of Labor, of board and
lodging or other facilities customarily furnished by the employer to the employee.
• ―fair reasonable value‖ shall not include any profit to the employer.
• IRR provides that the Sec. of Labor shall fix the fair and reasonable value of
facilities furnished to employees.

Facilities v. Supplements
Criterion: purpose of the item (not its kind)
Facilities - items of expense necessary for the wage-deductible
employee’s and his family’s
existence and subsistence (such as
board and lodging);
- does not include articles or services
primarily for the benefit of the
employer.
Supplements - extra remuneration or special not wage-deductible
privileges or benefits given to or
received by the laborers over and
above their wages

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 Legal requirements (before deduction)
(1) Proof must be shown that such facilities are customarily furnished by the trade
(2) Provision of deductible facilities must be voluntarily accepted by the employee
(3) Facilities must be charged at fair and reasonable value

Wages v. Salary (Gaa v CA, 1985)

Distinction important for purposes of Art. 1708 of the New Civil Code (Laborer’s wages
are not subject to execution or attachment except for debts for food, shelter, clothing,
medical attendance)
Wages applies to the compensation for manual labor, skilled or unskilled, paid at
stated times, and measured by the day, week, month, or season.
indicates considerable pay for a lower and less responsible character of
employment.
Salary denotes a higher degree of employment, or a superior grade of services,
and implies a position of office.
suggestive of a larger and more important service.

Payment by results
- The Secretary of Labor and Employment shall regulate the payment of wages by results
including pakyao, piecework, and other non-time work, in order to ensure the payment
of fair and reasonable wage rates, preferably through time and motion studies or in
consultation with representatives of workers’ and employers’ organizations. (Art. 101,
Labor Code.)

PAYMENT OF WAGES
Rule (Art 105): Wages shall be paid directly to the workers
Exceptions:
(1) In cases of force majeure (FM), payment to another person with written authority
from the employee
(2) In case the employee died, payment to the heirs

› The IRR requires every employer to pay his employee through payroll which should
show the employee’s pay rate, deductions made, and the amount actually made
(Book III, Rule X)

Form (Art 102)

- legal tender only
- other forms, e.g., promissory notes, vouchers, etc., are prohibited even when
expressly requested by the employee
EXCEPTIONS (where payment by checks or money order is allowed):
(1) Such manner of payment is customary on the date of effectivity of the Labor Code;
or
(2) Necessary because of special circs. as specified in appropriate regulations of the
Sec. of Labor

Time (Art. 103)

Rule: wages shall be paid at least once every 2 weeks or twice a month at intervals not
exceeding 16 days

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 Exceptions:
(1) In cases of force majeure (FM), provided that employer shall pay immediately after
cessation of FM
(2) The payment of employees whose tasks cannot be completed in 2 weeks is subject
to these conditions:
(a) Payments at intervals not exceeding 16 days, in proportion to the amount of
work completed;
(b) Final settlement is made upon completion of the work

Place (Art. 104)

- at or near the place of undertaking EXCEPT if otherwise provided by regulations of
the Sec of Labor
- payment of wages through ATMs is now allowed under a labor advisory dated Nov
25, 1996

PROHIBITION RE WAGES
(1) Employer shall not interfere with the freedom of any employee to dispose of his
wages. (Art. 112)

(2) No employer shall make any deduction except (Art. 113)

a. Where worker is insured and deduction is to recompense employer for the
amount he paid as a premium on the insurance
b. For union dues -- where the right to check-off by union has been recognized by
employer or individual employee has given written authorization. [cf. Art. 241 (o)]
c. employer is authorized by law or regulations of Sec. of Labor.
i. employee has due debt to employer (Art. 1706, NCC)
ii. In court awards, wages may be attached for debts incurred for food, shelter,
clothing, and medical attendance (Art. 1708, NCC)
iii. Withholding tax
iv. Salary deductions of a member of a legally established cooperative (RA
6398)
v. Deductions for payment to 3rd persons, with written authority of the
employee (Book III, Rule VIII, IRR)
vi. Agency fee (Art. 248)
vii. Deductions for value of meals and other facilities viii. Deductions for loss or
damage (Art. 114) ix. SSS, Medicare, Pag-IBIG premiums.

CASE: (Jardin v NLRC, 2000)

› With regard to the amount deducted for washing of the taxi units, we view the
same as not illegal in the context of the law. We note that after a tour of duty, it
is incumbent upon the driver to restore the unit he has driven to the same clean
condition when he took it out. Car washing after a tour of duty is indeed a
practice in the taxi industry and is in fact dictated by fair play. The drivers are
not entitled to reimbursement of the washing charges.

(3) No employee shall make deposits to reimburse loss of or damage of tools, materials
supplied by the employer except
a. when employer is engaged in such business where deductions or making
deposits is a recognized practice
b. when necessary or desirable as determined by the Sec. of Labor. (Art. 114)

(4) No deduction from the deposits for the actual amount of loss or damage unless
a. the employee is shown to be responsible for the loss or damage
Page 32 of 92
 b. the employee is given ample opportunity to show cause why deduction should not
be made;
c. the amount of deduction is fair and reasonable and shall not exceed the actual
loss or damage; and
d. the deduction does not exceed 20% of the employee’s wage in a week. (Art 115;
Book III, Rule VIII, IRR)

(5) Withholding any amount from employee’s wages by force, stealth, intimidation, threat
etc. (Art. 116)
- The wages must be paid on time and in full.
- Violation of an employee of a company violation is not a valid ground for refusing to
pay him his wages. Such violation can be acted upon in some ways, not by
withholding his wages.

(6) Deduction from the wages for the benefit of the employer as consideration of a promise
of employment or retention in employment. (Art. 117)

(7) Refusal of payment of wages and benefits of or to discharge or discriminate an EE

who:
 has filed any complaint or instituted any proceeding under this Title (Title II:
Wages); or,
 has testified or is about to testify in such proceedings. (Art. 118)

(8) Making any statement, report, or record filed knowing such statement, report or record
to be false. (Art. 119)
CASE: South Motorist Enterprises v. Tosoc, 1990
› All employment records of the employees of an employer shall be kept and
maintained in or about the premises of the workplace (i.e., the main or branch
office or establishment).
› The keeping of the employee's records in another place is prohibited.

OTHER FORMS OF REMUNERATION

(1) Service Charge (Art. 96; Book III, Rule VI, IRR)
 Distribution scheme
for all covered employees (equally distributed
85% among them, regardless of
position or employment status)
for management (this share may answer for
15% the losses and breakages, or may be
distributed to managers)

 Coverage
Covered employers: establishments collecting service charges such as hotels,
restaurants, lodging houses, casinos, night clubs, etc., including those entities
operating primarily as private subsidiaries of the Government.

Covered employees: to all employees of the covered employers except those receiving
more than P2,000/month

• Frequency of Distributions— not less than once every 2 weeks or twice a month of
intervals not exceeding 16 days

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 • In case service charge is abolished, the share shall be considered integrated in the
employees’ wages.
- basis of the amt to be integrated: average monthly share of each employee for
the past 12 months immediately preceding the abolition

• Service charge ≠ Tip

Tips— dependent on the will and generosity of the customer. It is paid by the
customer, not the employer. (Ace Navigation Co. Inc., v. CA, 2000)

(2) 13th-Month Pay [PD 851; Revised Guidelines on the Implementation of PD 851 (Nov 16,
1987)]
Min. Amt. of 13th-month pay = 1/12 x total basic salary earned within a calendar year

Basic Salary = includes all remunerations or earnings paid by employer for services
rendered BUT does not include allowances and monetary benefits which are
not considered or integrated as part of the regular or basic salary, such as
cash equivalent of unused vacation and sick leave credits, OT premium, night
differential, holiday pay, and COLA unless these items are treated as part of
the basic salary by individual or collective agreement, company practice or
policy

Nature
- an additional income based on wage but is not part of the wage
- demandable as a legal obligation
- not computed as additional benefits

Who are entitled

(a) all rank-and-file EEs who worked at least 1 month
(b) those with multiple employers
(c) EEs paid by results
(d) Private school teachers who have rendered service for at least 1 month (e)
Resigned or separated EEs (proportional)

Employers who are exempted

(a) Government
(b) Employers already paying 13th month pay or its equivalent*
• “its equivalent”
- shall include Christmas bonus, mid-year bonus, cash bonuses and other
payments amounting to not less than 1/12 of the basic salary
- but shall not include cash/ stock dividends, COLA, and other allowances
regularly enjoyed by employees.
• If the amount of such benefits less than 1/12 of the employee’s basic salary,
employer shall pay the difference.
(c) Employers of household helpers and persons who are in the personal service of
another
(d) Employers of those who are paid on commission, boundary, or task basis

Time of payment
- Rule: not later than Dec 24.

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 - However, employer may give ½ of the 13 th-month pay before the opening of the
regular schoolyear and the other half on or before Dec 24. Frequency of payment
may be the subject of agreement between the employer and employee

(3) Bonus— an amount granted and paid to an employee for his industry and loyalty which
contributed to the success of the employer's business and made possible the
realization of profits. (Luzon Stevedoring Corporation v. CIR 1965)

Nature
- it is not a demandable and enforceable obligation
- it is only a gratuity on the part of the employer

When demandable
- If made a part of the wage or salary or compensation (Luzon Stevedoring
Corporation v. CIR 1965)
- Whether or Not a bonus forms part of wages would depend on the circumstances
and the conditions for its payment. If it is promised without any conditions imposed,
then it is part of wages. But if it is paid only if profits are realized or if a certain level
of productivity is achieved, it is not part of wages. (PNCC. v. NLRC, 1999)
- Given for a long period of time (Liberation Steamship Co. Inc. v. CIR, 1968)
- Giving of such bonus has been the company's long and regular practice. (to be
considered “regular practice," the giving of the bonus should have been done over a
long period of time, and must be shown to have been consistent and deliberate, per
Manila Electric Co. v. Quisumbing, 1999)

NON-DIMINUTION RULE (Art. 100)— benefits enjoyed by the employees, at the time of the
promulgation of the Labor Code, cannot be taken back or reduced unilaterally by the
employer because the benefits are already part of the employment contract.

WAGE RECOVERY, LIABILITIES, and WORKER PREFERENCE

(1) Principal’s Liabilities under Arts. 106-109
In Labor-only Contracting— the principal is directly responsible to the employees
as if such employees had been directly hired by him.
- The contractor is merely an agent of the principal hence there is employeremployee
relationship between the principal and the employees

In Legitimate Contracting—in legitimate contracting, there exists a trilateral

relationship.
- A contract for a specific job exists between the principal and the contractor/
subcontractor and a contract of employment exists between the contractor and its
workers.
- Parties: principal, contractor/ subcontractor, contractual workers

1. Payment of wages/ money claims of employees— solidary liability with the

contractor ―to the extent of the work performed under the contract‖.
- The principal (indirect employer) cannot escape this liability even it has paid the
wages of the employees in accordance with his contract with the contractor.
- The employees are not privy to this contract.
- In any case, principal can recover from contractor based on their contract.

2. As to other violations—qualified or limited liability

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 - if for payment of min. wage, service incentive leave, or other benefits provided
by law— solidarily liable with the contractor, as if he were a direct employer
- if for payment of separation pay, backwages because of illegal dismissal
(hence, punitive char.)— contractor is solely liable, unless principal conspired
with the contractor in the commission of illegal dismissal

(2) Worker’s Preference (bankruptcy)

(Art. 110 cf. Arts. 1707, 2241, 2242, 2244, NCC)—
- workers shall enjoy preference as regards their wages and other monetary claims in
the event of bankruptcy or liquidation of an employer’s business.
- Such unpaid wages and monetary claims shall be paid in full before the claims of the
government and other creditors may be paid.
* a declaration of bankruptcy or judicial liquidation must happen before the worker’s
preference may be enforced

(DBP v. Sec. of Labor, 1989)

• Article 110 of the Labor Code cannot be viewed in isolation but must be read in
relation to the Civil Code scheme on classification and preference of credits
• What Art. 110 establishes is not a lien, but a preference of credit in favor of
employees.
• During bankruptcy, insolvency or liquidation proceedings involving the properties of
the employer, the employees have the advantage of having their unpaid wages
satisfied ahead of certain other claims.
(3) Wage Recovery and Atty’s Fees (Art. 111)— it is unlawful to demand or accept atty’s
fees more than 10% of the amt of wages recovered in proceedings for recovery of
wages. (cf. Arts. 128, 129, 217)

Agencies for wage-fixing machinery (Arts. 120, 121, 122)

(1) National Wages and Productivity Commission (NWPC)
(2) Regional Tripartite Wages and Productivity Board (RTWPB)

 No injunction or TRO may be issued against any proceedings before the NWPC or
RTWB. (Art. 126)

Per Nasipit Lumber Co. v. NLRC (1998)

NWPC power to prescribe the rules and guidelines for the determination of minimum
wage and productivity measures
RTWPB the power to issue wage orders under, subject to guidelines issued by the
Commission [Article 122 (b)] (hence, guidelines issued by RTWPB without
approval of NWPC are ineffectual)
In short, the NWPC lays down the guidelines which the RTWPB implements.

Wage Order (Art. 123-127)

Requirements of a valid wage order:
(1) public hearings/ consultations conducted by the RTWPB
(2) newspaper publication
* A wage order without following these requirements is null and void. (Cagayan Sugar
Milling Co. v. Sec of Labor, 1998)

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  No wage order shall provide for wage rates lower than the statutory minimum wage rates
prescribed by Congress (Art. 127) and no wage order shall prevent workers from
bargaining for higher wages with their employers. (Art. 125)

Remedy of aggrieved party (Art. 123): appeal to NWPC within 10 calendar days from
publication of wage order.
- NWPC shall decide within 60 calendar days from filing.
- appeal does not stay the wage order unless the person appealing shall file with
NWPC an undertaking with surety/sureties for the payment to the employees affected
by the wage order, in case it is affirmed.

