LABOR LAW AND

SOCIAL LEGISLATION

2015 GOLDEN NOTES

UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
MANILA
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 ACADEMIC YEAR 2015-2016

CIVIL LAW STUDENT COUNCIL

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HOWELL ICO
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ATTY. AL CONRAD B. ESPALDON

ADVISER
 ACADEMICS COMMITTEE
MENANDRO MAGCULANG
KATRINA GRACE C. ONGOCO EXECUTIVE COMMITTEE
ANGELIE C. QUINTO

MA. SALVE AURE M. CARILLO SECRETARY GENERAL

RAFAEL LORENZ SANTOS

REUBEN BERNARD M. SORIANO LAYOUT AND DESIGN
JUAN PAOLO MAURINO R. OLLERO

LABOR AND SOCIAL LEGISLATION COMMITTEE

CAMILLE ANGELICA B. GONZALES LABOR LAW COMMITTEE HEAD
DALEY ROSE A. LIMOSINERO ASST. COMMITTEE HEAD LABOR STANDARDS
SONIA MAE C. BALBABOCO ASST. COMMITTEE HEAD LABOR RELATIONS
EMMA RUBY J. AGUILAR ASST. COMMITTEE HEAD SOCIAL LEGISLATION
ANDREA VICTORIA R. AMOG MEMBER
AECAYA CHRISTINE V. CALERO MEMBER
NIKKI CAREEN R. PALACIOS MEMBER
LAURENCE P. SORIAO MEMBER

DEAN SALVADOR A. POQUIZ

ADVISER
 FACULTY OF CIVIL LAW
UNIVERSITY OF SANTO TOMAS

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LEGAL COUNSEL
UST CHIEF JUSTICE ROBERTO CONCEPCION LEGAL AID CLINIC

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LENY G. GADANIA, R.G.C.

GUIDANCE COUNSELOR
 OUR DEEPEST APPRECIATION TO OUR
MENTORS & INSPIRATION

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DEAN SALVADOR A. POQUIZ

ATTY. CESAR E. SANTAMARIA, JR.

DEAN ANTONIO H. ABAD JR.

USEC. JOSEPHUS JIMENEZ

ATTY. MARLON J. MANUEL

For being our guideposts in understanding the intricate sphere of Labor Law and Social
Legislation.
- Academics Committee 2015
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 LABOR LAW AND SOCIAL LEGISLATION
2015 BAR EXAMINATIONS

I. Fundamental Principles and Policies 1

A. Constitutional provisions 4
1. Article II, Secs. 9, 10, 11, 13, 14, 18, 20.
2. Article III, Secs. 1, 4, 7, 8, 10, 16, 18(2).
3. Article XIII, Secs. 1, 2, 3, 13, 14.

B. Civil Code 6
1. Article 19
2. Article 1700
3. Article 1702

C. Labor Code 7
1. Article 3 7
2. Article 4 7
3. Article 166 8
4. Article 211 8
5. Article 212 8
6. Article 255 10
7. Article 277 11

II. Recruitment and Placement 13

A. Recruitment of local and migrant workers 13

1. Illegal recruitment (Sec. 5, R.A. No. 10022) 16
a) License vs. authority 18
b) Essential elements of illegal recruitment 18
c) Simple illegal recruitment 19
d) Illegal recruitment in large scale 19
e) Illegal recruitment as economic sabotage 19
f) Illegal recruitment vs. estafa 20
g) Liabilities 20
(i) Local recruitment agency 20
(ii) Foreign employer 21
(a) Theory of imputed knowledge 21
(iii) Solidary liability 22
h) Pre-termination of contract of migrant worker 22

2. Direct hiring 24

B. Regulation and enforcement 24

1. Suspension or cancellation of license or authority (Art. 35, Labor Code) 24
2. Regulatory and visitorial powers of the DOLE secretary 25
3. Remittance of foreign exchange earnings 25
4. Prohibited activities 26

III. Labor Standards 30

A. Hours of work 30
1. Coverage/Exclusions (Art. 82, Labor Code) 30
2. Normal hours of work 31
a) Compressed work week 33
3. Meal break 34
4. Waiting time 34
 5. Overtime work, overtime pay 35
6. Night work (R.A. No. 10151), Night shift differential 37
7. Part-time work 38
8. Contract for piece work (see Civil Code) 38

B. Wages 39
1. Wage vs. salary 40
2. Minimum wage defined, Minimum wage setting 40
3. Minimum wage of workers paid by results 41
a) Workers paid by results 41
b) Apprentices 42
c) Learners 42
d) Persons with disability 42
4. Commissions 42
5. Deductions from wages 42
6. Non-diminution of benefits 43
7. Facilities vs. supplements 43
8. Wage Distortion/Rectification 43
9. Divisor to determine daily rate 45

C. Rest Periods 46
1. Weekly rest day 46
2. Emergency rest day work 47

D. Holiday pay/Premium pay 48

1. Coverage, exclusions 50
2. Teachers, piece workers, takay, seasonal workers, seafarers 50

E. Leaves 51
1. Service Incentive Leave 51
2. Maternity Leave 53
3. Paternity Leave 53
4. Parental Leave (R.A. No. 8972) 54
5. Leave for Victims of Violence against Women and Children (R.A. No. 9262) 54
6. Special leave benefit for women 54

F. Service Charge 54

G. Thirteenth Month Pay 55

H. Separation Pay 58

I. Retirement Pay 58

a. Eligibility 59
b. Amount 60
c. Retirement benefits of workers paid by results 61
d. Retirement benefits of part-time workers 61
e. Taxability 61

J. Women Workers 61
a. Provisions against discrimination 61
b. Stipulation against marriage 62
c. Prohibited acts 63
d. Anti-Sexual Harassment Act (R.A. No. 7877) 64

K. Employment of Minors (Labor Code and R.A. No. 7678, R.A. No. 9231) 66
 L. Househelpers (Labor Code as amended by R.A. No. 7655, An Act Increasing the 69
Minimum Wage of Househelpers; see also Household Service under the Civil Code)

M. Employment of Homeworkers 74

N. Apprentices and Learners 75

O. Persons with disability (R.A. No. 7277, as amended by R.A. No. 9442) 79
a. Definition 79
b. Rights of persons with disability 79
c. Prohibition on discrimination against persons with disability 79
d. Incentives for employers 79

IV. Termination of Employment 81

A. Employer-employee relationship 81

1. Four-fold test 82

2. Kinds of employment 83
a. Probationary 83
b. Regular 87
c. Project employment 90
d. Seasonal 92
e. Casual 93
f. Fixed-term 94

3. Job contracting 95
a. Articles 106 to 109 of the Labor Code 95
b. Department Order No. 18-A 97
c. Department Circular No. 01-12 98
d. Effects of Labor-Only Contracting 99
e. Trilateral relationship in job contracting 99

B. Dismissal from employment 100

1. Just Causes 100
2. Authorized Causes 106
3. Due Process 112
a) Twin-notice requirement 112
b) Hearing; meaning of opportunity to be heard 113

C. Reliefs for Illegal Dismissal 116

1. Reinstatement 117
a. Pending appeal (Art. 223, Labor Code) 117
b. Separation pay in lieu of reinstatement 120

2. Backwages 121
a. Computation 122
b. Limited backwages 122

D. Preventive Suspension 123

E. Constructive Dismissal 123

V. Management Prerogative 125

A. Discipline 127
 B. Transfer of employees 127

C. Productivity standard 127

D. Grant of bonus 128

E. Change of working hours 128

F. Rules on Marriage between employees of competitor-employers 129

G. Post-employment ban 129

VI. Social Welfare Legislation (P.D. 626) 130

A. SSS Law (R.A. No. 8282) 130

1. Coverage 131
2. Exclusions from coverage 133
3. Benefits 133
4. Beneficiaries 137

B. GSIS Law (R.A. No. 8291) 141

1. Coverage 145
2. Exclusions from coverage 145
3. Benefits 145
4. Beneficiaries 150

C. Limited Portability Law (R.A. No. 7699) 151

D. Employees compensation coverage and when compensable 151

VII. Labor Relations Law 156

A. Right to self-organization 156

1. Who may unionize for purposes of collective bargaining 157

a) Who cannot form, join or assist labor organizations 157

2. Bargaining unit 160

a) Test to determine the constituency of an appropriate bargaining unit 160
b) Voluntary recognition 162
(i) Requirements
c) Certification election 163
(i) In an unorganized establishment 167
(ii) In an organized establishment 167
d) Run-off election 168
(i) Requirements
e) Re-run election 168
f) Consent election 168
g) Affiliation and disaffiliation of the local union from the mother union 169
(i) Substitutionary doctrine 171
h) Union dues and special assessments 171
(i) Requirements for validity 172
i) Agency fees 173
(i) Requisites for assessment 173
B. Right to collective bargaining 173

1. Duty to bargain collectively 174

a) When there is absence of a CBA 176

b) When there is a CBA 176

2. Collective Bargaining Agreement (CBA) 177

a) Mandatory provisions of CBA 178

(i) Grievance procedure 178
(ii) Voluntary arbitration 179
(iii) No strike-no lockout clause 179
(iv) Labor management council 180

b) Duration 180
(i) For economic provisions 181
(ii) For non-economic provisions 181
(iii) Freedom period 183

3. Union Security 183

a) Union security clauses; closed shop, union shop, maintenance of
membership shop, etc. 183
b) Check-off; union dues, agency fees 184

4. Unfair Labor Practice in collective bargaining 184

a) Bargaining in bad faith 184
b) Refusal to bargain 184
c) Individual bargaining 184
d) Blue sky bargaining 185
e) Surface bargaining 185

5. Unfair Labor Practice (ULP) 185

a) Nature of ULP 185
b) ULP of employers 185
c) ULP of labor organizations 193

C. Right to peaceful concerted activities 194

1. Forms of concerted activities 194
2. Who may declare a strike or lockout? 196
3. Requisites for a valid strike 199
4. Requisites for a valid lockout 199
5. Requisites for lawful picketing 203
6. Assumption of jurisdiction by the DOLE Secretary or Certification of the 204
labor dispute to the NLRC for compulsory arbitration
7. Nature of assumption order or certification order 206
8. Effect of defiance of assumption or certification orders 207
9. Illegal strike 208
a) Liability of union officers 209
b) Liability of ordinary workers 209
c) Liability of employer 210
d) Waiver of illegality of strike 211

10. Injunctions 211

a) Requisites for labor injunctions 211
b) Innocent bystander rule 212
VIII. Procedure and Jurisdiction 214

A. Labor Arbiter 214

1. Jurisdiction 214
a) versus Regional Director 215
2. Reinstatement pending appeal 216
3. Requirements to perfect appeal to NLRC 216

B. National Labor Relations Commission (NLRC) 219

1. Jurisdiction 219
2. Effect of NLRC reversal of Labor Arbiters order of reinstatement 221
3. Remedies 221
4. Certified cases 222

C. Bureau of Labor Relations Med-Arbiters 223

1. Jurisdiction (original and appellate) 223

D. National Conciliation and Mediation Board 224

1. Nature of proceedings 224
2. Conciliation vs. Mediation 225
3. Preventive mediation 226

E. DOLE Regional Directors 227

1. Jurisdiction 227

F. DOLE Secretary 227

1. Visitorial and enforcement powers 227
2. Power to suspend/effects of termination 228
3. Assumption of jurisdiction 229
4. Appellate jurisdiction 229
5. Voluntary arbitration powers 229

G. Grievance Machinery and Voluntary Arbitration 230

1. Subject matter of grievance 230
2. Voluntary Arbitrator 230
a) Jurisdiction 230
b) Procedure 230
c) Remedies 231

H. Court of Appeals 233

1. Rule 65, Rules of Court 233

I. Supreme Court 234

1. Rule 45, Rules of Court 234

J. Prescription of actions 234

 FUNDAMENTAL PRINCIPLES AND STATE POLICIES

LEGEND LABOR LAW

BFOQ - Bona Fide Occupational FUNDAMENTAL PRINCIPLES AND POLICIES
Qualification
BLR - Bureau of Labor Relations Labor
CB - Collective Bargaining
CBA - Collective Bargaining Agreement It is the exertion by human beings of physical or
CE - Certification Election mental efforts, or both, towards the production of
DOLE - Department of Labor and goods and services.
Employment
Ee - Employee The State affirms labor as a primary social
Er - Employer economic force. It shall protect the rights of
LA - Labor Arbiter workers and promote their welfare (1987
LC - Labor Code Constitution, Art. II, Sec. 18).
LLO - Legitimate Labor Organization
LOA Leave of Absence Declaration of basic policy
NCMB - National Conciliation and
Mediation Board It is the policy of the State to:
NLRC - National Labor Relations
Commission 1. Afford full protection to labor
NSD - Night Shift Differential 2. Promote full employment
OFW - Overseas Filipino Worker 3. Ensure equal work opportunities regardless
OT Overtime of sex, race, or creed
PCE - Petition for Certification Election 4. Regulate the relations betwwen Ers and
POEA - Philippine Overseas Employment workers.
Administration 5. Assure the rights of workers to self-
RAB Regional Arbitration Branch organization, collective bargaining, security
RD - Regional Director of tenure, just and humane conditions of
RH - Regular Holiday work (LC, Art. 3).
RTWPB - Regional Tripartite Wages and
- Productivity Boards SOCIAL JUSTICE
RW - Regular Wage
RWD - Regular Working Days The State shall promote social justice in all phases
SIL - Service Incentive Leave of national development (1987 Constitution, Art. II,
SLE - Secretary of Labor and Sec. 10).
Employment
ULP - Unfair Labor Practice The aim of Labor law is social justice
UT - Undertime
VA - Voluntary Arbitrator Social justice is neither communism, nor
VR - Voluntary Recognition despotism, nor atomism, nor anarchy, but the
WD - Wage Distortion humanization of laws and the equalization of
WRD Weekly Rest Day social and economic force by the State so that
justice in its rational and objectively secular
conception may at least be approximated. Social
Justice means the promotion of the welfare of all
the people, the adoption by the government of
measures calculated to insure economic stability of
all the competent elements of society, through the
maintenance of a proper economic and social
equilibrium in the interrelations of the members of
the community, constitutionally, through the
adoption of measures legally justifiable, or extra-
constitutionally, through the exercise of powers
underlying the existence of all governments on the
time-honored principle of salus populi est suprema
lex (Calalang v. Williams, G.R. No. 47800, December
2, 1940).

UNIVERSITY OF SANTO TOMAS

1 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
The promotion of social justice shall include the
commitment to create economic opportunities
based on freedom of initiative and self-reliance
(1987 Constitution, Art. XIII, Sec. 2).
Limitations in invoking the principle of social
justice
1. Not to undermine property rights resulting
in confiscation (Guido v. Rural Progress
Adm, L-2089, October 31, 1949). It should not
tolerate usurpation of property, public or
private.
2. May only protect the laborers who come to
court with clean hands (Phil.Long Distance
Telephone Co. v. NLRC, G.R. No. 80609, August
23, 1988) and their motives blameless
(Gustilo v. Wyeth Phils., G.R. No. 149629,
October 4, 2004).
3. Never result to an injustice or oppression of
the Er (Phil.Geothermal Inc. v. NLRC, G.R. No.
106370, September 8, 1994).
4. If it is used to shield wrongdoings. It cannot
be permitted to be the refuge of scoundrels
(PNCC v. NLRC, G.R. No. 83320, Feb. 9, 1989).
Q: May social justice as a guiding principle in
labor law be so used by the courts in sympathy
with the working man if it collides with the
Equal protection clause of the Constitution?
(2003 Bar Question)
A:Yes. The State is bound under the Constitution to
afford full protection to Labor and when conflicting
interests collide and they are to be weighed on the
scales of social justice, the law should accord more
sympathy and compassion to the less privileged
workingman (Fuentes v. NLRC, 266 SCRA 24,
January 2, 1997).
However it should be borne in mind that social
justice ceases to be an effective instrument for the
equalization of the social and economic forces by
the State when it is used to shield wrongdoing
(Corazon Jamer v. NLRC, 278 SCRA 632).
LABOR LAW
Labor law
The law that defines State policies on labor and
employment and governs the rights and duties of
the employer (Er) and employees (Ee) with respect
to:
1. The terms and conditions of employment,
and
2. Labor disputes arising from collective
bargaining or other concerted activity
respecting such terms and conditions.
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
2
Matters that may properly fall under the term
labor law
The term labor law covers the following:
1. Statutes passed by the State to promote the
welfare of the workers and Ees and regulate
their relations with their Ers.
2. Judicial decisions applying and interpreting
the aforesaid statutes (NCC, Art. 8).
3. Rules and regulations issued by
administrative agencies, within their legal
competence, to implement labor statutes.
Classification of labor laws
1. Labor Standards Prescribe the terms and
conditions of employment as affecting wages
or monetary benefits, hours of work, cost of
living allowances, and occupational health,
safety and welfare of the workers. It
provides economic benefits to the workers
who are actually working.
e.g. 13th month pay
2. Labor Relations Defines and regulates the
status, rights and duties, and the
institutional mechanisms, that govern the
individual and collective interactions of
Ers, Ees or their representatives. It is
concerned with the stabilization of relations
of Ers and Ees and seeks to forestall and
adjust the differences between them by the
encouragement of CB and the settlement of
labor disputes through conciliation,
mediation and arbitration.
e.g. Collective Bargaining Negotiations
3. Social Legislation All laws passed by the
State to promote public welfare. It
includes statutes intended to enhance the
welfare of the people even where there is no
Er-Ee relationship. It provides economic
benefits to workers who are at work because
of the hazards of employment.
e.g. GSIS Law, SSS Law, Philhealth benefits,
Agrarian Laws
Q: How do the provisions of the law on labor
relations interrelate, if at all, with the
provisions pertaining to labor standards?
(2003 Bar Question)
A: The law on Labor Relations provides for rights
and procedures by which workers may obtain from
their Er benefits which are over and above the
 FUNDAMENTAL PRINCIPLES AND STATE POLICIES
minimum terms and conditions of employment set Essential characteristics of a contract of labor
by labor standards law. Labor Standards law alone
does not guarantee lasting industrial peace. It is 1. Er freely enters into a contract with the Ee;
assured through Labor Relations law which 2. Er can select who his Ee will be;
enables workers to obtain better benefits 3. Er can dismiss the Ee; the Ee in turn can quit
guaranteed by labor standards laws and by his job;
providing for a mechanism to settle disputes 4. Er must give remuneration; and
between the Er and his Ees. 5. Er can control and supervise the conduct of
the Ee.
Labor legislation v. Social legislation
Contracts are subject to police power of the
Labor legislation Social legislation State

1. Refers to labor 1. Refers to Social The supremacy of the law over the nomenclature of
statutes like Labor Security Laws the contract and the stipulations contained therein
Relations Law and 2. is to bring to life the policy enshrined in the
Those laws that
Labor Standards Constitution to afford full protection to
provide particular
labor. Thus, labor contracts are placed on a higher
2. Focuses on the kinds of protecion or
plane than ordinary contracts; these are imbued
rights of the benefits to societyor
with public interest and therefore subject to the
worker in the segments thereof in
police power of the State(Leyte Geothermal Power
workplace furtherance of social
Progressive Employees Union-ALU-TUCP v.
justice
Philippine National Oil Company-Energy
Development Corporation, G.R. No. 170351, March
NOTE: All Labor laws are social legislations, but 30, 2011).
not all social legislations are labor laws.
The relations between capital and labor are not
The purpose of labor legislation is to afford merely contractual. They are so impressed with
protection to labor, promote full employment, public interest that labor contracts must yield to
ensure equal work opportunities regardless of sex, the common good. Therefore, such contracts are
race or creed and regulate the relations between subject to the special laws on labor unions,
workers and Ers. The State shall assure the rights collective bargaining, strikes and lock outs, closed
of workers to self-organization, collective shop, wages, working conditions, hours of labor
bargaining (CB), security of tenure and just and and similar subject (NCC, Art. 1700).
humane conditions of work. Ultimately, the
primordial purpose is to promote the welfare of Prohibitions on contract of labor:
the people based on the latin maxim salus populi
est suprema lex. (2006 Bar Question) No law impairing the obligation of contracts shall
be passed (1987 Constitution, Art. III, Sec. 10).
SOURCES OF LABOR LAWS
No involuntary servitude in any form shall exist
1. Labor Code (LC) and other related special except as a punishment for a crime whereof the
legislation [including their respective party shall have been duly convicted. (1987
Implementing Rules and Regulations (IRR)] Constitution, Art. III, Sec. 18(2)).
2. Contracts
3. Collective Bargaining Agreement (CBA) No contract which practically amounts to
4. Company practice involuntary servitude, under any guise whatsoever,
5. Company policies shall be valid (NCC, Art. 1703).

Contract of labor The CBA operating as a source of law

It is a consensual, nominate, principal, and
commutative contract whereby one person, called
the Er, compensates another, called the laborer,
worker or Ee, for the latters service. It is
relationship impressed with public interest in
keeping with our constitutional policy of social
justice.
The CBA is the norm of conduct between Er and
Ees and compliance therewith is mandated by the
express policy of the law (DOLE Philippines, Inc.,
v. Pawis ng Makabayang Obrero (PAMAO-NFL), G.R.
No. 146650, January 13, 2003 in citing E. Razon, Inc.
v. Secretary of Labor and Employment, G.R. No.
85867, May 13, 1993).

UNIVERSITY OF SANTO TOMAS

3 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Requisites before past company practices
would be considered as a source of labor law
There must be:
1. Voluntarily institution by Er without any
legal compulsion
2. A passage of time- should have been done
over a long period of time, and must be
shown to have been consistent and
deliberate (American Wire and Cable Daily
Rated Employees Union v. American Wire and
Cable Co., Inc., G.R. No. 155059, April 29,
2005).
NOTE: No passage of time is required for a
company policy to become a source of labor law.
CONSTITUTIONAL PROVISIONS
Constitutional mandates on labor law
1. Sec. 3, Art. XIII The State shall afford full
protection to labor, local and overseas,
organized and unorganized, and promote full
employment and equality of employment
opportunities for all.
It shall guarantee the rights of all workers to
self-organization, collective bargaining and
negotiations, and peaceful concerted activities,
including the right to strike in accordance with
law. They shall be entitled to security of
tenure, humane conditions of work, and a
living wage. They shall also participate in
policy and decision-making processes affecting
their rights and benefits as may be provided by
law.
The State shall promote the principle of shared
responsibility between workers and employers
and the preferential use of voluntary modes in
settling disputes, including conciliation, and
shall enforce their mutual compliance
therewith to foster industrial peace.
The State shall regulate the relations between
workers and employers, recognizing the right
of labor to its just share in the fruits of
production and the right of enterprises to
reasonable returns to investments, and to
expansion and growth.
2. Sec. 9, Art. II The State shall promote a just
and dynamic social order that will ensure the
prosperity and independence of the nation and
free the people from poverty through policies
that provide adequate social services, promote
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
4
full employment, a rising standard of living,
and an improved quality of life for all.
3. Sec 10, Art. II - The State shall promote social
justice in all phases of national development.
4. Sec. 11, Art II - The State values the dignity of
every human person and guarantees full
respect for human rights.
5. Sec. 13, Art. II - The State recognizes the vital
role of the youth in nation-building and shall
promote and protect their physical, moral,
spiritual, intellectual, and social well-being. It
shall inculcate in the youth patriotism and
nationalism, and encourage their involvement
in public and civic affairs.
6. Sec. 14, Art. II - The State recognizes the role of
women in nation-building, and shall ensure the
fundamental equality before the law of women
and men.
Law: Magna Carta of Women
7. Sec. 18, Art. II - The State affirms labor as a
primary social economic force. It shall protect
the rights of workers and promote their
welfare.
8. Sec. 20, Art. II The State recognizes the
indispensable role of the private sector,
encourages private enterprise and provide
incentives to needed investments.
9. Sec. 1, Art. III - No person shall be deprived of
life, liberty, or property without due process of
law, nor shall any person be denied the equal
protection of the laws.
10. Sec. 4, Art. III - No law shall be passed
abridging the freedom of speech, of expression,
or of the press, or the right of the people
peaceably to assemble and petition the
government for redress of grievances.
11. Sec. 7, Art. III - The right of the people to
information on matters of public concern shall
be recognized. Access to official records, and to
documents and papers pertaining to official
acts, transactions, or decisions, as well as to
government research data used as basis for
policy development, shall be afforded the
citizen, subject to such limitations as may be
provided by law.
12. Sec. 8, Art. III The right of the people,
including those employed in the public and
private sectors, to form unions, associations, or
 FUNDAMENTAL PRINCIPLES AND STATE POLICIES
societies for purposes not contrary to law shall
not be abridged.
Law: EO No. 180 S. 1987 providing
guidelines for the exercise of the right to
organize of government employees,
creating a Public Sector Labor
Management Council and for other
purposes
13. Sect. 10, Art. III - No law impairing the
obligation of contracts shall be passed.
14. Sec. 16, Art. III All persons shall have the right
to a speedy disposition of their cases before all
judicial, quasi-judicial or administrative
bodies.
15. Sec. 18(2), Art. III - No involuntary servitude in
any form shall exist except as a punishment for
a crime whereof the party shall have been duly
convicted.
16. Sec. 1, Art. XIII - The Congress shall give highest
priority to the enactment of measures that
protect and enhance the right of all the people
to human dignity, reduce social, economic, and
political inequalities, and remove cultural
inequities by equitably diffusing wealth and
political power for the common good.
To this end, the State shall regulate the
acquisition, ownership, use, and disposition of
property and its increments.
17. Sec 2, Art. XIII - The promotion of social justice
shall include the commitment to create
economic opportunities based on freedom of
initiative and self-reliance.
18. Sec 3, Art. XIII - The State shall afford full
protection to labor, local and overseas,
organized and unorganized, and promote full
employment and equality of employment
opportunities for all.
19. Sec. 13, Art. XIII The State shall establish a
special agency for disabled persons for their
rehabilitation, self-development and self-
reliance and their integration into the
mainstream of society.
Law: RA 7277 Magna Carta for Disabled
Person
20. Sec. 14, Art. XIII The State shall protect
working women by providing safe and
healthful working conditions, taking into
account their maternal functions, and such
facilities and opportunities that will enhance
5 FACULTY OF CIVIL LAW
their welfare and enable them to realize their
full potential in the service of the nation.
Law: Maternal benefits law
State policy on labor as found in the
constitution
1. Afford full protection to labor
2. Promote full employment
3. Ensure equal work opportunities regardless
of sex, race, or creed
4. Assure the rights of workers to self-
organization, security of tenure, just and
humane conditions of work, participate in
policy and decision-making processes
affecting their right and benefits
5. Regulate the relations between Ers and
workers (Art. XIII, Sec. 3).
Basic rights of workers guaranteed by the
constitution
1. Security of tenure
2. Living wage
3. Just and humane working conditions
4. Share in the fruits of production
5. Self-organization
6. Collective bargaining
7. Collective negotiations
8. Engage in peaceful concerted activities,
including the right to strike
9. Participate in policy and decision making
processes (Art. XIII, Sec. 3).
Principle of Non-oppression
The principle mandates capital and labor not to act
oppressively against each other or impair the
interest and convenience of the public. The
protection to labor clause in the Constitution is not
designed to oppress or destroy capital (Capili v.
NLRC, G.R. No. 117378, March 26, 1997).
The law in protecting the rights of the Ees
authorizes neither oppression nor self-destruction
of the Er (Pacific Mills Inc. v. Alonzo, G.R. No. 78090,
July 26, 1991). It should be made clear that when
the law tilts the scale of justice in favor of labor, it
is but a recognition of the inherent economic
inequality between labor and management. The
intent is to balance the scale of justice; to put the
two parties on relatively equal positions. There
may be cases where the circumstances warrant
favoring labor over the interests of management
but never should the scale be so tilted if the result
is an injustice to the employer. Justitia nemini
neganda est (justice is to be denied to none)
(Philippine Geothermal, Inc. v. NLRC and Edilberto
M. Alvarez, G.R. No. 106370, September 8, 1994).
UNIVERSITY OF SANTO TOMAS
 LABOR LAW AND SOCIAL LEGISLATION
Neither capital nor labor shall act oppressively
against the other, or impair the interest or
convenience of the public (NCC, Art. 1701).
NEW CIVIL CODE AND OTHER LAWS
1. New Civil Code (NCC)
a. Art. 19 Every person must, in the
exercise of his rights and in the
performance of his duties, act with
justice, give everyone his due, and
observe honesty and good faith.
b. Art. 1700 - The relations between capital
and labor are not merely contractual.
They are so impressed with public
interest that labor contracts must yield to
the common good. Therefore, such
contracts are subject to the special laws
on labor unions, collective bargaining,
strikes and lockouts, closed shop, wages,
working conditions, hours of labor and
similar subjects.
c. Art. 1702 - In case of doubt, all labor
legislation and all labor contracts shall be
construed in favor of the safety and
decent living for the laborer.
d. Art. 1704 - In collective bargaining, the
labor union or members of the board or
committee signing the contract shall be
liable for non-fulfillment thereof.
e. Art. 1710 - Dismissal of laborers shall be
subject to the supervision of the
Government, under special laws.
2. Revised Penal Code (RPC)
Art. 289 Formation, maintenance and
prohibition of combination of capital or
labor through violence or threats. Any
person who, for the purpose of organizing,
maintaining or preventing coalitions or
capital or labor, strike of laborers or lock-
out of employees, shall employ violence or
threats in such a degree as to compel or
force the laborers or employers in the free
and legal exercise of their industry or
work, if the act shall not constitute a more
serious offense in accordance with the
provisions of the RPC.
3. Special Laws
a. E.O. 180- Providing guidelines for the
exercise of the Right to Organize of
Government Employees, creating a
Public Sector Labor-Management
Council, and for other purposes
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
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b. R.A. 8291 - Government Service
Insurance Act of 1997
c. 13th Month Pay Law
d. Retirement Pay Law
e. SSS Law
f. Paternity Leave Act
g. Anti Child Labor Act
h. Anti Sexual Harassment Act
i. Magna Carta for Public Health
Workers
j. Solo Parents Welfare Act of 2000
k. National Health Insurance Act as
amended by R.A. 9241
l. Migrant Workers and Overseas
Filipinos Act of 1995 as amended by
RA 10022
m. PERA Act of 2008
n. Home Development Mutual Fund Law
of 2009
o. The Magna Carta of Women
p. Magna Carta for Disabled Person
q. Comprehensive Agrarian Reform Law
as amended by R.A. 9700
r. Batas Kasambahay(RA No. 10361)
s. Working summer/Christmas
students as amended by RA 9547
expanding the coverage of the Special
Program for Employment of Students
(SPES)
t. Wage Rationalization Act (RA 6727)
LABOR CODE
Labor code
Presidential Decree No. 442 otherwise known as
the Labor Code of the Philippines is a decree
instituting a labor Code, thereby revising and
consolidating labor and social laws to afford
protection to labor, promote employment and
human resources development and ensure
industrial peace based on social justice. It is a
charter of human rights and a bill of obligations for
every working man.
Effectivity date: November 1, 1974
Presidential Decree No. 442 was signed into law on
May 1, 1974. Article 2 says, the Code was to take
effect six months after its promulgation. Therefore,
the law took effect on November 1, 1974.
Father of Labor Code
The writing of the labor code began under the
leadership of then Minister of Labor, Mr. Blas Ople,
who deserves to be regarded as the Father of the
Labor Code.
 FUNDAMENTAL PRINCIPLES AND STATE POLICIES
Applicability of the labor code
GR: All rights and benefits granted to workers
under the LC shall apply alike to all workers,
whether agricultural or non-agricultural.
XPNs:
1. Government Ees
2. Ees of government corporations created by
special or original charter
3. Foreign governments
4. International agencies
5. Corporate officers/ intra-corporate disputes
which fall under P.D. 902-A and now fall
under the jurisdiction of the regular courts
pursuant to the Securities Regulation Code.
6. Local water district except where NLRCs
jurisdiction is invoked.
7. As may otherwise be provided by the LC.
Original charter or manner of creation test
It is determined by the manner of their creation.
Government
Corporation
Incorporated under
Corporation Code Special (original) charter
from Congress
covered by LC subject to Civil Service rules
Agency that exercises the rule-making power
granted in the labor code
The Department of Labor and Employment (DOLE)
thru the Secretary of Labor and Employment (SLE)
and other Government agencies charged with the
administration and enforcement of the LC or any of
its parts shall promulgate the necessary IRRs.
Limitations to the rule-making power granted
to the SLE and other government agencies
1. It must be issued under the authority of law
2. It must not be contrary to law and the
Constitution
Effectivity of rules and regulations
Such rules and regulations shall become effective
15 days after announcement of their adoption in
newspapers of general circulation.
7 FACULTY OF CIVIL LAW
LABOR CODE PROVISIONS
Declaration of Basic Policy(Art. 3)
It is the policy of the State to:
1. Afford full protection to labor
2. Promote full employment
3. Ensure equal work opportunities regardless of
sex, race, or creed
4. Assure the rights of workers to self-
organization, security of tenure, just and
humane conditions of work, participate in
policy and decision-making processes affecting
their right and benefits
5. Regulate the relations between Ers and
workers.
Construction in favor of Labor(Art. 4)
All doubts in the implementation and
interpretation of the provisions of this Code,
including its implementing rules and regulations,
shall be resolved in favor of labor (LC, Art. 4).
In case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety
and decent living for the laborer (NCC, Art. 1702).
In case of doubt in the interpretation or application
of laws, it is presumed that the lawmaking body
intended right and justice to prevail (NCC, Art. 10).
Concept of liberal approach in interpreting the
labor code and its IRR
The LC and its IRR, being remedial in character
must be accorded the broadest scope and most
beneficial interpretation. It is only in this way that
their purpose, which is to remedy evils of
exploitation, manipulation and oppression, may be
achieved. Strict adherence to the letter of labor law
is not allowed; the spirit thereof prevails and must
be given effect. Under Art. 4 of the LC, all doubts in
the implementation and interpretation of the
provisions thereof, including its IRR, are to be
resolved in favor of labor.
Compassionate justice
The social justice policy mandates a compassionate
attitude toward the working class in its relation to
management. In calling for protection to labor, the
Constitution does not condone wrong doing by the
Ee. However, it urges a moderation of the
sanctionsthat maybe applied to him in the light of
the many disadvantages that weigh heavily on him
like an albatross on his neck. It is disregarding rigid
rules and giving due weight to all equities of the
case(Gandara Mill Supply and Milagros Sy v. NLRC
and Silvestre Germano, G.R. 126703, December 29,
1998).
UNIVERSITY OF SANTO TOMAS
 LABOR LAW AND SOCIAL LEGISLATION
Compassion and mercy subordinate to justice
for all
Before there can be an occasion for compassion,
sympathy and mercy, there must be justice for all.
Otherwise, Ees will be encouraged to steal and
misappropriate in the expectation that eventually,
in the name of social justice and compassion, they
will not be penalized but instead financially
rewarded. These are not the values the society
cherishes; these are the habits that it abhors (SMC
v. NLRC, G.R. No. 117055, March 29, 2006).
The Employees Compensation Law (P.D. 626)
operates on the principle of social justice, but
sympathy to the workers should also be placed in a
sensible equilibrium with the stability of the ECC
trust fund (Aquino v. SSS, G.R. No. 149256, July 21,
2006).
e.g. An Ee who was validly dismissed may still be
given severance pay.
Recognition of management prerogative
The law also recognizes that management has
rights which are also entitled to respect and
enforcement in the interest of fair play (St. Lukes
Medical Center Ees Assn v. NLRC, G.R. No. 162053,
March 7, 2007).
Policy(Art. 166)
Policy of the state in relation to Ees
compensation and state insurance fund
TheState shall promote and develop a tax-exempt
Ees compensation program whereby Ees and their
dependents, in the event of work-connected
disability or death, may promptly secure adequate
income benefits and medical related benefits (Art.
166, LC).
Purpose of Workmens Compensation Act
The primary purpose of a Workmens
Compensation Act is to provide compensation for
disability or death resulting from occupational
injuries or diseases, or accidental injury to, or
death of Ees.
Declaration of Policy(Art. 211)
The state aims to promote:
1. Free CB and negotiations, including voluntary
arbitration, mediation and conciliation as
modes of settling labor or industrial disputes;
2. Free trade unionism;
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
8
3. Free and voluntary organization of a strong
and united labor movement;
4. Enlightenment of workers concerning their
rights and obligations as union members and
as Ees;
5. Adequate administrative machinery for the
expeditious settlement of labor or industrial
disputes;
6. Stable but dynamic and just industrial peace;
7. Participation of workers in the decision-
making processes affecting their rights, duties
and welfare;
8. Truly democratic method of regulating the
relations between the Ers and Ees by means of
agreements freely entered into through CB, no
court or administrative agency or official shall
have the power to set or fix wages, rates of pay,
hours of work or other terms and conditions of
employment, except as otherwise provided
under the LC.
Definitions(Art. 212)
Employer
Any person acting in the interest of an Er, directly
or indirectly. The term does not include a labor
organization or any of its officers and agents,
except when acting as an Er (LC, Art. 212(e)).
An Er is defined as any person or entity that
employs the services of others; one for whom work
is done and who pays their wages of salaries; any
person acting in the interest of an Er; refers to the
enterprise where the labor organization operates
or seeks to operate (IRR, Book V, Rule I, Sec.1(s)).
NOTE: The term employer is not restricted to
business owners alone because it includes any
person as long as he acts in the interest of the Er.
Instance when a labor organization is deemed
an employer
When it is acting as such in relation to persons
rendering services under hire, particularly in
connection with its activities for profit or gain.
NOTE: The mere fact that respondent is a labor
union does not mean that it cannot be considered
an Er for persons who work for it. Much less should
it be exempted from labor laws (Bautista v. Inciong,
G.R. No. L-52824, March 16, 1988).
Employee
The term employee covers:
1. Any person in the employ of the Er
 FUNDAMENTAL PRINCIPLES AND STATE POLICIES
2. Any individual whose work has ceased as a
result of or in connection with any current
labor dispute or because of any unfair labor
practice if he has not obtained any other
substantially equivalent and regular
employment
3. One who has been dismissed from work but
the legality of dismissal is being contested in a
forum of appropriate jurisdiction (D.O. No. 40-
03).
NOTE: The term shall not be limited to the Ees of a
particular Er unless the LC explicitly states.
Any Ee, whether employed for a definite period or
not, shall, beginning on the first day of service, be
considered an Ee for purposes of membership in
any labor union (LC, Art. 277(c)).
Managerial employee
The person who is vested with the powers or
prerogatives to lay down and execute management
policies and/or to hire, transfer, suspend, lay-off,
recall, discharge, assign or discipline Ees.
Supervisory employee
The person who effectively recommends such
managerial actions if the exercise of such authority
is not merely routinary or clerical in nature but
requires the use of independent judgment.
Rank-and-file employees
Those persons who are neither managerial nor
supervisory Ees are considered rank-and-file.
Labor disputes
A labor dispute includes any controversy or matter
concerning:
1. Terms and conditions of employment, or
2. The association or representation of persons
in negotiating, fixing, maintaining, changing
or arranging the terms and conditions of
employment
3. Regardless of whether the disputants stand
in the proximate relation of Er and Ee (LC,
Art.212(l)).
Tests on whether a controversy is a labor
dispute
1. As to nature It depends on whether the
dispute arises from Er-Ee relationship,
although disputants need not be proximately
Er or Ee of another.
9 FACULTY OF CIVIL LAW
2. As to subject matter The test depends on
whether it concerns terms or conditions of
employment or association or
representation of persons in negotiating,
fixing, maintaining or changing terms or
conditions of employment.
Kinds of labor disputes
1. Labor standard disputes
a. Compensation E.g. Underpayment of
minimum wage; stringent output quota;
illegal pay deductions
b. Benefits E.g. Non-payment of holiday pay,
OT pay or other benefits
c. Working Conditions E.g. Unrectified work
hazards
2. Labor relations disputes
a. Organizational right disputes/ Unfair Labor
Practice (ULP) E.g. Coercion, restraint or
interference in unionization efforts;
reprisal or discrimination due to union
activities; company unionism; ULP, strike
or lockout; union members complaint
against union officers
b. Representation disputes E.g. Uncertainty
as to which is the majority union;
determination of appropriate CB unit;
contests for recognition by different sets of
officers in the same union
c. Bargaining disputes E.g. Refusal to
bargain; bargaining in bad faith;
bargaining deadlock; economic strike or
lockout
d. Contract administration or personnel policy
disputes E.g. Non-compliance with CBA
provision (ULP if gross non-compliance
with economic provisions); disregard of
grievance machinery; non observance of
unwarranted use of union security clause;
illegal or unreasonable personnel
management policies; violation of no-
strike/no-lockout agreement
e. Employment tenure disputes E.g. Non-
regularization of Ees; non-absorption of
labor-only contracting staff; illegal
termination; non-issuance of employment
contract
Parties to a labor dispute
1. Primary parties are the Er, Ees and the
union.
2. Secondary parties are the voluntary
arbitrator, agencies of DOLE, NLRC, SLE and
the Office of the President.
UNIVERSITY OF SANTO TOMAS
 LABOR LAW AND SOCIAL LEGISLATION
Inter-union dispute
Any conflict between and among legitimate labor
unions involving representation questions for the
purposes of CB or to any other conflict or dispute
between legitimate labor unions.
Intra-union dispute
Any conflict between and among union members,
grievances arising from any violation of the rights
and conditions of membership, violation of or
disagreement over any provision of the unions
constitution and by-laws, or disputes from
chartering or affiliation of union.
Internal union dispute
It includes all disputes or grievances arising from
any violation of or disagreement over any
provision of the constitution and by-laws of a
union, including any violation of the rights and
conditions of union membership provided for in
this LC (LC, Art. 212, (q)).
Rights disputes
They are claims for violations of a specific right
arising from a contract, i.e. CBA or company
policies.
Interest disputes
They involve questions on what should be
included in the CBA. Strictly speaking, the parties
may choose a voluntary arbitrator to decide on the
terms and conditions of employment, but this is
impracticable because it will be a value judgment
of the arbitrators and not of the parties.
Contractnegotiation disputes
These are disputes as to the terms of the CBA.
Contractinterpretation disputes
These are disputes arising under an existing CBA,
involving such matters as the interpretation and
application of the contract, or alleged violation of
its provisions.
Instances when a person or entity is considered
as participating or interested in a labor dispute
1. If relief is sought against him or it, and
2. He or it is engaged in the same industry,
trade, craft, or occupation in which such
dispute occurs, or
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
10
3. Has a direct or indirect interest therein, or
4. Is a member, officer, or agent of any
association composed in whole or in part of
Ees or Ers engaged in such industry, trade,
craft, or occupation.
Exclusive Bargaining Representation and
Workers Participation in Policy and Decision-
Making (Art. 255)
Bargaining representative of the Ees for
purposes of collective bargaining
The labor organization designated or selected by
the majority of the Ees in an appropriate collective
bargaining unit shall be the exclusive
representative of the Ees in such unit for the
purpose of CB. However, an individual Ee or group
of Ees shall have the right at any time to present
grievances to their Er (LC, Art. 255, as amended by
Sec. 22 of R.A. No. 6715, 1989).
Rule on solicitation of questions, suggestions
and complaints by the Er from the Ees who are
represented by a union
GR: The Er may not solicit questions, suggestions
and complaints from Ees who are represented by a
union.
XPN: Where the following requisites are met:
1. The CB representative executes an
agreement waiving the right to be present
on any occasion when Ee grievances are
being adjusted by the Er; and
2. Er acts strictly within the terms of his
waiver agreement.
Q: The hotel union filed a Notice of Strike with
the National Conciliation and Mediation Board
(NCMB) due to an unfair labor practice against
the Diamond Hotel who refused to bargain with
it. The hotel advised the union that since it was
not certified by the DOLE as the exclusive
bargaining agent, it could not be recognized as
such. The union sought to bargain for members
only. May the Union bargain collectively?
A: No. Art. 255 of the LC declares that only the
labor organization designated or selected by the
majority of the Ees in an appropriate CB unit is the
exclusive representative of the Ees in such unit for
the purpose of CB. The union is admittedly not the
exclusive representative of the majority of the Ees
of the hotel, hence, it could not demand from the
hotel the right to bargain collectively in their behalf
(Manila Diamond Hotel v. Manila Diamond Hotel Ees
Union, G.R. No. 158075, June 30, 2006).
 FUNDAMENTAL PRINCIPLES AND STATE POLICIES
Principle of Codetermination (2007 Bar
Question)
It refers to the right of workers to participate in
policy and decision-making process affecting their
rights and benefits (PAL v. NLRC, G.R. No. 85985,
August 13, 1993; 1987 Constitution, Art. XIII, Sec. 3).
Extent of the workers right to participate in
policy and decision-making processes in a
company
Such right refers not only to formulation of
corporate programs and policies but also to
participation in grievance procedures and
voluntary modes of settling disputes.
Q: Does the workers right to participate in
policy and decision-making process as
provided under Art. XIII, Sec. 13 of the 1987
Constitution include membership in the Board
of Directors of a corporation? (2008 Bar
Question)
A: No, such is not included. The SC recognized the
right of the union to participate in policy
formulation and decision-making process on
matters affecting the union members rights, duties
and welfare. However, such participation of the
union in committees of the Er is not in the nature of
a co-management control of the business.
Impliedly, therefore, workers participatory right in
policy and decision-making processes does not
include the right to put a union member in a
corporations Board of Directors (Manila Electric
Company v. Quisumbing, G.R. No. 127598, January
27, 1999).
Q: May the management be compelled to share
with the union or its employees its prerogative
of formulating a Code of Discipline?
A: Yes. The management may be compelled to do
so. The Code of Discipline involves security of
tenure and loss of employment a property right.
It is time that management realizes that to attain
effectiveness in its conduct rules, there should be
candidness and openness by Management and
participation by the union, representing its
members. In fact, our Constitution has recognized
the principle of shared responsibility between Ers
and workers and has likewise recognized the right
of workers to participate in policy and decision-
making process affecting their rights (PAL v. NLRC,
G.R. No. 85985, August 13. 1993).
11
Miscellaneous Provisions (Art. 277)
Right to security of tenure
It connotes that no worker shall be dismissed upon
employment without cause and without due
process.
Burden of proving the existence of a valid or
authorized cause of termination
The Er has the burden of proof in proving that the
termination was for a valid or authorized cause.
The existence of a just or authorized cause for
dismissal cannot be presumed. A contrary rule
would contravene the constitutional policy of
affording protection to the worker (LC, Art. 277).
Workers right to notice and hearing prior to
dismissal
1. The Er shall furnish the Ee whose employment
is sought to be terminated a written notice
containing a statement of the causes for
termination; and
2. Afford the Ee ample opportunity to be heard
and to defend himself[LC, Art. 277(b)].
NOTE: In connection with dismissals for
authorized causes, the Er must serve a written
notice upon the worker and the DOLE at least 1
month before the intended date of termination (LC,
Art. 283).
Purpose of notice and hearing
The twin requirement of notice and
hearing constitutes essential elements of due
process in cases of Ee dismissal. The requirement
of notice is intended to inform the Ee concerned of
the Ers intent to dismiss and the reason for the
proposed dismissal, upon the other hand, the
requirement of hearing affords the Ee opportunity
to answer his Ers charges against him and
accordingly to defend himself therefrom before
dismissal is effected. Neither of these two
requirements can be dispensed with without
running afoul of the due process requirement of
the 1987 Constitution (Century Textile Mills, Inc., et
al. v. NLRC, et al. G.R. No. 77859, May 25, 1988).
Q: May the Er be allowed to dismiss an Ee and
let him explain later?
A: No, the Er may not do so. While the procedure
laid down by the law for the dismissal of an Ee
need not be observed to the letter of the law, at
least it must be done in the natural sequence of
notice, hearing and judgment. Dismissing the Ee
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
and let him explain later is not in accord with the
requirement of due process (Batangas Laguna
Tayabas Bus Co. v. NLRC, et al. G.R. No. 94429, May
29, 1992).

Circumstances where the termination of Ees

may be suspended by the SLE

The SLE may suspend the effects of the termination

in the event of a prima facie finding by the
appropriate official of the DOLE before whom such
dispute is pending that the termination may cause
a serious labor dispute or is in implementation of a
mass lay-off [LC, Art. 277(b), as amended by Sec. 33,
R.A 6715].

Labor organizations responsibility with regard

the preservation of industrial peace

The Ministry shall help promote and gradually

develop, with the agreement of labor organizations
and Ers, labor-management cooperation programs
at appropriate levels of the enterprise based on the
shared responsibility and mutual respect in order
to ensure industrial peace and improvement in
productivity, working conditions and the quality of
working life [LC, Art. 277(g) incorporated by B.P
Blg. 130].

Rule with regard to establishments where no

legitimate labor organizations exists to
preserve industrial peace

Labor management committees may be formed

voluntarily by workers and Ers for the purpose of
promoting industrial peace [LC, Art. 277(h) as
ameded by Sec. 33, R.A. 6715].

UNIVERSITY OF SANTO TOMAS

2015 GOLDEN NOTES
12
 RECRUITMENT AND PLACEMENT
RECRUITMENT AND PLACEMENT 9. Name hires (Omnibus Rules and Regulations
implementing the Migrant Workers and
RECRUITMENT OF LOCAL AND MIGRANT Overseas Filipinos Act of 1995 as amended by
WORKERS R.A. 10022, Rule II, Sec. 1(i)).

Worker Name hires

Any member of the labor force, whether employed
or unemployed (LC, Art. 13 (a)).
Recruitment and placement
1. Any act of canvassing, enlisting, contracting,
transporting, utilizing, hiring or procuring
workers; and
2. Includes referrals, contact services,
promising or advertising for employment,
locally or abroad, whether for profit or not
(LC, Art. 13 (b)).
Essential elements in determining whether one
is engaged in recruitment and placement
It must be shown that:
1. The accused gave the complainant the
distinct impression that she had the power
or ability to send the complainant for work,
2. Such that the latter was convinced to part
with his money in order to be so employed
(People v. Goce, G.R. No. 113161, August 29,
1995).
Persons deemed engaged in recruitment and
placement
They are individual workers who are able to secure
contracts for overseas employment opportunities
with Ers without the assistance or participation of
any agency (Omnibus Rules and Regulations
implementing the Migrant Workers and Overseas
Filipinos Act of 1995 as amended by R.A. 10022, Rule
II).
Constitution of recruitment and placement
Regardless of the number of persons dealt with,
recruitment and placement is still constituted. The
proviso merely lays down a rule of evidence that
where a fee is collected in consideration of a
promise or offer of employment to 2 or more
prospective workers, the individual or entity
dealing with them shall be deemed to be engaged
in the act of recruitment and placement. The words
"shall be deemed" create that presumption (People
v. Panis, G.R. L-58674-77 July 11, 1986).
Private employment agency
Any person or entity engaged in the recruitment
and placement of workers for a fee which is
charged, directly or indirectly, from the workers or
Ers or both (LC, Art. 13).

Any person or entity which, in any manner, offers
or promises for a fee employment to 2 or more
persons (LC, Art. 13(b)).
Persons or entities that may engage in
recruitment and placement
Private recruitment agency
It is any person or association engaged in the
recruitment and placement of workers without
charging any fee, directly or indirectly, from the
workers or Ers.

GR: No person or entity other than the public Seafarer

employment offices, shall engage in the
recruitment and placement of workers. Refers to any person who is employed or engaged
in overseas employment in any capacity on board a
XPNs: ship other than a government ship used for
1. Construction contractors if authorized by the military or non-commercial purposes. The
DOLE and Construction Industry Authority definition shall include fishermen, cruise ship
2. Other persons or entities as may be personnel and those serving on mobile offshore
authorized by the SLE and drilling units in the high seas (Omnibus Rules
3. Members of the diplomatic corps (but hiring and Regulations Implementing Migrant Workers Act
must go through POEA) as amended by R.A. 10022 (2010), Rule II, Sec. 1(ss)).
4. Public employment offices
5. Private recruitment offices Overseas employment
6. Private employment agencies
7. POEA It is the employment of a worker outside the
8. Shipping or manning agents or Philippines.
representatives

UNIVERSITY OF SANTO TOMAS

13 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Overseas Filipino Worker (OFW)
A person who is to be engaged, is engaged or has
been engaged in a remunerated activity in a State
of which he or she is not a citizen or on board a
vessel navigating the foreign seas other than a
government ship used for military or non-
commercial purposes or on an installation located
offshore or on the high seas (Omnibus Rules and
Regulations Implementing Migrant Workers Act as
amended by R.A. 10022 (2010), Rule II, Sec. 1 (jj)).
NOTE: The term OFW is to be used
interchangeably with migrant worker as
provided in R.A. 10022.
Emigrant
Any person, worker or otherwise, who emigrates
to a foreign country by virtue of an immigrant visa
or resident permit or its equivalent in the country
of destination (LC, Art. 13).
EMPLOYMENT OF NON-RESIDENT ALIENS
Non-residents alien may be hired if an employment
permit is issued to a non-resident alien or to the
applicant employer after a;
1. Determination of the non-availability of a
person in the Philippines who is competent,
2. Able and willing at the time of application to
perform the services for which the alien is
desired.
Requirements in employment of non-resident
aliens
Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign
Er who desires to engage an alien for employment
in the Philippines:
1. Shall obtain an employment permit from the
DOLE;
2. The permit may be issued to a non-resident
alien or to the applicant Er after a
determination of the non-availability of a
person in the Philippines who is competent,
able and willing at the time of application to
perform the services for which the alien is
desired;
3. For an enterprise registered in preferred
areas of investments, said permit may be
issued upon recommendation of the
Government agency charged with the
supervision of said registered enterprise.
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
14
Q: The DOLE issued an alien employment
permit for Earl Cone, a U.S. citizen, as sports
consultant and assistant coach for GMC. Later,
the Board of Special Inquiry of the Commission
on Immigration and Deportation approved
Cones application for a change of admission
status from temporary visitor to pre-arranged
employee. A month later, GMC requested that it
be allowed to employ Cone as full-fledged
coach. The DOLE Regional Director granted the
request. The Basketball Association of the Phils.
appealed the issuance of said permit to the SLE
who cancelled Cones employment permit
because GMC failed to show that there is no
person in the Philippines who is competent and
willing to do the services nor that the hiring of
Cone would redound to the national interest. Is
the act of the SLE valid?
A: Yes. GMCs claim that hiring of a foreign coach is
an Ers prerogative has no legal basis. Under Art. 40
of the LC, an Er seeking employment of an alien
must first obtain an employment permit from the
DOLE. GMCs right to choose who to employ is
limited by the statutory requirement of an
employment permit (GMC v. Torres, G.R. No. 93666,
April 22, 1991).
PROHIBITION AGAINST TRANSFER OF
EMPLOYMENT
Persons required to obtain employment permit
GR: Only non-resident aliens;
XPNs:
1. Diplomatic services and foreign government
officials;
2. Officers and staff of international
organizations and their legitimate spouses;
3. Members of governing board who has voting
rights only;
4. Those exempted by special laws;
5. Owners and representatives of foreign
principals who interview Filipino applicants
for employment abroad;
6. Aliens whose purpose is to teach, present
and/or conduct research studies;
7. Resident aliens (D.O. 75-06).
Rule as to whether a non-resident alien may
transfer employment after issuance of the
employment permit
After the issuance of an employment permit, the
alien shall not transfer to another job or change his
Er without prior approval of the SLE.
 RECRUITMENT AND PLACEMENT
Requirement for immigrants and resident
aliens
An Alien Employment Registration Certificate.
Duration of the employment permit
GR: Minimum of 1 year
XPN: If the employment contract, consultancy
services, or other modes of engagement provides
otherwise, which in no case shall exceed 5 years
(DOLE D.O. 97-09, Revised Rules for the Issuance of
Employment Permits to Foreign Nationals (2009)).
Employment of aliens in entities engaged in
nationalized activities
GR: Aliens may not be employed engaged in
nationalized activities
XPNs:
1. Secretary of Justice specifically authorizes
the employment of technical personnel;
2. Aliens are elected members of the board of
directors or governing body of corporations
or associations engaging in partially
nationalized activities shall be allowed in
proportion to their allowable participation
or share in the capital of such entities (Anti-
Dummy Law, as amended by P.D. 715, Sec.
2(A)); or
3. Enterprises registered under the Omnibus
Investment Code in case of technical,
supervisory or advisory positions, but for a
limited period.
PRIVATE SECTOR PARTICIPATION IN THE
RECRUITMENT AND PLACEMENT OF WORKERS
Entities in the private sectors that can
participate in recruitment and placement of
workers
1. Shipping or manning agents or
representatives
2. Private recruitment offices
3. Public employment offices
4. Construction contractors if authorized by the
DOLE and Construction Industry Authority.
5. Persons that may be authorized by the SLE
6. Private employment agencies (IRR of the LC,
Book I, Rule VII, Sec. 1).
Qualifications for participation in recruitment
and placement of workers
1. Filipino citizens, or partnerships or
corporations with at least 75% of the
15
authorized capital stock is owned and
controlled by Filipino citizens; (LC, Art. 27)
2. Capitalization
a. Single proprietorship or partnership
- A minimum capitalization of P2
million
b. Corporation
- A minimum paid-up capital of P2
million
Provided, that those with existing licenses
shall, within 4 yrs. from the effectivity
hereof, increase their capitalization or paid
up capital, as the case may be, to P2
million at the rate of Php 250,000.00 every
year (LC, Art. 28).
3. Not otherwise disqualified by law or other
government regulations to engage in the
recruitment and placement of workers for
overseas employment (POEA Rules, Part II,
Rule I).
4. Payment of registration fees
5. Posting of surety/cash bonds
Regulation of the private sectors participation
in the recruitment and overseas placement of
workers
By setting up a licensing and registration system
(Sec. 14, R.A. 10022, Sec. 14).
Q: Is a corporation, 70% of the authorized and
voting capital of which is owned and controlled
by Filipino citizens, allowed to engage in the
recruitment and placement of workers, locally
or overseas? Explain briefly. (2002 Bar
Question)
A: No. It is because Art. 27 of the LC requires at
least 75%.
Persons and entities disqualified to engage in
the business of recruitment and placement of
workers
1. Travel agencies and sales agencies of airline
companies (LC, Art. 26);
2. Officers or members of the board of any
corporation or members in a partnership
engaged in the business of a travel agency;
3. Corporations and partnerships, when any of
its officers, members of the board or
partners, is also an officer, member of the
board or partner of a corporation or
partnership engaged in the business of a
travel agency;
4. Persons, partnerships or corporations which
have derogatory records, such as but not
limited to those:
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
a. Certified to have derogatory record or
information by the NBI or by the Anti-
Illegal Recruitment Branch of the POEA;
b. Against whom probable cause or prima
facie finding of guilt for illegal
recruitment or other related cases
exists;
c. Convicted for illegal recruitment or
other related cases and/or crimes
involving moral turpitude; and
d. Agencies whose licenses have been
previously revoked or cancelled by the
POEA for violation of R.A. 8042, P.D. 442
as amended and their IRRs.
5. Any official or Ee of the DOLE, POEA, OWWA,
DFA and other government agencies directly
involved in the implementation of R.A. 8042
and/or any of his/her relatives within the 4 th
civil degree of consanguinity or affinity; and
6. Persons or partners, officers and directors of
corporations whose licenses have been
previously cancelled or revoked for violation of
recruitment laws (2002 Rules and Regulations
on the Recruitment and Employment of Land-
Based Workers, Rule I, Sec. 2).
TRAVEL AGENCIES PROHIBITED FROM
RECRUITMENT AND PLACEMENT
Prohibition on travel agencies and sales
agencies of airline companies to recruit
They are prohibited from engaging in the business
of recruitment and placement of workers for
overseas employment whether for profit or not.
Q: WTTA is a well-known travel agency and an
authorized sales agent of the PAL. Since
majority of its passengers are overseas
workers, WTTA applied for a license for
recruitment and placement activities. It stated
in its application that its purpose is not for
profit but to help Filipinos find employment
abroad. Should the application be approved?
(2006 Bar Question)
A: No. The application should be disapproved, as it
is prohibited by Art. 26 of the LC, to wit: "Art. 26.
Travel agencies and sales agencies of airline
companies are prohibited from engaging in the
business of recruitment and placement of workers
for overseas employment whether for profit or
not." Rule I, Part II POEA Rules and Regulations
Governing the Recruitment and Employment of
Land-Based Workers (2002) disqualifies any entity
having common director or owner of travel
agencies and sales agencies of airlines, including
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
16
any business entity from the recruitment and
placement of Filipino workers overseas, whether
they derive profit or not.
FEES TO BE PAID BY WORKERS
Instances when a worker may be charged
Only when:
1. He has obtained work through recruiters
efforts, and
2. The worker has actually commenced
working
NOTE: A land-based agency may charge and collect
from its hired workers a placement fee in an
amount equivalent to 1 month salary, exclusive of
documentation costs (POEA Rules and Regulations,
Rule V, Sec. 3).
Authorized payments that may be collected
from a hired worker
1. Placement fee in an amount equivalent to
one months salary of the worker, and
2. Documentation costs (POEA Rules and
Regulations, Rule V, Sec. 3).
ILLEGAL RECRUITMENT, ART. 38 (LOCAL),
SEC. 6, MIGRANT WORKERS ACT, R.A. 8042
Prohibited practices in recruitment or
placement
1. Furnishing or publishing any falsie
notice/information/document related to
recruitment/employment
2. Failure to file reports required by SLE
3. Inducing or attempting to induce a worker
already employed to quit his employment
in order to offer him another unless the
transfer is designed to liberate a worker
from oppressive terms and conditions
4. Recruitment/placement of workers in jobs
harmful to public health or morality or to
the dignity of the country
5. Engaging directly or indirectly in the
management of a travel agency
6. Substituting or altering employment
contracts without approval of DOLE
7. Charging or accepting any amount greater
than that specified by DOLE or make a
worker pay any amount greater than
actually received by him
8. Committing any act of misrepresentation to
secure a license or authority
 RECRUITMENT AND PLACEMENT
9. Influencing or attempting to influence a Difference between the prohibited acts under
person/entity not to employ any worker LC and R.A. 8042 or the Overseas Filipinos and
who has not applied employment through Overseas Migrant Workers Act, as amended by
his agency R.A. 10022
10. Obstructing or attempting to obstruct
inspection by SLE or by his representatives R.A. 8042, as
11. Withholding or denying travel documents LC amended by RA
from applicant workers before departure 10022
for monetary considerations other than 1. Illegal Illegal recruitment
authorized by law recruitment under Sec. 6 means
Art.38 any recruitment
12. Granting a loan to an overseas Filipino
worker with interest exceeding eight 2. Prohibited acts activity committed by
under Art.34 of non-licensees/ non-
percent (8%) per annum, which will be
LC holders of authority or
used for payment of legal and allowable
placement fees and make the migrant prohibited acts (same
as Art. 34, LC)
worker issue, either personally or through a
guarantor or accommodation party,
postdated checks in relation to the said loan Added to the following
in the list of prohibited
13. Refusing to condone or renegotiate a loan acts:
incurred by an OFW after his employment 1. Failure to actually
contract has been prematurely terminated deploy without
through no fault of his or her own valid reason;
14. For a suspended recruitment/manning 2. Failure to
agency to engage in any kind of recruitment reimburse
activity including the processing of pending expenses incurred
workers applications; and by the worker in
15. For recruitment/manning agency or a connection with
foreign principal/Er to pass on the OFW or his/her
deduct from his or her salary the payment documentation
of the cause of fees, premium or other and processing for
insurance related charges, as provided purposes of
under the compulsory workers insurance deployment;
coverage To allow a non-Filipino
16. Imposing a compulsory and exclusive citizen to head or
arrangement whereby an OFW is required manage a licensed
to: recruitment/ manning
agency.
a. Avail a loan only from specifically
designated institutions, or entities or Persons prohibited from engaging in the
persons business of recruiting migrant workers
b. To undergo health examinations only
from specifically designated medical, 1. It is unlawful for any official or Ee of the
entities or persons, except seafarers following agencies to engage in recruiting
whose medical examination cost is migrant workers:
shouldered by the ship owner a. DOLE
c. To undergo training of any kind only b. POEA
from designated institutions, entities or c. Overseas Workers Welfare
persons, except for recommendatory Administration (OWWA)
trainings mandated by principals/ d. DFA
shipowners (R.A. 8042, Migrant e. Other Government agencies involved in
Workers and Overseas Filipino Act, as the implementation of R.A. 8042
amended by R.A. 10022, Sec. 6).
2. The relatives within the 4th civil degree of
consanguinity or affinity of such official or Ee
are also prohibited from engaging directly or
indirectly in the business of recruiting
migrant workers (R.A. 8042, Sec. 8).

UNIVERSITY OF SANTO TOMAS

17 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
LICENSE v. AUTHORITY transferred, conveyed or assigned to any other
person or entity. It may be noted that the grant of a
License requirement in the business of license is a governmental act by the DOLE based on
recruitment and replacement personal qualifications, and citizenship and
capitalization requirements (LC, Arts.27-28).
The business of recruitment and replacement is
regulated by law by requiring them to obtain NOTE: Change of ownership or relationship of a
license and authority. single proprietorship licensed to engage in
overseas employment shall cause the automatic
LICENSE AUTHORITY revocation of the license.
A document issued by A document issued by
DOLE authorizing a the DOLE authorizing ESSENTIAL ELEMENTS OF ILLEGAL
person or entity to a person or association RECRUITMENT
operate a private to engage in
employment agency. recruitment and Illegal recruitment
placement activities as
a private recruitment Illegal recruitment is defined by law as any
entity. recruitment activities undertaken by non-licenses
or non-holders of authority (People v. Senoron, G.N.
Persons who may be issued license and No. 119160, January 30, 1997).
authority
Elements of illegal recruitment
1. Natural persons Must be a Filipino
2. Artificial persons 75% of the capital and 1. Offender is a non-licensee or non-holder of
voting stock of which is owned and authority to lawfully engage in the
controlled by Filipino. recruitment/placement of workers.
2. Offender undertakes:
Non-licensee / non-holder of authority
a. Any act of canvassing, enlisting,
Any person, corporation or entity: contracting, transporting, utilizing,
hiring, or procuring workers and
1. Which has not been issued a valid license or includes referring, contract services,
authority to engage in recruitment and promising or advertising for
placement by the SLE, or employment abroad, whether for profit
2. Whose license or authority has been or not (R.A. 8042 as amended by R.A.
suspended, revoked or cancelled by the 10022, Art. 13(f)); or
POEA or the SLE b. Any of prohibited practices under Art.
34 of the LC.
Non-transferability of license or authority
3. For complex illegal recruitment, an
License or authority is non-transferable (Art. 29, additional element that the offender
LC). License or authority is granted on the basis of commits the act against three or more
personal qualifications of the grantee. Thus, it is persons, individually, or as a group (People v.
beyond the commerce of man. Baytic, G.R. No. 150530, February 20, 2003) or
there are three or more offenders.
Q: A recruitment and placement agency
declared voluntary bankruptcy. Among its Persons liable for illegal recruitment
assets is its license to engage in business. Is the
license of the bankrupt agency an asset which Any person (whether non-licensee, non-holder of
can be sold in public auction by the liquidator? authority, licensee or holder of authority) who
(1998 Bar Question) commits any of the prohibited acts, shall be liable
for Illegal recruitment (R.A. 8042, as amended by
A: No, because of the non-transferability of the R.A. 10022).
license to engage in recruitment and placement.
The LC (Art. 29) provides that no license to engage Kinds of illegal recruitment
in recruitment and placement shall be used directly
or indirectly by any person other than the one in 1. Simple Illegal Recruitment
whose favor it was issued nor may such license be 2. Complex Illegal Recruitment

UNIVERSITY OF SANTO TOMAS

2015 GOLDEN NOTES
18
 RECRUITMENT AND PLACEMENT
Way to prove illegal recruitment
It must be shown that the accused gave the distinct
impression that he had the power or ability to send
complainants abroad for work such that the latter
were convinced to part with their money in order
to be deployed (People v. Fortuna, 395 SCRA 353).
Q: Larry Domingo was accused of the crime of
illegal recruitment. He argued that he issued no
receipt or document in which he acknowledged
as having received any money for the promised
jobs. Hence, he should be free from liability.
Was Larry engaged in recruitment activities?
A: Yes. Even if at the time Larry was promising
employment no cash was given to him, he is still
considered as having been engaged in recruitment
activities, since Art. 13(b) of the LC states that the
act of recruitment may be for profit or not. It
suffices that Larry promised or offered
employment for a fee to the complaining witnesses
to warrant his conviction for illegal recruitment
(People v. Domingo, G.R. No. 181475, April 7, 2009).
SIMPLE ILLEGAL RECRUITMENT
Simple illegal recruitment
It is the violation of Arts. 13(b) and 34 of the LC
involving less than three recruiters or victims.
Complex illegal recruitment
It is the violation of Arts. 13(b) and 34 of the LC
involving at least three recruiters or victims. It may
either be:
1. Committed by a syndicate; or
2. In large Scale or qualified
ILLEGAL RECRUITMENT IN LARGE SCALE
(SEC. 6, R.A. 10022)
Illegal recruitment in large scale (qualified)
Illegal recruitment in large scale is committed
against three or more persons individually or as a
group.
Illegal recruitment committed by a syndicate
Illegal recruitment is committed by a syndicate if it
was carried out by a group of three or more
persons conspiring or confederating with one
another.
19
NOTE: Illegal recruitment in large scale pertains
to the number of victims while syndicated illegal
recruitment pertains to the number of recruiters.
Q: While her application for renewal of her
license to recruit workers for overseas
employment was still pending, Maryrose
Ganda recruited Alma and her 3 sisters, Ana,
Joan, and Mavic, for employment as
housemates in Saudi Arabia. Maryrose
represented to the sisters that she had a license
to recruit workers for overseas employment
and demanded and received P30,000.00 from
each of them for her services. Her application
for the renewal of her license, however, was
denied, and consequently failed to employ the
four sisters in Saudi Arabia. The sisters charged
Maryrose with large scale illegal recruitment.
Testifying in her defense, she declared that she
acted in good faith because she believed that
her application for the renewal of her license
would be approved. She adduced in evidence
the Affidavits of Desistance which the four
private complainants had executed after the
prosecution rested its case. In the said
affidavits, they acknowledge receipt of the
refund by Maryrose of the total amount of Php
120,000.00 and indicated that they were no
longer interested to pursue the case against
her. Resolve the case with reasons. (2005 Bar
Question)
A: Maryrose is guilty of large scale illegal
recruitment. It is large scale illegal recruitment
when the offense is committed against 3 or more
persons, individually or as a group (LC, Art. 38(b)).
In view of the above, her defense of good faith and
the Affidavit of Desistance as well as the refund
given will not save her because R.A. 8042 is a
special law, and illegal recruitment is malum
prohibitum (People v. Saulo, G.R. No. 125903,
November 15, 2000).
ILLEGAL RECRUITMENT AS ECONOMIC
SABOTAGE
Illegal recruitment as economic sabotage
Article 38 (b) of LC, as amended by PD 2018.
It is economic sabotage when complex illegal
recruitment is committed, such that it is syndicated
or done in a large scale.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Illegal recruitment v. Estafa not set in because illegal recruitment is malum
prohibitum, in which there is no necessity to prove
ILLEGAL RECRUITMENT ESTAFA criminal intent, whereas estafa is malum in se, in
the prosecution of which, proof of criminal intent is
Malum in se, thus: necessary (Sy v. People, G.R. No. 183879, April 14,
Malum prohibitum, thus:
1.Criminal intent is 2010).
1. Criminal intent is not
necessary
necessary
2. It is a crime which LIABILITIES
2. It is a crime which
involves moral
involves moral turpitude
turpitude LOCAL RECRUITMENT AGENCY
It is not required that it be Accused defrauded
shown that the recruiter Liability of the local recruitment agency
another by abuse of
wrongfully represented confidence, or by
himself as a licensed A Local Recruitment Angency shall be jointly and
means of deceit solidarily liable with its principal or foreign-based
recruiter
Er for any violation of the recruitment agreement
NOTE: It is and violation of contracts of employment (IRR,
NOTE: It is enough that the essential that the Book I, Rule V, Sec. 10(a)(2)).
victims were deceived as false statement or
they relied on the fraudulent Liability of corporate officers, directors or
misrepresentation and representation partners if the recruitment/ placement agency
scheme that caused them constitutes the is a juridical being
to entrust their money in very cause or the
exchange of what they only motive which If the recruitment/placement agency is a juridical
later discovered was a vain induces the being, the corporate officers, directors or partners
hope of obtaining complainant to as the case may be, shall themselves be jointly and
employment abroad. part with the thing solidarily liable with the corporation or
of value. partnership for the claims and damages (Becmen
Service Exporter and Promotion v. Cuaresma, G.R.
Illegal recruitment and estafa cases may be filed Nos. 182978-79, April 7, 2009).
simultaneously or separately. The filing of charges
for illegal recruitment does not bar the filing of Remedies under the Migrant Workers Act and
estafa, and vice versa. how may they be enforced:
Double jeopardy will not set in.
CRIMINAL ACTIONS
Q: Bugo, by means of false pretenses and
RTC
fraudulent representation, convinced Dado to
give the amount of Php 120,000.00 for Province or city:
processing the latters papers so that he can be 1. Where the offense was committed or
deployed to Japan. Dado later on found out that 2. Where the offended party actually resides at
Bugo had misappropriated, misapplied and the same time of the commission of the offense
converted the money to her own personal use
and benefit. Can Dado file the cases of illegal MONEY CLAIMS
recruitment and estafa simultaneously? NLRC
A: Yes. Illegal recruitment and estafa cases may be Original and exclusive jurisdiction to hear and
filed simultaneously or separately. The filing of decide claims arising out of an Er-Ee relationship
charges for illegal recruitment does not bar the or by virtue of any law or contract involving
filing of estafa, and vice versa. Bugos acquittal in Filipino workers for overseas deployment
the illegal recruitment case does not prove that she including claims for actual, moral, exemplary and
is not guilty of estafa. Illegal recruitment and estafa other forms of damages.
are entirely different offenses and neither one The liability of the principal/ Er and the
necessarily includes or is necessarily included in recruitment/ placement agency for any and all
the other. A person who is convicted of illegal claims shall be joint and several.
recruitment may, in addition, be convicted of estafa The performance bond to be filed by the
under Art. 315, par. 2(a) of the RPC. In the same recruitment/ placement agency shall be
manner, a person acquitted of illegal recruitment answerable for all money claims or damages
may be held liable for estafa. Double jeopardy will that may be awarded to the workers.