Criteria for Minimum Wage Fixing (Art. 124)

- regional min. wages shall be as nearly adequate as is economically feasible to
maintain the min. standards of living.
- These are the relevant factors to be considered:
(1) Demand for living wages
(2) Wage adjustment vis-à-vis consumer price index
(3) Cost of living
(4) Needs of workers and their families
(5) Need to induce industries to invest in the countryside
(6) Improvements in standards of living
(7) Prevailing wage levels
(8) Fair return of the capital and employer’s capacity to pay
(9) Effects on employment generation and family income
(10) Equitable distribution of income

Wage Distortion
- a situation where an increase in prescribed wage rates results in the elimination or
severe contraction of intentional quantitative differences in wage or salary rates
between and among employee groups in an establishment as to effectively obliterate
the distinctions embodied in such wage structure based on skills, length of service, or
other logical bases of differentiation.
- test: severe contraction or elimination of existing wage differentials

Ilaw at Buklod ng Mangagawa v. NLRC, 1991

• Both the employer and employee cannot use economic weapons (employer cannot
declare a lock-out; employee cannot declare a strike) because the law has provided
for a procedure for settling wage distortion.

Prubankers Assn., v. Prudential Bank, 1999

• Wage-fixing has been regionalized by RA 6727 (Wage Rationalization Act).
• Each region has a regional wage board which, in fixing the wage-level, considers
standards existing in the region.
• Hence, wage distortion involves comparison of jobs located in the same region of the
same employer, and not comparison of jobs in different regions.
• Comparison of salaries has to be intra-region, not inter-region.

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 • There is no wage-distortion when employees in one branch have higher pay than
their counterparts in other branches in other regions.

4 Elements of Wage distortion:

(1) an existing hierarchy of positions with corresponding salary rates
(2) significant change in the salary of a lower pay class without a concomitant increase
in the salary rate of a higher one
(3) elimination of distinction between the 2 levels
(4) existence of distortion in the same region. (Prubankers Assn., v. Prudential Bank,
1999)

Procedure for Correcting Wage Distortion (pendency of a dispute from wage

distortion shall not delay the applicability of any increase in the wage order)

Organized Establishment Unorganized Establishment

Grievance procedure Employer and workers will endeavor to correct the

distortion

NCMB
Voluntary Arbitration (should be decided within
(to settle any
10 days)
dispute arising from the correction)

NLRC
(if it remains unresolved after 10 calendar days
from conciliation; NLRC will decide within 20 days
from submission)

ACTIVITIES / ASSESSMENT:

1. What is the importance of wages?

2. Give the nature of payment of wages? Explain each
3. Differentiate facilities from supplements. Explain their differences.
4. Illustrate the difference between wage from salary.
5. What are the prohibition on wages?
6. Give the forms of remuneration, explain each.

LESSON VII SPECIAL WORKERS

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OVERVIEW: in this chapter you will learn the different kinds of special workers.
Learners, Apprentices and the nature of women workers. And the importance of the
Anti-Sexual Law.

LEARNING OUTCOMES:
After the end of this lesson, you will be able to:

• Identify the different kinds of special workers

• Differentiate Learners from Apprentices
• Know the nature of women workers
• Understand the importance of the anti-sexual law
• Know the nature and effects of anti-sexual law

COURSE MATERIALS:

SPECIAL WORKERS

HANDICAPPED WORKERS (Art. 78)

- workers whose earning capacity is impaired by age and physical/ mental defects
- Can be regular employee if work is usually or necessary or desirable to the business
(Bernardo v. NLRC, 1999)

When Employable (Art. 79)

(1) Necessary to prevent curtailment of employment opportunities; and
(2) Does not create unfair competition in labor costs or impairing working standards

Employment Agreement shall include (Art. 80)

 Names and addresses of the handicapped workers to be employed
 Rate to be paid (not less than 75% of applicable legal minimum wage)
 Duration of employment period
 Work to be performed by handicapped (the agreement is always subject to inspection by
Sec. of Labor or duly authorized representative)

Eligibility for Apprenticeship (Art. 81)

- if their handicap is not such as to effectively impede the performance of job operations in
the particular occupations for which they are hired

LEARNERS/ APPRENTICES (Art. 59-73)

Learners Apprentices
Persons hired as trainees in Persons hired as trainees in a highly
semi-skilled and other industrial skilled job or in a job found only in a
occupations which are highly technical industry
nonapprenticeable
What *apprenticeable occupation
- any trade, form of employment or
occupation which requires more
than 3 mos. of practical training on
the job supplemented by related
theoretical instruction

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 Duration Not exceeding 3 months Not exceeding 6 months
No experienced workers Only employers in highly technical
available. industries may employ apprentice;
Employment of learners is and
necessary to prevent
curtailment of employment Only in apprenticeable occupations
When may be
opportunities; and
hired
Employment does not create
unfair competition in labor costs
and lower working standards

Learnership agreements do not Apprenticeship program needs prior

need approval of DOLE, but are approval of DOLE
Approval of subject to DOLE’s inspection *if employed without a pre-approved
DOLE apprenticeship program,
he is deemed a regular
employee
Not below 75% of the Same
applicable min. wage *Sec. may authorize hiring
of apprentices without
Compensation
compensation whose training on the
job is required by the school as
requisite for graduation / board exam
There is commitment to employ No commitment
learners as an employee after
the training period
*Learners allowed to work
Employer’s during the first 2 months shall
commitment be deemed regular employees
to hire if training is terminated by the
employer before the end of the
stipulated period through no
fault of the learner

WOMEN WORKERS

NIGHTWORK PROHIBITION(Art. 130)

No woman shall be employed in:

1. Industrial Undertaking - 10pm-6am

2. Commercial or non-industrial or branch - 12am-6am

thereof, other than agricultural

3. Agricultural undertaking - Nighttime, unless given a period

of rest not less than 9
consecutive hours

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Exceptions(Art. 131)
(1) Actual or impending emergencies to prevent loss of life/ property or force majeure or
imminent danger to public safety
(2) Urgent work to be performed to avoid serious loss to employer
(3) Necessary to prevent serious loss of perishable goods
(4) Holds a responsible position of managerial or technical nature or engaged to provide
health or welfare service
(5) Nature of work requires the manual skill and dexterity of women workers and the same
cannot be performed with equal efficiency by male workers
(6) Immediate members of the family operating the establishment or undertaking
(7) Other analogous cases

FACILITIES FOR WOMEN (Art. 132)

(1) To provide seats for women
(2) Establish separate toilet rooms and lavatories and provide at least a dressing room for
women
(3) Establish a nursery in a workplace for the benefit of the women employees
(4) Determine appropriate min. age and other standards for retirement and termination in
special occupations such as those of flight attendants and the like

MATERNITY LEAVE and PATERNITY LEAVE BENEFITS

-Pls. see discussion above under Hours of Work: Leaves

FAMILY PLANNING SERVICES, INCENTIVES FOR FAMILY PLANNING (Art. 134)

• Those establishments required to maintain a clinic or infirmary shall provide free family
planning service
• Develop and prescribe incentive bonus schemes to encourage family planning among
female workers in any establishment/ enterprise

DISCRIMINATION PROHIBITED (Art. 135)

Acts of Discrimination
 Payment of lesser compensation to a female as against the male, for work of equal
value
 Favoring over promotion, training opportunities, study and scholarship grants solely on
account of their sexes

• Institution of any criminal action under this shall not bar the aggrieved employee from
filing an entirely separate and distinct action for money claims, which may include claims
for damages and other affirmative relief
• Actions authorized shall proceed independently of each other

STIPULATIONS AGAINST MARRIAGE (Art. 136)

- unlawful, either as a condition for employment or for continuing employment

PROHIBITED ACTS (Art. 137)

1. Deny benefits or discharge any woman employed to avoid giving benefits
2. Discharge such woman on account of her pregnancy or while on leave or in
confinement due to her pregnancy
3. Discharge or refuse the admission of such woman upon returning to her work for fear
she may again be pregnant

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CLASSIFICATION OF CERTAIN WOMEN WORKERS (Art. 137)
- any woman permitted or suffered to work in a night club, cocktail lounge, massage clinic,
bar or similar establishment, under effective control or supervision of the employer for
substantial period determined by the Sec. of Labor, shall be considered as employee of
such establishments

ANTI-SEXUAL HARASSMENT LAW (RA 7877)

Committed in these situations only:
(1) Work-related or employment environment
(2) Education or training environment

Offender
- Employer, employee, manager, supervisor, agent of the employer, teacher, instructor
professor, coach, trainor, or any other person who has authority, influence, or moral
ascendancy over another (hence, victim may be male or female)

How Committed
- offender demands, requests or otherwise requires any sexual favor from the other,
regardless of whether the demand, request or requirement for submission is
accepted by the object

Duty/ Liability of Employer or Head of Office

• Duty— to prevent or deter the commission of acts of sexual harassment and to
provide for the resolution, settlement or prosecution of acts of sexual harassment

• Liability— solidarily liable for damages arising from the acts of sexual harassment if
s/he is informed of such acts by the offended party and no immediate action is taken
thereon.

Independent Action for Damages

- the victim is not precluded from instituting a separate and independent action for
damages and other affirmative relief

• Commission of sexual harassment is a valid reason to dismiss an employee. (Villarama

v. NLRC, 1994)

• Certain acts, like caressing the nape of the secretary, amount to sexual harassment ―as
generally understood by the public‖ which justifies the dismissal of the harasser. (Libres
v. NLRC, 1999)

ACTIVITIES / ASSESSMENT:

1. Identify the different kinds of special workers. Explain each.

2. Differentiate Learners from Apprentices. Illustrate their differences.
3. Explain the nature of women workers. What are its exemptions?
4. Explain briefly the nature of women workers.
5. Explain the importance of the anti-sexual law.
6. Explain the nature and effects of anti-sexual law

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 LESSON VIII MINORS, HOUSEHELPERS and HOMEWORKERS

OVERVIEW: In this chapter you will learn the rule in employment of minors,
understand the nature of household helper and importance of homeworkers.

LEARNING OUTCOMES:
After the end of this lesson, you will be able to:

• Know the rule in employment of minors

• Be able to understand the nature of household helpers
• Understand homeworkers and their importance

COURSE MATERIALS:

MINORS

MINIMUM EMPLOYABLE AGE (Arts. 139-140)

Below 15 General Rule: shall not be employed

years old Exceptions*: (RA 7610, as amended by RA 7658)
(1)If working under parent’s responsibility and where only
members of the employer’s family are employed:
Requisites:
a. His employment does not endanger his life, safety, health and morals,
nor impair his normal development; and
b. The parent or legal guardian shall provide said minor with the
prescribed primary and/or secondary education

(2)Working in public entertainment Requisites:

a. Child’s employment in public and entertainment or information through
cinema, theater or radio or radio or television is essential;
b. Employment contract is concluded by child’s parents or guardian with
express agreement of child, if possible, and with DOLE approval; and
c. Strictly compliance with the ff:
(i) employer ensures child’s protection, health, safety and morals
(ii) employer institutes measures to prevent the exploitation of the child;
and
(iii) employer implements a continuing program for training and skills of
the child
*in these cases, employer shall first secure a work permit from the DOLE
before engaging the child
15-below Can be employed in undertakings which are not hazardous or deleterious (i.e.,
18 yrs old employee is not exposed to any risk which constitutes an imminent danger to
his safety and health)

These are hazardous and deleterious:

Exposes workers to dangerous environmental elements, contaminations or
work conditions including ionizing radiations, chemicals, fire, flammable
substances, noxious components and the like

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 Engaged in construction work, logging, fire-fighting, mining, quarrying,
blasting, stevedoring, dock work, deep-sea fishing and mechanized
farming
Engaged in the manufacture or handling of explosives and other pyrotechnic
products
Exposed to or use of heavy or power-driven machinery or equipment Use
or are exposed to power-driven tools
18 yrs No prohibition

HOUSEHELPERS

EMPLOYMENT OF HOUSEHELPERS (Arts. 141-152; cf. Arts 1689-1699, NCC)

Coverage: shall apply to all persons rendering services in the household for
compensation

 Domestic or household service

- shall mean services in the employer’s home which are usually necessary or
desirable for the maintenance and enjoyment thereof
- includes ministering to the personal comfort and convenience of the members of
the employer’s household
- also includes the services of family drivers

 ―Househelper‖ is synonymous to the term ―domestic servant‖. (Apex Mining Co.,

v. NLRC, 1991)

Pertinent provisions
(1) Original contract— not more than 2 years but may be renewed upon agreement of
the parties
(2) If assigned to work in a commercial, industrial, or agricultural enterprise, must not be
paid lower than agricultural or non-agricultural workers
(3) If househelper is under 18 years of age, must be given opportunity to finish at least
elementary schooling. The cost of education shall be a part of compensation
(4) Should be treated in a just and humane manner
(5) Free: sanitary and suitable living quarters, adequate food and medical attendance
(6) If period of household service is fixed, neither the parties may terminate contract prior
expiration of term; if not fixed, either of the parties may terminate by giving notice 5
days before the intended termination
(7) If employee is unjustly dismissed, indemnity = compensation earned + compensation
for 15 days; if employee leaves without justifiable reason, s/he shall forfeit any unpaid
salary not exceeding 15 days.

HOMEWORKERS

EMPLOYMENT OF HOMEWORKERS (Arts. 153-155; Dept. Order No. 5, 1992)

Coverage: shall apply to any person who performs industrial homework for an
employer, contractor or sub-contractor.

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 Industrial Homework—a system of production under which work for an employer or
contractor is carried out by a homeworker at his/her home. Materials may or may not
be furnished by the employer or contractor.

Employers of Homeworkers
(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; or
(2) Sells any goods, articles or materials for the purpose of having such goods or
articles processed or fabricated in or about a home and then repurchases them
after such processing or fabrication, either himself or through some other person.

• The IRR allows the formation and registration of labor organization of industrial
homeworkers.
• It also makes explicit the employer’s duty to pay SSS, Medicare and ECC premiums.

ACTIVITIES / ASSESSMENT:

1. What is the rule in employment of minors? Explain briefly.

2. What is the common nature of household helpers?
3. What is the iimportance of homeworkers? How do they differ from household
helpers?

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 LESSON IX TERMINATION OF EMPLOYMENT

OVERVIEW: In this chapter you will understand the process and procedure of
terminating employees, its basis and its effects. Also learn the difference between
illegal dismissal from constructive dismissal. Plus the rule on retirement.

LEARNING OUTCOMES:
After the end of this lesson, you will be able to:

• Fully understand the process of terminating employees

• Know the nature and the effects of terminating employees
• Grounds of terminating an employee
• Take into account the procedural due process of termination
• Know to differentiate illegal dismissal from constructive dismissal
• Know the rule in retirement

COURSE MATERIALS:

TERMINATION OF EMPLOYMENT

SECURITY OF TENURE (Art. 279; Art. XIII, Sec. 3, Const.)

- in cases of regular employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized
- Although the provision states only regular employment, right to security of tenure is also
available to non-regular employee (e.g., fixed-term employment, probationary employee,
project employee). The employer cannot terminate before the end of the agreed period
unless there is a just cause.

TERMINATION BY EMPLOYEE (RESIGNATION)

Without cause [Art. 285 (a)]
- employee must serve notice to employer at least 1 month in advance
- if no such notice, employee may be liable for damages

With just cause [Art. 285 (b)]

- no notice is needed Grounds:
a. Serious insult on the honor and person of the employee by the employer or his
representative
b. Inhumane and unbearable treatment accorded to the employee
c. Commission of a crime against the person of the employee or any of the immediate
members of his family
d. Analogous cases

Voluntary Resignation— act of an employee 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
(Habana v. NLRC, 1998)

TERMINATION BY EMPLOYER
2 Facets of a valid termination (Orlando Farms Growers v. NLRC, 1998; Salaw v. NLRC,
1991);
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 1. Substantive due process—legality of the act of the dismissal, i.e., the dismissal must
be under any of the just causes or authorized causes (Arts 279, 281, 282-284)
2. Procedural due process—the legality of the manner of dismissal
For just causes
- there must be observance of the requirements of the two-notice rule:
i. a written notice containing a statement of the cause for termination and to
afford him opportunity to be heard and to defend himself; and
ii. to notify the worker in writing of the decision to dismiss him, stating clearly the
reasons therefore

For authorized causes

- written notice to employee and DOLE Secretary at least 1 month before intended
date
Substantive due process
Just Causes (Art. 282) - an employer may terminate an employment for any of the
following causes:

1. Serious misconduct or willful disobedience by the employee of the lawful orders of

employer / his rep in connection with his work
“Serious Misconduct”
- 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 a wrongful
intent and not mere error in judgment.
*NB: Such misconduct, however serious, must nevertheless be in connection with
the work of the employee

Elements of Misconduct as just cause:

 it must be serious;
 must relate to the performance of the employee’s duties; and
 must show that the employee has become unfit to continue working for the
employer. (Phil. Aeolus Automotive United Corp. v. NLRC, 2000)

Elements of Willful Disobedience as just cause:

 the employee’s assailed conduct must have been willful or intentional, the
willfulness being characterized by a wrongful and perverse attitude; and
 the order violated must have been reasonable, lawful, made known to the
employee and must pertain to the duties which he has been engaged to
discharge. (Westin Phil. Plaza Hotel v. NLRC, 1999)

Elements of orders of employer:

(1) Reasonable and lawful;
(2) Sufficiently known to the employee; and
(3) In connection with the duties which the employee has been engaged to
discharge

 The employee’s disobedience, to justify his dismissal, must relate to substantial

matters and that the disobedience to be considered willful must be resorted to
without regard to its consequence.

2. Gross and habitual neglect by the employee of his duties

- Neglect of duties must not only be gross but also habitual

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 - Single acts of negligence is not a just cause for the dismissal of the employee - It is
not necessary to show that employer incurred actual loss/ damage.
- It is sufficient that the neglect of the employee tends to prejudice the interest of
employer.
- Abandonment is a form of neglect of duty

To constitute abandonment, these must concur:

a. the failure to report for work or absence without valid or justifiable reason, and
b. clear intention to sever the employer-employee relationship.

* 2nd element is the more determinative factor. Mere absence is not sufficient (Labor
et al, v. NLRC, 1995)

3. Fraud or willful breach by the employee of the trust reposed in him by his employer/
representative
- The fraud must be committed against the employer or his representative, not
against third person
- Basic premise of dismissal: employee concerned holds a position of trust and
confidence.
- For rank-and-file employees, there must be an overt/actual act, furthermore, the
worker should have been entrusted with the custody of money or property of the
employer. Mere accusations by the employer will not suffice.
- For managerial/ confidential employees, acts are not necessary; mere
circumstances tending to show loss of confidence are enough.

4. Commission of a crime or offense by the employee against the person of his employer
or any immediate member of his family or duly authorized representative
- A criminal case need not be actually filed. Commission of acts constituting a crime
is sufficient.
- ―Immediate member‖— spouse, ascendants, descendants, or legitimate, natural,
or adopted brothers or sisters of the employer or of his relative by affinity in the
same degrees, and those by consanguinity within the 4th civil degree.

5. Analogous cases
 Would depend upon the circumstances of each case. They must be work-related.
 Conviction of a crime involving moral turpitude against a third person, if not
workrelated, is not a just cause for dismissal (IRRI v. NLRC, 1993)
 Immorality— for private sector employees, it can only be a ground if it is
workrelated but for public sector employees, immorality is sufficient cause for
termination
 Sexual harassment is serious misconduct. (Villarama v. NLRC, 1994)
 Being quarrelsome/Bossy (analogous to serious misconduct/ insubordination, per
Cathedral School of Tech. v. NLRC, 1992)
 Gross inefficiency (analogous to gross neglect, per Lim v NLRC, 1996)
 Violation of a company rule prohibiting the infliction of harm or physical injury
against any person under particular circumstances (analogous to serious
misconduct, per Oania v. NLRC, 1995)
 Acquittal of the employee in the criminal case is not a bar to his dismissal on the
ground of loss of confidence. (Ramos v. NLRC, 1998)
- But in Quiambao v. NLRC (1996), this rule was qualified, saying that acquittal in
the criminal case will bar dismissal on the ground of loss of confidence if the
charges against the employee were not substantiated by evidence

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 - as long as there is substantial evidence that employee is guilty, not proof
beyond reasonable doubt (hence the acquittal), dismissal is warranted. If none,
then employee should not be dismissed based on the acquittal.

Authorized Causes (Art. 283)

- Authorized causes generally entail payment of separation pay. Just causes generally
do not.

1. Installation of labor-saving devices (Automation)

- reduction of the number of workers in a company’s factory made necessary by the
introduction of machinery in the manufacture of its products

2. Redundancy
- where services of an employee are in excess of what is reasonably demanded by
the actual requirements of the enterprise.
- It only requires superfluity, not duplication of work

When is a position redundant?

 When it is superfluous as an outcome of a number of factors, e.g., over hiring of
workers, decreased volume of business, dropping of a particular product line
previously manufactured.
 The employer has no legal obligation to keep in its payroll more employees than
are necessary for the operation of its business (Wiltshire File Co., Inc., v. NLRC,
1991)

3. Retrenchment to prevent losses Requisites for a valid

retrenchment:
(1) It is intended to prevent losses;
(2) Written notices are served on the workers and DOLE at least 1 month before
the retrenchment; and
(3) Separation pay is paid to affected workers (Fuentes v. NLRC, 1992)

4 standards/justification of retrenchment
(1) the losses expected should be substantial and not merely de minimis in extent
(2) the substantial loss apprehended must be reasonably imminent, and such
imminence can be perceived objectively and in good faith by the employer
(3) reasonably necessary and likely to effectively prevent the expected losses
* the employer should have taken other measures prior or parallel to
retrenchment to forestall losses, i.e., cut other costs than labor costs
(4) the alleged losses if already realized, and the expected imminent losses sought
to be forestalled, must be proven by sufficient and convincing evidence (Lopez
Sugar Corp., v. FFW, 1990)

Procedure for retrenchment to be valid:

(1) 1-month prior notice to the employee; and
(2) use of a fair and reasonable criterion in carrying out the retrenchment program,
such as less preferred status (as in the case of temporary employees),
efficiency rating, seniority, and proof of claimed financial losses

4. Closure or cessation of operations Closure may be:

(a) due to business losses; or
(b) not due to business losses

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 Requirements (if not due to losses):
a. Written notice to employee and DOLE 1 month before closure
b. Cessation of business operations must be bona fide character; and
c. Payment to the employees of separation pay
- 1/2 month pay, or 1 month pay for every year of service, whichever is higher
- if closure is due to losses, there is no need to pay separation pay

 It is management’s prerogative to close or cease its business operations even

though it is not suffering from any loss. (Cattista v. NLRC, 1995)

Disease (Art. 284)—

(1) When employee suffers from a disease; and
(2) continued employment is prohibited by law or prejudicial to his health or to the
health of his co-employees

- IRR requires a certification by a competent public health authority that the

disease is of such nature or at such a stage that it cannot be cured within 6
months even with proper medical treatment before an employee is dismissed.

- Company’s own physician is not a ―competent public health authority‖ hence his
medical certificate is not in compliance with the requirement. (Cebu Royal Plant
v. NLRC, 1987)

Separation Pay (Authorized Causes/Disease)

(1) Installation of labor-saving
1 month pay or 1 month pay for every year of service,
devices
whichever is higher
(2) Redundancy

(3) Retrenchment to prevent

losses
(4) Closure or cessation of 1 month pay or at least ½ month pay for every year of
operations or undertaking
service, whichever is higher
NOT due to serious
business losses or
financial reverses
(5) Disease
*in every case, a fraction of at least 6 months shall be considered as 1 whole year

Procedural Due Process

For just causes
- there must be observance of the requirements of the two-notice rule:
(i) a written notice containing a statement of the cause for termination and to afford
him opportunity to be heard and to defend himself; and
(ii) to notify the worker in writing of the decision to dismiss him, stating clearly the
reasons therefore

For authorized causes

- written notice to employee and DOLE Secretary at least 1 month before intended date

Effect of dismissal without procedural due process but with cause (substantive
process)

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 Serrano Doctrine
› Termination due to authorized cause without giving the notice required under the Labor
Code is not a violation of due process.
› It is valid although declared irregular/ ineffectual.
› He shall however be entitled to SEPARATION PAY AND BACKWAGES subject to the
ff. rules:
1. When the dismissal is for a cause (just or authorized), without prior notice the
employee is entitled to full backwages from the time he was terminated until the
decision finding cause becomes final.
2. When the dismissal is without just or authorized cause, backwages shall be
computed from the time of his dismissal until his actual reinstatement. (Serrano
v. NLRC, 2000)

Agabon doctrine (modifying Serrano)

› Dismissal for an authorized or just cause, without procedural due process, is not an
illegal dismissal which warrants backwages; employee is entitled only to nominal
damages.
› Here, the Court interpreted Art. 279 to the effect that termination is illegal only if it is not
for any of the just or authorized causes provided by law.
› Payment of backwages and other benefits, including reinstatement, is justified only if
the employee was unjustly dismissed.
› The Court decided to follow the Wenphil doctrine that where the dismissal is for a just
cause, the lack of statutory due process should not nullify the dismissal or render it
illegal.
› However, the employer should indemnify the employee for violation of his rights.
› The indemnity should be in the form of nominal damages, which is stiffer than that
provided in Wenphil to discourage the abhorrent practice of ―dismiss now, pay later‖.
* in Wenphil, the employer is only required to indemnify the employee P1,000 for failure
to give a formal notice. (Agabon v. NLRC, 2004)

Effect of illegal dismissal (i.e., without cause)

(1) Entitled to REINSTATEMENT without loss of seniority rights and other privileges
- or payment of SEPARATION PAY if reinstatement is not possible

When is reinstatement not possible?

(1) Strained relations doctrine
- happens because of employee’s and employer’s bad faith imputations against
each other but this applies only if employee occupies a position where he
enjoys the trust and confidence of his employer (Globe-Mackay v. NLRC,
1992)

(2) Position has been abolished

- applies to both managerial and rank-and-file employees

 employer is granted the option to merely reinstate the employee in the payroll but not
actually admit him back to work pending the appeal of the dismissal case  NB: per
Art. 223, a reinstatement order is immediately executory

(2) Entitled to FULL BACKWAGES, inclusive of allowances and other benefits or their
monetary equivalent

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 - Backwages are punitive in relation to the employer. Hence, they must be paid in full
from the time of illegal dismissal. It must be paid regardless of whether or not the
employee has since found work elsewhere. (Bustamante v. NLRC, 1996)

› NOTE: Reinstatement and backwages are 2 reliefs given to an illegally dismissed

employee. They are separate and distinct from each other.
› In other words, an illegally dismissed employee is entitled to either (1) reinstatement, if
viable, or separation pay if reinstatement is no longer viable; and (2) backwages (Torillo
v Leogardo, 1991)

(3) Damages
a. Moral damages— if the dismissal is in bad faith, attended by fraud, is against public
policy, good customs, morals, or oppressive to labor (based on Art. 2220 of the
NCC, not on the LC, per Cruz v. NLRC, 2000)
b. Exemplary damages— if the dismissal is wanton, oppressive or malevolent. (based
on Arts. 2229 and 2232 of the NCC, per Nueva Ecija Electric Cooperative, Inc. v.
NLRC, 2000)

Preventive Suspension (Book V, Rule XXIII, Sec. 9)

• The employer’s authority to put an employee under preventive suspension is not in the
Labor Code but in the IRR.
• Maximum period = 30 days. Beyond that, employee becomes entitled to his pay and
benefits.
• Preventive suspension is incident to investigation. It is not itself the penalty for the
offense. This is justified where the employee’s continued employment poses a serious
and imminent threat to the life or property of the employer or his co-workers. Without this
threat, preventive suspension is improper.

Instances of Constructive Dismissal

Constructive dismissal
- involuntary resignation to when continued employment becomes impossible,
unreasonable or unlikely
- Unwarranted transfer or demotion
- Status is changed from regular to casual
- Floating status beyond 6 months (Art. 286)

EMPLOYMENT NOT DEEMED TERMINATED (Art. 286)

(1) Bona fide suspension of the operation of a business for a period not exceeding 6
months (temporary lay-off).
• if this exceeds 6 months, this would be tantamount to constructive dismissal hence
the employee is entitled to benefits for their separation
(2) Fulfillment by the employee of a military or civic duty
• In these instances, 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 1 month from resumption of operations or from relief from military or civic duty.