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2015 GOLDEN NOTES
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 RECRUITMENT AND PLACEMENT
If the recruitment/placement agency is a
juridical being, the corporate officers and
directors and partners as the case may be, shall
themselves be jointly and solidarily liable with
the corporation or partnership for the claims
and damages.
ADMINISTRATIVE ACTIONS
POEA
Original and exclusive jurisdiction to hear and
decide:
1. All cases which are administrative in character,
involving or arising out of violations of rules
and regulations relating to licensing and
registration of recruitment and employment
agencies or entities and
2. Disciplinary action cases and other special
cases which are administrative in character,
involving Ers, principals, contracting partners
and Filipino migrant workers.
a. It may be filed with the POEA Adjudication
Office or the DOLE/POEA regional office of
the place where the complaint applied or
was recruited at the option of the
complainant. The office with which the
complaint was first filed shall take
cognizance of the case.
b. DA cases and other special cases, as
mentioned in the preceding Section, shall
be filed with POEA Adjudication Office.
Rule as to whether compromise agreement on
money claims is allowed
Consistent with the policy encouraging amicable
settlement of labor disputes, Sec. 10 of R.A. 8042
allows resolution by compromise of cases filed
with the NLRC.
Period as to when shall compromise
agreements on money claims be paid
Any compromise/amicable settlement or voluntary
agreement on money claims inclusive of damages
shall be paid within four months from the approval
of the settlement by the appropriate authority.
Rule as to whether overtime and leave pay
included in the terms which is the basis in the
computation of the monetary award
The word salaries in Sec. 10(5) of the LC does not
include OT and leave pay. For seafarers, DO No. 33,
series of 1996, provides a Standard Employment
Contract of Seafarers, in which salary is understood
as the basic wage, exclusive of OT, leave pay and
other bonuses; whereas OT pay is compensation
21
for all work performed in excess of the regular 8
hours, and holiday pay is compensation for any
work performed on designated rest days and
holidays (Serrano v. Gallant Maritime Services &
Marlow Navigation Co., Inc., G.R. No.167614, March
24, 2009).
FOREIGN EMPLOYER
THEORY OF IMPUTED KNOWLEDGE
Theory of Imputed Knowledge
A rule in insurance law that any information
material to the transaction, either possessed by the
agent at the time of the transaction or acquired by
him before its completion, is deemed to be the
knowledge of the principal, at least so far as the
transaction is concerned, even though in fact the
knowledge is not communicated to the principal at
all (Leonor v. Filipinas Compania, 48 OG 243).
Q: Sunace International Management Services
(Sunace), deployed to Taiwan Montehermozo
as a domestic helper under a 12-month
contract effective Feb. 1, 1997. The deployment
was with the assistance of a Taiwanese broker,
Edmund Wang, President of Jet Crown
International Co., Ltd. After her 12-month
contract expired on Feb. 1, 1998,
Montehermozo continued working for her
Taiwanese employer for two more years, after
which she returned to the Philippines on Feb. 4,
2000. Shortly after her return she file before
the NLRC against Sunace, one Perez, the
Taiwanese broker, and the employer-foreign
principal alleging that she was jailed for three
months and that she was underpaid. Should
Sunace be held liable for the underpayment for
the additional two years that she worked for
her Taiwanese employer under the theory of
imputed knowledge?
A: No. The theory of imputed knowledge ascribes
the knowledge of the agent, Sunace, to the principal
Taiwanese Er, not the other way around. The
knowledge of the principal-foreign Er cannot,
therefore, be imputed to its agent Sunace.
There being no substantial proof that Sunace knew
of and consented to be bound under the 2-year
employment contract extension, it cannot be said
to be privy thereto. As such, it and its owner
cannot be held solidarily liable for and of
Montehermozos claims arising from the 2-year
employment extension (Sunace v. NLRC, G.R. No.
161757, January 25, 2006).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
SOLIDARY LIABILITY
Liability of the private employment agency and
the principal or foreign-based employer
They are jointly and solidarily liable for any
violation of the recruitment agreement and the
contracts of employment.
NOTE: This joint and solidary liability imposed by
law against recruitment agencies and foreign Ers is
meant to assure the aggrieved worker of
immediate and sufficient payment of what is due
him (Becmen Service Exporter and Promotion v.
Cuaresma, G.R. Nos. 182978-79, April 7, 2009).
Effect of absence of employment contract,
special power of attorney and affidavit of
responsibility, as required by the POEA rules
and regulations to the private employment
agency and the principal
Non-compliance with POEA Rules and Regulations
cannot be utilized to relieve the agency and its
principal from liabitliy. In fact, such non-
compliance is a ground for the cancellation or
suspension of their license (Hornales v. NLRC, et al.,
G.R. No. 118934, September 10, 2001).
PRETERMINATION OF CONTRACT OF MIGRANT
WORKER
Q: Serrano, a seafarer, was hired by Gallant
Maritime and Marlow Navigation Co. for 12
months as Chief Officer. On the date of his
departure, he was constrained to accept a
downgraded employment contract for the
position of Second Officer, upon the assurance
that he would be made Chief Officer after a
month. It was not done; hence, he refused to
stay on as Second Officer and was repatriated
to the Phils. He had served only 2 months & 7
days of his contract, leaving an unexpired
portion of 9 months & 23 days.
Serrano filed with the LA a Complaint against
Gallant Maritime and Marlow for constructive
dismissal and for payment of his money claims.
The LA rendered a favorable decision to
Serrano awarding him $8,770.00, representing
his salary for 3 months of the unexpired
portion of his contract of employment applying
R.A. 8042, Sec 10, par. 5:
Money Claims. - In case of termination
of overseas employment without just,
valid or authorized cause as defined
by law or contract, the workers shall
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
22
be entitled to the full reimbursement
of his placement fee with interest of
12% per annum, plus his salaries for
the unexpired portion of his
employment contract or for 3 months
for every year of the unexpired term,
whichever is less.
Is the subject clause constitutional?
A: No. The subject clause contains a suspect
classification in that, in the computation of the
monetary benefits of fixed-term Ees who are
illegally discharged, it imposes a 3-month cap on
the claim of OFWs with an unexpired portion of
one year or more in their contracts, but none on
the claims of other OFWs or local workers with
fixed-term employment. The subject clause singles
out one classification of OFWs and burdens it with
a peculiar disadvantage.
The clause is a violation of the right of Serrano and
other OFWs to equal protection and right to
substantive due process, for it deprives him of
property, consisting of monetary benefits, without
any existing valid governmental purpose.
Furthermore, prior to R.A. 8042, all OFWs,
regardless of contract periods or the unexpired
portions thereof, were treated alike in terms of the
computation of their monetary benefits in case of
illegal dismissal. Their claims were subjected to a
uniform rule of computation: their basic salaries
multiplied by the entire unexpired portion of their
employment contracts. The same applies local
workers with fixed-term employment.
Thus, Serrano is entitled to his salaries for the
entire unexpired period of nine months and 23
days of his employment contract, pursuant to law
and jurisprudence prior to the enactment of RA
8042 (Serrano v. Gallant Maritime Services &
Marlow Navigation Co., Inc., G.R. No.167614, March
24, 2009).
Basis in computing an employees
compensation in case of premature termination
of contract
A worker dismissed from overseas employment
without just, valid or authorized cause as defined
by law or contract is entitled to full reimbursement
of his placement fee with interest at 12% per
annum, plus his salary for the unexpired portion of
his employment contract or for three months for
every year of the unexpired term, whichever is less.
(Sec. 7, R.A. 10020, 2010).
 RECRUITMENT AND PLACEMENT
Basis in computing an employees A: No. Joy is entitled to her salary for the unexpired
compensation in case of premature termination portion of her contract, in accordance with Section
of contract 10 of Republic Act No. 8042. Since she started
working on June 26, 1997 and was terminated on
The Migrant Workers Act provides that salaries for July 14, 1997, Joy is entitled to her salary from July
the unexpired portion of the employment contract 15, 1997 to June 25, 1998. Furthermore, there is an
or three months for every year of the unexpired implied stipulation in contracts between the
term, whichever is less, shall be awarded to the placement agency and the overseas worker that in
overseas Filipino worker, in cases of illegal case the overseas worker is adjudged as entitled to
dismissal. In Serrano v. Gallant Maritime Services reimbursement of his or her placement fees, the
(G.R. No. 167614, March 24, 2009) however, the amount shall be subject to a 12% interest per
clause or for three months for every year of the annum. This implied stipulation has the effect of
unexpired term, whichever is less is declared removing awards for reimbursement of placement
unconstitutional and awarded the entire unexpired fees from Circular No. 799s coverage. However, if
portion of the employment contract to the overseas judgment did not become final and executory
Filipino worker. before July 1, 2013 and there was no stipulation in
the contract providing for a different interest rate,
Nonetheless, Sec. 7 of R.A. 10022 amended Sec. 10 other money claims under Section 10 of Republic
of the Migrant Workers Act, and once again Act No. 8042 shall be subject to the 6% interest per
reiterated the provision of awarding the unexpired annum in accordance with Circular No. 799
portion of the employent contract or three months (Sameer v. Cabiles, G.R. No. 170139, Aug. 05, 2014).
for every year of the unexpired term, whichever is
less (Skippers United Pacific, Inc. v. Doza, et. al, G.R. PENALTIES FOR ILLEGAL RECRUITMENT
No. 175558, February 8, 2012).
Consequence of conviction for illegal
The declaration in March 2009 of the recruitment:
unconstitutionality of the clause or for three
months for every year of the unexpired term, PENALTIES (Under R.A. 10022)
whichever is less in RA 8042 shall be given Offender / Offense Penalty
retroactive effect to the termination that occurred
in January 1999 because an unconstitutional clause Illegal recruitment as Life imprisonment +
in the law confers no rights, imposes no duties and economic sabotage fine of P2M-P5M
affords no protection. The unconstitutional
provision is inoperative, as if it was not passed into Provided:
law at all (Yap v. Thenamaris Ships Management
1. If person illegally
and Intermare Maritime Agencies, Inc., G.R. No.
recruited is below
179532, May 30, 2011).
18 years of age or Maximum penalty
Q: Joy was deployed to work for Taiwan 2. Illegal recruitment is shall be imposed
Wacoal, Co. Ltd. on June 26, 1997 for 1 year. She committed by a non-
alleged that Sameer Overseas Agency required licensee/non-holder
her to pay a placement fee of P70,000.00. On Any person found 12 yrs. and 1 day - 20 yrs.
July 14, 1997, Mr. Huwang of Wacoal informed guilty of illegal imprisonment; or
Joy, without prior notice, that she was recruitment Fine: P1M-P2M
terminated and was given a salary from June 26
Any person found 6 yrs. and 1 day - 12 yrs.
to July 14, 1997 only. Joy filed a complaint for
guilty of the prohibited imprisonment; or
illegal dismissal with the NLRC. She asked for
the return of her placement fee, the withheld acts Fine of P500K - P1M
amount for repatriation costs, payment of her Licensee/holder of 2-5 yrs. imprisonment; or
salary for 23 months as well as moral and authority violates Fine: P10K - P50K;
exemplary damages. The NLRC ruled that Joy provisions or both
was illegally dismissed and awarded her three
Non-licensee/non- 4-8 yrs. imprisonment; or
months worth of salary, the reimbursement of
the cost of her repatriation, and attorneys fees. holder of authority Fine: P20K - P100K
Should Joy be awarded three months worth of violates provisions or both
salary and reimbursement of the cost of her Corporation, Penalty imposed upon
repatriation? partnership, officer/s responsible for
association, or entity violation

UNIVERSITY OF SANTO TOMAS

23 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Offender / Offense Penalty
Penalties prescribed
under RA 10022,
Alien +
Deportation without
further proceedings
Automatic revocation of
license or authority and
In every case all permits and privileges
of the recruitment or
manning agency, lending
institutions, training
school or medical clinic
PERIODS
Mandatory Period for Resolution of Illegal
Recruitment Cases
The preliminary investigations of cases under R.A.
10022 shall be terminated within a period of 30
calendar days from the date of their filing.
If the PI is conducted
If the PI is conducted
by a prosecution
by a judge and a
officer and a prima
prima facie case is
facie case is
found to exist
established
Information shall be Prosecution officer
filed in court within 24 within 48 hours from
hours from the the date of receipt of
termination of the the records of the case.
investigation (Sec. 11)
Prescriptive Period for Illegal Recruitment
Cases
Simple Illegal
Economic Sabotage
Recruitment
Within 20 yrs. from the
Within 5 yrs. from the
time illegal recruitment
time illegal recruitment
has happened. (Sec.
has happened
12,R.A. 8042)
DIRECT HIRING
3. Members of the diplomatic organizations
4. Other Ers as may be allowed by DOLE
Purposes of the prohibition on direct hiring:
1. To ensure the best possible terms and
conditions of employment for the worker.
2. To assure the foreign Er that he hires only
qualified Filipino workers.
3. To ensure full regulation of employment in
order to avoid exploitation.
REGULATION AND ENFORCEMENT
SUSPENSION OR CANCELLATION OF LICENSE OR
AUTHORITY
Person who can suspend or cancel license or
authority
The Secretary of Labor and Employment is vested
with power to suspend or cancel any license or
authority to recruit employees for overseas
employment.
Grounds for revocation of license:
1. Incurring an accumulated 3 counts of
suspension by an agency based on final and
executory orders within the period of
validity of its license
2. Violations of the conditions of license
3. Engaging in acts of misrepresentation for the
purpose of securing a license or renewal
4. Engaging in the recruitment or placement of
workers to jobs harmful to the public health
or morality or to the dignity of the country
(Rules and Regulations Governing Overseas
Employment, Book VI, Rule I, Sec. 3).
Grounds for suspension or cancellation of
license

Direct hiring 1. Commission of prohibited acts under Art. 34

of LC
It is when an Er hires a Filipino worker for 2. Publishing job announcements w/o POEAs
overseas employment without going through the approval
POEA or entities authorized by the SLE. 3. Charging a fee which may be in excess of the
authorized amount before a worker is
Ban on direct hiring employed
4. Deploying workers w/o processing through
GR: An Er may only hire Filipino worker for POEA
overseas employment through POEA or entities 5. Recruitment in places outside its authorized
authorized by DOLE. area (POEA Rules, Book IV, Rule II, Sec. 4).
6. If the employment agency fails to provide the
XPNs: Direct hiring by: ticket or PTA within 48 hours from receipt of
1. International organizations the notice (R.A. 10022).
2. Name hires

UNIVERSITY OF SANTO TOMAS

2015 GOLDEN NOTES
24
 RECRUITMENT AND PLACEMENT
Degree of proof required for suspension of
license or authority
Administrative determinations require only
substantial proof and not clear and convincing
evidence. In proceedings for cancellation or
suspension of license or authority, no rule requires
that testimonies or complaints be corroborated by
documentary evidence, if the charge of unlawful
exaction is substantially proven.
Q: Concerned Filipino contract workers in the
Middle East reported to the DFA that XYZ, a
private recruitment and placement agency, is
covertly transporting extremists to terrorist
training camps abroad. Intelligence agencies of
the Government allegedly confirmed the
report. Upon being alerted by the DFA, the
DOLE issued orders cancelling the licenses of
XYZ, and imposing an immediate travel ban on
its recruits for the Middle East. XYZ appealed to
the Office of the President to reverse and set
aside the DOLE orders, citing damages from
loss of employment of its recruits, and
violations of due process including lack of
notice and hearing by the DOLE. The DOLE in its
answer claimed the existence of an emergency
in the Middle East which required prompt
measures to protect the life and limb of OFWs
from a clear and present danger posed by the
ongoing war against terrorism. Should the
DOLE orders be upheld or set aside? (2004 Bar
Question)
A:
1. The DOLE order cancelling the licenses of
XYZ is void because a report that an agency
is covertly transporting extremists is not a
valid ground for cancellation of a Certificate
of Registration (LC, Art. 239) and there is
failure of due process as no hearing was
conducted prior to the cancellation (LC, Art.
238).
2. The DOLE order imposing the travel ban is
valid because it is a valid exercise of police
power to protect the national interest (Sec. 3,
Art. XIII, Constitution on full protection to
labor safety of workers) and on the rule
making authority of the SLE (LC, Art. 5; Phil.
Assn. of Service Exporters v. Drilon, G.R. No.
81958, June 30, 1988).
REGULATORY AND VISITORIAL POWERS OF
THE DOLE SECRETARY
Regulatory powers of the SLE
1. Restrict and regulate the recruitment and
placement activities of all agencies
25
2. Issue orders and promulgate rules and
regulations
Visitorial power
1. Access to Ers records and premises at any
time of the day or night, whenever work is
being undertaken
2. To copy from said records
3. Question any Ee and investigate any fact,
condition or matter which may be necessary
to determine violations or which may aid in
the enforcement of the LC and of any labor
law, wage order, or rules and regulation
issued pursuant thereto.
Instances where the visitorial power of the SLE
may be exercised under the LC
1. Inspect books of accounts and records of any
person or entity engaged in recruitment and
placement; require it to submit reports
regularly on prescribed forms and act in
violations of any provisions of the LC on
recruitment and placement (LC, Art. 37).
2. Have access to Ers records and premises to
determine violations of any provisions of the
LC on recruitment and placement (LC, Art.
128).
3. Conduct industrial safety inspections of
establishments (LC, Art. 165).
4. Inquire into the financial activities of
legitimate labor organizations (LLO) and
examine their books of accounts upon the
filing of the complaint under oath and duly
supported by the written consent of at least
20% of the total membership of the labor
organization concerned.
SLE cannot issue search warrants or warrants
of arrest
Under the 1987 Constitution, only a judge may
issue search warrants or warrants of arrest. Hence,
Art. 38(c) of the LC is unconstitutional in as much
as it gives the SLE the power to issue search
warrants and warrants of arrest. The labor
authorities must go through the judicial process
(Salazar v. Achacoso, G.R. No. 81510, March 14,
1990).
REMITTANCE OF FOREIGN EXCHANGE
EARNINGS
Remittance of foreign exchange earnings
GR: It shall be mandatory for all OFWs to remit a
portion of their foreign exchange earnings to their
families, dependents, and/or beneficiaries ranging
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
from 50% - 80% depending on the workers kind of
job (POEA Rules, Book III, Rule VIII).
XPNs:
1. The workers immediate family members,
beneficiaries and dependents are residing
with him abroad
2. Immigrants and Filipino professionals and
Ees working with the UN agencies or
specialized bodies
3. Filipino servicemen working in U.S. military
installations (Resolution No. 1-83, Inter-
Agency Committee for Implementation of E.O.
857).
Effect of failure to remit
1. Workers Shall be suspended or removed
from the list of eligible workers for overseas
employment.
2. Employers Will be excluded from the
overseas employment program. Private
employment agencies shall face cancellation
or revocation of their licenses or authority to
recruit (E.O. 857, Sec. 9).
PROHIBITED ACTIVITIES
Prohibited practices in recruitment/ placement
1. Furnishing or publishing any false
notice/information/document related to
recruitment/employment
2. Failure to file reports required by SLE
3. Inducing or attempting to induce a worker
already employed to quit his employment in
order to offer him another unless the
transfer is designed to liberate a worker
from oppressive terms and conditions
4. Recruitment/placement of workers in jobs
harmful to public health or morality or to the
dignity of the country
5. Engaging directly or indirectly in the
management of a travel agency
6. Substituting or altering employment
contracts without approval of DOLE
7. Charging or accepting any amount greater
than that specified by DOLE or make a
worker pay any amount greater than
actually received by him
8. Committing any act of misrepresentation to
secure a license or authority
9. Influencing or attempting to influence any
person/entity not to employ any worker
who has not applied of employment through
his agency
10. Obstructing or attempting to obstruct
inspection by SLE or by his representatives
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
26
11. Withholding or denying travel documents
from applicant workers before departure for
monetary considerations other than
authorized by law
12. Granting a loan to an OFW which will be
used for payment of legal and allowable
placement fees
13. Refusing to condone or renegotiate a loan
incurred by an OFW after his employment
contract has been prematurely terminated
through no fault of his or her own
14. For a suspended recruitment/manning
agency to engage in any kind of recruitment
activity including the processing of pending
workers' applications; and
15. For a recruitment/manning agency or a
foreign principal/ Er to pass on the OFW or
deduct from his or her salary the payment of
the cost of insurance fees, premium or other
insurance related charges, as provided under
the compulsory worker's insurance coverage
16. Imposing a compulsory and exclusive
arrangement whereby an OFW is required
to:
a. Avail a loan only from specifically
designated institutions, entities or
persons
b. To undergo health examinations only
from specifically designated medical,
entities or persons, except seafarers
whose medical examination cost is
shouldered by the shipowner
c. To undergo training of any kind only
from designated institutions, entities or
persons, except for recommendatory
trainings mandated by
principals/shipowners (R.A. 10022, Sec.
6).
PHILIPPINE OVERSEAS EMPLOYMENT
ADMINISTRATION (POEA)
Principal functions of the POEA
1. Protection of the right of Filipino workers
to fair and equitable employment practices
2. Regulation of private sector participation in
the recruitment and overseas placement of
workers by setting up a licensing and
registration system
3. Deployment of Filipino workers through
Government to Government hiring
4. Formulation, implementation, and
monitoring of overseas employment of
Filipino workers taking into consideration
their welfare and domestic manpower
requirements
 RECRUITMENT AND PLACEMENT
5. Shall inform migrant workers not only of
their rights as workers but also of their
rights as human beings, instruct and guide
the workers how to assert their rights and
provide the available mechanism to redress
violation of their rights (R.A. 10022, Sec. 14).
6. Implementation, in partnership with other
law-enforcement agencies, of an intensified
program against illegal recruitment
activities (R.A. 10022, Sec. 14).
Power of the POEAs to terminate or impose a
ban on employment of migrant workers
The POEA may at any time terminate or impose a
ban on employment of migrant workers, to do so,
in consultation with the DFA based on the ff.
grounds:
1. In pursuit of the national interest; or
2. When public welfare so requires (R.A. 10022,
Sec. 4)
Minimum conditions/ provisions of overseas
employment contracts
1. Guaranteed wages for regular hours and OT,
not lower than the minimum wage
prescribed in all of the following:
a. The host country
b. Bilateral agreements or international
conventions ratified by the host country
and the Philippines
c. The Philippines
2. Free transportation to and from the worksite
or offsetting benefit
3. Free food and accommodation or offsetting
benefit
4. Just/authorized causes of termination of the
contract or services of the worker
NOTE: An agreement that diminishes the Ees pay
and benefits as contained in a POEA-approved
contract is void, unless such subsequent agreement
is approved by the POEA.
Deployment of OFWs
The State shall allow the deployment of OFWs
1. Only in countries where the rights of Filipino
migrant workers are protected.
2. To vessels navigating the foreign seas or to
installations located offshore or on high seas
whose owners/Ers are compliant with
international laws and standards that
protect the rights of migrant workers.
3. To companies and contractors with
international operations: Provided, That
they are compliant with standards,
27
conditions and requirements, as embodied in
the employment contracts prescribed by the
POEA and in accordance with
internationally-accepted standards (R.A.
10022 amending R.A. 8042, Sec. 3).
Guarantees of the receiving country for the
protection of the rights of OFWs
1. It has existing labor and social laws
protecting the rights of workers, including
migrant workers;
2. It is a signatory to and/or a ratifier of
multilateral conventions, declarations or
resolutions relating to the protection of
workers, including migrant workers; and
3. It has concluded a bilateral agreement or
arrangement with the government on the
protection of the rights of OFWs (R.A. 10022
amending R.A. 8042, Sec. 3).
Provided, that the receiving country is taking
positive, concrete measures to protect the rights of
migrant workers in furtherance of any of the
guarantees.
NOTE: In the absence of a clear showing that any of
the guarantees exists in the country of destination
of the migrant workers, no permit for deployment
shall be issued by the POEA.
Repatriation of a worker
GR: The repatriation of the:
1. Worker and the transport of his personal
belongings shall be the primary
responsibility of the agency which recruited
or deployed the worker overseas.
2. Remains and transport of the personal
belongings of a deceased worker and all costs
attendant thereto shall be borne by the
principal and/or the local agency.
XPNs:
1. If the termination of employment is due
solely to the fault of the worker, the
principal/ Er or agency shall not be
responsible for the repatriation of the
former and/or his belongings.
2. In cases of war, epidemic, disaster or
calamities, natural or man-made, and other
similar event, and where the principal or
recruitment agency cannot be identified, the
Overseas Workers Welfare Administration,
in coordination with appropriate
international agencies, shall take charge of
the repatriation (R.A. 8042, Sec. 15).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Mandatory repatriation of underage migrant 11. Theft or robbery
workers 12. Drunkenness
13. Drug addiction or possession or trafficking
Upon discovery or being informed of the presence of prohibited drugs
of migrant workers whose ages fall below the 14. Desertion or abandonment
minimum age requirement for overseas
deployment, the responsible officers in the foreign Jurisdiction of the LA v. POEA
service shall without delay repatriate said workers
and advise the DFA through the fastest means of JURISDICTION
communication available of such discovery and
other relevant information. The license of a Labor Arbiter POEA
recruitment/manning agency which recruited or Original and Original and exclusive
deployed an underage migrant worker shall be exclusive jurisdiction over:
automatically revoked and shall be imposed a fine jurisdiction over
of not less than P500,000 but not more than all claims arising 1. All cases which are
P1,000,000 (Sec. 9, R.A. 10022). out of Er-Ee administrative in
relationship or by character relating to
Regulatory and adjudicatory functions of the virtue of any law licensing and registration
POEA or contract of recruitment and
involving OFWs employment agencies
1. Regulatory It regulates the private sector including claims
participation in the recruitment and overseas for:
placement of workers through its licensing and 2. Disciplinary Action
registration system. cases and other special
1. Actual cases, which are
2. Adjudicatory 2. Moral administrative in
a. Administrative cases involving violations 3. Exemplary character, involving Ees,
of licensing rules and regulations and principals, contracting
4. Other forms of partners and Filipino
registration of recruitment and damages (R.A.
employment agencies or entities migrant workers (POEA
8042, Sec. 10). Rules, Book VII, Rule VII).
b. Disciplinary action cases and other special
cases which are administrative in
character involving employers, principals, Q: A seafarer was prevented from leaving the
contracting partners and Filipino port of Manila and refused deployment without
migrants. valid reason. His POEA-approved employment
contract provides that the employer-employee
Grounds for disciplinary action of OFWs relationship shall commence only upon the
seafarers actual departure from the port in the
Under R.A. 8042, these are: point of hire. Is the seafarer entitled to relief
1. Prostitution under the Migrant Workers Act, in the absence
2. Unjust refusal to depart for the worksite of an employer-employee relationship?
3. Gunrunning or possession of deadly
weapons A: Yes. Despite the absence of an Er-Ee
4. Vandalism or destroying company property relationship, the NLRC has jurisdiction over the
5. Violation of the laws and sacred practices of seafarers complaint. The jurisdiction of LAs is not
the host country and unjustified breach of limited to claims arising from Er-Ee relationships.
employment contract Sec. 10 of the Migrant Workers Act provides that
6. Embezzlement of funds of the company or the LAs shall have jurisdiction over claims arising
fellow worker entrusted for delivery to out of an Er-Ee relationship or by virtue of any law
relatives in the Phils. or contract involving Filipino workers for overseas
7. Creating trouble at the worksite or in the deployment including claims for actual, moral,
vessel exemplary and other forms of damages. Since the
8. Gambling present case involves the employment contract
9. Initiating or joining a strike or work entered into by petitioner for overseas
stoppage where the laws of the host country employment, his claims are cognizable by the LAs
prohibits strikes or similar actions of the NLRC (Santiago v. CF Sharp Crew
10. Commission of felony punishable by Management,G.R. No. 162419, July 10, 2007).
Philippine laws or by the host country

UNIVERSITY OF SANTO TOMAS

2015 GOLDEN NOTES
28
 RECRUITMENT AND PLACEMENT
Matters that fall outside the jurisdiction of the
POEA

1. Foreign judgments such claim must be

brought before regular courts. POEA is not a
court; it is an administrative agency,
exercising adjudicatory or quasi-judicial
functions.
2. Torts falls under the provisions of the Civil
Code.

Q: Apolinario Siador was claiming death

benefits from a local manning agent, Agile
Maritime Resources (Agile) for allegedly, his
son, Dennis, fell from the vessel and died in the
high seas. Siador claims that Dennis was
suffering with mental disability days prior to
the incident. Agile claimed that Dennis willfully
took his life by jumping overboard. A life ring
was immediately thrown into the water by the
vessels crew but Dennis float on his back and
made no efforts to swim towards the life ring.
Under the Philippine Overseas Employment
Administration Standard Employment Contract
(POEA-SEC), the employer is not liable for the
compensation if the death is directly
attributable to the seafarer. Does Agile able to
prove by substantial evidence that Dennis
willfully took his life by jumping overboard
thus shifting the burden on Siador to prove by
substantial evidence that Dennis was insane at
the time of incident?

A: Yes. Unarguably, Apolinario has discharged his

burden of proof. Since Apolinario has initially
discharged his burden of proof, Agile, in order to
avoid liability, must similarly establish their
defense. If they are able to establish their defense
by substantial evidence, the burden now rests on
Apolinario to overcome the employers defense. In
other words, the burden of evidence now shifts to
the seafarers heirs. Since the POEA-SEC requires
the employer to prove not only that the death is
directly attributable to the seafarer himself but
also that the seafarer willfully caused his death,
evidence of insanity or mental sickness may be
presented to negate the requirement of willfulness
as a matter of counter-defense. In this case, Agile
sufficiently established that Dennis willfully caused
his death while Siador's evidence fell short of
substantial evidence to establish its counter-
defense of insanity (Agile v. Siador, G.R. No. 191034,
October 1, 2014).

UNIVERSITY OF SANTO TOMAS

29 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
LABOR STANDARDS
HOURS OF WORK
COVERAGE/EXCLUSIONS
Groups of Ees under the LC
1. Managerial Ee - One who is vested with the
powers or prerogatives to lay down and
execute management policies and/or to hire,
transfer, suspend, lay-off, recall, discharge,
assign or discipline Ees.
2. Supervisory Ee - those who in the interest of
the Er, effectively recommend such managerial
actions if the exercise of such authority is not
merely routinary or clerical in nature but
requires the use of independent judgment.
3. Rank-and-file Ee - all Ees not falling within
any of the above definitions (LC, Art. 212(m)).
Ees covered by the conditions of employment
under the LC
GR: Ees in all establishments and undertakings
whether for profit or not.
XPNs:
1. Government Ees
2. Managerial Ees
3. Field personnel
4. Ers family members who depend on him for
support
5. Domestic helpers and persons in the personal
service of another,
6. Workers who are paid by results
as determined under DOLE regulations (LC,
Art. 82).
NOTE: The conditions of employment under the LC
will apply only if an Er-Ee relationship exists.
Government Ees
They are Ees of the:
1. National Government
2. Any of its political subdivisions
3. Including those employed in GOCCs with
original charters
Law applicable to government Ees
It is the Civil Service Law, Rules and Regulations
Managerial Ees
Those whose primary duty consists of the
management of the establishment in which they
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
30
are employed or a department or subdivision
thereof, and other officers or members of the
managerial staff (LC, Art. 82(2)).
They must meet all of the ff. conditions, namely:
1. Primary duty: management of the
establishment in which they are employed or
of a department or sub-division thereof;
2. Customarily or regularly direct the work of 2
or more Ees;
3. Has the authority to hire or fire other Ees of
lower rank; or their suggestions and
recommendations as to the hiring and firing
and as to the promotion or any change of
status of other Ees are given particular weight;
4. Execute under general supervision work along
specialized or technical lines requiring special
training, experience, or knowledge;
5. Execute under general supervision special
assignment and tasks; and
6. Do not devote more than 20% of their hours
worked to activities which are not directly and
closely related to the performance of the work
described.
Reason why managerial employees are not
covered by the conditions of employment
under the LC
They are employed by reason of their special
training, expertise or knowledge and for positions
requiring the exercise of discretion and
independent judgment. Value of work cannot be
measured in terms of hours.
Field personnel
They are:
1. Non-agricultural Ees
2. Who regularly perform their duties
3. Away from the principal place of business or
branch office of the Er; and
4. Whose actual hours of work in the field cannot
be determined with reasonable certainty.
Domestic helpers and persons in the personal
service of another
Those who:
1. Perform services in the Ers home which are
usually necessary or desirable for the
maintenance or enjoyment thereof; or
2. Minister to the personal comfort, convenience
or safety of the Er as well as the members of
his Ers household.
 LABOR STANDARDS
Q: A house personnel was hired by a ranking
company official to maintain a staff house
provided for the official. The personnel is being
paid by the company itself. Is the house
personnel a domestic servant of the company
official?
A: No. The personnel is not a domestic helper but a
regular Ee of the company (Apex Mining v. NLRC,
G.R. No. 9366, April 22, 1991; Remington Industrial
Sales Corporation v. Castaneda, G.R. Nos. 169295-96,
November 20, 2006).
Q: Do bus drivers-conductors fall within the
term regular employees?
A. Yes. It is of judicial notice that along the routes
that are plied by these bus companies, there are its
inspectors assigned at strategic places who board
the bus and inspect the passengers, the punched
tickets, and the conductors reports. They must be
at specific place at specified tme as they generally
observe prompt departure and arrival from their
point of origin to their point of destination. In each
and every depot, there is always the dispatcher
whose function is precisely to see to it that the bus
and its crew leave the premises at specific times
and arrive at the estimated proper time. The
drivers are under constant supervision while in the
performance of their work. They cannot be
considered as field personnel but regular
employees (Auto Bus Transport Systems v. Antonio
Bautista, G.R. No. 156367, May 16, 2005).
Person who determines working conditions
Generally, they are determined by the Er, as he is
usually free to regulate, according to his discretion,
all aspects of employment.
Limitation on the Ers power to regulate
working conditions
It must be done in good faith and not for the
purpose of defeating or circumventing the rights of
the Ees. Such are not always absolute and must be
exercised with due regard to the rights of labor.
NOTE: Ones employment, profession, trade or
calling is a property right and the wrongful
interference therewith is an actionable wrong.
NORMAL HOURS OF WORK
Normal hours of work of an Ee
GR: The normal hours of work of any Ee shall not
exceed 8 hours a day (LC, Art. 83).
31
XPNs:
1. Health personnel
2. Compressed workweek
NOTE: Normal hours of work may be shortened or
compressed. Neither does it follow that a person
who does not observe normal hours of work
cannot be deemed an employee. In Cosmopolitan
Funeral Homes, Inc. v. Maalat, the employer
similarly denied the existence of an Er-Ee
relationship, as the claimant according to it, was a
"supervisor on commission basis" who did not
observe normal hours of work. This Court declared
that there was an Er-Ee relationship, noting that
"[the] supervisor, although compensated on a
commission basis, [is] exempt from the observance
of normal hours of work for his compensation is
measured by the number of sales he makes"
(Lazaro v. SSS, 435 SCRA 472).
Rationale behind the law on eight-hour labor
It is enacted not only to safeguard the health and
welfare of the Ee or laborer, but also in a way to
minimize unemployment by forcing Ers, in cases
where more than 8-hour operation is necessary, to
utilize different shifts of laborers or Ees working
only for 8 hours each.
Coverage of hours of work
1. All time during which an Ee is required to be:
a. On duty, or
b. At the Ers premises, or
c. At a prescribed workplace
2. All time during which an Ee is suffered or
permitted to work (IRR, Book III, Rule I, Sec.
3).
Principles in determining hours worked
1. All hours which the Ee is required to give to
his Er regardless of whether or not such
hours are spent in productive labor or
involve physical or mental exertion.
2. Rest period is excluded from hours worked,
even if Ee does not leave his workplace, it
being enough that:
a. He stops working
b. May rest completely
c. May leave his workplace, to go
elsewhere, whether within or outside
the premises of the workplace
3. All time spent for work is considered hours
worked if:
a. The work performed was necessary
b. If it benefited the Er
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
c. Or the Ee could not abandon his work at
the end of his normal working hours
because he had no replacement
d. Provided, the work was with the
knowledge of his Er or immediate
supervisor
4. The time during which an Ee is inactive by
reason of interruptions in his work beyond
his control shall be considered working time:
a. If the imminence of the resumption of
the work requires the Ees presence at
the place of work; or
b. If the interval is too brief to be utilized
effectively and gainfully in the Ees own
interest (IRR, Book III, Rule I, Sec. 4).
Instances when hours of worked are
compensable
1. Ee is required to be on duty
2. Ee is suffered or permitted to work
3. Rest periods of short duration during
working hours
4. Travel time, when beneficial to the Er (Rada
v. NLRC, 205 SCRA 69):
a. Travel from home to work
GR: Normal travel from home to work is
not working time.
XPNs:
i. Emergency call outside his regular
working hours where he is
required to travel to his regular
place of business or some other
work site.
ii. Done through a conveyance
provided by the Er.
iii. Done under the supervision and
control of the Er.
iv. Done under vexing and dangerous
circumstance.
b. Travel that is all in a days work
time spent in travel as part of the Ees
principal activity
E.g. travel from job site to job site
during the work day, must be counted
as working hours.
c. Travel away from home
GR:
a. Travel that requires an overnight
stay on the part of the Ee when it
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
32
cuts across the Ees workday is
clearly working time.
b. The time is not only hours worked
on regular workdays but also during
corresponding working hours on
non-working days. Outside of these
regular working hours, travel away
from home is not considered
working time.
XPN: During meal period or when Ee is
permitted to sleep in adequate facilities
furnished by the Er.
Instances when hours of work not counted as
compensable
1. Ee ceases to work
5. Ee may rest completely
6. Ee may leave at his will the spot where he
actually stays while working to go
somewhere else (Luzon Stevedoring v. Luzon
Marine G.R. No. L-9265 April 29, 1957).
7. When work is broken/not continuous (NDC
v.CIR G.R. No. L-53961 June 30, 1987).
8. Assembly time, routinary practice of
employees, proceedings not infected with
complexities so as to deprive Ees time to
attend to their personal pursuits (Arica
v.NLRC G.R. No. 78210 February 28, 1989).
9. Meal time (60 min.), unless predominantly
spent for the Ers benefit
NOTE: Activities before work and after work are
deemed performed during work hours, where such
activities are controlled or required by the Er and
are pursued necessarily and primarily for the Ers
benefit.
Hours of work of health personnel
GR: 8 hours for 5 days (40-hour workweek),
exclusive of time for meals.
XPN: Where the exigencies of the service require
that such personnel work for 6 days or 48 hours,
they shall be entitled to an additional
compensation of at least 30% of their regular wage
for work on the 6th day (LC, Art. 83).
Health personnel covered by the 40-hour
workweek
1. Those in cities and municipalities with a
population of at least 1 million; or
2. Those in hospitals and clinics with a bed
capacity of at least 100.
 LABOR STANDARDS
NOTE: Art. 83(2) of the LC does not require
hospitals to pay the Ees a full weekly salary with
paid 2 days off (San Juan de Dios Ees Assoc.-AFW et
al. v. NLRC, G.R. No. 126383, November 28, 1997).
Resident physicians to be on duty beyond the
40-hour workweek limitation
GR: The customary practice of requiring resident
physicians beyond the 40 hours of work per week
is not permissible and violates the limitation under
Art. 83.
XPN: If there is a training agreement between the
resident physician and the hospital and the
training program is duly accredited or approved by
appropriate government agency.
COMPRESSED WORKWEEK
Compressed workweek
The normal workweek is reduced to less than 6
days but the total number of work-hours of 48
hours per week shall remain. The normal workday
is increased to more than 8 hours but not to exceed
12 hours, without corresponding overtime
premium. The concept can be adjusted accordingly
depending on the normal workweek of the
company (Department Advisory Order No. 2, Series
of 2009).
This scheme was originally conceived for
establishments wishing to save on energy costs,
promote greater work efficiency and lower the rate
of employee absenteeism, among others. Workers
favor the scheme considering that it would mean
savings on the increasing cost of transportation
fares for at least one day a week; savings on meal
and snack expenses; longer weekends or an
additional 52 off-days a year that can be devoted to
rest leisure, family responsibilities, studies and
other personal matters, and that it will spare them
for at least another day in a week from certain
inconveniences that are the normal incidents of
employment, such as commuting to and from the
workplace, travel time spent, exposure to dust and
motor vehicl fumes, dressing up for work, etc.
(Bisig Manggagawa sa Tryco v. NLRC, G.R. No.
151309, October 15, 2008).
Requisites for the adoption of compressed
workweek
1. The Er shall notify the DOLE through the
Regional Office which has jurisdiction over
the workplace, of the adoption of
compressed workweek.
33
2. The notice shall be in Report Form attached
to the advisory.
The Regional Office shall conduct an ocular
visit to validate whether the adoption of the
flexible work arrangements is in accordance
with this issuance (Department Advisory
Order No. 2, Series of 2009).
Instance when the implementation of a
compressed workweek is considered valid
The validity of the reduction of working hours can
be upheld when the arrangement is:
1. Temporary
2. It is a more humane solution instead of a
retrenchment of personnel
3. There is notice and consultations with the
workers and supervisors
4. A consensus is reached on how to deal with
deteriorating economic conditions; and
5. It is sufficiently proven that the company
was suffering from losses.
NOTE: Under the Bureau of Working Conditions
bulletin, a reduction of the number of regular
working days (RWD) is valid where the
arrangement is resorted to by the Er to prevent
serious losses due to causes beyond his control,
such as when there is a substantial slump in the
demand for his goods or services or when there is a
lack of raw materials. There is one main
consideration in determining the validity of
reduction of working hours that the company
was suffering from losses. A year of financial losses
would not justify a reduced workweek (Linton
Commercial v. Hellera, G.R. No. 163147, October 10,
2007).
Conditions where a "compressed workweek"
schedule may be legally authorized as an
exception to the "8-hour a day" requirement
under the LC (2005 Bar Question)
1. The Ee voluntarily agrees to it
2. There is no diminution in their weekly or
monthly take home pay or fringe benefits
3. The benefits are more than or at least
commensurate or equal to what is due to the
Ees without the compressed work week
4. OT pay will be due and demandable when
they are required to work on those days
which should have ceased to be working
days because of the compressed work week
schedule.
5. No strenuous physical exertion or that they
are given adequate rest periods.
6. It must be for a temporary duration as
determined by the DOLE.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
MEAL BREAK
Duration of the meal period
Every Er shall give his Ees not less than 60 minutes
or 1 hour time-off for regular meals.
Non- compensability of the meal period
It is not compensable during a time-off. Ee must be
completely relieved from duty.
Instance when the meal period is considered
compensable
It is compensable where the lunch period or meal
time:
1. Is predominantly spent for the Ers benefit;
or
2. Where it is less than 20 min. It will be
considered only as a coffee break.
NOTE: Where during a meal period, the laborers
are required to stand by for emergency work, or
where the meal hour is not one of complete rest,
such is considered OT (Pan Am v. Pan Am Ees
Association, G.R. No. L-16275, (1961).Rest periods
or coffee breaks running from 5 to 20 min.shall be
considered as compensable working time (IRR,
Book III, Rule, Sec. 7).
Compensability of meal periods provided
during overtime work
Meal periods provided during overtime work are
compensable, since the 1 hour meal period (non-
compensable) is not given during OT work because
the latter is usually for a short period and to deduct
from the same would reduce to nothing the Ees OT
work. Thus, the 1 hour break for meals during OT
should be treated as compensable.
Instances where meal periods are shortened
and if it is compensable or not compensable
1. Compensable At the instance of Er, when:
a. Work is non-manual in nature or does not
involve strenuous physical exertion;
b. Establishment regularly operates less than
16 hours a day;
c. Work is necessary to prevent serious loss
of perishable goods.
d. Actual or impending emergency or there is
urgent work to be performed on
machineries and equipment to avoid
serious loss which the Er would otherwise
suffer (Sec. 7, Rule I, Book III, IRR).
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
34
2. Not Compensable Ee requested for the
shorter meal time so that he can leave work
earlier than the previously established
schedule.
Requisites:
a. Ees voluntarily agree in writing and are
willing to waive OT pay for the shortened
meal period;
b. No diminution in the salary and other
fringe benefits of the Ees which are
existing before the effectivity of the
shortened meal period;
c. Work of the Ees does not involve
strenuous physical exertion and they are
provided with adequate coffee breaks in
the morning and afternoon;
d. Value of the benefits derived by the Ees
from the proposed work arrangements is
equal to or commensurate with the
compensation due them for the shortened
meal period as well as the OT pay for 30
min. as determined by the Ees concerned;
e. OT pay will become due and demandable
after the new time schedule
f. Arrangement is of temporary duration.
NOTE: The implementing rules allow the meal time
to be less than 60 minutes, under specified cases
and in no case shorter than 20 minutes (IRR, Book
III, Rule 1, Sec. 7).
If the so called meal time is less than 20 minutes,
it becomes only a rest period and under the same
section 7, is considered working time.
WAITING TIME
Waiting time considered as working time
1. It is considered working time if waiting is an
integral part of his work, or
2. The Ee is required or engaged by the Er to
wait (engaged to wait).
NOTE: The controlling factor is whether waiting
time spent in idleness is so spent predominantly
for the Ers benefit or for the Ee.
Waiting time not considered as working time
It is not considered working time when the Ee is
waiting to be engaged; idle time is not working
time. Hence, it is not compensable (waiting to be
engaged).
 LABOR STANDARDS
NOTE: Under the law, the idle time that an Ee may Rationale behind the overtime pay
spend for resting and during which he may leave
the spot or place of work though not the premises Ee is made to work longer than what is
of his Er, is not counted as working time only commensurate with his agreed compensation for
where the work is broken or is not continuous the statutory fixed or voluntarily agreed hours of
(National Development Co. v. CIR, 6 SCRA 763). labor he is supposed to do (PNB v. PEMA and CIR,
G.R. No. L-30279, July 30, 1982). It discourages the
Idle time considered as working time Er from requiring such work thus protecting the
health and well-being of the worker, and also tend
It is when the Ee is idle or inactive by reason of to remedy unemployment by encouraging Ers to
interruptions beyond his control. employ others workers to do what cannot be
accomplished during the normal hours of work.
Conditions in order for lectures, meetings and
training programs to be not considered as Overtime pay v. Premium pay
working time
OVERTIME PAY PREMIUM PAY
All of the ff. conditions must be present:
1. Attendance is outside of the Ers regular Additional compensation for
Additional work performed within 8 hours
working hours compensation
2. Attendance is in fact voluntary and on days when normally he
for work should not be working (on non-
3. The Ee does not perform any productive performed
work during such attendance. working days, such as rest days
beyond 8 hours and special days.)
on ordinary
Ee considered as working while on call days (within the But additional compensation
workers 24- for work rendered in excess of
When Ee is required to remain on call in the Ers hour workday) 8 hours during these days is
premises or so close thereto that he cannot use the also considered OT pay.
time effectively and gainfully for his own purpose.
Overtime pay rates
OVERTIME WORK, OVERTIME PAY
OVERTIME PAY RATES
Work day
During a
regular Additional compensation of 25%
Work day is the 24-hour period which commences
working of the regular wage
from the time the Ee regularly starts to work
day
Illustration: Rate of the first 8 hours worked
on
If the worker starts to work 8 am today, the plus at least 30% of the regular
workday is from 8 am today up to 8 am wage (RW):
tomorrow. During a
holiday or If done on a special holiday OR
NOTE: Minimum normal working hours fixed by rest day rest day:
law need not be continuous to constitute the legal 30% of 130% of RW
working day.
If done on a special holiday AND
Overtime work rest day:
30% of 150% of RW
It is overtime work if performed beyond 8 hours
within the workers 24-hour workday. If done on a regular holiday:
30% of 200% of RW
NOTE: Express instruction from the Er to the Ee to
render OT work is not required for the Ee to be Basis of computing the overtime pay and
entitled to OT pay; it is sufficient that the Ee is additional remuneration
permitted or suffered to work. However, written
authority after office hours during rest days and Regular wage which includes the cash wage only,
holidays are required for entitlement to without deduction on account of the facilities
compensation. provided by the Er (LC, Art. 90).

UNIVERSITY OF SANTO TOMAS

35 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Q: In lieu of overtime pay, the employee was
given permission to go on leave on some other
day, is that valid?
A: No. Permission given to the Ee to go on leave on
some other day of the week shall not exempt the Er
from paying the additional compensation required
because it would prejudice the Ee, for he will be
deprived of the additional pay for the OT work he
has rendered and which is utilized to offset the
undertime he may have incurred. Undertime could
be charged against the Ees accrued leave.
Q: Socorro is a clerk-typist in Hospicio de San
Jose, a charitable institution dependent for its
existence on contributions and donations from
well wishers. She renders work 11 hours a day
but has not been given OT pay since her place of
work is a charitable institution. Is Socorro
entitled to overtime pay? Explain briefly. (2002
Bar Question)
A: Yes. Socorro is entitled to OT pay. She does not
fall under any of the exceptions to the coverage of
Art. 82, under the provisions of hours of work. The
LC is equally applicable to non-profit institutions. A
covered Ee who works beyond 8 hours is entitled
to OT compensation.
Q: Danilo Flores applied for the position of
driver in the motor-pool of Gold Company, a
multinational corporation. Danilo was
informed that he would frequently be working
overtime as he would have to drive for the
company's executives even beyond the
ordinary 8-hour work day. He was provided
with a contract of employment wherein he
would be paid a monthly rate equivalent to 35
times his daily wage, regular sick and vacation
leaves, 5 day-leave with pay every month and
time off with pay when the company's
executives using the cars do not need Danilo's
service for more than eight hours a day, in lieu
of overtime. Are the above provisions of the
contract of employment in conformity with, or
violative of, the law?
A: Except for the provision that Danilo shall have
time off with pay when the company's executives
using the cars do not need Danilo's service for
more than 8 hours a day, in lieu of OT, the
provisions of the contract of employment of Danilo
are not violative of any labor law because they
instead improve upon the present provisions of
pertinent labor laws.
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
36
Instances where an Ee may or may not be
compelled to render OT work
GR: An Ee may not be compelled to render OT
work; OT work is voluntary.
XPNs: Compulsory OT work in any of the following
situations:
1. Urgent work to be performed on machines
and installations in order to avoid serious
loss or damage to the Er or some other cause
of similar nature
2. Work is necessary to prevent loss or damage
to perishable goods
3. In case of imminent danger to the public
safety due to an actual or impending
emergency in the locality caused by serious
accidents, fire, flood, typhoon, earthquake,
epidemic or other disaster or calamity
4. Country is at war
5. Completion or continuation of the work
started before the 8th hour is necessary to
prevent serious obstruction or prejudice to
the business operations of the Er
6. Any other national or local emergency has
been declared
7. Necessary to prevent loss of life or property.
(LC, Art. 89)
NOTE: There should be payment of additional
compensation. Ees refusal to obey the order of the
Er constitutes insubordination for which he may be
subjected to disciplinary action.
Q: The employment contract requires work for
more than 8 hours a day with a fixed wage
inclusive of OT pay. Is that valid?
A: It depends.
1. When the contract of employment requires
work for more than 8 hours at specific wages
per day, without providing for a fixed hourly
rate or that the daily wages include OT pay,
said wages cannot be considered as
including OT compensation (Manila
Terminal Co. v. CIR, et al., 91 Phil., 625).
2. However, the employment contract may
provide for a built-in OT pay. Because of
this, non-payment of OT pay by the employer
is valid (Engineering Equipment v. Minister of
Labor, G.R. No. L-64967, September 23, 1985).
 LABOR STANDARDS
Undertime (UT) cannot offset overtime (OT)
Where a worker incurs undertime hours during his
regular daily work, said undertime hours should
not be offset against the overtime hours on the
same day or on any other day. It is both prohibited
by the statute and by jurisprudence.
Right to OT pay cannot be waived
GR: The right to OT pay cannot be waived as it is
governed by law and not merely by the agreement
of the parties.
XPNs:
1. If the waiver is made in exchange for certain
valuable benefits and privileges, which may
even exceed the OT Pay.
2. Compressed workweek
OT rate may be subject to stipulation of the Er
and Ee
GR: The premium for work performed on the Ees
rest days or on special days or regular holidays are
included as part of the regular rate of the Ee in the
computation of OT pay for any OT work rendered
on said days especially if the Er pays only the
minimum OT rates prescribed by law.
XPN: Ees and Er may stipulate in their collective
agreement the payment of OT rates higher than
those provided by law and exclude the premium
rates in the computation of OT pay. Such
agreement may be considered valid only if the
stipulated OT pay rates will yield to the Ees not less
than the minimum prescribed by law.
OT pay in a compressed workweek scheme
Any work performed beyond 12 hours a day or 48
hours a week shall be subject to OT premium
(Department Advisory No. 02, s. of 2004).
NIGHT WORK (R.A. 10151),
NIGHT SHIFT DIFFERENTIAL
Night work
Any and all work rendered between 6 pm and 6 am
(National Rice & Corn Corp. v. NARIC, 105 Phil 891).
Night worker
Any employed person whose work requires
performance of a substantial number of hours of
night work which exceeds a specified limit. This
limit shall be fixed by the SLE after consulting the
workers representatives/labor organizations and
37
Ers (LC, Chapter V, Art. 154 as amended by R.A.
10151).
Persons covered by the provisions on night
work under R.A. 10151
GR: All persons who shall be employed or
permitted or suffered to work at night.
XPN: Those employed in agriculture, stock raising,
fishing, maritime transport and inland navigation,
during a period of not less than 7 consecutive
hours, including the interval from midnight to 5 in
the morning, to be determined by the SLE after
consulting the workers representatives/labor
organizations and Ers.
Right of the workers to undergo health
assessment to avoid health problems
associated with night work
At their request, workers shall have the right to
undergo health assessment without charge and to
receive advice on how to reduce or avoid health
problems associated with their work:
1. Before taking up an assignment as a night
worker;
2. At regular intervals during such an
assignment; and
3. If they experience health problems during
such an assignment which are not caused
by factors other than the performance of
night work.
NOTE: Night workers who are certified as unfit for
night work, due to health reasons, shall be
transferred, whenever practicable, to a similar job
for which they are fit to work. If such transfer to a
similar job is not practicable, these workers shall
be granted the same benefits as other workers who
are unable to work, or to secure employment
during such period.
Employability of women for night work
R.A. 10151 repealed Arts. 130 and 131 of the LC on
Night Work prohibition with regard to women
workers. However, measures shall be taken to
ensure that an alternative to night work is
available to women workers who would otherwise
be called upon to perform such work:
1. Before and after childbirth, for a period of at
least 16 weeks, which shall be divided
between the time before and after childbirth;
2. For additional periods, in respect of which a
medical certificate is produced stating that
said additional periods are necessary for the
health of the mother or child:
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
a. During pregnancy;
b. During a specified time beyond the
period, after childbirth is fixed pursuant
to number 1, the length of which shall be
determined by the DOLE after consulting
the labor organizations and Ers.
NOTE: During the periods referred in Art. 158 in
RA 10151:
a. A woman worker shall not be dismissed or
given notice of dismissal, except for just or
authorized causes provided for in the Code
that are not connected with pregnancy,
childbirth and childcare responsibilities.
b. A woman worker shall not lose the benefits
regarding her status, seniority, and access to
promotion which may attach to her regular
night work position.
Pregnant women and nursing mothers may be
allowed to work at night
They are allowed if a competent physician, other
than the company physician, shall certify their
fitness to render night work, and specify, in the
case of pregnant Ees, the period of the pregnancy
that they can safely work.
Facilities required from Ers under R.A. 10151
1. Suitable first-aid facilities, including
arrangements where such workers, where
necessary, can be taken immediately to a
place for appropriate treatment.
2. Safe and healthful working conditions and
adequate or reasonable facilities, i.e. sleeping
or resting quarters in the establishment, and
transportation from the work premises to
the nearest point of their residence subject
to exceptions and guidelines to be provided
by the DOLE.
Night Shift Differential (NSD)
It is additional compensation of not less than 10%
of an Ees regular wage for every hour worked
between 10 pm to 6 am, whether or not such
period is part of the workers regular shift.
Non-waivability of NSD
GR: Waiver of NSD is against public policy
(Mercury Drug Co., Inc. v. Dayao, et al., G.R. No. L-
30452, September 30, 1982).
XPN: Waiver is allowed if this will result to higher
or better benefits to Ees.
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
38
PART-TIME WORK
Non-prohibition of part-time work
Part-time work is not prohibited. The LC merely
provides for the maximum number of hours and
not the minimum. Under Art. 124, as amended by
R.A. 6727, wage proportionate to part-time work is
recognized.
NOTE: The wage and benefits of a part-time
worker are in proportion to the number of hours
worked. For example, if an Ee earns P300.00 for an
8-hour work, he shall then get P150.00 for work
done in 4 hours.
CONTRACT FOR A PIECE OF WORK
Contract for a piece of work
It is a contract whereby the contractor binds
himself to execute a piece of work for the Er, in
price or consideration of a certain compensation.
The contractor may employ his labor, skill or also
furnish the material.
NOTE: All workers paid on piece-work shall be
entitled to receive not less than the prescribed
daily minimum wage or a proportion thereof for
working less than 8 hours.
Contract for piece of work v. Lease of services
CONTRACT FOR PIECE
LEASE OF SERVICES
OF WORK
The object is the work
done or the result of the The object is services.
said work.
The risk is generally
borne by the Er, not by
The risk is borne by the
the worker unless the
worker before delivery.
latter is guilty of fault or
negligence.
Contractor
The worker is also called a contractor. He in turn
may obtain the services of others, who will work
under him.
Test to determine if one is an Ee or an
independent contractor
The right of control test is used. If the person for
whom services are to be performed controls only
the end to be achieved, the worker is a contractor;
if the former controls not only the end but also the
manner and means to be used, the latter is an Ee.
 LABOR STANDARDS
Things that the contractor can furnish Effects when the Er accepts the work

1. Both material and labor, or 1. The contractor is generally relieved of

2. Only labor liability.
2. If the acceptance is made without objection,
Duties of a contractor who furnishes both work the Er may still sue for hidden defects.
and the material
Place of payment
This is equivalent to sale; therefore, these are the
duties: 1. Where stipulated
2. If no stipulation, then at the time and place
1. To deliver of delivery.
2. To transfer ownership
3. To warrant against eviction and hidden Mechanics lien
defects
One who executed a work on a movable property
Remedies of the ER in case of defects has a right to retain it by way of pledge until he is
paid.
1. Ask the contractor to remove the defect or to
execute another work. WAGES
2. If the contractor fails or refuses, the Er can
ask another at the contractors expense. If a It is the remuneration or earnings, however
building is involved, expenses for correction designated, capable of being expressed in terms of
and completion may be recovered. money, whether fixed or ascertained on a time,
task, piece, or commission basis, or other method
Rule on agreements waiving or limiting the of calculating the same, payable by an Er to an Ee
contractors liability under a written or unwritten contract of
employment:
1. In the absence of fraud, the agreement would
ordinarily be valid. 1. For work done or to be done, or for services
2. In the absence of prohibitory statute, the rendered or to be rendered; and includes
validity of a limitation is generally upheld, 2. Fair and reasonable value of board, lodging,
with a view of obtaining compensation or other facilities customarily furnished by
commensurate to the risk assumed. the Er to the Ee as determined by SLE.

Q: A asked B to make a radio cabinet. B bound
himself to furnish the material. Before the
radio cabinet could be delivered, it was
destroyed by a fortuitous event.
a. Who suffers the loss?
b. Is the contract extinguished?
A:
a) B suffers the loss of both the materials and
the work, unless there was mora
accipiendi. If there was mora accipiendi, it
is evident that A suffers the loss.
NOTE: Fair and reasonable value means it shall not
include any profit to the Er or to any person
affiliated with the Er.
No Work, No Pay Principle (Fair days wage
for a fair days labor); Basis of payment.
GR: If there is no work performed by the Ee,
without the fault of the Er, there can be no wage or
pay.
XPNs: The laborer was able, willing and ready to
work but was:

b) No. Therefore B may be required to do the 1. Prevented by management;

work all over again, unless there had been 2. Illegally locked out;
a prior stipulation to the contrary or 3. Illegally suspended;
unless a re-making is possible (NCC, Art. 4. Illegally dismissed
1717). 5. Illegally prevented from working (Aklan
Electric Coop. v. NLRC, G.R. No. 129246,
NOTE: The law merely refers to the burden of the January 10, 2000).
loss, and not to the extinguishment of the contract.

UNIVERSITY OF SANTO TOMAS

39 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Applicability of the term wages
GR: It applies to all Ees.
XPNs:
1. Farm tenancy or leasehold;
2. Household or domestic helpers, including
family drivers and persons working in the
personal service of another;
3. Home workers engaged in needlework or in
any cottage industry duly registered in
accordance with law;
4. Workers in any duly registered cooperatives
when so recommended by the Bureau of
Cooperative Development and upon
approval of the SLE;
5. Workers of a barangay micro business
enterprise (R.A. 9178);
6. Retail and service establishments regularly
employing not more than 10 workers (RA
6727, Sec. 4);
NOTE: Retail and service establishments must file
an application for exemption with the duly
appropriate Regional Board.
MINIMUM WAGE DEFINED, MINIMUM WAGE
SETTING
Minimum wage
Statutory minimum wage is the lowest wage rate
fixed by law that an Er can pay his workers.
Purpose of the minimum wage law
The compulsory payment of a fair statutory wage is
a preventive action, not remedial, for it settles the
wage rates before industrial disputes arise thereby
foreclosing the eruption of social and economic
disquietude.
The purpose of minimum wage law is to set
barrier below which wages may not fall, in order to
develop competition on a high level of efficiency
rather than competition on a low level of wages.
The establishment of a minimum wage encourages
competition above the lower limits set by the law.
The minimum wage law discourages the sweat-
shop operators from exploiting their workers.
(Poquiz, Vol. I)

Equal pay for equal work Principle Standards or criteria for minimum wage setting

Persons who work with substantially equal In the determination of such regional minimum
qualifications, skill, effort and responsibility, under wages, the Regional Board shall, among other
similar conditions, should be paid similar salaries relevant factors consider the following:
(International School Alliance of Educators v.
Quisumbing, G.R. No. 128845, June 01, 2000). 1. The demand for living wages
2. Wage adjustment vis-a-vis the consumer
WAGE v. SALARY price index
3. The cost of living and changes or increases
WAGE SALARY therein
(Gaa v.CA, G.R. No. 44169, Dec. 3, 1985) 4. The needs of workers and their families
Compensation for 5. The need to induce industries to invest in the
Paid to white collared countryside
manual labor (skilled or
workers and denotes a 6. Improvements in standards of living
unskilled) also known
higher degree of 7. The prevailing wage levels
as blue collared
employment or a 8. Fair return on the capital invested and
workers, paid at stated
superior grade of capacity to pay by Ers
times and measured by
services and implies a 9. Effects on employment generation and
the day, week, month or
position in the office. family income
season.
Considerable pay for a Suggestive of a larger 10. The equitable distribution of income and
lower and less and more permanent or wealth along the imperatives of economic
responsible character of fixed compensation for and social development (LC, Art. 124).
employment. more important service.
GR: Not subject to Persons exempted from the coverage of fixing a
execution minimum wage

Subject to execution. 1. Household or domestic helpers, including

XPN: Debts incurred for
food, shelter, clothing family drivers and persons in the personal
and medical attendance. service of another;
2. Homeworkers engaged in needle-work;

UNIVERSITY OF SANTO TOMAS

2015 GOLDEN NOTES
40
 LABOR STANDARDS
3. Workers employed in any establishment
duly registered with the National Cottage
Industries and Development Authority,
provided that such workers perform the
work in their respective homes;
4. Workers in a duly registered cooperative
when so recommended by the Bureau of
Cooperative Development and upon
approval of the SLE (IRR of LC, Book III, Rule
VII, Sec. 2).
5. Workers of a barangay micro business
enterprise (R.A. 9178).
Economically feasible
a. From Ers standpoint a minimum wage is
economically feasible if it will not prevent
the industry from operating efficiently and
prosperously over the long run (Dir. Harry
Kantors analysis of Senate Bill No. 202 and
House Bill No. 1732);
b. From Ees standpoint an economically
feasible minimum wage should be as nearly
adequate to maintain the minimum standard
of living necessary for the health, efficiency
and general well-being of employees.
METHODS OF MINIMUN WAGE ADJUSTMENT
Salary Ceiling Method
A method of minimum wage adjustment whereby
the wage adjustment is applied to Ees receiving a
certain denominated salary ceiling. In other words,
workers already being paid more than the existing
minimum wage are also to be given a wage
increase (ECOP v. NWCP, G.R. No. 96169, September
24, 1991).
Floor Wage Method
It involves the fixing of a determinate amount to be
added to the prevailing statutory minimum wage
rates.
Two basic methods of payment
1. Time wages refer to pay by the hour, day
or month, without specifying the amount of
work to be done
2. Production wages refer to pay related to
the amount of work the individual or group
performs regardless of the time involved in
its performance. This applies to workers
paid by result (Beal and Wickersham, The
Practice of Collective Bargaining; Poquiz, Vol.
I).
41
Q: The Regional Wage Board of Region II issued
a Wage Order granting all Ees in the private
sector throughout the region an across-the-
board increase of P15.00 daily. Is this Wage
Order valid?
A: It depends. The Wage Order is valid insofar as
the mandated increase applies to Ees earning the
prevailing minimum wage rate at the time of the
passage of the Wage Order and void with respect to
its application to Ees receiving more than the
prevailing minimum wage rate at the time of the
passage of the Wage Order. The Regional Wage
granted an across-the-board wage increase of
P15.00 to all Ees in the region. It did not set a wage
level nor a range to which a wage adjustment or
increase shall be added. In doing so, the Regional
Wage Board exceeded its authority by extending
the coverage of the Wage Order to wage earners
receiving more than the prevailing minimum wage
rate, without a denominated salary ceiling. The
Wage Order granted additional benefits not
contemplated by R.A. No. 6727 (MBTC v. NWPC
Commission, G.R. No. 144322, February 06, 2007).
Q: Since the Wage Order was declared void with
respect to its application to employees
receiving more than the prevailing minimum
wage rate at the time of the passage of the Wage
Order, should these Ees refund the wage
increase received by them?
A: No. The Ees should not refund the wage increase
since they received it in good faith, in the honest
belief that they are entitled to such wage increase
and without any knowledge that there was no legal
basis for the same (MBTC v. NWPC Commission, G.R.
NO.144322, February 06, 2007).
MINIMUM WAGE OF WORKERS PAID BY
RESULTS
WORKERS PAID BY RESULTS
Workers paid by results
They are:
1. Paid based on the work completed; and
2. Not on the time spent in working
3. Including those who are paid on piecework,
takay, pakiaw, or task basis if their output
rates are in accordance with the standards
prescribed.
Application of wage orders to workers paid by
results
All workers paid by result, including those who are
paid on piece work, takay or task basis, shall be
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
entitled to receive not less than the prescribed
daily minimum wage or a proportion thereof for
working less than 8 hours.
Minimum wage of workers paid by results
1. Those who are paid piece rates which are
prescribed in Piece Rate Orders issued by
DOLE Wages or earnings are determined
by simply multiplying the number of pieces
produced by the rate per piece.
2. Those who are paid output rates which
are prescribed by the Er and are not yet
approved by the DOLE The number of
pieces produced is multiplied by the rate per
piece as determined by the Er.
a. If resulting amount is equivalent to or
more than the applicable statutory
minimum rate in relation to the
number of hours worked Worker will
receive such amount
b. If the amount is less than the
applicable legal rate Er is required by
law to pay the difference between the
resulting amount and the applicable
legal minimum rate.
APPRENTICES/LEARNERS/PERSONS WITH
DISABILITY
Minimum wage rate for apprentices/learners
and persons with disability
The wage or salary rate shall not be less than 75%
of the applicable minimum wage.
COMMISSION
Commission
A fee paid based on a percentage of the sale made
by an Ee or agent, as distinguished from regular
payments of wages or salary.
Commissions included or not included in the
computation of the basic salary
1. Included in the basic salary If the
commission is comprised of a pre-
determined percentage of the selling price of
the goods.
2. Excluded from basic salary If the
commission were paid as productivity
bonuses or closely resemble profit-sharing,
or when it has no clear, direct or necessary
relation to the amount of work actually done
by each individual employee.
UNIVERSITY OF SANTO TOMAS
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42
DEDUCTIONS FROM WAGES
Wage deductions
GR: No employer, in his own behalf or in behalf of
any person, shall make any deduction from the
wages of his employees (LC, Art. 113).
XPNs:
1. Deductions under Art. 113 of the LC for
insurance premiums.
2. Union dues in cases where the right of the
worker or his union to check off has been
recognized by the Er or authorized in writing
by the individual worker concerned (LC, Art.
113).
NOTE: Art. 241(o) of the LC provides that special
assessments may be validly checked-off provided
that there is an individual written authorization
duly signed by every Ee.
3. Deductions for SSS, PhilHealth and Pag-ibig
premiums
4. Taxes withheld pursuant to the Tax Code
5. Deductions under Art. 114 of the LC for loss
or damage to tools, materials or equipment
supplied by the employer when the latter is
engaged in such trades, occupations or
businesses where the practice of making
deductions or requiring deposits is a
recognized one or is necessary or desirable
as determined by SLE
6. Deductions made with the written
authorization of the Ee for payment to a
third person (IRR, Book III, Rule VIII, Sec 13).
7. Deductions as disciplinary measures for
habitual tardiness (Opinion dated March 10,
1975 of the Labor Secretary).
8. Agency fees under Art. 248(e)of the LC
9. Deductions for value of meals and facilities
freely agreed upon
10. In case where the Ee is indebted to the Er
where such indebtedness has become due
and demandable (NCC, Art. 1706).
11. In court awards, wages may be subject of
execution or attachment, but only for debts
incurred for food, shelter, clothing, and
medical attendance (NCC, Art. 1703).
12. Salary deduction of a member of a legally
established cooperative (R.A. 6938; LC, Art.
59).
Deductions for absences are allowed
Deductions for unpaid absences are allowed. If the
Ee is monthly paid, the equivalent daily rate should
be determined first before making the deduction.
 LABOR STANDARDS
NON-DIMINUTION OF BENEFITS BASIS FACILITIES SUPPLEMENT

Non-diminution of benefits; Exception Inclusion Forms part of Independent

the wage of wage
GR: Benefits being given to Ees cannot be taken Deduction Deductible Not wage
back or reduced unilaterally by the Er because the from wage deductible
benefit has become part of the employment Granted for
contract, whether written or unwritten. However, For the benefit
To whose the
an agreement reducing certain labor standards of the worker
benefit convenience
benefits such as overtime and premium pay and his family.
of the Er.
violates Art. 100. Provisions of existing laws are
deemed part of a contract. (Republic Planters Bank
v. NLRC, 266 SCRA 142). Criterion in determining whether an item is a
supplement or facility
XPN: When diminution of benefits is done to
correct an error. The criterion is not so much with the kind of the
benefit or item (food, lodging, bonus or sick leave)
NOTE: If the error is not corrected in a reasonable given, but its purpose (State Marine v. Cebu
time, it ripens into a company policy and Ees can Seamens Assn., G.R. No. L-12444, February 28,
demand it as a matter of right. 1963).

Instances when non-diminution of benefits is Cost of facilities furnished by the Er may be

applicable charged against an Ee

It is applicable if it is shown that the grant of In order that the cost be charged against the Ee,
benefit: his/her acceptance of such facilities must be
voluntary.
1. Is based on an express policy of the law; or
2. Has ripened into practice over a long period
of time and the practice is consistent and Requirements for deducting values for facilities
deliberate and is not due to an error in the
1. Proof must be shown that such facilities are
construction/ application of a doubtful or
difficult question of law. customarily furnished by the trade
2. The provision of deductible Facilities must
FACILITIES v. SUPPLEMENTS be voluntarily accepted in writing
3. The Facilities must be charged at fair and
reasonable value (Mabeza v. NLRC, G.R. No.
BASIS FACILITIES SUPPLEMENT 118506, April 18, 1997).
Items of Extra
expenses remuneration Status of food and lodging, or the electricity and
necessary for or special water consumed by a hotel worker
the laborers privileges or
and his familys benefits given These are supplements. Considering, therefore,
existence and to or received that hotel workers are required to work different
Definition subsistence by the shifts and are expected to be available at various
laborers over odd hours, their ready availability is a necessary
NOTE: Does and above matter in the operations of a small hotel.
not include their ordinary Furthermore, granting that meals and lodging were
tools of trade earnings or provided and indeed constituted facilities, such
or articles / wages (Atok facilities could not be deducted without the Er
services Big Wedge complying first with certain legal requirements
primarily for Mining Co. v. (Mabeza v. NLRC, G.R. No. 118506, April 18, 1997).
the benefit of Atok Big
the Er or Wedge Mutual WAGE DISTORTION/RECTIFICATION
necessary to Benefit Assoc.,
the conduct of G.R. No. L- Concept of Wage Distortion (WD)
the Ers 7349, July 19,
business. 1955). A situation where an increase in wage results in the
elimination or severe contraction of intentional
quantitative differences in wage or salary rates

UNIVERSITY OF SANTO TOMAS

43 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
between and among the Ee-groups in an
establishment as to effectively obliterate the
distinctions embodied in such wage structure
based on skills, length of service or other logical
bases of differentiation (LC, Art. 124).
It is the disappearance or virtual disappearance of
pay differentials between lower and higher
positions in an enterprise because of compliance
with a wage order (P.I. Manufacturing v. P.I.
Manufacturing Supervisors and Foreman, G.R. No.
167217, February 4, 2008).
Elements of WD
1. An existing hierarchy of positions with
corresponding salary rates.
2. A significant change or increase in the salary
rate of a lower pay class without a
corresponding increase in the salary rate of a
higher one;
3. The elimination of the distinction between
the 2 groups or classes; and
4. The WD exists in the same region of the
country (Alliance Trade Unions v. NLRC, G.R.
No. 140689, February 17, 2004).
Basic principles in WD
1. The concept of WD assumes an existing
group or classification of Ees which
establishes distinctions among such Ees on
some relevant or legitimate basis. This
classification is reflected in a differing wage
rate for each of the classes of Ees.
2. Often results from Government decreed
increases in minimum wages.
3. Should a WD exist, there is no legal
requirement that, in the rectification of that
distortion by a re-adjustment of the wage
rates of the differing classes of Ees, the gap
which had previously or historically existed
be restored in precisely the same amount. In
other words, correction of a WD may be
done by re-establishing a substantial or
significant gap (as distinguished from the
historical gap) between the wage rates of the
differing classes of Ees.
4. The re-establishment of a significant
difference in wage rates may be the result of
the resort to grievance procedures or CB
negotiations (Metro Transit Org., Inc. v. NLRC,
G.R. No. 116008, july 20, 1995).
In mandating an adjustment, the law did not
require that there be an elimination or total
abrogation of quantitative wage or salary
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
44
differences; a severe contraction is enough
(Metrobank v. NLRC, G.R. No. 102636, September 10,
1993).
Wage distortion does not arise when a wage order
gives employees in one branch of a bank higher
compensation than that given to their counterparts
in other regions occupying the same pay scale who
are not covered by said wage order. In short, the
implementation of wage orders in one region but
not in others does not in itself necessarily result in
wage distortion (Prubankers Association v.
Prudential Bank & Trust Company, G.R. No. 131247,
January 25, 1999).
Q: Bankard, Inc. approved a New Salary Scale
which increased the hiring rates of new
employees. The Bankard Employees Union
pressed the company for the increase in the
salary of its old, regular employees. The
company refused to do so. The union filed a
Notice of Strike on the ground of discrimination
for it claimed that a wage distortion exists and
the company refused to negotiate to correct the
distortions. Is there a wage distortion brought
about by the New Salary Scale?
A: No. The union cannot legally obligate the
Bankard to correct the alleged wage distortion as
the increase in the wages and salaries of the newly-
hired was not due to a prescribed law or wage
order. If the compulsory mandate under Art. 124 to
correct wage distortion is applied to voluntary and
unilateral increases by the employer in fixing
hiring rates which is inherently a business
judgment prerogative, then the hands of the
employer would be completely tied even in cases
where an increase in wages of a particular group is
justified due to a re-evaluation of the high
productivity o a particular group or the need to
increase the competitiveness of Bankards hiring
rate. An employer would be discouraged from
adjusting the salary rates of a particular group of
employees for fear that it would result to a demand
by all employees for a similar increase, especially if
the financial conditions of the business cannot
address an across-the-board increase (Bankard
Employees Union-WTU v. NLRC, G.R. No. 140689,
February 17, 2004).
Duty of the Er and the union/worker if there is
WD
The Er and the union shall negotiate to correct the
distortions. If there is no union, the Er and the
workers shall endeavor to correct such
distinctions.
 LABOR STANDARDS
Process for correction of wage distortion of Where 313:
organized establishments v. unorganized = 298 ordinary working days
establishments = 12 regular holidays; and
= 3 special holidays
Organized Unorganized
Establishment Establishment 3. For those who do not work and are not
(with union) (without union) considered paid on Saturdays and Sundays or
The Er and the union The Er and the workers rest days
shall negotiate to shall endeavor to correct
correct distortion. the distortion. EEMR = (Applicable daily rate x 261
Any dispute shall be days)/12
Any dispute shall be Where 261:
resolved through a
settled through the = 246 ordinary working days
grievance procedure
NCMB. = 12 regular holidays; and
under the CBA.
If it remains = 3 special holidays
If it remains unresolved
unresolved, it shall be
within 10 days it shall be PAYMENT OF WAGES
dealt with through
referred to the NLRC.
voluntary arbitration.
The NLRC shall conduct Forms of payment
The dispute will be
continuous hearings and
resolved within 10 The laborers wages shall be paid in legal currency
decide the dispute
days from the time the (NCC, Art. 1705).
within 20 days from the
dispute was referred to
time the same was
voluntary arbitration. No employer shall pay the wages of an employee
referred.
by means of promissory notes, vouchers, coupons,
Non-strikeablity of WD tokens, tickets, chits, or any object other than legal
tender, even when expressly requested by the
WD is non-strikeable (Ilaw at Buklod ng employee (LC, Art. 102).
Manggagawa v. NLRC, G.R. No. 91980, June 27,
1991). WD is neither a deadlock in collective XPNs:
bargaining nor ULP. a. Check
b. Money order
NOTE: Minimum wage in NCR is P481.00 (P466
basic wage + 15 COLA). Effective April 4, 2015. When such manner of payment is:
a. Customary on the date of effectivity of the
DIVISOR TO DETERMINE DAILY RATE code
b. Necessary because of special circumstances
Ways for the computation of the estimated c. Stipulated in a collective bargaining
equivalent monthly rate (EEMR) of daily-paid agreement (LC, Art. 102).
Ees
Time of payment
1. For those who are required to work every day
including Sundays or rest days, special days It shall be paid at least once every two weeks or
and regular holidays. twice a month at intervals not exceeding 16 days
(LC, Art. 103).
EEMR = (Applicable daily rate x 393.50
days)/12 Payment of wages of employees engaged to
Where 393.50: perform a task which cannot be completed in
= 298 ordinary working days two weeks:
= 24 for 12 regular holidays x 200%
= 67.60 for 52 rest days x 130%; and a. Payments are to be made at intervals not
= 3.90 for 3 special days x 130% exceeding 16 days, in proportion to the
amount of work completed;
2. For those who do not work and are not b. Final settlement is made upon completion of
considered paid on Sundays or rest days. work.

EEMR = (Applicable daily rate x 313 NOTE: It is applicable in the absence of a collective
days)/12 bargaining agreement or arbitration award.

UNIVERSITY OF SANTO TOMAS

45 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
No employer shall make payment with less
frequency than once a month.
Place of payment
Payment of wages shall be made at or near the
place of undertaking (LC, Art. 104).
Exception:
Payment may be made through banks
a. All private establishments, companies,
businesses, and other entities
b. With 25 or more employees
c. Located within 1 km radius to a commercial,
savings or rural banks
d. Upon written permission of the majority of
the employees (RA 6727, Sec. 7).
WAGE PROTECTION PROVISIONS
Civil Code provisions
- Withholding of the wages, except for a debt
due, shall not be made by the employer (Art.
1706).
- The laborer's wages shall be a lien on the
goods manufactured or the work done (Art.
1707).
- The laborer's wages shall not be subject to
execution or attachment, except for debts
incurred for food, shelter, clothing and medical
attendance (Art. 1708).
- The employer shall neither seize nor retain any
tool or other articles belonging to the laborer
(Art. 1709).
Labor Code provisions
- No employer shall limit or otherwise interfere
with the freedom of any employee to dispose
of his wages. He shall not in any manner force,
compel, or oblige his employees to purchase
merchandise, commodities or other property
from any other person, or otherwise make use
of any store or services of such employer or
any other person (Art. 112).
- It shall be unlawful for any person, directly or
indirectly, to withhold any amount from the
wages of a worker or induce him to give up any
part of his wages by force, stealth,
intimidation, threat or by any other means
whatsoever without the workers consent (Art.
116).
- It shall be unlawful to make any deduction
from the wages of any employee for the benefit
of the employer or his representative or
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
46
intermediary as consideration of a promise of
employment or retention in employment (Art.
117).
- It shall be unlawful for an employer to refuse
to pay or reduce the wages and benefits,
discharge or in any manner discriminate
against any employee who has filed any
complaint or instituted any proceeding under
this Title or has testified or is about to testify
in such proceedings (Art. 118).
Q: Lutgardo is working as an assistant sales
manager in the Special Steel Products, Inc. He
obtained a car loan from the Bank of Commerce
with the Special Steel Products, Inc. as surety.
The company withheld Lutgardos thirteen
month pay and earned vacation and sick leave
as a lien to protect its right as a surety. Can
Special Steel Products, Inc. validly do so?
A: No. It is not sanctioned by law. It may only
protect its right as surety by instituting an action to
demand security. It may not take the law into his
own hands. Indeed, it shall be unlawful for any
person, directly or indirectly, to withhold any
amount from the wages of a worker. Furthermore,
Lutgardo is not indebted to the company. Thus,
Special Steel cannot offset its claim against
Lutgardos monetary benefits (Special Steel
Products v. Villareal, G.R. No. 143304, July 08, 2004).
REST PERIODS
WEEKLY REST DAY
Right to weekly rest day (WRD)
Every Er shall give his Ees a rest period of not less
than 24 consecutive hours after every 6
consecutive normal work days (IRR, Book III, Rule
III, Sec. 3).
Scope of WRD
It shall apply to all Ers whether operating for profit
or not, including public utilities operated by
private persons (IRR, Book III, Rule III, Sec. 1).
Person who determines the WRD
GR: Er shall determine and schedule the WRD of
his Ee.
XPNs:
1. CBA
2. Rules and regulations as the SLE provides
3. Preference of Ee based on religious grounds
Ee shall make known his preference in
 LABOR STANDARDS
writing at least 7 days before the desired Premium pay is the additional compensation for
effectivity of the initial rest day so preferred work rendered by the Ee on days when normally
(IRR, Book III, Rule III, Sec. 4(1)). he should not be working such as special holidays
and WRDs.
XPNs to XPN no. 3: Er may schedule the
WRD of his choice for at least 2 days in a Er and Ee can agree on the rate of premium pay
month if the preference of the Ee will other than that provided by law
inevitably result in:
a. serious prejudice to the operations of Nothing shall prevent the Er and his Ee or their
the undertaking and representatives from entering into any agreement
b. the Er cannot normally be expected to with terms more favorable to the Ees; Provided, it
resort to other remedial measures shall not be used to diminish any benefit granted to
(IRR, Book III, Rule III, Sec. 4(2)). the Ees under existing laws, agreements and
voluntary Er practices (IRR, Book III, Rule III, Sec.
Right of the Ee to know the schedule of their 9).
WRDs
Rates of compensation for rest day, Sunday or
Er shall make known rest period by means of holiday work
1. Written notice
2. Posted conspicuously in the workplace RATES OF ADDITIONAL
INSTANCES
3. At least 1 week before it becomes effective COMPENSATION
(IRR, Book III, Rule III, Sec. 5). Work on a
+ 30% premium pay of
scheduled rest day
EMERGENCY REST DAY WORK 100% RW (IRR, Book III,
Rule III, Sec. 7)
GR: The Ee cannot be compelled by the Er to work Work performed on
on his rest day. Sundays and
+ 30% premium pay of
Holidays by an Ee
XPNs: 100% RW (IRR, Book III,
who has no regular
1. Urgent work to be performed on the Rule III, Sec. 7)
workdays and rest
machinery, equipment or installation, to days
avoid serious loss which the Er would Work on a Sunday + 30% premium pay of
otherwise suffer; (If Ees scheduled 100% RW (IRR, Book III,
2. Nature of work requires continuous rest day) Rule III, Sec. 7)
operations for 7 days in a week or more and 1st 8 hrs: + 30% PP of
stoppage of the work may result in 100% RW
irreparable injury or loss to the Er;
3. Abnormal pressure of work due to special Work performed on
Excess of 8 hrs: + 30% of
circumstances, where the Er cannot be any Special Holiday
hourly rate on said date
ordinarily expected to resort to other (M.C. No. 10, Series of
measures; 2004).
4. Actual or impending emergencies (serious 1st 8 hrs: + 50% PP of
accident, fire, flood, typhoon, earthquake, 100% RW
etc.) Work performed on
5. Prevent loss or damage to perishable goods; a Special Holiday
Excess of 8 hrs:+ 30% of
6. Analogous or similar circumstances as and same day is the
hourly rate on said date
determined by the SLE; scheduled rest day
(M.C. No. 10, Series of
7. Work is necessary to avail of favorable 2004).
weather or environmental conditions where Ee is only entitled to
performance or quality of work is dependent his basic rate. No PP is
thereon. (LC, Art. 92) required.
Work performed on
Ee volunteers to work on his rest day under a Special Working Reason: Work performed
other circumstances Holiday is considered work on
ordinary working days
He shall express it in writing subject to additional (IRR, Book III, Rule III,
compensation (IRR, Book III, Rule III, Sec. 6(2). Sec. 7)
NOTE: Holiday work provided under Art. 93
pertains to special holidays or special days.

UNIVERSITY OF SANTO TOMAS

47 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Q: Jose applied with Mercury Drug Company for Movable date
Black Saturday
the position of Sales Clerk. Mercury Drug (April 4, 2015)
Company maintains a chain of drug stores that Ninoy Aquino Day August 21
are open every day till late at night. Jose was
informed that he had to work on Sundays and All Saints Day November 1
holidays at night as part of the regular course of Additional Special (non- December 24
employment. He was presented with a contract working) days January 2
of employment setting forth his compensation
Last day of the year December 31
on an annual basis with an express waiver of
extra compensation for work on Sundays and SPECIAL HOLIDAY (for all schools)
holidays, which Jose signed. Is such a waiver
EDSA Revolution February 25
binding on Jose? Explain. (1996 Bar Question)
(Proclamation 831, s. 2014 by President Benigno
A: No. The waiver is not binding on Jose. Rights Aquino III)
may be waived, unless the waiver is contrary to
law, public order, public policy, morals and Regular holidays (RH)
customs. The waiver in this case is void.
They are compensable whether worked or
HOLIDAY PAY/PREMIUM PAY unworked subject to certain conditions. They are
also called legal holidays.
Holiday pay
NOTE: RH falling within temporary or periodic
It is a premium given to Ees pursuant to the law shutdown and temporary cessation of work are
even if he has not been suffered to work on a compensable. However, if the temporary or
regular holiday. It is limited to the 12 regular periodic shutdown and cessation of work is due to
holidays, also called legal holidays listed by law. business reverses, the Er may not pay the Ees
The Ee should not have been absent without pay on during such period.
the working day preceeding the regular holiday.
Muslim holidays (MH)
Purpose of holiday pay
Muslim holidays are those observed in specified
To secure the payment of undiminished monthly Muslim areas. All private corporations, offices,
income undisturbed by any work interruption (JRC agencies and entities or establishments operating
v. NLRC, G.R. No. 65482, Dec. 1, 1987). within the designated Muslim provinces and cities
are required to observe Muslim holidays.
REGULAR HOLIDAYS DATE
New Years Day January 1 Determination of eidl fitr and/or eidl adha
Araw ng Kagitingan April 9
Movable date The proclamation declaring a national holiday for
Maundy Thursday the observance of Eidl Fitr and/or Eidl Adha shall
(April 2, 2015)
Movable date be issued:
Good Friday 1. After the approximate date of the Islamic
(April 3, 2015)
holiday has been determined in accordance
Labor Day May 1 with the:
Independence Day June 12 a. Islamic Calendar (Hijra) or
b. Lunar Calendar or
Last Monday of
National Heroes Day c. Upon astronomical calculations
August
d. Whichever is possible or convenient
Bonifacio Day November 30 2. The Office of Muslim Affairs shall inform the
Christmas Day December 25 Office of the President on which day the
holiday shall fall (Proclamation 295, s. 2011
Rizal Day December 30 by President Benigno Aquino III).
SPECIAL (NON-WORKING) HOLIDAYS
A Christian Ee working within the Muslim area
Second new moon cannot be compelled to work during muslim
after the winter holiday
Chinese New Year solstice in accordance
with the Lunisolar All workers, Muslims and Christians, working
Chinese calendar within the Muslim area are entitled to holiday pay

UNIVERSITY OF SANTO TOMAS

2015 GOLDEN NOTES
48
 LABOR STANDARDS
on Muslim holidays (SMC v. CA, G.R. 146775, RH on Ees RH on Ees
January 30, 2002). Basis regular workday rest day
230%
Muslim Ee working outside the Muslim area If worked 230% + 30%
cannot be compelled to work during the (OT)(excess 200% + 30% of of hourly rate
observance of the MH of 8 hours) hourly rate on on said date
said date
GR: Muslim Ees shall be excused from work during
MH without diminution of salary or wages. Important condition that should be met in
order to avail/receive the single holiday pay
XPN: Those who are permitted or suffered to work
on MH are entitled to at least 100% basic pay + The Ee should not have been absent without pay on
100% as premium of their basic pay (SMC v. CA, the working day preceding the RH.
G.R. 146775, January 30, 2002).
Monthly paid v. Daily paid Ees
Regular holiday v. Special holiday
Monthly Paid Ees Daily Paid Ees
REGULAR SPECIAL One whose wage or salary is
BASIS HOLIDAY HOLIDAY One whose wage or
being paid everyday of the
Regular pay salary is being paid
month, including rest days,
If unworked (subject to only on those days
Sundays, regular or special
certain No Pay he actually worked,
days, although he does not
conditions for except in cases of
regularly work on these
daily paid Ees) regular or special
days.
+30% days, although he
If worked 2x regular pay premium does not regularly
Not excluded from benefit of
(200%) pay of 100% work on these days.
holiday pay.
RW
Effect if a legal holiday falls on a Sunday
Work on RH
A legal holiday falling on a Sunday creates no legal
An Er may require an Ee to work on RH but Ee shall obligation for the Er to pay extra to the Ee who
be compensated twice his regular rate. does not work on that day, aside from the usual
holiday pay to its monthly paid Ee (Wellington v.
Rates of compensation for RH on Ees regular Trajano, G.R. No. 114698, July 03, 1995).
workday and rest day
DIVISOR
FORMULAS TO COMPUTE WAGES ON
REGULAR HOLIDAYS The divisor assumes an important role in
(M.C.No.10, Series of 2004) determining whether or not holiday pay is already
RH on Ees included in the monthly paid employees salary and
RH on Ees
Basis regular in the computation of his daily rate (Chartered
rest day
workday Bank Employees Association v. Ople, G.R. No. L-
100% 44717, August 28, 1985).
100%
If
unworked e.g. Php 300 If the divisor used is:
e.g. Php 300 RW
RW 365 (days in a year) All the 12 holidays, 52
200% + 30% Sundays and 52
of 200% Saturdays are paid.
200%
313 12 holidays and 52
If worked e.g 600 (365 52 = 313) Sundays (or
e.g. 300(RW)
(1st 8 (200% of Saturdays) are paid.
+ 300
hours) RW) 261 All the 12 holidays are
600 = Total X 0.3 (313 52 = 261) paid excluding the
Wage (TW)
180 Saturdays and
Sundays.
600 + 180 = 249 The 12 holidays are
780 (TW) (261 12 = 249) not paid.