RETIREMENT

RETIREMENT [Art. 287, implementing RA 7641 (Retirement Pay Law)]

With CBA If without retirement plan or agreement

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Retirement age Age established in the Rule: 60-65 y/o (65: compulsory retirement
CBA or employment age) and has served at least 5 yrs. in the
contract establishment EXCEPT:
Underground mining employees — 50-60
years old (60: compulsory retirement age)
and has served at least 5 yrs. in the
establishment (RA 8558, 1998)

Retirement pay/ Retirement benefits he ½ month

benefits is entitled under salary for every year of service
existing laws or CBA or (1/2 mo. salary= 15 days + 1/12 of the 13 th-
other agreements, mo.pay + cash equivalent of not more than
provided these are not 5 days Service Incentive Leave)
less than those
provided in Art. 287 *fraction of at least 6 mos. = 1yr

Not covered
(1) Retail, service and agricultural establishments
(2) Operations employing not more than 10 employees

• The retirement pay under Art. 287 is apart from the retirement benefit claimed by the
qualified employee under the social security law
• Sec. 2, RA 7641 states: ―Nothing in this Act shall deprive any employee of benefits to
which he may be entitled under existing law or company policies or practices‖

ACTIVITIES / ASSESSMENT:

1. Discuss the process of terminating employees.

2. What are the basis of termination of employees.
3. What are the nature in terminating employees?
4. Illustrate the procedural due process of termination.
5. Compare and state the difference between illegal dismissal from constructive dismissal.
6. Briefly explain the rule in retirement

LESSON X LABOR RELATION

OVERVIEW: In this chapter you will understand the importance of self-organization,

its restriction to self-organization and workers without right to self-organization in a
collective bargaining.

LEARNING OUTCOMES:
After the end of this lesson, you will be able to:

• Know their right to self-organization

• Understand the restriction of the right to self-organization
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 • Identify workers without right to self-organization for purposes of collective bargaining

COURSE MATERIALS:

RIGHT TO SELF-ORGANIZATION

7 CARDINAL RIGHTS OF WORKERS (1987 Const., Art. 13, Sec. 3)

(1) self-organization
(2) collective bargaining and negotiations
(3) peaceful concerted activities, including the right to strike in accordance with law
(4) security of tenure
(5) humane conditions of work
(6) a living wage
(7) participate in policy and decision-making processes affecting their rights and benefits
as may be provided by law

COVERAGE OF RIGHT TO SELF-ORGANIZATION [Art. 243-245, 269; DO 40-03 (Rules

Implementing Book V)]

• All persons may organize for a lawful purpose but not all may form labor unions (i.e.,
forming or joining labor organizations for the purpose of collective bargaining)

• The right to self-organization includes the right not to exercise it. An employee may, as
he pleases, join or refrain from joining an association. (Reyes v. Trajano, 1992)

General Rule (To whom the right is available)

Right Purpose
All persons employed in commercial, form, join, or Collective bargaining
industrial and agricultural enterprises and assist labor orgs
in religious, charitable, medical, or of their own
educational institutions, whether operating choosing
for profit
Ambulant, intermittent and itinerant form labor Mutual aid and
workers, self-employed people, rural organizations protection and other
workers and those without any definite legitimate purposes
employers other than collective
bargaining
Ambulant— moving about, ―palipat-lipat‖
Intermittent— temporary
Itinerant— travels from place to place

Specific Employees With Right to Self-Organization for purposes of collective

bargaining

(1) Government Employees

(a) For government employees of government corps established under the Corporation
Code (Labor Code governs them)— right to organize and bargain collectively
(b) For employees of all branches, subdivisions, instrumentalities of govt, including
Government Owned and Controlled Corporations (GOCCs) with original charters
from Congress—EO 180 governs them

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 EXECTUIVE ORDER 180
(June 1, 1987)

Applies to all employees of all branches, subdivisions, instrumentalities and agencies of the
government including employees of GOCCs with original charters

Rights
(1) can form, join or assist employees’ organizations for furtherance and protection of
interest
(2) can engage in concerted activities, including the right to strike
(3) may negotiate collective negotiation agreements (CNA) or memorandum of
agreement (MOA) with their empolyers

Limitations
(1) the concerted activities must be exercised in accordance with law, i.e., subject to
Civil Service Law and rules and any legislation that may be enacted by Congress
(2) negotiations should only involve terms and conditions of employment that are not
fixed by law
(3) the resolution of complaints, grievances, and cases involving government employees
is not ordinarily left to collective bargaining or other related concerted activities but to
Civil Service Law and labor laws and procedures whenever applicable
(4) in case any dispute remains unresolved after exhausting all available remedies
under existing laws and procedures, the parties may jointly refer the dispute to the
Public Sector Labor-Management Council (the EO provided for the composition of
this) for appropriate action

Employees’ Org
• The appropriate organizational unit is the unit consisting of rank-and-file employees
unless circumstances otherwise require
• Govt employees organizations shall register with the Civil Service Commission (CSC)
and the Bureau of Labor Relations (BLR)
• The duly registered Employees’ organization having the majority support of the
employees in the appropriate organizational unit shall be designated as the sole and
exclusive representative of the employees

Not Covered
(1) High-level employees (those whose functions are policy-
making or managerial or highly confidential cannot join the org
of rank-and-file employees)
(2) Armed Forces of the Philippines (AFP) (3) Police officers
(4) Policemen
(5) Firemen
(6) Jail guards

 BUT Memorandum Circular No. 6 of CSC, dated April 21, 1987, enjoins strikes by
government officials and employees (Arizala v CA, 1990)

Thus, to sum up the government employees covered by EO 180:

(1) may organize and unionize

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 (2) they can negotiate, but not bargain (negotiate only on matters not fixed by law) (3)
they cannot strike

(2) Supervisory Employees [Art. 245; Art. 212 (m)]— those who, in the interest of the
employer
(a) Effectively recommends such managerial actions
(b) If the exercise of such authority is not merely routinary or clerical in nature (c)
But requires the use of independent judgment.

• What determines the nature of employment is not the employee's title, but his job
description.
• Supervisory employees shall—NOT be eligible for membership in a labor organization
of the rank-and-file employees but may join, assist or form SEPARATE labor
organizations of their own.
• To maintain the segregation, a supervisor’s union is not allowed to affiliate with the
same federation as that of the rank-and-file union under these conditions:
(1) The rank-and-file employees are directly under the authority of the supervisory
employees
(2) The national federation is actively involved in union activities in the company
(Atlas Lithographic v. Laguesma, 1992; De la Salle University Medical Center v.
Laguesma, 1998)

(3) Aliens (Art. 269)—Aliens, generally, have no right to self-organize for purpose of
collective bargaining unless (the following must concur):
(a) They have valid permits issued by DOLE; and
(b) That said aliens are nationals of a country which grants the same or similar
rights to Filipino workers (reciprocity

(4) Security Guards

• EO 111 has eliminated the disqualification of security guards from forming labor
unions.
• They may now join a rank-and-file organization or that of the supervisory union,
depending on their rank. (Manila Electric v. Sec. of Labor, 1997)

Workers Without Right to Self-Organization For purposes of collective bargaining

(1) Managerial Employees [Art. 245; Art. 212 (m)]

- one who is vested with powers or prerogatives
a. To lay down and execute management policies and/ or
b. To hire, transfer, suspend, layoff, recall, discharge, assign, or discipline
employees

- NOT eligible to join, assist or form any labor organization

• ―labor organization‖ is a technical term
• it is formed for the purpose of collective bargaining concerning terms and
conditions or dealing with employment concerning terms and condition of
employment
• Hence, managerial employees are not prohibited from forming an association
- The prohibition of unionization of managerial employees does not violate the Phil.
Consti. (UPSU v. Laguesma, 1998)
- National Sugar Refineries Corp v NLRC (1993)

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 › the definition of a managerial employee in Labor relations [Art. 212 (m)] is not
exactly the same as the definition under labor standards (Art. 82).
› Art. 82 is much broader in scope than Art. 212 (m).
› It was held that for purposes of forming and joining unions, certification elections,
collective bargaining, supervisory employees are considered not managerial
employees hence they can unionize.
› However, in terms of working conditions and rest periods and entitlement to the
questioned benefits, they are officers or members of the managerial staff (which
are managerial employees per Art. 82,) hence they are not entitled thereto.

- Who are rank-and-file employees? Employees who are not managerial nor
supervisory employees.

(2) Confidential Employees--those who:

(a) Assist or act in a fiduciary capacity
(b) To persons who formulate, determine, and effectuate management policies in the
field of labor relations.

 The two criteria are cumulative, and both must be met if an employee is to be
considered a confidential employee — that is, the confidential relationship must exist
between the employee and his superior officer and that the superior officer must
handle the prescribed responsibilities relating to labor relations (if not labor relations,
then not confidential employee).
Sugbuanon Rural Bank vs. Laguesma, (2000)
› Art. 245 of the Labor Code does not directly prohibit confidential employees from
engaging in union activities.
› However, under the doctrine of necessary implication, the disqualification of
managerial employees equally applies to confidential employees.
› The confidential-employee rule justifies exclusion of confidential employees because
in the normal course of their duties they become aware of management policies
relating to labor relations.

Note: An employee may not be excluded from appropriate bargaining unit merely
because he has access to confidential information concerning employer’s internal
business operations and which is NOT RELATED to the field of labor relations. If
access is merely incidental, you cannot classify them as confidential employees.
Thus a phone operator or driver cannot be classified as a confidential employee for
the purpose of excluding them from joining a union. It is the policy of the law to
encourage self-organization, thus if you have to limit it, the limitation must strictly be
construed and well justified.

(3) Workers-Members of a Cooperative

Cooperative— is an organization composed of small producers and of consumers who
voluntarily join together to form business enterprises which they themselves, own, control
and patronize. (PD 175)
(a) An employee of such a cooperative who is a member and co-owner— no right to
collective bargaining because an owner cannot bargain with himself or co-owners.
(BENECO v. Ferrer-Calleja, 1989)
(b) Employees who are NOT members or co-owners— such employees are entitled to
exercise the rights of all workers to organization, collective bargaining negotiations,
and others. (San Jose Electric Service Coop. v. Min. of Labor, 1989)

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(4) Employees of International Organizations
Certain international organizations, such as the Intl Rice Research Institute (IRRI) and
the Intl Catholic Migration Commission (ICMC), are by their charters given a grant of
immunity from legal processes and thus are beyond the jurisdiction of the DOLE. A
certification election cannot be conducted in these international orgs.

(5) Non-Employees
- If there is no employer-employee relationship, then there is no right to collective
bargaining
- but they still have the right to organize since this right is constitutionally protected, only
that they cannot organize for the purpose of collective bargaining.

ACTIVITIES / ASSESSMENT:

1. Explain the right to self-organization.

2. What are the restriction to the right to self-organization
3. Who are the workers without right to self-organization for purposes of collective
bargaining? Explain each

LESSON XI LABOR ORGANIZATION

OVERVIEW: In this chapter you will learn the importance of labor organization and
the process of its registration. Grounds for cancellation of said registration and the
rights, conditions and benefits of being a member in a labor organization.

LEARNING OUTCOMES:
After the end of this lesson, you will be able to:

• Understand labor organization

• Differentiate labor organization from labor association
• Familiarize the grounds for cancellation of union registration
• Know the rights and conditions of membership in a labor organization
• Understand the rights of legitimate labor organizations

COURSE MATERIALS:

LABOR ORGANIZATION—any union or association of employees in the private sector

which exists for collective bargaining purposes or of dealing with employers concerning
terms and conditions of employment [Art. 212 (g)]

Legitimate Labor Organization— any labor organization in the private sector registered or
reported with the DOLE [Book V, Rule 1, Sec. 1 (ee)] (if not registered, does not possess
the rights of a LLO)

Union—any labor organization in the private sector organized for collective bargaining and
for other legitimate purpose [Book V, Rule 1, Sec. 1 (zz)]
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  Independent Union— labor organization operating at the enterprise level that acquired
legal personality from independent registration

 Chartered Local— labor organization at the enterprise level that acquired legal
personality acquired through issuance of charter certificate by a duly registered
federation or national union

 National Union / Federation— labor organization with at least 10 locals/ chapters or

affiliated unions, each of which must be a duly certified or recognized collective
bargaining agent.

 Company union— any labor organization whose formation, function or administration

has been assisted by any act defined as unfair labor practice

 Affiliate— refers to an independent union affiliated with a federation, national union or

a chartered local which was subsequently granted independent registration but did not
disaffiliate from its federation, reported to the Regional Office and the Bureau

Affiliation/ Disaffiliation
• Affiliation by a duly registered union with a national federation does not cause the
local union to lose its legal personality.
• The local union remains the basic unit that serves the common interest of its
members.
• The union also has the right to disaffiliate from its mother union and join a new
federation (exercise of right to self-organization), in the absence of enforceable
provisions in the federation’s constitution preventing disaffiliation.
• But when the union is not independently registered and it disaffiliates from a
federation, it is not granted the rights and privileges granted to LLO. It cannot file a
petition for CE or bargain with the employer or stage a strike (Villar v. Inciong, 1983)
• Affiliation/ disaffiliation is an affair between the parent and the daughter union. The
employer is not involved and should not be adversely affected. The CBA continues
to bind the members of the disaffiliated union up to the CBA’s expiration date
(Associated Workers Union PTWGO v. NLRC, 1990)

WORKER’S ASSOCIATION — an association of workers organized for the mutual aid and
protection or for any legitimate purpose other than collective bargaining of its members.
[Book V, Rule 1, Sec. 1 (ccc)]

 Legitimate Worker’s Association— an association of workers organized for the

mutual aid and protection or for any legitimate purpose other than collective
bargaining of its members registered with the DOLE. [Book V, Rule 1, Sec. 1 (ff)]

LABOR ORGANIZATION V. WORKER’S ASSN

LABOR ORGANIZATION
Composition Employees
Purpose collective bargaining or of dealing
with employers concerning terms
and conditions of employment.
WORKER’S ASSOCIATION
Workers
mutual aid and protection of its
members or for any other
legitimate purpose other than
collective bargaining

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REQUIREMENTS OF REGISTRATION
Independent Labor Organization
1. Registration fee
2. Name of the applicant union, its principal address, names and addresses of its
officers, approx. number of employees in the BU where it seeks to operate, with a
statement that it is not reported as a chartered local of any federation or national
union;
3. Minutes of the organizational meeting; list of workers who participated in the
meetings;
4. Names of all its members comprising at least 20% of all employees in the Bargaining
Unit;
5. Annual financial report if the applicant has been in existence for one or more years,
unless it has not collected any amount from the members, in which case a statement
to this effect shall be included;
6. Constitution and by-laws (CBL), minutes of its adoption and ratification, and the list of
the members who participated
- list of the ratifying members may be dispensed with where the CBL was ratified or
adopted during the organizational meeting— factual circumstance of the
ratification shall be recorded in the meeting

 All required documents shall be certified under oath by the Sec. or Treas. and
attested to by the Pres.
 1 original copy and 2 duplicate copies of all documents accompanying the application
or notice shall be submitted to the Regional Office or the Bureau.