UNIVERSITY OF SANTO TOMAS

49 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
CONCEPT OF ABSENCES
LOA with pay on the LOA without pay on the
day immediately day immediately
preceding RH. preceding a RH.
GR: An Ee may not be paid
the required HP if he
has not worked on
such RH.
GR: All covered Ees
XPNs: Where the day
are entitled to
immediately preceding the
HP.
holiday is a:
1. Non-working day in
the establishment or
2. The scheduled rest
day of the Ee.
Effect in case there is a temporary or periodic
shutdown and temporary cessation of work:
8. Ee paid fixed amount for performing work
irrespective of the time consumed in the
performance thereof (IRR, Book III, Rule IV,
Sec.1).
Retail establishments
They are engaged in the sale of goods to end users
for personal or household use. (e.g. Grocery)
Service establishments
They are engaged in the sale of services to
individuals for their own or household use. (e.g. TV
repair shop)
TEACHERS, PIECE WORKERS, TAKAY,
SEAFARERS, SEASONAL WORKERS
Holiday pays of certain Ees

TEMPORARY OR PERIODIC SHUTDOWN and EMPLOYEES RULE

TEMPORARY CESSATION OF WORK 1. RH during semestral
(IRR, Book III, Rule IV, Sec. 7)) Private school vacations
Instances Rule: teachers (Faculty - Not entitled to holiday
1. Yearly inventory, or members of pay
2. When the repair or RH falling within colleges and 2. RH during Christmas
cleaning of the period shall be universities) vacation
machineries is compensated. - Entitled to holiday pay
undertaken 1. No pay on regular
Due to business reverses holidays including
RH may not be Christmas and semestral
(cessation as authorized
paid by the Er vacations
by the SLE)
2. But with pay on special
COVERAGE and EXCLUSIONS public holidays and other
Hourly-paid
no-class days when
teachers
Persons entitled to holiday pay classes are called off or
shortened on account of
GR: All Ees are entitled (IRR, Book III, Rule IV, floods, typhoons, rallies
Sec.1). and the like (Jose Rizal
College v. NLRC, G.R. No.
XPNs: 65482, Dec. 1, 1987).
1. Government Ees and any of its political Holiday pay shall not be less
subdivisions, including GOCCs (with original than his average daily
Ee paid by:
charter) earnings for the last 7 actual
1. results or
2. Retail and service establishments regularly work days preceding the
2. output
employing less than 10 workers Regular holiday.
(Piece work
3. Domestic helpers and persons in the Provided: Holiday pay shall not
payment)
personal service of another be less than the statutory
4. Ee engaged on task or contract basis or minimum wage rate.
purely commission basis May not be paid the required
5. Members of the Family of the Er who are Seasonal Workers Holiday pay during off-season
dependent on him for support where they are not at work.
6. Managerial Ee and other members of the Workers having
managerial staff no regular work Shall be entitled to holiday pay
7. Field personnel and other Ee whose time days
and performance are unsupervised by the Er Seafarers Shall be entitled to holiday pay

UNIVERSITY OF SANTO TOMAS

2015 GOLDEN NOTES
50
 LABOR STANDARDS
Q: Are the school faculty who according to their Authorized 300%
Worked
contracts are paid per lecture hour entitled to absence (at least)
unworked holiday pay? 390%
Authorized Worked and day is (+30% of
A: absence Rest Day each 3
1. If during RH No. Art. 94 of the LC is silent with 100%)
respect to faculty members paid by the hour
who because of their teaching contracts are Concept of successive regular holidays
obliged to work and consent to be paid only for
work actually done (except when an emergency MAUNDY GOOD ENTITLED TO
or a fortuitous event or a national need calls for WED
THURS FRIDAY HOLIDAY PAY
the declaration of special holidays). Regular Worked RH RH Yes. Both
holiday specified as such by law are known to LOA
both school and faculty members as "no class RH RH Yes. Both
w/pay
days" certainly the latter do not expect payment LOA
for said unworked days, and this was clearly in RH RH No. Both
w/o pay
their minds when they entered into the teaching Yes. Only to
contracts (Jose Rizal College v. NLRC, G.R. No. LOA
Worked RH holiday pay on
65482, December 01, 1987). w/o pay
Friday
2. If during special public holidays Yes. The law
and the IRR governing holiday pay are silent as Conditions so that an Ee may be entitled to 2
to payment on Special Public Holidays. It is successive holiday pays
readily apparent that the declared purpose of
the holiday pay which is the prevention of On the day immediately preceding the 1st RH, he
diminution of the monthly income of the Ees on must be:
account of work interruptions is defeated when 1. Present (worked), or
a regular class day is cancelled on account of a 2. On LOA with pay (IRR, Book III, Rule IV, Sec.
special public holiday and class hours are held 10).
on another working day to make up for time
lost in the school calendar. Otherwise stated, If the above stated conditions are not met
the faculty member, although forced to take a
rest, does not earn what he should earn for that He must work on the 1st RH to be entitled to
day. Be it noted that when a special public holiday pay on the 2nd RH (IRR, Book III, Rule IV,
holiday is declared, the faculty member paid by Sec. 10).
the hour is deprived of expected income, and it
does not matter that the school calendar is LEAVES
extended in view of the days or hours lost, for
their income that could be earned from other SERVICE INCENTIVE LEAVE
sources is lost during the extended days.
Similarly, when classes are called off or Service incentive leave (SIL)
shortened on account of typhoons, floods,
rallies, and the like, these faculty members must It is 5-days leave with pay for every Ee who has
likewise be paid, whether or not extensions are rendered at least 1 year of service. It is
ordered (Jose Rizal College v. NLRC, G.R. No. commutable to its money equivalent if not used or
65482, December 01, 1987). exhausted at the end of the year.
Double holiday pay At least 1 year of service
There are 2 RHs falling on the same day. Service for not less than 12 months, whether
continuous or broken reckoned from the date the
MAUNDY Ee started working, including authorized absences
THURSDAY & and paid regular holidays unless the working days
WED RATE
ARAW NG in the establishment as a matter of practice or
KAGITINGAN policy, or that provided in the employment
Present Unworked 200% contract is less than 12 months, in which case said
LOA w/pay Unworked 200% period shall be considered as one year (Sec. 3, Rule
300% V, Book III, IRR).
LOA w/ pay Worked
(at least)

UNIVERSITY OF SANTO TOMAS

51 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Persons entitled to SIL
GR: Applies to every Ee who has rendered at least
1 year of service (LC, Art. 95[a]).
XPNs:
1. Government Ees and any of its political
subdivisions including GOCCs
2. Those already enjoying the benefit
3. Domestic helpers and persons in the
personal services of another
4. Those already enjoying vacation leave with
pay of at least 5 days
5. Managerial Ees
6. Field personnel and other Ees whose
performance is unsupervised by the Er
7. Employed in establishments regularly
employing less than 10 workers
8. Exempt establishments
9. Engaged with atask or contract basis, purely
commission basis, or those who are paid in a
fixed amount of performing work
irrespective of the time consumed in the
performance thereof [LC, Art. 95(b)].
Teachers of private schools on contract basis
are entitled to service incentive leave
The phrase "those who are engaged on task or
contract basis" should, however, be related to "field
personnel" applying the rule on ejusdem generis
that those general and unlimited terms are
restrained and limited by the particular terms that
they follow. Clearly, Cebu Institute of Technology
teaching personnel cannot be deemed as field
personnel which refers "to non-agricultural Ees
who regularly perform their duties away from the
principal place of business or branch office of the
Er and whose actual hours of work in the field
cannot be determined with reasonable certainty
(Par. 3, Art. 82, LC); (CIT v. Ople, G.R. No. 70203,
December 18, 1987).
Part-time workers are entitled to the full
benefit of the yearly 5-day service incentive
leave
A part-time worker is entitled to service incentive
leave whether the service within 12 months is
continuous or broken or where the working days
in the employment contract as a matter of practice
or plicy is less than 12 months. The availment and
commutation of the same can be proportionate to
the daily work rendered and the regular daily
salary. (DOLEs explanatory Bulletin on Part-time
Employment, January 2, 1996).
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
52
Entitlement of piece-rate workers to SIL
Piece-rate workers are entitled to the full benefit of
the yearly 5-day service incentive leave. Under P.D.
851 or the SIL Law, the exclusion from its coverage
of workers who are paid on a purely commission
basis is only with respect to field personnel. Ees
engaged on task or contract basis or paid on
purely commission basis are not automatically
exempted from the grant of SIL, unless, they fall
under the classification of field personnel (Serrano
v. Severino Santos, G.R. No. 187698, August 09,
2010).
NOTE: Field personnel shall refer to non-
agricultural Ees who regularly perform their duties
away from the principal place of business or
branch office of the employer and whose actual
hours of work in the field cannot be determined
with reasonable certainty (Ibid.)
Entitlement of Ees with salaries above
minimum wage to SIL
Ees with salaries above minimum wage are entitled
to service incentive leave. The difference between
the minimum wage and the actual salary received
by the Ees cannot be deemed as their 13th month
pay and SIL pay as such difference is not equivalent
to or of the same import as the said benefits
contemplated by law (JPL Marketing Promotions v.
CA, G.R. No. 151966, July 08,2005).
Entitlement of terminated Ees to SIL
1. Illegally dismissed Ees- entitled to SIL until
actual reinstatement (Integrated Contractor
and Plumbing Works, Inc. v. NLRC, G.R. No.
August 09, 2005).
2. Legally dismissed Ees the Ee who had not
been paid of SIL from the outset of
employment is entitled only of such pay after
a year from commencement of service until
termination of employment or contract (JPL
Marketing Promotions v. CA, G.R. No. 151966,
July 08, 2005).
Commutability of SIL to monetary equivalent
It is commutable if not used at the end of the year.
It is aimed primarily at encouraging workers to
work continuously and with dedication to the
company.
Basis for cash conversion
The basis shall be the salary rate at the date of
commutation. The availment and commutation of
 LABOR STANDARDS
the SIL may be on a pro-rata basis (No. VI(c), DOLE
Handbook on Workers Statutory Monetary Benefit,
No.VI(c)].
Establishments exempt from the application of
the SIL Law
Establishments employing less than 10 Ees are
exempted by the LC and the Implementing Rules
from paying SIL. The clear policy of the LC is to
include all establishments, except a few classes,
under the coverage of the provision granting SIL to
workers (Murillo v. Sun Valley Realty, Inc., G.R. No.
L-67272 June 30, 1988).
MATERNITY LEAVE
Maternity leave benefit
A covered female Ee, regardless of her civil statues,
is entitled to a daily maternity benefit equivalent to
100% of her present basic salary, allowances and
other benefits or the cash equivalent of such
benefits for 60 days or 78 days in case of caesarean
delivery.
Conditions for availment of maternity leave
benefit
1. The Ee shall have notified her Er of her
pregnancy and the probable date of her
childbirth which notice shall be transmitted
to the SSS;
2. The payment shall be advanced by the Er in
2 equal installments within 30 days from the
filing of the maternity leave application;
3. In case of caesarean delivery, the Ee shall be
paid the daily maternity benefit for 78 days;
4. Payment of daily maternity benefits shall be
a bar to the recovery of sickness benefits for
the same compensable period of 60 days for
the same childbirth, abortion, or
miscarriage;
5. The maternity benefits provided under Sec.
14-A shall be paid only for the first four
deliveries;
6. The SSS shall immediately reimburse the Er
of 100% of the amount of maternity benefits
advanced to the Ee by the Er upon receipt of
satisfactory proof of such payment and
legality thereof; and
7. If an Ee should give birth or suffer abortion
or miscarriage without the required
contributions having been remitted for her
by her Er to the SSS, or without the latter
having been previously notified by the Er of
the time of the pregnancy, the Er shall pay to
the SSS damages equivalent to the benefits
which said Ee would otherwise have been
53
entitled to, and the SSS shall in turn pay such
amount to the Ee concerned.
Requirements in order that maternity benefits
may be claimed
1. There is childbirth, abortion or miscarriage
2. She has paid at least three monthly
contributions
PATERNITY LEAVE
Paternity leave
It refers to the benefits granted to a married male
Ee allowing him not to report for work for 7 days
but continues to earn the compensation therefore,
on the condition that his spouse has delivered a
child or suffered a miscarriage for purposes of
enabling him to effectively lend support to his wife
in her period of recovery and/or in the nursing of
the newly-born child. In the event it is not availed
of, such leave is not convertible to cash.
Concept of paternity leave benefits
Every married male Ee in the private and public
sectors shall be entitled to a paternity leave of 7
days with full pay for the first 4 deliveries of the
legitimate spouse with whom he is cohabiting.
Conditions for entitlement to paternity leave
The male Ee is:
1. Legally married to, and is cohabiting with
the woman who delivers the baby;
2. Ee of private or public sector;
3. Maybe availed of only for the first 4
deliveries of the legitimate spouse with
whom he is cohabiting; and
4. Notify his Er of the pregnancy of his
legitimate spouse and the expected date of
such delivery
NOTE: Delivery shall include childbirth or any
miscarriage.
Q: Ron is a bank employee of BPI. He is
cohabiting with Michelle for five straight years
with whom he has four children. In the fifth
year of their cohabitation, Michelle had her
miscarriage. Ron is availing himself of his
paternity leave. Is he entitled to paternity
leave?
A: No. Ron is not entitled to paternity leave
because the facts of the case only show that he is
only cohabiting with Michelle. The law expressly
provides that the male must be legally married to
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
the woman with whom he is cohabiting as a
condition for entitlement of paternity leave. Even
assuming that Ron is legally married to Michelle, he
cannot avail also of the paternity leave because the
law limits the deliveries only to four which include
childbirth or miscarriage. Based on the facts, it is
already the 5th delivery of the woman.
PARENTAL LEAVE
Parental leave
Leave benefits granted to a solo parent to enable
him/her to perform parental duties and
responsibilities - where physical presence is
required.
In addition to leave privileges under existing laws,
parental leave of not more than 7 working days
every year shall be granted to any solo parent Ee
who has rendered service of at least 1 year (Sec. 8).
Conditions for entitlement of parental leave
1. He or she must fall among those referred to
as a solo parent
2. Must have the actual and physical custody of
the child or children
3. Must have at least rendered service of one
year to his or her employer
4. He or she must remain a solo parent
Persons considered a solo parent entitled to
parental leave
Any individual who falls under any of the ff.
categories:
1. A woman who gives birth as a result of rape
and other crimes against chastity even
without a final conviction of the offender;
Provided, That the mother keeps and raises
the child;
2. Parent left solo or alone with the
responsibility of parenthood due to:
a. Death of spouse;
b. Detention or service of sentence of
spouse for a criminal conviction for at
least 1 yr;
c. Physical and/or mental incapacity of
spouse
d. Legal separation or de facto separation
from spouse for at least 1 year as long as
he/she is entrusted with the custody of
the children;
e. Nullity or annulment of marriage as
decreed by a court or by a church as long
UNIVERSITY OF SANTO TOMAS
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as he/she is entrusted with the custody
of the children;
f. Abandonment of spouse for at least 1 yr;
3. Unmarried mother/father who has
preferred to keep and rear his or her
child/children instead of:
a. having others care for them or
b. give them up to a welfare institution;
4. Any other person who solely provides:
a. parental care and
b. support to a child or children;
5. Any family member who assumes the
responsibility of head of family as a result of
the:
a. death,
b. abandonment,
c. disappearance or
d. prolonged absence of the parents or
solo parent.
NOTE: A change in the status or circumstance of
the parent claiming benefits under this Act, such
that he/she is no longer left alone with the
responsibility of parenthood, shall terminate
his/her eligibility for these benefits. (Sec.3)
LEAVES FOR VICTIMS OF VIOLENCE AGAINST
WOMEN and their CHILDREN (R.A. 9262)
A female Ee who is a victim of violence (physical,
sexual, or psychological) is entitled to a paid leave
of 10 days in addition to other paid leaves (R.A.
9262, Anti- VAWC Act). This is known as the
battered woman leave.
SPECIAL LEAVE BENEFIT FOR WOMEN
A woman Ee having rendered continuous
aggregate employment service of at least 6 months
for the last 12 months shall be entitled to a special
leave benefit of 2 months with full pay based on
her gross monthly compensation following surgery
caused by gynaecological disorders (Sec. 18, R.A.
9710, Magna Carta of Women).
SERVICE CHARGES
Service charges
These are charges collected by hotels, restaurants
and similar establishments at the rate of 85% for
covered Ees equally distributed among them, and
15% for the management to answer for losses and
breakages.
 LABOR STANDARDS
Covered employees receive in a month, if their Ers are not otherwise
exempted from paying the 13th month pay. Such
GR: All Ees are covered, regardless of their Ees are entitled to the 13th month pay regardless of
position, designation, and employment status, said designation of employment status, and
irrespective of the method by which their wages irrespective of the method by which their wages
are paid. are paid.

NOTE: Applies only to hotels, restaurants and Provided, that they have worked for at least 1
similar establishment collecting service charges. month, during a calendar year (Revised Guidelines
on the Implementation of the 13th Month Pay Law).
XPN: Managerial Ees (IRR, Book III, Rule VI, Sec. 2)
Persons not covered by P.D. 851
Period to distribute the share of Ee
1. Government Ees
The period is not less than once every 2 weeks or 2. Household helpers
twice a month at intervals not exceeding 16 days.
NOTE: Covered by R.A. 10361 or the Batas
Service charge v. Tips Kasamabahay

SERVICE CHARGE TIPS 3. Ees paid purely on commission basis

Collected by the Voluntary payments 4. Ees already receiving 13th month pay
management from the made by the
customers. customers to the Ees Q: What would be your advice to your client, a
for excellent service. manufacturing company, who asks for your
legal opinion on whether or not the 13th Month
Rule if service charge is abolished Pay Law covers a casual Ee who is paid a daily
wage? (1998 Bar Question)
If it is abolished, the share of the covered Ees shall
be considered integrated in their wages on the A: I will advise the manufacturing company to pay
basis of the average monthly share of each Ees for the casual Ee 13th Month Pay if such casual Ee has
the past 12 months immediately preceding the worked for at least 1 month during a calendar year.
abolition. The law on the 13th Month Pay provides that Ees
are entitled to the benefit of said law regardless of
NOTE: Service charges form part of the award in their designation or employment status.
illegal dismissal cases.
The SC interpreted P.D. 851, as follows: Ees are
13th MONTH PAY entitled to the 13th month pay benefits regardless
of their designation and irrespective of the method
13th month pay or its equivalent by which their wages are paid (Jackson Building-
Condominium Corp. v. NLRC, G.R. No. 112546, March
Additional income based on wage required by P.D. 14, 1996).
851 requiring all Ers to pay their Ees a 13th month
pay which is equivalent to 1/12 of the total basic NOTE: An Er may give to his Ees of the required
salary earned by an Ee within a calendar year. 13th Month pay before the opening of the regular
school year and the other half on or before Dec. 24.
NOTE: The absence of an express provision in the
CBA obligating the Er to pay the members of a Equivalent forms of the 13th month pay
union 13th month pay is immaterial.
Notwithstanding therefore the absence of any 1. Christmas Bonus
contractual agreement, the payment of a 13th 2. Midyear Bonus
month pay being a statutory grant, compliance 3. Profit Sharing Scheme
with the same is mandatory and is deemed 4. Other Cash bonuses amounting to not less
incorporated in the CBA. than 1/12 of its basic salary

Persons covered by P.D. 851 NOTE: It must always be in the form of a legal
tender.
All rank-and-file Ees are covered by P.D. 851
regardless of the amount of basic salary that they

UNIVERSITY OF SANTO TOMAS

55 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Things not proper substitutes for 13th month
pay
1. Free rice
2. Electricity
3. Cash and stock dividends
4. Cost-of-living Allowance (P.D. 851, Sec. 3).
Q: Concepcion Textile Co. included the OT pay,
night-shift differential pay, and the like in the
computation of its Ees 13th month pay.
Subsequently, with the promulgation of the
decision of the SC in the case of SMC v. Inciong
(103 SCRA 139) holding that these other
monetary claims should not be included in the
computation of the 13th Month Pay, Concepcion
Textile Co. sought to recover under the
principle of solutio indebiti the overpayment of
the Ees 13th month pay, by debiting against
future 13th month payments whatever excess
amounts it had previously made.
a. Is the Company's action tenable?
b. With respect to the payment of the 13th
month pay after the SMC ruling, what
arrangement, if any, must the Company
make in order to exclude from the 13th
month pay all earnings and
remunerations other than the basic
pay? (1994 Bar Question)
A:
a. The Company's action is not tenable. The
principle of solutio indebiti which is a civil
law concept is not applicable in labor law
(Davao Fruits Corp. v. NLRC, et al., G.R. No.
85073, August 24, 1993). After the 1981
SMC ruling, the Supreme Court decided the
case of Philippine Duplicators Inc. v. NLRC,
(GR 110068, November 15, 1995).
Accordingly, management may undertake
to exclude sick leave, vacation leave,
maternity leave, premium pay for regular
holiday, night differential pay and cost of
living allowance.
b. The company shall include sales
commissions based on the settled rule.
(Songco v. NLRC, G.R. No. L-50999, March
23, 1990).
Ers covered by 13th month pay under P.D. 851
GR: Payment of 13th month pay applies to all Ers.
XPNs:
1. Distressed Ers:
a. Currently incurring substantial losses or
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
56
b. In the case of non-profit institutions and
organizations, where their income,
whether from donations, contributions,
grants and other earnings from any
source, has consistently declined by
more than 40% of their normal income
for the last 2 years, subject to the
provision of Sec. 7 of P.D. 851;
2. The Government and any of its political
subdivisions, including GOCCs, except those
corporations operating essentially as private
subsidiaries of the Government;
3. Ers already paying their Ees 13th month pay
or more in a calendar year of its equivalent
at the time of this issuance.
Its equivalent shall include:
a. Christmas bonus
b. Mid-year bonus
c. Profit-sharing payments and
d. Other cash bonuses amounting to
not less than 1/12th of the basic
salary
It shall not include:
a. Cash and stock dividends,
b. COLA
c. All other allowances regularly
enjoyed by the Ee, as well as non-
monetary benefits.
4. Ers of household helpers and persons in the
personal service of another in relation to
such workers; and
NOTE: Covered by R.A. 10361 or the
Batas Kasamabahay
5. Ers of those who are paid on a purely
commission, boundary, or task basis, and
those who are paid a fixed amount for
performing a specific work, irrespective of
the time consumed in the performance
thereof, except where the workers are paid
on a piece-rate basis in which case the Er
shall be covered by this issuance insofar as
such workers are concerned (P.D. 851, Sec 3).
Options of covered Ers
1. Pay 1/2 of the 13th month pay required
before the opening of the regular school year
and the other half on or before the 24th day
of December of every year.
2. In any establishment where a union has been
recognized or certified as the CB agent of the
Ee, the periodicity or frequency of payment
of the 13th month pay may be the subject of
agreement.
 LABOR STANDARDS
Adjudicated claims
Non-payment of the 13th month pay provided by
P.D. 851 and the rules of NLRC shall be treated as
money claims cases.
The following Ees may or may not be entitled to
13th month pay
1. Ee paid by results Entitled to 13th month
pay.
NOTE: Ees paid a fixed or guaranteed wage
plus commission are also entitled to the
mandated 13th month pay, based on their
total earnings during the calendar year, i.e.
on both their fixed or guaranteed wage and
commission.
2. Those with Multiple Ers Government Ees
working part time in a private enterprise,
including private educational institutions, as
well as Ees working in 2 or more private
firms, whether full or part time basis, are
entitled to the required 13th month pay from
all their private Ers regardless of their total
earnings from each or all their Ers.
3. Private School Teachers, including faculty
members of universities and colleges
Entitled regardless of the number of months
they teach or are paid within a year, if they
have rendered service for at least 1 month
within a year.
4. Resigned or Separated Ees - If resigned or
separated from work before the time of
payment of 13th month pay, entitled to
monetary benefits in proportion to the
length of time he started working during the
calendar year up to the time of resignation
or termination of service (Pro-rated 13th
month pay).
Application of pro-ration of 13th month pay
GR: Pro-ration of 13th month pay applies only in
cases of resignation or separation from work;
computation should be based on length of service
and not on the actual wage earned by the worker
(Honda Phils. v. Samahan ng Manggagawasa Honda,
G.R. No. 145561, June 15, 2005).
XPN: Ees who are paid a guaranteed minimum
wage or commissions earned are entitled to 13 th
Month Pay based on total earnings (Philippine
Agricultural Commercial and Industrial Workers
Union v. NLRC, G.R. No. 107994, August 14, 1995).
57
14th month pay not legally demandable
The granting of 14th month pay is a management
prerogative and is not legally demandable. It is
basically a bonus and is gratuitous in nature
(Kamaya Point Hotel v. NLRC, G.R. No. 75289, August
31, 1989).
Exception
A bonus, however, becomes a demandable or
enforceable obligation when it is made part of the
wage or salary or compensation of the employee. If
it is additional compensation which the employer
promised and agreed to give without any
conditions imposed for its payment, such as
success of business or greater production or
output, then it is part of the wage. But if it is paid
only if profits are realized or if a certain level of
productivity is achieved, it cannot be considered
part of the wage. Where it is not payable to all but
only to some employees and only when their labor
becomes more efficient or more productive, it is
only an inducement for efficiency, a prize
therefore, not a part of the wage (Metro Transit
Organization, Inc. v. National Labor Relations
Commission 315 Phil. 860, 871 (1995))
Q: ETPI (company) entered into a collective
bargaining agreement with ETEU (union). A
side agreement of the said CBA provided that
company confirms that the 14th, 15th and
16th month bonuses (other than 13th month
pay) are granted. The company then planned to
defer the payment of the 14th, 15th and 16th
month bonuses due continuing deterioration of
companys financial position. The union
opposed and filed a preventive mediation
complaint before the NCMB. May the company
validly postpone the payment of said bonuses?
A: No. A reading of the provision reveals that the
same provides for the giving of 14th, 15th and
16th month bonuses without qualification. There
were no conditions specified in the CBA Side
Agreements for the grant of the benefits contrary
to the claim of ETPI that the same is justified only
when there are profits earned by the company.
Terse and clear, the said provision does not state
that the subject bonuses shall be made to depend
on the ETPIs financial standing or that their
payment was contingent upon the realization of
profits. Neither does it state that if the company
derives no profits, no bonuses are to be given to
the employees. In fine, the payment of these
bonuses was not related to the profitability of
business operations. Verily, by virtue of its
incorporation in the CBA Side Agreements, the
grant of 14th, 15th and 16th month bonuses has
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
become more than just an act of generosity on the
part of ETPI but a contractual obligation it has
undertaken (ETPI v. ETEU, G.R. No. 185665, Feb. 8,
2012).
Commission in relation to 13th month pay
1. The salesmans commissions, comprising a
pre-determined percent of the selling price
of the goods sold by each salesman, were
properly included in the term basic salary
for purposes of computing their 13th month
pay.
2. The so-called commission paid to or received
by medical representatives of BoieTakeda
Chemicals or by the rank-and-file Ees of Phil.
Fuji Xerox were excluded from the term
basic salary because these were paid as
productivity bonuses. Such bonuses closely
resemble profit sharing, payments and have
no clear, direct, necessary relation to the
amount of work actually done by each
individual Ee.
3. Earnings and remuneration which are
closely akin to fringe benefits, overtime pay
or profit-sharing payments are excluded in
computing 13th month pay. However, sales
commissions which are effectively an
integral portion of the basic salary structure
of an employee shall be included in
determining his 13th month pay (Philippine
Duplicators, Inc. v. NLRC, G.R. No. 110068,
February 15, 1995).
SEPARATION PAY
Separation pay
whose continued employment is prohibited
by law or is prejudicial to his health and of
his co-Ees (LC, Art. 284).
3. When the termination from service has been
declared illegal, but his reinstatement to his
former position is no longer feasible for
some valid reason (Gabuay v. Oversea Paper
Supply, G.R. No. 148837, August 13, 2004).
4. In case of pre-termination of employment
contract in job-contracting arrangement (D.O
18-02, Rules Implementing Art. 106 109,
LC).
5. Where separation pay is awarded as a
measure of social or compassionate justice
(PLDT v. NLRC, G.R. No. L-80609, August 23,
1988).
RETIREMENT PAY
Retirement
It is the result of a bilateral act of the parties, a
voluntary agreement between the Er and the Ee
whereby the latter after reaching a certain age
agrees and/or consents to sever his employment
with the former (Soberano v. Secretary of Labor,
G.R. No. L-43753-56 and G.R. No.L-50991, August 29,
1980; Ariola v. Philex Mining Corp, 446 SCRA 152).
Persons covered by retirement benefit
All Ees in the private sector:
1. Regardless of their position, designation or
status; and
2. Irrespective of the method by which their
wages are paid (IRR, Book VI, Rule II, Sec.1).

Separation pay refers to the amount due to the Ee Persons not covered by retirement benefits
who has been terminated from service for causes
authorized by law such as the installation of labor- 1.
saving losses or the closing or cessation of
operation of the establishment or undertaking.
2.
Purpose for providing separation pay
3.
Separation pay intends to provide the Ee with the
wherewithal during the period he is looking for
another employment (Gabuay v. Oversea Paper
Supply, G.R. No. 148837, August 13, 2004).
Kinds of retirement schemes
Instances when Ee is entitled to separation pay
1.
1. When the termination of employment is due 2.
to causes authorized by law (Art. 284, LC).
2. When the severance of employment is
caused by a disease, particularly when the Ee
is found to be suffering from any disease and
Ees of the National Government and its
political subdivisions, including GOCCs (if
they are covered by the Civil Service Law)
Domestic helpers and persons in the
personal service of another
Ees of retail, service, and agricultural
establishments or operations employing not
more than 10 Ees (IRR, Book VI, Rule II,
Sec.2).
Compulsory and contributory in nature;
One set up by the agreement between the Er
and Ees in the CBA or other agreements
between them (other applicable
employment contract);

UNIVERSITY OF SANTO TOMAS

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 LABOR STANDARDS
3. One that is voluntarily given by the Er,
expressly as announced company policy or
impliedly as in the failure to contest the Ees
claim for retirement benefits (Marilyn
Odchimar Gertach v. Reuters Limited Phils.,
G.R. No. 14854, January 17, 2005).
Retroactive application of Art. 287 of the LC (on
retirement) as amended by R.A. 7641
Art. 287 of the LC as amended by R.A. 7641 can be
applied retroactively, provided that;
1. The claimant for retirement benefits was still
the Ee of the Er at the time the statute took
effect; and
2. The claimant was in compliance with the
requirements for eligibility under the statute
for such retirement benefits (PSVSIA v. NLRC,
G.R. No. 115019, April 14, 1997).
Provisions of the retirement plan binding as
part of the employment contract
The retirement plan forms part of the employment
contract since it is made known to the Ees and
accepted by them, and such plan has an express
provision that the company has the choice to retire
an Ee regardless of age, with 20 years of service,
said policy is within the bounds contemplated by
the LC. Moreover, the manner of computation of
retirement benefits depends on the stipulation
provided in the company retirement plan
(Progressive Devt Corporation v. NLRC, G.R. No.
138826, October 30, 2000).
NOTE: Although retirement plan forms part of the
employment contract, before a right to retirement
benefits or pension vests in an Ee, he must have
met the stated conditions of eligibility with respect
to the nature of employment, age, and length of
service. This is a condition precedent to his
acquisition of rights thereunder. SC ruled that the
conditions of eligibility for retirement must be met
at the time of retirement at which juncture the
right to retirement benefits or pension, if the Ee is
eligible, vests in him.
Again, it has been held that pension and retirement
plans create a contractual obligation in which the
promise to pay benefits is made in consideration of
the continued faithful service of the Ee for the
requisite period (Brion v. South Phil. Union Mission
of the Seventh Day Adventist Church, 307 SCRA 497).
59
Q: The instant labor dispute between
petitioners (PAL) stemmed from petitioners
act of unilaterally retiring airline pilot Captain
Albino Collantes under PAL-ALPAP Retirement
Plan. The SLE assailed the order of PALs action
of unilaterally retiring Captain Collantes and
further ordered that the basis of the
computation of Captain Collantes retirement
benefits should be Art. 287 of the LC the PAL-
ALPAP Retirement Plan. But PAL contends that
the retirement plan should prevail as it is the
agreement between the parties. What should be
the basis of the computation of Captain
Collantes retirement benefits?
A: The basis of computation of Collantes
retirement benefits should be Art. 287 of the LC.
The given retirement benefits under the retirement
plan is low compared to the retirement benefits
provided under Art. 287 of the LC. Applying the
second paragraph of Art. 287 ofthe LC, an Ees
retirement benefits under any collective bargaining
and other agreement shall not be less than those
provided in the LC. Hence, Art. 287 of the LC and
not the PAL-ALPAP Retirement Plan, should govern
the computation of the benefits to be awarded to
Captain Collantes. Moreover, a pilot who retires
after twenty years of service or after flying 20,000
hours would still be in the prime of his life and at
the peak of his career, compared to one who retires
at the age of 60 years old. Based on this peculiar
circumstance that PAL pilots are in, the parties
provided for a special scheme of retirement
different from that contemplated in the LC.
Conversely, the provisions of Art. 287 of the LC
could not have contemplated the situation of PALs
pilots. Rather, it was intended for those who have
no more plans of employment after retirement, and
are thus in need of financial assistance and reward
for the years that they have rendered service.
(Philippine Airlines, Inc. v. Airline PilotsAssociation
of the Philippines, G.R. No. 143686, January 15,
2002).
ELIGIBILITY
Retirement age
It is the age of retirement that is specified in the
1. CBA;
2. Employment contract;
3. Retirement plan (IRR, Book VI, Rule II, Sec. 3);
OR
4. Optional retirement age for underground
mining Ees
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Retirement age in the absence of a retirement
plan or other applicable agreement
1. Optional Upon reaching 60 years old
provided that Ee has rendered 5 years of
service.
NOTE: The option to retire upon reaching
the age of 60 years or more but not beyond
65 is the exclusive prerogative of the Ee if
there is no provision on retirement in a CBA
or any other agreement or if the Er has no
retirement plan (R.A. 7641; Capili v. NLRC,
G.R. No. 117378, March 26, 1997).
2. Compulsory 65 years old, regardless of
years of service (IRR, Book VI, Rule II, Sec. 4).
NOTE: Retirement benefits, where not
mandated by law, may be granted by
agreement of the Ees and their Er or as a
voluntary act on the part of the Er. Retirement
benefits are intended to help the Ee enjoy the
remaining years of his life, lessening the
burden of worrying for his financial support,
and are a form of reward for his loyalty and
service to the Er (Aquino v. NLRC, G.R. No.
87653, February 11, 1992).
Compulsory retirement age below 60 allowed
Art. 287 permits Er and Ee to fix the applicable
retirement age at below 60. The same is legal and
enforceable so long as the parties agree to be
governed by such CBA (Pantranco North Express v.
NLRC, G.R. No. 95940, July 24, 1996).
Rule for extension of service of retiree upon
reaching the compulsory retirement age
Upon the compulsory retirement of an Ee or official
in the public or private service, his employment is
deemed terminated. The matter of extension of
service of such Ee or official is addressed to the
sound discretion of the Er (UST Faculty Union v.
NLRC, G.R. No. 89885, August 6, 1990).
AMOUNT
Computation of retirement benefits in the
absence of an applicable agreement or
retirement plan
A retiree is entitled to a retirement pay equivalent
to at least month salary for every year of service,
a fraction of at least 6 months being considered as
1 whole year (R.A. 7641).
UNIVERSITY OF SANTO TOMAS
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Composition of month salary or retirement
pay
Unless parties provide for broader inclusions,
retirement pay is comprised of:
1. 15 days salary based on latest salary rate;
2. Cash equivalent of not more than 5 days of
service incentive leaves (22.5/year of
service)
3. 1/12 of the 13th month pay
4. All other benefits as may be agreed upon by
the Er and Ee (IRR, Book VI, Rule II, Sec.5.2).
NOTE: Under Sec. 26 of R.A. 4670, otherwise
known as Magna Carta for Public School
Teachers, public school teachers having fulfilled
the age and service requirements of the applicable
retirement laws shall be given one range salary
raise upon the retirement, which shall be the basis
of the computation of the lump sum of the
retirement pay and monthly benefit thereafter.
Q: In 1955, Hilaria was hired as a grade school
teacher at the Sta. Catalina College. In 1970, she
applied for and was granted a 1 year leave of
absence (LOA) without pay due to the illness of
her mother. After the expiration in 1971 of her
LOA, she had not been heard from by Sta.
Catalina. In the meantime, she was employed as
a teacher at the San Pedro Parochial School
during SY 80-81 and at the Liceo de San Pedro,
during SY 1981-1982. In 1982, she applied
anew at Sta. Catalina which hired her. On Mar
22, 1997, during the 51st Commencement
Exercises of Sta. Catalina, Hilaria was awarded
a Plaque of Appreciation for 30 yrs. of service
and Php 12,000 as gratuity pay. On May 31,
1997, Hilaria reached the compulsory
retirement age of 65. Sta. Catalina pegged her
retirement benefits at Php 59,038.35. However,
amount of Php 12,000 representing the gratuity
pay, which was given to her, was deducted from
her retirement benefits.
Should the gratuity pay be deducted from the
retirement benefits?
A: Yes. Gratuity pay is separate and distinct from
retirement benefits. It is paid purely out of
generosity.
 LABOR STANDARDS
Gratuity pay v. Retirement benefits RETIREMENT BENEFITS OF WORKERS PAID BY
RESULTS/ RETIREMENT BENEFITS OF PART-
RETIREMENT TIME WORKERS
GRATUITY PAY
BENEFITS
It is paid to the Determination of the amount of retirement
beneficiary for the past Are intended to help the benefits of workers paid by results and part-
services or favor Ee enjoy the remaining time workers
rendered purely out of years of his life,
the generosity of the releasing him from the The 15-day salary of workers paid by results and
giver or grantor. It is burden of worrying for part-time workers shall be determined from their
not intended to pay a his financial support, average daily salary which is the average daily
worker for actual and are a form of salary for the last 12 months reckoned from the
services rendered or for reward for his loyalty to date of their retirement, divided by the number of
actual performance. It the Er (Sta. Catalina actual working days in that particular period (Rules
is a money benefit or College and Sr. Loreta Implementing the New Retirement Law, Sec. 5.2 and
bounty given to the Oranza, v. NLRC and 5.3).
worker, the purpose of Hilaria Tercera, G.R. No.
which is to reward Ees 144483, November 19, TAXABILITY
who have rendered 2003).
satisfactory service to Non-taxability of retirement benefits under R.A.
the company. 7641

RETIREMENT PAY UNDER RA 7641 VIS--VIS
RETIREMENT BENEFITS UNDER SSS AND GSIS
LAWS
Retirement pay under the LC in relation to
retirement benefits under SSS and GSIS laws
(1997 Bar Question)
Retirement benefits under R.A 7641 are tax exempt
provided that such benefits provided by the
retirement plan be equal or less than the minimum
requirement provided by law.
Requirements for tax exemption under R.A.
7641

Revised 1. That there be no CBA or other applicable

Government Employees employment contract providing for
Social Security retirement benefits for an Ee; or
Service Compensation
Law 2. Even if there is a CBA or other applicable
Insurance Act
Act employment contract providing for
retirement benefits for an Ee, that the same
Compulsory upon Compulsory for Compulsory is below the requirements set forth by law.
all E e s n o t all permanent upon all Ers
o v e r 6 0 years Ees below 60 and their Ees WOMEN WORKERS
of age and their years of age not over 60
Ers. upon years of age; PROVISIONS AGAINST DISCRIMINATION
appointment of Provided, that
1. Filipinos permanent an Ee who is State policy on non-discrimination against
recruited in the status, and for over 60 years women
Philippines by all elective of age and
foreign-based Ers officials for the paying The State condemns discrimination against women
for employment duration of contributions in all its forms and pursues by all appropriate
abroad may be their tenure. to qualify for means and without delay the policy of eliminating
covered by the the retirement discrimination against women in keeping with the
SSS on a or life Convention on the Elimination of All Forms of
voluntary basis. NOTE: Any insurance Discrimination Against Women (CEDAW) and
person, benefit other international instruments consistent with
2. Compulsory whether elected administered Philippine law. The State shall accord women the
upon all self- or appointed, in by the System rights, protection, and opportunities available to
employed the service of an shall be every member of society (R.A. 9710 or the Magna
persons earning Er is a covered subject to Carta of Women, Sec. 2).
Php 1, 800 or Ee if he receives compulsory
more per annum. compensation coverage. The State shall take steps to review and, when
for such service. necessary, amend and/or repeal existing laws that

UNIVERSITY OF SANTO TOMAS

61 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
are discriminatory to women within 3 years from
the effectivity of this Act (R.A. 9710, Sec. 12).
Discriminatory acts against women Ee
1. Discrimination with respect to the terms
and conditions of employment solely on
account of sex
a. Discrimination in pay Payment of a lesser
compensation including wage, salary or
other forms of remuneration and fringe
benefits, to a female Ee as against a male
Ee;
b. Discrimination in employment opportunity
favoring a male Ee over a female Ee with
respect to promotion, assignment,
transfer, training opportunities, study and
scholarship grants solely in account or
their sexes;
c. Discrimination in hiring favoring a male
applicant with respect to hiring where the
particular job can equally be handled by a
woman;
d. Discrimination in dismissal favoring a
male Ee over a female Ee with respect to
dismissal of personnel or the application
of the last in / first out principle or other
retrenchment policy of the Er (Poquiz, Vol.
I).
2. Stipulating, whether as a condition for
employment or continuation of
employment:
a. That a woman Ee shall not get married, or
b. That upon marriage, such woman Ee shall
be deemed resigned or separated (LC, Art.
136).
3. Dismissing, discriminating or otherwise
prejudice a woman Ee by reason of her being
married (LC, Art. 136).
NOTE: Discrimination in any form from pre-
employment to post employment, including
hiring, promotion or assignment, based on the
actual, perceived or suspected HIV status of an
individual is unlawful (Philippine AIDS
Prevention and Control Act of 1998, R.A. 8504).
Standard of reasonable test
Under the standard reasonable test which is
parallel to the concept of a bona-fide occupational
qualification test in American jurisdictions, the Er
has the burden of proof to prove the existence of a
reasonable business necessity that would justify an
employment policy (Star Paper Corp. v. Simbol, G.R.
No. 164774, April 12, 2006).
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
62
Q: May a woman worker be dismissed on the
ground of dishonesty for having written
single on the space for civil status on the
application sheet, contrary to the fact that she
was married?
A: Art. 136 of the LC, explicitly prohibits
discrimination merely by reason of marriage of a
female Ee. The policy of not accepting or
disqualifying from work any woman worker who
contracts marriage is afoul of the right against
discrimination provided to all women workers by
our labor laws and by our Constitution (PT&T Co. v.
NLRC, G.R. No. 118978, May 23, 1997).
Q: Can an individual, the sole proprietor of a
business enterprise, be said to have violated
the Anti-Sexual Harassment Act of 1995 if he
clearly discriminates against women in the
adoption of policy standards for employment
and promotions in the enterprise? Explain.
(2003 Bar Question)
A: When an Er discriminates against women in the
adoption of policy standards for employment and
promotion in his enterprise, he is not guilty of
Sexual Harassment. Instead, the Er is guilty of
discrimination against women Ees which is
declared to be unlawful by the LC.
For an Er to commit Sexual Harassment, he as a
person of authority, influence or moral ascendancy
should have demanded, requested or otherwise
required a sexual favor from his Ee whether the
demand, request or requirement for submission is
accepted by the object of said act.
STIPULATION AGAINST MARRIAGE
(LC, ART. 136)
No-spouse employment policy
It is a policy banning spouses from working in the
same company.
No-spouse employment policy may or may not
violate provisions of the LC
GR: It may not facially violate Art. 136 of the LC but
it creates a disproportionate effect and the only
way it could pass judicial scrutiny is by showing
that it is reasonable despite the discriminatory and
disproportionate effect.
XPN: Bona fide occupational qualification rule
(BFOQR)
 LABOR STANDARDS
Bona fide occupational qualification rule
There must be a finding of any BFOQ to justify an
Ers no spouse employment rule. There must be a
compelling business necessity for which no
alternative exists other than the discriminating
practice. To justify a BFOQ, the Er must prove two
factors:
1. That the employment qualification is
reasonably related to the essential operation
of the job involved; and
2. That there is a factual basis for believing that
all or substantially all persons meeting the
qualification would be unable to properly
perform the duties of the job (Star Paper v.
Simbol, G.R. No. 164774, April 12, 2006).
Importance of the BFOQR
1. To ensure that the Ee can effectively perform
his work
2. So that the no-spouse employment rule will
not impose any danger to business.
Q: Glaxo, a company which has a policy against
employees having relationships with the
employees of its competitors, employed Tecson
as a medical representative. Tecson married
Bettsy, a Branch coordinator in one of Glaxos
competitors. Tecson was then transferred to
another area but he did not accept such
transfer.
Is the policy of Glaxo valid and reasonable so as
to constitute the act of Tecson as willful
disobedience?
A: Yes. The prohibition against personal or marital
relationships with Ees of competitor companies
upon Glaxos Ees is reasonable under the
circumstances because relationships of that nature
might compromise the interest of the company.
Glaxo does not impose an absolute prohibition
against relationships between its Ees and those of
competitor companies. Its Ees are free to cultivate
relationships with and marry persons of their own
choosing. What the company merely seeks to avoid
is a conflict of interest between the Ee and the
company that may arise out of such relationships.
Furthermore, the prohibition forms part of the
employment contract and Tecson was aware of
such restrictions when he entered into a
relationship with Bettsy (Duncan Assoc. of
Detailman-PTGWO v. GlaxoWellcome Phil. Inc., G.R.
No. 162994, September 17, 2004).
63
PROHIBITED ACTS
Prohibited acts under Art.137 of the LC
It shall be unlawful for any Er to:
1. Deny any woman Ee benefits provided by
law.
2. Discharge any woman for the purpose of
preventing her from enjoying any of the
benefits provided by law.
3. Discharge such woman on account of her
pregnancy, or while on leave or in
confinement due to her pregnancy.
4. Discharge or refuse the admission of such
woman upon returning to her work for fear
that she may again be pregnant.
Q: At any given time, approximately 90% of the
production work force of a semiconductor
company are females. 75% of the female
workers are married and of child-bearing
years. It is imperative that the Company must
operate with a minimum number of absences to
meet strict delivery schedules. In view of the
very high number of lost working hours due to
absences for family reasons and maternity
leaves, the company adopted a policy that it
will employ married women as production
workers only if they are at least 35 years old. Is
the policy in violation of any law? (1998 Bar
Question)
A: Yes, it violates Art. 140 of the LC which provides
that no Er shall discriminate against any person in
respect to the terms and conditions of employment
on account of his age.
Persons covered under the classification of
certain women workers
Any women who is permitted or suffered to work:
1. With or without compensation
2. In any night club, cocktail lounge, massage
clinic, bar or similar establishment
3. Under the effective control or supervision of
the Er for a substantial period of time
4. Shall be considered as an Ee of such
establishment for purposes of labor and
social legislation.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
ANTI-SEXUAL HARASSMENT ACT favor. It is not necessary that the demand, request
(R.A. 7877) or requirement of a sexual favor be articulated in a
categorical manner. It may be discerned, with
State policy in enacting the Anti-Sexual equal certitude, from the acts of the offender.
Harassment Law
Likewise, it is not essential that the demand,
The State shall: request or requirement be made as a condition for
continued employment or for promotion to a
1. Value the dignity of every individual higher position. It is enough that the respondents
2. Enhance the development of its human acts result in creating an intimidating, hostile or
resources offensive environment for the employee (Domingo
3. Guarantee full respect for human rights, and v. Rayala, G.R. No. 155831, February 18, 2008).
4. Uphold the dignity of workers, Ees,
applicants for employment, students or Places where sexual harassment are committed
those undergoing training, instruction or
education (R.A. 7877, Sec. 2). Specifically:

Persons who may be held liable for sexual 1. In a work-related or employment

harassment environment:

In a work, education or training-related a. The sexual favor is made as a condition in

environment Sexual Harassment may be the hiring or in the employment, re-
committed by an: employment or continued employment of
said individual, or in granting said
1. Er individual favorable compensation, terms,
2. Manager conditions, promotions, or privileges; or
3. Supervisor the refusal to grant the sexual favor results
4. Agent of the Er in limiting, segregating or classifying the
5. Teacher, instructor, professor Ee which in a way would discriminate,
6. Coach, trainer, or deprive or diminish employment
7. Any other person who, having authority, opportunities or otherwise adversely
influence or moral ascendancy over another affect said Ee (quid pro quo sexual
in a work or training or education harassment);
environment: b. The above acts would impair the Ees
a. Demands rights or privileges under existing labor
b. Requests or laws; or
c. Requires c. The above acts would result in an
- any sexual favor from the other, intimidating, hostile, or offensive
regardless of whether the environment for the Ee.
demand, request or requirement
for submission is accepted by the 2. In an education or training environment
object of R.A. 7877 (R.A. 7877, Sec. sexual harassment is employed:
3).
a. Against one who is under the care, custody
Acts of sexual harassment or supervision of the offender;
b. Against one whose education, training,
Generally, sexual harassment is committed when a apprenticeship or tutorship is entrusted to
person demands, requests, or otherwise requires the offender;
any sexual favor from another, regardless of c. When sexual favor is made a condition to
whether the demand, request or requirement for the giving of a passing grade, or the
submission is accepted by the latter. granting of honors and scholarships, or the
payment of a stipend, allowance or other
The definition of sexual harassment does not benefits, privileges, or considerations; or
require a categorical demand or request for d. When sexual advances result in an
sexual favor intimidating, hostile or offensive
environment for the student, trainee or
While the provision states that there must be a apprentice.
demand, request or requirement of a sexual

UNIVERSITY OF SANTO TOMAS

2015 GOLDEN NOTES
64
 LABOR STANDARDS
Duties of the Er or head of office in a work-
related, education or training environment
1. Prevent or deter the commission of acts of
Sexual Harassment, and
2. Provide the procedures for the resolution,
settlement or prosecution of acts of Sexual
Harassment.
Towards this end, the Er or head of office shall
1. Promulgate appropriate rules and
regulations in consultation with and jointly
approved by the Ees or students or trainees,
through their duly designated
representatives, prescribing the procedure
for the investigation or Sexual Harassment
cases and the administrative sanctions
therefore (Sec. 4, R.A. 7877).
NOTE: Administrative sanctions shall not be
a bar to prosecution in the proper courts for
unlawful acts of Sexual Harassment.
The said rules and regulations issued shall
include, among others, guidelines on proper
decorum in the workplace and educational
or training institutions.
2. Create a committee on decorum and
investigation of cases on Sexual Harassment.
3. The Er or head of office, education or
training institution shall disseminate or post
a copy of this R.A. 7877 for the information
of all concerned
Liability of the Er, head of office, educational or
training institution
Er shall be solidarily liable for damages arising
from the acts of Sexual Harassment committed in
the employment, education or training
environment provided:
1. The Er or head of office, educational or
training institution is informed of such acts
by the offended party; and
2. No immediate action is taken thereon (R.A.
7877, Sec. 5).
An independent action for damages may be
filed
Nothing under R.A. 7877 shall preclude the victim
of work, education or training-related Sexual
Harassment from instituting a separate and
independent action for damages and other
affirmative relief (Sec. 6).
65
Three-fold liability rule in sexual harassment
cases
An act of Sexual Harassment may give rise to civil,
criminal and administrative liability on the part of
the offender, each proceeding independently of the
others.
Prescription of action
The civil, criminal and administrative action shall
prescribe in 3 years.
Q: A Personnel Manager, while interviewing an
attractive female applicant for employment,
stared directly at her for prolonged periods,
albeit in a friendly manner. After the interview,
the manager accompanied the applicant to the
door, shook her hand and patted her on the
shoulder. He also asked the applicant if he
could invite her for dinner and dancing at some
future time. Did the Personnel Manager, by the
above acts, commit Sexual Harassment?
Reason. (2000 Bar Question)
A: Yes. The Personnel Manager, is in a position to
grant or not to grant a favor (a job) to the
applicant. Under the circumstances, inviting the
applicant for dinner or dancing creates a situation
hostile or unfriendly to the applicant's chances for
a job if she turns down the invitation (R.A. No. 7877,
Anti-Sexual Harassment Act, Sec. 3 (a) (3)).
Q: In the course of an interview, another female
applicant inquired from the same Personnel
Manager if she had the physical attributes
required for the position she applied for. The
Personnel Manager replied: "You will be more
attractive if you will wear micro-mini dresses
without the undergarments that ladies
normally wear." Did the Personnel Manager, by
the above reply, commit an act of sexual
harassment? Reason.
A: Yes. The remarks would result in an offensive or
hostile environment for the Ee. Moreover, the
remarks did not give due regard to the applicants
feelings and it is a chauvinistic disdain of her
honor, justifying the finding of Sexual Harassment
(Villarama v. NLRC, G.R. No. 106341, September 02,
1994).
Q: Pedrito Masculado, a college graduate from
the province, tried his luck in the city and
landed a job as a utility/maintenance man at
the warehouse of a big shopping mall. After
working as a casual employee for 6 months, he
signed a contract for probationary employment
for 6 months. Being well-built and physically
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
attractive, his supervisor, Mr. Hercules Barak,
took special interest to befriend him. When his
probationary period was about to expire, he
was surprised when one afternoon after
working hours, Mr. Barak followed him to the
mens comfort room. After seeing that no one
else was around, Mr. Barak placed his arm over
Pedritos shoulder and softly said: You have
great potential to become a regular Ee and I
think I can give you a favorable
recommendation. Can you come over to my
condo unit on Saturday evening so we can have
a little drink? Im alone, and Im sure you want
to stay longer with the company.
Is Mr. Barak liable for Sexual Harassment
committed in a work-related or employment
environment? (2000 Bar Question)
A: Yes. The elements of Sexual Harassment are all
present. The act of Mr. Barak was committed in a
workplace. Mr. Barak, as supervisor of Pedrito
Masculado, has authority, influence and moral
ascendancy over Masculado.
Given the specific circumstances mentioned in the
question like Mr. Barak following Masculado to the
comfort room, etc. Mr. Barak was requesting a
sexual favor from Masculado for a favorable
recommendation regarding the latter's
employment. It is not impossible for a male, who is
a homosexual, to ask for a sexual favor from
another male.
EMPLOYMENT OF MINOR WORKERS
Rules on employment of minor workers
GR:
1. No person under 18 years of age will be
allowed to be employed in an undertaking
which is hazardous or deleterious in nature.
2. No Er shall discriminate against any person
in respect to terms and conditions of
employment on account of his age.
XPN:
A. Below 15 yrs. Old
1. The child works directly under the sole
responsibility of his parents or legal
guardian and where only members of the
family are employed, subject to the
following conditions:
a. Employment does not endanger the
childs safety, health and morals
b. Employment does not impair the
childs normal development
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
66
c. Er-parent or legal guardian provides
the child with the primary and/or
secondary education prescribed by the
Department of Education
2. The childs employment or participation in
public entertainment or information
through cinema, theater, radio or
television is essential provided:
a. Employment contract is concluded by
the childs parents or legal guardian,
b. With the express agreement of the
child concerned, if possible, and
c. The approval of DOLE, the following
must be complied with:
i. The employment does not involve
advertisement or commercials
promoting alcoholic beverages,
intoxicating drinks, tobacco and
its by-products or exhibiting
violence
ii. There is a written contract
approved by DOLE
iii. The conditions provided in the
first instance are met
B. Above 15 but below 18 May be employed
in any non-hazardous work
C. Above 18 No prohibition
Duty of the Er before engaging a minor into
employment
The Er shall first secure a work permit from the
DOLE which shall ensure observance of the
requirements (R.A. 7160, Sec. 12).
Rule in the issuance of work certificates/
permits to children at least 15 but below 18
years of age
The issuance of a DOLE Certificate to youth aged 15
to below 18 years of age is not required by law. No
Er shall deny opportunity to any such youth
applying for employment merely on the basis of
lack of work permit or certificate of eligibility for
employment. Any young person aged 15 to below
18 years of age may present copy of this DOLE
advisory to any Er, job provider, government
authority, or his/her representative when seeking
employment or anytime during employment (DOLE
Department Advisory No. 01-08).
Non-hazardous work
It is any work or activity in which the Ee is not
exposed to any risk which constitutes an imminent
danger to his safety and health.
 LABOR STANDARDS
Hazardous workplaces
1. Nature of work exposes the workers to
dangerous environmental elements,
contaminants or work conditions
2. Workers are engaged in construction work,
logging, fire-fighting, mining, quarrying,
blasting, stevedoring, dock work, deep-sea
fishing, and mechanized farming
3. Workers are engaged in the manufacture or
handling of explosives and other pyrotechnic
products
4. Workers use or are exposed to heavy or
power-driven tools
Q: You were asked by a paint manufacturing
company regarding the possible employment
as a mixer of a person aged 17, who shall be
directly under the care of the section
supervisor. What advice would you give?
Explain briefly. (2002 Bar Question)
A: The paint manufacturing company cannot hire a
person who is aged 17. Art. 139(c) of the LC
provides that a person below 18 years of age shall
not be allowed to work in an undertaking which is
hazardous or deleterious in nature as determined
by the SLE. Paint manufacturing has been classified
by the SLE as a hazardous work.
Prohibitions on the employment of children in
certain advertisements
Employment of child models in all commercial
advertisements promoting the following shall be
prohibited:
1. Alcoholic beverage
2. Intoxicating drinks
3. Tobacco and its by products
4. Gambling
5. Violence
6. Pornography
Q: A spinster school teacher took pity on one of
her pupils, a robust and precocious 12-year old
boy whose poor family could barely afford the
cost of his schooling. She lives alone at her
house near the school after her housemaid left.
In the afternoon, she lets the boy do various
chores as cleaning, fetching water and all kinds
of errands after school hours. She gives him
rice and Php 30.00 before the boy goes home at
7 every night. The school principal learned
about it and charged her with violating the law
which prohibits the employment of children
below 15 years of age. In her defense, the
teacher stated that the work performed by her
pupil is not hazardous, and she invoked the
67
exception provided in the Department Order of
DOLE for the engagement of persons in
domestic and household service. Is her defense
tenable? (2004 Bar Question)
A: No. Under Art. 139 of the LC on minimum
employable age, no child below 15 years of age
shall be employed except when he works directly
under the sole responsibility of his parents or
guardian, the provisions of the alleged department
order of DOLE to the contrary notwithstanding. A
mere department order cannot prevail over the
express prohibitory provisions of the LC.
Q: Determine whether the following minors
should be prohibited from being hired and
from performing their respective duties
indicated hereunder: (2006 Bar Question)
a. A 17-year old boy working as miner at the
Walwadi Mining Corporation.
b. An 11-year old boy who is an accomplished
singer and performer in different parts of
the country.
c. A 15-year old girl working as a library
assistant in a girls' high school.
d. A 16-year old girl working as model
promoting alcoholic beverages.
e. A 17-year old boy working as a dealer in a
casino. (2006 Bar Question)
A:
a. Yes. He should be prohibited from being hired
and from performing the duties of a miner
because such constitutes hazardous work
under D.O. No. 04 Series of 1999. Art. 139(c) of
LC expressly prohibits the employment of
persons below 18 years of age in an
undertaking which is hazardous or deleterious
in nature as determined by the SLE.
b. No. He should not be prohibited from being
hired and from performing as a singer. Under
Art. VIII Sec. 12(2) of R.A. 7619 as amended by
R.A. 7658, this constitutes an exception to the
general prohibition against the employment of
children below 15 years of age, provided that
the following requirements are strictly
complied with:
1. The Er shall ensure the protection, health
safety and morals of the child
2. The Er shall institute measures to prevent
the childs exploitation or discrimination
taking into account the system and level of
remuneration, and the duration and
arrangement of working time; and
3. The Er shall formulate and implement,
subject to the approval and supervision of
competent authorities, a continuing
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
program for training and skill acquisition
of the child. Moreover, the child must be
directly under the sole responsibility of his
parents or guardian and his employment
should not in any way interfere with his
schooling.
c. No. She should not be prohibited from working
as a library assistant because the prohibition in
the LC against employment of persons below
18 years of age merely pertains to employment
in an undertaking which is hazardous or
deleterious in nature as identified in the
guidelines issued by the SLE. Working as a
library assistant is not one of undertakings
identified to be hazardous under D.O. No 04
Series of 1999.
d. Yes. She should be prohibited from working as
a model promoting alcoholic beverages. R.A.
7610 categorically prohibits the employment
of child models in all commercials or
advertisements promoting alcoholic beverages
and intoxicating drinks, among other things.
e. Yes. He should be prohibited from working as
a dealer in casino, because Art. 140 of the LC
prohibits the employment of persons below 18
years of age in an undertaking which is
hazardous or deleterious in nature identified
in the guidelines issued by the SLE. Working as
a dealer in a casino is classified as hazardous
under D.O. No. 04 Series of 1999 as it exposes
children to physical, psychological or sexual
abuses.
ACT AGAINST CHILD LABOR (R.A. 9231) AND
CHILD ABUSE LAW (R.A. 7610)
Child labor
Any work or economic activity performed by a
child that subjects him or her to any form of
exploitation or is harmful to his or her health and
safety or physical, mental or psychosocial
development.
Working child
Any child engaged as follows:
1. When the child is below 18 years of age in a
work or economic activity that is not child
labor; or
2. When the child is below 15 years of age:
a. In work where he/she is directly under
the responsibility of his/her parents or
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
68
legal guardian and where only members
of the childs family are employed; or
b. In public entertainment or information
Instances when the state can intervene in
behalf of the child
1. When the parent, guardian, teacher or
person having care or custody of the child
fails or is unable to protect the child against
abuse, exploitation and discrimination; or
2. When such acts are committed against the
child by the said parent, guardian, teacher or
person having care and custody over the
child.
Limitation on the hours of work of a working
child
If the child is:
1. Below 15 years of age Not more than 20
hours a week and not more than 4 hours a day
- Not allowed to work between 8:00 pm
6:00 am
2. At least 15 years of age but below 18 years
of age shall not exceed 8 hours a day or 40
hours a week
- Not allowed to work between 10:00 pm
6:00 am
Worst forms of labor
1. All forms of slavery (Anti-Trafficking of
Persons Act of 2003) or practices similar to
slavery such as sale and trafficking of
children, debt bondage and serfdom and
forced or compulsory labor, including
recruitment of children for use in armed
conflict;
2. The use, procuring, offering of a child for
prostitution, for the production of
pornography or for pornographic
performances;
3. The use, procuring, offering or exposing of a
child for illegal or illicit activities, including
the production and trafficking of dangerous
drugs and volatile substances prohibited
under existing laws;
4. Employing child models in all commercials
or advertisements promoting alcoholic
beverages, intoxicating drinks, tobacco and
its byproducts and violence; and
5. Work which, by its nature or circumstances
in which it is carried out, is hazardous or
likely to be harmful to the health, safety or
morals of children.
 LABOR STANDARDS
Persons who can file a complaint for unlawful Children under foster family arrangement
acts committed against children
Children under foster family arrangement are
1. Offended party those who are living with a family or household of
2. Parents or guardians relative/s and are provided access to education
3. Ascendants or collateral relatives within the and given an allowance incidental to education, i.e.,
3rd degree of consanguinity baon, transportation, school projects, and school
4. Officer, social worker or representative of a activities; provided, that the foster family and
licensed child-caring institution foster care arrangements are in compliance with
5. Officer or social worker of DSWD the procedures and requirements as prescribed by
6. Barangay chairman of the place where the R.A. 10165 or Foster Care Act of 2012.
violation occurred, where the child is
residing or employed Examples of persons performing work
7. At least 3 concerned, responsible citizens occasionally or sporadically and not on an
where the violation occurred occupational basis

Jurisdiction over offenses punishable under 1. A janitress doing irregular laundry work for
R.A. 9231 a household during rest day;
2. A construction worker doing casual
The Family Courts shall have original jurisdiction gardening job for a household; or
over all cases involving offenses punishable under 3. A hospital nurse or a student doing baby-
this Act. sitting job.

EMPLOYMENT OF HOUSEHELPERS Employable age for a kasambahay

Persons covered by R.A. 10361 otherwise The employable age for a kasambahay is 15 years
known as Batas kasambahay old and above.

All kasambahay engaged in domestic work, NOTE: The employment of children 15 but below
whether on a live-in or live-out arrangement, such 18 years of age may be made under the following
as, but not limited to, the following: conditions:

1. General househelp 1. They shall not be allowed to work for more

2. Nursemaid or Yaya than 8 hours a day, and in no case beyond
3. Cook 40 hours a week;
4. Gardener 2. They shall not be allowed to work between
5. Laundry person 10 p.m. to 6 a.m. of the following day;
6. Working children or domestic workers 15 3. They shall not be allowed to do hazardous
years and above but below 18 years of age; work; and
or 4. They shall not be denied access to education
7. Any person who regularly performs and training.
domestic work in one household on an
occupational basis (live-out arrangement) The consent of the parent/guardian of working
(R.A. 10361, Sec. 3(d)). children is required in the employment contract.

Persons not covered by the batas kasambahay Er of a kasambahay

The following are not covered: An Er is any person who engages and controls the
services of a kasambahay and is party to the
1. Service providers employment contract.
2. Family drivers
3. Children under foster family arrangement; Ers household
and
4. Any other person who performs work Household refers to the immediate family members
occasionally or sporadically and not on an or other occupants of the house who are directly
occupational and regular basis. and regularly provided services by the
kasambahay.

UNIVERSITY OF SANTO TOMAS

69 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Modes of hiring a kasambahay Contents of the employment contract

An Er can hire directly or through private 1. Duties and responsibilities of the

employment agencies registered with the DOLE kasambahay;
regional offices. The Er, whether the kasambahay is 2. Period of employment;
hired directly or through POEA, shall shoulder the 3. Compensation;
expenses for hiring. The kasambahay shall not be 4. Authorized deductions;
charged of any cost of the recruitment, placement, 5. Hours of work and proportionate additional
or finders fee. payment;
6. Rest days and allowable leaves;
NOTE: The Er shall pay the expenses that are 7. Board, lodging and medical attention;
directly used for the transfer of the kasambahay 8. Agreements on deployment expenses, if any;
from place of origin to the place of work. An Er can 9. Loan agreement;
be reimbursed of the deployment expenses when 10. Termination of employment; and
the kasambahay unreasonably leaves the Er within 11. Any other lawful condition agreed upon by
6 months from the time he/she started work. both parties.

If a kasambahay is hired thru a Private Registration of the kasambahay

Employment Agency, the agency is allowed to
collect Service Fee from the Er. The Er is required to register the kasambahay in
the Registry of Domestic Workers in the barangay
Pre-employment requirements where the Er resides. For this purpose, the DILG, in
coordination with the DOLE, shall formulate a
Before entering into an employment contract, the registration system.
Er has the option to require the following from a
kasambahay: NOTE: The registration of the kasambahay is free
of charge.
1. Medical certificate or health certificate
issued by a local government health officer; Mandatory benefits of a kasambahay
2. Barangay and police clearance;
3. NBI clearance; and 1. Monthly minimum wage;
4. Duly authenticated birth certificate or, if not 2. Daily rest period of 8 (total) hours;
available, voters identification card, 3. Weekly rest period of 24 (uninterrupted) hrs
baptismal record, or passport showing the 4. 5 days annual service incentive leave with
kasambahays age. pay;
5. 13th month pay;
NOTE: Requirements are mandatory when the 6. SSS benefit;
employment of the kasambahay is facilitated 7. PhilHealth benefit; and
through a private employment agency. 8. Pag-IBIG benefit

It is not a requirement for a kasambahay to be Other rights and privileges of a kasambahay

trained and certified by TESDA prior to
employment. However, the kasambahay is
encouraged to undergo competency assessment
and be certified by TESDA. Training is not a
requirement for competency assessment.
Contract between the Er and kasambahay
The Er and the kasambahay shall enter into a
contract of employment written in a language or
dialect understood by them.
NOTE: The contract need not be notarized. The
Punong Barangay or his/her designated officer may
attest to the contract and serve as witness to its
execution.
1. Freedom from Ers interference in wage
disposal;
2. Standard of treatment;
3. Board, lodging, and medical attendance;
4. Right to privacy;
5. Access to outside communication;
6. Access to education and training;
7. Right to be provided a copy of the
employment contract;
8. Right to Certificate of Employment;
9. Right to form, join, or assist labor
organization;
10. Right to terminate employment based on
just cause; and
11. Right to exercise religious beliefs and
cultural practices.

UNIVERSITY OF SANTO TOMAS

2015 GOLDEN NOTES
70
 LABOR STANDARDS
Basic necessities of a kasambahay
1. At least 3 adequate meals a day, taking into
consideration the kasambahays religious
beliefs and cultural practices;
2. Humane sleeping condition; and
3. Appropriate rest and basic medical
assistance.
NOTE: Though not part of the basic necessities
required to be provided by the Er to the
kasambahay, shampoo, soap, toothpaste etc. may
be provided gratuitously.
Monthly minimum wage of a kasambahay
For those employed in:
1. National Capital Region Php 2,500.00
2. Cities and 1st class municipalities Php
2,000.00
3. Other municipalities Php 1,500.00 (R.A.
10361, Sec. 24).
NOTE: The law provides a mechanism for
increasing the minimum wage of the kasambahay.
Initially, one year from 4 June 2013, the Regional
Tripartite Wages and Productivity Boards
(RTWPB) may review, and if proper, determine and
adjust the minimum wage (Sec. 24, R.A. 10361). The
RTWPB shall coordinate with TESDA on the wage
review and adjustment based on the kasambahays
competency level, in line with the thrust to
professionalize the domestic service sector.
Payment of Wage
Wage shall be in cash and at least be paid once a
month.
NOTE: The Er shall at all times provide the
kasambahay with a copy of the pay slip every pay
day containing the amount paid and all deductions
made, if any. The copies of the pay slip shall be
kept by the Er for a period of 3 years (R.A. 10361,
Sec. 26).
Payment of wages by means of promissory,
voucher, coupon, token, ticket, chit, or anything
other than the cash wage is prohibited.
Daily rest period
The kasambahay is entitled to a total daily rest
period of at least 8 hours.
Prohibition of work beyond 16 hours
The Er cannot require the kasambahay to work
beyond 16 hours at any given workday in return
71
for an equivalent hourly rate. The eight-hour rest
period must be observed.
NOTE: Kasambahays are also entitled to at least
24 consecutive hours of rest in a week. The Er and
the kasambahay may determine the schedule of
the weekly rest period. The Er shall respect the
preferred weekly rest day of the kasambahay on
religious grounds (Sec. 21, R.A. 10361).
Five-day annual service incentive leave
The kasambahay can avail the five day annual
service incentive leave after 1 year of service.
NOTE: If the kasambahay fails to avail of any of
his/her annual SIL, it shall be forfeited and cannot
be converted to cash.
Other agreement that the Er and the
kasambahay can enter into relative to the
kasambahays weekly rest day and service
incentive leave
1. Offsetting a day of absence with a particular
rest day;
2. Waiving a particular rest day in return for an
equivalent daily rate of pay;
3. Accumulating rest days not exceeding 5 days;
4. Adding the accumulated rest days (maximum
of 5 days) to the five-day SIL; and
5. Waiving a particular SIL in return for an
equivalent daily rate of pay.
13th month pay
The kasambahay is entitled to 13th month pay after
1 month of service.
Computation of the 13thmonth pay
In computing the 13thmonth pay, the total basic
wage received in a given calendar year shall be
divided by 12. The amount derived shall be paid
not later than December 24.
SSS, PHILHEALTH, and PAG-IBIG
The kasambahay is covered by SSS, PhilHealth and
Pag-IBIG after 1 month of service.
Ers obligation to register the kasambahay in
SSS, PHILHEALTH, and PAG-IBIG
Under the SSS, PhilHealth, and PAG-IBIG laws, the
Er has the obligation to register the kasambahay
and deduct and remit the required premiums and
contributions. The Er shall incur certain liabilities,
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
including criminal prosecution, if he fails or refuses
to comply with his/her obligations.
Employers liability in case the kasambahay
refuses to be a member of SSS, PHILHEALTH,
and PAG-IBIG
The employer is still liable under the SSS,
PHILHEALTH, and PAG-IBIG laws in case the
kasambahay refuses membership with those
agencies, because it is mandatory and non-
negotiable.
Person liable to pay the SSS premium,
PHILHEALTH and PAG-IBIG contributions of the
kasambahay
GR: The Er shall pay the SSS premium, and
PHILHEALTH and PAG-IBIG contributions of the
kasambahay
XPN: If the wage of the kasambahay is Php
5,000.00 or more, the kasambahay will pay his/her
share in the premiums/contributions.
Provisions protecting Ers of a kasambahay
1. Prohibition against privileged information;
2. Er may require certain pre-employment
documents prior to engagement;
3. Ers are assured of quality services through
DOLE-TESDA training, assessment, and
certification of kasambahay;
4. Forfeiture of 15-day unpaid salary should the
kasambahay leave the residence of the Er
without any justifiable reason; and
5. Right to terminate the employment on
justifiable grounds.
Grounds for termination of contract by the
kasambahay
1. Verbal or emotional abuse of the
kasambahay by the Er or any member of the
household;
2. Inhuman treatment including physical abuse
of the kasambahay by the Er or any member
of the household;
3. Commission of a crime or offense against the
kasambahay by the Er or any member of the
household;
4. Violation by the Er of the terms and
conditions of the employment contract and
other standards set forth under the law;
5. Any disease prejudicial to the health of the
kasambahay, the Er, or member/s of the
household; and
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
72
6. Other causes analogous to the foregoing (R.A.
10361, Sec. 33).
Grounds for termination of contract by the Er
1. Misconduct or willful disobedience by the
kasambahay of the lawful order of the Er in
connection with the formers work;
2. Gross or habitual neglect or inefficiency by
the kasambahay in the performance of
duties;
3. Fraud or willful breach of the trust reposed
by the Er on the kasambahay;
4. Commission of a crime or offense by the
kasambahay against the person of the Er or
any immediate member of the Ers family;
5. Violation by the kasambahay of the terms
and conditions of the employment contract
and other standards set forth under the law;
6. Any disease prejudicial to the health of the
kasambahay, the Er, or member/s of the
household; and
7. Other causes analogous to the foregoing
(R.A. 10361, Sec. 34).
NOTE: Neither the domestic worker nor the Er
may terminate the contract before the expiration
of the term except for grounds provided for in
Secs. 33 and 34 of the Batas Kasambahay.
The domestic worker and the Er may mutually
agree upon written notice to pre-terminate the
contract of employment to end the employment
relationship (R.A. 10361, Sec. 32).
Termination of contract if the duration of
service is not determined in the contract
The kasambahay or the Er may terminate the
contract anytime if the duration of service is not
determined in the contract. Either the Er or the
kasambahay may give notice to end the working
relationship 5 days before the intended date of the
termination of service.
Effect of unjust dismissal by the Er
The kasambahay shall receive the following if
he/she is unjustly dismissed by the Er:
1. Outright payment of earned wage; and
2. Indemnity benefit in the form of wage
equivalent to 15 days work.
Liabilities of a kasambahay who leaves his/her
Er without justifiable reason
1. Forfeiture of wage equivalent to 15 days
work; and
 LABOR STANDARDS
2. Reimbursement of the deployment
expenses, if the employment contract is
terminated within 6 months from
employment.
Right against inspection of his belongings
The Er cannot inspect the belongings of the
kasambahay. However, the Er and the kasambahay
can agree in their employment contract that an
inspection can be made before he/she leaves the
household.
Kasambahay desk officer
In case of non-payment or underpayment of wage
and other labor-related concerns, the kasambahay
can seek assistance to the Kasambahay Desk
Officer situated in their respective barangays or
the nearest DOLE field/provincial/regional office.
Replacement of a kasambahay from a private
employment
The Er can demand from a private employment
agency the replacement of a kasambahay within 1
month from the day the kasambahay reported for
work on the following cases:
1. The kasambahay is found to be suffering
from an incurable or contagious disease, or
mental illness as certified by a competent or
government physician;
2. The kasambahay abandons the job without
justifiable cause, voluntarily resigns,
commits theft or any other analogous acts
prejudicial to the Er or his/her family; or
3. The kasambahay is physically or mentally
incapable of discharging the minimum
requirements of the job, as specified in the
employment contract.
Effect of failure of the private employment
agency to provide a qualified replacement
After one month from receipt of the Ers request
and the private employment agency failed to
provide a qualified replacement, the Er shall be
entitled to a refund of 75% of the fees paid to the
private employment agency.
Responsibilities of the private employment
agency under the law
1. Ensure that the kasambahay is qualified as
required by the Er;
2. Secure the best terms and conditions of
employment for the kasambahay;
73
3. Ensure that the employment agreement
between the kasambahay and the employer
stipulates the terms and conditions of
employment and all the benefits in
accordance with the IRR;
4. Provide a pre-employment orientation
briefing to the kasambahay and the Er about
their rights and responsibilities in
accordance with this IRR;
5. Ensure that the kasambahay is not charged
or required to pay any recruitment or
placement fees;
6. Keep copies of employment contracts and
agreements pertaining to recruited
kasambahay which shall be made available
during inspections or whenever required by
the DOLE or local government officials;
7. Assist the kasambahay in filing his/her
complaints or grievances against the Ers;
8. Cooperate with government agencies in
rescue operations involving abused or
exploited kasambahay; and
9. Assume joint and solidary liability with the
Er for payment of wages, wage-related and
other benefits, including monthly
contribution for SSS, PhilHealth, and Pag-
IBIG membership.
Unlawful acts under the Batas Kasambahay
1. Employment of children below 15 years of
age;
2. Withholding of the kasambahays wages;
3. Interference in the disposal of the
kasambahays wages;
4. Requiring kasambahay to make deposits for
loss or damage;
5. Placing the kasambahay under debt bondage;
and
6. Charging another household for temporarily
performed tasks.
NOTE: Unlawful acts are punishable with an
administrative fine ranging from Php 10,000 to Php
40,000 to be imposed by the DOLE Regional Offices.
Remedies for unlawful acts
The aggrieved party may file the appropriate civil
or criminal action before the regular courts.
Remedy for abused or exploited kasambahay
The law mandates the conduct of immediate rescue
of abused or exploited kasambahay by the
municipal or city social welfare officer or a social
welfare officer from DSWD, in coordination with
the concerned barangay officials. The law sets out
that crimes or offenses committed under the Penal
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Code and other criminal laws shall be filed with the
regular courts.
Q: Erlinda worked as a cook, preparing the
lunch and merienda of the Ees of Remington
Industrial Sales Corp. She worked at the
premises of the company. When Erlinda filed
an illegal dismissal case, Mr. Tan, the managing
director of Remington Corp., claimed that
Erlinda was a domestic helper and not a regular
Ee of the corporation. Mr. Tan argued that it is
only when the househelper or domestic servant
is assigned to certain aspects of the business of
the Er that such househelper or domestic
servant may be considered as such an Ee. Is
Erlinda a domestic or househelper?
rest house staff includes a caretaker, two cooks
and a laundrywoman. All of them are reported
to the SSS as domestic or household Ees of the
resthouse and recreational facility and not of
NBC. Can NBC legally consider the caretaker,
cooks and laundrywoman as domestic Ees of
the rest house and not of NBC? (2000 Bar
Question)
A: No, they are not domestic Ees. They are the Ees
of NBC because the rest house and recreational
facility are business facilities which are for use of
NBCs top executives and clients (Traders Royal
Bank v. NLRC, G.R. No. 127864, December 22, 1999).
EMPLOYMENT OF HOMEWORKERS

A: No. Erlinda is clearly not a househelper. A Homeworkers

househelper or domestic servant under the IRR
of the LC is one who is employed in the Ers home They are those who perform in or about his own
to minister exclusively to the personal comfort and home any processing or fabrication of goods or
enjoyment of the Ers family. A househelper, materials, in whole or in part, which have been
domestic servant or laundrywoman in a home or in furnished directly or indirectly, by an Er and sold
a company staffhouse is different in the sense that thereafter to the latter.
in a corporation or a single proprietorship engaged
in business or industry or any agricultural or Househelpers v. Homeworkers
similar pursuit, service is being rendered in the
staffhouses or within the premises of the business HOUSEHELPERS HOMEWORKERS
of the Er. In such instance, they are Ees of the Performs in or about his
company or Er in the business concerned, entitled own home any
to the privileges of a regular Ee. The mere fact that processing or
the househelper or domestic servant is working Minister to the personal fabrication of goods or
within the premises of the business of the needs and comfort of materials, in whole or in
employer and in relation to or in connection with his Er in the latters part, which have been
its business, as in its staffhouses for its guest or home furnished directly or
even for its officers and Ees, warrants the indirectly, by an Er and
conclusion that such househelper or domestic sold thereafter to the
servant is and should be considered a regular Ee latter.
and not a househelper (Remington Industrial v.
Castaneda, G.R. Nos. 169295-96, Nov. 20, 2006). Er of a homeworker

Q: Albert, a 40-year old Er, asked his domestic
helper, Inday, to give him a private massage.
When Inday refused, Albert showed her Art.
141 of the Labor Code, which says that one of
the duties of a domestic helper is to minister to
the Ers personal comfort and convenience. Is
Indays refusal tenable? (2009 Bar Question)
A: Yes. Indays refusal to give her Er a private
massage is in accordance with law because the
nature of the work of a domestic worker must be in
connection with household chores. Massaging is
not a domestic work.
Q: NBC has a rest house and recreational facility
in the highlands of Tagaytay City for the use of
its top executives and corporate clients. The
Includes any person, natural or artificial who, for
his account or benefit, or on behalf of any person
residing outside the country, directly or indirectly,
or through an Ee, agent contractor, subcontractor
or any other person:
1. Delivers or causes to be delivered, any
goods, articles or materials to be processed
or fabricated in or about a home and
thereafter to be returned or to be disposed
of or distributed in accordance with his
directions.
2. Sells any goods, articles or materials to be
processed or fabricated in or about a home
and then rebuys them after such processing
or fabrication, either by himself or through
some other person.