Federation/ National Union

In addition to 1,2,3,5 and 6 above:
- Resolution of affiliation of at least 10 LLOs, whether independent union or chartered
locals (all duly recognized as collective bargaining agents)
- Names and addresses of the companies where the affiliates operate plus list all
members in each company involved.

 LOs operating within an identified industry may also apply for registration as a
federation or national union within the specified industry by submitting to the Bureau
the same set of documents

Worker’s Association
1. Registration fee
2. Name of the applicant association, its principal address, the name of its officers and
their respective addresses
3. Minutes of the organizational meeting(s) and the names of individual members who
attended such meetings
4. The financial reports of the applicant association if it has been in existence for one or
more years, unless it has not collected any amount from the members, in which case
a statement to this effect shall be included in the application;
5. Constitution and by-laws (CBL) to which must be attached the names of the ratifying
members, the minutes of adoption or ratification of the CBL, and the date when the
ratification was made, unless ratification was done in the organizational meeting(s),
in which case such fact shall be reflected in the minutes of the organizational
meeting(s)

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  Application for registration of a workers’ association operating in more than one region
shall be accompanied, in addition to the above requirements, by a resolution of
membership of each member association, duly approved by its BOD.

Legal personality: cannot be attacked collaterally

• The labor union or worker’s association shall be deemed registered and vested with
legal personality on the date of the issuance of its certificate of registration or certificate
of creation of chartered local.
• such legal personality may be questioned only through an independent petition for
cancellation of union registration, and not by collateral attack (Book V, Rule IV, Sec. 8)

GROUNDS FOR CANCELLATION OF UNION REGISTRATION

A. Failure to comply with the requirements of registration (see above)

B. Violation of any of the provisions of Art. 239. These are:
(1) Misrepresentation, false statement or fraud in connection with
a. the adoption or ratification of the CBL or amendments thereto, the minutes of
ratification and the list of members who took part in the ratification;
b. the election of officers, minutes of the election of officers, the list of voters
c. in the preparation of financial reports

(2) Failure to submit

a. the CBL or amendments thereto, the minutes of ratification and the list of
members who took part in the ratification within 30 days from adoption/
ratification
b. minutes of the election of officers, the list of voters within 30 days from election
c. annual financial report within 30 days after the closing of every fiscal year
d. list of individual members to the Bureau once a year or whenever required

(3) Acting as a labor contractor or engaging in the "cabo" system, or otherwise

engaging in any activity prohibited by law

C. Entering into CBA which provide terms and conditions of employment below minimum
standards established by law

D. Asking for or accepting attorney’s fees or negotiation fees from employers

E. Checking off special assessments or any other fees without duly signed individual
written authorizations of the members (Other than for mandatory activities under the
Labor Code)

F. Failure to comply with requirements under Articles 237 and 238 (requirements for
unions and federations)

 Commission of any of the acts in Art. 241 (Rights and conditions of membership in a labor
org)

Rule: Any party-in-interest may commence a petition for cancellation of registration except
in actions involving violations of Art. 241, which can only be commenced by members of
the labor organization concerned.
- and if it involves the entire membership of the union, the complaint should be supported
by at least 30% of the union members

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RIGHTS AND CONDITIONS OF MEMBERSHIP IN A LABOR ORGANIZATION (Art. 241)
- violations of these shall be a ground for cancellation of union registration or expulsion of
officer from office, whichever is appropriate.

• Any employee, whether employed for a definite period or not, shall be eligible for
membership in any labor organization beginning the 1 st day of service. (Book V, Rule ii,
Sec. 2)
• Union is an agent of its members.

Political Rights
 Officers directly elected by secret ballot at intervals of 5 years
 No qualification requirement for candidacy to any position other than membership in
good standing
 No person convicted of crime involving moral turpitude shall be eligible to be an officer
of union
 Officers shall not be paid any compensation other than salaries and expenses due to
their positions as authorized by CBL or written resolution of majority

Deliberative and decision-making rights

 Determination by secret ballot any question of major policy
 No admission of individuals who are members of subversive organizations

Right to be informed
 Full and detailed report of financial transactions
 All income and revenue evidenced by a record and every expenditure evidenced by a
receipt
 Treasurer and officers render a true and correct account of all moneys received and
paid since assuming office or since last accounting:
- At least once a year within 30 days from close of fiscal year
- Other times as required by written resolution of majority
- Upon vacating his office
 Books of account and financial records open to inspection by officer/ member during
office hours
 Members should be informed about the provisions of its constitution and by-laws, CBA,
prevailing labor relations system and their rights and obligations under existing labor
laws (LLO may assess reasonable dues to finance labor relations seminars/ labor
education activities)

Rights over money matter

 No arbitrary, excessive, oppressive initiation fees, fines and forfeiture
 No collection of fees, dues nor disbursements unless duly authorized pursuant to CBL
 All payment of fees, dues, contributions evidenced by receipt and entered into records
 Funds shall not be applied for any purpose other than expressly provided in CBL or
authorized by majority of members at general meeting
 No special assessment or other extraordinary fees may be levied unless authorized by
written resolution of majority (levy)
 Other than mandatory activities under the Code, no special assessment, atty’s fees,
negotiation fees or any other extraordinary fees may be checked off from any amount
due to an employee without any individual written authorization (check-off) (cf. Art.
113)

Requisites for a valid levy (i.e., imposition of a certain amount)

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  Authorization by a written resolution of majority of all members at the general
membership meeting called for the purpose

Requisites for a valid check-off (i.e., collecting an amount through salary deduction)
 Authorization by a written resolution of majority of all members
 at the general membership meeting called for the purpose
 individual written authorization of the employee, specifying the amount, purposes,
and beneficiary of the deduction
› employees’ check-off authorization is only valid as long as they remain members of the
union. When a local union disaffiliates from a national union/ federation, the latter
ceases to be entitled to check-off dues. The local union, which has validly disaffiliated
will be the one entitled to check off dues (Volkschel Labor Union v. BLR, 1985)

RIGHTS OF LEGITIMATE LABOR ORGANIZATIONS (Art. 242)

 To act as the representative of its members for the purpose of CB; (per Azucena:
erroneous because only the LLO who has majority status can represent the BU;
minority LLO does not have this right)
 To be certified as the exclusive representative of all employees in an appropriate
collective bargaining unit for purposes of CB; (per Azucena, this is only true if the union
won the certification election or consent election)
 To be furnished by the employer with the annual audited financial statements after the
union has been duly recognized by the employer or certified as the sole and exclusive
bargaining representatives of the employees in the Bargaining Unit, or within 60
calendar days before the expiration of the existing CBA, or during the CB negotiation;
 To own property, real or personal, for the use and benefit of the labor org and its
members;
 To sue and be sued in its registered name; and
 To undertake all other activities designed to benefit the organization and its members
 The income and the properties, etc. of LLOs used actually, directly and exclusively for
lawful purposes shall be free from taxes

ACTIVITIES / ASSESSMENT:
1. What is a labor organization?
2. Differentiate labor organization from labor association. Explain each.
3. Identify grounds for cancellation of union registration. Explain each.
4. What are the rights and conditions of membership in a labor organization?
5. What are the benefits and rights of a legitimate labor organizations?

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 LESSON XII THE APPROPRIATE BARGAINING UNIT

OVERVIEW: In this chapter, you will understand the importance of a bargaining unit
and its importance to a union representation. The process in selecting a sole and
exclusive bargaining agent and the process in acquiring such Certification Election.

LEARNING OUTCOMES:
After the end of this lesson, you will be able to:

• Know what an appropriate bargaining unit is

• Know the importance of union representation
• Know the process in selection of sole and exclusive bargaining agent (SEBA)
• Know the process in acquiring a Certification Election

COURSE MATERIALS:

APPROPRIATE BARGAINING UNIT (ABU)— group of employees sharing mutual interest

within a given employer unit, comprised of all or less than all of the entire body of
employees in the employer unit or any specific occupational or geographical grouping
within such employer unit.

Factors to be considered in determining the ABU

(1) Will of the employees
(2) Affinity and unity of employees’ interest, such as substantial similarity of works and
duties or similarity of compensation & working conditions,
(3) Prior collective bargaining history
(4) Employment status, i.e., temporary, seasonal, and probationary employees

• Test of grouping: community or mutuality of interests because the basic test of an

asserted bargaining unit’s acceptability is whether it is fundamentally the combination w/c
will best assure to all employees the exercise of their collective bargaining rights.

• Globe Doctrine— determinative factor is the express will of the employees. (The
practice of the courts to hold a series of elections not for the purpose of granting the right
of representation to the group garnering the majority vote but to let employees select on
several units to represent them)

UNION REPRESENTATION: ESTABLISHING MAJORITY STATUS

EXCLUSIVE BARGAINING AGENT [Art. 255; Book V, Rule 1, Sec. 1(t)] — the legitimate
labor union duly recognized or certified as the sole and exclusive bargaining agent
(SEBA) of the employees in a Bargaining Unit.
 Despite having a SEBA, an individual employee or group of employees shall have the right
at anytime to present grievances to their employers. (Art. 255)

PRE-CONDITION: EMPLOYER-EMPLOYEE RELATIONSHIP

 An employer-employee relationship is a pre-condition before the conduct of a certification
election since without such relationship, there will be no duty to bargain on the part of
either the employer or employee. Thus, it will be senseless to go on with a certification
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 election to choose their bargaining representative when there is no duty to collectively
bargain anyway. (Allied Free Workers Union v. Cia Maritima, 1967)

SELECTION OF SOLE AND EXCLUSIVE BARGAINING AGENT (SEBA)

(1) Voluntary Recognition by Employer—allowed only

a. in an enterprise being unionized for the first time (unorganized establishment—if
there exists no duly recognized or certified bargaining agent of the concerned
bargaining unit); and
b. where there is only one legitimate labor organization seeking recognition (Book
V, Rule, VII, Sec. 1)

Note: If a union asks the employer to voluntarily recognize it as the bargaining agent of the
employees, it in effect asks the employer to certify it as the SEBA—a certification
which the employer has no authority to give. It is the employees’ prerogative, not
the employer’s, to determine whether they want a union to represent them, and if
so, which one it should be. (Samahan ng Manggagawa sa Permex v. Sec. of
Labor, 1998)

In Colgate Palmolive Phils v. Ople (1988), it was held that the Sec. of Labor cannot
directly certify a union as the SEBA.

(2) Certification Election (CE)(Art. 256)—(see below)

(3) Consent Election— process of determining through secret ballot, voluntarily agreed
upon by the parties, the SEBA of the employees in an ABU for purposes of CB or
negotiation.

(4) Run-off Election (Art. 256)— election between the labor unions receiving the 2 highest
number of votes provided:
(1) There are 3 or more choices in the CE;
(2) results of the CE: none of these choices received majority of the valid votes cast;
and
(3) total number of votes for all contending unions: at least 50% of the total votes
cast

• Presumption: there is a valid election, i.e., majority of the eligible voters voted
• “No Union” shall not be a choice in the run-off election

CERTIFICATION ELECTION— process of determining through secret balloting the sole and
exclusive representative of the employees in an ABU for purposes CB or negotiation
(this is different from union election which selects the officers of the union)

Nature of CE proceedings
(1) Non-adversarial
(2) Non-litigious
(3) Administrative proceeding to determine the worker’s choice

“Organized Establishment”— an enterprise where there is a recognized or certified

SEBA. The determination of ―organized establishment‖ status should be at the
bargaining unit level. (Hence an establishment may be considered as organized

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 insofar as the rank-and-file BU is concerned but not organized insofar as the
supervisor BU is concerned.)

Freedom Period—last 60 days of the 5th year of the CBA

Valid Election— at least majority of the eligible voters voted (base: eligible voters in the
BU)

Exclusive Bargaining Agent— labor union receiving the majority of the valid votes cast
[base: valid votes (not the number of voters); exclude the invalid votes first]

Petition for Certification Election (Arts. 256-258)

Organized Establishment Unorganized Establishment

What Verified petition— supported by a Verified petition—
written consent of at least 25% of all No 25% requirement
employees in the BU
Who LLO or the employer (when requested to LLO or the employer (when requested to
files bargain collectively) bargain collectively)
When With CBA— within the 60-day freedom Anytime except within 1 yr. from a valid
filed period CE

Without CBA— anytime except when

barred (cf. bars to petition for CE)
Where Regional Office which issued the
filed petitioning union’s cert. of reg / cert. of
creation of chartered local (with the
Med-Arbiter)
Regional Office which issued the
petitioning union’s cert. of reg / cert. of
creation of chartered local (with the
Med-Arbiter)

2 positive requisites:

1. filed within the freedom period

2. with written consent of at least 25% of all employees in the BU

25% signature requirement

› Submission of the 25% consent signature need not be simultaneous with the
filing of the petition. The SC held that the mere filing of a petition for CE
within the freedom period is sufficient basis for the holding of a CE, subject to
the submission of the consent signatures within a reasonable period from
such filing. (Port Worker’s Union of the Philippines v. Laguesma, 1992)

› Even if 25% is not achieved, if Med-Arb feels there is a representation

achievement, Med-Arb may still order CE. (California Mfg. v. Laguesma,
1992)
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 › Labor Code: mandatory requirement (it becomes the ministerial duty of the
Med-Arb to conduct the CE)
› IRR: absence of such ground is a ground for the dismissal of the petition for
CE.

Procedure

Petition for CE is filed with Med-Arbiter

decides within 20 days

(if no appeal, order of Med-Arb is final;
order granting conduct of CE in an unorganized establishment is unappealable)

Appeal to Sec. of Labor within 10

days from receipt of order
(but appeal is filed with the Regional Office, who later transmits the
records to the Sec.; reply to the appeal may be
filed with the Sec. within 10 days; appeal stays the conduct of the CE)

Sec. decides within 15 days

Decision of Sec. becomes final and executory in 10 days;

no MR is allowed from this decision; (but may be questioned before the CA
in a pet. for certiorari under Rule 65)

Records remanded to the Regional Office of origin for

implementation within 48 hrs. from finality;
(implementation shall not be stayed unless restrained by appropriate court)
 The incumbent bargaining agent shall automatically be one of the choices in the CE as
forced intervenor. (Book V, Rule VIII, Sec. 7)

Bars To A Petition For CE(negative requisites)

1. Certification year— no CE may be held within 12 months from a previous CE, or
consent election, or a run-off election, or voluntary recognition by employer

2. Negotiation/ Deadlock bar— no CE if a duly certified union has commenced and

sustained negotiations with the employer within 1 year from its certification or there is a

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 pending bargaining deadlock which has been submitted to conciliation or arbitration or
has become the subject of a valid notice of strike or lockout

3. Contract bar— no CE when there is an existing CBA which has been duly registered
(a petition for CE may only be filed within the last 60 days of the 5th year of the
CBA— freedom period)

* If the legitimacy of the petitioner union is under question in a proceeding seeking to cancel
its registration, such question must first be filed before its petition for CE may be granted.