UNIVERSITY OF SANTO TOMAS

2015 GOLDEN NOTES
74
 LABOR STANDARDS
Duty of the Er in case he contracts with another
in the performance of his work
It shall be the duty of the Er to provide in such
contract that the Ees or homeworkers of the
contractor and the latters subcontractor shall be
paid in accordance with the LC.
Liability of the Er if the contractor or
subcontractor fails to pay the wages or
earnings of his Ees
Er shall be jointly and severally liable with the
contractor or sub-contractor to the workers of the
latter to the extent that such work is performed
under such contract, in the same manner as if the
Ees or homeworkers were directly engaged by the
Er.
Right of industrial homeworkers to form labor
organizations
DO No. 5, replacing Rule XIV of the IRR Book 3 of
the LC, authorizes the formation and registration of
labor organization of industrial homeworkers. It
also makes explicit the Ers duty to pay and remit
SSS, PHILHEALTH and ECC premiums.
Prohibitions against homework
The following shall be prohibited as homework:
1. Explosives, fireworks and similar articles;
2. Drugs and poisons; and
3. Other articles, the processing of which
requires exposure to toxic substances (IRR,
Book III, Rule XIV, Sec. 13).
Prohibition of any deduction from the
homeworkers earnings due to loss or damage
GR: The Er, contractor or subcontractor shall not
make any deduction from the homeworkers
earnings for the value of materials which have
been lost, destroyed, soiled or otherwise damage.
XPNs: Unless the ff. conditions are met:
1. The homeworker is clearly shown to be
responsible for the loss or damage;
2. The Ee is given reasonable opportunity to
show cause why deductions should not be
made;
3. The amount of such deduction is fair and
reasonable and shall not exceed the actual
loss or damages; and
4. The deduction is made at such rate that the
amount deducted does not exceed 20% of
the homeworkers earnings in a week.
75
Q: Josie is the confidential secretary of the
Chairman of the Board of the bank. She is
presently on maternity leave. In an
arrangement where the Chairman of the Board
can still have access to her services, the bank
allows her to work in her residence during her
leave. For this purpose, the bank installed a fax
machine in her residence, and gave her a
cellphone and a beeper. Is Josie a homeworker
under the law? Explain. (2000 Bar Question)
A: No, she is actually an office worker. She is not an
industrial homeworker who accepts work to be
fabricated or processed at home for a contractor,
which work, when finished, will be returned to or
repurchased by said contractor (LC, Art. 155).
APPRENTICES AND LEARNERS
Apprenticeship
It is practical training on the job supplemented by
related theoretical instruction involving a contract
between an apprentice and an Er on an approved
apprenticeable occupation.
Apprentice
Any worker who is covered by a written
apprenticeship agreement with an individual Er or
any of the entities recognized under the LC.
NOTE: GR: Apprenticeship programs shall be
primarily voluntary
XPNs: Compulsory Apprenticeship:
1. National security or economic development
so demand, the President may require
compulsory training
2. Services of foreign technicians are utilized
by private companies in apprenticeable
trades.
Apprenticeable occupation
Any trade, form of employment or occupation
which requires more than three (3) months of
practical training with theoretical instruction
officially endorsed by the tripartite body and
approved for apprenticeship by the TESDA.
On the job training (OJT)
It is practical work experience through actual
participation in productive activities given to or
acquired by an apprentice.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Highly technical industries
Highly technical industries are those which are
engaged in the application of advanced technology.
NOTE: Prior approval by TESDA (formerly DOLE)
of the proposed apprenticeship program is a
condition sine qua non. Otherwise, an apprentice
becomes a regular Ee (Nitto Enterprises v. NLRC,
248 SCRA 654).
Qualifications of an apprentice
1. At least 15 years of age
NOTE: Those below 18 years of age shall not
work in hazardous occupations
2. Physically fit for the occupation
3. Possess vocational aptitude and capacity
4. Possess:
a. The ability to comprehend, and
b. Follow oral and written instructions
5. The company must have an apprenticeship
program duly approved by the DOLE.
NOTE: Trade and industry associations may
recommend to the SLE appropriate educational
requirements for different occupations.
When occupation deemed hazardous
1. Nature of work exposes worker to
dangerous environmental elemental
contaminants or work conditions
2. Workers are engaged in construction work,
logging, fire fighting, mining, quarrying,
blasting, stevedoring, deep-sea fishing, and
mechanized farming
3. Workers are engaged in the manufacture or
handling of explosives and other pyrotechnic
products
4. Workers use, or are exposed to heavy or
power-driven machinery or equipment.
Ers of apprentices
1. Only Ers in highly technical industries and
2. Only in apprenticeable occupations
approved by SLE
Employment status of apprentices
They are contractual workers whose length of
service depends on the term provided for in the
apprenticeship agreement. Thus, the Er is not
obliged to employ the apprentice after the
completion of his training.
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
76
Conditions for employment of an apprentice
1. Should be an apprenticeable trade as
determined by TESDA
2. Prior approval by the DOLE of the proposed
apprenticeship program is a condition sine
qua non before an apprenticeship agreement
can be validly entered into (Nitto Enterprises
v. NLRC, 248 SCRA 654).
NOTE: One of the objectives of Title II (Training
and Employment of Special Workers) of the LC is to
establish apprenticeship standards for the
protection of apprentices. An apprenticeship
program should first be approved by the DOLE
before an apprentice may be hired, otherwise a
person hired will be considered a regular Ee.
(Century Canning Corp. v. CA, 530 SCRA 501)
Period of apprenticeship
Apprenticeship must not exceed 6 months.
NOTE:
1. 2 months/400 hours: Trades or occupations
which normally require 1 year or more for
proficiency
2. 1 month/200 hours: Occupations and jobs
which require more than 3 months but less
than 1 year for proficiency (IRR, Book II, Rule
VI, Sec. 19).
Status of an apprentice after the lapse of the
period of apprenticeship
He is deemed a regular Ee. He cannot be hired as a
probationary Ee since the apprenticeship is deemed
the probationary period.
Compensation of an apprentice
GR: It starts at not less than 75% of the statutory
minimum wage for the 1st 6 months (except OJT);
thereafter, shall be paid in full minimum wage,
including the full COLA.
XPN: Art. 72 of the LC provides that the SLE may
authorize the hiring of apprentices without
compensation whose training on the job is
required:
1. By the school or;
2. By a training program curriculum or;
3. As requisite for graduation or
4. As requisite for board examination.
 LABOR STANDARDS
Rules regarding apprenticeship agreements
Apprenticeship agreements, including the wage
rates of apprentices, shall:
1. Conform to the rules issued by SLE.
2. The period of Apprenticeship shall not
exceed 6 months.
3. Apprenticeship agreements providing for
wage rates below the legal minimum wage,
which in no case shall start below 75% of the
applicable minimum wage, may be entered
into only in accordance with Apprenticeship
programs duly approved by the SLE.
4. The DOLE shall develop standard model
programs of Apprenticeship (IRR, Book II,
Rule VI, Sec. 18).
Every apprenticeship agreement shall be
signed by
1. The Er or his agent, or
2. An authorized representative of any of the
recognized organizations, associations or
groups, and
3. The apprentice.
Apprenticeship agreement with a minor
An apprenticeship agreement with a minor shall be
signed in his behalf by:
1. His parent or guardian, or if the latter is not
available,
2. An authorized representative of the DOLE.
Rules on working scholars
There is no Er-Ee relationship between students on
one hand, and schools, where there is written
agreement between them under which the former
agree to work for the latter in exchange for the
privilege to study free of charge. The student is not
considered an Ee (IRR, Book III, Rule IX, Sec. 14).
Q: Padilla entered into a written agreement
with Gomburza College to work for the latter in
exchange for the privilege of studying in said
institution. His work was confined to keeping
clean the lavatory facilities of the school. One
school day, he got into a fist fight with a
classmate, Monteverde, as a result of which the
latter sustained a fractured arm.
Monteverdefiled a civil case for damages
against him, impleading Gomburza College due
to the latter's alleged liability as his Er. Under
the circumstances, could Gomburza College be
held liable by Monteverde as Padillas
employer? (1997 Bar Question)
77
A: No. Gomburza College is not liable for the acts of
Padilla because there is no Er-Ee relationship
between them. As provided in the IRR of the LC,
"there is no Er-Ee relationship between students
on one hand, and schools, colleges, or universities
on the other, where students work with the latter
in exchange for the privilege to study free of
charge, provided the students are given real
opportunity, including such facilities as may be
reasonable and necessary to finish their chosen
courses under such arrangement."
Procedure for the termination of
apprenticeship
The party terminating shall:
1. Serve a written notice on the other at least 5
days before actual termination,
2. Stating the reason for such decision; and
3. A copy of said notice shall be furnished to
the Apprenticeship Division concerned.
Party which can terminate an apprenticeship
agreement
1. Either party may terminate an agreement
after the apprenticeship period but only for a
valid cause.
2. It may be initiated by either party upon filing
a complaint or upon DOLEs own initiative.
Party which appeal the decision of the
authorized agency of the DOLE
It may be appealed by any aggrieved person to the
SLE within 5 days from receipt of the decision.
NOTE: The decision of the SLE shall be final and
executory.
Principle of Exhaustion of Administrative
Remedies applied in case of breach of
apprenticeship agreement
Exhaustion of Administrative Remedies is a
condition precedent to the institution of an action
for enforcing application of agreement.
Duty of the plant apprenticeship committee
The plant apprenticeship committee shall have the
initial responsibility for settling differences arising
out of Apprenticeship agreement (IRR, Book II, Rule
VI, Sec. 32(b)).
Learners
1. They are persons hired as trainees in semi-
skilled and other industrial occupations
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
2. Which are non-apprenticeable and Learnership v. Apprenticeship
3. Which may be learned through practical
training on the job in a relatively short BASIS Learnership Apprenticeship
period of time
4. Which shall not exceed 3 months Training on the
Training in
5. Whether or not such practical training is job in semi-
trades which
supplemented by theoretical instructions Nature skilled and other
are
(IRR, Book II, Rule VII, Sec. 1(a)). industrial
apprenticeable,
occupation or
that is, practical
Employment of learners trades which are
training on the
non-
job
Learners may be employed when: apprenticeable
supplemented
and which may
by related
1. No experienced worker is available be learned thru
theoretical
2. It is necessary to prevent curtailment of practical training
instruction for
employment opportunities; and on the job in a
more than 3
3. Employment does not create unfair relatively short
months.
competition in terms of labor costs or impair period of time.
or lower working standards. Duration of Min: 3 months
training Max: 3 months
Max: 6 months
Contents of a learnership agreement
With
Commitment commitment to
Any Er desiring to employ learners shall enter into
to employ employ the
a learnership agreement with them, which
learner as a No commitment
agreement shall include:
regular Ee if he to hire
desires upon
1. The names and addresses of the learners;
completion of
2. The duration of the learnership period,
learnership
which shall not exceed 3 months;
3. The wages or salary rates of the learners Considered a
which shall begin at not less than 75% of the regular Ee if pre-
applicable minimum wage; and In case of termination
4. A commitment to employ the learners if they pre- occurs after2 Worker not
so desire, as regular Ees upon completion of termination months of considered as
the Learnership. of contract training and the regular Ee.
dismissal is
Employment of minors as learners without fault of
the Learner.
A learner must be at least 15 years of age. Highly technical
Semi- industries and
NOTE: Those below 18 years of age shall not work skilled/Industrial only in
in hazardous occupations. Coverage
occupations industrial
occupation
Persons who may employ learners
There is a list of
Only Ers in semi-skilled and other industrial List learnable trades No list
occupations which are non-apprenticeable may by TESDA
employ learners. Requires Requires
Written learnership apprenticeship
Pre-termination of Learnership contract; agreement agreement agreement
regular employment

If training is terminated by the Er before the end of

the stipulated period through no fault of the
Learners, they are deemed regular Ees (IRR, Book
II, Rule VII, Sec. 4). Provided they have already been
trained for 2 months.

UNIVERSITY OF SANTO TOMAS

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 LABOR STANDARDS
PERSONS WITH DISABILITY qualified disabled worker entitled to the same
(R.A. 7277 as amended by R.A. 9442) treatment as qualified able-bodied workers
(Bernardo v. NLRC, G.R. No. 122917, July 12, 1999).
DEFINITION
RIGHTS OF PERSONS WITH DISABILITY
Persons with disability (PWD)
Rights and privileges of PWD
Those whose earning capacity is impaired by:
1. Physical deficiency 1. Equal opportunity for employment
2. Age 2. Sheltered employment (the Government shall
3. Injury endeavour to provide them work if suitable
4. Disease employment for disabled persons cannot be
5. Mental deficiency found through open employment)
6. Illness 3. Apprenticeship
4. Vocational rehabilitation (means to develop
Employment of PWD the skills and potentials of disabled workers
and enable them to compete in the labor
1. When their employment is necessary to market)
prevent curtailment of employment 5. Vocational guidance and counselling
opportunities; and
2. When it will not create unfair competition in PROHIBITIONS ON DISCRIMINATION AGAINST
labor costs or lower working standards (LC, PERSONS WITH DISABILITY
Art. 79).
Prohibition on discrimination against PWD
Employment period of PWD
No disabled person shall be denied access to
There is no minimum or maximum duration. It opportunities for suitable employment. A qualified
depends on the agreement but it is necessary that disabled employee shall be subject to the same
there is a specific duration stated. terms and conditions of employment and the same
compensation, privileges, benefits, fringe benefits,
PWD as apprentices or learners incentives or allowances as a qualified able-bodied
person.
PWD may be hired as apprentices or learners if
their disability is not such as to effectively impede NOTE: 5% of all casual emergency and contractual
the performance of job operations in the particular positions in the Departments of Social Welfare and
occupations for which they are hired (LC, Art. 81). Development; Health; Education, Culture and
Sports; and other government agencies, offices or
Persons with disability can be a regular Ee corporations engaged in social development shall
be reserved for disabled persons (R.A. 7277).
Persons with disability can be a regular Ee if work
is usually or necessarily desirable to the business INCENTIVES FOR EMPLOYERS
(Bernardo v. NLRC, G.R No. 122917, July 12, 1999).
Incentives of Er who are employing disabled
Persons who may employ persons with workers
disability
1. Entitled to an additional deduction, from
Ers in all industries: Provided, the disability is not their gross income, equivalent to 25% of the
such as to effectively impede the performance of total amount paid as salaries and wages to
job operations in the particular occupations for disabled persons: Provided, however, That
which they are hired. such entities present proof as certified by the
DOLE that disabled persons are under their
Not all workers with a disability are considered employ: Provided further, That the disabled
disabled workers Ee is accredited with the DOLE and the
Department of Health as to his disability,
The mere fact that a worker has a disability does not skills and qualifications.
make him a disabled worker because his disability 2. Private entities that improve or modify their
may not impair his efficiency or the quality of his physical facilities in order to provide
work. If despite his disability he can still efficiently reasonable accommodation for disabled
perform his work, he would be considered a persons shall also be entitled to an

UNIVERSITY OF SANTO TOMAS

79 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
additional deduction from their net taxable
income, equivalent to 50% of the direct costs
of the improvements or modifications (R.A.
7277, Sec. 8).

Persons with Disability v. Differently Abled

Persons with
Differently Abled
Disability

Refers to all suffering from

restriction of different
Earning capacity is abilities as a result of
impaired by age, or mental, physical or sensory
physical or mental impairment to perform an
deficiency or injury. activity in the manner or
within range considered
normal for a human being.

Covers all activities or

Covers only workers.
endeavors.

Basis: Basis: range of activity

loss/impairment of which is normal for a
earning capacity. human being.

Restriction due to
Loss due to injury or
impairment of
physical or mental
mental/physical/ sensory
defect or age.
defect.

If hired, entitled to
75% of minimum
wage. If qualified, entitled to all
terms and conditions as
qualified able-bodied
Subject to definite person.
periods of
employment.

No restrictions on
Employable only
employment.
when necessary to
prevent curtailment
of employment
Must get equal opportunity
opportunity.
and no unfair competition.

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 TERMINATION OF EMPLOYMENT
TERMINATION OF EMPLOYMENT
EMPLOYER-EMPLOYEE RELATIONSHIP
Existence of an employment relationship
Employment relationship is determined by law and
not by contract (Insular Life Assurance Co. Ltd. v.
NLRC, G.R. No. 119930, March 12, 1998).
NOTE: Taxi or jeepney drivers under the
boundary system are Ees of the taxi or jeepney
owners/operators; so also the passenger bus
drivers and conductors (Jardin v. NLRC and
Goodman Taxi, G.R. No. 119268, February 23, 2000).
Er-Ee relation is a question of law
An employment contract which stipulates that
there is no Er-Ee relationship between the parties
is invalid. The existence of an Er-Ee relation is a
question of law and being such, it cannot be made
the subject of agreement (Tabas v. California
Manufacturing Co., G.R. No. L-80680, January 26,
1989).
Q: Banco de Manila and the Ang Husay
Janitorial and Pest Control Agency entered into
an Independent Contractor Agreement with the
usual stipulations specifically, the absence of
Er- Ee relationship, and the relief from liability
clauses. Can the bank, as a client, and the
agency, as an independent contractor, stipulate
that no Er-Ee relationship exists between the
bank and the employees of the Agency who may
be assigned to work in the Bank? Reason.
A: Yes, they can stipulate provided that the
relationship is job contracting. However the
stipulation cannot prevail over the facts and the
laws. The existence of Er-Ee relationship is
determined by facts and law and not by stipulation
of the parties.
It is axiomatic that the existence of an Er-Ee
relationship cannot be negated by expressly
repudiating it in the management contract and
providing therein that the Ee is an independent
contractor when the terms of the agreement
clearly show otherwise. For the employment status
of a person is defined and prescribed by law and
not by what the parties say it should be. In
determining the status of the management
contract, the "four-fold test" on employment has to
be applied (Insular Life Assurance Co.. Ltd. v. NLRC,
G.R. No. 119930, March 12, 1998).
Q: ASIA executed a 1-year contract with the
Baron Hotel for the former to provide the latter
81
with 20 security guards to safeguard the
persons and belongings of hotel guests, among
others. The security guards filled up Baron
application form and submitted the executed
forms directly to the Security Department of
Baron. The pay slips of the security guards bore
Baron's logo and showed that Baron deducted
the amounts for SSS premiums, medicare
contributions and withholding taxes from the
wages of the secutiry guards. The assignments
of security guards, who should be on duty or on
call, promotions, suspensions, dismissals and
award citations for meritorious services were
all done upon approval by Baron's chief
security officer. After the expiration of the
contract with ASIA, Baron did not renew the
same and instead executed another contract for
security services with another agency. ASIA
placed the affected security guards on "floating
status" on "no work no pay" basis. Having been
displaced from work, the ASIA security guards
filed a case against Baron for illegal dismissal,
OT pay, minimum wage differentials, vacation
leave and sick leave benefits, and 13thmonth
pay. Baron denied liability alleging that ASIA is
the Er of the security guards and therefore,
their complaint for illegal dismissal and
payment of money claims should be directed
against ASIA. Nevertheless, Baron filed a Third
Party Complaint against ASIA. Is there an Er-Ee
relationship between the Baron, on one hand,
and the ASIA security guards, on the other
hand? Explain briefly. (1999 Bar Question)
A: Yes. As a general rule, the security guards of a
private security guard agency are the Ees of the
latter and not of the establishment that has entered
into a contract with the private security guard
agency for security services. But under the facts in
the question, Baron Hotel appear to have hired the
security guards, paid their wages, have the power
to promote, suspend or dismiss the security guards
and the power of control over them, in other
words, the security guards were under orders of
Baron Hotel as regard their employment. Because
of the above-mentioned circumstances, Baron
Hotel is the Er of the security guards.
Q: Assuming that ASIA is the Er, is the act of
ASIA in placing the security guards on "floating
status" lawful? Why?
A: Yes. It is lawful for a private security guard
agency to place its security guard on a "floating
status" if it has no assignment to give to said
security guards. But if the security guards are
placed on a "floating status" for more than 6
months, the security guards may consider
themselves as having been dismissed.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Q: Lacson was one of more than 100 Ees who
were terminated from employment due to the
closure of LBM Construction Corporation. LBM
was a sister company of Lastimoso
Construction, Inc. and RL Realty & Devt Corp.
All three entities formed what came to be
known as the Lastimoso Group of Companies.
The three corporations were owned and
controlled by members of the Lastimoso family;
their incorporators and directors all belonged
to the Lastimoso family. The three corporations
were engaged in the same line of business,
under one management, and used the same
equipment including manpower services.
Lacson and his co-Ees filed a complaint with the
Labor Arbiter against LBM, RL Realty and
Lastimoso Construction to hold them jointly
and severally liable for back wages and
separation pay. Lastimoso Construction, Inc. RL
Realty & Development Corporation interposed
a Motion to Dismiss contending that they are
juridical entitles with distinct and separate
personalities from LBM Construction
Corporation and therefore, they cannot be held
jointly and severally liable for the money
claims of workers who are not their employees.
Rule on the motion to dismiss. Should it be
granted or denied? Why? (1999 Bar Question)
A: It is very clear that even if LBM Construction
company, Lastimoso Construction Company, Inc.
and RL Realty & Devt Corp. all belong to the
Lastimoso family and are engaged in the same line
of business under one management and used the
same equipment including manpower services,
these corporations were separate juridical entities.
Thus, only the LBM Construction Corporation is the
Er of Teofilo Lacson. The other corporation do not
have any Er-Ee relations with Lacson. The case in
question does not include any fact that would
justify piercing the veil of corporate fiction of the
other corporations in order to protect the rights of
workers. In a case (Concept Builders, Inc. v. NLRC,
G.R. No. 108734, May 29,1996) the SC ruled that it is
a fundamental principle of corporation law that a
corporation is an entity separate and distinct from
its stockholders and from other corporations to
which it may be connected. But this separate and
distinct personality of a corporation is merely a
fiction created by law for convenience and to
promote justice. So, when the notion of separate
juridical personality is used to defeat public
convenience, justify wrong, protect fraud or defend
crime, or is used as a device to defeat the labor
laws, this separate personality of the corporation
maybe disregarded or the veil of corporate fiction
pierced.
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
82
FOUR- FOLD TEST
Factors determining the existence of an
employer-employee relationship
The fourfold test (indicia of determination):
1. Selection and engagement of the
employee;
2. Payment of wages;
3. Power of dismissal; and
4. Power of control (Azucena, Vol. I).
Control test
The control test assumes primacy in the overall
consideration. There is an Er-Ee relationship when
the person for whom the services are performed
reserves the right to control not only the end
achieved but also the manner and means used to
achieve that end (Television and Production
Exponents Inc. v. Servana, 542 SCRA 578).
Kinds of control exercised by an Er
Not every form of control establishes employer-
employee relationship. A demarcation line should
be drawn between: (a) rules that merely serve as
guidelines which only promote the result, and (b)
rues that fix the methodology and bind or restrict
the party hired to the use of such means or
methods. Inder the first category, there exists no
employer-employee relationship. In the second
category, it has the effect of establishing employer-
employee relationship (Insular life v. NLRC, 179
SCRA 439; Consulta v. CA, G.R. No. 145443, March 18,
2005).
NOTE: However, in certain cases the control test is
not sufficient to give a complete picture of the
relationship between the parties, owing to the
complexity of such a relationship where several
positions have been held by the worker. The better
approach is to adopt the two-tiered test (Francisco
v. NLRC, G.R. No. 170087, August 31, 2006).
This two-tiered test would provide us with a
framework of analysis, which would take into
consideration the totality of circumstances
surrounding the true nature of the relationship
between the parties. This is especially appropriate
in this case where there is no written agreement or
terms of reference to base the relationship on and
due to the complexity of the relationship based on
the various positions and responsibilities given to
the worker over the period of the latters
employment (Francisco v. NLRC, G.R. No. 170087,
August 31, 2006).
 TERMINATION OF EMPLOYMENT
Q: The Pizza Corporation (PizCorp) and Ready
Supply Cooperative (RSC) entered into a
"service agreement" where RSC in
consideration of service fees to be paid by
PizCorp's will exclusively supply PizCorp with a
group of RSC motorcycle-owning cooperative
members who will henceforth perform
PizCorp's pizza delivery service. RSC assumes
under the agreement --- full obligation for the
payment of the salaries and other statutory
monetary benefits of its members deployed to
PizCorp. The parties also stipulated that there
shall be no Er-Ee relationship between PizCorp
and the RSC members. However, if PizCorp is
materially prejudiced by any act of the delivery
crew that violates PizCorps directives and
orders, PizCorp can directly impose
disciplinary actions on, including the power to
dismiss, the erring RSC member/s. (2008 Bar
Question)
a. Is the contractual stipulation that there
is no Er-Ee relationship binding on
labor officials?
b. Based on the test/s for Er-Ee
relationship, determine the issue of
who is the Er of the RSC members.
A:
a. No. The contractual stipulation that there is no
Er-Ee relationship between PizCorp and the RSC
members is not binding on labor officials because
what determines the existence or non-existence of
employer-employee relationship is the actual
factual situation between PizCorp and RSC
members and not what is stipulated in the contract.
Alternative Answer : The agreement between
PizCorp and RSC, that there is, or will not be, an Er-
Ee relationship between the RSC motorcycle-
owning cooperative members performing delivery
services is not binding on labor officials because
the test of employer-employee relationship is law
and not agreement between the parties. (Insular
Life, etc. v. NLRC, 287 SCRA 476).
b. Using the control test, the Er of the RSC members
is PizCorp. According to the facts, the RSC members
are supposed to make their deliveries in
accordance with PizCorp directives and orders. In
addition, the PizCorp can directly impose
disciplinary sanction, including the power to
dismiss the RSC members.
Q: Genesis entered into a Careers Agent
Agreement with EmoLife Insurance Company, a
domestic corporation engaged in insurance
business. In the Agreement, it provides that the
agent is an independent contractor and nothing
therein shall be construed or interpreted as
creating an Er-Ee relationship. It further
provides that the agent must comply with three
83
requirements: (1) compliance with the
regulations and requirements of the company;
(2) maintenance of a level of knowledge of the
company's products that is satisfactory to the
company; and (3) compliance with a quota of
new businesses. However, EmoLife insurance
company terminated Genesis services. Genesis
filed an illegal dismissal complaint alleging
therein that an Er-Ee relationship exists and
that he was illegally dismissed. Is he an
employee of the Insurance Company?
A: No. Genesis is not an Ee of EmoLife Insurance
Company. Generally, the determinative element is
the control exercised over the one rendering the
service. The concept of control in LC has to be
compared and distinguished with control that
must necessarily exist in a principal-agent
relationship. The Er controls the Ee both in the
results and in the means and manner of achieving
this result. The principal in an agency relationship,
e.g. insurance agent, on the other hand, also has the
prerogative to exercise control over the agent in
undertaking the assigned task based on the
parameters outlined in the pertinent laws. In the
present case, the Agreement fully serves as grant of
authority to Genesis as EmoLifes insurance agent.
This agreement is supplemented by the companys
agency practices and usages, duly accepted by the
agent in carrying out the agency. Foremost among
these are the directives that the principal may
impose on the agent to achieve the assigned tasks,
to the extent that they do not involve the means
and manner of undertaking these tasks. The law
likewise obligates the agent to render an account;
in this sense, the principal may impose on the
agent specific instructions on how an account shall
be made, particularly on the matter of expenses
and reimbursements. To these extents, control can
be imposed through rules and regulations without
intruding into the labor law concept of control for
purposes of employment (Gregorio Tongko v.
ManuLife Insurance Company, G.R. No. 167622, June
29, 2010).
Two-tiered test
1. The putative Ers power to control the Ee
with respect to the means and methods by
which the work is to be accomplished (Four-
fold test);
2. The underlying economic realities of the
activity or relationship (economic reality
test).
The existence or non-existence of the Er-Ee
relationship is commonly determined by
examination of certain factors or aspects of the
relationship, as follows:
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
1. The manner of selection and engagement of
the putative employee;
2. The mode of payment of wages;
3. The presence or absence of the power of
dismissal; and
4. The presence or absence of a power to
control the putative employees conduct
(Hijos De F. Escano, Inc. v. NLRC, G.R. No.
59229. April 22, 1991I, i.e., the power to
control the employee with respect to the
means and methods by which the work is to
be accomplished.
To bolster the payment of wages and control test,
the existing economic conditions prevailing
between the parties, like the inclusion of the Ee in
the payrolls (Sevilla v. CA, G.R. Nos. 44182-3, April
15, 1988), submission of his name with the SSS,
PAG-IBIG, PhilHealth, otherwise known as the
economic test, are also applied in determining Er-
Ee relationship (Poquiz, Vol. I).
Proper standard for economic dependence
The proper standard is whether the worker is
dependent on the alleged Er for his continued
employment in that line of business.
The determination of the relationship between Er
and Ee depends upon the circumstances of the
whole economic activity, such as:
1. The extent to which the services performed
are an integral part of the Ers business
2. The extent of the workers investment in
equipment and facilities;
3. The nature and degree of control exercised
by the Er;
4. The workers opportunity for profit and loss;
5. The amount of initiative, skill, judgment, or
foresight required for the success of the
claimed independent enterprise;
6. The permanency and duration of the
relationship between the worker and Er; and
7. The degree of dependency of the worker
upon the Er for his continued employment in
that line of business (Francisco v. NLRC, G.R.
No. 170087, August 31, 2006).
Application of the four-fold test and the two-
tiered test
Present Philippine law recognizes a two-tiered test.
The first tier of the test is the four-fold test. The
second tier is the economics of the relationship
test. But the latter test is used if and only if there is
going to be harshness in the results because of the
strict application of the four-fold test (Francisco v.
NLRC, G.R. No. 170087, August 31, 2006).
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
84
KINDS OF EMPLOYMENT
PROBATIONARY EMPLOYMENT
Probationary employment
Employment where the Ee, upon his engagement:
1. Is made to undergo a trial period
2. During which the Er determines his fitness
to qualify for regular employment,
3. Based on reasonable standards made known
to the Ee at the time of engagement (IRR,
Book VI, Rule I, Sec 6).
Characteristics of probationary employment
1. It is an employment for a trial period;
2. It is a temporary employment status prior to
regular employment;
3. It arises through a contract with the
following elements:
a. The Ee must learn and work at a
particular type of work
b. Such work calls for certain qualifications
c. The probation is fixed
d. The Er reserves the power to terminate
during or at the end of the trial period
e. And if the Ee has learned the job to the
satisfaction of the Er, he becomes a
regular Ee.
Rules on probationary employment
1. Er shall make known to the Ee at the time he
is hired, the standards by which he will
qualify as a regular Ee;
2. An Ee allowed to continue work after the
probationary period shall be considered a
regular Ee;
3. During the probationary period, the Ee
enjoys security of tenure; his services can
only be terminated for just or authorized
causes.
Period of probationary employment
GR: It shall not exceed 6 months.
XPNs:
1. Covered by an Apprenticeship or
Learnership agreement stipulating a
different period
2. Voluntary agreement of parties (especially
when the nature of work requires a longer
period)
3. The Er gives the Ee a second chance to pass
the standards set (Mariwasa Manufacturing,
 TERMINATION OF EMPLOYMENT
Inc. v. Leogardo, Jr., G.R. No. 74246, January
26, 1989).
4. When the same is required by the nature of
the work, e.g. the probationary period set for
professors, instructors and teachers is 3
consecutive years of satisfactory service
pursuant to DOLE Manual of Regulations for
Private Schools.
5. When the same is established by company
policy.
NOTE: Period of probation shall be reckoned from
the date the Ee actually started working [IRR, Book
VI, Rule I, Sec.6(b)]. Probationary Ees may be
dismissed for cause before end of the probationary
period.
After the lapse of the probationary period (6
months), Ee becomes regular.
Purpose of the probation period
The purpose of the probation period is to afford
the Er an opportunity to observe the fitness of a
probationary Ee at work.
Extension of the probationary period beyond
six months
The Er and Ee may validly agree to extend the
probationary period beyond six months. Such an
extension may be lawfully agreed upon, despite the
restrictive language of Art. 281. A voluntary
agreement extending the original probationary
period to give the Ee a second chance to pass the
probation standards constitutes a lawful exception
to the statutory limit (Mariwasa Manufacturing,
Inc. v. Leogardo, Jr., G.R. No. 74246, January 26,
1989).
NOTE: By voluntarily agreeing to such an
extension, the Ee waived any benefit attaching to
the completion of the period if he still failed to
make the grade during the period of extension
(Mariwasa Mfg. Inc. v. Hon. Leogardo, G.R. No.
74246, January 26, 1989).
Instances when extension of probationary
period is allowed
Extension is allowed only when:
1. Nature of the job requires extensive training,or
2. If it is a company policy that the period of
probationary employment should be an
extended period
NOTE: The extension of period should always be
reasonable; Such that, the nature of the work so
85
requires and that it is the amount of time required
for an ordinary worker to learn the job.
Essence of the prohibition on double or
successive probation
The evil sought to be prevented is to discourage
scheming Ers from using the system of double or
successive probation to circumvent the mandate of
the law on regularization and make it easier for
them to dismiss their Ees (Holiday Inn Manila v.
NLRC, G.R. No. 109114, September 14, 2003).
Q: Michelle Miclat was employed on a
probationary basis as marketing assistant by
Clarion Printing House but during her
employment she was not informed of the
standards that would qualify her as a regular
Ee. 30 days after, Clarion informed Miclat that
her employment contract had been terminated
without any reason. Miclat was informed that
her termination was part of Clarions cost-
cutting measures. Is Miclat considered as a
regular Ee and hence entitled to its benefits?
A: Yes. In all cases of probationary employment,
the Er shall make known to the Ee the standards
under which he will qualify as a regular Ee at the
time of his engagement. Where no standards are
made known to the Ee at that time, he shall be
deemed a regular Ee. In the case at bar, she was
deemed to have been hired from day one as a
regular Ee (Clarion Printing House Inc., v. NLRC, G.R.
No. 148372, June 27, 2005).
Obligation of the Er to his probationary Ees
There is obligation on the part of Er to inform
standards for regularization at the time of
engagement. The failure to inform has the effect
that upon the expiry of the probationary
employment, with or without the period provided
for in the contract, the worker is deemed to be
regular.
Q: Middleby Phils. Corp. hired Alcira as
engineering support services supervisor on a
probationary basis for six months. Apparently
unhappy with Alciras performance, Middleby
terminated his services. Alcira contends that he
was already a regular Ee when his employment
was terminated. According to Alciras
computation, since Art. 13 of the NCC provides
that 1 month is composed of 30 days, 6 months
totaling 180 days, then his 180th day would fall
on Nov. 16, 1996 making him a regular Ee
before his termination. Is the contention of the
petitioner in the computation of six months
correct?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
A: No, the computation of the 6-month
probationary period is reckoned from the date of
appointment up to the same calendar date of the
6th month following. In short, since the number of
days in each particular month was irrelevant,
Alcira was still a probationary Ee when Middleby
opted not to regularize him on Nov. 20, 1996
(Alcira v. NLRC, G.R. No. 149859, June 9, 2004).
NOTE: In Mitsubishi Motors v. Chrysler Phils. Labor
Union, G.R. No. 148738, June 29, 2004, the SC ruled
in this wise:
Applying Art. 13 of the NCC, the
probationary period of 6-months consists of
180 days. This is in conformity with Art.
13(1) of the NCC. The number of months in
the probationary period, 6, should then be
multiplied by the number of days within a
month, 30; hence, the period of 180 days. As
clearly provided for the in last par. of Art.
13, in computing a period, the first day shall
be excluded and the last day included. Thus,
the 180 days commenced on May 27, 1996,
and ended on Nov. 23, 1996. The
termination letter dated Nov. 25, 1996 was
served on Paras only on Nov. 26, 1996. He
was, by then already a regular Ee of the
company under Art. 281 of the LC.
How to resolve the conflict between the Alcira
and Mitsubishi Motors case:
1. Statutory Construction The latter case
prevails (Mitsubishi Motors); or
2. Rule more favorable to the Ee Use the
computation which would amount to
granting the subject Ee regular employment
status (based on Constitutional and statutory
provisions for the liberal interpretation of
labor laws)
Instances when a probationary Ee is deemed to
be a regular Ee
1. If he is allowed to work after a probationary
period (LC, Art. 281).
2. If no standards, under which he will qualify
as a regular Ee, are made known to him at
the time of his engagement [IRR, Book VI,
Rule I, Sec. 6(d)].
Grounds for terminating a probationary
employment
1. Just/authorized causes
2. When he fails to qualify as a regular Ee in
accordance with reasonable standards made
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
86
known by the Er to the Ee at the time of his
engagement (ICMC v. NLRC, G.R. No. 72222,
January 30, 1989; LC, Art. 281).
NOTE: If Pre-termination of probationary contract
is due to the valid causes, the Er is not liable to pay
the monetary value of the unexpired portion of the
employment.
While probationary Ees do not enjoy permanent
status, they are afforded the security of tenure
protection of the Constitution. Consequently, they
cannot be removed from their positions unless for
cause. Such constitutional protection, however,
ends upon the expiration of the period stated in
their probationary contract of employment.
Thereafter, the parties are free to renew the
contract or not (CSA v. NLRC, G.R. No. 87333,
September 6, 1991).
Limitations on the Ers power to terminate a
probationary employment contract
1. The power must be exercised in accordance
with the specific requirements of the
contract;
2. If a particular time is prescribed, the
termination must be within such time and if
formal notice is required, then that form
must be used;
3. The Ers dissatisfaction must be real and in
good faith, not feigned so as to circumvent
the contract or the law; and
4. There must be no unlawful discrimination in
the dismissal.
NOTE: The probationary Ee is entitled to
procedural due process prior to dismissal from
service.
Q: Ron Cruz was employed as gardener by
Manila Hotel on probation status effective
Sept. 22, 1976. The appointment signed by Cruz
provided for a 6 month probationary period.
On Mar. 20, 1977, or a day before the expiration
of the probationary period, Cruz was promoted
to lead gardener position. On the same day,
Cruz position was abolished by Manila Hotel
allegedly due to economic reverses or business
recession, and to salvage the enterprise from
imminent danger of collapse. Was Cruz illegally
dismissed?
A: Yes. There is no dispute that as a probationary
Ee, Cruz had but limited tenure. Although on
probationary basis, however, Cruz still enjoys the
constitutional protection on security of tenure.
During his tenure of employment, therefore, or
 TERMINATION OF EMPLOYMENT
before his contract expires, Cruz cannot be
removed except for cause as provided for by law.
What makes Cruz dismissal highly suspicious is
that it took place at a time when he needs only but
a day to be eligible as a regular Ee. That he is
competent finds support in his being promoted to a
lead gardener in so short span of less than 6
months. By terminating his employment or
abolishing his position with but only one day
remaining in his probationary appointment, the
hotel deprived Cruz of qualifying as a regular Ee
with its concomitant rights and privileges (Manila
Hotel Corp. v. NLRC, G.R. No. L-53453, January 22,
1986).
Period of probationary employment of private
school teachers
The probationary employment of academic
teaching personnel shall not be more than a period
of 6 consecutive semesters or 9 consecutive
trimesters of satisfactory service, as the case may
be (The Manual of Regulations for Private Higher
Education, Sec. 117).
NOTE: An academic teaching personnel, who does
not possess the minimum academic qualifications
under Section 35 and 36 of the Manual of
Regulations for Private Higher Education shall be
considered as a part-time Ee, and therefore can not
avail of the status and privileges of a probationary
employment. A part-time Ee cannot acquire a
regular permanent status, and hence, may be
terminanted when a qualified teacher becomes
available (Manual of Regulations for Provate Higher
Education).
Q: Colegio de San Agustin (CSA) hired Gela Jose
as a grade school classroom teacher on a
probationary basis for SY 84 85. Her
contract was renewed for SYs 85-86 and 86-
87. On Mar. 24, 87, the CSA wrote the Gela that
"it would be in the best interest of the students
and their families that she seek employment in
another school or business concern for next
school year." Notwithstanding the said notice,
the CSA still paid Gela her salary for April 15 to
May 15, 1987. On April 6, 87, Gela wrote the
CSA and sought reconsideration but she
received no reply. Thereafter, she filed a
complaint for illegal dismissal. Was Gela
illegally dismissed?
A: No. The Faculty Manual of CSA underscores the
completion of three years of continuous service at
CSA before a probationary teacher acquires tenure.
Hence, Gela cannot claim any vested right to a
permanent appointment since she had not yet
87
achieved the prerequisite 3-year period under the
Manual of Regulation for Private Schools and the
Faculty Manual of CSA.
In the instant case where the CSA did not wish to
renew the contract of employment for the next
school year, Gela has no ground to protest. She was
not illegally dismissed. Her contract merely
expired (CSA v. NLRC, G.R No. 87333, September 6,
1991).
Q: During their probationary employment,
eight employees were berated and insulted by
their supervisor. In protest, they walked out.
The supervisor shouted at them to go home
and never to report back to work. Later, the
personnel manager required them to explain
why they should not be dismissed from
employment for abandonment and failure to
qualify for the positions applied for. They filed
a complaint for illegal dismissal against their
Er. As the Labor Arbiter, how will you resolve
the case? (2006 Bar Question)
A: As the LA, I will resolve the case in favor of the
8 probationary Ees due to the following:
1. Probationary Ees also enjoy security of
tenure ( Biboso v. Victoria Milling, G.R.No.
L-44360, March 31, 1977).
2. In all cases involving Ees on probationary
status, the Er shall make known to the Ee
at the time he is hired, the standards by
which he will qualify for the positions
applied for.
3. The filing of the complaint for illegal
dismissal effectively negates the Ers
theory of abandonment (Rizada v. NLRC,
G.R. No. 96982, September 21, 1999).
4. The order to go home and not to return to
work constitutes dismissal from
employment.
5. The 8 probationary Ees employment were
terminated without just cause and
without due process.
In view of the foregoing, I will order reinstatement
to their former positions without loss of seniority
rights with full back wages, plus damages and
attorneys fees.
REGULAR EMPLOYMENT
Types of regular employment
1. An employment shall be deemed to be
regular where the Ee has been engaged to
perform activities which are usually
necessary or desirable in the usual business
or trade of the Er, the provisions of written
agreements to the contrary notwithstanding
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
and regardless of the oral agreements of the
parties [IRR, Book VI, Rule I, Sec. 5 (a)].
(Nature of work)
2. Any Ee who has rendered at least one year of
service, whether such service is continuous
or broken, shall be considered a regular Ee
with respect to the activity in which he is
employed and his employment shall
continue while such activity exists [IRR, Book
VI, Rule I, Sec. 5 (b)]. (Years of service)
NOTE: Regularization is not a management
prerogative; rather, it is the nature of employment
that determines it. It is a mandate of the law (PAL
v. Pascua, G.R. No. 143258, August 15, 2003).
Regular employment does not mean permanent
employment. A probationary Ee becomes a regular
Ee after 6 months. The service of a regular Ee may
only be terminated for just/authorized causes.
The practice of entering into employment contracts
which would prevent the workers from becoming
regular should be struck down as contrary to
public policy and morals (Universal Robina Corp. v.
Catapang, G.R. No. 164736, October 14, 2005).
Tests to determine regular employment
1. The primary standard of determining
regular employment is the reasonable
connection between the particular activity
performed by the Ee to the usual trade or
business of the Er. The test is whether the
former is usually necessary or desirable in
the usual business or trade of the Er (De
Leon v. NLRC, G.R. No. 70705, August 21,
1989).
NOTE: The connection can be determined by
considering the nature of the work
performed and its relation to the scheme of
the particular business or trade in its
entirety (Highway Copra Traders v. NLRC,
G.R. No. 108889, July 30, 1998).
2. Also, the performance of a job for at least a
year is sufficient evidence of the jobs
necessity if not indispensability to the
business. This is the rule even if its
performance is not continuous and merely
intermittent. The employment is considered
regular, but only with respect to such
activity and while such activity exists
(Universal Robina Corp. v. Catapang, G.R. No.
164736, October 14, 2005).
NOTE: The status of regular employment attaches
to the casual Ee on the day immediately after the
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
88
end of his first year of service. The law does not
provide the qualification that the Ee must first be
issued a regular appointment or must first be
formally declared as such before he can acquire a
regular status (Aurora Land Projects Corp. v. NLRC,
G.R. No. 114733, January 2, 1997).
Mode of compensation is not determinative of
regular employment
While the Ees mode of compensation was on a per
piece basis the status and nature of their
employment was that of regular Ees (Labor
Congress of the Phils v. NLRC, G.R. No. 123938, May
21, 1998).
NOTE: Seafarers cannot be considered as regular
Ees. Their employment is governed by the
contracts they sign every time they are hired and
their employment terminated when the contract
expires. Their employment is fixed for a certain
period of time (Ravago v. Esso Eastern Maritime
Ltd., G.R. No. 158324, March 15, 2005).
In case of OFWs, Art280 of the LC does not apply.
Q: Moises was employed by La Tondea at the
maintenance section of its Engineering
Department paid on a daily basis through petty
cash vouchers. His work consisted mainly of
painting company building and equipment and
other odd jobs relating to maintenance. After a
service of more than 1 year, Moises requested
that he be included in the payroll of regular
workers, instead of being paid through petty
cash vouchers. Instead, La Tondea dismissed
Moises and claimed that Moises was contracted
on a casual basis specifically to paint certain
company buildings and that its completion
terminated Moises employment. Can Moises be
considered as a regular Ee?
A: Yes. The law demands that the nature and
entirety of the activities performed by the Ee be
considered. Here, the painting and maintenance
work given to Moises manifests a treatment
consistent with a maintenance man and not just a
painter, for if his job was only to paint a building
there would be no basis for giving him other work
assignments in-between painting activities.
It is not tenable to argue that the painting and
maintenance work of Moises are not necessary in
La Tondeas business of manufacturing liquors;
otherwise, there would be no need for the regular
maintenance section of the companys engineering
department (De Leon v. NLRC, August 21, G.R. No.
70705, 1989).
 TERMINATION OF EMPLOYMENT
Q: Honorio Dagui was hired by Doa Aurora
Suntay Tanjangco in 1953 to take charge of the
maintenance and repair of the Tanjangco
apartments and residential bldgs. He was to
perform carpentry, plumbing, electrical and
masonry work. Upon the death of Doa Aurora
Tanjangco in 1982, her daughter, Teresita
Tanjangco Quazon, took over the
administration of all the Tanjangco properties,
and dismissed Dagui. Is Honorio Dagui a
regular Ee?
A: Yes. The jobs assigned to Dagui as maintenance
man, carpenter, plumber, electrician and mason
were directly related to the business of the
Tanjangcos as lessors of residential and apartment
bldgs. Moreover, such a continuing need for his
services by the Tanjangcos is sufficient evidence of
the necessity and indispensability of his services to
their business or trade.
Dagui should likewise be considered a regular Ee
by the mere fact that he rendered service for the
Tanjangcos for more than one year, that is,
beginning 1953 until 1982, under Doa Aurora;
and then from 1982 up to June 8, 1991 under the
daughter, for a total of 29 and 9 years respectively.
Owing to Dagui's length of service, he became a
regular Ee, by operation of law, one year after he
was employed in 1953 and subsequently in 1982
(Aurora Land Projects Corp. v. NLRC, G.R. No.
114733, January 2, 1997).
Q: A total of 43 Ees who are deaf-mutes were
hired and re-hired on various periods by Far
East Bank and Trust Co. as money sorters and
counters through a uniformly worded
agreement called Employment Contract for
Handicapped Workers. The company
disclaimed that these Ees were regular Ees and
maintained among others that they are a
special class of workers, who were hired
temporarily under a special employment
arrangement which was a result of overtures
made by some civic and political personalities
to the Bank. Should the deaf-mute Ees be
considered as regular Ees?
A: Yes. The renewal of the contracts of the
handicapped workers and the hiring of others
leads to the conclusion that their tasks were
beneficial and necessary to the bank. It also shows
that they were qualified to perform the
responsibilities of their positions; their disability
did not render them unqualified or unfit for the
tasks assigned to them.
The Magna Carta for Disabled Persons mandates
that a qualified disabled Ee should be given the
89
same terms and conditions of employment as a
qualified able-bodied person. The fact that the Ees
were qualified disabled persons necessarily
removes the employment contracts from the ambit
of Art. 80. Since the Magna Carta accords them the
rights of qualified able-bodied persons, they are
thus covered by Art. 280 of the LC (Bernardo v.
NLRC, G.R. No. 122917, July 12, 1999).
Q: Coca-Cola Bottlers Phils, Inc., (CCBPI)
engaged the services of the workers as sales
route helpers for a period of 5 months. After 5
months, the workers were employed by the
company on a day-to-day basis. According to
the company, the workers were hired to
substitute for regular route helpers whenever
the latter would be unavailable or when there
would be an unexpected shortage of manpower
in any of its work places or an unusually high
volume of work. The practice was for the
workers to wait every morning outside the
gates of the sales office of the company, if thus
hired, the workers would then be paid their
wages at the end of the day. Should the workers
be considered as regular Ees of CCBPI?
A: Yes, the repeated rehiring of the workers and
the continuing need for their services clearly attest
to the necessity or desirability of their services in
the regular conduct of the business or trade of the
company. The fact that the workers have agreed to
be employed on such basis and to forego the
protection given to them on their security of
tenure, demonstrate nothing more than the serious
problem of impoverishment of so many of our
people and the resulting unevenness between
labor and capital (Magsalin & Coca-Cola v. N.O.W.M.,
G.R. No. 148492, May 9, 2003).
Q: Metromedia Times Corp. entered, for the
fifth time, into an agreement with Efren Paguio,
appointing him to be an account executive of
the firm. He was to solicit advertisements for
The Manila Times. The written contract
between the parties provided that, You are not
an employee of the Metromedia Times Corp.
nor does the company have neither any
obligations towards anyone you may employ,
nor any responsibility for your operating
expenses or for any liability you may incur. The
only rights and obligations between us are
those set forth in this agreement. This
agreement cannot be amended or modified in
any way except with the duly authorized
consent in writing of both parties. Is Efren
Paguio a regular Ee of Metromedia Times
Corporation?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
A: Yes. He performed activities which were
necessary and desirable to the business of the Er,
and that the same went on for more than a year.
He was an account executive in soliciting
advertisements, clearly necessary and desirable,
for the survival and continued operation of the
business of the corp.
The corporation cannot seek refuge under the
terms of the agreement it has entered into with
Efren Paguio. The law, in defining their contractual
relationship, does so, not necessarily or exclusively
upon the terms of their written or oral contract,
but also on the basis of the nature of the work of
Efren has been called upon to perform. A Ee does not necessarily become regular.
stipulation in an agreement can be ignored as and
when it is utilized to deprive the Ee of his security
of tenure (Paguio v. NLRC, G.R. No. 147816, May 9,
2003).
Q: Super Comfort Hotel employed a regular
pool of extra waiters who are asked to report
for duty when the Hotels volume of business is
beyond the capacity of the regularly employed
waiters to undertake. Pedro has been an extra
waiter for more than 10 years. He is also called
upon to work on weekends, on holidays and
when there are big affairs at the hotel. What is
Pedros status as an Ee under the LC? (2008 Bar
Question)
A: Pedro has acquired the status of a regular Ee.
Pedro was engaged to perform activities which are
necessary or desirable in the usual business or
trade of the Er. Moreover, Pedro has been extra
waiter for more than 10 years. Under the law, any
Ee who has rendered service for at least one year,
whether such service is continuous or broken, shall
be considered a regular Ee with respect to the
activity in which he is employed and his
employment shall continue while such activity
exists (LC, Art. 280).
Alternative Answer: Pedro is a regular, but
seasonal worker. He is regular because as waiter,
he was engaged to perform activities which are
usually necessary or desirable in the usual
business or trade of employer Super Comfort Hotel.
However, his security of tenure is coterminous
with the seasonal need for which he was hired [LC,
Art. 280(1)].
PROJECT EMPLOYMENT
Project
A "project" has reference to a particular job or
undertaking that may or may not be within the
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
90
regular or usual business of the Er. In either case,
the project must be distinct, separate and
identifiable from the main business of the Er, and
its duration must be determined or determinable
(PAL v. NLRC, G.R. No. 125792, November 9, 1998).
Project employment
Project employment is employment that has been
fixed for a specific project or undertaking the
completion for which has been determined at the
time of engagement of the Ee (IRR, Book VI, Rule I,
Sec. 5(a)). The period is not the determining factor,
so that even if the period is more than 1 year, the
NOTE: Where the employment of a project Ee is
extended long after the supposed project has been
finished, the Ees are removed from the scope of
project Ees and considered as regular Ees.
Repeated hiring on a project-to-project basis is
considered necessary and desirable to the business
of the Er. The Ee is regular (Maraguinot v. NLRC,
G.R. No. 120969, July 22, 1998).
Indicators of project employment
Either one or more of the following circumstances,
among others, may be considered as indicators that
an Ee is a project Ee (Hanjin v. Ibaez, G.R. No.
170181, June 26, 2008).
a. The duration of the specific/identified
undertaking for which the worker is engaged
is reasonably determinable;
b. Such duration, as well as the specific
work/service to be performed, is defined in
an employment agreement and is made clear
to the Ee at the time of hiring;
NOTE: Absent any other proof that the
project Ees were informed of their status as
such, it will be presumed that they are
regular Ees.
c. The work/service performed by the Ee is in
connection with the particular project/
undertaking for which he is engaged;
d. The Ee, while not employed and awaiting
engagement, is free to offer his services to
any other Er;
e. The termination of his employment in the
particular project/undertaking is reported to
the DOLE Regional Office having jurisdiction
over the workplace within 30 days following
the date of his separation from work, using
 TERMINATION OF EMPLOYMENT
the prescribed form on Ees termination,
dismissal or suspensions;
f. An undertaking in the employment contract
by the Er to pay completion bonus to the
project Ee as practiced by most construction
companies
Requisites in determining whether an Ee is a
project Ee
1. The project Ee was assigned to carry out a
specific project or undertaking, and
2. The duration and scope of which were
specified at the time the Ee was engaged for
that project (Imbuido v. NLRC, G.R. No.
114734, May 31, 2000).
3. The Ee must have been dismissed every after
completion of his project or phase
4. Report to the DOLE of Ees dismissal on
account of completion of contract [Policy
Inst. No. 20; D.O. 19 (1997)].
Q: Diosdado, a carpenter, was hired by Building
Industries Corporation (BIC), and assigned to
build a small house in Alabang. His contract of
employment specifically referred to him as a
"project employee," although it did not provide
any particular date of completion of the project.
Is the completion of the house a valid cause for
the termination of Diosdados employment?
(2009 Bar Question)
A: Yes. The completion of the house should be a
valid cause for termination of Diosdados
employment. Although the employment contract
may not state a particular date, but if it did not
specify that the termination of the parties
employment relationship was to be on a day
certain the day when the phase of work would
be completed the Ee cannot be considered to
have been a regular Ee (Filipinas Pre-Fabricated
Building Systems, v. Puente, 453 SRA 820).
To satisfy due process requirements, under DOLE
Department Order No. 19, Series of 1993, the
employer is required to report to the relevant
DOLE Regional Office the fact of termination of
project Ees as a result of the completion of the
project or any phase thereof in which one is
employed.
Alternative answer:No. The completion of the
house is not a valid cause for termination of
employment of Diosdado, because of the failure of
the BIC to state the specific project or undertaking
the completion or termination of which has been
determined at the time of the engagement of the
Ee (LC, Art. 280). There being no valid termination
of employment, there is no need to comply with
requirements of procedural due process.
91
Q: The Er hires the Ees whereby their
employment would automatically expire upon
the completion of a project. When the employer
Er proceeded to serve notices of termination of
employment when the project was about to be
completed, the Ees filed a notice of strike for
mass termination. Is the action of the Ees
correct?
A: No. The litmus test to determine whether an
individual is a project Ee lies in setting a fixed
period of employment involving a specific
undertaking which completion or termination has
been determined at the time of the particular Ees
engagement. In this case, as previously adverted to,
the officers and the members of the Union were
specifically hired as project Ees for Leyte
Geothermal Power Project. Consequently, upon the
completion of the project or substantial phase
thereof, the officers and the members of the Union
could be validly terminated (Leyte Geothermal
Power Progressive Employees Union v. Philippine
National Oil Company, G.R. No. 170351, March 30,
2011).
Requisites to acquire regular Ee status of
project Ee or a member of work pool
The following must concur to acquire a status of a
regular Ee status:
1. There is a continuous rehiring of project Ees
even after cessation of a project; and
2. The tasks performed by the alleged project
Ee are vital, necessary and indispensable to
the usual business or trade of the Er (D.M.
Consunji, Inc. v. JAMIN, G.R. No. 192514, April
18, 2012).
NOTE: The length of time during which the Ee was
continuously re-hired is not controlling, but merely
serves as a badge of regular employment. Enero
and Maraguinot have been employed for a period
of not less than 2 years and have been involved in
at least 18 projects. These facts are the basis in
considering them as regular Ees of the company.
A work pool may exist although the workers in the
pool do not receive salaries and are free to seek
other employment during temporary breaks in the
business, provided that the worker shall be
available when called to report for a
project. Although primarily applicable to regular
seasonal workers, this set-up can likewise be
applied to project workers insofar as the effect of
temporary cessation of work is concerned. This is
beneficial to both the Er and Ee for it prevents the
unjust situation of coddling labor at the expense of
capital and at the same time enables the workers
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
to attain the status of regular Ees (Maraguinot v.
NLRC, G.R. No. 120969, January 22, 1998).
Day certain rule
It states that a project employment that ends on a
certain date does not end on an exact date but
upon the completion of the project.
Entitlement to separation pay
GR: Project Ees are not entitled to separation pay if
their services are terminated as a result of the
completion of project.
XPN: If the projects they are working on have not
yet been completed when their services are
terminated; project Ees also enjoy security of
tenure during the limited time of their employment
(De Ocampo v. NLRC, G.R. No. 81077, June 6, 1990).
Q: Roger Puente was hired by Filsystems, Inc.,
initially as an installer and eventually
promoted to mobile crane operator, and was
stationed at the companys premises. Puente
claimed in his complaint for illegal dismissal,
that his work was continuous and without
interruption for 10 years, and that he was
dismissed from his employment without any
cause. Filsystems on its part averred that
Puente was a project Ee in the companys
various projects, and that after the completion
of each project, his employment was
terminated, and such was reported to the DOLE.
Is Roger Puente a regular Ee?
A: No. Puente is a project Ee. The contracts of
employment of Puente attest to the fact that he was
hired for specific projects. His employment was
coterminous with the completion of the projects
for which he had been hired. Those contracts
expressly provided that his tenure of employment
depended on the duration of any phase of the
project or on the completion of the construction
projects. Furthermore, the company regularly
submitted to the labor dept reports of the
termination of services of project workers. Such
compliance with the reportorial requirement
confirms that Puente was a project Ee.
The mere rehiring of Puente on a project-to-project
basis did not confer upon him regular employment
status. The practice was dictated by the practical
consideration that experienced construction
workers are more preferred. It did not change his
status as a project Ee (Filipinas Pre-Fabricated
Building Systems (FILSYSTEMS), Inc. v. Puente, G.R.
No. 153832, March 18, 2005).
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
92
SEASONAL EMPLOYMENT
Seasonal employment
Employment where the job, work or service to be
performed is seasonal in nature and the
employment is for the duration of the season [IRR,
Book VI, Rule I, Sec.5 (a)].
An employment arrangement where an Ee is
engaged to work during a particular season on an
activity that is usually necessary or desirable in the
usual business or trade of the Er.
NOTE: For Seasonal Ees, their employment legally
ends upon completion of the project or the season.
The termination of their employment cannot and
should not constitute an illegal dismissal (Mercado
v. NLRC, G.R. No. 79869, September 5, 1991).
One year duration on the job is pertinent in
deciding whether a casual Ee has become regular
or not, but it is not pertinent to a Seasonal or
Project Ee. Passage of time does not make a
seasonal worker regular or permanent (Mercado v.
NLRC, G.R. No. 78969, September 5, 1991).
During off-season, the relationship of Er-Ee is not
severed; the Seasonal Ee is merely considered on
LOA without pay. Seasonal workers who are
repeatedly engaged from season to season
performing the same tasks are deemed to have
acquired regular employment (Hacienda Fatima v.
National Federation of Sugarcane Workers-Food
and General Trade, G.R. No. 149440, January 28,
2003).
Entitlement to separation pay
When the business establishment is sold which
effectively terminates the employment of the
seasonal Ees, the latter would be entitled to
separation pay.
Seasonal Ees as regular Ees
Seasonal Ees can be considered regular Ees. The
fact that Seasonal Ees do not work continuously for
one whole year but only for the duration of the
season does not detract from considering them in
regular employment. Seasonal workers who are
called to work from time to time and are
temporarily laid off during off-season are not
separated from service in that period, but merely
considered on leave until re-employed.
If the Ee has been performing the job for at least a
year, even if the performance is not continuous and
 TERMINATION OF EMPLOYMENT
merely intermittent, the law deems repeated and
continuing need for its performance as sufficient
evidence of the necessity if not indispensability of
that activity to the business. Hence, the
employment is considered regular, but only with
respect to such activity and while such activity
exists (Benares v. Pancho, G.R. No. 151827, April 29,
2005).
But one year duration on the job is pertinent in
deciding whether a casual Ee has become regular
or not, but it is not pertinent to a Seasonal or
Project Ee. Passage of time does not make a
seasonal worker regular or permanent (Mercado v.
NLRC, G.R. No. 78969, September 5, 1991).
Q: Carlito Codilan and Maximo Docena had been
working for the rice mill for 25 years, while
Eugenio Go, Teofilo Trangria and Reynaldo
Tulin have been working for 22, 15, and 6 years
respectively. The operations of the rice mill
continue to operate and do business
throughout the year even if there are only two
or three harvest seasons within the year. This
seasonal harvesting is the reason why the
company considers the workers as seasonal
employees. Is the company correct in
considering the Ees as seasonal Ees?
A: No. The fact is that big rice mills such as the one
owned by the company continue to operate and do
business throughout the year even if there are only
two or three harvest seasons within the year. It is
a common practice among farmers and rice dealers
to store their palay and to have the same milled as
the need arises. Thus, the milling operations are
not seasonal. Finally, considering the number of
years that they have worked, the lowest being 6
years, the workers have long attained the status of
regular Ees as defined under Art. 280 (Tacloban
Sagkahan Rice Mill v. NLRC, G.R. No. 73806, March
21, 1990).
CASUAL EMPLOYMENT
Casual employment
1. It is an employment where the Ee is engaged
in an activity which is not usually necessary
or desirable in the usual business or trade of
the Er, Provided: such employment is neither
Project nor Seasonal (LC, Art. 281). He
performs only an incidental job in relation to
the principal activity of the Er.
NOTE: But despite the distinction between
regular and casual employment, every Ee
shall be entitled to the same rights and
privileges, and shall be subject to the same
93
duties as may be granted by law to regular
Ees during the period of their actual
employment.
2. An Ee is engaged to perform a job, work or
service which is merely incidental to the
business of the Er, and such job, work or
service is for a definite period made known
to the Ee at the time of engagement [IRR,
Book Vi, Rule I, Sec. 5 (b)].
Casual Ee becoming a regular Ee
If he has rendered at least 1 year of service,
whether such service is continuous or broken, he is
considered as regular Ee with respect to the
activity in which he is employed and his
employment shall continue while such activity
exists.
A casual Ee is only casual for 1 year, and it is the
passage of time that gives him a regular status
(KASAMMA-CCO v. CA, G.R. No. 159828, April 19,
2006).
The purpose is to give meaning to the
constitutional guarantee of security of tenure and
right to self-organization (Mercado v. NLRC, G.R. No.
79868, September 5, 1991).
Q: Yakult Phils. is engaged in the manufacture
of cultured milk. The workers were hired to cut
cogon grass and weeds at the back of the
factory building used by Yakult. They were not
required to work on fixed schedule and they
worked on any day of the week on their own
discretion and convenience. The services of the
workers were terminated by Yakult before the
expiration of the 1 year period. May casual or
temporary Ees be dismissed by the Er before
the expiration of the 1-year period of
employment?
A: Yes. The usual business or trade of Yakult
Phils.is the manufacture of cultured milk. The
cutting of the cogon grasses in the premises of its
factory is hardly necessary or desirable in the usual
business of the Yakult.
The workers are casual Ees. Nevertheless, they
may be considered regular Ees if they have
rendered services for at least 1 year. When, as in
this case, they were dismissed from their
employment before the expiration of the 1-year
period they cannot lawfully claim that their
dismissal was illegal (Capule, et al. v. NLRC, G.R. No.
90653, November 12, 1990).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Project Ee v. Casual Ee and business of Er (Philips Semiconductor v.
Fadriquela, G.R. No. 141717, April 14, 2004).
PROJECT EE CASUAL EE
Employed for a specific Engaged to perform a Q: Darrell was hired as an athletic director in
project or undertaking job, work or service Amorita School for a period of five years. As
the completion or which is incidental to such, he oversees the work of coaches and
termination of which is the business of the Er related staff involved in intercollegiate or
determined at the time and the definite period interscholastic athletic programs. However, he
of his engagement. of his employment is was not rehired upon the expiration of said
made known to him at period. Darrell questions his termination
the time of his alleging that he was a regular Ee and could not
engagement. be dismissed without valid cause.
His work need not be His continued
incidental to the employment after the a. Is he a regular Ee?
business of the Er and lapse one year makes b. Will Rene automatically become a
his employment may him a regular Ee. regular Ee if he is rehired by the school
exceed one year for another definite period of
without necessarily employment?
making him a regular
Ee. A:
Job is coterminous with No termination report a. No. Darrell was not a regular Ee but an Ee
a specific project or required. under a fixed- term contract. While it can be
phase thereof. It is said that the services he rendered were
required that a usually necessary and desirable to the
termination report be business of the school, it cannot also be
submitted at the denied that his employment was for a fixed
nearest employment term of five years. The decisive determinant in
office upon completion fixed- term employment should not be the
of the project or phase. activities that the employee is called upon to
perform, but the day certain agreed upon by
FIXED TERM EMPLOYMENT the parties for the commencement and
termination of their employment relation
Term employment (Brent School Inc. v. Zamora, G.R. No. 48494,
February 5, 1990).
A contract of employment for a definite period
terminates by its own terms at the end of such b. No. The decisive determinant in term
period (Brent School v. Zamora, G.R. No. L-48494, employment is the day certain agreed upon by
February 5, 1990). the parties for the commencement and
termination of their employment relationship,
NOTE: Term employment is not a circumvention of a day certain being understood to be that
the law on security of tenure if it follows the which must necessarily come, although it may
requisites laid down by the Brent ruling (Romares not be known when and not whether the work
v. NLRC, G.R. No. 122327, August 19, 1998). is usually necessary and desirable to the
business of the Er.
Decisive determinant in term employment
Q: Does the Reasonable Connection Rule
It is the day certain agreed upon by the parties for apply in fixed term employment for a fixed-
the commencement and the termination of their term Ee to be eventually classified as a regular
employment relation. Ee?

Fixed term employment
It is an employment where a fixed period of
employment was agreed upon:
1. Knowingly and voluntarily by the parties,
2. Without any force, duress or improper
pressure being brought to bear upon the Ee
A: No. It should be apparent that this settled and
familiar notion of a period, in the context of a
contract of employment, takes no account at all of
the nature of the duties of the Ee; it has absolutely
no relevance to the character of his duties as being
usually necessary and desirable to the usual
business of the Er, or not.

UNIVERSITY OF SANTO TOMAS

2015 GOLDEN NOTES
94
 TERMINATION OF EMPLOYMENT
Q: Dean Jose and other Ees are holding
administrative positions as dean, dept heads
and institute secretaries. In the
implementation of the Reorganization,
Retrenchment and Restructuring program
effective Jan. 1, 1984, Dean Jose and other Ees
were retired but subsequently rehired. Their
appointment to their administrative positions
as dean, dept heads and institute secretaries
had been extended by the company from time
to time until the expiration of their last
appointment on May 31, 1988. Were Dean Jose
and other Ees illegally dismissed?
A:No. Petitioners were dismissed by reason of the
expiration of their contracts of employment.
Petitioners' appointments as dean, dept heads and
institute secretaries were for fixed terms of
definite periods as shown by their respective
contracts of employment, which all expired on the
same date, May 31, 1988. The validity of
employment for a fixed period has been
acknowledged and affirmed by the SC (Blancaflor v.
NLRC, G.R. No. 101013, February 2, 1993).
JOB CONTRACTING
ARTS. 106-109, LABOR CODE
Job contracting (independent contracting/
subcontracting)
"Contracting" or "subcontracting" is an
arrangement whereby a principal agrees to put out
or farm out with a contractor the performance or
completion of a specific job, work or service within
a definite or predetermined period, regardless of
whether such job, work or service is to be
performed or completed within or outside the
premises of the principal (DO 18-A).
Conditions in order to be considered as
legitimate job contracting or subcontracting
1. The contractor must be registered in
accordance with these Rules and carries a
distinct and independent business and
undertakes to perform the job, work or service
on its own responsibility, according to its own
manner and method, and free from control and
direction of the principal in all matters
connected with the performance of the work
except as to the results thereof;
2. The contractor has substantial capital and/or
investment; and
3. The Service Agreement ensures compliance
with all the rights and benefits under Labor
Laws (DO 18-A, Sec. 4).
95
Labor-only contracting
There is labor-only contracting when:
1. The contractor does not have substantial
capital or investments in the form of tools,
equipment, machineries, work premises,
among others, and the Ees recruited and
placed are performing activities which are
usually necessary or desirable to the operation
of the company, or directly related to the main
business of the principal within a definite or
predetermined period, regardless of whether
such job, work or service is to be performed or
completed within or outside the premises of
the principal; or
2. The contractor does not exercise the right to
control over the performance of the work of
the Ee (DO 18-A, Sec. 6).
Factors to consider in determining whether
contractor is carrying on an independent
business
1. Nature and extent of work
2. Skill required
3. Term and duration of the relationship
4. Right to assign the performance of specified
pieces of work
5. Control and supervision of worker
6. Power of Er to hire, fire and pay wages
7. Control of the premises
8. Duty to supply premises, tools, appliances,
materials and labor
9. Mode, manner and terms of payment (Vinoya v.
NLRC, G.R. No. 126586, February 03, 2000).
NOTE: Individuals with special skills, expertise or
talent enjoy the freedom to offer their services as
independent contractors. An individual like an
artist or talent has a right to render his services
without any one controlling the means and
methods by which he performs his art or craft
(Sonza v. ABS-CBN, G.R. No. 138051, June 10, 2004).
Q: SMC and Sunflower Cooperative entered into
a 1-yr Contract of Services, to be renewed on a
month to month basis until terminated by
either party. Pursuant to the contract,
Sunflower engaged Prospero, Bonny and Edwin
to render services at SMCs Bacolod Shrimp
Processing Plant. The contract was deemed
renewed by the parties every month after its
expiration on Jan. 1, 1994 and the three
continued to perform their tasks until Sep. 11,
1995. In July 1995, Prospero, Bonny and Edwin
filed a complaint before the NLRC, praying to be
declared as regular Ees of SMC, with claims for
recovery of all benefits and privileges enjoyed
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
by SMC rank and file Ees. The former
subsequently filed an Amended Complaint to
include illegal dismissal as additional cause of
action following SMCs closure of its Bacolod
Shrimp Processing Plant on which resulted in
the termination of their services. SMC filed a
Motion for Leave to File Attached Third Party
Complaint to implead Sunflower as 3rd-
Party Defendant. SMC argues that Sunflower
could not have been issued a certificate of
registration as a cooperative if it had no
substantial capital. Are Prospero, Bonny
and Edwin Ees of the independent
cooperative contractor (Sunflower) or of the
SMC?
A: The contention of SMC holds no basis. Using the
substantial capital doctrine and the right of
control test, the Court found that the Sunflower
had no substantial capital in the form of tools,
equipment, machineries, work premises and other
materials to qualify itself as an independent
contractor. The lot, building, machineries and all
other working tools utilized by private
respondents in carrying out their tasks were
owned and provided by SMC. In addition, the
shrimp processing company was found to have
control of the manner and method on how the
work was done. Thus, Prospero, Bonny and Edwin
were deemed Ees not of the cooperative but of the
shrimp processing company. Since the former who
were engaged in shrimp processing performed
tasks usually necessary or desirable in the
aquaculture business of SMC, they should be
deemed regular Ees of the latter and as such are
entitled to all the benefits and rights appurtenant
to regular employment (SMC v. Prospero Aballa, et
al., G.R. No. 149011, June 28, 2005).
Conditions of permissible job contracting
1. The labor contractor must be duly licensed by
the appropriate Regional Office of the DOLE
2. There should be a written contract between
the labor contractor and his client-Er that will
assure the Ees at least the minimum labor
standards and benefits provided by existing
laws.
NOTE: The Ees of the contractor or subcontractor
shall be paid in accordance with the provisions of
the LC (LC, Art. 106).
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
96
Q: The Pizza Corporation (PizCorp) and Ready
Supply Cooperative (RSC) entered into a
"service agreement" where RSC in
consideration of service fees to be paid by
PizCorp's will exclusively supply PizCorp with a
group of RSC motorcycle-owning cooperative
members who will henceforth perform
PizCorp's pizza delivery service. RSC assumes
under the agreement full obligation for the
payment of the salaries and other statutory
monetary benefits of its members deployed to
PizCorp. The parties also stipulated that there
shall be no Er-Ee relationship between PizCorp
and the RSC members. However, if PizCorp is
materially prejudiced by any act of the delivery
it can impose disciplinary sanctions on,
including the power to dismiss, the erring RSC
member/s. Assume that RSC has a
paid-up capitalization of P1, 000.000.00. Is RSC
engaged in "labor-only" contracting,
permissible job contracting or simply,
recruitment? (2008 Bar Question)
A:
Even if the RSC has a paid up capitalization of P1,
000,000.00 it is not engaged in labor-only
contracting, or permissible job contracting. It is
engaged simply in recruiting. RSC merely provides
PizCorp the formers motorcycle-owning members
to deliver the product of PizCorp in accordance
with PizCorps directives and orders.
Alternative Answer:
RSC is engaged in labor only contracting. It is not
enough to show substantial capitalization
or investment in the form of tools, equipment,
machinery and word premises. In addition, the
following factors have to be considered: (a)
whether the contractor is carrying on an
independent business; (b) the nature and extent of
the work; (c) the skill required; (d) the term and
duration of the relationship; (e) the right to assign
the performance of specified pieces of work; (f) the
control and supervision of the workers; (g) the
power of Er with respect to the hiring, firing, and
payment of workers of the contractor; (h) the
control and supervision of the workers; (i) the
control of the premises; (j) the mode, manner and
terms of payment (Alexander Vinoya v. NLRC,
Regent Food Corporation and/or Ricky See, 324
SCRA 469 (2000); Osias Corporal Sr., et al v. NLRC,
Lao Enteng Company, Inc. and/or Trinidad Lao Ong,
341, SCRA 658).
 TERMINATION OF EMPLOYMENT
Parties in contracting and subcontracting
1. Contractor/subcontractor Any person or
entity, including a cooperative, engaged in a
legitimate contracting or subcontracting
arrangement.
2. Contractual Ee One who is employed by a
contractor or subcontractor to
perform or complete a job, work, or service
pursuant to a service agreement with a
principal (D.O. 18-A).
3. Principal Any Er who puts out or farms out a
job, service, or work to a contractor or
subcontractor.
Relationship arising from contractual
arrangements
There is a trilateral relationship between the
principal, contractor and Ee. There exists a
contractual relationship between the principal and
the contractor or subcontractor to its Ees.
DEPARTMENT ORDER NO. 18-A
Rights of a contractual Ee
They shall be entitled to all the rights and
privileges as provided for in the LC, as amended, to
include the following:
1. Safe and healthful working conditions;
2. SIL, rest days, OT pay, holiday pay, 13th month
pay and separation pay;
3. Retirement benefits under SSS or retirement
plans of the contractor;
4. Social security and welfare benefits;
5. Self-organization, CBA and peaceful concerted
actions; and
6. Security of tenure (DO 18-A, Sec. 8)
Effects of termination of Contractual Ee to
separation pay and other benefits
1. If caused by the pre-termination of the
Service Agreement not due to authorized
causes under Art. 283 of LC The right of Ee
to unpaid wages and other unpaid benefits
including unremitted legal mandatory
contributions shall be borne by the party at
fault, without prejudice to the solidary liability
of the parties to the Service Agreement.
2. If the termination results from the
expiration of the service agreement or
completion of the phase of the job The Ee
may opt for payment of separation benefits as
97
may be provided by law or the Service
Agreement, without prejudice to his/her
entitlement to the completion bonuses or
other emoluments, including retirement
benefits whenever applicable.
Principal as the Er of the contractual Ee
When:
1. There is labor-only contracting
2. The contracting arrangement falls within the
prohibited acts
Furnishing a bond forwages due to the Ees in
case the contractor or subcontractor fails to
pay the same
The Er or indirect Er may require the contractor or
subcontractor to furnish a bond equal to the cost of
labor under contract to answer for the wages due
to Ees in case the contractor or subcontractor fails
to pay the same
Liability of the principal
The principal shall be solidarily liable with the
contractor in the event of any violation of any
provision of the LC, including the failure to pay
wages. This will not prevent the principal from
claiming reimbursement from the contractor.
Essence of the prohibition on labor-only
contracting
It gives rise to confusion as to who is the real Er of
the workers and who is liable to their claims. It also
deprives workers of the opportunity to become
regular Ees.
Bases of the state in prohibiting labor-only
contracting
1. The Constitution, which provides that the State
shall protect labor and promote its welfare, and
shall guarantee basic labor rights including just
and humane terms and conditions of
employment and the right to self-organization.
2. Art.106 of the LC, which allows the SLE to
distinguish between labor-only contracting and
job contracting to prevent any violation or
circumvention of the LC.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Labor-only contracting v. Job contracting that there exist an Er-Ee relationship between
SMPC and workers hired by Arnold. This is so
Labor-only contracting Job contracting because Arnold is considered a mere agent of
SMPC (Lim v. NLRC, G.R. No. 124630, February
No Er-Ee relationship 19, 1999).
exist between the Er
and the contractor's Grounds for cancellation of registration of
Ees except when the contractors or subcontractors
Er is treated as direct Er
contractor or
of the person recruited
subcontractor fails to 1. Misrepresentation of facts in the application;
in all instances
pay the wages of the 2. Submission of a falsified or tampered
Ees application or supporting documents to the
Liability is limited(shall application for registration;
be solidarily liable with 3. Non-submission of Service Agreement
Er only when the Er between the principal and the contractor when
fails to comply with required to do so;
Liability extends to all 4. Non-submission of the required semi-annual
requirements as to
those provided under report;
unpaid wages and other
the Labor Standards 5. Findings through arbitration that the
labor standards
law contractor has engaged in labor-only
violations)
contracting and/or the prohibited activities;
Permissible, subject
6. Non-compliance with labor standards
Prohibited by Law only to certain
and working conditions;
conditions
7. Findings of violation of Sec. 8 (Rights of
The contractor has Contractor's Employees) or Sec. 9 (Required
Has no substantial substantial capital or Contracts of DO 18-A)
capital or investment investment 8. Non-compliance with SSS, the HDMF, Pag-ibig,
Philhealth, and ECC laws; and
Q: SMPC entered into a contract with Arnold for 9. Collecting any fees not authorized by law and
the milling of lumber as well as the hauling of other applicablerulesand regulations (DO 18-A,
waste wood products. The company Sec. 23).
provided the equipment and tools because
Arnold had neither tools and equipment nor DEPARTMENT CIRCULAR NO. 01-12 (Clarifying
capital for the job. Arnold, on the other hand, the Applicability of D.O. 18-A
hired his friends, relatives and neighbors for
the job. Their wages were paid by SMPC to Q: Are the rules provided under D.O. No. 18-A
Arnold, based on their production or the (Rules Implementing Art. 106 to 109 of the LC
number of workers and the time used in certain as amended) applicable to companies or firms
areas of work. All work activities and schedules in:
were fixed by the company.
1. Business Process Outsourcing (BPO) or
1. Is Arnold a job contractor? Explain briefly. Knowledge Process Outsourcing (KPO); and
2. Who is liable for the claims of the workers 2. Construction Industries
hired by Arnold? Explain briefly. (2002 Bar
Question) A:
1. No. D.O. 18-A contemplates generic or focused
A: singular activity in one contract between the
1. No. In the problem given, Arnold did not have principal and the contractor and does not
sufficient capital or investment for one. For contemplate information-technology enabled
another, Arnold was not free from the control services involving entire business processes.
and direction of SMPC because all work These companies engaged in business
activities and schedules were fixed by the processes may hire Ees in accordance with the
company. Therefore, Arnold is not a job applicable laws and maintain these employees
contractor. He is engaged in labor-only based on businesses requirements, which may
contracting. or may not be for different clients of the BPOs
at different periods of the Ees employment
2. SMPC is liable for the claims of the workers (Department Circular No. 01-12, 3.2).
hired by Arnold. A finding that Arnold is a
labor-only contractor is equivalent to declaring

UNIVERSITY OF SANTO TOMAS

2015 GOLDEN NOTES
98
 TERMINATION OF EMPLOYMENT
2. No. Licensing and the exercise of the FACTOR Independent Labor-only
regulatory powers over the construction TEST contractor Contractor
industry is lodged with the Philippine
Contractors Accreditation Board (PCAB) under
the Construction Industry Authority of the No separate
Philippines (CIAP) pursuant to P.D. 1746 and business
not with the DOLE or any of its regional offices The business independent
[Department Circular No. 01-12, 4.1]. of an and distinct
independent from the
EFFECTS OF LABOR-ONLY CONTRACTING contractor is principal. May
entirely be a cabo or
Effects of finding that there is labor-only Nature separate and an in-house
contracting of distinct from agency
business the business of prohibited
A finding that a contractor is a labor-only the principal under DO 18-
contractor is equivalent to declaring that there is 02
an Er-Ee relationship between the principal and
the Ees of the labor-only contractor (Assoc. Anglo-
American Tobacco Corp. v. Clave, G.R. No. 50915,
August 30, 1990). The only
Substantial Has investment is
NOTE: The principal is considered the direct Er capital OR substantial bringing
of the contractual Ees for purposes of enforcing the investment capital or individuals to
provisions of the LC and other social legislations. investment. work
The contractor/subcontractor is deemed only to be
the agent of the principal.
Control as to
The principal is solidarily liable with the only Control as to
contractor/subcontractor in the event of any Control RESULTS BOTH
violation of any provision of the LC, including but not the results and
failure to pay wages. means means

TRILATERAL RELATIONSHIP IN JOB Effect VALID VOID

CONTRACTING

Trilateral relationship (in legitimate contracting NOTE: DO 18-A prohibits job contracting of
or subcontracting arrangement) is when: functions performed by regular Ees.

1. Er-Ee relationship between the contractor and Substantial capital or investment

theEesit engaged to performthe specific job,
work or service being contracted; and It refers to paid-up capital stocks/shares of at least
Three Million Pesos (Php 3,000,000.00) in the case
2. Contractual relationship between the of corporations, partnerships and cooperatives; in
principal and the contractor (DO 18-A, Sec. 5). the case of single proprietorship, a net worth of at
least Three Million Pesos (Php 3,000,000.00) (D.O.
Factor Test 18-A).

It is used to determine the relationship of the
parties if it is independent contracting or labor-
only contracting. This considers the nature of the
business, substantial capital and the control
exercised.
NOTE: The law does not require both substantial
capital and investment in the form of tools,
equipment, machineries, etc. This is clear from the
use of conjunction or. If the contention was to
require the contractor to prove that he has both
capital and requisite investment, then the
conjunction and should have been used (Virginia
Neri v. NLRC, G.R. No. 97008, July 23, 1993).

Right to control

It refers to the right reserved to the person for

UNIVERSITY OF SANTO TOMAS

99 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
whom the services of the contractual workers are
performed, to determine not only the end to be
achieved, but also the manner and means to be
used in reaching that end (D.O. 18-A).
DISMISSAL FROM EMPLOYMENT
In cases of regular employment, Substantive due
process (Security of Tenure) is when the Er shall
not terminate the services of an Ee except for a just
cause or when authorized by the LC on
Termination of Employment (LC, Art. 279).
No worker shall be dismissed except for a just or
authorized cause provided by law and after due
process.
JUST CAUSES
Just causes for termination
1. Serious misconduct or willful disobedience
by the Ee of the lawful orders of his Er or
representative in connection with his work;
2. Gross and habitual neglect by the Ee of his
duties;
3. Fraud or willful breach by the Ee of the trust
reposed in him by his Er or duly organized
representative;
4. Commission of a crime or offense by the Ee
against the person of his Er or any
immediate member of his family or his duly
authorized representative;
5. Other causes analogous to the foregoing (LC,
Art. 282).
NOTE: The burden of proving that the termination
was for a valid or authorized cause shall rest on the
Er [LC, Art. 277(b)].
Serious misconduct
It is an improper or wrong conduct; the
transgression of some established and definite rule
of action, a forbidden act, a dereliction of duty,
willful in character, and implies wrongful intent
and not mere error in judgment. To be serious
within the meaning and intendment of the law, the
misconduct must be of such grave and aggravated
character and not merely trivial or unimportant
(Villamor Golf Club v. Pehid, G.R. No. 166152,
October 4, 2005).
Elements of serious misconduct
1. It must be serious or of such a grave and
aggravated character;
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
100
2. Must relate to the performance of the Ees
duties;
3. Ee has become unfit to continue working for
the Er (Philippine Aeolus Automotive United
Corp. v. NLRC, G.R. No. 124617, April 28,
2000).
Examples of serious misconduct:
1. Sexual Harassment
2. Fighting within the company premises
3. Uttering obscene, insulting or offensive
words against a superior
4. Falsification of time records
5. Gross immorality
Q: Escando, upset at his transfer to the washer
section, repeatedly uttered gago ka and
threatened bodily harm to his superior Mr.
Andres. Is the utterance of the obscene words
and threats of bodily harm gross and willful
misconduct?
A:Yes. The repeated utterances by Escando of
obscene, insulting or offensive words against a
superior were not only destructive of the morals of
his co-Ees and a violation of the company rules and
regulations, but also constitute gross misconduct
which is one of the grounds provided by law to
terminate the services of an Ee (Autobus Workers
Union v. NLRC, G.R. No. 117453, June 26, 1998).
Q: Samson made insulting and obscene
utterances towards the General Manager saying
Si EDT bullshit yan, sabihin mo kay EDT yan
among others during the Christmas party. Are
the utterances towards the General Manager
gross misconduct?
A: The alleged misconduct of Samson when viewed
in its context is not of such serious and grave
character as to warrant his dismissal. Samson
made the utterances and obscene gestures at an
informal Christmas gathering and it is to be
expected during this kind of gatherings, where
tongues are more often than not loosened by liquor
of other alcoholic beverages, that Ees freely
express their grievances and gripes against their
Ers. Ees should be allowed wider latitude to freely
express their grievances and gripes against their
Er. Ees should be allowed wider latitude to freely
express their sentiments during these kinds of
occasions which are beyond the disciplinary
authority of the Er (Samson v. NLRC, G.R. No.
121035, April 12, 2000).
 TERMINATION OF EMPLOYMENT
Q: Cheryll Leus was a non-teaching personnel
employed in St. Scholasticas College Westgrove
(SSCW). Cheryll and her boyfriend conceived a
child out of wedlock. SSCW dismissed her on
the ground that her pregnancy out of wedlock
constitutes disgraceful and immoral conduct
and ran counter to the moral principles that
SSCW stands for and teaches its students. Does
pregnancy out of wedlock (without a legal
impediment to marry) constitutes immoral
conduct as a ground for dismissal contemplated
by law?
A: No. It is not the totality of the circumstances
surrounding the conduct per se that determines
whether the same is disgraceful or immoral, but
the conduct that is generally accepted by society as
respectable or moral. If the conduct does not
conform to what society generally views as
respectable or moral, then the conduct is
considered as disgraceful or immoral. Tersely put,
substantial evidence must be presented, which
would establish that a particular conduct, viewed
in light of the prevailing norms of conduct, is
considered disgraceful or immoral. Thus, the
determination of whether a conduct is disgraceful
or immoral involves a two-step process: first, a
consideration of the totality of the circumstances
surrounding the conduct; and second, an
assessment of the said circumstances vis--vis the
prevailing norms of conduct, i.e., what the society
generally considers moral and respectable. There is
still a necessity to determine whether the
petitioners pregnancy out of wedlock is
considered disgraceful or immoral in accordance
with the prevailing norms of conduct. To stress,
pre-marital sexual relations between two
consenting adults who have no impediment to
marry each other, and, consequently, conceiving a
child out of wedlock, gauged from a purely public
and secular view of morality, does not amount to a
disgraceful or immoral conduct (Leus v. SSCW, G.R.
No. 187226, January 28, 2015).
Requisites that must concur in order that
willful disobedience of the Ers lawful orders
are considred just cause for termination:
1. The Ees assailed conduct must have been
willful or intentional, the willfulness being
characterized by a wrongful and perverse
attitude.
2. The disobeyed orders, regulations or
instructions of the Er must be:
a. Reasonable and lawful
b. Sufficiently known to the Ee
c. In connection with the duties which the
Ee has been engaged to discharge (Cosep
v. NLRC, G.R. No. 124966, June 16, 1998).
101
Q. Is refusal to a promotion by an Ee an act of
insubordination or willful disobedience?
A. No. There is no law that compels an Ee to accept
a promotion for the reason that a promotion is in
the nature of a gift or reward, which a person has
the right to refuse. The exercise of the Ee of the
right to refuse a promotion cannot be considered in
law as insubordination or willful disobedience
(PT&T Corp. v. CA, G.R. No. 152057, September, 29,
2003).
Q: A company vehicle was brought twice out of
the company premises without authorization.
In the first instance the company opted not to
implement any action against Homer and
instead issued a memorandum reminding
Homer as well as the security guards of the
proper procedure. However, in the second
instance the vehicle met an accident. Is Homer
guilty of willful disobedience even though he
was not the one who personally brought the
company vehicle out of the company premises
and was merely a passenger in the second
incident?
A: Yes. A rule prohibiting Ees from using company
vehicles for private purpose without authority
from management is a reasonable one. When
Homer rode the company vehicle, he was
undoubtedly aware of the possible consequences of
his act and taking into consideration his moral
ascendancy over the security guards it was
incumbent upon him not only to admonish them
but also to refrain from using the company car
himself. Homer is responsible for the unauthorized
release of the vehicle of the company which is a
violation of the rules and regulations of the
company. Homer was already reminded of the
proper procedure of the company (Family Planning
Org. of the Phil. v. NLRC, G.R. No. 75907, May, 23,
1992).
Q: Escobins group were security guards based
in Basilan. They were placed in floating status
and were asked to report for reassignment in
Metro Manila by PISI. Upon failure to report or
respond to such directives they were ordered
dismissed from employment by PISI for willful
disobedience. Did the failure to report to
Manila amount to willful disobedience?
A: No. The reasonableness of the rule pertains to
the kind of character of directives and commands
and to the manner in which they are made. In this
case, the order to report to the Manila office fails to
meet this standard. The order to report to Manila
was inconvenient, unreasonable, and prejudicial to
Escobins group since they are heads of families
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
residing in Basilan and they were not given
transportation money or assurance of availability
of work in Manila (Escobin v. NLRC, G.R. No. 118159,
April 15, 1998).
Gross negligence
It implies a want or absence of or failure to
exercise slight care of diligence of the entire
absence of care it evinces thoughtless disregard of
consequences without exerting any effort to avoid
them. However, such neglect must not only be
gross but habitual in character (Judy Phils. v. NLRC,
G.R. No. 111934, April 29, 1998).
Degree of negligence as a just cause for
termination
Gross and habitual negligence.
Habitual neglect of duties
Imply repeated failure to perform ones duties over
a period of time, depending upon the circumstance
(JGB and Associates v. NLRC, GR No. 10939, March, 7,
1996).
Q: Antiola, as assorter of baby infant dress for
Judy Phils., erroneously assorted and packaged
2,680 dozens of infant wear. Antiola was
dismissed from employment for this infraction.
Does the single act of misassortment constitute
gross negligence?
A: No. Such neglect must not only be gross but also
habitual in character. Hence, the penalty of
dismissal is quite severe considering that Antiola
committed the infraction for the first time (Judy
Phils. v. NLRC, G.R. No. 111934, April 29, 1998).
Q: Does the failure in performance evaluations
amount to gross and habitual neglect of duties?
A: As a general concept poor performance is
equivalent to inefficiency and incompetence in the
performance of official duties. The fact that an Ees
performance is found to be poor or unsatisfactory
does not necessarily mean that the Ee is grossly
and habitually negligent of his duties. Gross
negligence implies a want or absence of or failure
to exercise slight care of diligence or the entire
absence or care. He evinces a thoughtless disregard
of consequences without exerting any effort to
avoid them (Eastern Overseas Employment Center
Inc. v. Bea, G.R. 143023, November 29, 2005).
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
102
Q: Is inefficiency a just cause for dismissal?
A: Yes, failure to observe prescribed standards of
work or to fulfill reasonable work assignments due
to inefficiency may constitute just cause for
dismissal. Such inefficiency is understood to mean
failure to attain work goals or work quotas, either
by failing to complete the same within the allotted
reasonable period, or by producing unsatisfactory
results (Buiser v. Leogardo, G.R. No. L-63316,
1984).This ground is considered analogous to those
enumerated under Art. 282. (Skippers United
Pacific v. Magud, G.R. No. 166363, August 15, 2006).
Q: Gamido was a quality control inspector of VH
Manufacturing. Gamido was allegedly caught by
the company Pres. Dy Juanco of sleeping and
was dismissed from employment. Did Gamidos
act of sleeping on the job constitute a valid
cause of dismissal?
A: No. Sleeping on the job as a valid ground for
dismissal only applies to security guards whose
duty necessitates that they be awake and watchful
at all times. Gamidos single act of sleeping further
shows that the alleged negligence or neglect of
duty was neither gross nor habitual (VH
Manufacturing v. NLRC, G.R. No. 130957, January,
19, 2000).
Some forms of neglect of duty
1. Habitual tardiness and absenteeism
2. Abandonment:
a. Failure to report for work or absence
without justifiable reason
b. Clear intention to sever Er-Ee
relationship manifested by some overt
acts (Labor et. al v. NLRC, GR No. 110388,
September 14, 1995).
Loss of trust and confidence a just cause for
termination when
1. It applies only to cases involving:
a. Ees occupying positions of trust and
confidence (confidential and
managerial Ees) To this class belong
managerial Ees, i.e., those vested with the
powers or prerogatives to lay down
management policies and/or to hire,
transfer, suspend, lay-off, recall, discharge,
assign or discipline Ees or effectively
recommend such managerial actions
NOTE: The mere existence of a basis for
the loss of trust and confidence justifies
 TERMINATION OF EMPLOYMENT
the dismissal of the managerial Ee because
when an Ee accepts a promotion to a
managerial position or to an office
requiring full trust and confidence, such Ee
gives up some of the rigid guaranties
available to ordinary workers (Cecilia T.
Manese v. Jollibee Foods Corporation, G.R.
No. 170454, October 11, 2012).
b. Ees routinely charged with the care and
custody of the Ers money or property
To this class belong cashiers, auditors,
property custodians, etc., or those who, in
the normal and routine exercise of their
functions, regularly handle significant
amounts of money or property (Mabeza v.
NLRC, G.R. No. 118506, April 18, 1997).
2. The loss of trust and confidence must be based
on willful breach.
NOTE: A breach is willful if it is done
intentionally, knowingly, and purposely
without justifiable excuse, as distinguished
from an act done carelessly, thoughtlessly,
heedlessly, or inadvertently (De la Cruz v.
NLRC, G.R. No. 119536, February 17, 1997).
3. The act constituting the breach must be work-
related such as would show the Ee concerned
to be unfit to continue working for the Er
(Gonzales v. NLRC, G.R. No. 131653, March 26,
2001).
4. It must be substantial and founded on clearly
established facts sufficient to warrant the Ees
separation from employment (Sulpicio Lines
Inc. v. Gulde, G.R. No. 149930, February 22,
2002).
5. Fraud must be committed against the Er or his
representatives, e.g.:
a. Falsification of time cards
b. Theft of company property
c. Unauthorized use of company vehicle
NOTE: The treatment of rank and file personnel
and managerial Ees in so far as the application of
the doctrine of loss of trust and confidence is
concerned is different. As regards managerial Ees,
such as Caoile, mere existence of a basis for
believing that such Ee has breached the trust of his
Er would suffice for his dismissal (Caoile v. NLRC,
G.R. No. 115491, November 24, 1998).
Guidelines for the Doctrine of Loss of
Confidence to apply
1. Loss of confidence should not be simulated
(reasonable basis for loss of trust and
confidence);
103
2. Not used for subterfuge for causes which are
improper and/or illegal and unjustified;
3. Not arbitrarily asserted in the face of
overwhelming evidence to the contrary;
4. Must be genuine, not a mere afterthought to
justify earlier action taken in bad faith; and
5. The Ee involved holds a position of trust and
confidence.
NOTE: The breach of trust must rest on substantial
grounds and not on the Ers arbitrariness, whims,
caprices, or suspicion; otherwise, the Ee would
eternally remain at the mercy of the Er. It should be
genuine and not simulated, nor should it appear as
a mere afterthought to justify earlier action taken
in bad faith of a subterfuge for causes which are
improper, illegal, or unjustified. It has never been
intended to afford and occasion for abuse because
of its subjective nature. There must, therefore, be
an actual breach of duty committed by the Ee
which must be established by substantial evidence
(Dela Cruz v. NLRC, G.R. No. 119536, February 17,
1997).
Q: Mabeza, a chambermaid at Hotel Supreme
was terminated from employment because of
her refusal to sign an affidavit attesting to their
Ers compliance with minimum wage and other
labor standards. Mabeza filed a complaint for
illegal dismissal against Hotel Supreme. As a
defense, Hotel Supreme claimed that she
abandoned her work and belatedly claimed
loss of confidence as the ground for the
dismissal of Mabeza because she stole some of
the properties of her Er. Is loss of confidence a
valid ground for dismissal of a hotel
chambermaid?
A: No. Loss of confidence as a just cause for
dismissal was never intended to provide Ers with a
blank check for terminating their Ees. Evidently, an
ordinary chambermaid who has to sign out for
linen and other hotel property from the property
custodian each day and who has to account for
each and every towel or bed sheet utilized by the
hotel's guests at the end of her shift would not fall
under any of these two classes of Ees for which loss
of confidence, if ably supported by evidence, would
normally apply (Mabeza v. NLRC, G.R. No. 118506,
April 18, 1997).
Q: Abelardo Abel was first hired by Philex
Mining Corp. in January 1988. He was later
assigned to the companys Legal Department as
a Contract Claims Asst., and held the position
for 5 yrs. prior to his transfer to the Mine
Engineering and Draw Control Department
wherein he was appointed Unit Head. In 2002,
he was implicated in an irregularity occurring
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
in the subsidence area of the companys mine
site at Benguet. His co-worker Lupega, executed
an affidavit known as the Subsidence Area
Anomaly. The incidents in Lupegas affidavit
supposedly took place when Abel was still a
Contract Claims Asst. at the companys legal
dept. An investigation was promptly launched
by the companys officers. Abel attended the
meetings but claimed that he was neither asked
if he needed the assistance of counsel nor
allowed to properly present his side. By memo,
the company found Abel guilty of (1) fraud
resulting in loss of trust and confidence and (2)
gross neglect of duty, and was meted out the
penalty of dismissal from employment. Was
Abel validly dismissed for any of the causes
provided for in Art.282 of the LC?
A: No. The 1st requisite for dismissal on the
ground of loss of trust and confidence is that the Ee
concerned must be holding a position of trust and
confidence. Abel was a contract claims assistant at
the time he allegedly committed the acts which led
to its loss of trust and confidence. It is not the job
title but the actual work that the Ee performs. It
was part of Abels responsibilities to monitor the
performance of the companys contractors in
relation to the scope of work contracted out to
them.
The 2ndrequisite is that there must be an act that
would justify the loss of trust and confidence. Loss
of trust and confidence, to be a valid cause for
dismissal, must be based on a willful breach of
trust and founded on clearly established facts. The
basis for the dismissal must be clearly and
convincingly established but proof beyond
reasonable doubt is not necessary. The companys
evidence against Abel fails to meet this standard.
Its lone witness, Lupega, did not support his
affidavit and testimony during the company
investigation with any piece of evidence at all. It
could hardly be considered substantial evidence
(Abel v. Philex Mining Corp., G.R. No. 178976, July 31,
2009).
Q: Is failure to reach the monthly sales quota a
valid ground for dismissal based on loss of trust
and confidence?
A: No. It is stated in Art. 282 of the LC that loss of
trust and confidence is a ground for termination of
an employee. However, it requires that such breach
of trust be willful whether it be done
intentionally, knowingly, and purposely, without
justifiable excuse. The court finds that failure to
reach the monthly sales quota is not valid ground
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
104
for loss of trust and confidence as this is not what
has been contemplated in Art. 282(c) of the LC.
Several factors can be attributed to the low sales
performance, which may not be compelled by the
respondent. It being involuntary on his part the
factors cannot be taken as a valid ground as they
are not to be considered willful breach of trust, for
they were not done intentionally, knowingly and
purposely, without justifiable excuse (Norkis
Distributors, Inc and Alex D. Buat v. Delfin S.
Descallar, G.R. No. 185255, March 14, 2012).
Abandonment as a just cause for termination
It means deliberate and unjustified refusal of an
employee to resume his employment.
Requirements for a valid finding of
abandonment
Two (2) factors must be present:
1. The failure to report for work, or absence
without valid or justifiable reason; and
2. A clear intention to sever Er-Ee relationship,
with the 2nd element as the more
determinative factor, being manifested by
some overt acts(Sta. Catalina College v. NLRC,
G.R. No. 144483, November 19, 2003).
How to prove abandonment
Abandonment is proven when the Er must show
that the Ee deliberately and unjustifiably refused to
resume his employment without any intention of
returning. There must be a concurrence of the
intention to abandon and some overt acts from
which an Ee may be deduced as having no more
intention to work. The law, however, does not
enumerate what specific overt acts can be
considered as strong evidence of the intention to
sever the Ee-Er relationship (Sta. Catalina College v.
NLRC, G.R. No. 144483, November 19, 2003).
Q: Mejila, a barber at Windfield Barber Shop,
had an altercation with a fellow barber which
resulted in his subsequent turning over the
duplicate keys of the shop to the cashier and
took away all his belongings there from and
worked at different barbershop. Mejila then
filed an illegal dismissal case but did not seek
reinstatement as a relief. Did Mejila commit
abandonment?
A: Yes. Mejilas acts such as surrendering the
shops keys, not reporting to the shop anymore
without any justifiable reason, his employment in
 TERMINATION OF EMPLOYMENT
another barber shop, and the filing of a complaint
for illegal dismissal without praying for
reinstatement clearly show that there was a
concurrence of the intention to abandon and some
overt acts from which it may be inferred that the
Ee concerned has no more interest in working (Jo v.
NLRC, G.R. No. 121605, February 2, 2000).
Q: The Ees averred that they were underpaid
and filed a complaint for money claims against
the Er before the LA. As a result of their
complaint, they were relieved from their posts
and were not given new assignments despite
the lapse of six months. On the other hand, the
Er maintains that the Ees were not dismissed
but were merely transferred to a new post and
voluntarily abandoned their jobs when they
failed to report for duty in the new location.
Upon termination, the Ee moved to file a joint
complaint for illegal dismissal. Is there a valid
indication of abandonment from work?
A. No. For abandonment of work to fall under Art.
282 of the LC, as amended, as gross and habitual
neglect of duties there must be the occurrence of
two elements: first, there should be a failure of the
Ee to report for works without a valid or justifiable
reason and second, there should be a showing that
the Ee intended to sever the Er-Ee relationship, the
second element being the more determinative
factor as manifested by overt acts.
The Er cannot simply conclude knowledge that an
Ee is ipso facto notified of a transfer when there is
no evidence to indicate that the Ee had knowledge
of the transfer order. Hence, the failure of an Ee to
report for work at the new location cannot be
taken against him as an element of abandonment.
In addition to these tests for valid transfer, there
should be proper and effective notice to the Ee
concerned. It is the Ers burden to show that the Ee
was duly notified of the transfer. Verily, an Er
cannot reasonably expect an Ee to report for work
in a new location without first informing said Ee of
the transfer. Alert securitys insistence on the
sufficiency of mere issuance of the transfer order is
indicative of bad faith on their part (Alert Security
and Investigation Agency, Inc. et al v. Saidali
Pasawilan, et al., G.R. No. 182397, September 14,
2011).
Guidelines to determine the validity of
termination:
Validity of termination per se is determined by
compliance with two-notice rule, hearing, just or
authorized cause. This is more or propriety of
105
dismissal as penalty as oppose to reprimand,
suspension, etc.
"Commission of a crime or offense" as just
cause for termination of an Es service
When an offense committed by the Ee against the
person of his Er or any immediate member of his
family or his duly authorized representative and
thus, conviction of a crime involving moral
turpitude is not analogous thereto as the element
of relation to his work or to his Er is lacking.
NOTE: A criminal case need not be actually filed.
Commission of acts constituting a crime itself is
sufficient.
For an act to be included in analogous cases of
just causes of termination
It must be due to the voluntary and/or willful act
or omission of the Ee (Nadura v. Benguet
Consolidated, G.R. No. L-17780, August 24, 1962).
e.g.:
1. Violation of company rules and regulations
2. Drunkenness
3. Gross inefficiency
4. Illegally diverting Ers products
5. Failure to heed an order not to join an illegal
picket
6. Violation of safety rules and code of
discipline
NOTE: To fall within the ambit of analogous cases
the act or omission must have an element similar
to those found in the specific Just cause
enumerated under Art. 282. (International Rice
Research Institute v. NLRC, G.R. No. 97239, May 12,
1993).
Past offenses
Previous offenses may be so used as a valid
justification for dismissal from work ONLY if the
infractions are related to the subsequent
offense upon which the basis the termination of
employment is decreed (Stellar Industrial
Service Inc. v. NLRC, G.R. No. 117418. Jan. 24,
1996).
The school failed to show that Chua took
advantage of her position to court her student
Chua. If the two eventually fell in love, despite
the disparity in their ages and academic levels,
this only lends substance to the truism that the
heart has reasons of its own which reason does
not know. But, yielding to this gentle and
universal emotion is not to be so casually
equated with immorality. The deviation of the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
circumstances of their marriage from the usual
social pattern cannot be considered as a
defiance of contemporary social mores (Chua-
Qua v. Clave, G.R. No. L-49549 August 30, 1990).
Doctrine of Incompatibility
Where the Ee has done something that is contrary
or incompatible with the faithful performance of
his duties, his Er has a just cause for terminating
his employment (Manila Chauffeurs League
v.Bachrach Motor Co., G.R. No. L-47071, June 29,
1940).
AUTHORIZED CAUSES
Authorized causes of termination by the Er:
1. Installation of labor-saving devices
(automation/robotics)
2. Redundancy(superfluity in the performance
of a particular work) Exists where the
services of an Ee are in excess of what is
reasonably demanded by the actual
requirements of the enterprise (Wiltshire File
Co., Inc. v. NLRC, G.R. No. 82249, February 7,
1991).
NOTE: The redundancy should not have been
created by the Er.
3. Reorganization
NOTE: An Er is not precluded from adopting a
new policy conducive to a more economical
and effective management, and the law does
not require that the Er should be suffering
financial losses before he can terminate the
services of the Ee on the ground of redundancy
(DOLE Phil., Inc. v. NLRC, G.R. No. L-55413, July
25, 1983).
4. Retrenchment Cutting of expenses and
includes the reduction of personnel; It is a
management prerogative, a means to protect
and preserve the Ers viability and ensure his
survival. To be an authorized cause it must be
effected in good faith and for the
retrenchment, which is after all a drastic
recourse with serious consequences for the
livelihood of the Ees or otherwise laid-off.
NOTE: The phrase to prevent losses means
that retrenchment or termination from the
service of some Ees is authorized to be
undertaken by the Er sometime before the
anticipated losses are actually sustained or
realized. Evidently, actual losses need not set
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
106
in prior to retrenchment (Cajucom VII v. TP
Phils Cement Corp., et al, G.R. No. 149090,
February 11, 2005).
5. Closing or cessation of operation of the
establishment or undertaking Must be
done in good faith and not for the purpose of
circumventing pertinent labor laws.
6. Disease Must be incurable within 6 months
and the continued employment is prohibited
by law or prejudicial to his health as well as to
the health of his co-Ees with a certification
from the public health officer that the disease
is incurable within 6 months despite due to
medication and treatment
Other authorized causes
1. Total and permanent disability of Ee
2. Valid application of union security clause
3. Expiration of period in term of employment
4. Completion of project in project employment
5. Failure in probation
6. Relocation of business to a distant place
7. Defiance of return-to work-order
8. Commission of Illegal acts in strike
9. Violation of contractual agreement
10. Retirement
Steps required in termination of an Ees
employment for authorized causes:
1. Written Notice to DOLE 30 days prior to the
intended day of termination.
Purpose: To enable it to ascertain the
veracity of the cause of termination.
2. Written notice to Ee concerned 30 days prior
the intended date of termination.
3. Payment of separation pay Serious business
losses do not excuse the Er from complying
with the clearance or report required in Art.
283 of the LC and its IRR before terminating
the employment of its workers. In the
absence of justifying circumstances, the
failure of the Er to observe the procedural
requirements under Art. 284 of the LC taints
their actuations with bad faith if the lay-off
was temporary but then serious business
losses prevented the reinstatement of
respondents, the Ers should have complied
with the requirements of written notice.
Requisites of a valid redundancy:
1. Written notice served on both the Ees and
the DOLE at least 1 month prior to
separation from work
 TERMINATION OF EMPLOYMENT
2. Payment of separation pay equivalent to at
least 1 month pay or at least 1 month pay for
every year of service, whichever is higher
3. Good faith in abolishing redundant position
4. Fair and reasonable criteria in ascertaining
what positions are to be declared redundant:
a. Less preferred status, e.g. temporary Ee
b. Efficiency and
c. Seniority
Q: Ong, a Sales Manager of Wiltshire File Co.,
Inc., was informed of the termination of his
employment due to redundancy upon returning
from a trip abroad. Ong maintains that there
can be no redundancy since he was the only
person occupying his position in the company.
Is there redundancy even though Ong was the
only one occupying his position?
A: Yes. Redundancy in an Ers personnel does not
necessarily or even ordinarily refer to duplication
of work. The characterization of Ongs services as
no longer necessary or sustainable and therefore
properly terminable, was an exercise of business
judgment on the part of Wiltshire. Furthermore, a
position is redundant where it is superfluous, and
superfluity of a position or positions may be the
outcome of a number of factors, such as over hiring
of workers, decreased volume of business, or
dropping of a particular product line or service
activity previously manufactured or undertaken by
the enterprise. The Er has no legal obligation to
keep in its payroll more Ees that are necessary for
the operation of its business (Wiltshire File Co., Inc.
v. NLRC, G.R. No. 82249, February 7, 1991).
NOTE: The losses which the company may suffer
or is suffering may be proved by financial
statements audited by independent auditors (Asian
Alcohol Corporation v. NLRC, G.R. No. 131108, March
25, 1999).
Retrenchment is a means of last resort because in
the normal course of business losses are expected.
Er must have taken all measures necessary to
prevent losses and it is the last measure when you
touch the work force.
Requisites of a valid retrenchment:
1. Written notice served on both the Ee and the
DOLE at least 1 month prior to the intended
date of retrenchment
2. Payment of separation pay equivalent to at
least one month pay or at least 1/2 month
pay for every year of service, whichever is
higher
3. Good faith
107
4. Proof of expected or actual losses
5. The Er used fair and reasonable criteria in
ascertaining who would be retained among
the Ees, such as status, efficiency, seniority,
physical fitness, age, and financial hardship
of certain workers (FASAP v. PAL, G.R. No.
178083, October 2, 2009).
Criteria in selecting Ees to be retrenched:
There must be fair and reasonable criteria to be
used in selecting Ees to be dismissed such as:
1. Less preferred status;
2. Efficiency rating;
3. Seniority (Phil. Tuberculosis Society, Inc. v.
National Labor Union, G.R. No. 115414,
August 25, 1998).
Last In First Out (LIFO) Rule
It applies in the termination of employment in the
line of work. What is contemplated in the LIFO rule
is that when there are two or more Ees occupying
the same position in the company affected by the
retrenchment program, the last one employed will
necessarily be the first one to go (Maya Farms Ees
Organization v. NLRC, G.R. No. 106256, December
28, 1994).
Q: Is the seniority rule or "last in first out"
policy to be strictly followed in effecting a
retrenchment or redundancy program? (2001
Bar Question)
A: No. In Asian Alcohol Corp., the SC stated that
with regard the policy of "first in, last out" in
choosing which positions to declare as redundant
or whom to retrench to prevent further business
losses, there is no law that mandates such a
policy. The reason is simple enough. A host of
relevant factors come into play in determining
cost efficient measures and in choosing the Ees
who will be retained or separated to save the
company from closing shop. In determining these
issues, management plays a pre-eminent role. The
characterization of positions as redundant is an
exercise of business judgment on the part of the
Er. It will be upheld as long as it passes the test of
arbitrariness.
Q: Philippine Tuberculosis Society, Inc.
retrenched 116 Ees after incurring deficits
amounting to 9.1 million pesos. Aside from
retrenching its Ees, the company also
implemented cost cutting measures to prevent
such losses for increasing and minimizing it.
The NLRC ruled that the retrenchment was not
valid on the ground that the Society did not
take the seniority rule into account in the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
selection of the retrenchment. Was the
retrenchment done by the Society not valid for
its failure to follow the criteria laid down by
law?
A: No. The Society terminated the employment of
several workers who have worked with the Society
for great number of years without consideration
for the number of years of service and their
seniority indicates that they had been retained for
such a long time because of loyal and efficient
service. The burden of proving the contrary rests
on the Society (Phil. Tuberculosis Society, Inc. v.
National Labor Union, G.R. No. 115414, August 25,
1998).
Q: Due to mounting losses the former owners of
Asian Alcohol Corporation sold its stake in the
company to Prior Holdings. Upon taking control
of the company and to prevent losses, Prior
Holdings implemented a reorganization plan
and other cost-saving measures including the
retrenchment of 117 Ees some of which are
members of the union and the majority held by
non-union members. Some retrenched workers
filed a complaint for illegal dismissal alleging
that the retrenchment was a subterfuge for
union busting activities.
Was the retrenchment made by Asian Alcohol
valid and justified?
A: Yes. Even though the bulk of the losses were
suffered under the old management and continued
only under the new management, ultimately the
new management of Prior Holdings will absorb
such losses. The law gives the new management
every right to undertake measures to save the
company from bankruptcy (Asian Alcohol Corp. v.
NLRC, G.R. No. 131108, March 25, 1999).
Redundancy v. Retrenchment
Redundancy does not involve losses or the closing
or cessation of operations of the establishment.
On the other hand, retrenchment involves losses,
closures or cessation of operations of
establishment or undertaking due to serious
business losses or financial reverses.
Requisites of a valid closure
1. Written notice served on both the Ees and
the DOLE at least 1 month prior to the
intended date of closure
2. Payment of separation pay equivalent to at
least one month pay or at least 1/2 month
UNIVERSITY OF SANTO TOMAS
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108
pay for every year of service, whichever is
higher, except when closure is due to serious
business losses
3. Good faith
4. No circumvention of the law
5. No other option available to the Er
Test for the validity of closure or cessation of
establishment or undertaking
The ultimate test of the validity of closure or
cessation of establishment or undertaking is that it
must be bona fide in character. And the burden of
proving such falls upon the Er (Capitol Medical
Center, Inc. v. Dr. Meris, G.R. No. 155098, September
16, 2005).
Payment of separation pay in case of closure
Payment of separation pay is required only where
closure is neither due to serious business losses
nor due to an act of Government (North Davao
Mining Corp v. NLRC, G.R. No. 112546, Mar. 13, 1996;
NFL v. NLRC, G.R. No. 127718, March 2, 2000).
NOTE: Closure contemplated is a unilateral and
voluntary act on the part of the Er to close the
business establishment.
There is no obligation to pay separation pay:
a. When the closure of the business is due to
serious business loss
b. Where closure of business is by compulsion
of law because closure of business is not
attributed to Ers will. (e.g.: the land where
the building is situated was declared covered
by the Comprehensive Agrarian Reform
Law)
Q: Galaxie Steel Corp. decided to close down
because of serious business loses. It filed a
written notice with the DOLE informing its
intended closure and the termination of
employment. It posted the notice of closure on
the corporate bulletin board.
1. Does the written notice posted by
Galaxie on the bulletin board
sufficiently comply with the notice
requirement under Art. 283 of the LC?
2. Are Galaxie Ees entitled to separation
pay?
A:
1. No. In order to meet the purpose, service
of the written notice must be made
individually upon each and every Ee of the
 TERMINATION OF EMPLOYMENT
company. However, the Court held that
where the dismissal is for an authorized
cause, non-compliance with statutory due
process should not nullify the dismissal, or
render it illegal, or ineffectual. Still, the Er
should indemnify the Ee, in the form of
nominal damages, for the violation of his
right to statutory due process (Galaxie
Steel Workers Union v. NLRC, G.R. No.
165757, October 17, 2006).
2. No. Galaxie had been experiencing serious
financial losses at the time it closed
business operations. Art. 283 of the LC
governs the grant of separation benefits
"in case of closures or cessation of
operation" of business establishments "not
due to serious business losses or financial
reverses." Where, the closure then is due
to serious business losses, the LC does not
impose any obligation upon the Er to pay
separation benefits (Galaxie Steel Workers
Union v. NLRC, G.R. No. 165757, October 17,
2006).
Q: Rank-and-file workers of SIMEX filed a
petition for direct certification and affiliated
with Union of Filipino Workers (UFW).
Subsequently, 36 workers of the companys
lumpia department and 16 other workers
from other departments were effectively locked
out when their working areas were cleaned out.
The workers through UFW filed a complaint for
unfair labor practices against the company.
SIMEX then filed a notice of permanent
shutdown/total closure of all units of operation
in the establishment with the DOLE allegedly
due to business reverses brought about by the
enormous rejection of their products for export
to the United States.
Was the closure warranted by the alleged
business reverses?
A: No. The closure of a business establishment is a
ground for the termination of the services of any Ee
unless the closing is for the purpose of
circumventing the provisions of the law. But, while
business reverses can be a just cause for
terminating Ees, they must be sufficiently proved.
In this case, the audited financial statement of
SIMEX clearly indicates that they actually derived
earnings. Although the rejections may have
reduced their earnings they were not suffering
losses. There is no question that an Er may reduce
its work force to prevent losses but it must be
serious, actual and real otherwise this ground for
termination would be susceptible to abuse by
scheming Ers who might be merely feigning
109
business losses or reverses in their business
ventures to ease out Ees (Union of Filipino Workers
v. NLRC, G.R. No. 90519, March 23, 1992).
Q: Carmelcraft Corporation closed its business
operations allegedly due to losses of Php 1,
603.88 after the Carmelcraft Employees Union
filed a petition for certification election.
Carmelcraft Union filed a complaint for illegal
lockout and ULP with damages and claim for
employment benefits. Were the losses incurred
by the company enough to justify closure of its
operations?
A: No. The determination to cease operations is a
prerogative of management that is usually not
interfered with by the State as no business can be
required to continue operating at a loss simply to
maintain the workers in employment. That would
be a taking of property without due process of law
which the Er has a right to resist. But where it is
manifest that the closure is motivated not by a
desire to avoid further losses but to discourage the
workers from organizing themselves into a union
for more effective negotiations with management,
the State is bound to intervene. The losses of less
than Php 2,000 for a corporation capitalized at Php
3 million cannot be considered serious enough to
call for the closure of the company (Carmelcraft
Corp. v. NLRC, G.R. No. 90634-35, June 6, 1990).
Q: Is the transferee of the closed corporation
required to absorb the Ees of the old
corporation?
A:
GR: There is no law requiring a bona fide purchaser
of assets of an on-going concern to absorb in its
employ the Ees of the latter except when the
transaction between the parties is colored or
clothed with bad faith (Sundowner Devt Corp. v.
Drilon, G.R. No. 82341, December 6, 1989).
XPNs:
1. Where the transferee was found to be
merely an alter ego of the different merging
firms (Filipinas Port Services, Inc. v. NLRC,
G.R. No. 97237, August 16, 1991).
2. Where the transferee voluntarily agrees to
do so (Marina Port Services, Inc. v. Iniego, G.R.
No. 77853, January 22, 1990).
Q: Marikina Dairy Industries, Inc. decided to
sell its assets and close operations on the
ground of heavy losses. The unions alleged that
the financial losses were imaginary and the
dissolution was a scheme maliciously designed
to evade its legal and social obligations to its
Ees. The unions want the buyers of the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
corporations assets restrained to operate
unless the members of the unions are hired to
operate the plant under the terms and
conditions specified in the collective bargaining
agreements.
Is the buyer of a companys assets required to
absorb the Ees of the seller?
A: No. There is no law requiring that the purchaser
of a companys assets should absorb its Ees and the
most that can be done for reasons of public policy
and social justice was to direct that buyers of such
assets to give preference to the qualified separated
Ees in the filling up of vacancies in the facilities of
the buyer (MDII Supervisors & Confidential Ees Assn
(FFW) v. residential Assistant on Legal Affairs, G.R.
Nos. L-45421-23, September 9, 1977).
Closure v. Retrenchment
CLOSURE RETRENCHMENT
Is the reduction of
It is the reversal of
fortune of the Er personnel for the
purpose of cutting
whereby there is a
complete cessation of down on costs of
operations in terms of
business operations
to prevent further salaries and wages
resorted to by an Er
financial drain upon
an Er who cannot because of losses in
operation of a business
pay anymore his Ees
since business has occasioned by lack of
work and considerable
already stopped.
reduction in the
volume of business.
In the case of
retrenchment,
however, for the
One of the closure of a business or
prerogatives of a department due to
management is the serious business losses
decision to close the to be regarded as an
entire establishment authorized cause for
or to close or abolish terminating Ees, it
a department or must be proven that
section thereof for the losses incurred are
economic reasons, substantial and actual
such as to minimize or reasonably
expenses and reduce imminent; that the
capitalization. same increased
through a period of
time; and that the
condition of the
company is not likely to
improve in the near
future.
UNIVERSITY OF SANTO TOMAS
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110
CLOSURE RETRENCHMENT
LC provides for the
Does not obligate the payment of separation
Er for the payment of package in case of
separation package if retrenchment to
there is closure of prevent losses.
business due to
serious losses.
Disease as a ground for dismissal
When the Ee suffers from a disease, and:
1. His continued employment is prohibited by
law or prejudicial to his health or to the
health of his co-Ees (IRR, Book VI, Rule I,
Sec.8).
2. With a certification by competent public
health authority that the disease is incurable
within 6 months despite due medication and
treatment (Solis v. NLRC, GR No. 116175,
October 28, 1996).
NOTE: The requirement for a medical certification
cannot be dispensed with; otherwise, it would
sanction the unilateral and arbitrary determination
by the Er of the gravity or extent of the Ees illness
and thus defeat the public policy on the protection
of labor (Manly Express v. Payong, G.R. No. 167462,
October 25, 2005).
Procedure in terminating an Ees employment
on the ground of disease
1. The Er shall not terminate his employment
unless:
a. There is a certification by a competent
public health authority
b. That the disease is of such nature or at
such a stage that it cannot be cured within
a period of 6 months even with proper
medical treatment.
2. If the disease or ailment can be cured within
the period, the Er shall not terminate the Ees
employment but shall ask the Ee to take a
leave. The Er shall reinstate such Ee to his
former position immediately upon the
restoration of his normal health (IRR, Book VI,
Rule I, Sec.8).
 TERMINATION OF EMPLOYMENT
Entitlement to reinstatement Rules on separation pay with regard to each
cause of termination:
An Ee suffering from a disease is entitled to a
reinstatement. Provided he presents a certification CAUSE OF
by a competent public health authority that he is fit SEPARATION PAY
TERMINATION
to return to work (Cebu Royal Plant v. Deputy Equivalent to at least 1
Minister, G.R. No. L-58639, August 12, 1987). month pay or at least 1
Automation
month pay for every year of
Medical Certificate as mandatory requirement service, whichever is higher
Equivalent to at least 1
The requirements of a medical certificate is
month pay or at least 1
mandatory. Only where there is a prior Redundancy
month pay for every year of
certification from a competent public authority
service, whichever is higher
that the disease afflicting the Ee sought to be
dismissed is of such nature or at such stage that it Equivalent to 1 month pay
cannot be cured within 6 months even with proper Retrenchment or at least month pay for
medical treatment that the latter could be validly every year or service
terminated from his job (Tan v. NLRC, G. R. No. Closures or
116807, April 14, 1997). cessation of Equivalent to at least 1
operation not month pay or at least 1
NOTE: Termination from work on the sole basis of due to month pay for every year of
actual perceived or suspected HIV status is deemed serious service (if due to severe
unlawful (R.A. 8504 HIV/AIDS Law, Sec. 35). business financial losses, no
losses/financial separation pay
Q: Anna Ferrer has been working as a reverses
bookkeeper at Great Foods, Inc., which Equivalent to at least 1
operates a chain of high-end restaurants month pay or at least
throughout the country, since 1970 when it Disease
month pay for every year of
was still a small eatery at Binondo. In the early service, whichever is higher
part of the year 2003, Anna, who was already
50 years old, reported for work after a week-
NOTE: A fraction of at least 6 months shall be
long vacation in her province. It was the height
considered 1 whole year.
of the SARS scare, and management learned
that the first confirmed SARS death case in the
There is no separation pay when the closure is due
Phils, a balikbayan nurse from Canada, is a
to an act of the Government.
townmate of Anna. Immediately, a
memorandum was issued by management
Purpose of the two notices served to the Ee and
terminating the services of Anna on the ground
the DOLE 1 month prior to termination
that she is a probable carrier of SARS virus and
that her continued employment is prejudicial
1. To give the Ees some time to prepare for the
to the health of her co-Ees. Is the action taken
eventual loss of their jobs and their
by the Er justified? (2004 Bar Question)
corresponding income, look for other
employment and ease the impact of the loss
A: The Ers act of terminating the employment of
of their jobs.
Anna is not justified. There is no showing that said
2. To give the DOLE the opportunity to
Ee is sick with SARS, or that she associated or had
ascertain the veracity of the alleged cause of
contact with the deceased nurse. They are merely
termination (Phil. Telegraph & Telephone
town mates. Furthermore, there is no certification
Corp. v. NLRC, G.R. No. 147002, August 15,
by a competent public health authority that the
2005).
disease is of such a nature or such a stage that it
cannot be cured within a period of 6 months even
NOTE: Notice to both the Ees concerned and the
with proper medical treatment (IRR, Book VI, Rule 1,
DOLE are mandatory and must be written and
Sec. 8).
given at least 1 month before the intended date of
retrenchment and the fact that the Ees were
already on temporary lay-off at the time notice
should have been given to them is not an excuse to
forego the 1-month written notice (Sebuguero v.
NLRC, G.R. No.115394, September 27, 1995).

UNIVERSITY OF SANTO TOMAS

111 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Q: DAP Corp. ceased its operation due to the
termination of its distribution agreement with
Intl Distributors Corp. which resulted in its
need to cease its business operations and to
terminate the employment of its Ees. Marcial et
al. filed a complaint for illegal dismissal and for
failure to give the Ees written notices regarding
the termination of their employment. On the
other hand, DAP claims that their Ees actually
knew of the termination therefore the written
notices were no longer required. Are written
notices dispensed with when the Ees have
actual knowledge of the redundancy?
A: The Ees actual knowledge of the termination of
a companys distributorship agreement with
another company is not sufficient to replace the
formal and written notice required by law. In the
written notice, the Ees are informed of the specific
date of the termination, at least a month prior to
the date of effectivity, to give them sufficient time
to make necessary arrangements. In this case,
notwithstanding the Ees knowledge of the
cancellation of the distributorship agreement, they
remained uncertain about the status of their
employment when DAP failed to formally inform
them about the redundancy (DAP Corp. v. CA, G.R.
No. 165811, December 14, 2005).
DUE PROCESS
TWIN NOTICE REQUIREMENT
Two-fold requirements of a valid dismissal for
a just cause
1. Substantive It must be for a just cause.
2. Procedural There must be notice and
hearing.
Twin requirements of procedural due process
[Art. 277(b), LC]
1. Notice Twin-notice rule
a. First notice Necessity of first notice to
inform the worker of the violation and
preparation for the defense (Pre-notice)
b. Last notice To give the worker a notice
of the Ers final decision (Post notice)
2. Hearing Two fundamental rules:
a. Hearing means ample opportunity to be
heard
b. What the law prohibits is total absence
of opportunity to be heard
If ample opportunity to be heard is
given, there is no violation.
Position paper A position paper is a
valid alternative because not all cases
UNIVERSITY OF SANTO TOMAS
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112
are of litigation concerns. It should
suffice in matters that only involve a
question of law.
NOTE: When termination is based on just cause,
notice should be given to the Ee applying the twin
notice rule
If the termination is based on all of the authorized
causes, notices should be given to all Ees affected
and the DOLE at least one month before the
intended date of termination.
Purpose of notice and hearing
The requirement of notice is intended to inform the
Ee concerned of the Ers intent to dismiss him and
the reason for the proposed dismissal.
On the other hand the requirement of Hearing
affords the Ee the opportunity to answer his Ers
charges against him and accordingly to defend
himself there from before dismissal is effected
(Salaw v. NLRC, G.R. No. 90786, September 27,
1991).
NOTE: Failure to comply with the requirement of
the 2 notices makes the dismissal illegal. The
procedure is mandatory (Loadstar Shipping Co. Inc.
v. Mesano, G.R. No. 138956, August 7, 2003). And for
non-compliance with the due process
requirements in the termination of a persons
employment, a company is sanctioned to pay a
certain amount as damages (King of Kings
v. Mamac, G.R. No. 166208, June 29, 2007).
Q: Should there exist a valid and just cause, may
the Er depart from giving theEe the right to be
heard?
A: No. Art. 277(b) of the LC mandates that an Er
who seeks to dismiss an Ee must afford the latter
ample opportunity to be heard and to defend
himself with the assistance of his representative if
he so desires. Expounding on this provision, the
SC held that ample opportunity connotes every
kind of assistance that management must accord
the Ee to enable him to prepare adequately for his
defense including legal representation (U-BIX Corp.
v. Bravo, G.R. No. 177647, October 31, 2008).
Procedure to be observed by the Er for the
termination of employment based on any of the
just causes for termination
1. A written notice should be served to the Ee
specifying the ground/s for termination and
 TERMINATION OF EMPLOYMENT
giving the said Ee reasonable opportunity to
explain.
NOTE: This first written notice must apprise the
Ee that his termination is being considered due
to the acts stated in the notice (Phil. Pizza Inc. v.
Bungabong, G.R. No. 154315, May 9, 2005).
2. A hearing or conference should be held
during which the Ee concerned, with the
assistance of counsel, if the Ee so desires, is
given the opportunity to respond to the
charge, providefor his evidence and present
the evidence offered against him.
NOTE: The ample opportunity to be heard
under the LC is paramount over the hearing or
conference standard in the IRR of LC
3. A written notice of termination If
termination is the decision of the Er, it
should be served on the Ee indicating that
upon due consideration of all the
circumstance, grounds have been
established to justify his termination.
NOTE: Single notice of termination does not
comply with the requirements of the law (Aldeguer
& Co., Inc. v. Honeyline Tomboc, G.R. No. 147633, July
28, 2008).
Q: Caong, Tresquio and Daluyon were employed
by Regualos under a boundary agreement, as
drivers of his jeepneys. Later on, the three were
barred by Regualos from driving the vehicles
due to deficiencies in their boundary
payments.Is the policy of suspending jeepney
drivers pending payment of arrears in their
boundary obligations reasonable?
A: Yes. The policy of suspending drivers who fail to
remit the full amount of the boundary was fair and
reasonable under the circumstances. Notice was
given to the drivers who were getting lax in
remitting their boundary payments. In fact,
Regualos incurred a considerable amount of
arrears. He had to put a stop to it as he also relied
on these boundary payments to raise the full
amount of his monthly amortizations on the
jeepneys.
Caong, Tresquio and Daluyon were not denied due
process. Due process is not a matter of strict, rigid
or formulaic process. The essence of due process is
simply the opportunity to be heard, or as applied to
administrative proceedings, an opportunity to
explain ones side or an opportunity to seek a
reconsideration of the action or ruling complained
of. A formal or trial-type hearing is not at all times
and in all instances essential, as the due process
113
requirements are satisfied where the parties are
afforded fair and reasonable opportunity to explain
their side of the controversy at hand (Caong v.
Regualos, G.R. No. 179428, January 26, 2011).
HEARING; MEANING OF OPPORTUNITY TO BE
HEARD
Coverage of opportunity to be heard
The first written notice to be served on the Ees
should contain the specific causes or grounds for
termination against them, and a directive that the
Ees are given the opportunity to submit their
written explanation within a reasonable period.
Under the Omnibus Rules, reasonable opportunity
means every kind of assistance that management
must accord to the Ees to enable them to prepare
adequately for their defense. This should be
construed as a period of at least five (5) calendar
days from receipt of the notice to give the Ees an
opportunity to study the accusation against them,
consult a union official or lawyer, gather data and
evidence, and decide on the defenses they will raise
against the complaint. To enable the Ees to
intelligently prepare their explanation and
defenses, the notice should contain a detailed
narration of the facts and circumstances that will
serve as basis for the charge against the Ees. A
general description of the charge will not suffice.
Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which
among the grounds under Art. 282 is being charged
against the Ees.
After serving the first notice, the Ers should
schedule and conduct a hearing or conference
wherein the Ees will be given the opportunity to:
(1) explain and clarify their defenses to the charge
against them; (2) present evidence in support of
their defenses; and (3) rebut the evidence
presented against them by the management.
During the hearing or conference, the Ees are given
the chance to defend themselves personally, with
the assistance of a representative or counsel of
their choice. Moreover, this conference or hearing
could be used by the parties as an opportunity to
come to an amicable settlement (King of Kings v.
Mamac, G.R. No. 166208, June 29, 2007).
Q: The illegal dismissal case was referred to the
LA. Is a formal hearing or trial required to
satisfy the requirement of due process?
A: No. Trial-type hearings are not required in labor
cases and these may be decided on verified
position papers, with supporting documents and
their affidavits.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
The holding of a formal hearing or trial is
discretionary with the labor arbiter and is
something that the parties cannot demand as a
matter of right. It is entirely within his authority to
decide a labor case before him, based on the
position papers and supporting documents of the
parties, without a trial or formal hearing. The
requirements of due process are satisfied when the
parties are given the opportunity to submit
position papers wherein they are supposed to
attach all the documents that would prove their
claim in case it be decided that no hearing should
be conducted or was necessary (Shoppes Manila v.
NLRC, 419 SCRA 354).
NOTE: It is not necessary for the affiants to appear
and testify and be cross-examined by the counsel
for the adverse party. It is sufficient that the
documents submitted by the parties have a bearing
on the issue at hand and support the positions
taken by them (C.F. Sharp & Co. v. Zialcita, 495 SCRA
387).
The essence of due process is simply an
opportunity to be heard, or as applied to
administrative proceedings, an opportunity to
explain ones side or an opportunity to seek a
reconsideration of the action or ruling complained
of (PLDT v. Bolso, 530 SCRA 550).
The burden of proof in termination cases
The burden of proof rest upon the Er to show that
the dismissal of the Ee is for a just cause, and
failure to do so would necessarily mean that the
dismissal is not justified, consonant with the
constitutional guarantee of security of tenure.
NOTE: Due process refers to the process to be
followed; burden of proof refers to the amount of
proof to be adduced. In money claims, the burden
of proof as to the amount to be paid the Ees rests
upon the Er since he is in custody of documents
that would be able to prove the amount due, such
as the payroll.
Degree of proof required
In illegal dismissal cases, the Er is burdened to
prove just cause for terminating the employment of
its Ee with clear and convincing evidence to give
flesh and blood to the guaranty of security of
tenure granted by the Constitution to Ees under
the LC (Duty Free Phils. Services, Inc. v. Tria, G.R. No.
174809, June 27, 2012).
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
114
Q: Perez and Doria were employed by PT&T.
After investigation, Perez and Doria were
placed on preventive suspension for 30 days
for their alleged involvement in anomalous
transactions in the shipping section. PT&T
dismissed Perez and Doria from service for
falsifying documents. They filed a complaint for
illegal suspension and illegal dismissal. The LA
found that the suspension and the subsequent
dismissal were both illegal. The NLRC reversed
the LAs decision, it ruled that Perez and Doria
were dismissed for just cause, that they were
accorded due process and that they were
illegally suspended for only 15 days (without
stating the reason for the reduction of the
period of petitioners illegal suspension). On
appeal, thev CA held that they were dismissed
without due process. Were petitioners illegally
dismissed?
A: Yes. The Er must establish that the dismissal is
for cause in view of the security of tenure that Ees
enjoy under the Constitution and the LC. PT&T
failed to discharge this burden. PT&Ts illegal act of
dismissing Perez and Doria was aggravated by
their failure to observe due process. To meet the
requirements of due process in the dismissal of an
Ee, an Er must furnish the worker with 2 written
notices: (1) a written notice specifying the grounds
for termination and giving to said Ee a reasonable
opportunity to explain his side and (2) another
written notice indicating that, upon due
consideration of all circumstances, grounds have
been established to justify the Er's decision to
dismiss the Ee (Perez. v. Phil. Telegraph and
Telephone Company, G.R. No. 152048, April 29,
2009).
Guidelines in determining whether the penalty
imposed on Ee is proper
1. Gravity of the offense
2. Position occupied by the Ee
3. Degree of damage to the Er
4. Previous infractions of the same offense
5. Length of service (ALU-TUCP v. NLRC, G.R. No.
120450, February 10, 1999); PAL v. PALEA, G.R.
No.L-24626, June 28, 1974)
Q: Felizardo was dismissed from Republic Flour
Mills-Selecta Ice Cream Corporation for
dishonesty and theft of company property for
bringing out a pair of boots, 1 piece aluminum
container and 15 pieces of hamburger patties.
Is the penalty of dismissal commensurate with
the offense committed?
 TERMINATION OF EMPLOYMENT
A: There is no question that the Er has the inherent Procedural Due Process under Art. 282-284 of
right to discipline its Ees which includes the right the LC as applied in the Agabon Case
to dismiss. However this right is subject to the Art. 282 Art. 283 Art. 284
police power of the State. As such, the Court finds The Er must The Er must Er may
that the penalty imposed upon Felizardo was not give the Ee a give the Ee and terminate the
commensurate with the offense committed notice the DOLE services of his
considering the value of the articles he pilfered and specifying the written notices Ee.
the fact that he had no previous derogatory record grounds for 30 days prior
during his 2 years of employment in the company. which to the
Moreover, Felizardo was not a managerial or dismissal is effectivity of
confidential Ee in whom greater trust is reposed by sought a his separation.
management and from whom greater fidelity to hearing or an
duty is correspondingly expected (ALU-TUCP v. opportunity to
NLRC, G.R. No. 120450, February 10, 1999). be heard and
after hearing or
Hearing is not an indispensable part of due opportunity to
process be heard, a
notice of the
Art. 277(b) of the LC provides that, in cases of decision to
termination for a just cause, an Ee must be given dismiss.
ample opportunity to be heard and to defend The Worker is an There is no
himself. Thus, the opportunity to be heard requirement inactive party hearing
afforded by law to the Ee is qualified by the word under Art. 277 in the cause requirement in
ample which ordinarily means considerably (b) of notice for diseases but
more than adequate or sufficient. In this regard, and hearing termination. there is notice
the phrase ample opportunity to be heard can be applies only in Only notice requirement to
reasonably interpreted as extensive enough to Art. 282 with dole and worker, but no
cover actual hearing or conference. To this extent, because the Er notice to notice to
Sec. 2(d), Rule I of the IRR of Book VI of the LC is accusing the worker is DOLE.
requiring a hearing and conference during which worker that the required. No
the Ee concerned is given the opportunity to latter need for a
respond to the charge is in conformity with Art. committed an hearing
277(b). act or omission because due
constituting a process is
Significantly, Sec. 2(d), Rule I of the IRR of Book VI cause for found in LC
of the LC itself provides that the so-called termination of (Art. 283) not
standards of due process outlined therein shall be his in Constitution
observed substantially, not strictly. This is a employment. according to
recognition that while a formal hearing or Agabon.
conference is ideal, it is not an absolute, mandatory
or exclusive avenue of due process (Perez v. PT&T, NOTE: in Art.
G.R. No. 152048, April 29, 2009). 277 (b) in
relation
Q: If the dismissal is for just or authorized to Art. 283, if
cause but the requirement of notice and the closure of
hearing were not complied with, should the business will
dismissal be held illegal? result in a
mass
A:No. In Agabon v. NLRC, G.R. No. 158693, layoff and
November 17, 2004, it was held that when dismissal serious labor
is for just or authorized cause but due process was dispute, the
not observed, the dismissal should be upheld. SLE can
enjoin the Er
The Er, however, should be held liable for non- as regards
compliance with the procedural requirements of mass
due process in the form of damages. termination

UNIVERSITY OF SANTO TOMAS

115 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Possible Effect of 1. Reinstatement without loss of seniority
Liability of ER
Situations termination rights
a.) With Just NO Liability 2. Full backwages
or
Authorized NOTE: NOTE: Full backwages means no deduction
VALID
Cause Separation Pay if
b.) With Due for Authorized 3. Separation pay in lieu of reinstatement
Process Cause 4. Damages, including Attorneys fees
Reinstatement +
a.) Without Q: Does the offer to reinstate the illegally
Full
Just or dismissed Ee affect the liability of the erring Er?
Backwages
Authorized
INVALID
Cause A: No. At any rate, sincere or not, the offer of
NOTE: If
b.) With Due reinstatement could not correct the earlier illegal
Reinstatement
Process dismissal of the Ee. The Er incurred liability under
not possible
Separation Pay the LC from the moment an Ee was illegally
Reinstatement + dismissed, and the liability did not abate as a result
a.) Without of the Er's repentance (Ranara v.NLRC, 212 SCRA
Full
Just or 631).
Backwages
Authorized
INVALID
Cause Q: PAL dismissed strike leader Capt. Gaston as a
NOTE: If
b.) Without result of which the Union resolved to undertake
Reinstatement
Due Process the grounding of all PAL planes and the filing of
not possible
Separation Pay applications for protest retirement of
Liable for members who had completed 5 years of
a.) With Just noncompliance continuous service, and protest resignation
or With procedural for those who had rendered less than 5 years of
Authorized requirements service in the company. PAL acknowledged
VALID receipt of said letters and among the pilots
Cause
b.) Without NOTE: whose protest resignation or retirement was
Due Process Separation Pay if accepted by PAL were Enriquez and Ecarma.
for Authorized
Cause Before their readmission, PAL required
Enriquez and Ecarma to accept 2 conditions,
NOTE: The Agabon ruling was modified by JAKA namely: that they sign conformity to PALs
Food Processing v. Pacot G.R. No. 151378, March 28, letter of acceptance of their retirement and or
2005 where it was held that: resignation and that they submit an application
for employment as new Ees without protest or
1. If based on just cause (LC, Art. 282) but the reservation. As a result of this, their seniority
Er failed to comply with the notice rights were lost.
requirement, the sanction to be imposed
upon him should be tempered because the Are the pilots entitled to the restoration of their
dismissal process was, in effect, initiated by seniority rights?
an act imputable to the Ee; and
2. If based on authorized causes (LC, Art. 283) A: No. An Ee has no inherent right to seniority. He
but the Er failed to comply with the notice has only such rights as may be based on a contract,
requirement, the sanction should be stiffer statute, or an administrative regulation relative
because the dismissal process was initiated thereto. Seniority rights which are acquired by an
by Ers exercise of his management Ee through long-time employment are contractual
prerogative. and not constitutional. The discharge of an Ee
thereby terminating such rights would not violate
RELIEFS FOR ILLEGAL DISMISSAL the Constitution. When the pilots tendered their
respective retirement or resignation and PAL
Remedies of Ee in case of illegal dismissal immediately accepted them, both parties mutually
terminated the contractual employment
In case where the worker is illegally terminated, relationship between them thereby curtailing
his remedies are: whatever seniority rights and privileges the pilots
had earned through the years.

UNIVERSITY OF SANTO TOMAS

2015 GOLDEN NOTES
116
 TERMINATION OF EMPLOYMENT
Full backwages
The LC as amended by R.A. 6715 points to "full
backwages" as meaning exactly that, i.e., without
deducting from backwages the earnings derived
elsewhere by the concerned Ee during the period
of his illegal dismissal (Buenviaje v. CA, G.R. 147806,
November 12, 2002).
Separation pay in lieu of reinstatement when
1. Doctrine of Strained Relations (applies to
confidential and managerial Ees only)
2. In case the position has been abolished
(applies to both managerial and rank and file
Ees)
NOTE: Moral and exemplary damages may also be
awarded.
Prescriptive period for filing an action for
illegal dismissal
An action for reinstatement by reason of illegal
dismissal is one based on an injury which may be
brought within 4 years from the time of dismissal
pursuant to Art. 1146 of the NCC (Azcor
Manufacturing v. NLRC, 303 SCRA 26).
REINSTATEMENT
PENDING APPEAL (ART. 223, LC)
Reinstatement
It is the restoration of the Ee to the state from
which he has been unjustly removed or separated
without loss of seniority rights and other
privileges.
Forms of reinstatement
1. Actual or physical The Ee is admitted back
to work
2. Payroll The Ee is merely reinstated in the
payroll
NOTE: An order of reinstatement by the LA is not
the same as actual reinstatement of a dismissed or
separated Ee, however it is immediately executory
even pending appeal. Thus, until the Er
continuously fails to actually implement the
reinstatement aspect of the decision of the LA, their
obligation to the illegally dismissed Ee, insofar as
accrued backwages and other benefits are
concerned, continues to accumulate. It is only
when the illegally dismissed Ee receives the
separation pay (in case of strained relations) that it
could be claimed with certainty that the Er-Ee
117
relationship has formally ceased thereby
precluding the possibility of reinstatement (Triad
Security & Allied Services, Inc. et al v.Ortega, G.R. No.
160871, February 6, 2006).
Q: Is an illegally dismissed Ee entitled to
reinstatement as a matter of right?
A: GR: Yes.
XPNs:
Proceeds from an illegal dismissal wherein
reinstatement is ordered but cannot be carried
out as in the following cases:
1. Reinstatement cannot be effected in view
of the long passage of time or because of
the realities of the situation.
2. It would be inimical to the Ers interest.
3. When reinstatement is no longer feasible.
4. When it will not serve the best interest of
the parties involved.
5. Company will be prejudiced by
reinstatement.
6. When it will not serve a prudent purpose.
7. When there is resultant strained relation
(applies to both confidential and
managerial Ees only).
8. When the position has been abolished
(applies to managerial, supervisory and
rank-and-file Ees).
NOTE: In such cases, it would be more prudent to
order payment of separation pay instead of
reinstatement (Quijano v. Mercury Drug
Corporation, G.R. No. 126561, July 8, 1998).
Order of reinstatement
It means restoration to a state or condition from
which one had been removed or separated. The
person reinstated assumes the position he had
occupied prior to his dismissal. Reinstatement
presupposes that the previous position from which
one had been removed still exists, or that there is
an unfilled position which is substantially
equivalent or of similar nature as the one
previously occupied by the Ee.
An order for reinstatement entitles an Ee to receive
his accrued backwages from the moment the
reinstatement order was issued up to the date
when the same was reversed by a higher court
without fear of refunding what he had received
(Pfizer v. Velasco, G.R. 177467, March 9, 2011).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Arts. 223 v. 279 of the LC
Art. 223 Art. 279
May be availed of as Presupposes that the
soon as the LA renders a judgment has already
judgment declaring that become final and
the dismissal of the Ee is executory.
illegal and ordering said Consequently, there is
reinstatement. It may be nothing left to be done
availed of even pending except the execution
appeal thereof.
NOTE: An award or order for reinstatement is self-
executory. It does not require the issuance of a writ
of execution (Pioneer Texturizing Corp. v. NLRC, G.R.
No. 118651, October 6, 1997).
Rule on wages during reinstatement pending
appeal
Dismissed Ee whose case was favorably decided by
the LA is entitled to receive wages pending appeal
upon reinstatement, which is immediately
executory. Unless there is a restraining order, it is
ministerial upon the LA to implement the order of
reinstatement and it is mandatory on the Er to
comply therewith.
After the LAs decision is reversed by a higher
tribunal, the Ee may be barred from collecting the
accrued wages, if it is shown that the delay in
enforcing the reinstatement pending appeal was
without fault on the part of the Er.
The test is two-fold: (1) there must be actual delay
or the fact that the order of reinstatement pending
appeal was not executed prior to its reversal; and
(2) the delay must not be due to the Ers unjustified
act or omission. If the delay is due to the Ers
unjustified refusal, the Er may still be required to
pay the salaries notwithstanding the reversal of the
LAs decision (Garcia v. PAL, G.R. No. 164856,
August 29, 2009).
Q: PAL dismissed Garcia, for violating PALs
Code of Discipline for allegedly sniffing shabu
in PALs Technical Center Tool Room Section.
Garcia then filed for illegal dismissal and
damages where the LA ordered PAL to
immediately reinstate Garcia. On appeal, the
NLRC reversed the decision and dismissed
Garcias complaint for lack of merit. Garcias
motion for reconsideration was denied by the
NLRC. It affirmed the validity of the writ and the
notice issued by the LA but suspended and
referred the action to the Rehabilitation
Receiver for appropriate action. May Garcia
collect wages during the period between the
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
118
LAs order of reinstatement pending appeal and
the NLRC decision overturning that of the LA?
A: Art. 223(3) of the LC provides that the decision
of the LA reinstating a dismissed or separated Ee,
insofar as the reinstatement aspect is concerned,
shall immediately be executory, pending appeal.
Even if the order of reinstatement of the LA is
reversed on appeal, it is obligatory on the part of
the Er to reinstate and pay the wages of the
dismissed Ee during the period of appeal until
reversal by the higher court. On the other hand, if
the Ee has been reinstated during the appeal
period and such reinstatement order is reversed
with finality, the Ee is not required to reimburse
whatever salary he received for he is entitled to
such, more so if he actually rendered services
during the period.
In Genuino v. NLRC, 539 SCRA 342, the Ee reinstated
should refund the salaries he received while the
case was pending appeal for he should not enrich
himself at the expense of the Er. However, in Garcia
v. PAL, 576 SCRA 479, the Supreme Court ruled that
the principle of social justice renders inapplicable
the civil law doctrine of unjust enrichment.
Q: May the Court order the reinstatement of a
dismissed employee even if the prayer of the
complaint did not include such relief?
A: Yes. So long as there is a finding that the Ee was
illegally dismissed, the court can order the
reinstatement of an Ee even if the complaint does
not include a prayer for reinstatement, unless, of
course the Ee has waived his right to
reinstatement. By law, an Ee who is unjustly
dismissed is entitled to reinstatement among
others. The mere fact that the complaint did not
pray for reinstatement will not prejudice the Ee,
because technicalities of law and procedure are
frowned upon in labor proceedings (Pheschem
Industrial Corp. v. Moldez, G.R. No. 116158, May 9,
2005).
In any case, Sec.2(c), Rule 7 of the Rules of Court
provides that a pleading shall specify the relief
sought, but may add a general prayer for such
further or other reliefs as may be deemed just and
equitable. Under this rule, a court can grant the
relief warranted by the allegation and the proof
even if it is not specifically sought by the injured
party; the inclusion of a general prayer may justify
the grant of a remedy different from or together
with the specific remedy sought, if the facts alleged
in the complaint and the evidence introduced so
warrant. The prayer in the complaint for other
 TERMINATION OF EMPLOYMENT
reliefs equitable and just in the premises justifies
the grant of a relief not otherwise specifically
prayed for (Prince Transport, Inc. v. Garcia et.al,
G.R. No. 167291, January 12, 2011).
Q: A complaining Ee obtained a favorable
decision in an illegal dismissal case. The LA
ordered her immediate reinstatement. The Er
opted payroll reinstatement pending appeal.
The NLRC reversed the decision of the LA ruled
that the dismissal was valid. The Er stopped the
payroll reinstatement. The Ee elevated the case
to the CA, and eventually to the SC. The SC
upheld the dismissal. Is the Ee entitled to
continued payroll reinstatement after the NLRC
decision?
A: No. The Ee is not entitled to continued payroll
reinstatement. The decision of the NLRC on appeals
from decisions of the LA shall become final and
executory after 10 calendar days from receipt
thereof by the parties. That the CA may take
cognizance of and resolve a petition for certiorari
for the nullification of the decisions of the NLRC on
jurisdictional and due process considerations does
not affect the statutory finality of the NLRC
decision. Since the NLRC decision which upheld the
dismissal became final, the Er was correct in
stopping the payroll reinstatement of the Ee (Bago
v. NLRC, G.R. No. 170001, April 4, 2007).
Q: Can the Er demand that the Ee reimburse the
amount that had been paid under the period of
payroll reinstatement?
A: No. Even if the order of reinstatement of the LA
is reversed on appeal, it is obligatory on the part of
the Er to reinstate and pay the wages of the
dismissed Ee during the period of appeal until
reversal by the higher court.
If the Ee has been reinstated during the appeal
period and such reinstatement order is reversed
with finality, the Ee is not required to reimburse
whatever salary he received for he is entitled to
such, more so if he actually rendered services
during the period (Garcia v. PAL, G.R. No. 164856,
June 20, 2009).
Q: What happens if there is an Order of
Reinstatement but the position is no longer
available?
A: The Ee should be given a substantially
equivalent position. If no substantially equivalent
position is available, reinstatement should not be
ordered because that would in effect compel the Er
to do the impossible. In such a situation, the Ee
should merely be given a separation pay consisting
119
of 1-month salary for every year of service (Grolier
Intl Inc. v. ELA, G.R. No. 83523, August 31, 1989).
Q: Can the order of reinstatement be
immediately enforced in the absence of a
motion for the issuance of a writ of execution?
(2009 Bar question)
A: Yes. In Pioneer Texturizing Corp. v. NLRC, the
Court held that an award or order of reinstatement
is self-executory and does not require a writ of
execution to implement and enforce it. To require
the application for and issuance of a writ of
execution as a prerequisite for the execution of a
reinstatement award would certainly betray and
run counter to the very objective and intent of Art.
223 of the Labor Code (on the immediate execution
of a reinstatement order).
Alternative Answer:
The decision to reinstate pending appeal is not self-
executory. A motion for a writ of execution is
mandatory before an order of reinstatement can be
enforced because an Ee needs, the assistance of the
NLRC Sheriff to enforce the order.
Strained relations rule
It is when the Er can no longer trust the Ee and vice
versa or there were imputations of bad faith to
each other, reinstatement could not effectively
serve as a remedy. This rule applies only to
positions which require trust and confidence
(Globe Mackay v. NLRC, G.R. No. 82511, March 3,
1992).
NOTE: Under the circumstances where the
employment relationship has become so strained
to preclude a harmonious working relationship
and that all hopes at reconciliation are naught after
reinstatement, it would be more beneficial to
accord the Ee backwages and separation pay.
The following must be proven before the
strained relations rule can be applied to a
particular case
1. The Ee concerned occupies a position where
he enjoys the trust and confidence of his Er;
and
2. That it is likely if the Ee is reinstated, an
atmosphere of antipathy and antagonism
may be generated as to adversely affect the
efficiency and productivity of the Ee
concerned (Globe Mackay Cable & Wire Corp.
v. NLRC G.R. No. 82511, March 3, 1992).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Q: Does the strained relations rule always bar
reinstatement in all cases?
A: No. The rule should be applied on a case to case
basis, based on each cases peculiar conditions and
not universally. Otherwise, reinstatement can
never be possible simply because some hostility is
invariably engendered between the parties as a
result of litigation. That is human nature (Anscor
Transport v. NLRC, G.R. No. 85894, September 28,
1990).
Besides, no strained relations should arise from a
valid and legal act of asserting one's right;
otherwise an Ee who shall assert his right could be
easily separated from the service, by merely paying
his separation pay on the pretext that his
relationship with his Er had already become
strained (Globe Mackay Cable & Wire Corp. v. NLRC,
G.R. No. 82511, March 3, 1992).
SEPARATION PAY IN LIEU OF REINSTATEMENT
Separation pay can be viewed
Under present laws and jurisprudence, separation
pay may be viewed in 4 ways:
1. In lieu of reinstatement in illegal dismissal
cases, where Ee is ordered reinstated but
reinstatement is not feasible.
2. As Ers statutory obligation in cases of legal
termination due to authorized causes under
Arts. 283 and 284 of the LC.
3. As financial assistance, as an act of social
justice and even in case of legal dismissal
under Art. 282 of the LC.
4. As employment benefit granted in CBA or
company policy (Poquiz, 2005).
Q: Delfin and Luisito are licensed drivers of
public utility jeepneys owned by Moises Capili.
When Capili assumed ownership and operation
of the jeepneys, the drivers were required to
sign individual contracts of lease of the
jeepneys. The drivers gathered the impression
that signing the contract was a condition
precedent before they could continue driving.
The drivers stopped plying their assigned
routes and a week later filed with the LA a
complaint for illegal dismissal praying not for
reinstatement but for separation pay. Are the
respondents entitled to separation pay?
A: No. When the drivers voluntarily chose not to
return to work anymore, they must be considered
as having resigned from their employment. The
common denominator of those instances where
payment of separation pay is warranted is that the
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
120
employee was dismissed by the Er (Capili v. NLRC,
G.R. 117378, March 26, 1997).
Q: Romeo has been an Ee of AAA Company from
1993 to 1999 but was unable to report to work
due to some illness. Romeo claimed that he was
offered by AAA of Php 15,000 separation pay,
on the contrary AAA claimed Romeo was never
terminated and even told the latter that Romeo
could go back to work anytime but Romeo
clearly manifested that he was no longer
interested in returning to work and instead
asked for separation pay. Is Romeo terminated
or considered resigned? Is Romeo entitled to
separation pay?
A: Romeo is considered resigned. Romeos various
pleadings support his intention of not returning to
work on the ground that his health is failing.
Moreover, Romeo did not ask for reinstatement
and rejected AAA Companys offer for him to
return to work. This is tantamount to resignation.
Resignation is defined as the voluntary act of an Ee
who finds himself in a situation where he believes
that personal reasons cannot be sacrificed in favor
of the exigency of the service and he has no other
choice but to disassociate himself from his
employment.
Romeo is not entitled to separation pay. There is no
provision in the LC which grants separation pay to
voluntarily resigning Ees. In fact, the rule is that an
Ee who voluntarily resigns from employment is not
entitled to separation pay, except when it is
stipulated in the employment contract or CBA, or it
is sanctioned by established Er practice or policy.
Hence, Romeo is not entitled to separation pay in
the absence of a Labor provision and a stipulation
in his employment contract or CBA (Romeo
Villaruel v. Yeo Han Guan, G.R. No. 169191, June 1,
2011).
Q: Two groups of seasonal workers claimed
separation benefits after the closure of Phil.
Tobacco processing plant in Balintawak and the
transfer of its tobacco operations to Candon,
Ilocos Sur. Phil. Tobacco refused to grant
separation pay to the workers belonging to the
first batch, because they had not been given
work during the preceding year and, hence,
were no longer in its employ at the time it
closed its Balintawak plant. Likewise, it claims
exemption from awarding separation pay to the
second batch, because the closure of its plant
was due to "serious business losses," as defined
in Art. 283 of the LC. Both labor agencies held
that the two groups were entitled to separation
pay equivalent to 1/2 month salary for every
year of service, provided that the employee
worked at least 1 month in a given year. Is the
 TERMINATION OF EMPLOYMENT
separation pay granted to an illegally dismissed
Ee the same as that provided under Art.283 of
the LC in case of retrenchment to prevent
losses?
A: No. The separation pay awarded to Ees due to
illegal dismissal is different from the amount of
separation pay provided for in Art. 283 of the
LC.Preceding from the above, Phil. Tobacco is liable
for illegal dismissal and should be responsible for
the reinstatement of the first group and the
payment of their backwages. However, since
reinstatement is no longer possible as Phil.
Tobacco have already closed its Balintawak plant,
members of the said group should instead be
awarded normal separation pay (in lieu of
reinstatement) equivalent to at least one month
pay, or one month pay for every year of service,
whichever is higher. It must be stressed that the
separation pay being awarded to the first group is
due to illegal dismissal; hence, it is different from
the amount of separation pay provided for in Art.
283 in case of retrenchment to prevent losses or in
case of closure or cessation of the Ers business, in
either of which the separation pay is equivalent to
at least one (1) month or one-half (1/2) month pay
for every year of service, whichever is higher (Phil.
Tobacco Flue-Curing & Redrying Corp. v. NLRC, G.R.
No. 127395, December 10, 1998).
Q: Does separation pay apply in cases of legal
dismissal?
A: It depends. As Ers statutory obligation in cases
of legal termination due to authorized causes
under Arts. 283 and 284 of the LC.As financial
assistance, as an act of social justice and even in
case of legal dismissal under Art.282 of the LC. Art.
223 of the LC concerns itself with an interim relief,
granted to a dismissed or separated Ee while the
case for illegal dismissal is pending appeal. It does
not apply where there is no finding of illegal
dismissal. On the other hand, an Ee who is unjustly
dismissed from work shall be entitled to
reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive
of allowances, and to his other benefits or their
monetary equivalent computed from the time his
compensation was withheld from him up to the
time of his actual reinstatement (Lansangan v.
Amkor Technology Philippines, Inc., G.R. No. 177026,
(2009).
BACKWAGES
Backwages
It refers to the relief given to an Ee to compensate
him for the lost earnings during the period of his
dismissal. It presupposes illegal termination.
121
NOTE: Entitlement to backwages of the illegally
dismissed Ee flows from law. Even if he does not
ask for it, it may be given. The failure to claim
backwages in the complaint for illegal dismissal is a
mere procedural lapse which cannot defeat a right
granted under substantive law (St. Michaels
Institute v. Santos, G.R. No. 145280, December 4,
2001).
Q: What is the basis of awarding backwages to
an illegally dismissed employee?
A: The payment of backwages is generally granted
on the ground of equity. It is a form of relief that
restores the income that was lost by reason of the
unlawful dismissal; the grant thereof is intended to
restore the earnings that would have accrued to
the dismissed Ee during the period of dismissal
until it is determined that the termination of
employment is for a just cause. It is not private
compensation or damages but is awarded in
furtherance and effectuation of the public objective
of the LC. Nor is it a redress of a private right but
rather in the nature of a command to the Er to
make public reparation for dismissing an Ee either
due to the formers unlawful act or bad faith
(Tomas Claudio Memorial College Inc., v. CA, G.R. No.
152568, February 16, 2004).
Q: What is the period covered by the payment
of backwages?
A: The backwages shall, from the time that wages
are unlawfully withheld until the time of actual
reinstatement or, if reinstatement is no longer
feasible, until the finality of judgment awarding
backwages, cover the period from the date of
dismissal of the Ee up to the date of:
1. Actual reinstatement, or if reinstatement is
no longer feasible
2. Finality of judgment awarding backwages
(Buhain v. CA, G.R. 143709, July 2, 2002).
NOTE: The backwages to be awarded should not be
diminished or reduced by earnings elsewhere
during the period of his illegal dismissal. The
reason is that the Ee while litigating the illegality of
his dismissal must earn a living to support himself
and his family (Bustamante v. NLRC, G.R. No.
111651, Mar. 15, 1996; Buenviaje v. CA, G.R. No.
147806, November 12, 2002).
Q: Baldo was dismissed from employment for
having been absent without leave (AWOL) for
eight (8) months. It turned out that the reason
for his absence was his incarceration after he
was mistaken as his neighbors killer.
Eventually acquitted and released from jail,
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Baldo returned to his Er and demanded
reinstatement and full backwages. Is Baldo
entitled to reinstatement and backwages?
Explain your answer. (2009 BAR QUESTION)
A: Yes, Baldo is entitled to reinstatement. Although
he shall not be entitled to backwages during the
period of his detention, but only from the time the
company refused to reinstate him. (Magtoto v.
NLRC, 140 SCRA 58).
Alternative Answer:
No. Baldo is not entitled to reinstatement and
backwages. The dismissal was for cause, i.e. AWOL.
Baldo failed to timely inform the employer of the
cause of his failure to report for work; hence,
prolonged absence is a valid ground to terminate
employment.
COMPUTATION
The following are included in the computation
of backwages
1. Transportation and emergency allowances
2. Vacation or SIL and sick leave
3. 13th month pay
NOTE: Facilities such as uniforms, shoes, helmets
and ponchos should not be included in the
computation of backwages because said items are
given for free, to be use only during official tour of
duty not for private or personal use.
The award of backwages is computed on the basis
of 30-day month (JAM Trans Co. v. Flores, G.R. No.
82829, March 19, 1993).
Q: How are the backwages of a probationary Ee
who fails to qualify as a regular Ee computed?
A: The backwages that should be awarded to
respondent shall be reckoned from the time of her
constructive dismissal until the date of the
termination of her employment. The computation
should not cover the entire period from the time
her compensation was withheld up to the time of
her actual reinstatement. This is because as a
probationary Ee, the lapse of probationary
employment without appointment as a regular Ee
of effectively severed the Er-Ee relationship
between the parties (Robinsons Galleria v. Ranchez,
G.R. No. 177937, January 9, 2011).
Q: Is an Ee entitled to backwages even after the
closure of the business?
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
122
A: No. The closure of the business rendered the
reinstatement of complainant to an Ees previous
position impossible but she is still entitled to the
payment of backwages up to the date of dissolution
or closure. An Er found guilty of ULP in dismissing
his Ee may not be ordered to pay backwages
beyond the date of closure of business where such
closure was due to legitimate business reasons and
not merely an attempt to defeat the order of
reinstatement (Pizza Inn v. NLRC, G.R. No. 74531,
June 28, 1988).
Circumstances that prevent award of
backwages
1. Dismissal for cause
2. Death, physical or mental incapacity of the
employee
3. Business reverses
4. Detention in prison
LIMITED BACKWAGES
Rule on backwages for dismissed employees
GR: In the case of Osmalik Bustamante, et al. v.
NLRC and Evergreen Farms, Inc., the SC held that
the passing of R.A. 6715, particularly Sec. 34, which
took effect on March 21, 1989, amended Art. 279 of
the LC, which now states in part:
ART. 279. Security of Tenure. - An Ee who
is unjustly dismissed from work shall be
entitled to reinstatement without loss of
seniority rights and other privileges and
to his full backwages, inclusive of
allowances, and to his other benefits or
their monetary equivalent computed from
the time his compensation was withheld
from him up to the time of his actual
reinstatement.
Verily, the evident legislative intent as expressed in
R.A. 6715, is that the backwages to be awarded to
an illegally dismissed Ee, should not, as a general
rule, be diminished or reduced by the earnings
derived by him elsewhere during the period of his
illegal dismissal. The underlying reason for this
ruling is that the Ee, while litigating the legality
(illegality) of his dismissal, must still earn a living
to support himself and his family. Corollary
thereto, full backwages have to be paid by the Er as
part of the price or penalty he has to pay for
illegally dismissing his Ee. Thus, the provision
calling for full backwages to illegally dismissed
Ees is clear, plain and free from ambiguity and,
therefore, must be applied without attempted or
strained interpretation.
 TERMINATION OF EMPLOYMENT
XPN: Award of backwages to a separated Ee may
be limited for a certain number of years
considering good faith on the part of the Er in
terminating the Ee, which period shall depend on
the attending circumstances of the case (Victory
Liner, Inc. v. Race, G.R. No. 164820 March 28, 2007).
NOTE: The rule providing for the entitlement of an
illegally dismissed Ee to only three years
backwages without deduction or qualification to
obviate the need for further proceedings in the
course of execution, otherwise known as the
Mercury Drug Rule, has long been abandoned
since March 21, 1989 (BPI Employees Union & Uy v.
BPI, et al., G.R. No. 137863, March 31, 2005).
PREVENTIVE SUSPENSION
Preventive suspension
It means that during the pendency of the
investigation, the Er may place the Ee under
preventive suspension leading to termination
when there is an imminent threat or a reasonable
possibility of a threat to the lives and properties of
the Er, his family and representatives as well as the
offenders co-workers by the continued service of
the Ee.
Duration of preventive suspension
It should not last for more than 30 days. The Ee
should be made to resume his work after 30 days.
It can be extended provided the Ees wages are
paid after the 30-day period.
This period is intended only for the purpose of
investigating the offense to determine whether he
is to be dismissed or not. It is not a penalty.
NOTE: The Er may continue the period of
preventive suspension provided that he pays the
salary of the Ee. If more than 1 month, the Ee must
actually be reinstated or reinstated in the payroll.
Officers are liable only for the offense committed if
done with malice.
Q: Cantor and Pepito were preventively
suspended pending application for their
dismissal by Manila Doctors Hospital after
being implicated by one Macatubal when they
refused to help him when he was caught
stealing x-ray films from the hospital. Was the
preventive suspension of Cantor and Pepito
proper?
A: No. Where the continued employment of an Ee
poses a serious and imminent threat to the life and
123
property of the Er or on his co-Ees, the Ees
preventive suspension is proper. In this case, no
such threat to the life and property of the Er or of
their co-Ees is present and they were merely
implicated by Macatubal (Manila Doctors Hospital
v. NLRC, G.R. No L-64897, February 28, 1985).
CONSTRUCTIVE DISMISSAL
Constructive dismissal
It occurs when there is cessation of work because
continued employment is rendered impossible,
unreasonable, or unlikely as when there is a
demotion in rank or diminution in pay or when a
clear discrimination, insensibility, or disdain by an
Er becomes unbearable to the Ee leaving the latter
with no other option but to quit (The University of
Immaculate Conception v. NLRC, G.R. No. 181146,
January 26, 2011).
Relief entitled to illegally or constructively
dismissed Ees
An an illegally or constructively dismissed Ee is
entitled to: (1) either reinstatement, if viable, or
separation pay, if reinstatement is no longer viable;
and (2) backwages. These two reliefs are separate
and distinct from each other and are awarded
conjunctively (Robinsons Galleria v. Ranchez, G.R.
No. 177937, January 9, 2011).
Q: Reynaldo was hired by Geminilou Trucking
Service (GTS) as a truck driver to haul and
deliver products of San Miguel Pure Foods
Company, Inc. He was paid Php 400 per trip and
made 4 trips a day. He claimed that he was
requested by GTS to sign a contract entitled
Kasunduan Sa Pag-upa ng Serbisyo which he
refused as he found it to alter his status as a
regular Ee to merely contractual. He averred
that on account of his refusal to sign the
Kasunduan, his services were terminated
prompting him to file a complaint before the
NLRC for constructive dismissal against the GTS.
Would Reynaldos refusal to sign the Kasunduan
adequately support his allegation of
constructive dismissal?
A: No. The test of constructive dismissal is whether
a reasonable person in the Ees position would
have felt compelled to give up his job under the
circumstances. In the present case, the records
show that the lone piece of evidence submitted by
Reynaldo to substantiate his claim of constructive
dismissal is an unsigned copy of the Kasunduan.
This falls way short of the required quantum of
proof which is substantial evidence, or such
relevant evidence as a reasonable mind might
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
accept as adequate to support a conclusion.
Reynaldo was not dismissed, but that he simply
failed to report for work after an altercation with a
fellow driver (Madrigalejos v. Geminilou Trucking
Service, G.R. No. 179174, December 24, 2008).
Q: Flores, a conductor of JAM Transportation
Co., Inc., had an accident where he had to be
hospitalized for a number of days. Upon
reporting back to the company he was told to
wait. For several days this continued and he
was promised a route assignment which did not
materialize. Upon speaking to Personnel
Manager Medrano, he was told that he will be
accepted back to work but as a new Ee. Flores
rejected the offer because it would mean
forfeiture of his 18 years of service to the
company. Is the offer for reinstatement as a
new Ee a constructive dismissal?
A: Yes. Flores re-employment as a new Ee would
be very prejudicial to him as it would mean a
demotion in rank and privileges and the retirement
benefits for his previous 18 years of service with
the company would simply be considered as non-
existent. It amounts to constructive dismissal (JAM
Transportation Co., Inc. v. Flores, G.R. No. 82829,
March 19, 1993).
Q: Quinanola was transferred from the position
of Executive Secretary to the Executive Vice
President and General Manager to the
Production Dept as Production Secretary.
Quinanola rejected the assignment and filed a
complaint for illegal dismissal due to
constructive dismissal. Did the transfer of
Quinanola amount to constructive dismissal?
A: No. Quinanolas transfer was not unreasonable
since it did not involve a demotion in rank or a
change in her place of work nor a diminution in
pay, benefits and privileges. It did not constitute
constructive dismissal. Furthermore, an Ees
security of tenure does not give him a vested right
in his position as would deprive the company of its
prerogative to change his assignment or transfer
him where he will be most useful (Philippine Japan
Active Carbon Corp. v. NLRC, G.R. No. 83239, March
8, 1989).
Q: Sangil was a utility man/assistant steward of
the passenger cruise vessel Crown odyssey
under a one-year contract. Sangil suffered head
injuries after an altercation with a Greek
member of the crew. He informed the captain
that he no longer intends to return aboard the
vessel for fear that further trouble may erupt
between him and the other Greek
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
124
crewmembers of the ship. Was Sangil
constructively dismissed?
A: Yes. There is constructive dismissal where the
act of a seaman in leaving ship was not voluntary
but was impelled by a legitimate desire for self-
preservation or because of fear for his life.
Constructive dismissal does not always involve
diminution in pay or rank but may be inferred from
an act of clear discrimination, insensibility or
disdain by an Er may become unbearable on the
part of the Ee that it could foreclose any choice by
him except to forego his continued employment
(Sunga Ship Management Phil., Inc. v. NLRC, G.R. No.
119080, April 14, 1998).
Q: Does the validity of suspending operation
excuse the Er from paying separation pay?
A: No. The validity of its act of suspending its
operations does not excuse it from paying
separation pay. Art. 283 of the LC is emphatic that
an Ee, who was dismissed due to cessation of
business operation, is entitled to the separation
pay equivalent to one month pay or at least 1/2
month pay for every year of service, whichever is
higher. And it is jurisprudential that separation pay
should also be paid to Ees even if the closure or
cessation of operations is not due to losses (Manila
Minings Corp. Employees Assn. v. Manila Mining
Corp., G.R. Nos. 178222-23, September 29, 2010).
Circumstances where financial assistance are
proper
The general rule is that financial assistance is
allowed only in instances where the Ee is validly
dismissed for causes other than serious
misconduct or those reflecting on his moral
character. Nonetheless, financial assistance may be
allowed as a measure of social justice and
exceptional circumstances, and as an equitable
concession for balancing the interests of the Er
with those of the worker.Where there is neither a
dismissal nor abandonment, it has been previously
held that separation pay may be awarded under
appropriate circumstances. Also, in cases where
there is no dismissal, the status quo between the Ee
and Er should be maintained; and in lieu of
reinstatement thegrant of separation pay to Ee is
proper (Luna v. Allado Construction Co., Inc., G.R.
No. 175251, May 30, 2011).
 MANAGEMENT PREROGATIVE

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

floating status considered to be constructively
dismissed? Management prerogative

A: Pursuant to Art. 286 of the LC, the bona fide GR: It is the right of an Er to regulate, according to
suspension of the operation of a business his own discretion and judgment, all aspects of
undertaking for a period not exceeding 6 months, employment, including:
or the fulfillment by the Ee of a civic duty shall not
terminate employment. In all such cases the Er 1. Hiring
shall reinstate the Ee to his former position 2. Work assignments
without loss of seniority rights if he indicates his 3. Working methods
desire to resume his work not later than one month 4. Time, place and manner of work
from the resumption of operations of his Er or 5. Tools to be used
from his relief from the military or civic duty.Only 6. Processes to be followed
when such a "floating status" lasts for more than 6 7. Supervision of workers
months that the Ee may be considered to have been 8. Working regulations
constructively dismissed (Nippon Housing Phil. Inc., 9. Transfer of Ees
v. Leynes, G.R. No. 177816, August 3, 2011). 10. Work supervision
11. Lay-off of workers
12. Discipline
13. Dismissal
14. Recall of workers

XPNs: Otherwise limited by law, contract, and

principles of fair play and justice.