Grounds for denial of petition for CE

 Petitioning union is not a LLO (not registered as a LLO or legal personality has been
revoked or cancelled)
 Petition violates any of the bars to CE
 Petitioning union in an organized establishment fails to submit the 25% support
requirement for the filing of the petition for CE

Note: Any question pertaining to the validity of petitioning union’s certificate of registration
or its legal personality as LLO, or validity of registration and execution of CBA, shall be
held and resolved by the Regional Director in an independent petition for cancellation of
its registration (not by the Med-Arb in the petition for CE), unless the petitioning union is
not in the roster of LLO or the CBA is not registered.

ACTIVITIES / ASSESSMENT:

1. What is an appropriate bargaining unit?

2. What is the importance of a union representation? How can a member benefit
from it?
3. Illustrate the process in selection of sole and exclusive bargaining agent (SEBA).
4. How do we acquire a Certification Election?

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 LESSON XIII COLLECTIVE BARGAINING AGREEMENT

OVERVIEW: This chapter explains the importance of collective bargaining, shows

how the procedure in making a successful collective bargaining and its process that
would create benefits for its members as well as its employer.

LEARNING OUTCOMES:
After the end of this lesson, you will be able to:

• Understand the importance of collective bargaining

• Familiarize the procedure in making a collective bargaining
• Know the process in registration of collective bargaining
• Know the benefits of collective bargaining

COURSE MATERIALS:

COLLECTIVE BARGAINING AGREEMENT

DUTY TO BARGAIN COLLECTIVELY (Art. 250-253) — performance of a mutual obligation

of employers and employees (through the SEBA):

When there is no CBA

(1) To meet and convene
a. Promptly and expeditiously
b. In good faith
- parties deal with each other with open and fair mind and sincerely endeavor to
overcome obstacles between them
c. PURPOSE: Executing a contract with respect to (bargainable issues):
(i) Wages (but parties may not set a wage lower than minimum wage
(ii) Hours of work
(iii) All other terms and conditions of employment including proposals for
adjusting any grievances or questions arising under such agreement

(2) Executing a contract incorporating such agreements if requested by either party

(3) BUT such duty does not compel any party to
a. Agree to a proposal or
b. Make a concession.

When there is a CBA—all the foregoing PLUS

(4) Neither party to the CBA may modify nor terminate the CBA during its lifetime.

› While it is a mutual obligation of the parties to bargain, the employer is not under any
legal duty to initiate contract negotiation. The mechanics of collective bargaining are
set in motion only when these jurisdictional preconditions are present:
1. Possession of the status of majority representation of the employees’
representative;
2. Proof of majority representation; and
3. Demand to bargain under Art. 250 (a) (Kiok Loy v. NLRC, 1986)

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 › If these jurisdictional preconditions are present, the collective bargaining should begin
within 12 months following the determination and certification of the employees’ SEBA.
This is the certification year.

› Violation of the duty to bargain collectively = ULP (which is a ground for holding a
strike by the employees or declaration of a lockout of employer).
› This is committed in these ways:
1. failure or refusal to meet and convene
2. in evading the purposes of bargaining
3. in not observing good faith in bargaining
4. in grossly violating the economic provisions of the CBA

COLLECTIVE BARGAINING PROCEDURE

- Follow CBA procedure for collective bargaining.
- If no CBA or voluntary agreement providing for a more expeditious manner, follow this
procedure (Art. 251, 250):
(a) Party desiring to negotiate shall serve a written notice upon the other party with a
statement of its proposals.
(b) Other party shall reply later than 10 calendar days from receipt.
(c) If there are differences on the basis of notice and reply, either party may request for
a conference which shall begin not later than 10 calendar days from request
(d) If the dispute is not settled, the Board shall intervene and call the parties to
conciliation meetings.
Parties are prohibited from doing any act which may disrupt or impede the early
settlement of the disputes.
(e) The Board shall exert all efforts to settle disputes amicably and encourage the
parties to submit their case to a voluntary arbitrator.

COLLECTIVE BARGAINING AGREEMENT (CBA)— refers to the contract between

legitimate labor organization and the employer concerning wages, hours of work, and all
other terms and conditions of employment in a BU

Terms of the CBA (Arts. 253- 253-A)

Political Aspect (representation)— 5 years
Economic Aspect— renegotiation of provisions other than the representations aspect
shall not be later than 3 years after its execution

 At least 60 days prior to expiration date— either parties may serve a written notice to
terminate or modify
 During the 60-day period or until a new CBA is reached— the parties shall keep the
status quo (automatic renewal)  Retroaction:
- If new CBA is reached within 6 months from expiration date— retroact to the day
immediately following such date.
- If beyond 6 months— parties shall agree on duration of retroactivity
- If CBA resulting from an arbitration award— Sec. of Labor’s determination of
retroactivity date shall control (MERALCO v. Quisumbing, 2000)

Contents
(1) Enumeration or reservation of management rights
(2) Union recognition and security
(3) Wage and fringe benefits and their administration
(4) Physical working condition

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 (5) Selected personnel management and plant operation practices
(6) Grievance and arbitration (Art. 260)
(7) Duration of contract

Registration of the CBA (Book V, Rule XVII)

When to File Within 30 days from execution of agreement
Who will file Parties to the CBA
Where to File Regional Office which issued the certificate of registration / certificate of
creation of chartered local
If the certificate was issued by the BLR, CBA shall be filed with the
Regional Office which has jurisdiction over the place where it
principally operates
Multi-employer bargaining— filed with BLR
What to File 2 duly signed copies of (certified under oath):
(1) The CBA
(2) Statement that the CBA was posted in 2 conspicuous places in the
establishment at least 5 days before ratification
(3) Statement that the CBA was ratified by at least majority of the
employees in the bargaining unit
Other Documents must be certified under oath by the representatives of the
requirements employer and labor organization.
Payment of registration fee
• A registered CBA is a bar to a petition for CE (contract bar)

Effect of Substandard CBA—ground for cancellation of union registration

Beneficiaries of CBA—all employees in the collective bargaining unit, including those

who do not belong to the labor organization (union).

CBA Provision on Grievance Procedure (Art. 260)— machinery established by the CBA
for the adjustment and resolution of grievances arising from (“grievance” is limited to
these only):
(1) the interpretation or implementation of the CBA and
(2) those arising from the interpretation or enforcement of company personnel policies.

• Grievances submitted to the machinery not settled within 7 calendar days from
submission shall automatically be referred to voluntary arbitration prescribed in the CBA.

• The CBA must designate in advance a Voluntary Arbitrator (VA) or panel of VAs, or
include in the agreement a procedure for the selection of such. In case the parties fail to
select, the NCMB shall designate the VAs or panel of VAs.
• A grievance procedure is a ―must‖ provision in any CBA and no CBA can be registered
in the absence of such procedure.

CBA and 3rd Party Liability

• Unless expressly assumed, labor contracts (such as employment contracts and CBAs)
are not enforceable against a transferee of an enterprise; labor contracts being binding
only between the parties.
General rule: There is no law requiring a bona fide purchaser of assets of an ongoing
concern to absorb in its employ the employees of the latter.

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However, the parties are liable to the employees if the transaction is colored or clothed with
bad faith. (Associated Labor Unions v NLRC, 1991)

ACTIVITIES / ASSESSMENT:

(1) Give importance of collective bargaining. Explain.

(2) Give the procedure in making a collective bargaining.
(3) State the process in registration of a collective bargaining.
(4) What are the benefits of collective bargaining. Explain each.

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 LESSON XIV UNFAIR LABOR PRACTICE

OVERVIEW: In this chapter you will learn about unfair labor practices, jurisprudence
and doctrines about illegal practices of employer and concerted activities of union.
Illegal strikes, lockouts and picketing when valid or not.

LEARNING OUTCOMES:
After the end of this lesson, you will be able to:

• Familiarize the nature of unfair labor practices

• Know the importance of the totality conduct doctrine
• Know the different union concerted activities
• Know the difference between strikes, lockouts and picketing

COURSE MATERIALS:

UNFAIR LABOR PRACTICES (ULP) (Arts. 247-249)

- Violate the constitutional right of workers and employees to self-organization
- Disrupt industrial peace
- Violations of the civil rights of both labor and management and criminal offenses against
the State

Civil aspect
- may include claims for damages - under Labor Arbiter’s jurisdiction.
- recovery of civil liability in the administrative proceedings shall bar recovery under the
Civil Code.

Criminal prosecution
- needs final judgment (in the civil case) that ULP was committed before criminal
prosecution

Who are criminally liable?

If ULP of EMPLOYER—only the officers and agents of corps who have actually
participated in, authorized or ratified ULPs shall be held criminally liable.
If ULP of LABOR OFFFICERS— only the officers, members of governing boards,
reps, or agents or members of LOs or associations who have actually participated
in, authorized or ratified ULPs shall be held criminally liable.

Elements of ULP
(1) Employer - Employee Relationship
(2) Act done must be specifically defined as ULP in the Code (Arts. 248-249).
* Not every unfair act is ULP. It has a technical meaning. It has to be related to the right
to self-org and to the observance of the CBA

ULP of EMPLOYERS
Totality of Conduct Doctrine— culpability of an employer’s remarks is to be evaluated
not only on the basis of their implications, but against the background of collateral
circumstances.

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(1) Interference, restraint or coercion of employees in their exercise of right to self-org—
broadest of all the 9 proscriptions

• Subjection by the company of its employees to questionings regarding their union

memberships or activities, in such a way as to hamper their exercise of free choice
constitutes ULP (Philsteam v. Phil Marine Officers Guild, 1965)

• Espionage by an employer of union activities, or surveillance thereof constitutes ULP

(Insular Life Assurance Employees Assn v. Insular Life Assurance, 1971)

• Interference and restraint of demonstrations held purely as an exercise of freedom of

expression and right of assembly constitute ULP. (Phil Blooming Mills Employees
Assn v Phil Blooming Mills, 1973)

(2) To require as a condition of employment that a person or an employee shall not join a
labor org or shall withdraw from one which he belongs (yellow dog contract) – non-union
membership or withdrawal from membership as a condition of employment.

(3) Contracting out services or functions being performed by union members to discourage
unionism (subcontracting)
 It is ULP when it is motivated by a desire to prevent his employees from organizing
and selecting a collective bargaining representative.
 Not ULP when it is for business reasons

(4) To initiate, dominate, assist or otherwise interfere with the formation or administration of
any labor org, including the giving of financial or other support to it or its organizers or
supporters (company-domination of union)

(5) Discrimination to encourage / discourage membership in any labor org

 If the discrimination is to influence the union activity of employees, the

discrimination is unlawful. But the discrimination is not the same as differentiation
or classification (e.g., management classifies jobs and grants them varying levels
of pay of benefits)

 Test whether or not dismissal is discriminatory: look at the reason. The fact that
a lawful cause for the dismissal is available is not a defense where the employee
is actually discharged because of his union activities. But if the dismissal was
actually motivated by a lawful reason, the fact that the employee is engaged in
union activities will not prevent the employer from discharging the employee for
cause.

Union security clause— any form of agreement which imposes upon the employees the
obligation to acquire or retain union membership, otherwise their employment will be
terminated.
- It is discrimination favoring unionism. It is a valid kind of discrimination.
- But this union shop stipulation should be strictly construed.
- To validly dismiss an employee under this, there should be:
 a clear and unequivocal statement that loss of good standing in the union is a
cause for dismissal; and
 employer must observe due process

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 - All employees in the Bargaining Unit covered by a closed-shop agreement are
subject to its term except:
(1) An employee who at the time the closed-shop agreement takes effect is a bona
fide member of a religious org which prohibits its members from joining labor
unions based on religious grounds
(2) employee already members of a union other than the majority at the time the
closed-shop agreement took effect; and
(3) employees excluded from the closed-shop agreement by express terms (also,
those who are not members of the Bargaining Unit)

Hiring Continued Ground for

Employment Termination
Union Shop employees have After some time, If the employee does
access to labor employee must not join the union after
market; Can be hired become a member reasonable time, it will
even if not union be a ground for
member. termination

After due process is

observed.
Closed Shop employee must Must be a member all If not a member at
become a member at through-out anytime, ground for
the time of hiring termination

After due process is

observed
Maintenance Already a member at Must maintain If disaffiliates from
shop the time of hiring membership, union, grounds for
otherwise ground for termination
termination
After due process is
observed

(6) To dismiss, discharge, or otherwise prejudice or discriminate against and employee for
having given or being about to give testimony under this Code.

(7) To violate the duty to bargain collectively

(8) To pay negotiation or atty’s fees to the union or its officers or agents as part of the
settlement of any issue in collective bargaining or any other dispute

(9) Violation of the CBA— to constitute ULP, violation must be gross, i.e., flagrant and
malicious refusal to comply with the economic provisions of the CBA (cf. Art. 261). If not
gross, then it is not ULP.

ULP of Labor Organization

(1) To restrain or coerce employees in their exercise of right to self-org. However, a labor
org shall have the right to prescribe its own rules re membership.

(2) To cause employer to discriminate against an employee, including discrimination on the

basis of membership/ non-membership in the organization

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(3) Violation of duty to bargain collectively

(4) To cause an employer to pay money or other things of value, in the nature of an
exaction, for services which are not performed, including the demand for fee for union
negotiations (featherbedding/ make-work schemes)—spreading or creating employment
by unnecessarily maintaining or increasing the number of employees used, or amount of
time consumed, to work on a particular job.

(5) To ask for or accept negotiations or atty’s fees from employers as part of the settlement
of any issue in CB or other dispute (sweetheart contract)— here, a CBA does not
substantially improve the employees’ wages and benefits. It is a juicy deal between the
employer and the bargaining agent.

(6) To violate a CBA—to constitute ULP, violation must be gross, i.e., flagrant and malicious
refusal to comply with the economic provisions of the CBA (cf. Art. 261). If not gross,
then it is not ULP.