NOTE: So long as a companys prerogatives are

exercised in good faith for the advancement of the
Ers interest and not for the purpose of defeating or
circumventing the rights of the Ees under special
laws or under valid agreements, the Supreme Court
will uphold them.

Q: Little Hands Garment Company, an

unorganized manufacturer of children's
apparel with around 1,000 workers, suffered
losses for the 1st first time in history when its
US and European customers shifted their huge
orders to China and Bangladesh. The
management informed its Ees that it could no
longer afford to provide transportation shuttle
services. Consequently, it announced that a
normal fare would be charged depending on
the distance traveled by the workers availing of
the service.

Was the Little Hands Garments Company within

its rights to withdraw this benefit which it had
unilaterally been providing its Ees? (2005 Bar
Question)

A: Yes. This is a management prerogative which is

not due any legal or contractual obligation. The
facts of the case do not state the circumstances
through which the shuttle service may be
considered as a benefit that ripened into a
demandable right. There is no showing that the
benefit has been deliberately and consistently

UNIVERSITY OF SANTO TOMAS

125 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
granted, i.e. with the Ers full consciousness that
despite its not being bound by law or contract to
grant it, it just the same granted the benefit.
Limitations on management prerogative
It is circumscribed by limitations found in:
1. Law,
2. CBA, or
3. General principles of fair play and justice
Furthermore, a line must be drawn between
management prerogatives regarding business
operations per se and those which affect the rights
of Ees. In treating the latter, management should
see to it that its Ees are at least properly informed
of its decisions and modes of actions. Such
management prerogative may be availed of
without fear of any liability so long as it is
exercised in good faith for the advancement of the
Ers interest and not for the purpose of defeating or
circumventing the rights of Ees under special laws
or valid agreement and are not exercised in a
malicious, harsh, oppressive, vindictive or wanton
manner or out of malice or spite (PAL v. NLRC, G.R.
No. 85985, August 13, 1993; San Miguel Brewery
Sales v. Ople, G.R. No. 53515, February 8, 1989;
Punzal v. ETSI Technologies Inc, 518 SCRA 66).
NOTE: It must be established that the prerogative
being invoked is clearly a managerial one.
Q: Is withholding an Ees salary a valid exercise
of management prerogative?
A: No. Any withholding of an Ees wages by an Er
may only be allowed in the form of wage
deductions under the circumstances provided in
Art. 113 of the LC: 1) the worker is insured; 2) for
union dues; 3) in cases authorized by law or
regulation issued by the SLE. In the absence of the
following circumstances, withholding thereof is
thus unlawful (SHS Perforated Materials, Inc. v.
Diaz, G.R. 185814, October 13, 2010).
Q: May a MERALCO Ee invoke the remedy of
writ of habeas data available where his Er
decides to transfer her workplace on the basis
of copies of an anonymous letter posted
therein, imputing to her disloyalty to the
company and calling for her to leave, which
imputation it investigated but fails to inform
her of the details thereof?
A: No. The writs of amparo and habeas data will
not issue to protect purely property or commercial
concerns nor when the grounds invoked in support
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
126
of the petitions therefore are vague or doubtful.
Employment constitutes a property right under the
context of the due process clause of the
Constitution. The writ of habeas data directs the
issuance of the writ only against public officials or
Ees, or private individuals or entities engaged in
the gathering, collecting or storing of data or
information regarding an aggrieved partys person,
family or home; and that MERALCO (or its officers)
is clearly not engaged in such activities (MERALCO
v. Lim, G.R. No. 184769, October 5, 2010).
RIGHT TO HIRE
It is both a right and a prerogative.
Legal limitations and prohibitions prior to
hiring
Stipulation against marriage. It shall be unlawful
for an employer to require as a condition of
employment or continuation of employment that a
woman employee shall not get married, or to
stipulate expressly or tacitly that upon getting
married, a woman employee shall be deemed
resigned or separated, or to actually dismiss,
discharge, discriminate or otherwise prejudice a
woman employee merely by reason of her
marriage (LC, Art. 136).
To require as a condition of employment that a
person or an employee shall not join a labor
organization or shall withdraw from one to which
he belongs [LC, Art. 248 (2)].
Minimum employable age.
1. No child below fifteen (15) years of age
shall be employed, except when he
works directly under the sole
responsibility of his parents or guardian,
and his employment does not in any way
interfere with his schooling.
2. Any person between fifteen (15) and
eighteen (18) years of age may be
employed for such number of hours and
such periods of the day as determined
by the Secretary of Labor and
Employment in appropriate regulations.
3. The foregoing provisions shall in no case
allow the employment of a person below
eighteen (18) years of age in an
undertaking which is hazardous or
deleterious in nature as determined by
the Secretary of Labor and Employment
(LC, Art. 139).
 MANAGEMENT PREROGATIVE
Prohibitions on Compulsory HIV Testing
HIV Testing shall not be imposed as a
precondition for the following:
a. Employment (RA 8504, Sec. 27).
DISCIPLINE
Er's right to discipline his Ees
The Er has the prerogative to instill discipline in
his Ees and to impose reasonable penalties,
including dismissal, on erring Ees pursuant to
company rules and regulations (San Miguel
Corporation v. NLRC, G.R. No. 87277, May 12, 1989).
An Er has the prerogative to prescribe reasonable
rules and regulations necessary for the proper
conduct of its business, to provide certain
disciplinary measures in order to implement said
rules and to assure that the same would be
complied with. An Er enjoys a wide latitude of
discretion in the promulgation of policies, rules
and regulations on work-related activities of the
Ees. This is inherent in its right to control and
manage its business effectively (San Miguel Corp. v.
NLRC, 551 SCRA 410).
Limitation on the Ers power to discipline
While management has the prerogative to
discipline its Ees and to impose appropriate
penalties on erring workers, pursuant to company
rules and regulations, however, such management
prerogative must be exercised in good faith for the
advancement of the Ers interest and not for the
purpose of defeating or circumventing the rights of
the Ees under special laws and valid agreements.
(PLDT v. Teves, G.R. No. 143511, November 15,
2010).
TRANSFER OF EMPLOYEES
Employers right to transfer and reassign Ees
In the pursuit of its legitimate business interests,
especially during adverse business conditions,
management has the prerogative to transfer or
assign Ees from one office or area of operation to
another provided there is no demotion in rank or
diminution of salary, benefits and other privileges
and the action is not motivated by discrimination,
bad faith, or effected as a form of punishment or
demotion without sufficient cause. This privilege is
inherent in the right of Ers to control and manage
their enterprises effectively.
NOTE: The right of Ees to security of tenure does
not give them vested rights to their positions to the
127
extent of depriving management of its prerogative
to change their assignments or to transfer them
(Endico v. Quantum Foods Distribution Center, G.R.
No. 161615, January 30, 2009).
Q: May the Er exercise his right to transfer an
Ee and compel the latter to accept the same if
said transfer is coupled with or is in the nature
of promotion?
A: No. There is no law that compels an Ee to accept
promotion. Promotion is in the nature of a gift or a
reward which a person has a right to refuse. When
an Ee refused to accept his promotion, he was
exercising his right and cannot be punished for it.
While it may be true that the right to transfer or
reassign an Ee is an Ers exclusive right and the
prerogative of management, such right is not
absolute (Dosch v. NLRC and Northwest Airlines, G.R.
No. 51182, July 5, 1983).
Burden of proving that the transfer was
reasonable
The Er must be able to show that the transfer is not
unreasonable, inconvenient or prejudicial to the
Ee; nor does it involve a demotion in rank or a
diminution of his salaries, privileges and other
benefits. Should the Er fail to overcome this burden
of proof, the Ees transfer shall be tantamount to
constructive dismissal (Blue Dairy Corporation v.
NLRC, 314 SCRA 401).
Limitations on management prerogatives
1. Such that the Er must be motivated by good
faith
2. The contracting out should not be resorted
to circumvent the law or must not have been
the result of malicious or arbitrary actions
(MERALCO v. Quisumbing, G.R. no. 127598.
February 22, 2000).
PRODUCTIVITY STANDARD
Q: May an Er impose productivity standards for
its workers?
A: Yes. An Er is entitled to impose productivity
standards for its workers. In fact, non-compliance
may be visited with a penalty even more severe
than demotion. The practice of a company in laying
off workers because they failed to make the work
quota has been recognized in this jurisdiction.
Failure to meet the sales quota assigned to each of
them constitute a just cause of their dismissal,
regardless of the permanent or probationary status
of their employment. Likewise, failure to observe
prescribed standards of work, or to fulfill
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
reasonable work assignments due to inefficiency
may constitute just cause for dismissal. Such
inefficiency is understood to mean failure to attain
work goals or work quotas, either by failing to
complete the same within the allotted reasonable
period, or by producing unsatisfactory results. This
management prerogative of requiring standards
may be availed of so long as they are exercised in
good faith for the advancement of the Ers interest
(Leonardo v. NLRC, G.R. No. 125303, 2000).
GRANT OF BONUS
Bonus
It is an amount granted and paid to an Ee for his
industry and loyalty which contributed to the
success of the Ers business and made possible the
realization of profits.
Q: Can bonus be demanded?
A:
GR:No. Bonus is not demandable as a matter of
right. It is a management prerogative given in
addition to what is ordinarily received by or
strictly due to recipient (Producers Bank of the Phil.
v. NLRC, G.R. No. 100701, March 28, 2001).
XPNs: Given for a long period of time, provided
that:
1. Consistent and deliberate Er continued
giving benefit without any condition
imposed for its payment;
2. Er knew he was not required to give benefit;
3. Nature of benefit is not dependent on profit;
4. Made part of the wage or compensation
agreed and stated in the employment
contract.
Q: The projected bonus for the Ees of Suerte Co.
was 50% of their monthly compensation.
Unfortunately, due to the slump in the business,
the president reduced the bonus to 5% of their
compensation. Can the company unilaterally
reduce the amount of bonus? (2002 Bar
Question)
A: Yes. The granting of a bonus is a management
prerogative, something given in addition to what is
ordinarily received by or strictly due the recipient.
An Er cannot be forced to distribute bonuses when
it can no longer afford to pay. To hold otherwise
would be to penalize the Er for his past generosity
(Producers Bank of the Phil. v. NLRC, G.R. No.
100701, March 28, 2001).
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
128
CHANGE OF WORKING HOURS
Ers right to change working hours
Well-settled is the rule that management retains
the prerogative, whenever exigencies of the service
so require, to change the working hours of its Ees.
Q: May the normal hours fixed in Art. 83 of the
LC be reduced by the Er? Explain.
A: It depends. Art. 83 provides that the normal
hours of work of an Ee shall not exceed 8 hours a
day. This implies that the Er, in the exercise of its
management prerogatives, may schedule a work
shift consisting of less than 8 hours. And following
the principle of a fair days wage for a fair days
labor, the Er is not obliged to pay an Ee, working
for less than 8 hours a day, the wages due for 8
hours. Nonetheless, if by voluntary practice or
policy, the Ee for a considerable period of time has
been paying his Ees wages due for 8 hours work
although the work shift less than 8 hours (e.g.
seven) it cannot later on increase the working
hours without an increase in the pay of the Ees
affected. An Er is not allowed to withdraw a benefit
which he has voluntarily given.
Q: Sime Darby Pilipinas issued a memorandum
implementing a new work schedule. It
eliminated the 30 minute paid on call lunch
break of its monthly salaried employees and
instead provided for a 10 minute break time
and one hour lunch break. The employees felt
adversely affected by the memorandum and
filed before the Labor Arbiter a complaint for
unfair labor practice. The LA dismissed the
complaint on the ground that the change in the
work schedule constituted a valid exercise of
management prerogative. Is changing the work
schedule of the employees a valid exercise of
management prerogative?
A: Yes. The right to fix the work schedules of the
employee rests principally on their employer. The
petitioner, as the employer, cites as reason for the
adjustment the efficient conduct of its business
operations and improved production. Management
retains the prerogative, whenever exigencies of the
service so require, to change the working hours its
employees. So long as such prerogative is exercised
in good faith for the advancement of the
employers interest and not for the purpose of
defeating and circumventing the rights of the
employees under special laws or under valid
agreements, this court will uphold such exercise
(Sime Darby Pilipinas v. NLRC, G.R. No. 119205, April
15, 1998).
 MANAGEMENT PREROGATIVE
RULE ON MARRIAGE BETWEEN EMPLOYEES OF employment competitive employment or restraint
COMPETITOR-EMPLOYEES on trade in employment contracts and restraints
on post-retirement competitive employment in
Q: Is the stipulation in the employment contract pension and retirement plans either incorporated
prohibiting an Ee from marrying another Ee of in employment contracts or in CBAs between the
a competitor company a valid exercise of Er and the union of Ees, or separate from said
management prerogative? contracts or CBAs which provide that an Ee who
accepts post retirement competitive employment
A: Yes. The policy is not aimed at restricting a will forfeit retirement and other benefits or will be
personal prerogative that belongs only to the obliged to reinstitute the same to the Er. The
individual. However, an Ees personal decision strong weight of authority is that forfeitures for
does not detract the Er from exercising engaging in subsequent competitive employment
management prerogatives to ensure maximum included in pension and retirement plans are valid
profit and business success. It does not impose an even though unrestricted in time or geography. A
absolute prohibition against relationships between post-retirement competitive employment
its Ees and those of competitor companies. Its Ees restriction is designed to protect the Er against
are free to cultivate relationships with and marry competition by former Ee who may retire and
persons of their own choosing. What the company obtain retirement or pension benefits and, at the
merely seeks to avoid is a conflict of interest same time, engage in competitive employment
between the employee and the company that may (Rivera v. Solidbank, G.R. No. 163269, April 19,
arise out of such relationships. It is also not 2006).
violative of the equal protection clause because it is
a settled principle that the commands of the equal
protection clause are addressed only to the State or
those acting under color of its authority.
Corollarily, it has been held in a long array of U.S.
Supreme Court decisions that the equal protection
clause erects no shield against merely private
conduct, however, discriminatory or wrongful. The
only exception occurs when the State in any of its
manifestations or actions has been found to have
become entwined or involved in the wrongful
private conduct (Duncan Association of Detailman-
PTGWO and Pedro A. Tecson v. Glaxo Wellcome
Philippines, Inc., G.R. No. 162994, September 17,
2004).

POST-EMPLOYMENT BAN

Q: Genesis Fulgencio had been working for

Solidbank Corporation since 1977. He later on
applied for retirement. Solidbank required
Genesis to sign an undated Undertaking where
he promised that "[he] will not seek
employment with a competitor bank or
financial institution within one (1) year from
February 28, 1995, and that any breach of the
Undertaking or the provisions of the Release,
Waiver and Quitclaim would entitle Solidbank
to a cause of action against him before the
appropriate courts of law. Equitable Banking
Corporation (Equitable) employed Genesis. Is
the post-retirement employment ban
incorporated in the Undertaking which Genesis
executed upon his retirement unreasonable,
oppressive, hence, contrary to public policy?

A: No. There is a distinction between restrictive

covenants barring an Ee to accept a post-

UNIVERSITY OF SANTO TOMAS

129 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
SOCIAL WELFARE LEGISLATION
SOCIAL AND WELFARE LEGISLATION
Social Legislation
Itconsists of statutes, regulations and
jurisprudence that afford protection to labor,
especially to working women and minors, and is in
full accord with the constitutional provisions on
the promotion of social justice to insure the well-
being and economic security of all the people.
SOCIAL SECURITY SYSTEM LAW (R.A. 8282)
Policy objective in the enactment of the Social
Security Law
To establish, develop, promote and perfect a sound
and viable tax-exempt social security service
suitable to the needs of the people throughout the
Philippines, which shall promote social justice and
provide meaningful protection to members and
their beneficiaries against the hazards of disability,
sickness, maternity, old age, death, and other
contingencies resulting in loss of income or
financial burden (R.A. 8282, Sec. 2).
NOTE: The enactment of SSS law is a legitimate
exercise of the police power. It affords protection
to labor and is in full accord with the constitutional
mandate on the promotion of social justice [Roman
Catholic Archbishop of Manila vs. SSS, G.R. No.
15045, (1961)].
Definitions
1. Employer-Any person, natural or juridical,
domestic or foreign, who carries into the
Philippines any trade, business, industry,
undertaking or activity of any kind and uses
the services of another person who is under
his orders as regards the employment,
except the Government and any of its
political subdivisions, branches or
instrumentalities, including corporations
owned or controlled by the Government:
Provided, That a self-employed person shall
be both Ee and Er at the same time [R.A.
8282, Sec 8(c)]
2. EmployeeAny person who:
a. performs services for an Er which either
or both mental and physical efforts are
used
b. who receives compensation for such
services
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
130
c. there is an Er-Ee relationship. Provided,
That a self-employed person shall be
both Ee and Er at the same time [R.A.
8282, Sec. 8(d)].
3. Employment Any service performed by
an Ee for his Er.
XPNs:
a. Employment purely casual and not for
the purpose of occupation or business of
the Er;
b. Service performed on or in connection
with an alien vessel by an Ee if he is
employed when such vessel is outside
the Phils;
c. Service performed in the employ of the
Phil. Government or instrumentality or
agency thereof;
d. Service performed in the employ of a
foreign government or international
organization, or their wholly-owned
instrumentality:
e. Such other services performed by
temporary and other Ees which may be
excluded by regulation of the SSC. Ees of
bona fide independent contractors shall
not be deemed Ees of the Er engaging
the services of said contractors. [R.A.
8282, Sec. 8(j)].
4. Contingency -The retirement, death,
disability, injury or sickness and maternity
of the member.
5. Monthly pension The monthly pension
shall be the highest of the following
amounts:
a. The sum of the following:
i. Php 300.00; plus
ii. 20% of the average monthly salary
credit; plus
iii. 2% of the average monthly salary
credit for each credited year of
service in excess of 10 years; or
b. 40% of the average monthly salary
credit; or
c. Php 1,000.00, provided that the
monthly pension shall in no case be paid
for an aggregate amount of less than
sixty (60) months [R.A. 8282, Sec. 12 (a)].
Minimum Pension
a. Php 1,200.00 - members with at least 10
credited years of service
b. Php 2, 400.00 for those with 20 credited
years of service [R.A. 8282, Sec. 12(b)].
 SOCIAL WELFARE LEGISLATION
NOTE: The monthly dependents pension
shall be suspended:
1. Upon the reemployment or resumption
of self-employment;
2. Recovery of the disabled member from
his permanent total disability
3. Failure to present himself for
examination at least once a year upon
notice by the SSS [RA 8282, Sec. 13-A
(b)].
6. Average monthly credit The result
obtained by:
a. Dividing the sum of the last 60 monthly
salary credits immediately preceding
the semester of contingency by 60; or
b. Dividing the sum of all the monthly
salary credits paid prior to the
semester of contingency by the number
of monthly contributions paid in the
same period, whichever is greater.
Provided, that the injury or sickness which caused
the disability shall be deemed as the permanent
disability for the purpose of computing the average
monthly salary credit [RA 8282, Sec. 8(m)].
7. Average daily salary credit The result
obtained by dividing the sum of the 6 highest
monthly salary credits in the 12-month
period immediately preceding the semester
of contingency by 180 [RA 8282, Sec. 8(n)].
8. Compensation all actual remuneration for
employment, including the mandated cost of
living allowance, as well as the cash value of
any remuneration paid in any medium other
than cash exept that part of the
remuneration received during the month in
excess of the maximum salary credit as
provided under section eighteen of this Act
[RA 8282, Sec. 8(f)].
SSS premiums are not taxes
The funds contributed to the System belong to the
members who will receive benefits, as a matter of
right, whenever the hazards provided by the law
occur [CMS Estate, Inc., vs. SSS, G.R. No. 26298,
(1984)].
Benefits received under SSS law are not part of
the estate of a member
Benefits receivable under the SSS Law are in the
nature of a special privilege or an arrangement
secured by the law pursuant to the policy of the
State to provide social security to the workingman.
The benefits are specifically declared not
transferable and exempt from tax, legal processes
and liens [SSS vs. Davac, et. al., G.R. No.21642,
(1966)].
COVERAGE
1. Compulsory Coverage
a. All Ees not over 60 years of age and their
Ers;
b. Domestic helpers whose income is not less
than P 1000/month and not over 60 years
of age and their Ers;
Limitations:
i. Any benefit earned by the Ees under
private benefit plans existing at the
time of the approval of the Act shall
not be discontinued, reduced or
otherwise impaired;
ii. Existing private plans shall be
integrated with the SSS but if the Er
under such plan is contributing more
than what is required by this Act, he
shall pay to the SSS the amount
required to him, and he shall continue
with his contributions less the amount
paid to SSS;
iii. Any changes, adjustments,
modifications, eliminations or
improvements in the benefits of the
remaining private plan after the
integration shall be subject to
agreements between the Ers and the
Ees concerned; and
iv. The private benefit plan which the Er
shall continue for his Ees shall remain
under the Ers management and
control unless there is an existing
agreement to the contrary
c. All self-employed considered both an Er
and Ee
NOTE: A self-employed person is one whose
income is not derived from employment as
well as those mentioned in Sec. 9-A of the law
[RA 8282, Sec. 8(s)].
d. All self-employed professionals;
e. Partners and single proprietors of
business;
f. Actors and actresses, directors,
scriptwriters and news correspondents
who do not fall within the definition of the
term Ee;
g. Professional athletes, coaches, trainers and
jockeys; AND
h. Individual farmers and fisherman. (R.A.
8282, Sec. 9-A)

UNIVERSITY OF SANTO TOMAS

131 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
2. Voluntary
a. Spouses who devote full time to managing
the household and family affairs, unless
they are also engaged in other vocation or
employment which is subject to
mandatory coverage; [R.A. 8282, Sec. 9(b)]
a. Filipinos recruited by foreign-based Ers for
employment abroad may be covered by the
SSS on a voluntary basis; (Sec. 9[c], R.A.
8282)
b. Ee separated from employment to maintain
his right to full benefits
c. Self-employed who realizes no income for a
certain month
3. By agreement
Any foreign government, international
organization, or their wholly-owned
instrumentality employing workers in the
Philippines, may enter into an agreement with
the Philippine government for the inclusion of
such Ees in the SSS except those already
covered by their respective civil service
retirement systems.
NOTE:
Seafarers are also covered by the SSS Law The
result of the Memorandum of Agreement entered
by SSS and DOLE approved by the Social Security
Commission per the Commission's Resolution No.
437, dated July 14, 1988 was that the Standard
Contract of Employment to be entered into
between foreign shipowners and Filipino seafarers
is the instrument by which the former express
their assent to the inclusion of the latter in the
coverage of the Social Security Act. In other words,
the extension of the coverage of the SSS to Filipino
seafarers arises by virtue of the assent given in the
contract of employment signed by Er and seafarer.
By extending the benefits of the Social Security Act
to Filipino seafarers on board foreign vessels, the
individual employment agreements entered into
with the stipulation for such coverage
contemplated in the DOLE-SSS Memorandum of
Agreement, merely gives effect to the
constitutional mandate to the State to afford
protection to labor whether "local or overseas"
(Ben Sta. Rita v. Court of Appeals, G.R. No. 119891,
(1995)).
Effectivity of compulsory coverage
The compulsory coverage is deemed effective:
As to the employer On the first of operation
As to the employee On the first day of his
employment
As to the self- Upon his registration with the
employed SSS
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
132
Effect of separation of an employee from his
employment under compulsory coverage
1. His Ers obligation to contribute arising from
that employment shall cease at the end of the
month of separation,
2. But said Ee shall be credited with all
contributions paid on his behalf and entitled
to benefits according to the provisions of
R.A. 9282.
3. He may, however, continue to pay the total
contributions to maintain his right to full
benefit (R.A. 8282, Sec. 11).
Note: The above provision recognizes the once a
member, always a member rule.
Effect of the interruption of business or
professional income
If the self-employed member realizes no income in
any given month:
1. He shall not be required to pay contributions
for that month.
2. He may, however, be allowed to continue
paying contributions under the same rules
and regulations applicable to a separated Ee
member:
3. Provided, that no retroactive payment of
contributions shall be allowed other than as
prescribed under Sec.22-A [R.A. 8282, Sec.
11(a)].
Determination of the contributions of the self-
employed
The contribution shall be determined in
accordance with Sec. 18 of the SSS Law, provided
that:
1. The monthly earnings declared at the time of
registration shall be considered as his
monthly compensation and he shall pay for
both Er and Ee contributions
2. The monthly earnings declared at the time of
registration shall remain the basis of his
monthly salary credit, unless another
declaration of his monthly earnings was
made, the latter becomes the new basis of
his monthly salary credits [R.A. No. 8282, Sec.
19(a)].
Reportorial requirements of the ER and self-
employed
1. Employer Report immediately to SSS the
names, ages, civil status, occupations,
salaries and dependents of all his covered
Ees
 SOCIAL WELFARE LEGISLATION
2. Self-employed Report to SSS within 30
days from the first day of his operation, his
name, age, civil status, occupation, average
monthly net income and his dependents.
EXCLUSIONS FROM COVERAGE
Employment which are excluded from
compulsory coverage under the SSS Law
1. Employment purely casual and not for the
purpose of occupation or business of the Er;
2. Service performed on or in connection with
an alien vessel by an employee if he is
employed when such vessel is outside the
Philippines;
3. Service performed in the employ of the
Philippine Government or instrumentality or
agency thereof;
4. Service performed in the employ of a foreign
government or international organization, or
their wholly-owned instrumentality:
Provided, however, that this exemption
notwithstanding, any foreign government,
international organization or their wholly-
owned instrumentality employing workers in
the Philippines or employing Filipinos outside
of the Philippines, may enter into an
agreement with the Philippine Government for
the inclusion of such Ees in the SSS except
those already covered by their respective civil
service retirement systems: Provided,
further, that the terms of such agreement shall
conform with the provisions of this Act on
coverage and amount of payment of
contributions and benefits: Provided,
finally, that the provisions of this Act shall be
supplementary to any such agreement; and
5. Such other services performed by temporary
and other Ees which may be excluded by
regulation of the Commission. Ees of bona
fide independent contractors shall not be
deemed Ees of the Er engaging the service of
said contractors (R.A. 1161, as amended, Sec.
8(j)).
. approval.
Q: A textile company hires 10 carpenters to
repair the roof of its factory which was
destroyed by typhoon Bening. Are the
carpenters subject to compulsory coverage
under the SSS Law? Why?
A: No. The employment is purely casual and not for
the purpose of the occupation or business of the Er.
Their engagement is occasioned by the passage of
the typhoon; they are not hired on a regular basis.
133
BENEFITS
Benefits under the SSS Law
1. Sickness Benefits
2. Permanent Disability Benefits
3. Maternity Leave Benefit
4. Retirement Benefit
5. Death and funeral Benefits
Non-transferability of the benefits provided for
in the SSS law
Benefits provided for in the SSS Law are not
transferable and no power of attorney or other
document executed by those entitled thereto in
favor of any agent, attorney or any other person for
the collection thereof on their behalf shall be
recognized, except when they are physically unable
to collect personally such benefits (R.A. 1161 as
amended, Sec. 15).
Q: On her way home from work, Mikaela, a
machine operator in a sash factory, decided to
watch a movie in a movie house. However, she
is stabbed by an unknown assailant. When she
filed a claim for benefits under the SSS Law, it
was denied on the ground that her injury is not
work-connected. Is the denial legal? Why?
A: No. It is not necessary, for the enjoyment of
benefits under the SSS Law that the injury is work-
connected. What is important is membership in the
SSS and not the causal connection of the work of
the Ee to his injury or sickness.
Note: Claims based on work-connected injuries or
occupational diseases are covered by the State
Insurance Fund.
SICKNESS BENEFITS
Sickness benefit
It is a daily allowance paid to a covered Ee who
becomes sick and is confined in a hospital for more
than 3 days or elsewhere with the Commissions
Entitlement to sickness benefit
Under Sec. 14 of the Social Security Law, the
following are the requisites for the enjoyment by a
covered individual of the sickness benefits:
1. Payment of at least 3 monthly contributions
in the 12-month period immediately
preceding the semester of sickness;
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
2. Sickness or injury and confinement for more
than 3 days in a hospital or elsewhere with
the Commissions approval;
3. Notice of the fact of sickness by the Ee to the
Er (or to the SSS in case the member is
unemployed) within 5 calendar days after
the start of his confinement; and
4. Exhaustion of sick leaves of absence with full
pay to the credit of the Ee.
NOTE: The requirement of notification is not
necessary when:
1. Confinement is in a hospital; or
2. The employee became sick or was injured
while working or within the premises of the
employer.
Requisites that must be complied with in order
to avail of sickness benefits
1. In no case shall the daily sickness benefit be
paid longer than 120 days in 1 calendar year,
nor shall any unused portion of the 120 days
of sickness benefit granted be carried
forward and added to the total number of
compensable days allowable in the
subsequent year;
2. No employee shall be paid any sickness
benefit for more than 240 days on account of
the same confinement;
3. Ee member shall notify his Er of the fact of
his sickness or injury within 5 calendar days
after the start of his confinement unless such
confinement:
a. Is in a hospital
b. The Ee became sick or was injured while
working or within the premises of the Er
(notification to the Er not necessary);
NOTE: If the member is unemployed or self-
employed, he shall directly notify the SSS of his
confinement within 5 calendar days after the
start thereof unless such confinement is in a
hospital in which case notification is also not
necessary. Where notification is necessary,
confinement shall be deemed to have started not
earlier than the 5th day immediately preceding
the date of notification (R.A. 8282, Sec. 14[b]).
Compensable confinement
1. It begins on the 1st day of sickness
2. Payment of such allowances shall be
promptly made by the Er:
a. Every regular payday or on the 15th and
last day of each month,
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
134
b. In case of direct payment by the SSS - as
long as such allowances are due and
payable (R.A. 8282, Sec. 14[b]).
Payment of sickness benefit
1. The Er shall pay the Ee for each compensable
confinement or fraction thereof
2. The SSS shall pay the member who is
unemployed, self-employed or voluntary
members with a daily sickness benefit
equivalent to 90% of his average daily salary
credit.
Requirements for an Er to claim
reimbursement of the sickness benefit
1. 100% of daily benefits shall be reimbursed
by SSS if the following requirements are
satisfied:
a. Receipt of SSS of satisfactory proof of
such payment and legality thereof;
b. The Er has notified the SSS of the
confinement within 5 calendar days
after receipt of the notification from the
Ee member.
2. Er shall be reimbursed only for each day of
confinement starting from the 10th calendar
day immediately preceding the date of
notification to the SSS if the notification to
the SSS is made beyond 5 calendar days after
receipt of the notification from the Ee
member (R.A. 8282, Sec. 14 [c]).
Reimbursement by SSS
GR: SSS shall reimburse the Er or pay the
unemployed member only for confinement within
1 year immediately preceding the date the claim
for benefit or reimbursement is received by the
SSS.
XPN: Confinement in a hospital in which case the
claim for benefit or reimbursement must be filed
within 1 year from the last day of confinement (R.A.
8282, Sec. 14[c]).
Instances when the employer or the
unemployed member is not entitled to
reimbursement
1. Where the Er failed to notify the SSS of the
confinement;
2. In the case of the unemployed; where he
failed to send the notice directly to the SSS
except when the confinement is in a hospital;
and
 SOCIAL WELFARE LEGISLATION
3. Where the claim for reimbursement is made Effect of the death of a pensioner with
after 1 year from the date of confinement. permanent total disability

PERMANENT DISABILITY BENEFITS 1. Primary beneficiaries are entitled to

Permanent disability benefit
It is a cash benefit paid to a member who becomes
permanently disabled, either partially or totally.
Permanent total disability
The following are deemed permanent total
disabilities:
1. Complete loss of sight of both eyes;
2. Loss of two limbs at or above the ankle or
wrists;
3. Permanent complete paralysis of two limbs;
4. Brain injury resulting to incurable imbecility
or insanity; and
5. Such cases as determined and approved by
the SSS [RA 8282, Sec. 13-A (d)].
receive monthly pension as of the date of
disability.
2. If there are no primary beneficiaries and
the pensioner dies within 60 months
from the start of his monthly pension
secondary beneficiaries shall be entitled to a
lump sum benefit equivalent to the total
monthly pensions corresponding to the
balance of the 5-year guaranteed period
excluding the dependents pension (R.A.
8282, Sec. 13-A [c]).
Effect of retirement or death of a pensioner
with a partial disability
If the pensioner with partial disability retires or
dies, the disability pension shall cease upon his
retirement or death [R.A. 8282, Sec 13-A (j)].

Death benefits v. Permanent total disability Compensability under the LC v. Compensability

benefits under the SSS Law

BASIS LABOR CODE SOCIAL

BASIS DEATH PERMANENT
SECURITY LAW
BENEFITS TOTAL
DISABILITY Purpose Governs Intends to provide
BENEFITS compensability insurance or
of: protection against
Requisite At least 36 At least 36 1. Work-related the hazards or
monthly monthly disabilities risks of disability,
contributions contributions 2. When there is sickness, old age
Benefits Primary Member loss of income or death, inter
payable Beneficiaries due to work- alia, irrespective
to whom connected or of whether they
work-aggravated arose from or in
Failure to Benefits shall be Benefits shall
injury or illness. the course of the
make 36 in lump sum be in lump sum
employment.
monthly equivalent to the equivalent to
Nature A disability is Disability may be
payments monthly pension the monthly
total and permanent total
times the number pension times
permanent if as a or permanent
of monthly the number of
result of the partial.
contributions monthly
injury or
paid to SSS or 12 contributions
sickness the Ee is
times the monthly paid to SSS or
unable to
pension, 12 times the
perform any
whichever is monthly
gainful
higher. pension,
occupation for a
whichever is
continuous
higher.
period exceeding
120 days
regardless of
whether he loses
the use of any of
his body parts.

UNIVERSITY OF SANTO TOMAS

135 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
MATERNITY LEAVE BENEFIT
Maternity benefit
The maternity benefit is a daily cash allowance
granted to a female member who was unable to
work due to childbirth or miscarriage.
Qualifications for entitlement to maternity
benefit
1. She has paid at least three monthly
contributions within the 12-month period
immediately preceding the semester of her
childbirth or miscarriage.
2. She has given the required notification of her
pregnancy through her Er if employed, or to
the SSS if separated, voluntary or self-
employed member.
NOTE: A voluntary or a self-employed member is
entitled to the maternity benefit provided that she
meets the aforementioned qualifying conditions.
Guidelines
1. Circular No. 15-V Pursuant to RA No. 7322
increasing the maternity benefits provided
for under Sec. 14-A of the SS Law
a. The daily maternity benefit shall be paid
for compensable period of 60 days in
case of normal delivery, abortion or
miscarriage, or 78 days in case of
caesarian delivery.
b. The payment of daily maternity benefit
shall bar the recovery of sickness
benefits for the same compensable
period
c. The daily maternity benefit shall be
equivalent to 100% of the average daily
salary credit as defined under the SSS
Law
d. These guidelines shall be observed for
child deliveries, abortions and
miscarriages occurring on or after April
23, 1991.
2. Circular No. 22-V Circular No. 103-T on
Maternity Leave Benefits has been
amended to 10 years instead of 1 year
prescriptive period for the employers to
file their reimbursement for maternity
benefits claims from the date said
advances were made in line with Arts.
1144 and 1150 of the NCC. (Alcantara, Vol.
II)
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
136
RETIREMENT BENEFIT
Retirement benefit
It is a cash benefit paid to a member who can no
longer work due to old age.
Types of retirement benefit
1. Monthly Pension Lifetime cash benefit
paid to a retiree who has paid at least 120
monthly contributions to the SSS prior to the
semester of retirement.
2. Lump Sum Amount Granted to a retiree
who has not paid the required 120 monthly
contributions.
Members entitled to retirement benefits
1. A member who
a. Is at least 60 years old
b. Has paid at least 120 monthly
contributions prior to the semester of
retirement; and
c. Already separated from employment or
has ceased to be self-employed,
2. A member who has reached the age of 65
years old, shall be entitled for as long as he
lives to the monthly pension [R.A. 8282, Sec
12-B (a)];
3. A member who
a. At least 60 years old at retirement;
and
b. Does not qualify for pension benefits
under paragraph a of Sec. 12-B
entitled to a lump sum benefit equal to
the total contributions paid by him
and on his behalf;
c. Must be separated from employment
and is not continuing payment of
contributions to the SSS on his own
[R.A. 8282, Sec. 12-B (b)].
Consequence of the re-employment or
resumption to work of a retired pensioner
The monthly pension of a retired member who
resumes employment and is less than 65 years old
will be suspended. He and his Er will again be
subject to compulsory coverage (R.A. 8282, Sec. 12-
B [c]).
Children of the retiree member who are
entitled to dependents pension
Only 5 minor children, beginning from the
youngest, are entitled to the dependents pension.
No substitution is allowed. Where there are more
 SOCIAL WELFARE LEGISLATION
than 5 legitimate and illegitimate children, the
legitimate ones will be preferred (RA 8282, Sec. 12-
A).
NOTE: The dependent child will receive the
pension until the child reaches (1) 21 years of age,
(2) gets married, (3) gets employed and earns Php
300 a month or more, or (4) dies.
However, the dependent's pension is granted for
life to children who are over 21 years old, provided
they are incapacitated and incapable of self-
support due to physical or mental defect which is
congenital or acquired during minority.
DEATH AND FUNERAL BENEFITS
Entitlement to death benefits
1. Upon death of a member, if he has paid at
least 36 monthly contributions prior to the
semester of death:
a. primary beneficiaries shall be entitled to
the monthly pension; or
b. If there are no primary beneficiaries,
secondary beneficiaries shall be entitled
to a lump sum benefit equivalent to 36
times the monthly pension.
2. Upon death of a member if he has not paid
the required 36 monthly contributions prior
to the semester of death:
a. Primary or secondary beneficiaries shall
be entitled to a lump sum benefit
equivalent to the monthly pension
multiplied by the number of monthly
contributions paid to the SSS: or
b. 12 times the monthly pension,
whichever is higher (R.A. 8282, Sec 13).
Length of time the primary beneficiaries shall
be entitled to the death benefits
The primary beneficiary shall be entitled to death
benefits consisting of monthly pension and
dependents pension until:
1. Dependent spouse entitled until he/she
remarries
2. Dependent children entitled until:
a. They get married;
b. Find gainful employment;
c. Reach the age of 21 years; or
d. Recover from mental or physical
incapacity and can now support
themselves.
137
Funeral benefit
A funeral grant equivalent to Php 12, 000.00 shall
be paid, in cash or in kind, to help defray the cost of
expenses upon the death of a member or retiree
(R.A. 8282, Sec. 13-B).
BENEFICIARIES
Primary beneficiaries
1. The dependent spouse until he or she
remarries
2. The dependent legitimate, legitimated or
legally adopted, and illegitimate children:
Provided, that the dependent illegitimate
children shall be entitled to 50% of the share
of the legitimate, legitimated or legally
adopted children. In the absence of the
dependent legitimate, legitimated or legally
adopted children of the member, his/her
dependent illegitimate children shall be
entitled to one hundred percent (100%) of
the benefits.
Secondary beneficiaries
1. In the absence of primary beneficiaries, the
dependent parents of the member
2. In the absence of the foregoing, any other
person designated by the covered employee
as secondary beneficiary (R.A. 8282, Sec.
8(k)).
Dependents
1. The legal spouse entitled by law to receive
support from the member;
2. The legitimate, legitimated, or legally
adopted, and illegitimate child who:
a. Is unmarried,
b. Not gainfully employed, and
c. Has not reached 21 years of age, or if
over 21 years of age, he is congenitally
or while still a minor has been
permanently incapacitated and
incapable of self-support, physically or
mentally.
d. The parent who is receiving regular
support from the member.
3. The parent who is receiving regular support
from the member (RA 8282, Sec. 8(e)).
Dependent for support
The entitlement to benefits as a primary
beneficiary requires not only legitimacy but also
dependence upon the member Ee (Gil v. SSC CA- GR
SP. 37150, May 8, 1996).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
NOTE: The Court defined a dependent as one who
derives his or her main support from
another. Meaning, relying on, or subject to,
someone else for support; not able to exist or
sustain oneself, or to perform anything without the
will, power, or aid of someone else. It should be
noted that the GSIS law likewise defines
a dependent spouse as the legitimate spouse
dependent for support upon the member or
pensioner. If a wife is already separated de facto
from her husband, she cannot be said to be
"dependent for support" upon the husband, absent
any showing to the contrary. Conversely, if it is
proved that the husband and wife were still living
together at the time of his death, it would be safe to
presume that she was dependent on the husband
for support, unless it is shown that she is capable of
providing for herself (SSS vs. Aguas, G.R. No.
165546, Feb. 27, 2006).
Q: A, an SSS member was survived by his legal
wife, who is not dependent upon him. He was
also survived by two common-law wives with
whom he had illegitimate minor children. Who
among them is entitled to the benefits?
A: The illegitimate minor children shall be entitled
to the death benefits as primary beneficiaries
because the legal wife is not dependent upon the
member. The SSS Law is clear that for a minor child
to qualify as a dependent the only requirements
are that he/she must be below 21 yrs. of age, not
married nor gainfully employed (Signey vs. SSS, G.R.
No. 173582, Jan. 28, 2008).
Q: Bonifacio and Elena Dycaico lived together
as husband and wife without the benefit of
marriage. In June 1989, Bonifacio was
considered retired and began receiving his
monthly pension from the SSS. Bonifacio
married Elena on January 6, 1997. He
continued to receive the monthly pension until
he passed away on June 19, 1997. Elena filed
with the SSS an application for survivors
pension but it was denied on the ground that
under Section 12-B(d) of the SS Law, the
primary beneficiaries who are entitled to
survivors pension are those who qualify as such
as of the date of retirement of the deceased
member. Hence, Elena, who was not then the
legitimate spouse of Bonifacio as of the date of
his retirement, could not be considered his
primary beneficiary. Is Elena entitled to claim
survivors pension?
A: Yes. The proviso as of the date of his retirement
in Section 12-B(d) of Rep. Act No. 8282, which
qualifies the term primary beneficiaries, is
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
138
unconstitutional for it violates the due process and
equal protection clauses of the Constitution. The
classification of dependent spouses on the basis of
whether their respective marriages to the SSS
member were contracted prior to or after the
latters retirement for the purpose of entitlement
to survivors pension does not rest on real and
substantial distinctions. It is too sweeping because
the proviso effectively disqualifies the dependent
spouses whose respective marriages to the retired
SSS member were contracted after the latters
retirement as primary beneficiaries and unfairly
lumps all these marriages as sham relationships or
were contracted solely for the purpose of acquiring
benefits accruing upon the death of the other
spouse. It unduly prejudices the rights of the legal
surviving spouse and defeats the avowed policy of
the law to provide meaningful protection to
members and their beneficiaries against the hazards
of disability, sickness, maternity, old age, death,
and other contingencies resulting in loss of income
or financial burden. The proviso runs afoul of the
due process clause as it outrightly deprives the
surviving spouses whose respective marriages to
the retired SSS members were contracted after the
latters retirement of their survivors benefits. There
is outright confiscation of benefits due such
surviving spouses without giving them an
opportunity to be heard (Dycaico v. SSS, G.R. No.
161357, Nov. 30, 2005).
NOTE: The reckoning point in determining the
beneficiaries of the deceased should be the time of
the latters death (SSS v. De Los Santos, G.R. No.
164790, Aug. 29, 2008).
QUALIFICATION OF SPOUSE-BENEFICIARY
To insure a uniform implementation of the Dycaico
case, the SSS issued the following guidelines:
1. Spouse
a. must have been legally married to the
retiree-pensioner at the time of death,
provided that if the marriage was
celebrated after the retirement of the
member, any of the following
circumstances is present:
i. The spouses were living together
as husband and wife without legal
impediment to marry each other
prior to the retirement of the
member; or
ii. The surviving spouse was reported
as beneficiary-spouse in the SSS
 SOCIAL WELFARE LEGISLATION
Forms prior to the retirement of
the member; or
iii. A child was born during the
existence of the marriage between
the retiree-pensioner and the
surviving spouse; or
iv. Before marriage, a child was born
during the time the spouses were
living together as husband and wife
without legal impediment to marry
each other; or
v. The marriage between the
surviving spouse and retiree-
pensioner is established to have
been contracted not for any
fraudulent purpose. In this regard,
the SSS Branch concerned shall
conduct an appropriate
investigation to satisfy this
requirement. One indicator of a
marriage celebrated in good faith is
that of the retiree-pensioner and
surviving spouse had subsequently
lived together as husband and wife.
b. Must have been dependent for support
upon the retiree-pensioner during the
existence of marriage (SSS Office Order
No. 2010-025).
Q: Antonio and Gloria de los Santos, both
Filipinos, got married in 1964. In 1983, Gloria
left Antonio and went to the United
States. In 1986, she filed for divorce against
Antonio in California. The divorce was granted.
In 1987, Antonio married Cirila de
los Santos. On her part, Gloria married Larry
Thomas Constant, an American citizen, in
the US. In 1999, Antonio died of respiratory
failure. Cirila applied for and began receiving
his SSS pension benefit. On December 21, 1999,
Gloria filed a claim for Antonios death benefits
with the SSS. Her claim was denied on the
ground that she was not a qualified beneficiary
of Antonio. She contended that her marriage to
Larry Constant was not the subsequent
marriage contemplated under SS Law that
would disqualify her as a beneficiary; that the
decree of divorce issued by a foreign state
involving Filipino citizens has no validity and
effect under Philippine law. Is Gloria still
qualified as a primary beneficiary of Antonio
under the SS Law?
A: Yes. The divorce obtained by Gloria against the
deceased Antonio was not binding in this
jurisdiction. Under Philippine law, only aliens may
obtain divorces abroad, provided they are valid
according to their national law. The divorce was
139
obtained by Gloria while she was still a Filipino
citizen and thus covered by the policy against
absolute divorces. It did not sever her marriage ties
with Antonio. Although Gloria was the legal spouse
of the deceased, the Court finds that she is
still disqualified to be his primary beneficiary
under the SS Law. She fails to fulfill the
requirement of dependency upon her deceased
husband Antonio (SSS v. De Los Santos, G.R. No.
164790, Aug. 29, 2008).
Compensation
All actual remuneration for employment, including
the mandated cost of living allowance, as well as
the cash value of any remuneration paid in any
medium other than cash exceptthat part of the
remuneration received during the month in excess
of the maximum salary.
Q: The owners of FALCON Factory, a company
engaged in the assembling of automotive
components, decided to have their building
renovated. Fifty (50) persons, composed of
engineers, architects and other construction
workers, were hired by the company for this
purpose. The work was estimated to be
completed in 3 years. The workers contended
that since the work would be completed after
more than 1 year, they should be subject to
compulsory coverage under the Social Security
Law. Do you agree with their contention?
Explain your answer fully. (2000 Bar Question)
A: No. Under Sec. 8(j) of R.A.1161,as amended,
employment of purely casual and not for the
purpose of the occupation or business of the Er is
excepted from compulsory coverage. An
employment is purely casual if it is not for the
purpose of occupation or business of the Er. In the
problem given, Falcon Factory is a company
engaged in the assembly of automotive
components. The 50 persons (engineers, architects
and construction workers) were hired by Falcon
Factory to renovate its building. The work to be
performed by these 50 people is not in connection
with the purpose of the business of the factory.
Hence, the employment of these 50 persons is
purely casual. They are, therefore, excepted from
the compulsory coverage of the SSS law.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
SETTLEMENT OF DISPUTES
DISPUTE SETTLEMENT
Disputes involving:
1. Coverage
2. Benefits
3. Contributions
4. Penalties
5. Any other matter
related thereto.
Social
Security
Note: Disputes within the
Commission
mandatory period of 20 days
(SSC)
after the submission of evidence
[R.A. 8282, Sec. 5(a)].
Decision, in the absence of
appeal, shall be final and
executory 15 days after date of
notification [R.A. 8282, Sec. 5(b)].
Decisions of SSC shall be
appealable to:
1. CA questions of law and fact
[R.A. 8282, Sec. 5(c); Rule 43,
CA / SC
1997 Rules of Court]
2. SC questions of law. [ R.A.
8282, Sec. 5(c); Rule 45, 1997
Rules of Court]
SSC may, motu proprio or on
motion of any interested party,
issue a writ of execution to
Execution of
enforce any of its decisions or
decision
awards, after it has become final
and executory [Sec. 5d R.A.
8282, Sec. 5(d)].
Q: Can the SSC validly re-evaluate the findings
of the RTC, and on its own, declare the latters
decision to be bereft of any basis?
A: No. It cannot review, much less reverse,
decisions rendered by courts of law as it did in the
case at bar when it declared that the CFI Order was
obtained through fraud and subsequently
disregarded the same, making its own findings
with respect to the validity of Bailon and Alices
marriage on the one hand and the invalidity of
Bailon and Teresitas marriage on the other. In
interfering with and passing upon the CFI Order,
the SSC virtually acted as an appellate court. The
law does not give the SSC unfettered discretion to
trifle with orders of regular courts in the exercise
of its authority to determine the beneficiaries of
the SSS (SSS vs. Teresita Jarque Vda. De Bailon, G.R.
No. 165545, March 24, 2006).
Q: Due to the delinquency incurred by ABC Co.
on its premium and loan amortizations, SSS
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
140
suggested settling its obligation either through
installment or through dacion en pago. ABC
chose dacion en pago and offered its property
situated in Baguio City. It was approved by the
SSS. However, SSS refused to accept the
payment unless the interest and charges will be
paid. ABC then filed a suit in court. SSS moved
for dismissal contending that the SSC, and not
regular courts, has the jurisdiction to entertain
controversy arising from the non-
implementation of a dacion en pago agreed
upon by the parties as a means of settlement of
ABCs liabilities. Resolve.
A: The law clearly vests upon the Commission
jurisdiction over disputes arising under this Act
with respect to coverage, benefits, contributions
and penalties thereon or any matter related
thereto... Dispute is defined as a conflict or
controversy.From the allegations of the complaint,
it readily appears that there is no longer any
dispute with respect to ABCs accountability to the
SSS. It had, in fact, admitted their delinquency and
offered to settle them by way of dacion en
pago subsequently approved by the SSS in
Resolution No. 270-s. 2001. The controversy,
instead, lies in the non-implementation of the
approved and agreed dacion en pago on the part of
the SSS. As such, ABC filed a suit to obtain its
enforcement which is, doubtless, a suit for specific
performance and one incapable of pecuniary
estimation beyond the competence of the
Commission (SSS vs. Atlantic Gulf and Pacific
Company of Manila, Inc. and Semirara Coal Corp.,
G.R. No. 175952, (2008)).
Prescriptive period to claim the benefits
GR: 10 years from the date of contingency
Re-adjudicating retirement, disability and
death claims
The reckoning point for the 10-year prescriptive
period depends on when the claim was originally
settled. For claims settled before March 1, 2006,
the 10-year prescriptive period will start on the
said date. For claims settled on or after March 1,
2006, the prescriptive period will start on the
initial settlement date of the retirement, disability
or death claim (SSC Resolution Number 10-19279-
10)
XPNs:
1. Cases wherein the reason for benefit
adjustment is not due to the fault or oversight
of the member or claimant.
 SOCIAL WELFARE LEGISLATION
2. Claims needing re-adjudication due to a change
of guardian of the member or dependent,
emancipation or death of dependents, re-
marriage of spouse but with dependents under
his/her custody, resumption of monthly
pension that was supended due to non-
compliance with the Annual Confirmation of
Pensioners, and payment of withheld shares
for co-claimants in the death benefit.
GSIS LAW (R.A. 8291)
Purpose for the enactment of the GSIS law
To provide and administer the following social
security benefits for government Ees:
1. Compulsory life insurance
2. Optional life insurance
3. Retirement benefits
4. Disability benefits to work-related
contingencies; and
5. Death benefits
Definitions
1. Employer
a. National Government
b. Its political subdivisions, branches,
agencies, instrumentalities
c. GOCCs, andfinancial institutionswith
original charters
d. Constitutional Commissions and the
Judiciary [R.A. 8291, Sec. 2(c)].
2. Employee or member Any person,
receiving compensation while in the service
of an Er, whether by election or
appointment, irrespective of status of
appointment, including barangay and
sanggunian officials [R.A. 8291, Sec. 2(d)].
3. Compensation The basic pay or salary
received by an Ee, pursuant to his or her
election or appointment, excluding per
diems, bonuses, OT pay, honoraria,
allowances and any other emoluments
received in addition to the basic pay which
are not integrated into the basic pay under
existing laws [R.A. 8291, Sec. 2(i)].
Q: Baradero is a member of the Sangguniang
Bayan of the Municipality of La Castellana,
Negros Occ. and is paid on a per diem basis. On
the other hand, Belo a Vice-Governor of Capiz is
in a hold over capacity and is paid on a per diem
basis. Are the services rendered by Baradero
and Belo on a per diem basis creditable in
computing the length of service for retirement
purposes?
141
A: Yes. The traditional meaning of per diem is a
reimbursement for extra expenses incurred by the
public official in the performance of his duties.
Under this definition, the per diem is intended to
cover the cost of lodging and subsistence of officers
and employees when the latter are on a duty
outside of their permanent station. On the other
hand, a per diem could rightfully be considered a
compensation or remuneration attached to an
office.
The per diems paid to Baradero and Belo were in
the nature of compensation or remuneration for
their services as Sangguniang Bayan and Vice-
Governor, respectively, rather than a
reimbursement for incidental expenses incurred
while away from their home base.
If the remuneration received by a public official in
the performance of his duties does not constitute a
mere allowance for expenses but appears to be
his actual base pay, then no amount of categorizing
the salary as a per diem would take the
allowances received from the term service with
compensation for the purpose of computing the
number of years of service in government (GSIS v.
CSC, G. R. Nos. 98395 and 102449, June 19, 1995).
Reportorial requirements of the Er
Er must report to GSIS the names, employment
status, positions, salaries of the employee and such
other matter as determined by the GSIS.
Penalty in case of delayed remittance or non-
remittance of contributions
The unremitted contributions shall be charged
interests as prescribed by the GSIS Board of
Trustees but shall not be less than 2% simple
interest per month from due date to the date of
payment by the employers concerned (R.A. 8291,
Sec. 7).
Q: May a member enjoy the benefits provided
for in the Revised GSIS Act simultaneous with
similar benefits provided under other laws for
the same contingency?
A: Whenever other laws provide similar benefits
for the same contingencies covered by this Act, the
member who qualifies to the benefits shall have the
option to choose which benefits will be paid to him.
However, if the benefits provided by the law
chosen are less than the benefits provided under
this Act, the GSIS shall pay only the difference (R.A.
8291, Sec. 55).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Similarities between the SSS law and the GSIS law

Basis Social Security Act of 1997 Government Service Insurance

(RA 8282) Act of 1997 (RA 8291)
Dependents 1. Legal spouse entitled for support;
2. Child, whether legitimate, legitimated, legally adopted or
illegitimate;
3. Parents dependent for support
Funding 1. ERs contribution
2. Ees / members contribution
Exemption from tax, legal Property, assets, revenues of SSS and GSIS are all exempt from taxes,
processes, lien and all benefits paid by SSS or GSIS shall likewise be exempt from
taxes, assessments, fees, charges and duties of all kinds.

SSS law v. GSIS law

Basis Social Security Act of 1997 Government Service Insurance Act

(RA 8282)
Who are covered 1. Employer Any person, natural or
judicial, domestic or foreign who
carries on in the Philippines any
trade, business, industry,
undertaking or activity of any kind
and uses the services of another
person who is under his orders as
regards employment
Exempt employer Government and
any of its political subdivisions,
branches and instrumentality,
including GOCCs, i.e. those under
GSIS
2. Employee any person who
performs services for an employer
who receives compensation for such
services, where there is an employer-
employee relationship
of 1997 (RA 8291)
1. Employer the national
government, its political
subdivisions, branches, agencies or
instrumentalities, including GOCCs,
and financial institutions with
original charters, the constitutional
commissions and the judiciary
2. Employee any person receiving
compensation while in service of an
employer as defined herein, whether
by election or appointment,
regardless of the status of
employment, including Barangay and
Sanggunian Members

3. Self-employed considered both

employer and employee
Conditions for child to 1. Unmarried; 1. Unmarried;
be considered
dependent 2. Not gainfully employed; 2. Not gainfully employed;

3. Has not reached 21 years of age;
OR
4. Incapable of supporting himself
either physically or mentally prior to
21 years of age or age of majority as
the case may be
3. Not over the age of majority; OR
4. Incapable of supporting himself
either physically or mentally prior to
21 years of age or age of majority as
the case may be

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 SOCIAL WELFARE LEGISLATION
Basis Social Security Act of 1997 Government Service Insurance Act
(RA 8282) of 1997 (RA 8291)
Beneficiaries 1.Primary 1. Primary
a. Dependent Spouse until a. Legal dependent spouse until
remarriage AND remarriage AND
b. Dependent Legitimate or b. Dependent Children
Legitimated or Legally
Adopted and Illegitimate 2. Secondary
Children
a. Dependent parents AND
b. Legitimate descendants subject
2. Secondary to restrictions on dependent
a. Dependent Parents children, legitimate
b. Absent any primary and descendants
secondary beneficiaries, any
other person designated by
member as secondary
beneficiary
Benefits 1. Sickness Benefits 1. Separation Benefits
2. Permanent Disability Benefits 2. Retirement Benefits
3. Maternity Benefits 3. Pemanent Disability Benefits
4. Retirement Benefits 4. Temporary Disability Benefits
5. Permanent Disability 5. Survivorship Benefits
6. Death Benefits 6. Funeral Benefits
7. Funeral Benefits 7. Life Insurance Benefits
8. Loan Grant
XPN: The members of the Judiciary and
Constitutional Commissions shall have
life insurance only.
Coverage 1.Compulsory Compulsory for all employees receiving
a. All Ees not over sixty (60) years of compensation who have not reached
age and their Ers; compulsory compulsory retirement age,
coverage of the Ers shall take effect irrespective of employment status
on the first day of his operation and
that of the Ee on the day of his
employment
b. Self-employed persons as may be
determined by the Commission,
including but not limited to: all self-
employed professionals; partners
and single-proprietors of business;
actors and actresses, directors,
scriptwriters and news
correspondents not employees;
professional athletes, coaches,
trainers and jockeys, and individual
farmers and fishermen, upon their
registration with the SSS.
c. Domestic helpers sixty years of age
and below with a monthly income
of not less than P1000 on the date
of their employment.
d. Individual farmers and fishermen
under SSS rules and regulation.

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143 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
2. Voluntary
a. Filipinos recruited by foreign-
based Ers for employment
abroad
b. Ees separated from
employment to maintain his
right to full benefits
c. Self-employed who realizes no
income for a certain month
d. Spouses who devote full time
to managing household and
family affairs unless
specifically mandatorily
covered
Exceptions from 1. Employment purely casual and not 1. Members of the AFP
coverage for purpose, occupation, or business 2. Members of the PNP
of the Er. 3. Contractual Ees, who have no Er-Ee
2. Services performed on or in relationship with the agency they
connection with alien vessel, if serve
employed when such vessel is 4. Members of Judiciary and
outside of the Philippines. Constitutional Commissions covered
3. Ees of Philippine Government or by life insurance only
instrumentality or agency thereof.
4. Service performed in the employ of a
foreign government, or
international organizations, or
wholly owned instrumentality
employing workers in the
Philippines or employing Filipinos
outside of the Philippines.
5. Services performed by temporary
employees and other employees
excluded by SSS regulation; Ees of
bona fide independent contractors
shall not be deemed Ees of the Er
engaging the services of an
independent contractor
Compensation All actual remuneration for The basic pay or salary received by an
employment, including the mandated Ee, pursuant to his
COLA, as well as the cash value of any election/appointment, EXCLUDING per
remuneration paid in any medium diems, bonuses, overtime pay,
other than cash EXCEPT that part of the honoraria, allowances and any other
remuneration in excess of the emoluments received in addition to the
maximum salary credit basic pay
Effects of separation 1. ERs contribution on his account A member separated from the service
from employment ceases; shall continue to be a member, and
2. Ees obligation to contribute also shall be entitled to whatever benefits
ceases at the end of the month of he has qualified to in the event of any
separation; contingency compensable under the
3. Ee shall be credited with all GSIS Act.
contributions paid on his behalf and
entitled to benefits according to the
provisions of the SSS Act.

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 SOCIAL WELFARE LEGISLATION
COVERAGE b. Covered for the entire package benefits and
privileges being extended by GSIS.
Compulsory coverage of the GSIS (2009 Bar
question) 2. Policyholders
a. Covered for life insurance only
The following are compulsorily covered by the b. Can avail of policy loan privilege only
GSIS: c. May also apply for housing loans
1. All Ees receiving compensation who have d. Judiciary and Constitutional Commissions
not reached the compulsory retirement age,
irrespective of employment status. 3. Retired Members
2. Members of the Judiciary and Constitutional a. Former active members who have retired
Commissions for life insurance policy (RA from the service and are already enjoying
8291, Sec. 3). the corresponding retirement benefits
applied for;
Government Ees subject to coverage under the b. Not entitled to any loan privilege, except
GSIS law stock purchase loan (R.A. 8291, IRR, Rules II,
Sec. 2.2).
GR: All Ees receiving compensation who have not
reached the compulsory retirement age, EXCLUSIONS FROM COVERAGE
irrespective of employment status.
Persons excluded from the coverage of the GSIS
XPNs: law
1. Uniformed members of the:
a. AFP; and 1. Ees who have separate retirement schemes
b. PNP (members of the Judiciary, Constitutional
2. Contractuals who have no Er and Ee Commissions and others similarly situated)
relationship with the agencies they serve. 2. Contractual Ees who have no Er-Ee with the
agencies they serve
Coverage of life insurance, retirement and 3. Uniformed members of the AFP, BJMP,
other social security protection whose coverage by the GSIS has ceased
effective June 24, 1997
GR: All members of the GSIS shall have life 4. Uniformed members of the PNP whose
insurance, retirement, and all other social security coverage by the GSIS has ceased effective
protections such as disability, survivorship, February 1, 1996 (R.A. 8291, IRR, Rule II, Sec.
separation, and unemployment benefits (R.A. 8291, 2.4).
Sec. 3).
BENEFITS
XPNs: The members of the following shall have life
insurance only: Benefits under the GSIS Act
1. The Judiciary; and
2. Constitutional Commissions 1. Separation
2. Unemployment or involuntary separation
Compulsory coverage of life insurance 3. Retirement
4. Permanent disability
GR: All Ees receiving compensation who have not 5. Temporary disability
reached the compulsory retirement age, 6. Survivorship
irrespective of employment status 7. Funeral
8. Life Insurance
XPNs: All members of the Armed Forces of the 9. Such other benefits and protection as may be
Philippines and the Philippine National Police extended to them by the GSIS such as loans.
(PNP).
SEPARATION BENEFITS
Classification of members for the purpose of
benefit entitlement Entitlement of a member to separation benefits

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

a. Still in the service and are paying integrated of creditable service shall be entitled to separation
premiums; benefit upon resignation or separation under the
following terms:

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145 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
1. A member with at least 3 years but less
than 15 years Cash payment equivalent to
100% of the average monthly compensation
for every year of service the member has
paid contributions:
a. Not less than Php 12,000.00
b. Payable upon reaching 60 years of age
or upon separation, whichever comes
later.
2. A member with less than 15 years of
service and less than 60 years of age at
the time of resignation or separation:
a. Cash payment equivalent to 18 times the
basic monthly pension (BMP), payable at
the time of resignation or separation
b. An old-age pension benefit equal to the
basic monthly pension, payable monthly
for life upon reaching the age of 60.
Effects of separation from service with regard
to membership
A member separated from the service shall
continue to be a member and shall be entitled to
whatever benefits he has qualified to (once a
member is always a member).
Note: A member separated for a valid cause shall
automatically forfeit his benefits, unless the terms
of resignation or separation provide otherwise. In
the case of forfeiture, the separated employee shall
be entitled to receive only of the cash surrender
value of his insurance.
UNEMPLOYMENT BENEFITS
Unemployment benefits
It will consists ofcash payment equivalent to 50%
of the average monthly compensation.
NOTE: A member who has rendered at least 15
years of service will be entitled to separation
benefits instead of unemployment benefits.
Conditions for entitlement to unemployment
benefits
1. The recipient must be a permanent Ee at the
time of separation;
2. His separation was involuntary due to the
abolition of his office or position resulting
from reorganization; and
3. He has been paying the contribution for at
least 1 year prior to separation.
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
146
RETIREMENT BENEFITS
Reason for compulsory retirement
The compulsory retirement of government officials
and Ees upon reaching the age of 65 years is
founded on public policy which aims by it to
maintain efficiency in the government service and
at the same time give the retiring public servants
the opportunity to enjoy during the remainder of
their lives the recompense, for their long service
and devotion to the government, in the form of a
comparatively easier life, freed from the rigors of
civil service discipline and the exacting demands
that the nature of their work and their relations
with their superiors as well as the public would
impose upon them [Beronilla vs. GSIS, G.R. No.
21723, (1970)].
Conditions in order to be entitled to retirement
benefits
1. A member has rendered at least 15 years of
service;
2. He is at least 60 years of age at the time of
retirement; and
3. He is not receiving a monthly pension
benefit from permanent total disability (R.A.
8291, Sec. 13-A).
Options of the retiree with regard to his or her
retirement benefits
The retiree may get either of the following:
1. Lump sum equivalent to 6 months of the
basic monthly pension (BMP) payable at the
time of retirement and an old-age pension
benefit equal to BMP payable for life, starting
upon the expiration of the 5 years covered
by the lump sum; or
2. Cash payment equivalent to 18 times his
BMP and monthly pension for life payable
immediately [R.A. 8291, Sec. 13(a)].
Rule in case of extension of service in order to
be entitled for retirement benefits
The Supreme Court held that the head of the
government agency concerned is vested with
discretionary authority to allow or disallow
extension of the service of an official or Ee who has
reached 65 years old without completing the 15
years of government service. However, this
discretion is to be exercise conformably with the
provisions of Civil Service Memorandum Circular
No. 27, series of 1990 which provides that the
extension shall not exceed 1 year (Rabor v. CSC, G.R.
No. 111812, May 31, 1995).
 SOCIAL WELFARE LEGISLATION
PERMANENT DISABILITY BENEFITS
Disability
Any loss or impairment of the normal functions of
the physical and/or mental faculty of a member,
which reduces or eliminates his/her capacity to
continue with his/her current gainful occupation
or engage in any other gainful occupation.
Total disability
Complete incapacity to continue with present
employment or engage in any gainful occupation
due to the loss or impairment of the normal
functions of the physical and/or mental faculties of
the member.
monthly compensation for each year of
service he has pad contributions but not less
than Php 12,000.00 which should have been
his separation benefit [RA 8291, Sec. 16(b)].
The following disabilities shall be deemed total
and permanent
1. Complete loss of sight of both eyes
2. Loss of two (2) limbs at or above the ankle
or wrist
3. Permanent complete paralysis of two (2)
limbs
4. Brain injury resulting in incurable imbecility
or insanity
5. Such other cases as may be determined by
the GSIS [RA 8291, Sec. 6(d)].

Types of permanent disability Benefits for permanent partial disability

1. Permanent Total Disability (PTD) A member is entitled to cash payment in

Accrues or arises when recovery from any accordance with the schedule of disabilities to be
loss or impairment of the normal functions prescribed by GSIS, if he satisfies the given
of the physical and/or mental faculty of a conditions of either (1) or (2) of Sec. 16(a).
member which reduces or eliminates his
capacity to continue with his current gainful The following disabilities shall be deemed
occupation or engage in any other gainful permanent partial
occupation is medically remote [R.A. 8291,
Sec. 2(q) and (s)]. 1. Complete and permanent loss of the use of:
2. Permanent Partial Disability (PPD) a. Any finger
Accrues or arises upon the irrevocable loss b. Any toe
or impairment of certain portion/s of the c. One arm
physical faculties, despite which the member d. One hand
is able to pursue a gainful occupation [R.A. e. One foot
8291, Sec. 2(u)]. f. One leg
g. One or both ears
Benefits for permanent total disability h. Hearing of one or both ears
i. Sight of one eye
1. A member is entitled to the monthly income 2. Such other cases as may be determined by
benefit for life equivalent to the BMP when: the GSIS [RA 8291, Sec. 17(b)].
a. He is in the service at the time of the
disability or Suspension of payment of benefits
b. If separated from service
c. He has paid at least 36 monthly 1. In case amember is re-employed; or
contributions within 5 years 2. Member recovers from disability as
immediately preceding his disability determined by the GSIS; or
d. He has paid a total of at least 180 3. Fails to present himself for medical
monthly contribution prior his disability examination when required by the GSIS [R.A.
e. He is not receiving old-age retirement 8291, Sec. 16(c)].
pension benefits [RA 8291, Sec. 16(a)].
Instances when recovery is precluded
NOTE: A member cannot enjoy the monthly
income benefit for permanent disability and If the permanent disability was due to the
the old-age retirement simultaneously. following acts of the subject Ee, recovery from the
GSIS is precluded:
2. If the member does not satisfy the conditions 1. Grave misconduct
above but has rendered at least 3- years- 2. Notorious negligence
service, he shall be advanced the cash 3. Habitual intoxication
payment equivalent to 100% of his average 4. Willful intention to kill himself or another

UNIVERSITY OF SANTO TOMAS

147 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
TEMPORARY DISABILITY BENEFITS
Temporary total disability
It accrues or arises when the impaired physical
and/or mental faculties can be rehabilitated
and/or restored to their normal functions [R.A.
8291, Sec. 2(t)].
NOTE: A member cannot enjoy the temporary total
disability benefit and sick leave pay
simultaneously.
Benefits for temporary disability
1. Member is entitled to 75% of his current
daily compensation for each day or fraction
thereof of total disability benefit, to start at
the 4th day but not exceeding 120 days in one
calendar year when:
a. He has exhausted all sick leaves
b. CBA sick leave benefits
Provided, that:
i. He was in the service at time of
disability; or
ii. If separated, he has rendered at
least 3 years of service and has
paid at least 6 monthly
contributions in the year preceding
his disability
2. The temporary total disability benefits shall
in no case be less than P70 a day.
NOTE: An application for disability must be filed
with the GSIS within 4 years from the date of the
occurrence of the contingency.
SURVIVORSHIP BENEFITS
Persons entitled to survivorship benefits
Upon the death of a member or pensioner, his
beneficiaries shall be entitled to survivorship
benefits. Such benefit shall consist of:
1. The basic survivorship pension which is
50% of the basic monthly pension; and
2. The dependent childrens pension not
exceeding 50% of the basic monthly pension
Note: The dependent children shall be entitled to
the survivorship pension as long as there are
dependent children and, thereafter, the surviving
spouse shall receive the basic survivorship pension
for life or until he or she remarries.
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
148
Conditions for the primary beneficiaries to be
entitled to basic monthly pension
Upon the death of a member, the primary
beneficiaries shall be entitled to:
1. Survivorship pension Provided, that the
deceased:
a. Was in the service at the time of his
death; or
b. If separated from the service, has
rendered at least 3 years of service at
the time of his death and has paid 36
monthly contributions within the five-
year period immediately preceding his
death; or has paid a total of at least 180
monthly contributions prior to his
death; or
2. The survivorship pension plus a cash
payment equivalent to 100% of his
average monthly compensation for every
year of service Provided,that the deceased
was in the service at the time of his death
with at least 3 years of service; or
3. A cash payment equivalent to 100% of his
average monthly compensation for each
year of service he paid contributions, but
not less than Php 12,000.00 Provided,
that the deceased has rendered at least 3
years of service prior to his death but does
not qualify for the benefits under item (1) or
(2) of this paragraph [R.A. 8291, Sec. 21(a)].
Secondary beneficiaries
In the absence of primary beneficiaries, the
secondary beneficiaries shall be entitled to:
1. The cash payment equivalent to 100% of his
average monthly compensation for each year
of service he paid contributions, but not less
than Php 12,000.00 Provided, That the
member is in the service at the time of his
death and has at least 3 years of service; or
2. In the absence of secondary beneficiaries,
the benefits under this paragraph shall be
paid to his legal heir [R.A. 8291, Sec. 21(c)].
Payment of survivorship pension
After the end of the guaranteed 30 months, the
beneficiaries are still entitled to survivorship
benefits. The survivorship pension shall be paid as
follows:
1. When the dependent spouse is the only
survivor, he/she shall receive the basic
 SOCIAL WELFARE LEGISLATION
survivorship pension for life or until he or
she remarries;
2. When only dependent children are the
survivors, they shall be entitled to the basic
survivorship pension for as long as they are
qualified, plus the dependent childrens
pension equivalent to 10% of the basic
monthly pension for every dependent child
not exceeding 5, counted from the youngest
and without substitution;
3. When the survivors are the dependent
spouse and the dependent children, the
dependent spouse shall receive the basic
survivorship pension for life or until he/she
remarries, and the dependent children shall
receive the dependent childrens pension
(R.A. 8291, Sec. 21(b)).
Benefits that the beneficiaries are entitled to
upon the death of the pensioner
1. Upon the death of an old-age pensioner or a
member receiving the monthly income
benefit for permanent disability, the
qualified beneficiaries shall be entitled to the
survivorship pension.
2. When the pensioner dies within the period
covered by the lump sum, the survivorship
pension shall be paid only after the
expiration of such period.
Q: Gary Leseng was employed as a public school
teacher at the Marinduque High School. On
April 27, 1997, a memorandum was issued by
the school principal designating Gary to prepare
the model dam project, which will be the official
entry of the school in the search for Outstanding
Improvised Secondary Science Equipment for
Teachers. Gary complied with his superior's
instruction and took home the project to enable
him to finish beforethe deadline. While working
on the model dam project, he came to contact
with a live wire and was electrocuted. The death
certificate showed that he died of cardiac arrest
due to accidental electrocution.
Bella (Garys common-law wife) and Jobo (his
only son) filed a claim for death benefits with
the GSIS which was denied on the ground that
Garys death did not arise out of and in the
course of employment and therefore not
compensable because the accident occurred in
his house and not in the school premises. Is
Bella entitled to file a claim for death benefits
with the GSIS? Why? (1991 Bar Question)
A: No. Not being a beneficiary, Bella is not entitled
to receive survivorship benefits. She is not a
beneficiary becauses he is a common-law wife and
149
not a legal dependent spouse. The beneficiaries of
a member of the GSIS are entitled to the benefits
arising from the death of said member. Death
benefits are called survivorship benefits under the
GSIS Law.
Q: Is the cause of death of Gary (cardiac arrest
due to accidental electrocution in his house)
compensable? Why?
A: Yes. To be compensable under the GSIS Law,
the death need not be work-connected.
Q: Abraham, a policeman, was on leave for a
month. While resting in their house, he heard
two of his neighbours fighting with each other.
Abraham rushed to the scene in tending to
pacify the protagonists. However, he was shot
to death by one of the protagonists. Eva Joy, a
housemaid, was Abraham's surviving spouse
whom he had abandoned for another woman
yearsback. When she learned of Abraham's
death, Eva Joy filed a claim with the GSIS for
death benefits. However, her claim was denied
because: (a)when Abraham was killed, he was
on leave; and (b) she was not the dependent
spouse of Abraham when he died. Resolve with
reasons whether GSIS is correct in denying the
claim. (2005 Bar Question)
A: Yes, because under the law, a dependent is one
who is a legitimate spouse living with the Ee (LC,
Art. 167 (i)). In the problem given, Eva Joy had been
abandoned by Abraham who was then living
already with another woman at the time of his
death.
Moreover, Abraham was on leave when he was
killed.The24-hour duty rule does not apply when
the policeman is on vacation leave (ECC v.CA,
G.R.No.121545, Nov. 14, 1996). Taking together
jurisprudence and the pertinent guidelines of the
ECC with respect to claims for death benefits,
namely:
1. That the Ee must be at the place where his
work requires him to be;
2. That the Ee must have been performing his
official functions; and
3. That if the injury is sustained elsewhere, the
Ee must have been executing an order for the
Er, it is not difficult to understand then why
Eva Joy's claim was denied by the GSIS
[Tancinco v. GSIS, G.R. No. 132916, (2001)].
In the present case, Abraham was resting at his
house when the incident happened; thus, he was
not at the place where his work required him to be.
Although at the time of his death Abraham was
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
performing a police function, it cannot be said that LIFE INSURANCE
his death occurred elsewhere other than the place
where he was supposed to be because he was Classes of life insurance coverage under the
executing an order for his Er. GSIS law

No presumption of Sham Marriages 1. Compulsory Life Insurance

The present GSIS law does not presume that
marriages contracted within three years before
retirement or death of a member are sham
marriages contracted to avail of survivorship
benefits. The law acknowledges that whether the
surviving spouse contracted the marriage mainly
to receive survivorship benefits is a matter of
evidence. It no longer prescribes a sweeping
classification that unduly prejudices the legitimate
surviving spouse and defeats the purpose for
which Congress enacted the social legislation
(Alcantara, Book II; GSIS v. Montesclaros, G.R. No.
146494, July 14, 2004).
2. Optional Life Insurance
Note: The plans may be endowment or ordinary
life.
Compulsory life insurance coverage
All Ees including the members of the Judiciary and
the Constitutional Commissioners except for
Members of the AFP, the PNP, BFP and BJMP, shall,
under such terms and conditions as may be
promulgated by the GSIS, be compulsorily covered
with life insurance, which shall automatically take
effect as follows:

FUNERAL BENEFITS 1. Those employed after the effectivity of this

Funeral benefits
The funeral benefit is in the amount Php 20,000. It
is intended to defray the expenses incident to the
burial and funeral of the deceased member,
pensioner, or retiree under R.A. 660, R.A. 1616, P.D.
1146, and R.A. 8291. It is payable to the members
of the family of the deceased, in the order which
they appear:
Act, their insurance shall take effect on the
date of their employment;
2. For those whose insurance will mature after
the effectivity of this Act, their insurance
shall be deemed renewed on the day
following the maturity or expiry date of their
insurance;
3. For those without any life insurance as of the
effectivity of this Act, their insurance shall
take effect following said effectivity.