UNION CONCERTED ACTIVITIES

(Arts. 263-266)

LABOR DISPUTE[(Art. 212 (l)]—— includes any controversy or matter 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 employer and
employee.

STRIKE/ LOCKOUT
 The law treats strike and lockout similarly because both connote the temporary stoppage
of work in relation to a labor dispute.
 The only difference is in the identity of the doer.

Strike [(Art. 212 (o)]—any temporary stoppage of work by the concerted action of
employees as a result of an industrial or labor dispute.
* if not based on a labor dispute= illegal strike

Lockout [(Art. 212 (p)]—any temporary refusal of an employer to furnish work as a result of
an industrial or labor dispute.

Valid grounds for strike or lockout (Art. 263)

(1) Bargaining deadlock (economic strike)
(2) ULP
- When ULP is found to have been actually committed; or
- When the union/ employer believed in good faith that ULP was committed, although
found subsequently as not committed (“good faith strike”)

Procedure (Art. 263)

*Note: employer or labor org must have first bargained collectively
(1) filing notice of strike/ lockout (cooling-off period)
 If bargaining deadlock—30 days before intended date - who files? Only the
exclusive bargaining agent

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  If ULP— 15 days before intended date except in case of union busting (i.e.,
where existence of union is threatened, e.g., dismissal from employment of union
officers)
- who files? the exclusive bargaining agent; or if none, the LLO affected by the
ULP (remember: only a legitimate labor org can legally hold a strike)

 In case of union busting, the union may take action immediately (i.e, they can
disregard the 15-day cooling-off period) but only after the strike-vote is obtained
and results submitted to the NCMB at least 7 days before the intended date of
strike/ lockout (this 7-day period cannot be disregarded)

(2) Observance of the cooling-off period

 Duty of NCMB to exert all efforts at mediation and conciliation to effect a
voluntary settlement.
 If still unsettled after cooling-off period, union may strike/employer may declare
lockout.

Decision to declare a strike / lockout

- must be approved by a majority of the total union membership in the bargaining unit /
majority of the board of directors of the corporation
- obtained by secret ballot in meetings for that purpose

› decision is valid for the duration of the dispute based on substantially the same ground as
when the vote was taken.
› The union or employer shall furnish the NCMB the results of the voting (strike-vote) at
least 7 days before the intended strike or lockout, subject to the cooling-off period (hence
strike/ lockout should only be after the appropriate cooling-off period PLUS 7 days; the
cooling-off period and the 7-day period are counted separately)

Assumption of Jurisdiction by the Sec. of Labor/ Certification to NLRC for compulsory

arbitration— in cases of labor dispute in an industry indispensable to national interest
(as determined by the President of the Philippines)

Effect of AJ or certification:
 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 assumption, all striking or locked out
employees shall immediately return-to-work and the employer shall immediately
resume operations and readmit all workers
 Before or at any stage of the compulsory arbitration, the parties may opt to submit the
dispute to voluntary arbitration (VA); also, the President of the Philippines is not
precluded from intervening at anytime and assuming jurisdiction over the dispute
 Sec., NLRC, or VA shall decide within 30 days. Decision of these or the President
shall be final and executory 10 days from receipt of the parties.

 The moment there is Presidential (or by Secretary of Labor) assumption of jurisdiction,

whether a return-to-work order is issued or not, the return-to-work order is an integral
part of the assumption of jurisdiction. (Sarmiento v. Tuico, 1988)

Not valid grounds for strike/ lockout

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[RA 6727; Book V, Rule XXII, Sec. 5]
(1) Inter-union dispute— conflict between and among LLOs involving representation for
purposes of CB or other conflict [Book V, Rule I, Sec. 1 (x)]

(2) Intra-union dispute— conflict between and among union members (violation of rights
and conditions of membership, disagreement over the union’s constitution and by-laws
or those arising from chartering or affiliation of union) [Book V, Rule I, Sec. 1 (bb)]

(3) Wage distortion, per RA 6727 (Wage Rationalization Act) (Ilaw at Buklod ng
Manggagawa v. NLRC, 1991)

PICKETING— walking and patrolling the vicinity of a place of business involved in a labor
dispute (this may happen even if no strike or work stoppage)

 Peaceful picketing is entitled to protection as an exercise of free speech, but the courts
are empowered to confine or localize the sphere of demonstration to the parties to
the labor dispute. Court may insulate establishments/ persons with no connection to
the dispute. (this is the “innocent by-stander” rule, giving third persons right to
regulate the dispute)

PROHIBITED ACTIVITIES (hence making it an illegal strike/ lockout/ picketing) (Art. 264)
(1) Strike/ lockout without
(a) Bargaining collectively first
(b) Filing the notice required or
(c) Obtaining the necessary strike or lockout vote and reporting it to the NCMB

(2) Strike/ lockout after AJ 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.

(3) Obstruct, impede, or interfere with, by force, violence, coercion, threats or

intimidation, any peaceful picketing by employees during any labor controversy or in
the exercise of the right to self-organization or collective bargaining (strike-beaker), or
shall aid or abet such obstruction or interference

(4) Employment of strike-breaker/ employed as strike-breaker

(5) Public official / employee, AFP or PNP officers / personnel bringing in, introducing, or
escorting in any manner, any individual who seeks to replace strikers in entering or
leaving the premises of a strike area, or work in place of the strikers.
Rule: Police shall keep out of the picket lines unless
1. actual violence or other criminal acts occur; or
2. taking any measure necessary to maintain peace and order, protect life and
property, and/or enforce the law and legal order.

(6) Acts of violence, coercion or intimidation or obstruct the free ingress to or egress from
the employer’s premises for lawful purposes or obstruct public thoroughfares.

CONSEQUENCES OF CONCERTED ACTIONS ON THE EMPLOYMENT STATUS

(1) Lawful Strike/ Lockout
a. Dismissal in a lawful economic strike— reinstatement (no backwages because
―no work, no pay‖)

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 b. Dismissal in a lawful ULP strike
i. employees who were discriminatorily dismissed because of union activities—
reinstatement + backwages
ii.employees who voluntarily went on strike because of such ULP— reinstatement
only
 Court has still the discretion, despite the finding of ULP, whether or not to grant
backpay

 Any worker or union officer who knowingly participates in the commission of illegal
acts during a lawful strike—justified dismissal
 Mere participation of a worker in a lawful strike—not a ground for his dismissal,
even if a replacement had been hired by the employer during the lawful strike [Art.
264 (a)]

(2) Unlawful Strike/ Lockout

a. Dismissal of employee in an unlawful lockout— reinstatement + full backwages
[Art. 264 (a)]
b. Dismissal of employee in an unlawful strike
i. Union officer who knowingly participates in an illegal strike— justified dismissal ii.
Any worker or union officer who knowingly participates in the commission of
illegal acts during an illegal strike—justified dismissal
iii. Participation of a worker— not ground for dismissal. There must be proof that
he committed illegal acts during the strike.

Note: The penalty imposable to erring strikers does not always have to be dismissal.
It may be scaled down to suspension especially of there is a finding that both the
employer and employees contributed to the volatile atmosphere. (PAL v. Brilliantes,
1997)

WHEN IS A STRIKE ILLEGAL

 Contrary to statutory prohibition
- If employees do not have the right to strike (e.g., govt employees)

 Violates a specific requirement of law (procedural requirements) - If did not

observe the procedural requirements in Art. 263

 Validity of grounds
- If not because of bargaining deadlock or ULP

 Employing unlawful means

- If prohibited activities were committed such as:
 Violence, coercion or intimidation
 Obstruct the free ingress to or egress from the employer’s premises
 Obstruct public thoroughfares
 Coercing or threatening non-striking employees (amounts to ULP by labor org)

 If there is an injunction (in national interest strikes)

 Violation of agreement of the parties

- If there is a no-strike clause in the CBA (applies only to economic strikes)

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LABOR INJUNCTION ON LABOR DISPUTES (Arts.254,218 (e), 264)
Issuing agency—NLRC
Rule: No temporary or permanent injunction or restraining order in any case involving
labor dispute.
Except: Under Arts. 264 and 218 (e)

Procedure for issuance of injunction (not ex parte)

(1) Hearing of the testimony of witnesses,
(2) with opportunity for cross-examination, in support of the allegations of a complaint
made under oath,
(3) and testimony in opposition thereto, if offered, and
(4) only after a finding of fact by the commission, to the effect:
(a) That prohibited or unlawful acts have been threatened and will be committed and
will be continued unless restrained (no injunction or TRO shall be issued except
against those making the threat or committing the prohibited or unlawful act or
actually authorizing or ratifying the same after actual knowledge thereof);
(b) That substantial and irreparable injury to complainants property will follow;
(c) That greater injury will be inflicted upon complainant by the denial of relief than
will be inflicted upon defendants by the granting of relief;
(d) That complainant has no adequate remedy at law; and
(e) That the public officers charged with the duty to protect complainants’ property
are unable or unwilling to furnish adequate protection.

(5) Personal notice to:

- all known persons against whom relief is sought
- to the Chief Executive and
- other public officials of the province or city within which the unlawful have been
threatened or committed charged with the duty to protect complainant's property
[Art. 218 (e)]

 With regard to allegations under Art. 264 (prohibited activities), follow the same
procedure. [Art. 264 and 218 (e) differ only in the allegations]

Conditions for Issuance of TRO ex parte

1. a substantial and irreparable injury to complainant's property will be unavoidable
2. there is testimony under oath, sufficient, if sustained, to justify the NLRC in issuing a
temporary injunction upon hearing after notice
3. the complainant shall first file an undertaking with adequate security in an amount to be
fixed by the commission sufficient to recompense those enjoined for any loss, expense
or damage caused by the improvident or erroneous issuance of such order or
injunction; and
4. the TRO shall be effective for 20 days only. [Art. 218 (e)]

ACTIVITIES / ASSESSMENT:

1. What is the nature of unfair labor practices?

2. What is the importance of the totality conduct doctrine?
3. What are the different union concerted activities? Explain each.
4. Illustrate the difference between strikes, lockouts and picketing. Explain each.

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 LESSON XV SUMMARY OF JURISDICTION

OVERVIEW: In this chapter, you will learn the jurisdiction of cases in labor to what or
how to file and where should it be filed. In addition to this this chapter will focus on
the Social Security Act (RA8282) and Government Service Insurance Act (RA 8291)
and its function.

LEARNING OUTCOMES:
After the end of this lesson, you will be able to:

• Familiarize jurisdiction of cases in labor

• Know the functions of offices that handle labor issues
• Know the importance of social legislation
• Understand the Salient Features of Social Security Act (RA 8282)
• Know the function of the Government Service Insurance Act (RA 8291)

COURSE MATERIALS:

SUMMARY OF JURISDICTION

VOLUNTARY ARBITRATORS (VA) (Arts. 261-262)

 supervised by the National Conciliation and Mediation Board (NCMB)

Original and Exclusive jurisdiction

1. Unresolved grievances from the interpretation or implementation of the CBA except
gross violation of the CBA (which is a ULP, hence under LA’s jurisdiction)
2. Unresolved grievances arising from the interpretation or enforcement of company
personnel policies
3. Any other labor dispute, upon agreement of the parties

Procedure

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 Grievances submitted to the grievance
machinery of the CBA,
if unresolved within 7 days from submission

voluntary arbitration
(to be decided within 20 calendar days)

Decision
(final and executory in 10 calendar Days from receipt of the parties)

NATIONAL CONCILIATION AND MEDIATION BOARD (NCMB) [created by EO 251

(1987)]
 absorbed the conciliation, mediation, and voluntary arbitration functions of the Bureau
of Labor Relations

Functions
(1) formulate policies/ guidelines pertaining to effective mediation and conciliation of
labor disputes
(2) perform preventive mediation and conciliation functions
(3) formulate policies/ guidelines pertaining to the promotion of non-adversarial
schemes, grievance handling, voluntary arbitration, and other voluntary modes of
dispute settlements
(4) administer the voluntary arbitration program, maintain/ update a list of VAs
(5) provide counseling and preventive mediation assistance

NATIONAL LABOR RELATIONS COMMISSION (NLRC) (Arts. 213, 217, 223)— the
country’s labor court (principal government agency that hears and decides labor-mgt
disputes). The NLRC has regional arbitration branches or RABS. The labor arbiters or
executive labor arbiters are the NLRC representatives in the country’s various regions.

Original and exclusive jurisdiction of the Labor Arbiter (LA)- Compulsory

Arbitration
- ULP cases
- Termination disputes
- Cases involving wages, rates of pay, hours of work, and other terms and conditions
of employment, if accompanied with a claim for reinstatement
- Claims for damages arising from employer-employee relationship
- Cases arising from Art. 264, including questions involving the legality of strikes and
lockouts
- Whether accompanied with claim for reinstatement , all other claims arising from
employer-employee relationship, including those of persons in domestic or household
service involving an amount exceeding P5,000 (if not exceeding P5,000, Regional
Director of DOLE has jurisdiction)

Note: these cases may be under the jurisdiction of the VA based on the agreement of
the parties (without clear agreement, LA has jurisdiction)

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Exclusive appellate jurisdiction of the Commission over all cases decided by the LA—
not any more compulsory arbitration (Note: it is only in national interest strikes that the
Commission conducts compulsory arbitration)

Powers of the NLRC (Arts. 218-219)

(1) Power to make rules and regulations pertaining to its functions;
(2) Power to administer oath and issue subpoena and summons;
(3) Power to investigate, hear, and decide disputes within its jurisdiction;
(4) The power to hold persons in contempt;
(5) The power to issue restraining orders and injunctions;
(6) Power to conduct ocular inspection;
(7) Power to decide appealed cases

Procedure

Labor Arbiter
[Note: a decision of the Labor Arbiter reinstating a dismissed employee, insofar as the
reinstatement aspect is concerned, shall be immediately executory (readmitted to work or
reinstated in the payroll at the option of the employer), pending appeal]

appeal to the NLRC

(within 10 calendar days from
receipt of the decision)

Commission shall decide

(within 20 calendar days
from receipt of answer of
the other party)

Finality of the decision of the Commission

(after 10 calendar days from receipt
of notice by the parties)

Remedies available to challenge final decision

1. Motion for Reconsideration within 10 calendar days from receipt of the decision
based on palpable or patent errors; only 1 MR is allowed; or
2. Special civil action for certiorari under Rule 65 not later than 60 days from receipt of
notice of judgment; filed with the CA (St. Martin Funeral Homes v. NLRC).

BUREAU OF LABOR RELATIONS (BLR) and the Labor Relations Divisions in the
Regional Offices of DOLE (Art. 226-233; DO 40-03)
• Hearing Officer: Med-Arbiter in the BLR or Regional Office
• Jurisdiction is largely confined to union matters, CB registry, and labor education
because of the creation of NCMB (BLR no longer handles labor-mgt disputes).

Original and exclusive jurisdiction

- Inter-union/ Intra-Union disputes— may be filed only by a LLO
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 Inter-union conflicts (e.g., representation issue/ cancellation of registration)
Intra-union conflicts (e.g., election of officers of the union/ compliance with CBL/
violations of rights of union membership)

- Other related labor relations disputes between the union and the employer or any
individual or group that is not a Labor Organization or worker’s association (e.g.,
cancellation of registration of unions/ petition for interpleader) (added by DO 40-03)—
may be filed by any party-in-interest

Procedure

File with DOLE Regional Office where registered File with the BLR
(if independent union/chartered local
) (if federation/national union)

Bureau Director
Regional Director (20 days from last hearing within which to
(if cancellation of registration)
or decide)
Mediation-Arbiter (other dispute ) d

(decide within 20 days from last hearing)

Appeal to Secretary of Labor

Appeal to Bureau
(10 days from receipt of decision; Bureau will
decide within 20 days from receipt of records)
Finality of decision of the Secretary after
10 days from receipt of parties
Finality of decision of the Bureau after 10 days
from receipt of parties

(appeal stays decision of Med-Arb/ Regional

Director)
(appeal stays decision of Bureau Dir.)

 Relationships/ rights of the parties prior to the filing of the complaint or petition shall
continue during pendency of the proceedings. (Book V, Rule XI, Sec. 3)
 Pendency of an intra/ inter-union dispute and other related labor relations dispute is not a
prejudicial question to any petition for Certification of Election nor is it a ground for
dismissal of such petition. (Book V, Rule XI, Sec. 3)

ADMINISTRATION AND ENFORCEMENT OF LABOR LAWS (Arts. 128-129)

Powers
Visitorial and enforcement powers (Art. 128)—no court/ entity can issue TRO or injunction
against enforcement orders issued here
1. Inspection
a. Access to employer’s records and premises
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 b. Right to copy records
c. Right to question any employee
d. Investigate any fact, condition or matter which may be necessary to determine
violations, or which may be necessary to aid enforcement of the LC or any labor
law or order
2. Issue compliance orders to give effect to labor law regulations based on the findings of
inspection and issue writs of execution for enforcement of the orders
3. To order suspension of operations of an establishment whose non-compliance with law
poses grave danger to workers

Money Claims Adjudication under Art. 129— Summary Proceeding

4 Jurisdictional Requirements:
1. If claimant is an employee or person in domestic or household service;
2. Claim arises from employer-employee relationship
3. No claim for reinstatement;
4. Aggregate claims of each employee or househelper does not exceed P5,000 (if
there is a question of reinstatement or claim exceeds P5,000, LA has jurisdiction)

Difference between Art. 128 and Art. 129

Art. 128
Nature Inspection of establishments and
issuance of orders to comply with labor
legislation in general; proceedings here
are offshoots of the inspection)
Art. 129
Adjudication of money
claims (labor standards
only); proceedings are
initiated by complaints

Jurisdictional These do not apply here See above

requirements
Who exercises Sec. of Labor or duly authorized reps Regional Director or any
power (officers (may or may not be the DOLE Regional Hearing Officer of DOLE
designated) Director)
Appeal Appealable to Secretary of Labor Appealable to NLRC

PRESCRIPTIVE PERIODS
ULP 1 year
Money Claims 3 years
Offenses under LC 3 years
Illegal Dismissal 4 years

SOCIAL LEGISLATION

SALIENT FEATURES
Social Security Act of 1997 Government Service
(RA 8282) Insurance Act of 1997 (RA
8291)
EMPLOYER Any person, natural or juridical, (1) The national government,
domestic or foreign, who carries on its political subdivisions,
in the Philippines any trade, branches, agencies or
business, industry undertaking or instrumentalities
activity of any kind and uses the (2) GOCCs, and financial
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 services of another person who is
under his orders as regards
employment
Exempt Employer:
(1) Government and any of its
political subdivisions, branches
and instrumentality, including
GOCCs
(2) Self-employed person who is
both employer and employee at
the same time
EMPLOYEE (1) Any person who performs
services for an employer in
which either or both physical or
mental efforts are used and
who receives compensation for
such services, where there is
an employer-employee
relationship
(2) Self-employed person who is
both employer and employee at
the same time
DEPENDENT (1) Spouse— legal spouse entitled
by law to receive support from
member
(2) Child—
(a) Legitimate; legitimated;
legally adopted; and
illegitimate;
(b) Not married;
(c) Not gainfully employed; and
(d) Has not reached 21 years
of age, or if over 21 years,
is congenitally incapacitated
or while still a minor has
been permanently
incapacitated and incapable
of self-support, physically or
mentally
(3) Parent— who is receiving
support from the member
BENEFICIARIES
(1) Primary (a) Dependent spouse until (a) Legal, dependent spouse
remarriage; and
(b) Dependent legitimate and (b) Dependent children
legitimated or legally adopted
institutions with original
charters
(3) The Constitutional
Commissions and the
Judiciary
(1) Any person receiving
compensation while in the
service of an employer
whether by election or
appointment, irrespective of
status of appointment;
(2) Barangay officials; and
(3) Sanggunian officials
(1) Spouse— legitimate and
dependent for support
upon member or pensioner
(2) Child—
(a) Legitimate; legitimated;
legally adopted; and
illegitimate;
(b) Not married;
(c) Not gainfully employed;
and
(d) Has not age of
majority, or if over the
age of majority but
incapacitated
and incapable of
self-
support, due to mental
or physical defect
acquired prior to age of
majority
(3) Parent— who is dependent
upon member for support
until remarriage; and
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 and illegitimate children

(2) Secondary Dependent parents, in the absence (a) Dependent parents; and
or primary beneficiaries (b) Legitimate descendants
subject to restrictions on
dependent children

(3) Others Absent primary and secondary

beneficiaries, any other person
designated by member as
secondary beneficiary

BENEFITS (1) Monthly pension (1) All members

(2) Dependents’ pension (a) Life insurance
(3) Retirement (b) Retirement
(4) Death (if no beneficiary (c) Disability
qualifies under the Act, benefits (d) Survivorship
shall be paid to legal heirs in (e) Separation
accordance with the law of (f) Funeral
succession)
(5) Permanent disability (2) Judiciary and
(6) Funeral Commissions—
(7) Sickness insurance only
(8) Maternity (but only for the 1st 4
deliveries or miscarriages) All are tax-exempt
Const
All are tax-exempt . life
COVERAGE
(1) Compulsory (1) All employees not over 60 years Compulsory for all employees
of age and their receiving compensation who

employers have not reached compulsory

(2) Domestic helpers with monthly retirement age, irrespective of
income not less than P1,000 employment status
(3) Self-employed employees as
may be determined by the Members of Judiciary and
Commission, including, but not Constitutional Commissions
limited to: qualify for life-insurance only
(a) All self-employed
professionals
(b) Partners and
singleproprietors of business
(c) Actors and actresses,
directors, scriptwriters and
news correspondents, who
do not fall within definition of
employees
(d) Professional athletes,
coaches, trainers
and
jockeys;
(e) Individual farmers
and fishermen
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 Effectivity:
For employees—first day
of employment
For employers—first day of his
operation
For self-employed—upon their
registration with the SSS

(1) Filipinos recruited by foreign-

(2) Voluntary based employers for
employment abroad
(2) employee under compulsory
coverage is separated from
employment
(3) Self-employed— realizes no
income in any given month
(4) Spouse who devotes full time
managing household and family
affairs unless employed subject
to mandatory coverage

Any foreign government,

international organization or their
wholly- owned instrumentality
employing workers in the
(3) By arrangement Philippines or employing Filipinos
outside the Philippines may enter
into agreement with Philippine govt
for inclusion of such employees in
SSS except those already covered
by their respective civil service
retirement system.

Page 88 of 92
EXCEPTIONS (1) Employment purely casual and (1) Members of the AFP
FROM COVERAGE not for purpose occupation, or (2) Members of the PNP
business of employer
(2) Service performed by an (members of the judiciary and
employee on or in connection constitutional commissions—
with alien vessel, if employed
life insurance only)
when such vessel is outside of
Philippines
(3) employees of Philippine
government or instrumentality
or agency thereof
(4) Service performed in the
employ of a foreign
government, or international
organizations, or their wholly
owned instrumentalities
(5) Services performed by
temporary and other employees
excluded by SSS regulation
(6) employees of bona fide
independent contractors shall
not be deemed employees of
the employer engaging the
services of an independent
contractor
BASIS OF CLAIM Non-work connected disability, GSIS is exempt from liability
sickness, maternity, death and old where permanent disability due
age and other contingencies to his grave misconduct,
resulting in loss of income or habitual intoxication, or willful
financial burden intention to kill himself or
another

ACTIVITIES / ASSESSMENT:

1. State the jurisdiction of cases in labor.

2. What are the functions of offices that handle labor issues?
3. What is the importance of social legislation?
4. Give the Salient Features of Social Security Act (RA 8282)
5. What is the function of the Government Service Insurance Act (RA 8291)?

Page 89 of 92
 Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

Office of the Vice President for
Academic Affairs
College of Business Administration
Midterm Examination in
LW 412: LABOR LAW AND LEGISLATION
Prof. Perry David L. Solosa

Problem Solving (10 points each)

Write answer in concise and simple words. Answer directly to the point supported by legal
basis.

1. Santino works at 8:00 am to 10:00am every day under the H20 waterworks. He
inspects and maintains the water pipeline in the subdivision. For ten years he work
the same hours a day. Can you consider Santino a regular employee? State your
basis? What is a regular employee?

2. Olivia works at Merks Inc., she acquired SSS loan and eventually added personal
loan from her co-worker. Here comes payday, she received her payroll reflecting
deductions of SSS loan and her personal loan. Since her pay is shockingly low, Olivia
complained for diminution of her salary. Will her complaint prosper? What is
diminution of wage? Up to what extent deductions are allowed? Is the SSS loan
deductible to Olivia’s wage? Why? Is the personal loan deductible to her wage? What
are the requirements to make deductions allowable?

3. Miriam is working at Bonifacio Elementary School as a regular janitress, unluckily she

was terminated from work without just cause. She went to TULFO and filed a
complaint against the principal. Is it correct to file a complaint with Tulfo? Where
should Miriam file her complaint? Why?

4. Antonio and Milo worked at Sapphire Altrusion Inc. Antonio works at night shift. Milo
works at dayshift. However, Milo call sick and compelled Antonio to extend working
hours as instructed by the supervisor. How will the company compensate (pay)
Antonio for the Night shift and extended hours of work with the supervisor’s consent?
In case Antonio refuses to work in extended hours what should be his reasonable
ground? What are the grounds the worker cannot refuse Overtime?

5. What are the rights of the worker under the constitutional provision in the 1987
Philippine Constitution, state ten (10) rights.

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 Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

Office of the Vice President for
Academic Affairs College of Business
Administration

Final Examination in
LW 412: LABOR LAW AND LEGISLATION
Prof. Perry David L. Solosa

Problem Solving (10 points each)

Please answer direct to the point and give the legal justification.

1. Romeo assigned in Manila branch was transferred to Laguna. He questioned the

supervisor and led to a fight. Romeo argued that it is a constructive dismissal. What
is a grievance machinery? What are the issues handled under the grievance
machinery? In case your issue did not prosper, where should you seek reliefs? What
is a constructive dismissal? Where do you seek relief if you were constructively
dismissed? What is management prerogative?

2. Sharon is an employee of Pagoda Shine Co. with a Collective Bargaining Agreement

with Zinnot Labor Union. However, Sharon is restricted to join Labor Union due to
religious practices. Her comes Christmas time, the labor union succeed in pushing for
14th month bonus for employees. Is Sharon entitled to the bonus? What is agency
fee? How does agency fee apply? When is it applied? To whom it is applied?

3. Ricardo is a member of the Labor Union of Genetiles Inc. He is working 10 hours a

day for four days a week. He felt stress and abuse because he wants to claim for the
overtime pay exceeding 8 hours of work a day. Is Ricardo’s claim correct? If he is
filing for complaint where should he file his complaint? What does the labor Code
provides for hours worked? Can he claim overtime pay? Why?

4. Fernando is the manager of the department, he is the one who hires and selects
employees. He makes policy for the operation in the department. He was invited by
Geno his friend from the rank and file to join the Labor Union and offered a position in
the Labor Union. Is Ricardo has the right to join the Labor Union? Why?
In case Fernando is a supervisor who oversees employees is he allowed to join
union? What Labor Union should Ricardo join in case he is a supervisor?
In case, Fernando is simply a co-worker from the rank and file can he join Geno in
the Labor Union? Why?

5. Marian is working at Mango Genetics Co. as she progress at work, she was given a
probationary status. The contract provides for 2 years probationary period and that
she qualifies and pass the requirements for the regularization. However, two years
passed, unfortunately she was not hired. What is security of Tenure? How can a
probationary becomes a regular employee? In case the policy of the company
exceeds from the labor law requirements for maturity of probationary status to regular
status, which will prevail, is it the labor law or the company policy? Why?

Page 91 of 92
 GRADING SYSTEM

Class Standing 70%

• Activities / Assessment
Midterm / Final Examinations 30%
TOTAL 100%

Midterm Grade + Final Term Grade = FINAL GRADE

2

REFERENCES

• Labor Code of the Philippines

• The Labor Code of the Philippines, (Renumbered) DOLE, Edition., Presidential

Decree 442 of 1974 as amended and renumbered. Copyright 2017 by DOLE

• Everyone’s Labor Code 8th Ed. By Cesario A. Azucena, 2013

• Compendium on Labor Laws, 3rd. Ed. By A. H. Abad, 2011

• The Labor Code with Comments and Cases Vol.1 t, 5th Ed., by Cesario A. Azucena

2017

• Labor Law Handbook: The Labor Code with Essential Notes and Related Laws: Part

of Labor Law-labor Relations Series, 4th Ed., by Cesario A. Azucena, 2017

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