1. Legitimate spouse Optional life insurance coverage

2. Legitimate child who spent for the funeral
services, or 1. A member may at any time apply for himself
3. any other person who can show and/or his dependents an insurance and/or
unquestionable proof that he has borne the pre-need coverage embracing:
funeral expenses of the deceased. a. Life
b. Memorial plans
Payment of funeral benefits c. Health
d. Education
Funeral benefits will be paid upon the death of: e. Hospitalization
f. Other plans as maybe designed by GSIS
1. An active member
2. A member who has been separated from the 2. Any Er may apply for group insurance
service but is entitled to future separation or coverage for its Ees.
retirement benefits
3. A member who is a pensioner (excluding BENEFICIARIES
survivorship pensioners)
4. A retiree who is at the time of his retirement Beneficiaries
was of pensionable age, at least 60 years old,
who opted to retire under RA 1616 (An act 1. Primary beneficiaries
furtheramending Sec.12, C.A. 186, as amended, a. The legal dependent spouse until he/she
by prescribing two other modes of retirement remarries, and
and for other purposes). b. The dependent children (Sec. 2[g], R.A.
8291)

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2015 GOLDEN NOTES
150
 SOCIAL WELFARE LEGISLATION
2. Secondary beneficiaries
a. The dependent parents, and
b. Subject to the restrictions on dependent
children, the legitimate descendants [RA
8291, Sec. 2(h)].
Dependents
1. Legitimate spouse dependent for support
upon the member or pensioner;
2. Legitimate, legitimated, legally adopted
child, including the illegitimate child,
a. Who is unmarried,
b. Not gainfully employed,
c. Not over the age of majority, or if over
the age of majority, incapacitated and
incapable of self-support due to a
mental or physical defect acquired
prior to age of majority; and
d. Parents dependent upon the member
for support [RA 8291, Sec. 2(f)].
Prescriptive period to claim the benefits
GR: 4 years from the date of contingency
XPNs: Life insurance and retirement (R.A. 8291,
Sec. 28).
LIMITED PORTABILITY LAW (R.A. 7699)
Limited portability rule
A covered worker who transfers employment from
one sector to another or is employed on both
sectors, shall have creditable services or
contributions on both Systems credited to his
service or contribution record in each of the
Systems and shall be totalized for purposes of old-
age, disability, survivorship, and other benefits in
either or both Systems (R.A. 7699, Sec. 3).
All contributions paid by such member personally,
and those that were paid by his employers to both
Systems shall be considered in the processing of
benefits which he can claim from either or both
Systems (R.A. 7699, Sec. 4).
This is advantageous to the SSS and GSIS members
for purposes of death, disability or retirement
benefits. In the event the Ees transfer from the
private sector to the public sector, or vice-versa,
their creditable employment services and
contributions are carried over and transferred as
well.
151
EMPLOYEES COMPENSATION
Employees compensation program
It is the program provided for in Arts. 166 to 208 of
the LC whereby a fund known as the State
Insurance Fund is established through premium
payments exacted from Ers and from which the Ees
and their dependents in the event of work-
connected disability or death, may promptly secure
adequate income benefit, and medical or related
benefits.
NOTE: The claimant under the Employees
Compensation Program is required to present
proof of casual relation or aggravation, if the cause
or origin of the disease is still unknown.
Compassion for the victims of diseases not covered
by law ignores the need to show a greater concern
for the trust fund to which the tens of millions of
workers and their families look for compensation
whenever accidents, disease, and deaths occur. The
law, however, does not require a direct casual
relation. It is enough that the hypothesis on which
the workmans claim is based is PROBABLE.
Contributions to the State Insurance Fund
Contributions under this Title shall be paid in their
entirety by the Er and any contract or device for
the deduction of any portion thereof from the
wages or salaries of the Ees shall be null and void
[LC, Art.183(c)].
Definitions
1. Injury Any harmful change in the
human organism from any accident arising
out of and in the course of employment.
2. Sickness Any illness definitely
accepted as an occupational disease.
3. Occupational DiseaseOne which
results from the nature of the employment,
and by nature is meant conditions which all
Ees of a class are subject and which produce
the disease as a natural incident of a
particular occupation, and attach to that
occupation a hazard which distinguishes it
from the usual run of occupations and is in
excess of the hazard attending the
employment in general.
To be occupational, the disease must be wholly due
to causes and conditions which are normal and
constantly present and characteristic of the
particular occupation.
NOTE: Although the cause of cancer is not yet
known, it has already been included as a qualified
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
occupational disease in certain cases (Abadiano v.
GSIS and ECC, G.R. No. L-52254, Jan. 30, 1984).
4. Compensable Sickness It means any
illness definitely accepted as an occupational
disease listed by the Commission or any
illness caused by employment, subject to
proof that the risk of contracting the same is
increased by working conditions [LC, Art.
167(l)].
Accrual of the right to compensation or benefit
under the Employees Compensation Program
The right to compensation or benefit for loss or
impairment of an employees earning capacity due
to work-related illness or injuryarises or accrues
upon, and not before, the happening of the
contingency. Hence, an Ee acquires no vested right
to a program of compensation benefits simply
because it was operative at the time he became
employed (San Miguel Corporation vs. NLRC, G.R.
No. 57473, Aug. 15, 1988).
Benefits under the State Insurance Fund
1. Medical Benefits
2. Disability Benefits
3. Death Benefits
4. Funeral Benefits
Persons entitled to benefits under the
Employees Compensation Program
The covered Ee, his dependents, and in case of his
death, his beneficiaries.
Dependents of the employee
1. Legitimate, legitimated, legally adopted or
acknowledged natural child who is
unmarried, not gainfully employed, and not
over 21 years of age or over 21 years of age
provided he is incapacitated and incapable of
self-support due to a physical or mental
defect which is congenital or acquired during
minority;
2. Legitimate spouse living with the Ee;
3. Parents of said Ee wholly dependent upon
him for regular support [LC as amended by
P.D. 1921, Art.167(i)];
Beneficiaries
Primary beneficiaries
1. Dependent spouse until he remarries
2. Dependent children
UNIVERSITY OF SANTO TOMAS
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Secondary beneficiaries
1. In absence of primary beneficiaries, the
dependent parents
2. Subject to the restrictions imposed on
dependent children, the illegitimate children
and legitimate descedants. Provided, that the
dependent acknowledged natural child shall
be considered as a primary beneficiary when
there are no other dependent children who
are qualified and eligible for monthly income
benefit (LC, Art. 167, as amended by Sec. I,
P.D. 1921).
Recovery from the State Insurance Fund does
not bar a claim for benefits under the SSS Law\
As expressly provided for in Art. 173 of the LC,
payment of compensation under the State
Insurance Fund shall not bar the recovery of
benefits under the SSS Law. Benefits under the
State Insurance Fund accrue to the Ees concerned
due to hazards involved and are made a burden on
the employment itself. On the other hand, social
security benefits are paid to SSS members by
reason of their membership therein for which they
contribute their money to a general fund (Ma-ao
Sugar Central Co., Inc. vs. CA, G.R. No. 83491, Aug. 27,
1990).
COVERAGE
Coverage
Ers and their Ees not over 60 years of age are
subject to compulsory coverage under this
program.
The Er may belong to either the:
1. Public sector covered by the GSIS,
comprising the National Government,
including GOCCs, Philippine Tuberculosis
Society, the Philippine National Red Cross,
and the Philippine Veterans Bank; and
2. Private sector covered by the SSS,
comprising all Ers other than those defined
in the immediately preceding paragraph.
The Ee may belong to either the:
1. Public sector comprising the employed
workers who are covered by the GSIS,
including the members of the AFP, elective
officials who are receiving regular salary and
any person employed as casual emergency,
temporary, substitute or contractual;
 SOCIAL WELFARE LEGISLATION
2. Private sector comprising the employed
workers who are covered by the SSS.
Effectivity of the compulsory coverage
1. Employer On the first day of operation
2. Employee On the day of his employment
Theory of increased risk
The term sickness as defined in Art. 167(l) of the
LC is a recognition of the theory of increased risk.
To establish compensability under the same, the
claimant must show substantial proof of work-
connection, but what is required is merely a
reasonable work-connection and not a direct
causal relation. Proof of actual cause of the ailment
is not necessary. The test of evidence of relation of
the disease with the employment is probability and
not certainty (Jimenez v. Employees Compensation
Commission, G.R. No. L-58176, Mar. 23, 1984;
Panotes vs. ECC, G.R. No. L-64802, Sept. 23, 1985).
NOTE: An illness not listed by the Employees
Compensation Commission as an occupational
disease is compensable provided that it is
established that the risk of contracting the same is
increased by working conditions.
Going and coming rule
GR: In the absence of special circumstances, an Ee
injured while going to or coming from his place of
work is excluded from the benefits of Workmens
Compensation Act.
XPNs:
1. Where the Ee is proceeding to or from his
work on the premises of the Er;
2. Proximity Rulewhere the Ee is about to
enter or about to leave the premises of his
Er by way of exclusive or customary means
of ingress and egress;
3. Ee is charged, while on his way to or from his
place of employment or at his home, or
during this employment with some duty or
special errand connected with his
employment; and
4. Where the Er as an incident of the
employment provides the means of
transportation to and from the place of
employment.
Personal comfort doctrine
Acts performed by an Ee within the time and space
limits of his employment, to minister personal
comfort, such as satisfaction of his thirst, hunger,
or other physical demands, or to protect him from
153
excessive cold, shall be deemed incidental to his
employment and injuries suffered in the
performance of such act shall be considered
compensable and arising out of and in the course of
employment.
Defenses that may be interposed by the state
insurance fund against a claim for
compensation made by a covered Ee or his
dependents
The following defenses may be set up:
1. Injury is not work-connected or the sickness
is not occupational
2. Disability or death was occasioned by the
Ees intoxication, willful intention to injure
or kill himself or another, or his notorious
negligence (LC, Art. 172).
3. No notice of sickness, injury or death was
given to the Er (LC, Art. 206).
4. Claim was filed beyond 3 years from the time
the cause of action accrued (LC, Art. 201 as
amended by P.D. 1921).
Note: Notorious negligence is equivalent to gross
negligence; it is something more than mere
carelessness or lack of foresight.
Q: Abraham Dino works as a delivery man in a
construction supply establishment owned by
Abraham Julius. One day, while Dino was
making reports on his delivery, he had an
altercation with Julius; irked by the
disrespectful attitude of Dino, Julius pulled out
his gun and shot Dino, hitting him in the spinal
column and paralyzing him completely. Julius
was prosecuted for the act.
1. Is the disability suffered by Abraham Dino
compensable?
2. If Abraham Dino recovers compensation
from the SIF, can he still recover from
Abraham Julius damages in the criminal
case? Why?
A:
1. Yes. The injury was sustained by Abraham
Dino in his place of work and while in the
performance of his official functions.
2. No. Under Art. 173 of the LC, as amended by
P.D. 1921, the liability of the State Insurance
Fund under the Employees Compensation
Program shall be exclusive and in place of all
other liabilities of the Er to the Ee or his
dependents or anyone otherwise entitled to
recover damages on behalf of the Ee or his
dependents.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Q: Wilfredo, a truck driver employed by a local
construction company, was injured in an
accident while on assignment in one of his
employers project in Iraq. Considering that his
injury was sustained in a foreign country, is
Wilfredo entitled to benefits under the
Employees Compensation Program?
A: Yes. Filipinos working abroad in the service of
an Er, domestic or foreign, who carries on in the
Philippines any trade, business, industry,
undertaking or activity of any kind, are covered by
the ECP (ECC Rules, Rule 1, Section 5; LC, Art.169).
MEDICAL BENEFIT (MEDICAL SERVICES)
Conditions for the entitlement to medical
services
For an Ee to be entitled to medical services, the
following conditions must be satisfied:
1. He has been duly reported to the System
(SSS or GSIS);
2. He sustains a permanent disability as a
result of an injury or sickness; and
3. The System has been notified of the injury or
sickness which caused his disability.
DISABILITY BENEFIT
Disability benefits
They are income benefits in case of temporary total
disability, permanent total disability and
permanent partial disability.
Permanent and total disabilities
The following disabilities shall be deemed
permanent and total:
1. Temporary total disability lasting
continuously for more than one hundred
twenty days, except as otherwise provided
for in the Rules;
2. Complete loss of sight of both eyes;
3. Loss of two limbs at or above the ankle or
wrist;
4. Permanent complete paralysis of two limbs;
5. Brain injury resulting in incurable imbecility
or insanity; and
6. Such cases as determined by the Medical
Director of the System and approved by the
Commission [LC, Art.192(c)].
UNIVERSITY OF SANTO TOMAS
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154
NOTE: Permanent total disability may arise
although the employees does not lose the use of
any part of his body.Where the Ee is unable, by
reason of the injury or sickness, to perform his
customary job for more than 120 days, permanent
total disability arises (Ijares vs. CA, G.R. No. 105854,
Aug. 26, 1999).
Conversion of a permanent partial disability to
permanent total disability
A permanent partial disability be converted to
permanent total disability after the employees
retirement. This is in line with the social justice
provision in the Constitution. A persons disability
may not manifest itself fully at one precise moment
in time but rather over a period of time. Disability
should not be understood more on its medical
significance but on the loss of earning capacity.
DEATH BENEFITS
Conditions for entitlement to death benefits
The beneficiaries of a deceased Ee shall be entitled
to an income benefit if all of the following
conditions are satisfied:
1. The Ee has been duly reported to the
System;
NOTE: If an employee suffers disability or
dies before he is duly reported for coverage
to the System (SSS or GSIS), the Er shall be
liable for the benefits (Rule X, Sec. 1; Rule XI,
Sec. 1; Rule XII, Sec. 1; Rule XIII, Sec. 1; ECC
Rules).
2. He died as a result of an injury or sickness;
and
3. The System has been duly notified of his
death, as well as the injury or sickness which
caused his death.
Length of time the primary beneficiaries are
entitled to death benefits
1. Dependent Spouse until he or she
remarries.
2. Dependent Children until they get
married, or find gainful employment, or
reach 21 years of age.
3. Dependent Child suffering from physical
or mental defect until such defect
disappears.
 SOCIAL WELFARE LEGISLATION
Ers liability in case of death or injury of the Ee

1. If the cause of the death or personal injury

arose out of and in the course of
employment, the Er is liable.
2. If the cause was due to the Ees own
notorious negligence, or voluntary act or
drunkenness, the Er shall not be liable.
3. If the cause was partly due to the Ees lack of
due care, the compensation shall be
inequitably reduced.
4. If the cause was due to the negligence of a
fellow Ee, the Er and the guilty Ee shall be
liable solidarily.
5. If the cause was due to the intentional or
malicious act of fellow Ee,the fellow Ee and
Er are liable unless the Er exercised due
diligence in selecting and supervising his
Ees.

FUNERAL BENEFIT

Funeral benefit

A funeral benefit of Php 10, 000.00 shall be paid

upon the death of a covered Ee or permanently
totally disabled pensioner.

UNIVERSITY OF SANTO TOMAS

155 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
LABOR RELATIONS LAW
DECLARATION OF POLICY
The state aims to promote:
1. Free CB and negotiations, including
voluntary arbitration, mediation and
conciliation as modes of settling labor or
industrial disputes;
2. Free trade unionism;
3. Free and voluntary organization of a strong
and united labor movement;
4. Enlightenment of workers concerning their
rights and obligations as union members and
as Ees;
5. Adequate administrative machinery for the
expeditious settlement of labor or industrial
disputes;
6. Stable but dynamic and just industrial peace;
7. Participation of workers in the decision-
making processes affecting their rights,
duties and welfare;
8. Truly democratic method of regulating the
relations between the Ers and Ees by means
of agreements freely entered into through
CB, no court or administrative agency or
official shall have the power to set or fix
wages, rates of pay, hours of work or other
terms and conditions of employment, except
as otherwise provided under the LC (LC, Art.
211).
RIGHT TO SELF ORGANIZATION
Right to Self-Organization
It is the right of workers and Ees to form, join or
assist unions, organizations or associations for
purposes of CB and negotiation and for mutual aid
and protection. It also refers to the right to engage
in peaceful concerted activities or to participate in
policy and decision-making processes affecting
their rights and benefits.
NOTE: The LC incorporated the policy laid down in
the International Labor Organization Convention
No. 87: Freedom of Association and Protection of
the Right to Organization which provides that
workers and Ers, without distinction whatsoever,
shall have the right to establish and, subject only to
the rules of the organization concerned, to join
organizations of their own choosing without
previous authorization.
Also, under the International Covenant on Civil and
Political Rights, - Everyone shall have the right to
freedom of association with others, including the
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
156
right to form and join trade unions for the
protection of his interests.
Constitutional provisions that protect the right
to self-organization
1. The State affirms labor as a primary social
economic force. It shall protect the rights of
the workers and promote their welfare (Art.
II, Sec. 18).
2. The State is required to guarantee the rights
of all workers to self-organization, CB and
negotiations, and peaceful concerted
activities, including the right to strike in
accordance with law (Art. XIII, Sec. 3).
3. The right of the people, including those
employed in the public and private sectors,
to form unions, associations, or societies for
purposes not contrary to law, shall not be
abridged (Art. III, Sec. 8).
4. The civil service embraces all branches,
subdivisions, instrumentalities, and agencies
of the Government, including government-
owned or controlled corporations with
original charters [Art. IX-B, Sec. 2(1)].
Extent of the Right to Self-Organization
It includes the right
1. To form, join and assist labor organizations
for the purpose of CB through
representatives of their own choosing; and
2. To engage in lawful and concerted activities
for the purpose of CB or for their mutual aid
and protection (Art. 246, LC).
Exercise of right to self-organization by aliens
GR: All aliens, natural or juridical, as well as
foreign organizations are strictly prohibited from
engaging directly or indirectly in all forms of trade
union activities without prejudice to normal
contacts between Philippine labor unions and
recognized international labor centers.
XPN: Alien Ees with valid working permits issued
by the DOLE may exercise the right to self-
organization and join or assist labor organizations
for purposes of CB, if they are nationals of a
country which grants the same or similar rights to
Filipino workers, as certified by the DFA.
Q: A, an employee of XYZ Cooperative, owns 500
shares in the cooperative. He has been asked to
join the XYZ Cooperative Employees
Association. He seeks your advice on whether
he can join the association. What advice will
you give him? (2010 Bar Question)
 LABOR RELATIONS
A: A cannot join XYZ Cooperative Employees
Association because owning shares makes him a
co-owner thereof. An Ee-member of a cooperative
cannot join a union and bargain collectively with
his cooperative for an owner cannot bargain with
himself and his co-owners (Cooperative Rural Bank
of Davao City, Inc. v. Calleja, 165 SCRA 725).
WHO MAY UNIONIZE FOR PURPOSES OF
COLLECTIVE BARGAINING
1. All persons employed in commercial,
industrial and agricultural enterprises
2. Workers in religious, charitable, medical, or
educational institutions, whether operating
for profit or not
3. Supervisors
4. Security Guards
5. Workers of Cooperatives
Right of supervisory Ees in self-organization
Supervisory Ees shall not be eligible for
membership in a labor organization of the rank-
and-file Ees but may join, assist or form separate
labor organizations of their own. The rank and file
union and the supervisors union operating within
the same establishment may join the same
federation or national union (LC, Art. 245).
Effect of inclusion as members of employees
outside the bargaining unit
The inclusion as union members of employees
outside the bargaining unit shall not be a ground
for the cancellation of the registration of the union.
Said employees are automatically deemed removed
from the list of membership of said union (LC, Art.
245-A; RA No. 9481).
Ees eligible to join a labor organization for
mutual aid and protection
The following enjoy the right to self-organization
for mutual aid and protection
1. Ambulant workers
2. Intermittent workers
3. Itinerant workers
4. Self-employed people
5. Rural workers
6. Those without definite Ers (LC, Art. 243).
NOTE: The reason for this rule is that the
abovementioned workers have no Ers to
collectively bargain with.
157
When Ee are eligible to join a labor
organization
Any Ee, whether employed for a definite period or
not, shall, beginning on his first day of service, be
considered as an employee for purposes of
membership in any labor union [LC, Art. 277 (c) as
amended by Sec. 33, R.A. No. 6715].
NOTE: Organizations of workers and Ers shall have
the right to establish and join federations and
confederations, and any such organization,
federation or confederation shall have the right to
affiliate with international organizations of
workers and Ers (ILO Convention No. 87, Art. 5).
WHO CANNOT FORM, JOIN, AND ASSIST LABOR
ORGANIZATIONS
Exceptions to Article 243, notwithstanding the
all-inclusive coverage of all persons
1. High level or Managerial Government Ees
(E.O. 180, Sec. 3).
2. Ees of International organizations with
functional immunities
3. Managerial Ees vested with the powers or
prerogatives to lay down and execute
management policies and/or to hire,
transfer, suspend, lay-off, recall, discharge,
assign or discipline Ees [LC, Art. 212 (m)].
NOTE: The mere fact that an Ee is
designated as manager does not ipso facto
make him one. Job description determines
the nature of his employment
4. Members of the AFP including the police
officers, policemen, firemen, and jail guards
(E.O. 180, Sec. 4).
5. Confidential Ees who have access to
confidential labor relations information.
6. Ees of cooperatives who are its members.
However they may form workers
association.
7. Non-Ees
8. Government Ees, including GOCCs with
original charters
NOTE: Government Ees are governed by the
Civil Service Commission.
9. Aliens without a valid working permit or
aliens with working permits but are
nationals of a country which do not allow
Filipinos to exercise their right of self-
organization and to join or assist labor
organizations [LC, Art. 269; D.O. No. 9, Rule II,
Sec. 2 (1997)].
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Doctrine of necessary implication
While Art. 245 of the Labor Code singles out
managerial employees as ineligible to join, assist or
form any labor organization, under the doctrine of
necessary implication, confidential employees are
similarly disqualified. This doctrine states that
what is implied in a statute is as much a part
thereof as that which is expressed (National
Association of Trade Unions (NATU) Republic
Planters Bank Supervisors Chapter v. Torres, G.R. No.
93468, Dec. 29, 1994).
CONFIDENTIAL EMPLOYEES
Definitions based from jurisprudence
Those who by reason of their positions or nature of
work are required to assist or act in a fiduciary
manner to managerial employees and hence, are
likewise privy to sensitive and highly confidential
records like executive secretaries (Metrolab
Industries v. Confesor, G.R. No. 108855, Feb. 28,
1996).
They assist and act in a confidential capacity to, or
have access to confidential matters of, persons who
exercise managerial functions in the field of labor
relations. As such, the rationale behind the
ineligibility of managerial employees to form, assist
or join a labor union equally applies to them
(Philips Industrial Development v. NLRC, G.R. No.
88957, June 25, 1992).
Confidential Ees are defined as those who
1. Assist or act in a confidential capacity,
2. Formulate, determine, and effectuate
management policies in the field of labor
relations.
The two (2) criteria are cumulative, and both must
be met if an employee is to be considered a
confidential employee that is, the confidential
relationship must exist between the employee and
his supervisor, and the supervisor must handle the
prescribed responsibilities relating to labor
relations (Tunay na Pagkakaisa ng Manggawa sa
Asia Brewery vs. Asia Brewer, Inc., G.R. No. 162025,
August 3, 2010).
NOTE: An important element of the confidential
Ee rule is the Ees access to confidential labor
relations information. An Ee may not be excluded
from the appropriate bargaining unit merely
because he has access to confidential information
concerning the Ers internal business which is not
related to the field of labor relations and has no
relevance to negotiations and settlement of
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
158
grievances wherein the interests of a union and the
management are invariably adversarial (San
Miguel Corp. Supervisors v. Laguesma, G.R. 110399,
August 15, 1997).
Examples of Confidential Ees who could not
unionize
1. Bank cashiers
2. Accounting personnel,
3. Radio and telegraph operators who, having
access to confidential information
4. Personnel staff (Standard Chartered Bank
Employees Union v. Standard Chartered Bank,
G.R. No. 161933, April 22, 2008)
Rationale behind the exclusion of confidential
employees from the rank-and-file bargaining
unit
The rationale for their separate category and
disqualification to join any labor organization is
similar to the inhibition for managerial Ees,
because if allowed to be affiliated with a union, the
latter might not be assured of their loyalty in view
of evident conflict of interests and the union can
also become company-dominated with the
presence of managerial Ees in the union
membership. Having access to confidential
information, confidential Ees may also become the
source of undue advantage. Said Ees may act as a
spy or spies of either party to a CBA (San Miguel
Foods Inc., vs. San Miguel Corporation Supervisors
and Exempt Union, G.R. No. 146206, August 1, 2011).
Human Resource Assistant and Personnel
Assistant are considered confidential Ees
As Human Resource Assistant, the scope of ones
work necessarily involves labor relations,
recruitment and selection of employees, access to
Ees' personal files and compensation package, and
human resource management. As regards a
Personnel Assistant, one's work includes the
recording of minutes for management during CB
negotiations, assistance to management during
grievance meetings and administrative
investigations, and securing legal advice for labor
issues from the petitioners team of lawyers, and
implementation of company programs. Therefore,
in the discharge of their functions, both gain access
to vital labor relations information which
outrightly disqualifies them from union
membership.
 LABOR RELATIONS
Exception: Payroll master
A confidential employee is one entrusted with
confidence on delicate, or with the custody,
handling or care and protection of the employers
property. Confidential employees, such as
accounting personnel, should be excluded from the
bargaining unit, as their access to confidential
information may become the source of undue
advantage. However, such fact does not apply to
the position of Payroll Master and the whole
gamut of employees who has access to salary and
compensation data. The position of Payroll Master
does not involve dealing with confidential labor
relations information in the course of the
performance of his functions. Since the nature of
his work does not pertain to company rules and
regulations and confidential labor relations, it
follows that he cannot be excluded from the subject
bargaining unit (San Miguel Foods Inc. v. San Miguel
Corporation Supervisors and Exempt Union, G.R. No.
146206, August 1, 2011).
Exclusive Bargaining Representation and
Workers Participation in Policy and Decision-
Making
Bargaining representative of the Ees for
purposes of collective bargaining
The labor organization designated or selected by
the majority of the Ees in an appropriate collective
bargaining unit shall be the exclusive
representative of the Ees in such unit for the
purpose of CB. However, an individual Ee or group
of Ees shall have the right at any time to present
grievances to their Er [LC, Art. 255 as amended by
R.A. No. 6715, Sec. 22 (1989)].
Rule on solicitation of questions, suggestions
and complaints by the Er from the Ees who are
represented by a union
GR: The Er may not solicit questions, suggestions
and complaints from Ees who are represented by a
union.
XPN:
1. The CB representative executes an
agreement waiving the right to be present on
any occasion when Ee grievances are being
adjusted by the Er; and
2. Er acts strictly within the terms of his waiver
agreement.
Q: The hotel union filed a Notice of Strike with
the National Conciliation and Mediation Board
(NCMB) due to an unfair labor practice against
the Diamond Hotel who refused to bargain with
159
it. The hotel advised the union that since it was
not certified by the DOLE as the exclusive
bargaining agent, it could not be recognized as
such. The union sought to bargain for members
only. May the Union bargain collectively?
A: No. Art. 255 of the LC declares that only the
labor organization designated or selected by the
majority of the Ees in an appropriate CB unit is the
exclusive representative of the Ees in such unit for
the purpose of CB. The union is admittedly not the
exclusive representative of the majority of the Ees
of the hotel, hence, it could not demand from the
hotel the right to bargain collectively in their behalf
(Manila Diamond Hotel v. Manila Diamond Hotel Ees
Union, G.R. No. 158075, June 30, 2006).
Principle of Codetermination or co-sharing
(2007 Bar Question)
It refers to the right of workers to participate in
policy and decision-making process affecting their
rights and benefits (PAL v. NLRC, G.R. No. 85985,
August 13, 1993; 1987 Constitution, Art. XIII, Sec. 3).
Extent of the workers right to participate in
policy and decision-making processes in a
company
Such right refers not only to formulation of
corporate programs and policies but also to
participation in grievance procedures and
voluntary modes of settling disputes.
Q: Does the workers right to participate in
policy and decision-making process as
provided under Art. XIII, Sec. 13 of the 1987
Constitution include membership in the Board
of Directors of a corporation? (2008 Bar
Question)
A: No..The SC recognized the right of the union to
participate in policy formulation and decision-
making process on matters affecting the union
members rights, duties and welfare. However,
such participation of the union in committees of
the Er is not in the nature of a co-management
control of the business. Impliedly, therefore,
workers participatory right in policy and decision-
making processes does not include the right to put
a union member in acorporations Board of
Directors (Manila Electric Company v. Quisumbing,
G.R. No. 127598, January 27, 1999).
Q: May the management be compelled to share
with the union or its employees its prerogative
of formulating a Code of Discipline?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
A: Yes. The management may be compelled to do
so. The Code of Discipline involves security of
tenure and loss of employment a property right.
It is time that management realizes that to attain
effectiveness in its conduct rules, there should be
candidness and openness by Management and
participation by the union, representing its
members. In fact, our Constitution has recognized
the principle of shared responsibility between Ers
and workers and has likewise recognized the right
of workers to participate in policy and decision-
making process affecting their rights (PAL v. NLRC,
G.R. No. 85985, August 13. 1993).
PROPER BARGAINING UNIT
It is a group of Ees of a given Er, comprised of all or
less than all of the entire body of the Ees which the
collective interest of all the Ees consistent with
equity to the Er, indicate to be best suited to serve
the reciprocal rights and duties of the parties
under the collective bargaining provisions of the
law.
TEST TO DETERMINE THE CONSTITUENCY OF
AN APPROPRIATE BARGAINING UNIT
Factors/tests considered in determining the
appropriateness of a bargaining unit
1. Will of the Ees (Globe Election Doctrine)
2. Prior CB history (CB History Doctrine)
3. Similarity of employment status
(Employment Status Doctrine)
4. Affinity and unity of the Ees interest, such as
substantial similarity of work and duties, or
similarity of compensation and working
conditions (Substantial or Mutuality of
Interest Doctrine / Community of Interest
Rule)
Globe Election Doctrine
In defining the appropriate bargaining unit, the
determining factor is the express will of the
workers which is the inherent and basic right to
self-organization.
Collective Bargaining History Doctrine
In determining the appropriate bargaining unit,
prior CB history and affinity of the Ees may be
resorted to.
Employment Status Doctrine
The determination of the appropriate bargaining
unit is based on the employment status of the Ees.
UNIVERSITY OF SANTO TOMAS
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160
Substantial or Mutuality of Interest Doctrine
The Ees sought to be represented by the CB agent
must have substantial mutual interest in terms of
employment and working condition as evinced by
the type of work they perform (San Miguel Corp.
Employees Union-PTGWO v. Confesor, 262 SCRA 81).
Factors considered in determining the
Substantial or Mutuality Interest Doctrine
1. Similarity in the scale and manner of
determining earnings
2. Similarity in employment benefits, hours of
work, and other terms and conditions of
employment
3. Similarity in the kinds of work performed
4. Similarity in the qualifications, skills and
training of Ees
5. Frequency of contract or interchange among
the Ees
6. Geographical proximity
7. Continuity and integration of production
processes
8. Common supervision and determination of
labor-relations policy
9. History of CB
10. Desires of the affected Ees or
11. Extent of union organization
Q: A registered labor union in UP, ONAPUP,
filed a petition for certification election among
the non-academic employees. The university
did not oppose, however, another labor union,
the All UP Workers Union assents that it
represents both academic and non-academic
personnel and seeks to unite all workers in one
union. Do employees performing academic
functions need to comprise a bargaining unit
distinct from that of the non-academic
employees?
A: Yes. The mutuality of interest test should be
taken into consideration. There are two classes of
rank and file Ees in the university, those who
perform academic functions such as the professors
and instructors, and those whose function are non-
academic who are the janitors, messengers, clerks
etc. Thus, not much reflection is needed to perceive
that the mutuality of interest which justifies the
formation of a single bargaining unit is lacking
between the two classes of Ees (U.P. v. Ferrer-
Calleja, G.R. No.96189, July 14, 1992).
 LABOR RELATIONS
Bargaining history not a decisive factor in the
determination of appropriateness of
bargaining unit
While the existence of a bargaining history is a
factor that may be reckoned with in determining
the appropriate bargaining unit, the same is not
decisive or conclusive. Other factors must be
considered. The test of grouping is community or
mutuality of interests. This is so because the basic
test of an asserted bargaining units acceptability is
whether or not it is fundamentally the combination
which will best assure to all Ees the exercise of
their CB rights (Democratic Labor Association v.
Cebu Stevedoring Company, Inc., G.R. No. L-10321,
February 28, 1958).
One-company, One-union Policy
GR: All the rank-and-file Ees with substantially the
same interests and who invoke the right to self-
organization are part of a single unit so that they
can deal with their Er with just one and potent
voice. The Ees bargaining power is strengthened
thereby (General Rubber and Footwear Corporation
v. Bureau of Labor Relations, et al., G.R. No. 74262,
October 29, 1987).
XPNs:
1. Supervisory Ees who are allowed to form
their own unions apart from the rank-and-
file Ees and
2. Craft Unit bargaining unit composed of
employees of the company with the same
occupation, such as pilots as distinguished
from ground personnel
3. Plant Unit bargaining unit composed of
employees in a particular plant of the
company, such as the companys Cebu plant
as distinguished from its Ilocos Plant.
The main consideration in a plant unit is
geographical while it is occupational in a craft unit
(Alcantara, 2008).
NOTE: The policy should yield to the right of Ees to
form union for purposes not contrary to law, self-
organization and to enter into CB negotiations.
Two companies cannot be treated into a single
bargaining unit even if their businesses are related.
Corporate spin-off
Subsidiaries or corporations formed out of former
divisions of a mother company following a re-
organization may constitute a separate bargaining
unit.
161
Q: Union filed a petition for certification
election among the rank and file employees of
three security agencies including the Veterans
Security. The latter opposed alleging that the
three security agencies have separate and
distinct corporate personalities. May a single
petition for certification election be filed by a
labor union in the three corporations instead of
filing three separate petitions?
A: Yes. The following are indications that the three
agencies do not exist and operate separately and
distinctly from each other with different corporate
direction and goals: 1) Veterans Security failed to
rebut the fact that they are managed through the
Utilities Management Corporation with all their
employees drawing their salaries and wages from
the said entity; 2) that the agencies have common
and interlocking incorporators and officers; 3) that
they have a single mutual benefit system and
followed a single system of compulsory
retirement; 4) they could easily transfer security
guards of one agency to another and back again by
simply filling-up a common pro-forma slip; 5) they
always hold joint yearly ceremonies such as the
PGA Annual Awards Ceremony; and 6) they
continue to be represented by one counsel.
Hence, the veil of corporate fiction of the three
agencies should be lifted for the purpose of
allowing the Ees of the three agencies to form
single union. As a single bargaining unit, the Ees
need not file three separate PCE (Philippine Scout
Veterans Security and Investigation Agency v. SLE,
G.R. No. 92357, July 21, 1993).
Q: Company XYZ has two recognized labor
unions, one for its rank-and-file employees and
the other for its supervisory employees. Of late,
the company instituted a restructuring
program by virtue of which A, a rank-and-file
employee and officer of rank-and-file
employees labor union, was promoted to a
supervisory position along with four other
colleagues, also active union members and/or
officers. Labor Union KMJ, a rival labor union
seeking recognition as the rank-and-file
bargaining agent, filed a petition for the
cancellation of the registration of rank-and-file
Ees labor union on the ground that A and her
colleagues have remained to be members of
rank-and-file Ees labor union. Is the petition
meritorious? Explain. (2010 Bar Question)
A: No. The inclusion as union members of Ees
outside the bargaining unit shall not be a ground
for the cancellation of the registration of the union.
Said Ees are automatically deemed removed from
the list of membership of said union.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
There are only three grounds for the cancellation
of union registration:
a. Misrepresentation, false statement or fraud
in connection with the adoption or
ratification of the constitution and by-laws
or amendments thereto, the minutes of
ratification and the list of members who took
part in the ratification;
b. Misrepresentation, false statements or fraud
in connection with the election of officers,
minutes of the election of officers, and the
list of voters;
c. voluntary dissolution by the members (LC,
Art. 239 as amended by RA 9481, June 14,
2007)
Methods in determining the exclusive
bargaining representative
1. Voluntary recognition (VR)
2. Certification election
3. Consent election
VOLUNTARY RECOGNITION
Voluntary recognition
The process by which a legitimate labor union is
recognized by the Er as the exclusive bargaining
representative or agent in a bargaining unit,
reported with the Regional Office [IRR, Book V, Rule
I, Sec. 1 (bbb)]. Simply stated, what is allowed is
voluntary recognition not direct certification.
Voluntary recognition when proper
VR is proper only in cases where there is only one
legitimate labor organization existing and
operating in a bargaining unit.
Requirements for voluntary recognition
The notice of VR shall be accompanied by the
original copy and two duplicate copies of the
following requirements
1. Joint statement under oath of the VR
2. Certificate of posting of joint statement for
15 consecutive days in at least two
conspicuous places in the establishment of
the bargaining unit
3. Certificate of posting
4. Approximate number of Ees in the
bargaining unit and the names of those who
supported the recognition
5. Statement that the labor union is the only
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
162
legitimate labor organization operating
within the bargaining unit
NOTE: Where the notice of VR is sufficient in form,
number and substance and where there is no
registered labor union operating within the
bargaining unit concerned, the Regional Office,
through the Labor Relations Division shall, within
10 days from receipt of the notice, record the fact
of VR in its roster of legitimate labor unions and
notify the labor union concerned.
Conditions to Voluntary Recognition
1. VR is possible only in an unorganized
establishment.
2. Only one union must ask for recognition. If
there are two or more unions asking to be
recognized, the Er cannot recognize any of
them; the rivalry must be resolved through
an election.
3. The union voluntarily recognized should be
the majority union as indicated by the fact
that members of the bargaining unit did not
object to the projected recognition. If no
objection is raised, the recognition will
proceed and the DOLE shall be informed. If
objection is raised, the recognition is barred
and a CE or consent election will have to take
place.
NOTE: In an organized establishment, VR is not
possible. A petition to hold a CE has to be filed
within the freedom period which means the last 60
days of the 5th year of the expiring CBA. The
petition may be filed by any LLO, but the petition
must have written support of at least 25% of the
Ees in the bargaining unit.
Where and when to file the petition for
Voluntary Recognition
Within 30 days from such recognition, Er shall
submit a notice of VR with the Regional Office
which issued the recognized labor unions
certificate of registration or certificate of creation
of a chartered local.
Effects of recording of fact of voluntary
recognition
1. The recognized labor union shall enjoy the
rights, privileges and obligations of an
existing bargaining agent of all the Ees in the
bargaining unit.
2. It shall also bar the filing of a PCE by any
labor organization for a period of one year
from the date of entry of VR.
 LABOR RELATIONS
Employer cannot voluntarily recognize a union
in case there are other legitimate labor
organizations in a bargaining unit
An Er cannot ignore the existence of an LLO at the
time of its VR of another union. The Er and the
voluntarily recognized union cannot, by
themselves, decide whether the other union
represented an appropriate bargaining unit (Sta.
Lucia East Commercial Corporation v. Hon.
Secretary of Labor, G.R. 162355, August 14, 2009).
CERTIFICATION ELECTION
Certification Election (sole concern rule/by-
stander rule)
It is the process of determining through secret
ballot the sole and exclusive representative of the
Ees in an appropriate bargaining unit, for purposes
of CB or negotiation [IRR, Book V, Rule I, Sec. 1 (h)].
NOTE: The process is called CE because it serves as
the official, reliable and democratic basis for the
BLR to determine and certify the union that shall
be the exclusive bargaining representative of the
Ees for the purpose of bargaining with the Er.
Nature of certification election
A CE is not a litigation but merely an investigation
of a non-adversarial fact-finding character in which
BLR plays a part of a disinterested investigator
seeking merely to ascertain the desire of the Ees as
to the matter of their representation (Airline Pilots
Association of the Philippines v. CIR, G.R. No. L-
33705, April 15, 1977).
Purpose of a certification election
It is a means of determining the workers choice of
1. Whether they want a union to represent
them for CB or if they want no union to
represent them at all.
2. And if they choose to have a union to
represent them, they will choose which
among the contending unions will be the sole
and exclusive bargaining representative of
the Ees in the appropriate bargaining unit.
Filing a petition for certification election (PCE)
The following may file a PCE
1. Any LLO
2. A national union or federation which has
already issued a charter certificate to its
local chapter participating in the CE
3. A local chapter which has been issued a
charter certificate
163
4. An Er only when requested to bargain
collectively in a bargaining unit where no
registered CBA exists (IRR as amended by
D.O. 40-F-03, Book V, Rule VIII, Sec. 1).
NOTE: A national union or federation filing a
petition in behalf of its local/chapter shall not be
required to disclose the names of the
local/chapters officers and members, but shall
attach to the petition the charter certificate it
issued to its local/chapter (IRR as amended by D.O.
40-F-03, Book V, Rule VIII, Sec. 1).
In registration of federation or national union,
the 20% membership requirement may not be
complied with
The registration requirement of submitting the
names of all its members comprising at least 20%
of all the Ees in the bargaining unit where it seeks
to operate is applicable only to registration of
independent union. LC merely requires for proof of
affiliation of at least 10 local chapters and the
names and addresses of the companies where they
operate. No 20% membership requirement is
required for registration of a federation or national
union.
NOTE: Under the LC and the rules, the power
granted to labor organizations to directly create a
chapter or local through chartering is given to a
federation or national union only, not to a trade
union center (SMCEU v. San Miguel Packaging
Products Employees Union, G.R. No. 171153,
September 12, 2007).
Employer may file a petition for certification
election
Er may file a petition for certification election when
requested to bargain collectively. But thereafter it
should not be allowed to have an active role in the
CE; it shall merely act as a bystander.
CE proceeding is not a litigation, but a mere
summary and non-litigious proceeding. The only
purpose is to ascertain the will of the parties in
determining who will be the bargaining agent.
Double Majority rule (certification election)
1. Valid election majority of eligible voters
shall have validly cast their votes (First
Majority rule).
2. Winning Union the winner who obtained
majority of the valid votes casts shall be
declared as the bargaining agent in the
bargaining unit (Second Majority rule).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Consequences of selection of a bargaining agent -
Ers duty to bargain collectively
Employer as a Bystander (Bystander Rule)
In all cases, whether the PCE is filed by an Er or a
LLO, the Er shall not be considered a party thereto
with a concomitant right to oppose a PCE. The Ers
participation in such proceedings shall be limited
to: (1) being notified or informed of petitions of
such nature; and (2) submitting the list of Ees
during the pre-election conference should the
Mediator-Arbiter act favorably on the petition.
Except when it is requested to bargain collectively,
an Er is a mere bystander to any PCE; such
proceeding is non-adversarial and merely
investigative, for the purpose thereof is to
determine which organization will represent the
Ees in their CB with the Er. The choice of their
representative is the exclusive concern of the Ees;
the Er cannot have any partisan interest therein; it
cannot interfere with, much less oppose, the
process by filing a motion to dismiss or an appeal
from it; not even a mere allegation that some Ees
participating in a PCE are actually managerial Ees
will lend an Er legal personality to block the
CE. The Ers only right in the proceeding is to be
notified or informed thereof (Republic v.
Kawashima Textile, G.R. No. 160352, July 23, 2008).
Q: May an organization which carries a mixture
of rank-and-file and supervisory employees
possess any of the rights of a legitimate labor
organization, including the right to file a
petition for certification election for the
purpose of collective bargaining?
A: Yes. While there is a prohibition against the
mingling of supervisory and rank-and-file
employees in one labor organization, the Labor
Code does not provide for the effects thereof. Thus,
the Court held that after a labor organization has
been registered, it may exercise all the rights and
privileges of a legitimate labor organization. Any
mingling between supervisory and rank-and-file
employees in its membership cannot affect its
legitimacy for that is not among the grounds for
cancellation of its registration, unless such
mingling was brought about by misrepresentation,
false statement or fraud under Article 239 of the
Labor Code (Republic vs. Kawashima Textile, G.R.
No. 160352, July 23, 2008).
Issues directly involved in a certification
proceeding
1. Proper composition and constituency of the
bargaining unit; and
UNIVERSITY OF SANTO TOMAS
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164
2. The veracity of majority membership claims
of the competing unions so as to identity the
one union that will serve as the bargaining
representative of the entire bargaining unit.
NOTE: Some of the Ees may not want to have a
union; hence, no union is one of the choices
named in the ballot. If no union wins, the
company or the bargaining unit remains un-
unionized for at least 12 months, the period is
known as 12-month bar. After that period, a PCE
may be filed again.
Five-year representation status of a bargaining
agent cannot be extended
While the parties may agree to extend the CBAs
original five-year term together with all other CBA
provisions, any such amendment or term in excess
of five years will not carry with it a change in the
unions exclusive CB status. Under Art. 253-A, LC,
the exclusive bargaining status cannot go beyond
five years and the representation status is a legal
matter not for the workplace parties to agree upon.
In other words, despite an agreement for a CBA
with a life of more than five years, either as an
original provision or by amendment, the
bargaining unions exclusive bargaining status is
effective only for five years and can be challenged
within 60 days prior to the expiration of the CBAs
first five years (FVC Labor Union-Philippine
Transport and General Workers Organization v.
Sama-samang Nagkakaisang Manggagawa sa FVC-
Solidarity of Independent and General Labor
Organizations, G.R. No. 176249, November 27,
2009).
GROUNDS FOR DENIAL OF PCE
In the following instances, PCE is barred:
1. Non-appearance Non appearance of the
petitioner for two consecutive scheduled
conferences before the Mediator-Arbiter
despite notice (No appreance rule).
2. Unregistered Union The petitioning union
or national union/federation is not listed in
the Departments registry of legitimate labor
unions or that its registration certificate has
been cancelled with finality (Not listed in the
registry union rule).
NOTE: A filing of a petition to cancel DOES
NOT SUSPEND the PCE. To serve as a
ground for dismissal, the legal personality
of the petitioner should have been revoked
or cancelled with finality.
 LABOR RELATIONS
3. No Charter Failure of a local/chapter or When petition for certification election is filed
national union/federation to submit duly
issued charter certificate upon filling of the The proper time to file the PCE depends on
petition for certification eletction (Non- whether the certified bargaining unit has a CBA or
submission of charter certificate rule). not:
4. Absence of Employment Relationship
Absence of employer-employee relationship 1. If it has no CBA, the petition may be filed
between all members of the petitioning anytime outside the 12-month bar
union and the establishment where the (certification year).
propsed bargaining unit is sought to be 2. If it has CBA, it can be filed only within the
represented (No employment relationship last 60 days of the 5th year of the CBA.
rule).
5. The 12 month Bar Filing of a petition NOTE: At the expiration of the freedom period, the
within one (1) year from the date of the Er shall continue to recognize the majority status
recording of the voluntary recognition, or of the incumbent bargaining agent where no PCE is
within the same period from a valid filed.
certification, consent or run-off election
where no appeal on the results of the Union Election v. Certification Election
certification, consent or run-off election is
pending (One year bar rule). CERTIFICATION
UNION ELECTION
6. Negotiation or Deadlock a duly certified ELECTION
union has commenced and sustained Held pursuant to the The process is ordered
negotiations with the employer in unions constitution and supervised by
accordance with Article 250 of the LC within and by-laws DOLE
the 12 month bar, or there exists a All Ees whether union
bargaining deadlock which had been or non-union members
submitted to conciliation or arbitration or Right to vote is enjoyed
who belong to the
had become the subject of a valid notice of only by union members
appropriate bargaining
strike or lockout to which an incumbent or unit can vote
certified bargaining agent is a party The winner in a CE is an
(Negotiation/Deadlock bar rule). entity, a union, which
7. Existing CBA Winners of union
becomes the
8. Lack of Support In an organized election become
representative of the
establishment, the failure to submit the officers and
whole bargaining unit
twenty five percent (25%) signature representatives of the
that includes even the
requirement to support the filling of the union only
members of the
petition for the certification election (Failure defeated unions.
to submit 25% consent requirement rule).
NOTE: Both in CE and union election, the
Ee may intervene in the petition for prescribed procedures should be followed.
certification election
Q: Can a "No-union" win in a certification
An Ee may intervene in the petition for certification election? (2006 Bar Question)
election for the purpose of protecting his individual
right (IRR as amended by D.O. 40-F-03, s. 2008, Book A: Yes. The objective in a CE is to ascertain the
V, Rule VIII, Sec. 1). majority representation of the bargaining
representative, if the Ees desire to be represented
Where petition for certification election is filed at all by anyone. Hence, no union is one of the
choices in a CE.
The petition for certification election shall be filed
with the Regional Office (IRR, as amended by D.O. Alternative Answer: No. A no union cannot win
40-F-03, s. 2008). in a CE. The purpose of a CE is to select an exclusive
bargaining agent and a no union vote would
Authority to hear and resolve the petition for precisely mean that the voter is not choosing any of
certification election the contending unions. If the no-union votes
constitute a majority of the valid votes cast, this
The authority to hear and resolve the petition for fact will all the more mean that no union won in CE.
certification election rests with the Mediator- A one-year bar will consequently stop the holding
Arbiter.

UNIVERSITY OF SANTO TOMAS

165 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
of another CE to allow the Er to enjoy industrial
peace for at least one year.
A Petition for Certification Election can be filed at
any time outside of the 60-day freedom period if
there is a mass withdrawal or split from the
majority union (Poquiz, 2012).
Q: In what instance may a petition for
certification election be filed outside the
freedom period of a current collective
bargaining agreement? (1997 Bar Question)
A: As a general rule in an establishment where
there is a CBA in force and effect, a PCE may be
filed only during the freedom period of such CBA.
But to have that effect, the CBA should have been
filed and registered with the DOLE (LC, Art. 231,
253-A and 256).
Thus, a CBA that has not been filed and registered
with the DOLE cannot be a bar to a CE and such
election can be held outside the freedom period of
such CBA.
Alternative Answer: A PCE may be filed outside
the freedom period of a current CBA if such CBA is
a new CBA that has been prematurely entered into,
meaning, it was entered into before the expiry date
of the old CBA. The filing of the PCE shall be within
the freedom period of the old CBA which is outside
the freedom period of the new CBA that had been
prematurely entered into.
Q: Are probationary employees entitled to vote
in a certification election? Why? (1999 Bar
Question)
A: Yes. In a CE, all rank-and-file Ees in the
appropriate bargaining unit are entitled to vote.
This principle is clearly stated in Art. 255, LC which
states that the "labor organization designated or
selected by the majority of the Ees in such unit
shall be the exclusive representative of the Ees in
such unit for the purpose of CB" (Airtime Specialists
,Inc. v. Ferrer-Calleja, G.R. No. 80612-16, December
29, 1989).
Any Ee, whether employed for a definite period or
not, shall beginning on the first day of his service,
be eligible for membership in any labor
organization. In a CE for the bargaining unit of rank
and file Ees, all rank and file Ees, whether
probationary or permanent are entitled to vote. As
long as probationary Ees belong to the defined
bargaining unit, they are eligible to support the
PCE (NUWHRAIN-Manila Pavilion Hotel Chapter v.
Secretary, G.R. No. 181531, July 31, 2009).
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
166
Direct certification
It is the process whereby the Mediator-Arbiter
directly certifies a labor organization of an
appropriate bargaining unit of a company after a
showing that such petition is supported by at least
a majority of the Ees in the bargaining unit.
Direct certification is no longer allowed
By virtue of Executive Order No. 111, which
became effective on March 4, 1987, the direct
certification previously allowed under the Labor
Code had been discontinued as a method of
selecting the exclusive bargaining agents of the
workers. Even in a case where a union has filed a
PCE, the mere fact that there was no opposition
does not warrant a direct certification. More so in a
case when the required proof is not presented in
an appropriate proceeding and the basis of the
direct certification is the unions self-serving
assertion that it enjoys the support of the majority
of the Ees, without subjecting such assertion to the
test of competing claims (Samahang Manggagawa
sa Permex v. Secretary, G.R. No. 107792, March 2,
1998).
Failure of an independent union to prove its
affiliation with a federation does not affect its
right to file a petition for certification election
as an independent union
As a LLO, it has the right to file a PCE on its own
beyond question. Its failure to prove its affiliation
with a federation cannot affect its right to file said
PCE as an independent union. At the most, its
failure will result in an ineffective affiliation with
the federation. Despite affiliation, the local union
remains the basic unit free to serve the common
interest of all its members and pursue its own
interests independently of the federation
(Samahan ng mga Manggagawa sa Filsystems v.
SLE, G.R. No. 128067, June 5, 1998).
Illegally dismissed employees of the company
may participate in the certification election
It is now well-settled that Ees who have been
improperly laid off but who have at present an
unabandoned right to or expectation of re-
employment, are eligible to vote in CEs. Thus, and
to repeat, if the dismissal is under question, as in
the case now at bar whereby a case of illegal
dismissal and/or ULP was filed, the Ees concerned
could still qualify to vote in the elections (Phiippine
Fruits & Vegetables Industries v. Torres, G.R. No.
92391, July 3, 1992).
 LABOR RELATIONS
Employees whose services were terminated are
still entitled to vote during the certification
election
Provided that there is a pending illegal dismissal
case filed by them. While the case is still pending,
the Er-Ee relationship is not yet severed.
How protest should be made during
certification elections
Protest must be raised and contained in the
minutes of the proceedings otherwise it is deemed
waived (National Association of Trade Free Unions
v. Mainit Lumber Development Co. Workers Union,
G.R. No. 79526, December 21, 1990). Protests should
be formalized before the Med-Arbiter within 5 days
from the close of the proceedings otherwise it is
deemed abandoned (Timbungco v. Castro, G.R. No.
76111, March 14, 1990).
IN AN UNORGANIZED ESTABLISHMENT
Unorganized Establishment
An unorganized establishment is a bargaining unit
with no recognized or certified bargaining agent. It
does not necessarily refer to an entire company.
NOTE: It may happen that the rank-and-file unit
has a bargaining agent while the supervisory unit
still does not have such agent; thus, the former is
already an organized establishment while the
latter remains, in the same company, an
unorganized establishment.
Requirement for certification election in
unorganized establishments
The certification election shall be automatically
conducted upon the filing of a PCE by a LLO.
IN AN ORGANIZED ESTABLISHMENT
Requisites for certification election in an
Organized Establishment
The Mediator-Arbiter is required to automatically
order the conduct of a CE by secret ballot in an
organized establishment as soon as the following
requisites are met:
1. A petition questioning the majority status of
the incumbent bargaining agent is filed
before the DOLE within the 60-day freedom
period;
2. Such petition is verified;
3. The petition is supported by the written
consent of at least 25% of all the Ees in the
167
bargaining unit (LC, Art. 256; TUPAS-WFTU v.
Laguesma, G.R. No. 102350, June 30, 1994).
Filing of 25% consent signature in the petition
for certification election
Ideally, the signature should be filed together with
the petition. However, it may be filed after the
petition within a reasonable period of time.
Effect if the petition for certification election
was not accompanied by the requisite 25%
consent signatures
Under the Implementing Rules, absence or failure
to submit the written consent of at least 25% of all
the Ees in the bargaining unit to support the
petition is a ground for denying the said petition.
The Supreme Court said that the Mediator-Arbiter
may still have the discretion to grant or deny the
petition. Even if there is no 25% consent signature
submitted together with the petition, it is within
the discretion of the Med-Arbiter whether to grant
or deny the petition (Port Workers Union v.
Bienvenido Laguesma, G.R. Nos. 94929-30, March 18,
1992). If the petition, however, is accompanied by
the 25% consent signatures, then the holding of the
CE becomes mandatory (California Manufacturing
Corp. v. Laguesma, G.R. No. 97020, June 8, 1992).
Consent signatures of at least 25% of the
employees in the bargaining unit may not be
submitted simultaneously with the filing of the
petition for certification election
The administrative rule requiring the simultaneous
submission of the 25% consent signatures upon
the filing of PCE should not be strictly applied to
frustrate the determination of the legitimate
representative of the workers. Accordingly, the
Court held that the mere filing of a PCE within the
freedom period is sufficient basis for the issuance
of an order for the holding of a CE, subject to the
submission of the consent signatures within a
reasonable period from such filing (Port Workers
Union of the Phils. v. Laguesma, G.R. Nos. 94929-30,
March 18, 1992).
Effect of Ees withdrawal of his signature in the
petition for certification election
If the withdrawal was made before the filing of the
petition, then the withdrawal is presumed to be
voluntary unless there is convincing proof to the
contrary. If the withdrawal was made after the
filing of the petition, the withdrawals are deemed
involuntary. Thus, withdrawals made after the
filing of the petition will not affect the PCE.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Requisites for a petition for certification declared the winner provided they get the
election between organized and unorganized majority votes of the total votes cast.
establishments
Requirements for a run-off election
Art.256. Art.257.
BASIS
ORGANIZED UNORGANIZED 1. An election was conducted with three or
Bargaining more choices
Present None 2. None of the contending union obtained the
agent
Has to be a required majority vote of 50% + 1 of the
Petition No need to be valid votes cast
verified
filed verified 3. There are no objections or challenges that
petition
No PCE except can alter the results materially
within 60 days Not applicable. 4. The number of votes received by all
before the No freedom contending unions when added together
Freedom amounts to at least 50% of the total votes
expiration of period. Petition
Period cast
the CBA. (See can be filed
Art. 253 & 253- anytime.
A) NOTE: Thus if no union garnered the majority
Must be duly vote, no run-off elections may be held.
supported by
No substantial Choices in a run-off election
25% of all the
support rule.
members of the
appropriate The unions receiving the highest and 2nd highest
Substantial It is the intention number of the votes cast (IRR, Book V, Rule X, Sec.
bargaining unit.
support of law is to bring 2).
rule in the union, to
Percentage
implement policy NOTE: No Union is not a choice in the Run-off
base: all
behind Art. Election.
members of an
211(a).
appropriate
bargaining unit. Posting of notice for run-off election

NOTE: The approval of the PCE in an unorganized
bargaining unit is NEVER appealable, the reason
being that the law favors unionized than not
unionized.
RUN-OFF ELECTION
It is an election conducted when
1. A CE which provides for three or more
choices results in none of the contending
unions receiving a majority of the valid votes
cast, and
2. There are no objections or challenges which
if sustained can materially alter the results,
provided
3. The total number of votes for all the
contending unions is at least 50% of the
number of votes cast (IRR, Book V, Rule X,
Sec. 1).
4. None of the choices obtained the majority of
the valid votes cast (50%+ 1 second
majority);
5. The two choices which garnered the highest
votes will be voted and the one which
garners the highest number of votes will be
The notice should be posted by the Election Officer
at least five days before the actual date (IRR, Book
V, Rule X, Sec. 1).
RE-RUN ELECTION
It is an election that takes place when
1. One choice receives a plurality of the vote
and the remaining choices results in a tie; or
2. All choices received the same number of
votes.
NOTE: In both instances, the no union is also a
choice.
CONSENT ELECTION
It is an election voluntarily agreed upon by the
parties, with or without the intervention by the
DOLE [IRR, Book V, Rule I, Sec.1 (h)].
NOTE: To afford an individual Ee-voter an
informed choice where a local/chapter is the
petitioning union, the local/chapter shall secure its
certificate of creation atleastfive working days
before the date of the consent election (IRR as
amended by DO 40-F-03, Book V, Rule VIII, Sec. 1).

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168
 LABOR RELATIONS

Certification election v. consent election v. run-off election v. re-run election

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

In both instances, the no union is also a

choice.

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

AFFILIATION AND DISAFFILIATION OF THE How local chapter is created

LOCAL UNION FROM THE MOTHER UNION
Affiliate refers to
1. An independent union affiliated with a
federation, national union; or
2. A local chapter which was subsequently
granted independent registration but did not
disaffiliate from its federation.
Purpose of affiliation
The purpose of affiliation is to foster the free and
voluntary organization of a string and united labor
movement [LC, Art. 211 (c)].
A duly registered federation or national union may
directly create a local/chapter by issuing a charter
certificate indicating the establishment of a
local/chapter.
1. The chapter shall acquire legal personality
only for purposes of filing a PCE from the
date it was issued a charter certificate
2. The chapter shall be entitled to all other
rights and privileges of a LLO only upon the
submission of the following documents in
addition to its charter certificate:

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169 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
a. Names of the chapters officers, their
addresses, and the principal office of the
chapter
b. Chapters constitution and by-laws
c. Where the chapters constitution and by-
laws are the same as that of the
federation or the national union, this fact
shall be indicated accordingly
3. The genuineness and due execution of the
supporting requirements shall be
a. Certified under oath by the secretary or
treasurer of the local/chapter, and
b. Attested to by its president [IRR as
amended by D.O. 40-F-03, Book V, Rule III,
Sec. 2(e)]
Reportorial requirements in affiliation
The report of affiliation of independently
registered labor unions with a federation or
national union shall be accompanied by the
following documents
1. Resolution of the labor union's board of
directors approving the affiliation;
2. Minutes of the general membership meeting
approving the affiliation;
3. The total number of members comprising
the labor union and the names of members
who approved the affiliation;
4. The certificate of affiliation issued by the
federation in favor of the independently
registered labor union; and
5. Written notice to the Er concerned if the
affiliating union is the incumbent bargaining
agent [D.O. 40-03, Rule, III, Sec. 7 (2003)].
Effect of affiliation
The labor union that affiliates with a federation is
subject to the laws of the parent body under whose
authority the local union functions. The
Constitution, by-laws and rules of the mother
federation, together with the charter it issues to
the local union, constitutes an enforceable contract
between them and between the members of the
subordinate union inter se. Thus, pursuant to the
Constitution and by-laws, the federation has the
right to investigate and expel members of the local
union (Villar v. Inciong, G.R. No. L-50283-84, April
20, 1983).
Disaffiliation of local union from the federation
GR: A labor union may disaffiliate from the mother
union to form an independent union only during
the 60-day freedom period immediately preceding
the expiration of the CBA.
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170
XPN: Even before the onset of the freedom period,
disaffiliation may still be carried out, but such
disaffiliation must be effected by the majority of
the union members in the bargaining unit.
NOTE: This happens when there is a substantial
shift in allegiance on the part of the majority of the
members of the union. In such a case, however, the
CBA continues to bind the members of the new or
disaffiliated and independent union to determine
the union which shall administer the CBA may be
conducted (ANGLO-KMU v. Samahan ng
Manggagawang Nagkakaisa sa Manila Bay Spinning
Mills at J.P. Coats, G.R. No.118562, July 5, 1996).
Limitation to disaffiliation
Disaffiliation should be in accordance with the
rules and procedures stated in the Constitution and
by-laws of the federation. A local union may
disaffiliate with its mother federation provided
that there is no enforceable provision in the
federations constitution preventing disaffiliation
of a local union (Tropical Hut Employees Union v.
Tropical Hut, G.R. Nos. L-43495-99, January 20,
1990).
NOTE: A prohibition to disaffiliate in the
Federations constitution and by-laws is valid
because it is intended for its own protection.
Locals or chapters who retained status as LLO shall
be allowed to register as independent unions. If
they fail to register, they shall lose their legitimate
status upon the expiration of the CBA.
Q: PSEA is a local union in Skylander Company
which is affiliated with PAFLU. PSEA won the
certification election among the rank and file
employees of the Skylander Company but its
rival union PSEA-WATU protested the results.
Pending the resolution of such controversy,
PSEA disaffiliated with PAFLU and hence
affiliated with NCW which was supported by its
members. May a local union disaffiliate with its
mother federation pending the settlement of
the status as the sole and exclusive bargaining
agent?
A: Yes. The pendency of an election protest does
not bar the valid disaffiliation of the local union
which was supported by the majority of its
members.
The right of a local union to disaffiliate with the
federation in the absence of any stipulation in the
Constitution and by-laws of the federation
prohibiting disaffiliation is well settled. Local
 LABOR RELATIONS
unions remain as the basic unit of association, free SUBSTITUTIONARY DOCTRINE
to serve their own interest subject to the restraints
imposed by the Constitution and by-laws of Under this doctrine, where there occurs a shift in
national federation and are free to renounce such the Ees union allegiance after the execution of a CB
affiliation upon the terms and conditions laid down contract with the Er, the Ees can change their agent
in the agreement which brought such affiliation to (labor union) but the CB contract which is still
existence. In the case at bar, no prohibition existed subsisting continues to bind the Ees up to its
under the Constitution and by-laws of the expiration date. They may however, bargain for the
federation. Hence, the union may freely disaffiliate shortening of said expiration date.
with the federation (Philippine Skylanders v. NLRC,
G.R. No. 127374, January 31, 2002). NOTE: The Ee cannot revoke the validly executed
CB contract with their Er by the simple expedient
Independently Registered v. Unregistered of changing their bargaining agent. The new agent
Chartered Local Union must respect the contract (Benguet Consolidated
Inc. v. BCI Employees and Workers Union-PAFLU,
CHARTERED LOCAL UNION G.R. No. L-24711, April 30, 1968).
Basis Independently
Unregistered However, it cannot be invoked to support the
Registered
By application contention that a newly certified CB agent
with the automatically assumes all the personal
federation for undertakings of the former agent-like the no
the issuance of strike clause in the CBA executed by the latter.
By signing
How to a charter
contract of UNION DUES AND SPECIAL ASSESSMENTS
affiliate? certificate to be
affiliation
submitted to
the Bureau Dues and assessments which the union may
Labor collect
Relations
Would cease to Legitimate labor organizations are authorized to
be an LLO and collect reasonable amount of the following
would no longer 1. Membership fees
Would not affect
have the legal 2. Union dues
its being an LLO
personality and 3. Assessments
and therefore it
Effect of the rights and 4. Fines
would continue
Disaffiliation privileges 5. Contribution for labor education and
to have legal
to the union granted by law research, mutual death and hospitalization
personality and
(local) to LLO, unless benefits, welfare fun, strike fund and credit
to possess all
the local and cooperative undertakings (LC, Art. 277
rights and
chapter is (a))
privileges of LLO.
covered by its
6. Agency fees (LC, Art. 248 (e))
duly registered
CBA.
Assessments
An existing CBA
would continue
to be valid as the The CBA would Payments used for a special purpose. Especially if
Effect of required only for a limited time.
labor continue to be
Disaffiliation
organization can valid up to its
to the CBA Union dues
continue expiration date.
administering the
CBA. These are regular monthly contributions paid by
Union dues may the members to the union in exchange for the
Labor
no longer be benefits given to them by the CBA and to finance
organization
collected as the activities of the union in representing the
entitled to the
Entitlement there would no union.
union dues and
to union dues longer be any
not the
after labor union that Check-off
federation from
Disaffiliation is allowed to
which the labor
collect such It is a method of deducting from an Ees pay at a
organization
union dues from prescribed period, the amounts due the union for
disaffiliated.
the Ees. fees, fines and assessments.

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171 FACULTY OF CIVIL LAW
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NOTE: Deductions for union service fees are
authorized by law and do not require individual
check-off authorizations.
Nature and purpose of check-off
Union dues are the lifeblood of the union. All
unions are authorized to collect reasonable
membership fees, union dues, assessments, fines
and other contributions for labor education and
research, mutual death and hospitalization
benefits, welfare fund, strike fund and credit and
cooperative undertakings (LC, Art. 277(a)).
Special assessments or extraordinary fees
These are assessments for any purpose or object
other than those expressly provided by the labor
organizations Constitution and by-laws.
REQUIREMENTS FOR VALIDITY
Requisites of a valid check-off
a. List of members present
b. Votes cast
c. Purpose of the special assessments
d. Recipient of such assessments;
3. Individual written authorization to check-off
duly signed by the Ee concerned to levy
such assessments. [LC, Art. 241 (n)]
Effect of failure to strictly comply with the
requirements set by law
It shall invalidate the questioned special
assessments. Substantial compliance with the
requirements is not enough in view of the fact that
the special assessment will diminish the
compensation of union members (Palacol v. Ferrer-
Calleja, G.R. No. 85333, February 26, 1990).
Jurisdiction over check-off disputes
Being an intra-union dispute, the RD of the DOLE
has jurisdiction over check off disputes.

GR: No special assessments, attorneys fees, Check-off v. special assessments

negotiation fees or any other extraordinary fees
may be checked off from any amount due to an Ee Special
without individual written authorization duly BASIS Check-off
Assessment
signed by the Ee.
(Union Dues)
The authorization should specify the By obtaining the
1. Amount individual By written
2. Purpose & written resolution
3. Beneficiary of the deduction. How authorization approved by
approved duly signed by majority of all
XPNs: the Ee which the members
1. For mandatory activities under the LC must specify at the meeting
2. For Agency Fees called for that
1. Amount
3. When non-members of the union avail of the purpose.
benefits of the CBA: 2. Purpose
3. Beneficiary
a. Non-members may be assessed union
dues equivalent to that paid by union (Agency fees)
members; Not necessary
b. Only by board resolution approved by when
majority of the members in general
meeting called for the purpose. 1. For mandatory
Exception to activities under
No exception;
Requisites for a valid levy of special assessment such the LC
written
or extraordinary fees requirement 2. For Agency resolution is
Fees mandatory in
1. Authorization by a written resolution of the all instances.
3. When non-
majority of all members at the general
members of
membership meeting duly called for that
the union avail
purpose;
of the benefits
of the CBA
2. Secretarys record of the minutes of the
meeting, which must include the

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172
 LABOR RELATIONS
a. Said non- REQUISITES FOR ASSESSMENT
members may
be assessed Requisites for assessment of agency fees
union dues
equivalent to 1. The Ee is part of the bargaining unit
that paid by 2. He is not a member of the union
union 3. He partook of the benefits of the CBA
members;
NOTE: Other than for mandatory activities under
the Code, no special assessments, attorneys fees,
b. Only by Board negotiation fees or any other extraordinary fees
resolution may be checked off from any amount due to an Ee
approved by without his authorization. The individual
majority of authorization required under this article shall not
the members apply to non-members of the recognized CB agent
in general with regard to assessment of agency fees.
meeting
called for the Union Dues v. Agency Fees
purpose
Union Dues Agency Fee
AGENCY FEES Is deducted from non-
members of the
Is deducted from
Agency fee bargaining agent
members for the
(union) for the
payment of union dues
It is an amount equivalent to union dues, which a enjoyment of the
non-union member pays to the union because he benefits under the CBA.
benefits from the CBA negotiated by the union. May not be deducted
from the salaries of the May be deducted from
NOTE: Payment by non-union members of agency union members the salary of the Ees
fees does not amount to unjust enrichment because without the written without their written
the purpose of such dues is to avoid discrimination consent of the workers consent.
between union and non-union members. affected.

Q: A is employed by XYZ Company where XYZ RIGHT TO COLLECTIVE BARGAINING

Employees Union (XYZ-EU) is the recognized
exclusive bargaining agent. Although A is a Collective bargaining
member of rival union XYR-MU, he receives the
benefits under the CBA that XYZ-EU had 1. It is the process of negotiation by an
negotiated with the company. XYZ-EU assessed organization or group of workmen, in behalf
A, a fee equivalent to the dues and other fees of its members, with the Er, concerning
paid by its members but A insists that he has no wages, hours of work, and other terms and
obligation to pay said dues and fees because he conditions of employment, and
is not a member of XYZEU and he has not 2. The settlement of disputes by negotiation
issued an authorization to allow the collection. between an Er and the representative of his
Explain whether his claim is meritorious. (2010 Ees.
Bar Question)
NOTE: GR: No court or administrative agency or
A: No. The fee exacted from A takes the form of an official shall have the power to set or fix wages,
agency fee which is sanctioned by Art. 248 (e), LC. rates of pay, hours of work, or other terms and
The collection of agency fees in an amount conditions of employment
equivalent to union dues and fees from Ees who
are not union members is recognized under the LC. XPNs: As otherwise provided under the LC:
The union may collect such fees even without any
written authorization from the non-union member 1. National Wages and Productivity
Ees, if said Ees accept the benefits resulting from Commission and RTWPB as to wage fixing
the CBA. The legal basis of agency fees is quasi- (LC, Art. 99 and 122).
contractual (Del Pilar Academy v. Del Pilar Academy 2. NCMB and NLRC as to wage distortion (LC,
Employees Union, G.R. No. 170112, April 30, 2008). Art. 124).

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173 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
3. SLE and President of the Philippines as to
certification and assumption of powers over
labor disputes [LC, Art. 236(g)].
Purpose behind this rule
It is to encourage a truly democratic method of
regulating the relations between the Ers and Ees by
means of agreements freely entered into through
CB.
Parties to a collective bargaining
1. Er
2. Ees, represented by the exclusive bargaining
agent
Jurisdictional preconditions in Collective
Bargaining (Kiok Loy Doctrine)
The mechanics of CB, which is defined as
negotiations towards a collective agreement, is set
in motion only when the following jurisdictional
preconditions are present, namely
1. Possession of the status of majority
representation of Ees representative in
accordance with any of the means of
selection or designation provided for by the
LC;
2. Proof of majority representation;
3. A demand to bargain under Art. 250 (a), LC
(Kiok Loy v. NLRC, G.R. No. L-54334, January
22, 1986).
Commencement of collective bargaining
Bargaining commences within 12 months after the
determination and certification of the Ees exclusive
bargaining representative (certification year).
Procedure in collective bargaining
When a party desires to negotiate an agreement
1. It shall serve a written notice upon the other
party with a statement of proposals
2. Reply by the other party shall be made
within 10 days with counter proposals
3. In case of differences, either party may
request for a conference which must be held
within 10 calendar days from receipt of
request
4. If not settled, NCMB may intervene and
encourage the parties to submit the dispute
to a VA
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2015 GOLDEN NOTES
174
5. If not resolved, the parties may resort to any
other lawful means (either to settle the
dispute or submit it to a VA).
NOTE: During the conciliation proceeding in the
NCMB, the parties are prohibited from doing any
act which may disrupt or impede the early
settlement of disputes [LC, Art. 250 (d)].
Stages in Collective Bargaining
1. Preliminary process: Sending a written
notice for negotiation which must be clear
and unequivocal
2. Negotiation process.
3. Execution process: The signing of the
agreement
4. Publication for at least 5 days before
ratification
5. Ratification by the majority of all the
workers in the bargaining unit represented
in the negotiation (not necessary in case of
arbitral award)
6. Registration process.
7. Administration process: The CBA shall be
jointly administered by the management and
the bargaining agent for a period of 5 years.
8. Interpretation and Application process.
DUTY TO BARGAIN COLLECTIVELY
Duty to bargain collectively
The duty to bargain collectively means the
performance of a mutual obligation to meet and
convene promptly and expeditiously in good faith
for the purpose of negotiating an agreement with
respect to wages, hours of work and all other terms
and conditions of employment including proposals
for adjusting any grievances or questions arising
under such agreement and executing a contract
incorporating such agreements if requested by
either party but such duty does not compel any
party to agree to a proposal or to make any
concession (LC, Art. 252).
When there is a CBA, the duty to bargain
collectively shall also mean that neither party shall
terminate nor modify such agreement during its
lifetime. However, either party can serve a written
notice to terminate or modify the agreement at
least 60 days prior to its expiration date. It shall be
the duty of both parties to keep the status quo and
to continue in full force and effect the terms and
conditions of the existing agreement during the 60-
day period and/or until a new agreement is
reached by the parties (LC, Art. 253).
 LABOR RELATIONS
Commencement of duty of the Er to bargain
collectively
Only after the union requests the Er to bargain. If
there is no demand, the Er cannot be in default.
NOTE: Where a majority representative has been
designated, it is a ULP for the Er, as a refusal to
collectively bargain, to deal and negotiate with the
minority representative to the exclusion of the
majority representative.
Where there is a legitimate representation issue,
there is no duty to bargain collectively on the part
of the Er (Lakas ng mga Manggagawang
Makabayan v. Marcelo Enterprises, G.R. No. L-38258,
November 19, 1982).
Restrictions to the duty to bargain collectively
1. Such duty does not compel any party to
agree to a proposal or to make any
concession.
2. Parties cannot stipulate terms and
conditions of employment which are below
the minimum requirements prescribed by
law.
Q: Does a petition for cancellation of a unions
certificate of registration involve a prejudicial
question that should first be settled before
parties could be required to collectively
bargain?
A: No. A pending cancellation proceeding is not a
bar to set mechanics for CB. If a certification
election may still be held even if a petition for
cancellation of a unions registration is pending,
more so that the CB process may proceed. The
majority status of the union is not affected by the
cancellation proceedings (Capitol Medical Center v.
Trajano,G.R. No. 155690, June 30, 2005).
Impasse in bargaining
1. Where the subject of a dispute is a
mandatory bargaining subject, either party
may bargain to an impasse as long as he
bargains in good faith.
2. Where the subject is non-mandatory, a party
may not insist in bargaining to the point of
impasse. His instance may be construed as
evasion of duty to bargain.
175
Test of bargaining in good faith
There is no perfect test of good faith in bargaining.
The good faith or bad faith is an inference to be
drawn from the facts and is largely a matter for the
NLRCs expertise. The charge of bad faith should be
raised while the bargaining is in progress.
NOTE: With the execution of the CBA, bad faith can
no longer be imputed upon any of the parties
thereto. All provisions in the CBA are supposed to
have been jointly and voluntarily incorporated
therein by the parties. This is not a case where
private respondent exhibited an indifferent
attitude towards CB because the negotiations were
not the unilateral activity of petitioner union. The
CBA is good enough that private respondent
exerted reasonable effort of good faith bargaining
(Samahang Manggagawa sa Top Form
Manufacturing-United Workers of the Phiippinels v.
NLRC, G.R. No. 113856, September 7, 1998).
Q: Does an employers steadfast insistence to
exclude a particular substantive provision in
the negotiations for a CBA constitute refusal to
bargain or bargaining in bad faith?
A: No. This is no different from a bargaining
representatives perseverance to include one that
they deem of absolute necessity. Indeed, an
adamant insistence on a bargaining position to the
point where the negotiations reach an impasse
does not establish bad faith. Obviously, the purpose
of CB is the reaching of an agreement resulting in a
contract binding on the parties; but the failure to
reach an agreement after negotiations have
continued for a reasonable period does not
establish a lack of good faith. The statutes invite
and contemplate a CB contract, but they do not
compel one. The duty to bargain does not include
the obligation to reach an agreement. While the
law makes it an obligation for the Er and the Ees to
bargain collectively with each other, such
compulsion does not include the commitment to
precipitately accept or agree to the proposals of the
other. All it contemplates is that both parties
should approach the negotiation with an open
mind and make reasonable effort to reach a
common ground of agreement (Union of Filipro
Employees v. Nestle Philippines, G.R. Nos. 158930-31,
March 3, 2008).
Deadlock
Deadlock is synonymous with impasse or a
standstill which presupposes reasonable effort at
good faith bargaining but despite noble intentions
does not conclude an agreement between the
parties.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Occurrence of deadlock in collective bargaining
A deadlock arises when there is an impasse which
presupposes reasonable effort at good faith in
bargaining which, despite noble intentions, does
not conclude in agreement between the parties.
Remedies in case of deadlock in the
renegotiation of the collective bargaining
agreement
The parties may
1. Call upon the NCMB to intervene for the
purpose of conducting conciliation or
preventive mediation;
2. Refer the matter for VA or compulsory
arbitration;
3. Declare a strike or lockout upon compliance
with the legal requirements (This remedy is
a remedy of last resort)
Economic exigencies
Economic exigencies cannot justify refusal to
bargain. An Er is not guilty of refusal to bargain by
persistently rejecting the unions economic
demands where he is operating at a loss, on a low
profit margin, or in a depressed industry, as long as
he continues to negotiate. But financial hardship
constitutes no excuse for refusing to bargain
collectively.
WHEN THERE IS NO CBA
Duty to bargain collectively when there is no
collective bargaining agreement
In the absence of an agreement or other voluntary
arrangement providing for a more expeditious
manner of CB, it shall be the duty of Er and the
representatives of the Ees to bargain collectively in
accordance with the provisions of the LC (LC, Art.
251).
WHEN THERE IS A CBA
Duty to bargain collectively when there is a
collective bargaining agreement
When there is a CBA, the duty to bargain
collectively, in addition to Art. 252, shall mean that
1. Neither party shall terminate nor modify
such agreement during its lifetime.
2. However, either party can serve a written
notice to terminate or modify the agreement
UNIVERSITY OF SANTO TOMAS
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176
at least 60 days prior the expiration of its 5th
year.
3. It shall be the duty of both parties to keep
the status quo and to continue in full force
and effect the terms and conditions of the
existing agreement during the 60-day period
and/or until a new agreement is reached by
the parties (LC, Art. 253).
NOTE: CBA is a contract of indefinite period under
Art. 253.
A CBA is entered into in order to foster stability
and mutual cooperation between labor and capital.
An Er should not be allowed to rescind unilaterally
its CBA with the duly certified bargaining agent it
had previously contracted with, and decide to
bargain anew with a different group if there is no
legitimate reason for doing so and without first
following the proper procedure. If such behavior
would be tolerated, bargaining and negotiations
between the Er and the union will never be truthful
and meaningful, and no CBA forged after arduous
negotiations will ever be honored or be relied upon
(Employees Union of Bayer Phils., FFW v. Bayer
Philippines, Inc., 636 SCRA 472).
Single Enterprise Bargaining
It involves negotiation between one certified labor
union and one Er. Any voluntarily recognized or
certified labor union may demand negotiations
with its Er for terms and conditions of work
covering Ees in the bargaining unit concerned (IRR
as amended by Department Order No. 40-03, s. 2003,
Book V, Rule XVI, Sec. 3).
Multi-employer Bargaining Scheme
It involves negotiation between and among several
certified labor unions and Ers.
Any legitimate labor union and Er may agree in
writing to come together for the purpose of CB
provided that
1. Only legitimate labor unions which are
incumbent exclusive bargaining agents may
participate and negotiate;
2. Only Ers with counterpart legitimate labor
unions which are incumbent bargaining
agents may participate and negotiate; and
3. Only those legitimate labor unions which
pertain to employer units which consent to
multi-Er bargaining may participate (IRR as
amended by Department Order No. 40-03, s.
2003, Book V, Rule XVI, Sec. 5).
 LABOR RELATIONS
COLLECTIVE BARGAINING AGREEMENT
Collective Bargaining Agreement (Law of the
Plant)
It is a contract executed upon request of either the
Er or the exclusive bargaining representative of the
Ees incorporating the agreement reached after
negotiations with respect to wages, hours of work,
terms and conditions of employment, including
proposals for adjusting any grievance or questions
under the agreement.
NOTE: The certification of the CBA by the BLR is
not required to make such contract valid. Once it is
duly entered into and signed by the parties, a CBA
becomes effective as between the parties whether
or not it has been certified by the BLR (Liberty
Flour Mills Employees Association v. Liberty Flour
Mills, G.R. Nos. 58768-70, December 29, 1989).
Nature of a collective bargaining agreement
The CBA is the law between the contracting
partiesthe CB representative and the Er-
company. Compliance with a CBA is mandated by
the expressed policy to give protection to labor
(Vicente Almario v. Philippine Airlines, Inc., 532
SCRA 614).
Purpose of a collective bargaining agreement
The goal of CB is the making of agreements that
will stabilize business conditions and fix fair
standards of working conditions (P.I.
Manufacturing, Incorporated v. P.I. Manufacturing
Supervisors and Foremen Association, 543 SCRA
614).
Filing for registration of collective bargaining
agreement
Within 30 days from execution of CBA, the parties
thereto shall submit the agreement to the Regional
Office which issued the certificate of registration/
certificate of creation of chartered local of the labor
union-party to the agreement.
Requirements for registration
The application for CBA registration shall be
accompanied by the original and two duplicate
copies of the following requirements
1. CBA
2. A statement that the CBA was posted in at
least two conspicuous places in the
establishment concerned for at least five
days before its ratification
177
3. Statement that the CBA was ratified by the
majority of the Ees in the bargaining unit.
The following documents must be certified under
oath by the representative of the Er and the labor
union. No other document shall be required in the
registration of the CBA.
In one case, the CBA was not posted for at least five
days in two conspicuous places in the
establishment before ratification, to enable the
workers to clearly inform themselves of its
provisions. Moreover, the CBA submitted to the
MOLE (now SOLE) did not carry the sworn
statement of the union secretary, attested by the
union president, that the CBA had been duly posted
and ratified, as required by Section 1, Rule 9, Book
V of the Implementing Rules and Regulations.
These requirements being mandatory, non-
compliance therewith rendered the said CBA
ineffective (Associated Trade Unions v. Trajano,
G.R. No. L-75321, June 20, 1988).
Ratification of the CBA
GR: The agreement negotiated by the employees'
EBR should be ratified or approved by the majority
of all the workers in the bargaining unit. The
proper ratifying group is not the majority union
but the majority of all the workers in the
bargaining unit represented by the negotiation. A
CBA is valid between the parties, but unless it will
be ratified, it shall not be enforceable.
XPN: Ratification of the CBA by the employees is
not needed when the CBA is a product of an
arbitral award by a proper government authority
[LC, Art. 263 (g)] or a voluntary arbitrator (LC, Art.
262).
Zipper clause
It is a stipulation in a CBA indicating that issues
that could have been negotiated upon but not
contained in the CBA cannot be raised for
negotiation when the CBA is already in effect.
A CBA is not an ordinary contract but one
impressed with public interest, only provisions
embodied in the CBA should be so interpreted and
complied with. Where a proposal raised by a
contracting party does not find print in the CBA, it
is not a part thereof and the proponent has no
claim whatsoever to its implementation (SMTFM-
UWP v. NLRC, G.R. No. 113856, September 7, 1998)
under the zipper clause.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
MANDATORY PROVISIONS OF THE CBA Establishment of grievance machinery

Mandatory provisions of the collective Grievance machinery should be established:

bargaining agreement
1. Agreement by the parties
1. Grievance machinery Conclusive arbitration 2. A grievance committee composed of at
2. Voluntary Arbitration clause least two representatives each from the
3. Wages members of the bargaining unit and the Er,
4. Hours of work unless otherwise agreed upon by the parties
5. Family planning shall be created within 10 days from the
6. Rates of pay signing of CBA
7. Mutual observance clause
8. No Strike-No Lockout Clause NOTE: Although Art. 260, LC mentions parties to a
9. Labor-Management Council CBA, it does not mean that grievance machinery
10. Drug-free provision cannot be set up in a CBA-less enterprise. In any
workplace where grievance can arise, grievance
NOTE: In addition, the BLR requires that the CBA machinery can be established.
should include a clear statement of the term of the
CBA. Ers duty to bargain is limited to mandatory Grievance procedure
bargaining subjects; as to other matters, he is free
to bargain or not. It refers to the internal rules of procedure
established by the parties in their CBA which
GRIEVANCE PROCEDURE usually consists of successive steps starting at the
level of the complainant and his immediate
Grievance supervisor and ending, when necessary, at the level
of the top union and company officials and with VA
There is grievance when a dispute or controversy as the terminal step.
arises over the interpretation or implementation of
any provision of the CBA or interpretation or Q: What will happen to grievances submitted to
enforcement of company personnel policies [IRR, the grievance machinery which are not settled
Book V, Rule I, Sec.1 (u)]. within seven calendar days from the date of
their submission?
Provisions that must be included in a collective
bargaining agreement A: They shall automatically be referred to VA
prescribed in the CBA [LC, Art. 260 (2)].
1. Provisions that will ensure the mutual
observance of its terms and conditions. NOTE: The automatic transmittal to the VA is in the
2. A machinery for adjustment and resolution nature of an appeal.
of grievances arising from the:
Either party may serve notice upon the other of its
a. Interpretation/implementation of the decision to submit the issue to VA. If the party
CBA and upon whom such notice is served fails/refuses to
b. Interpretation/ enforcement of company respond within seven days from receipt, VA/panel
personnel policies. designated in the CBA shall commence arbitration
proceedings. If the CBA does not designate or if the
Grievance machinery parties failed to name the VA/panel, the regional
branch of NCMB appoints VA/panel.
It refers to the mechanism for the adjustment and
resolution of grievances arising from the Q: How are cases arising from the
interpretation or enforcement of company Interpretation or implementation of collective
personnel policies. It is part of the continuing bargaining agreements handled and disposed?
process of CB. (1995 Bar Question)

NOTE: It is a mandatory provision in any CBA. No A: They are disposed through the grievance
collective agreement can be registered in the machinery and if not resolved by the grievance
absence of such procedure. machinery, through VA.

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 LABOR RELATIONS
VOLUNTARY ARBITRATION
Voluntary arbitration
It refers to the mode of settling labor management
disputes by which the parties select a competent,
trained and impartial third person who shall
decide on the merits of the case and whose
decision is final and executory [NCMB Revised
Procedural Guidelines in the Conduct of Voluntary
Arbitration Proceedings, (2004), Rule II, Sec. 1(d)].
Basis for voluntary arbitration
It is the policy of the State to promote and
emphasize the primacy of free collective bargaining
and negotiations, including voluntary arbitration,
mediation and conciliation, as modes of settling
labor or industrial disputes [LC, Art. 211(a)].
The State shall promote the principle of shared
responsibility between workers and employers
and the preferential use of voluntary modes in
settling disputes, including conciliation, and shall
enforce their mutual compliance therewith to
foster industrial peace (1987 Constitution, Art. XIII,
Sec. 3).
The primacy of voluntary arbitration is mandated
by the Philippine Constitution itself and
entrenched in the Labor Code as a matter of basic
industrial relations policy. These legal mandates, in
turn, are formalized recognition of the fundamental
tenet that the best persons to resolve a labor
dispute are the party disputants themselves.
(Azucena, 2010)
Voluntary arbitrator
Any person who has been accredited by the NCMB
as such, or any person named or designated in the
CBA by the parties as their voluntary arbitrator, or
one chosen by the parties with or without the
assistance of the NCMB, pursuant to a selection
procedure agreed upon in the CBA or one
appointed by the NCMB in case either of the parties
to the CBA refuses to submit to VA.
NOTE: A voluntary arbitrator is not an Ee,
functionary or part of the government or of the
DOLE, but he is authorized to render arbitration
services provided under labor laws (Ludo & Luym
Corporation v. Saornido, G.R. No. 140960, January
20, 2003).
179
Compulsory arbitration v. Voluntary
arbitration
Compulsory arbitration is a system whereby the
parties to a dispute are compelled by the
government to forego their right to strike and are
compelled to accept the resolution of their dispute
through arbitration by a 3rd party. The essence of
arbitration remains since a dispute is resolved by a
disinterested 3rdparty whose decision is final and
binding on the parties. The 3rdparty is normally
appointed by the government.
Under VA, referral of a dispute by the parties is
made, pursuant to a VA clause in their CBA, to an
impartial 3rdperson for a final and binding
resolution. Ideally, arbitration awards are to be
complied with by both parties without delay, such
that once an award has been rendered by an
arbitrator, nothing is left to be done by both parties
but to comply with the same (Luzon Development
Bank v. Association of Luzon Development Bank
Employees, G.R. No. 120319, October 6, 1995).
Enforcement of decision of a voluntary
arbitrator
Upon motion of any interested party, the voluntary
arbitrator or panel of voluntary arbitrators or the
LA in the region where the movant resides, in case
of the absence or incapacity of the voluntary
arbitrator or panel of voluntary arbitrators, for any
reason, may issue a writ of execution requiring
either the sheriff of the NLRC or regular courts or
any public official whom the parties may designate
in the submission agreement to execute the final
decision, order or award.
NO STRIKE-NO LOCKOUT CLAUSE
No strike-no Lockout clause
It is a clause in the CBA which is an expression of
the firm commitment of the parties that, on the
part of the union, it will not mount a strike during
the effectivity of the CBA, and on the part of the Er,
that it will not stage a lockout during the lifetime
thereof.
Application of no strike-no Lockout clause in
the collective bargaining agreement
The no strike-no lockout clause in the CBA
applies only to economic strikes. It does not apply
to ULP strikes. Hence, if the strike is founded on a
ULP of the Er, a strike declared by the union cannot
be considered a violation of the no strike clause
(Master Iron Labor Union v. NLRC, G.R. No. 92009,
February 17, 1993).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Effects of acts of violence committed in the Grievance Machinery v. Labor Management
course of strike Council

1. If pervasive, widespread and regularly GRIEVANCE LABOR MANAGEMENT

committed, it is illegal, union is responsible. MACHINERY COUNCIL

2. If isolated, sporadic or remote, it is still legal Resolves disputes in the Resolves disputes not
but the person who committed is interpretation and within the provisions of
responsible. implementation of the the CBA (PHIMCO
meaning of the Industries v. PHIMCO
LABOR MANAGEMENT COUNCIL provisions of the CBA Industries Labor
and of the company Association, G.R. No.
Formation of Labor Management Council personnel policies. 170830, August 11,
2010).
Labor-Management Councils or Committees may
be formed voluntarily by workers and Ers in the DURATION
event no legitimate labor organization exists for
the purpose of promoting industrial peace. Duration of a collective bargaining agreement

NOTE: One thing it cannot and must not do is to 1. 5 years Representation aspect (refers to
replace a union. It can deal with the Er on matters the identity and majority status of the union
affecting the employee's rights, benefits and that negotiated the CBA as the exclusive
welfare (Azucena, 2010). bargaining representative)

Role of the DOLE in the creation of Labor
Management Councils
The DOLE shall promote the formation of labor-
management councils in organized and
unorganized establishments to enable the workers
to participate in policy and decision-making
processes in the establishment, insofar as said
processes will directly affect their rights, benefits
and welfare, except those which are covered by CB
agreements or are traditional areas of bargaining.
The DOLE shall promote other labor-management
cooperation schemes and, upon its own initiative
or upon the request of both parties, may assist in
the formulation and development of programs and
projects on productivity, occupational safety and
health, improvement of quality of work life,
product quality improvement, and other similar
schemes (IRR, Book V, Rule XXI, Sec. 1).
Selection of representative in the Management
Council
In organized establishments, the workers
representative to the council shall be nominated by
the exclusive bargaining representative. In
establishments where no LLO exists, the workers
representative shall be elected directly by the Ees
at large (IRR, Book V, Rule XXI, Sec. 2).
2. 3 years after the execution of the CBA All
other provisions which refers to the rest of
the CBA, economic as well as non-economic
provisions except representation (LC, Art.
253-A).
NOTE: Neither party shall terminate nor modify
the CBA during its lifetime. However, either party
can serve a written notice to terminate or modify
the agreement at least 60 days prior to its
expiration date. It shall be the duty of both parties
to keep the status quo and to continue in full force
and effect the terms and conditions of the existing
agreement during the 60-day period and/or until a
new agreement is reached by the parties (LC, Art.
253,).
No petition questioning the majority status of the
incumbent bargaining agent shall be entertained
by the DOLE and no CE shall be conducted outside
of the 60-day freedom period.
Q: What is the automatic renewal clause of
collective bargaining agreements? (2008 Bar
Question)
A: The automatic renewal clause means that
although the CBA has expired, it continues to have
legal effects as between the parties until a new CBA
has been entered into (Pier & Arrastre Stevedoring
Services, Inc. v. Confessor, G.R. No. 110854, February
13, 1995). The rationale of the such clause to make

UNIVERSITY OF SANTO TOMAS

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 LABOR RELATIONS
it the duty of the parties to keep the status quo and
to continue in full effect the terms and conditions
of the existing agreement until a new agreement is
reached by the parties (Principle of CBA
Continuity; LC, Art. 253).
Hold-over Principle
It shall be the duty of both parties to keep the
status quo and to continue in full force and effect
the terms and conditions of the existing agreement
during the 60-day period and/or until a new
agreement is reached by the parties. Despite the
lapse of the formal effectivity of the CBA the law
still considers the same as continuing in force and
effect until a new CBA shall have been validly
executed.
Q: Does the hold-over principle apply to
imposed CBA / arbitral award?
A: Yes. The hold-over principle, i.e., the duty of the
parties to keep the status quo and to continue in
full force and effect the terms and conditions of the
existing CBA until a new agreement is reached by
the parties apply to an imposed CBA. The law does
not provide for any exception nor qualification on
which economic provisions of the existing
agreement are to retain its force and effect.
Likewise, the law does not distinguish between a
CBA duly agreed upon by the parties and an
imposed CBA (General Milling Corporation ILU v.
General Milling Corp., G.R. No. 193723, July 20,
2011).
FOR ECONOMIC PROVISIONS
Economic provisions of a collective bargaining
agreement
Economic provisions are provisions granting
economic benefits to the Ees such as increases,
vacation and sick leaves, hospitalization and
retirement.
FOR NON-ECONOMIC PROVISIONS
Non-economic provisions of a collective
bargaining agreement
1. Coverage of the bargaining unit
2. Union security clauses
3. Management prerogatives and/or
rights/responsibilities of Ees
4. Grievance machinery and VA
5. No strike no lock out provision
181
Effectivity and retroactivity date of economic
and non-economic provisions of the collective
bargaining agreement
1. If the CBA is the very first for the bargaining
unit, the parties have to decide the CBA
effectivity date.
2. Those made within six months after date of
expiry of the CBA are subject to automatic
retroaction to the day immediately following
the date of expiry.
3. Those not made within six months, the
parties may agree to the date of retroaction.
NOTE: This rule applies only if there is an existing
agreement. If there is no existing agreement, there
is no retroactive effect because the date agreed
upon shall be the start of the period of agreement.
Retroactivity does not apply if the provisions were
imposed by the SLE by virtue of arbitration. It
applies only if the agreement was voluntarily made
by the parties.
Q: May the economic provisions of an existing
CBA be extended beyond the 3 year period as
prescribed by law in the absence of a new
agreement?
A: Yes. Under the principle of hold over, until a
new CBA has been executed by and between the
parties, they are duty bound to keep the status quo
and must continue in full force and effect the terms
and conditions of the existing agreement. The law
does not provide for any exception or qualification
as to which of the economic provisions of the
existing agreement are to retain force and effect.
Therefore, it must be encompassing all the terms
and condition in the said agreement (New Pacific
Timber v. NLRC, G.R. No. 124224, March 17, 2000).
Q: Mindanao Terminal Company and
respondent union has an existing CBA which
was about to expire. Negotiations were held
regarding certain provisions of the CBA which
resulted in a deadlock. The union thereafter
filed a notice of strike. During the conference
called by the NCMB, the company and the union
were able to agree on all of the provisions of
the CBA except for one. The unresolved
provision was subsequently settled, however
no CBA was signed. Thus, in the records of the
Mediation Arbiter, all issues were settled
before the lapse of the six month period after
the expiration of the old CBA. Does the signing
of the CBA by the parties determine the date it
was entered into?
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
A: No. The signing of the CBA does not determine
the date it was entered into. In the present case,
there was already a meeting of the minds between
the company and the union prior to the end of the
six month period after the expiration of the old
CBA. Hence, such meeting of the minds is sufficient
to conclude that an agreement has been reached
within the six month period as provided under Art.
253-A, LC (Mindanao Terminal and Brokerage
Services Inc., v. Confessor, G.R. No. 111809, May 5,
1997).
Q: When is the effectivity of an arbitral award
concluded beyond six months from the
expiration of the old CBA?
A: The CBA arbitral award granted six months from
the expiration of the last CBA shall retroact to such
time agreed upon by both the Er and the union.
Absent such agreement as to retroactivity, the
award shall retroact to the 1st day after the six
month period following the expiration of the last
day of the CBA should there be one. In the absence
of a CBA, the SLEs determination of the date of
retroactivity as part of his discretionary powers
over arbitral award shall control (Manila Electric
Company v. Quisumbing, G.R. No. 127598, Feb. 22,
2000).
Q: PAL was suffering from a worsened financial
condition resulting to a retrenchment which
downsized its labor force by more than 1/3
thereby affecting numerous union members.
Hence, the union went on strike. The PAL
offered that shares of stock be transferred to its
Ees but the union refused. Thus, PAL claimed it
has no alternative left but to close. PALEA then
proposed that the CBA be suspended for 10
years provided they remain the certified
bargaining agent. PAL agreed and resumed
operations. Is the agreement to suspend the
CBA for 10 years abdicated the workers right
to bargain?
A: No. The primary purpose of a CBA is to stabilize
labor-management relations in order to create a
climate of a sound and stable industrial peace. The
assailed agreement was the result of the voluntary
CB negotiations undertaken in the light of severe
financial situation faced by PAL (Rivera v. Espiritu,
G.R. No. 135547, January 23, 2002).
Q: Is the agreement in conflict with Art. 253-A,
LC?
A: No. There is no conflict between the agreement
and Art. 253-A, LC for the latter has a two-fold
purpose namely: a) to promote industrial stability
UNIVERSITY OF SANTO TOMAS
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182
and predictability and b) to assign specific time
tables wherein negotiations become a matter of
right and requirement. In so far as the first
purpose, the agreement satisfies the first purpose.
As regard the second purpose, nothing in Art. 253-
A prohibits the parties from waiving or suspending
the mandatory timetables and agreeing on the
remedies to enforce the same (Rivera v. Espiritu,
G.R. No. 135547, January 23, 2002).
Q: Does the agreement violate the five year
representation limit as provided under Art.
253-A, LC?
A: No. Under the said article, the representation
limit of the exclusive bargaining agent applies only
when there is an existing CBA in full force and
effect. In this case, the parties agreed to suspend
the CBA and put in abeyance the limit on
representation (Rivera v. Espiritu, G.R. No. 135547,
January 23, 2002).
Q: What is the effect of an amended or extended
term of the collective bargaining agreement on
the exclusive representation status of the
collective bargaining agent and the right of
another union to ask for certification as
exclusive bargaining agent?
A: While the parties may agree to extend the CBAs
original five-year term together with all other CBA
provisions, any such amendment or term in excess
of five years will not carry with it a change in the
unions exclusive bargaining status. By express
provision of Art. 253-A of the LC, the exclusive
bargaining status cannot go beyond the five years
and the representation status is a legal matter not
for the workplace parties to agree upon. Despite an
agreement for a CBA with a life of more than five
years, either as an original provision or by
amendment, the bargaining unions exclusive
bargaining status is effective only for five years and
can be challenged within 60 days prior to the
expiration of the CBAs first five years (FVC Labor
Union-Philippine Transport and General Workers
Organization v. Sama-samang Nagkakaisang
Manggagawa sa FVC-Solidarity of Independent and
General Labor Organizations, G.R. 176249,
November 27, 2009).
Q: ABC Company and U labor union have been
negotiating for a new collective bargaining
agreement but failed to agree on certain
economic provisions of the existing agreement.
In the meantime, the existing collective
bargaining agreement expired. The company
thereafter refused to pay the employees their
midyear bonus, saying that the collective
 LABOR RELATIONS
bargaining agreement which provided for the
grant of midyear bonus to all company
employees had already expired. Are the
employees entitled to be paid their midyear
bonus? Explain your answer. (2010 Bar
Question)
A: Yes. The parties are duty-bound to maintain the
status quo and to continue in full force and effect
the terms and conditions of the existing CBA until a
new agreement is reached by the parties (Art. 253,
LC). Furthermore, Art. 253-A provides for an
automatic renewal clause of a CBA. Although a CBA
has expired, it continues to have legal effects as
between the parties until a new CBA has been
entered into.
FREEDOM PERIOD
60-day freedom period
During the 60-day freedom period
1. A labor union may disaffiliate from the
mother union to form a local or independent
union only during the 60-day freedom
period immediately preceding the expiration
of the CBA.
2. Either party can serve a written notice to
terminate or modify agreement at least 60
days prior to its expiration period.
3. A PCE may be filed.
Notice Period under Art. 253
The freedom period under Article 253-A & 256 is
different from the other 60-day period mentioned
in Article 253. The latter speaks of the right of the
parties to propose modifications to the existing
CBA, as an exception to the rule that the CBA
cannot be modified during its lifetime. This 60-day
period does not and cannot refer to the
representative status of the incumbent union since
the acquisition or loss of representative status is to
be resolved through CE.
UNION SECURITY
UNION SECURITY CLAUSES; CLOSED SHOP,
UNION SHOP, MAINTENANCE OF MEMBERSHIP
SHOP, ETC.
Union security
Union security is a generic term, which is applied
to and comprehends closed shop, union shop,
maintenance of membership, or any other form
of agreement which imposes upon Ees the
183
obligation to acquire or retain union membership
as a condition affecting employment.
Union security clause
A stipulation in CBA whereby the management
recognizes that the memberships of Ees in the
union which negotiated said agreement should be
maintained and continued as a condition for
employment or retention of employment. The
obvious purpose is to safeguard and ensure the
continued existence of the union.
Closed shop
A closed shop may be defined as an enterprise in
which, by agreement between the Er and his Ees or
their representatives, no person may be employed
in any or certain agreed departments of the
enterprise unless he or she is, becomes, and, for the
duration of the agreement, remains a member in
good standing of a union entirely comprised of or
of which the Ees in interest are a part.
Union shop
There is union shop when all new regular Ees are
required to join the union within a certain period
as a condition for their continued employment.
Closed shop v. Union shop
CLOSED SHOP UNION SHOP
Er cannot hire any Ee Er can hire even those
unless they are who are not members
members of the union. of the union but it
requires that after a
certain period they
must become members
of the union.
Maintenance of membership shop
There is maintenance of membership shop when
Ees, who are union members as of the effective
date of the agreement, or who thereafter become
members, must maintain union membership as a
condition for continued employment until they are
promoted or transferred out of the bargaining unit
or the agreement is terminated.
Requisites for termination on account of
enforcement of a union security clause in a
collective bargaining agreement
In terminating the employment of an Ee by
enforcing the union security clause, the Er needs
only to determine and prove that
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
1. The union security clause is applicable;
2. The union is requesting for the enforcement
of the union security provision in the CBA;
and
3. There is sufficient evidence to support the
decision of the union to expel the Ee from
the union.
BARGAINING IN BAD FAITH
Boulwareism
Boulwareism is a violation of good faith in
bargaining. It includes the failure to execute the
CBA (Bad Faith Bargaining).

These requisites constitute just cause for Occurrence of boulwareism

terminating an Ee based on the union security
provision of the CBA (Gen. Milling Corporation v. It occurs when Er directly bargains with the Ee
Casio, G.R. No. 149552 March 10, 2010). disregarding the union; the aim was to deal with
the labor union through Ees rather than with the
CHECK-OFF: UNION DUES v. AGENCY FEES Ees thru the union. Er submits its proposals and
adopts a take-it-or-leave-it stand.
Union dues v. agency fees
REFUSAL TO BARGAIN
BASIS UNION DUES AGENCY FEES
Occurrence of refusal to bargain
Collected from Collected by
union members the union from This occurs when the Er refuses or fails to meet
non-members and convene with the majority of his Ees. To
belonging to bargain in good faith, an Er must not only meet and
From whom
the same confer with the union which represents his Ees, but
collected
bargaining unit must also recognize the union for the purpose of
who receive CB (Azucena, 2010).
the benefits
under the CBA Effect of refusal of management to give counter-
There must be Can be proposals to the unions demands
an individual assessed even
written without the The failure of the Er to submit its counter-
Need for
authorization written proposals to the demands of the bargaining union
Written
by individual authorization does not, by itself, constitute refusal to bargain
Authorization
members. of the (Philippine Marine Radio Officers Association v. CIR,
employee 102 Phil 373). However, when the Er refuses to
concerned. submit an answer or reply to the written
bargaining proposals of the certified bargaining
union, ULP is committed.
ULP IN COLLECTIVE BARGAINING
NOTE: While the law does not compel the parties
Forms of unfair labor practice in bargaining to reach an agreement, it contemplates that both
parties will approach the negotiation with an open
1. Failure to meet and convene mind and make a reasonable effort to reach a
2. Evading the mandatory subjects of common ground of agreement (Kiok Loy v. NLRC,
bargaining G.R. No. 54334, January 22, 1986).
3. Bad faith in bargaining, including failure to
execute the CBA if requested INDIVIDUAL BARGAINING
4. Gross violation of the CBA
5. Surface Bargaining When individual bargaining is considered as
6. Blue sky bargaining unfair labor practice

NOTE: Violations of CBA, except those which are
gross in character, shall no longer be treated as
ULP but a grievance under CBA (Silva v. NLRC, G.R.
No. 110226, June 19, 1997).
When the Er attempts to negotiate with individual
workers rather than with the certified bargaining
agent is considered as ULP (Insular Life Assurance
Co.,Ltd., Employees Assoc.-NATU v. Insular Life
Assurance Co., Ltd., G.R. No. L-25291, January 30,
1971).

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2015 GOLDEN NOTES
184
 LABOR RELATIONS
NOTE: There is no legal prohibition for an Ee to
bargain with his Er.
BLUE SKY BARGAINING
Blue-sky bargaining
It is defined as making exaggerated or
unreasonable proposals. Demands which the Er
has no capacity to give.
NOTE: Whether or not the union is engaged in
blue-sky bargaining is determined by the evidence
presented by the union as to its economic
demands. Thus, if the union requires exaggerated
or unreasonable economic demands, then it is
guilty of ULP (Standard Chartered Bank v.
Confessor, G.R. No. 114974, June 16, 2004).
SURFACE BARGAINING
Surface bargaining
It is the act of going through the motions of
negotiating without any legal intent to reach an
agreement (Standard Chartered Bank v. Confessor,
G.R. No. 114974, June 16, 2004).
A concrete example is the withholding of the Er of
the audited financial statement requested by the
union.
NOTE: Surface bargaining is a question of intent of
the party concerned and usually such intent can
only be inferred from the totality of the challenged
partys conduct both at and away from the
bargaining table.
Featherbedding/make work activities
It refers to the practice of the union or its agents in
causing or attempting to cause an Er to pay or
deliver or agree to pay or deliver money or other
things of value, in the nature of an exaction, for
services which are not performed or not to be
performed, as when a union demands that the Er
maintain personnel in excess of the latters
requirements, including the demand for fee for
union negotiations [LC, Art. 249 (d)]. It is a form of
an extortion committed by the union against the Er.
NOTE: It is not featherbedding if the work is
performed no matter how unnecessary or useless
it may be.
Sweetheart Contract
It is when a labor organization asks for or accepts
negotiations or attorneys fees from Ers as part of
185
the settlement of any issue in CB or any other
dispute.
NOTE: The resulting CBA is considered as a
sweetheart contract a CBA that does not
substantially improve the employees wages and
benefits and whose benefits are far below than
those provided by law. It is an incomplete or
inadequate CBA.
UNFAIR LABOR PRACTICE (ULP)
NATURE OF ULP
ILO Convention No. 98, Right to Organize and
Collective Bargaining Convention, frowns upon
anti-union discrimination and interference.
Article 2.1 states that, Workers' and Employers'
organizations shall enjoy adequate protection
against any acts of interference by each other or
each other's agents or members in their
establishment, functioning or administration.
Acts considered as Unfair Labor Practice (ULP)
The act complained of must have a proximate and
causal connection with:
1. Exercise of the Right to Self-organization
2. Exercise of the Right to CB
NOTE: Not all illegal acts are ULP. Only those
enumerated in the LC are ULP.
ULP OF EMPLOYERS
Unfair labor practice committed by employers
1. Interference, restraint, coercion
2. Yellow dog condition
3. Contracting out of services
4. Company unionism or captive unionism
5. Discrimination for or against union
membership
6. Discrimination because of testimony
7. Violation of duty to bargain
8. Payment by the Er of negotiation fees
9. Gross violation of CBA
1st ULP: Interference
It is the act of Er to interfere with, restrain or
coerce Ees in the exercise of their right to self-
organization.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Test of interference
The test of whether an employer has interfered
with and coerced employees in their right to self-
organization is:
Whether the Er has engaged in conduct which, it
may reasonably be said, tends to interfere with the
free exercise of the Ees right to self-organization.
NOTE: It is not necessary that there be direct
evidence that any employee was in fact intimidated
or coerced by statements of threats of the
employer if there is a reasonable inference that
anti-union conduct of the employer does have an
adverse effect on self-organization and CB. (The
Insular Life Assurance-NATU v. The Insular Life Co.
Ltd, G.R. No.L-25291, January 30, 1971).
Totality of Conduct Doctrine
It states that the culpability of Ers remarks is to be
evaluated not only on the basis of their
implications, but against the background of and in
conjunction with collateral circumstances.
Under this doctrine, expressions of opinion by an
Er, though innocent in themselves, frequently were
held to be culpable because of:
1. The circumstances under which they were
uttered
2. The history of the particular Ers labor
relations or anti-union bias
3. Their connection with an established
collateral plan of coercion or interference
(The Insular Life Assurance-NATU v. The
Insular Life Co. Ltd, G.R. No.L-25291, January
30, 1971).
NOTE: An expression which might be permissibly
uttered by one employer, might, in the mouth of a
more hostile employer, be deemed improper and
consequently actionable as a ULP.
Q: Phil. Marine Officers Guild (PMOG) is a union
representing some of Philsteams officers and
Cebu Seamens Association (CSA) is another
union representing some of Philsteams
officers. PMOG sent a letter to Philsteam
requesting for CB but the company asked the
former to first prove that it represents the
majority. Simultaneously, Philsteam
interrogated its captains, deck officers and
engineers while CSA likewise sent its demands
to Philsteam. The company recognized CSA as
representing the majority and entered into a
CBA. Hence PMOG declared a strike. PMOG was
subjected to vilification. Philsteams purchasing
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186
agent made a statement that PMOG was a
money-asking union and that CSA is a good
union. Philsteam's pier superintendent did not
disavow the statements. Is the company guilty
of ULP?
A: Yes. An employer is not denied the privilege of
interrogating its employees as to their union
affiliation, provided:
a. The same is for a legitimate purpose, and:
b. Assurance is given by the employer that no
reprisals would be taken against unionists.
Nonetheless, any employer who engages in
interrogation does so with notice that he risks a
finding of unfair labor practice if the circumstances
are such that his interrogation restrains or
interferes with employees in the exercise of their
rights to self-organization.
Moreover, the pier superintendent participated in
the solicitation of membership for CSA when he did
nothing to show that the statement money-asking
union is not intended to represent PHILSTEAMs
opinion. Thus, the company, through its
supervisory official, made it appear to the Ee that
the purchasing agent was speaking for or on behalf
of the company, when he made the remarks
derogatory to PMOG and favorable to CSA.
PHILSTEAM thereby interfered with the Ees right
to self-organization (Philsteam and Navigation v.
Philippine Marine Officers Guild, G.R. Nos. L-20667
and L-20669, October 29, 1965).
NOTE: interrogating an employee as to his union
affiliation is not per se ULP, but circumstances may
make it as such.
Other examples of acts of interference
1. Outright and unconcealed intimidation
2. Intimidating expressions of opinion by Er
3. An Er who interfered with the right to self-
organization before a union is registered can
be held guilty of ULP (Samahan ng mga
Manggagawa sa Bandolino-LMLC v. NLRC,
G.R. No. 125195, July 17, 1997).
NOTE: It is the prerogative of the company to
promote, transfer or even demote its Ees to other
positions when the interests of the company
reasonably demand it. Unless there are
circumstances which directly point to interference
by the company with the Ees right to self-
organization, the transfer of an Ee should be
considered as within the bounds allowed by law
(Rubberworld Phils. v. NLRC, G.R. No. 75704, July 19,
1989).
 LABOR RELATIONS
In order that interrogation would not be deemed
coercive
a. The Er must communicate to the Ee the
purpose of questioning
b. Assure him that no reprisal would take place
c. Obtain Ee participation voluntarily
d. Must be free from Er hostility to union
organization
e. Must not be coercive in nature
2nd ULP: Yellow dog condition
It is to require as a condition of employment that a
person or an Ee shall not join a labor organization
or shall withdraw from one to which he belongs.
Yellow dog contract
It is a promise exacted from workers as condition
of employment that they are not to belong to or
attempts to foster a union during their period of
employment. Once employed, he promises that he
will never join a union.
Validity of yellow dog contract
Yellow dog contracts are null and void because
1. It is contrary to public policy for it is
tantamount to involuntary servitude.
2. It is entered into without consideration for
Ees in waiving their right to self-
organization.
3. Ees are coerced to sign contracts
disadvantageous to their family.
NOTE: This is one of the cases of ULP that may be
committed in the absence of an Er-Ee relationship.
Three usual provisions under a yellow dog
contract
1. A representation by the Ee that he is not a
member of a labor union.
2. A promise by the Ee not to join a labor union.
3. A promise by the Ee that upon joining a labor
union, he will quit his employment.
3rd ULP: Contracting out as a form of ULP
It is to contract out services or functions being
performed by union members when such act will
interfere with, restrain or coerce Ees in the
exercise of their rights to self-organization.
Contracting out services
GR: Contracting out services by the ER is not ULP
per se.
187
XPNs: The following are prohibited for being
contrary to law or public policy:
A. Contracting out of jobs, works or services
when not done in good faith and not justified by
the exigencies of the business such as the
following:
1. Contracting out of jobs, works or services
when the same results in the termination or
reduction of regular employees and
reduction of work hours or reduction or
splitting of the bargaining unit.
2. Contracting out of work with a Cabo.
3. Taking undue advantage of the economic
situation or lack of bargaining strength of the
contractors employees, or undermining
their security of tenure or basic rights, or
circumventing the provisions of regular
employment, in any of the following
instances:
i. Requiring them to perform functions
which are currently being performed
by the regular employees of the
principal; and
ii. Requiring them to sign, as a
precondition to employment or
continued employment, an antedated
resignation letter; a blank payroll; a
waiver of labor standards including
minimum wages and social or welfare
benefits; or a quitclaim releasing the
principal, contractor or from any
liability as to payment of future claims.
4. Contracting out of a job, work or service
through an in-house agency.
5. Contracting out of a job, work or service that
is necessary or desirable or directly related
to the business or operation of the principal
by reason of a strike or lockout whether
actual or imminent.
6. Contracting out of a job, work or service
being performed by union members when
such will interfere with, restrain or coerce
employees in the exercise of their rights to
self-organization as provided in Art. 248 (c)
of the LC, as amended.
7. Repeated hiring of employees under an
employment contract of short duration or
under a Service Agreement of short duration
with the same or different contractors,
which circumvents the Labor Code
provisions on Security of Tenure.
8. Requiring employees under a subcontracting
arrangement to sign a contract fixing the
period of employment to a term shorter than
the term of the Service Agreement, unless
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
the contract is divisible into phases for
which substantially different skills are
required and this is made known to the
employee at the time of engagement.
9. Refusal to provide a copy of the Service
Agreement and the employment contracts
between the contractor and the employees
deployed to work in the bargaining unit of
the principals certified bargaining agent to
the sole and exclusive bargaining agent
(SEBA).
10. Engaging or maintaining by the principal of
subcontracted employees in excess of those
provided for in the applicable Collective
Bargaining Agreement (CBA) or as set by the
Industry Tripartite Council (ITC).
B. Contracting out of jobs, works or services
analogous to the above when not done in good
faith and not justified by the exigencies of the
business (D.O. 18-A, Sec. 7).
NOTE: Consistent with the authority of the
Secretary of Labor and Employment to restrict or
prohibit the contracting out of labor to protect the
rights of workers, it shall be mandatory for all
persons or entities, including cooperatives, acting
as contractors, to register with the Regional Office
of DOLE where it principally operates. Failure to
register shall give rise to the presumption that the
contractor is engaged in labor-only contracting
(D.O. 18-A, Sec. 14).
Q: Company "A" contracts out its clerical and
janitorial services. In the negotiations of its
CBA, the union insisted that the company may
no longer engage in contracting out these types
of services, which services the union claims to
be necessary in the company's business,
without prior consultation. Is the union's stand
valid or not? For what reasons? (2001 Bar
Question)
A: The union's stand is not valid. It is part of
management prerogative to contract out any work,
task, job, or project except that it is ULP to contract
out services or functions performed by union
members when such will interfere with, restrain or
coerce Ees in the exercise of their rights to self-
organization [LC, Art. 248 (c)].
Examples when an Ers contracting out of work
are itself a ULP:
a. Motivated by a desire to prevent his
employees from organizing and selecting a
collective bargaining representative
b. Rid himself of union men
UNIVERSITY OF SANTO TOMAS
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188
c. Escape his statutory duty to bargain
collectively with his employees bargaining
representative.
When Ers contracting out is not ULP:
a. For business reasons such as decline in
business, the inadequacy of his equipment,
or the need to reduce cost, even if the Ers
estimate of his cost is based on a projected
increase attributable to unionization.
Q: The Secretary of Labor imposed upon the
management the duty to consult the union
before implementing a job contracting out that
would last for six months or more. Is this valid?
A: No. A balance already exists in the parties
relationship with respect to contracting out. The
company has its legally defined and protected
management prerogatives while the workers are
guaranteed their own protection through labor
provisions and recognition of limits to the exercise
of management prerogatives. The Secretarys
added requirement only introduces an imbalance
in the parties collective bargaining relationship.
(Manila Electric Company v. Quisumbing and
MEWA, G.R. No. 127598, January, 27, 1999).
Run-away shop
It is an industrial plant moved by its owners from
one location to another to escape labor regulations
or State laws, but the term is also used to describe
a plant removed to a new location in order to
discriminate against employees at the old plant
because of their union activities. (Complex
Electronics Employees Association v. NLRC, G.R. No.
121315, July 19, 1999).
It may also be the place where the Er transferred
his business in case of strike.
Resorting to run-away shop is ULP
Where a plant removal is for business reasons but
the relocation is hastened by anti-union
motivation, the early removal is ULP. It is
immaterial that the relocation is accompanied by a
transfer of title to a new Er who is an alter ego of
the original Er.
4th ULP: Company-domination of union
Labor organization in which, in whole or in part, is
Er-controlled or Er-dominated.
 LABOR RELATIONS
Forms of company unionism
1. Initiation of the company union idea by
a. Outright formation by Er or his
representatives
b. Ee formation on outright demand or
influence by Er and
c. Managerially motivated formation by
Ees
2. Financial support to the union by
a. Er defrays union expenses
b. Pays attorney's fees to the attorney who
drafted the Constitution or by-laws of
the union.
3. Er encouragement assistance - Immediately
granting of exclusive recognition as
bargaining agent without determining
whether the union represents the majority of
the employees
4. Supervisory assistance- Soliciting
membership, permitting union activities
during work time or coercing Ees to join the
union by threats of dismissal or demotion
Act of company-domination of union
This is to initiate, dominate, assist or otherwise
interfere with the formation or administration of
any labor organization including giving of financial
or other support to it or its organizers or
supporters.
Reason why company unionism/captive
unionism is a form of ULP
It is considered ULP because the officers will be
beholden to the Ers and they will not look after the
interest of whom they represent.
5th ULP: Discrimination as a form of ULP
It is to discriminate in regard to wages, hours of
work and other terms and conditions of
employment in order to encourage or discourage
membership in any labor organization.
Discrimination occurs when a union member,
involved in union activity, is treated differently
from a non-union worker. Antiunion animus is
found when the employers conduct is not
motivated, or at least is not entirely motivated by
legitimate and substantial business reasons but by
a desire to penalize or reward employees for union
activity or lack of it.
189
Discrimination, not the same as Differentiation
or Classification
It is common management practice to classify jobs
and grant them varying levels of pay or benefits
package. These are valid differentiations that
recognize differences in job requirements or
contributions. They are not necessarily
discrimination classifiable as ULP.
Discriminatory discharge of an employee
The underlying reason for the discharge must be
established in order to determine whether such act
is discriminatory or not.
The fact that a lawful cause for discharge is
available is not a defense where the Ee is actually
discharged because of his union activities. If the
discharge is actually motivated by lawful reason,
the fact that the Ee is engaged in union activities at
the time will not lie against the Er and prevent him
from the exercise of business judgment to
discharge an Ee for cause (Phil. Metal Foundries Inc.
v. CIR, G.R. Nos. L-34948-49, May 15, 1979).
Q: Jobo has 3 hotels, the Taal Vista Lodge,
Manila Hotel and the Pines Hotel. Among the 3,
Pines Hotel had more employees and the only
one with a labor organization. When the bonus
was distributed among the 3 hotels, Pines Hotel
employees received the least amount compared
to the employees of Manila Hotel and Taal Vista
Lodge. Did the company commit ULP?
A: Yes. In this case, Pines Hotel Ees who were the
most numerous "would receive, a lesser bonus
than the employees of the Manila Hotel and Taal
Vista Lodge where neither is there any existing
labor organization nor the complainant union has
any member." The fact that management granted
Christmas bonus to its Ees, the same should have
been distributed pro rata among all its Ees
regardless of their place of work (Manila Hotel Co.
v. Pines Hotel Employees Association, G.R. No.L-
30139, September 28, 1972).
Q: Can an employer discriminate against an
employee without committing ULP?
A: Yes. The Er is not guilty of ULP if it merely
complies in good faith with the request of the
certified union for the dismissal of Ees expelled
from the union pursuant to the union security
clause in the CBA (Soriano v. Atienza, G.R. No. L-
68619, March 16, 1989).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Q: A profit sharing scheme was introduced by
the company for its managers and supervisors,
who are not members of the union, and hence
do not enjoy the benefits of the CBA. The
respondent union wanted to participate with
the scheme but was denied by the company due
to the CBA. Subsequently the company
distributed the profit sharing to the manager,
supervisors and other non-union member
employees. As a result the union filed a notice
of strike alleging ULP. Is the non-extension of
the profit sharing scheme to union members
discriminatory and an ULP?
A: No. There can be no discrimination when the
Ees are not similarly situated. The situation of
union members is different and distinct from non-
union members because only union members
enjoy the benefit under the CBA. The profit sharing
scheme was extended to those who do not enjoy
the benefits of the CBA. Hence, there is no
discrimination and ULP is not committed (Wise and
Co., Inc. v. NLRC, G.R. No. L-87672, October 13,
1989).
Valid Discrimination: Union Security Clause
There is a form of encouragement of union
membership which is not considered ULP. This is
where the Management and Union enter into a CBA
containing a union security clause, which
essentially requires membership in the union so
that an employee may retain his job and the
unions existence is assured. In a sense, there is
discrimination when certain employees are obliged
to join a particular union. However, it is
discrimination favoring unionism, thus it is valid.
Q: Is dismissal of an employee pursuant to a
union security clause a form of ULP?
A: No. Union security clauses in the CBA, if freely
and voluntarily entered into, are valid and binding.
Thus, the dismissal of an Ee by the company
pursuant to a labor unions demand in accordance
with a union security agreement does not
constitute ULP (Malayang Samahan ng mga
Manggagawa sa M. Greenfield v. Ramos, G.R. No.
113907, February 28, 2000).
A union member who is employed under an
agreement between the union and his Er is bound
by the provisions thereof since it is a joint and
several contract of the members of the union
entered into by the union as their agent (Manalang
v. Artex Devt., G.R. No. L-20432, October 30, 1967).
UNIVERSITY OF SANTO TOMAS
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190
Q: Is notice and hearing required in case an
employee is dismissed pursuant to a union
security clause?
A: Yes. Although a union security clause in a CBA
may be validly enforced and dismissal pursuant
thereto may likewise be valid, this does not erode
the fundamental requirement of due process. The
reason behind the enforcement of union security
clauses which is the sanctity and inviolability of
contracts cannot erode ones right to due process.
Notwithstanding the fact that the dismissal was at
the instance of the federation and that it undertook
to hold the company free from any liability
resulting from such dismissal, the company may
still be held liable if it was remiss in its duty to
accord the would-be dismissed Ees their right to be
heard on the matter.
Indirect Discrimination
What is prohibited to be done directly shall not be
allowed to be accomplished indirectly. It is ULP for
an Er to dismiss or discriminate against an Ee for
having filed charges or for having given or being
about to give testimony. Although it seems that it
refers only to the one who filed the charges, the
legislative intent is to assure absolute freedom of
employee to establish labor organizations and
unions, thus, in addition, dismissal of a laborer on
account of union activities of his brother, wife or
husband, is considered ULP.
6th ULP: Discrimination because of testimony
The law protects not only the Ees right to form,
join, or assist labor organizations but also their
right to testify on matters covered by the Code. It
shields the Ees rights from indirect assault from
the Er.
Ers reprisal against a testifying Ee is ULP because,
furthermore, it violates the right to engage in
concerted activity, a right included in the right to
self-organize.
Q: Mabeza and her co-employees were asked by
the company to sign an affidavit attesting to the
latters compliance with pertinent labor laws.
Mabeza signed the affidavit but refused to
swear to its veracity before the City prosecutor.
Mabeza then filed a LOA which was denied by
management. After sometime, she attempted to
return to work but the company informed her
not to report for work and continue with her
unofficial leave. Did the company commit ULP?
 LABOR RELATIONS
A: Yes. The act of compelling an Ee to sign an
instrument indicating the Ers compliance with
Labor laws which the company might have violated
together with the act of terminating or coercing
those Ees to cooperate is an act of ULP. This is
analogous with Art. 248(f) of the LC which
provides to dismiss, discharge or otherwise
prejudice or discriminate against an Ee for having
given or being about to give testimony under this
Code. For in not giving a positive testimony in
favor of the Er, Mabeza reserved not only her right
to dispute the claim but also to work for better
terms and conditions of employment (Mabeza v.
NLRC, G.R No. 118506, April 18, 1997).
7th ULP: Violation of the Duty to Bargain
When the act constitutes violation of the duty to
bargain collectively as prescribed in the LC it is
considered ULP in bargaining.
NOTE: A companys refusal to make counter-
proposal, if considered in relation to the entire
bargaining process, may indicate bad faith and this
is especially true where the unions request for a
counter proposal is left unanswered (Kiok Loy v.
NLRC, G.R. No. L-54334, January 22, 1986).
Examples of ULP in bargaining
1. Delaying negotiations by discussing
unrelated matters
2. Refusal to accept request to bargain
3. Rejecting a unions offer to prove its majority
claim
4. Shutdown to avoid bargaining
5. Engaging in surface bargaining
Q: Balmar Farms Employees Association (BFEA)
is affiliated with Associated Labor Union (ALU).
ALU won in the certification election held in the
company. Thus, ALU sent its proposal for a CBA,
but the company refused to act on it alleging
that BFEA is the sole and exclusive bargaining
representative and that BFEA through its
president had sent a letter informing the
company of its disaffiliation with ALU. Is the
company guilty of ULP for refusing to bargain
collectively?
A: Yes. ALU is the certified exclusive bargaining
representative after winning the certification
election. The company merely relied on the letter
of disaffiliation by BFEAs president without proof
and consequently refusing to bargain collectively
constitutes ULP. Such refusal by the company to
bargain collectively with the certified exclusive
bargaining representative is a violation of its duty
to collectively bargain which constitutes ULP
191
(Balmar Farms v. NLRC, G.R. No.73504, October 15,
1991).
Q: The Kilusang Kabisig, a newly-formed labor
union claiming to represent a majority of the
workers in the Microchip Corp., proceeded to
present a list of demands to the management
for purposes of Collective Bargaining. The
Microchips Corp., a multinational corp.
engaged in the production of computer chips
for export, declined total with the union
leaders, alleging that they had not as yet
presented any proof of majority status. The
Kilusang Kabisig then charged Microchip Corp.
with ULP, and declared a "wildcat" strike
wherein means of ingress and egress were
blocked and remote and isolated acts of
destruction and violence were committed. Was
the company guilty of an ULP when it refused
to negotiate with the Kilusang Kabisig? (1997
Bar Question)
A: No. It is not ULP to refuse to bargain with a
union which has not presented any proof of its
majority status. Only the labor organization
designated or selected by the majority of the
employees in an appropriate CB unit is
the exclusive representative of the Ees in such unit
for the purpose of collective bargaining. It is not a
ULP for an Er to ask a union requesting to bargain
collectively that such union first show proof of its
being a majority union [Philippine Diamond Hotel
and Resort, Inc. (Manila Diamond Hotel) v. Manila
Diamond Hotel Employees Union, G.R. No. 158075,
June 30, 2006].
8th ULP: Paid negotiation
It is the act of the Er to pay negotiation or
attorneys fees to the union or its officers or agents
as part of the settlement of any issue in CB or any
other dispute.
It is also prohibited for union officers or agents
from asking for or accepting such payments.
9th ULP: Violation of the CBA
Only when the violation is gross There must be a
flagrant and/or malicious refusal to comply with
the economic provision of the CBA.
NOTE: All the ULP acts must have a relation to the
Ees exercise of their right to self-organization. Anti-
union or anti-organization motive must be proved
because it is a definitional element of ULP.
If violation is not gross, it is not ULP but a
grievance under CBA. The grossly violate phrase
is an amendment by R.A. 6715.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Q: A complaint for ULP was filed by a
prosecutor of the CIR against Alhambra
company, upon the charges of the union that 15
of its members employed as drivers and
helpers are discriminated for being deprived of
the benefits under the CBA with no justifiable
reason other than union membership. Is the
company guilty of ULP?
A: Yes. The refusal to extend the benefits and
privileges under the CBA to Ees constitutes ULP.
Failure on the part of the company to live up in
good faith to the terms of the CBA is a serious
violation of the duty to collectively bargain which
again amounts to ULP. The 15 drivers and helpers
are found to be Ees of the company, hence, the
benefit and privileges under the CBA should be
extended to them (Alhambra Industries v. CIR, G.R.
No. L-25984, October 30, 1970).
Reliefs available in ULP cases
The following reliefs may be availed of:
1. Civil liability
NOTE: Recovery of civil liability in the
administrative proceedings shall bar
recovery under the Civil Code (LC, Art. 247).
2. Criminal liability
NOTE: No criminal prosecution under this
Title may be instituted without a final
judgment finding that a ULP was committed
(LC, Art. 247).
3. Cease and desist order: To support such
order, the record must show that:
a. The restrained misconduct was an issue
in the case;
b. That there was a finding of fact of said
misconduct; and
c. Such finding of fact was supported by
evidence.
NOTE: If the act complained of happened so
long a time that there is no longer any
threat or probability of recurrence, a cease
and desist order will not be justified.
4. Affirmative order
NOTE: The order may usually direct the full
reinstatement of the discharged employees
to their substantially equivalent position
without prejudice to their seniority and
other rights and privileges.
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
192
5. Court may order the Er to bargain
6. CBA may be imposed upon an Er who
refused to bargain with the union of its Ees
7. Strike by union members
NOTE: ULP cases are not subject to compromise in
view of the public interest involve. The relation
between capital and labor is not merely
contractual. They are impressed with public
interest that labor contracts must yield to common
good.
Q: Is the commission of an ULP by an employer
subject to criminal prosecution? (2005 Bar
Question)
A: Yes. ULPs are not only violations of the civil
rights of both labor and management but are also
criminal offenses against the State which shall be
subject to prosecution and punishment (LC,
Art.247; See also B.P.Blg.386 as amended by R.A.
6715). However, the criminal aspect can only be
filed when the decision of the labor tribunals,
finding the existence of ULP, shall have become
final and executory.
Furnishing financial report by the Er
Upon written request of an LLO, the Er should
furnish the Ee its annual audited financial
statements, including the balance sheet and the
profit and loss statement, within 30 calendar days
from the date of receipt of the request, after the
union has been duly recognized by the Er or
certified as the sole and exclusive bargaining
representative of the Ees in the bargaining unit, or
within 60 calendar days before the expiration of
the existing CBA, or during the CB negotiation.
Instance when Ers refusal to furnish financial
information is NOT an unfair labor practice
While the refusal to furnish the requested
information is in itself an unfair labor practice and
also supports the interference of surface
bargaining, however, if the union failed to put its
request in writing, management cannot be held
liable for ULP (Standard Chartered Bank Employees
Union v. Confesor, G.R. No. 114974, June 16, 2004).
Instance when violation of the CBA is
constitutive of ULP
When there is gross violation of the CBA is
considered ULP. Gross violation shall be
understood as the flagrant and malicious refusal to
comply with economic provisions of the CBA.
 LABOR RELATIONS
ULP OF LABOR ORGANIZATIONS
ULP of labor organizations
It shall be ULP for labor organizations, its officers,
agents or representatives
1. To restrain or coerce Ees in the exercise of
their rights to self-organization. However, a
labor organization shall have the right to
prescribe its own rules with respect to the
acquisition or retention of membership
2. To cause or attempt to cause an Er to
discriminate against an Ee, including
discrimination against an Ee with respect to
whom membership in such organization has
been denied or to terminate an Ee on any
ground other than the usual terms and
conditions under which membership or
continuation of membership is made
available to other members
3. To violate the duty, or refuse to bargain
collectively with the Er, provided it is the
representative of the Ees
4. To cause or attempt to cause an Er to pay or
deliver or agree to pay or deliver any money
or other things of value, in the nature of an
exaction, for services which are not
performed or not to be performed, including
the demand for fee for union negotiations
5. To ask for or accept negotiations or
attorney's fees from Ers as part of the
settlement of any issue in Collective
Bargaining or any other dispute or
6. To violate a CBA (LC, Art. 248)
Interference by a labor organization not ULP
Interference by a labor organization in the exercise
of the right to organize is not considered ULP
because it is in itself a function of self-organizing.
Examples of interference which does not
amount to ULP
1. Union campaigns for membership even
among members of another union
2. Filing by a union of a petition, at the
appropriate time, to dislodge an incumbent
bargaining union
3. A bargaining union, through a union security
clause, requires an incoming employee to
join the union, or
4. When the occasion arises, persuades a non-
striking employee to join a strike.
NOTE: These are acts of interference but not ULP.
They are instead manifestations of union dynamics
193
and democracy whose ultimate beneficiaries will
be the workers themselves.
Union cannot coerce Ees to join a strike
A union violates the law when, to restrain or coerce
non-strikers from working during the strike, it
1. Assaults or threatens to assault them
2. Threatens them with the loss of their jobs
3. Blocks their ingress to or egress from the
plant
4. Damages non-strikers automobiles or forces
them off the highway
5. Physically preventing them from working
6. Sabotages the Ers property in their
presence, thereby creating an atmosphere of
fear or violence
7. Demonstrates loudly in front of a non-
strikers residence with signs and shouts
accusing the non-striker of scabbing
8. Holding the non-striker up to ridicule
9. Seeking public condemnation of the non-
striker
Union-induced discrimination
This pertains to the arbitrary use of union security
clause. A union member may not be expelled from
the union, and consequently from his job, for
personal and impetuous reasons or for causes
foreign to the closed shop agreement (Manila
Mandarin Employees Union v. NLRC, G.R. No. 76989,
September 29, 1987).
The broad rule is that the union has the right to
determine its membership and to prescribe the
conditions for the acquisition and retention
thereof. Consequently, admission to membership
may not be compelled. However, this rule is
qualified.
Thus, labor unions are not entitled to arbitrarily
exclude qualified applicants for membership and a
closed-shop applicants provision will not justify
the employer in discharging, or a union in insisting
upon the discharge of an Ee whom the union thus
refuses to admit to membership without any
reasonable ground thereof (Salunga v. CIR, G.R. No.
L-22456, September 27, 1967).
Aspects of ULP
Under the Labor Code, ULP has two aspects
1. Civil aspect
2. Criminal aspect.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
NOTE: Civil aspect LA together with claim for
damages arising from termination (ex:
reinstatement)
Criminal aspect Regular courts.Commenced only
upon final decision by LA that party commits ULP.
No simultaneous filing is allowed. There must be a
final decision first by the Labor Arbiter.
Persons who may be criminally liable for ULP
1. On the part of the employer only the
officers and agents of corporations,
associations or partnerships who have
actually participated in, authorized or
ratified unfair labor practices, shall be held
criminally liable.
2. On the part of the union only officers,
members of governing boards,
representatives or agents or members of
labor associations or organizations who have
actually participated in, authorized or
ratified the unfair labor practices shall be
held criminally liable.
Burden of proof in ULP cases
In ULP cases, it is the union which has the burden
of proof to present substantial evidence to support
its allegations of ULP committed by the employer.
It is not enough that the union believed that the
employer committed acts of unfair labor practice
when the circumstances clearly negate even a
prima facie showing to warrant such a belief.
RIGHT TO PEACEFUL CONCERTED ACTIVITIES
Constitutional basis of strikes, lockouts and
other concerted activities
The State shall guarantee the rights of all workers
to self-organization, collective bargaining and
negotiations, and peaceful concerted activities,
including the right to strike in accordance with law
(1987 Constitution, Art. XIII, Sec. 3).
NOTE: The law does not look with favor upon
strikes and lockouts because of their disturbing
and pernicious effects upon the social order and
the public interests; to prevent or avert them and
to implement Sec. 6, Art. XIV of the Constitution,
the law has created several agencies, namely: the
BLR, the DOLE, the Labor Management Advisory
Board, and the CIR (Luzon Marine Devt Union v.
Roldan, G.R. No. L-2660, May 30, 1950).
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
194
Concerted action
It is an activity undertaken by two or more
employees or by one on behalf of others.
Not all concerted actions are strikes
They may only be protest actions they do not
necessarily cause work stoppage by the protesters.
A strike in contrast is always a group action
accompanied by work stoppage.
FORMS OF CONCERTED ACTIVITIES
Forms of concerted activities
1. Strike
2. Lockout
3. Picketing
4. Boycott
5. Other Concerted Activities
a. Collective Letter
b. Publicity
c. Placards and Banners
d. Speeches Music and Broadcasts
BOYCOTT
It is an attempt, by arousing a fear of loss, to coerce
others, against their will to withhold from one
denominated unfriendly to labor their beneficial
business intercourse.
A boycott may be said to include any activity on the
part of a labor organization whereby it is sought
through concerted action, other than by reason of
lawful competition, to obtain withdrawal of public
patronage from one in business (Burke v. Adams
Dairy, Inc., 352 U.S. 969).
Lawfulness of boycott
Ees may lawfully exert economic pressure on their
Er by means of a boycott, provided they act
peaceably and honestly. They have a right to
persuade the public by any lawful means to refuse
to patronize the Er. Union members are entitled to
advise the public of the existence of their
controversy with the Er and may request their
friends and the public generally to assist them by
not patronizing the Er. In so doing, there is no
element of threat or coercion or unlawful
interference with anothers business (51A, C.J.S. Sec.
286).
Boycott may be lawful or unlawful depending on
the means and methods employed, and the ends
intended to be accomplished.
 LABOR RELATIONS
Kinds of Boycott
Primary boycott applied directly and alone to
the offending person by withdrawing from him, all
business relations on the part of the organization
that initiated the boycott.
Secondary Boycott is a combination not merely
to refrain from dealing with a person, or to advise
or by peaceable means persuade his customers to
refrain, but to exercise coercive pressure upon
such customers, actual or prospective, in order to
cause them to withhold or withdraw patronage
from him through fear of loss or damage to
themselves should they deal with him.
Slowdown
It is a method by which ones Ees, without seeking
a complete stoppage of work, retard production
and distribution in an effort to compel compliance
by the Er with the labor demands made upon him.
Q: Does an overtime boycott or work
slowdown by the employees constitute a strike
and hence a violation of the CBAs No strike, no
lockout clause?
A: Yes. The concept of a slowdown is a "strike on
the installment plan." It is a willful reduction in the
rate of work by concerted action of workers for the
purpose of restricting the output of the Er, in
relation to a labor dispute; as an activity by which
workers, without a complete stoppage of work,
retard production or their performance of duties
and functions to compel management to grant their
demands.
Such a slowdown is generally condemned as
inherently illicit and unjustifiable, because while
the Ees "continue to work and remain at their
positions and accept the wages paid to them," they
at the same time "select what part of their allotted
tasks they care to perform of their own volition or
refuse openly or secretly, to the Er's damage, to do
other work;" in other words, they "work on their
own terms" (Interphil Laboratories Employees
Union-FFW v. Interphil Laboratories, Inc., G.R. No.
142824, December 19, 2001).
Q: The employees wrote and published a letter
to the bank president, demanding his
resignation on the grounds of immorality,
nepotism, favoritism and discrimination in the
appointment and promotion of bank
employees. The bank dismissed the employees
for the alleged libelous letter. Were the
employees engaged in a concerted activity?
195
A: Yes. Assuming that they acted in their individual
capacities when they wrote the letter, they were
nonetheless protected, for they were engaged in a
concerted activity, in their right of self-
organization that includes concerted activity for
mutual aid and protection. Any interference made
by the company will constitute as ULP.
The joining in protests or demands, even by a small
group of Ees, if in furtherance of their interests as
such is a concerted activity protected by the
Industrial Peace Act. It is not necessary that union
activity be involved or that Collective Bargaining
be contemplated (Republic Savings Bank v. CIR, G.R.
No. L-20303, September 27, 1967).
Q: May the grievances of the employees be
published in newspapers and on placards and
banners?
A: Members of a labor union may, without
authorization by statute, make known the facts of a
labor dispute, for freedom of speech is guaranteed
by the Constitution. Striking Ees, too, have a right
to acquaint the public with the fact of the existence
of the strike setting forth their claims in a
controversy over terms and conditions of
employment by sign, handbill or newspaper,
advertisement as a legitimate means of economic
coercion (31 Am. Jur., Sec. 274).
It is generally conceded that a striker having the
right to apprise the public of the fact of the strike
and solicit its support may inscribe his grievances
upon placards and banners to be seen at a distance
and to be read by many at the same time and that
he may carry such placards or banners upon a
public street, provided the inscription is not
libelous or otherwise unlawful (31 Am. Jur., Sec.
278).
PICKETING
It is the act of marching to and fro the Ers premises
which is usually accompanied by the display of
placard and other signs, making known the facts
involved in a labor dispute, in the hope of being
able to persuade peacefully other workers not to
work in the establishment, and customers not to do
business there.
The right to picket as a means of communicating
the facts of a labor dispute is a phase of the
freedom of speech guaranteed by the Constitution.
Picketing if peacefully carried out, cannot be
curtailed even in the absence of Er-Ee relationship
(PAFLU v. Cloribel, G.R. No. L-25878, March 28,
1969).
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Constitional provisions protect the right to
picket
The right to picket is guaranteed under the
freedom of speech and of expression and to
peaceably assemble to air grievances under Sec. 4,
Art. III.
STRIKE
It means any temporary stoppage of work by the
concerted action of Ees as a result of an industrial
or labor dispute [IRR, Book V, Rule I, Sec. 1(uu)].
The term strike shall comprise not only concerted
work stoppages, but also slowdowns, mass leaves,
sit-downs, attempts to damage, destroy or
sabotage plant equipment and facilities and similar
activities. Thus, the fact that the conventional term
strike was not used by the striking employees to
describe their common course of action is
inconsequential, since the substance of the
situation and not its appearance, will be deemed to
be controlling.
The right to strike, while constitutionally
recognized, is not without legal constrictions. Art.
264(a) of the LC, as amended, provides that no
strike or lockout shall be declared after assumption
of jurisdiction by the President or the Secretary or
after certification or submission of the dispute to
compulsory or voluntary arbitration or during the
pendency of cases involving the same grounds for
the strike or lockout. The court has consistently
ruled that once the Secretary of Labor assumes
jurisdiction over a labor dispute, such jurisdiction
should not be interfered with by the application of
the coercive processes of a strike or lockout. A
strike that is undertaken despite the issuance by
the Secretary of Labor of an assumption order
and/or certification is a prohibited activity and
thus illegal (Solidbank Corporation v. Ernesto U.
Gamier/ Solid Bank Union, G.R. No. 159460,
November 15, 2010).
NOTE: The fact that the conventional term strike
was not used by the striking employees to describe
their common course of action is inconsequential,
since the substance of the situation and not its
appearance will be deemed controlling (Toyota
Motor Phils. Corp. Workers Association v. NLRC, 537
SCRA 174). It shall comprise not only concerted
work stoppages, but also slowdowns, mass leaves,
sit downs, attempt to damage, destroy or sabotage
plant equipment and facilities, and similar
activities (Samahang Manggagawa sa Sulpicio Lines
v. Sulpicio Lines, Inc., G.R. No. 140992, March 25,
2004).
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
196
Purpose of a strike
A strike is a coercive measure resorted to by
laborers to enforce their demands. The idea behind
a strike is that a company engaged in a profitable
business cannot afford to have its production or
activities interrupted, much less, paralyzed (Phil.
Can Co. v. CIR, G.R. No. L-3021, July 13, 1950).
Elements of strike
1. Existence of an Er-Ee relationship
2. Existence of a labor dispute and the
utilization by labor of the weapon of
concerted refusal to work as a means of
persuading, or coercing compliance with the
working mens demands
3. Employment relation is deemed to continue
although in a state of belligerent suspension
4. Temporary work stoppage
5. Work stoppage is done through concerted
action
6. The striking group is a legitimate labor
organization; in case of a bargaining
deadlock, it must be the Ees sole bargaining
representative
Different forms of strike
1. Legal Strike One called for a valid purpose
and conducted through means allowed by
law.
2. Illegal Strike One staged for a purpose not
recognized by law, or if for a valid purpose,
conducted through means not sanctioned by
law.
3. Economic Strike One staged by workers to
force wage or other economic concessions
from the employer which he is not required
by law to grant (Consolidated Labor
Association of the Phil. vs. Marsman, G.R. No.
L-17038, July 31, 1964).
4. ULP Strike One called to protest against
the employers acts of unfair practice
enumerated in Art. 248 of the LC, as
amended, including gross violation of the
CBA and union busting.
5. Slow Down Strike One staged without the
workers quitting their work but by merely
slackening or by reducing their normal work
output.
6. Wild-Cat Strike One declared and staged
without filing the required notice of strike
and without the majority approval of the
total union membership.
7. Sit Down Strike One where the workers
stop working but do not leave their place of
work.
 LABOR RELATIONS
Strike-breaker (Fink)
Any person who obstructs, impedes, or interferes
with by force, violence, coercion, threats, or
intimidation any peaceful picketing affecting
wages, hours or conditions of work or in the
exercise of the right of self-organization or CB [LC,
Art. 212 (r)].
Strike area
It means the establishment, warehouses, depots,
plants or offices, including the sites or premises
used as runaway shops, of the Er struck against, as
well as the immediate vicinity actually used by
picketing strikers in moving to and fro before all
points of entrance to and exit from said
establishment [Sec. 1 (vv), Rule I, Book V, IRR].
LOCKOUT
It means any temporary refusal of an Er to furnish
work as a result of an industrial or labor dispute
[LC, Art. 212 (p)]. It is an Ers act excluding Ees who
are union members from the plant.
Lockout amounting to ULP
A lockout, actual or threatened, as a means of
dissuading the Ees from exercising their rights is
clearly an ULP. However, to hold an Er guilty, the
evidence must establish that the purpose was to
interfere with the Ees exercise of their rights.
Express statutory recognition of the workers
right to strike and the employers right to
lockout
TheLC provides that workers shall have the right to
engage in concerted activities for purposes of CB
for their mutual benefit and protection. The right of
LLOs to strike and picket and of Ers to lockout,
consistent with the national interest, shall continue
to be recognized and respected. However, no labor
union may strike and no Er may declare a lockout
on grounds involving inter-union and intra-union
disputes.
Right to strike or lockout not absolute
The exercise of these rights is subject to reasonable
restrictions pursuant to the police power of the
State. It has been held that the right to strike,
because of the more serious impact upon the public
interest, is more vulnerable to regulation that the
right to organize and select representatives for
purposes of CB [National Federation of Sugar
Workers (NFSW) v. Ovejera, et al. G.R. No. L-59743,
May 31, 1982].
197
Strike cannot be converted into a lockout
A strike cannot be converted into a pure and
simple lockout by the mere expedient of filing
before the trial court a notice of offer to return to
work during the pendency of the labor dispute
between the union and the Er (Rizal Cement
Workers Union v. CIR, G.R. No. L-18442, November
30, 1962).
Instances where a strike or lockout cannot be
declared
1. Violations of CBAs, except flagrant and/or
malicious refusal to comply with economic
provisions.
2. Inter-union disputes
3. Intra-union disputes
4. Failure to file a notice of strike or lockout or
without necessary strike or lockout vote
obtained and reported to the Board.
5. After assumption of jurisdiction by the
Secretary has been declared
6. After certification or submission of the
dispute to compulsory or voluntary
arbitration
7. There is already a pending case involving the
same grounds for the strike or lockout.
8. Labor standards cases such as wage orders
(IRR, as amended by D.O. 40-03, Book V, Rule
XXII, Sec. 5).
WHO MAY DECLARE A STRIKE OR LOCKOUT
Declaration of a strike or lockout
The following may declare a strike or lockout:
1. Any certified or duly recognized bargaining
representative may declare a strike in cases
of bargaining deadlocks and ULP. The Er may
declare a lockout in the same cases.
2. In the absence of a certified or duly
recognized bargaining representative, any
LLO in the establishment may declare a
strike but only on grounds of ULP [IRR as
amended by D.O. 40-03, Book V, Rule XXII, Sec.
6].
NOTE: A strike conducted by a minority union is
patently illegal because no labor dispute which will
justify the conduct of a strike may exist between
the employer and a minority union.
Grounds for declaration of strike or lockout
1. Collective Bargaining Deadlock economic
2. ULP act political
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
NOTE: It is possible to change an economic strike Q: Does a strike staged by resigned employees
into a ULP strike (Consolidated Labor Assn of the fall under the ambit of concerted actions
Phils. v. Marsman and Co., G.R. No. L-17038, July 31, protected by law?
1964).
A: No. Resigned employees mass action is not a
Conversion Doctrine strike because Ees who go on strike do not quit
their employment. Ordinarily, the relationship of
It is when a strike starts as economic and later, as it Er and Ee continues until one of the parties acts to
progresses, it becomes a ULP, or vice versa. sever the relationship or they mutually act to
accomplish that purpose. As they did not assume
Economic strike v. ULP strike the status of strikers, their protest
retirement/resignation was not a concerted
ECONOMIC activity which was protected by law (Enrique v.
BASIS ULP STRIKE
STRIKE Zamora, G.R. No. L-51382, December 29, 1986).
Voluntary Involuntary strike; the
strike LO is forced to go on Q: PHIMCO argues that the strike staged by its
because the strike because of the employees was illegal as they committed the
employee will ULP committed against prohibited acts under Art. 264(e) of the LC such
As to declare a them by the Er. It is an as blocking the ingress and egress of the
nature strike to act of self-defense company premises. The employees, on the
compel since the Ees are being other hand, submit that the picket was peaceful
management pushed to the wall and and no human barricade blocked the company
to grant its their only remedy is to premises. May a peaceful picketing of
demands stage a strike. employees be held illegal?
The CB agent
of the A: Yes. Despite the validity of the purpose of a
appropriate strike and compliance with the procedural
Either the CB agent or requirements, a strike may still be held illegal
Who will bargaining
the LLO in behalf of where the means employed are illegal. The means
initiate unit can
its members become illegal when they come within the
declare an
economic prohibitions under Art. 264(e) of the LC. Protected
strike picketing does not extend to blocking ingress to
30 days from and egress from the company premises, and, the
notice of fact that the picket was moving, was peaceful and
As to the strike before was not attended by actual violence may not free it
15 days from the from taints of illegality if the picket effectively
cooling- the intended
filing of the notice of blocked entry to and exit from the company
off date of actual
strike premises (PHIMCO Industries, Inc. v. PHIMCO
period strike subject
to the 7-day Industries Labor Association, G.R. No. 170830,
strike ban August 11, 2010).
The cooling-off period
may be dispensed with, NOTE: Even if the purpose of a strike is valid,
and the union may take the strike may still be held illegal where
immediate action in the means employed are illegal. Thus, the
No exception case of dismissal from employment of violence, intimidation, restraint or
mandatory employment of their coercion in carrying out concerted activities which
As to the officers duly elected in are injurious to the right to property renders
NOTE: Notice accordance with the a strike illegal. And so is picketing or the
exception
of strike and unions constitution obstruction to the free use of property or the
to the
strike vote and by-laws, which comfortable enjoyment of life or property, when
cooling- may constitute union
may be accompanied by intimidation, threats, violence, and
off busting where the
dispensed coercion as to constitute nuisance (Soriano
period existence of the union
with; they Aviation v. Employees Association of A. Soriano
may strike is threatened. It must
Aviation, G.R. No. 166879, August 14, 2009).
immediately still observe the
mandatory 7-day
strike ban period
before it can stage a
valid strike

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 LABOR RELATIONS
Penalty for outright dismissal against the
striking employees so severe for a one-day
absence from work
The penalty of dismissal against the striking Ees,
who only staged a one day walkout, is too severe. It
is not in accordance with settled and authoritative
doctrine and legal principles that a mere finding of
the illegality of a strike does not automatically
warrant a wholesale dismissal of the strikers from
their employment and that a premature or
improvident strike should not be visited with a
consequence so severe as dismissal where a
penalty less punitive would suffice (Automotive
Engine Rebuilders, Inc. v. Progresibong Unyon ng
mga Manggagawa ng AER, G.R. No. 160138, July 13,
2011).
Q: Because of financial problems, the company
decided to temporarily shutdown its
operations at the dyeing and finishing division.
It notified the DOLE of the shutdown. Raymund
Tomaroy with 16 members of the union staged
a picket in front of the companys compound,
carrying placards. He demanded a resumption
of work and 13th month pay. The company filed
a petition to declare the strike illegal. The
union argues that they did not stage a strike,
for considering that the dyeing and finishing
division of the company was shutdown; it could
not have caused a work stoppage. Was the
action of the union a strike?
A: Yes. The concerted efforts of the members of the
union and its supporters caused a temporary work
stoppage. The allegation that there can be no work
stoppage because the operation in the division had
been shut down is of no consequence. It bears
stressing that the other divisions were fully
operational (Bukluran ng Manggagawa sa
Clothman Knitting Corp. v. CA, G.R. No. 158158,
January 17, 2005).
REQUISITES FOR A VALID STRIKE AND VALID
LOCKOUT
Requisites of a lawful strike / lockout
The requirements for a valid strike or lockout
are as follows:
1. It must be based on a valid and factual
ground;
2. A strike or lockout notice shall be filed with
the NCMB at least 15 days before the
intended date of the strike or lockout if the
issues raised are unfair labor practices, or at
least 30 days before the intended date
199
thereof if the issue involves bargaining
deadlock.
NOTE: The failure of the union to serve the
company a copy of the notice of strike is a
clear violation of Section 3, Rule XXII, Book V
of the Rules Implementing the LC. The
Constitutional precepts of due process
mandate that the other party be notified of
the adverse action of the opposing party
(Filipino Pipe and Foundry Corp. v. NLRC, G.R.
No. 115180, November 16, 1999).
3. In cases of dismissal from employment of
union officers duly elected in accordance
with the union constitution and by-laws,
which may constitute union busting where
the existence of the union is threatened, the
15-day cooling-off period shall not apply and
the union may take action immediately after
the strike vote is conducted and the result
thereof submitted to the DOLE.
4. Notice of conduct of strike vote 24 hours
before the intended strike vote is filed with
the DOLE (compliance with the 24-hour
prior notice rule).
5. A strike must be approved by a majority vote
of the members of the union and a lockout
must be approved by a majority vote of the
members of the Board of Directors of the
Corporation or Association or of the partners
in a partnership, obtained by secret ballot in
a meeting called for that purpose.
6. A strike or lockout vote shall be reported to
the NCMB-DOLE Regional Branch at least 7
days before the intended strike or lockout
subject to the cooling-off period.
7. In the event the result of the strike/lockout
ballot is filed within the cooling-off period,
the 7-day requirement shall be counted from
the day following the expiration of the
cooling-off period (NSFW vs. Ovejera, G.R. No.
59743, May 31, 1982).
In case of dismissal from employment of union
officers which may constitute union busting, the
time requirement of 15 days for the filing of the
Notice of Strike shall be dispensed with but the
strike vote requirement, being mandatory in
character, shall in every case be complied with.
Simply stated, the 7-day strike ban cannot be
dispensed with.
It will be adding insult to injury to ask the
unionists to cool off while their union is being
busted.
NOTE: The purpose of the 7 day strike ban is to
give DOLE an opportunity to verify whether the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
projected strike really carries the imprimatur of
the majority of the union members in addition to
the cooling-off period before the actual strike
(Lapanday Workers Union, et.al. v. NLRC, G.R. Nos.
95494-97, September 7, 1995).
8. The dispute must not be the subject of an
assumption of jurisdiction by the President
or the SLE, a certification for compulsory
arbitration, or submission to compulsory or
voluntary arbitration or a subject of a
pending case involving the same grounds for
the strike or lockout.
Cooling-off period
It is the period of time given by the NCMB to
mediate and conciliate the parties. It is the span of
time allotted by law for parties to settle their
disputes in a peaceful manner before staging a
strike or lockout. The principles of improved offer
and reduced offer balloting apply during the
cooling-off period.
NOTE: Cooling-off and waiting period may be done
simultaneously.
Q: Johnny is the duly elected President and
principal union organizer of the Nagkakaisang
Manggagawa ng Manila Restaurant (NMMR), a
legitimate labor organization. He was
unceremoniously dismissed by management
for spending virtually 95% of his working
hours in union activities. On the same day
Johnny received the notice of termination, the
labor union went on strike.
Management filed an action to declare the
strike illegal, contending that
1. The Union did not observe the cooling-
off period mandated by the LC; and
2. The Union went on strike without
complying with the strike-vote
requirement under the LC.
Rule on the foregoing contentions with reasons.
(2009 Bar Question)
A:
1. Yes. The conduct of a strike action without
observing the cooling-off period is a violation
of one of the requirements of law which must
be observed. The cooling-off periods required
by Art. 263 (c) and (f) of the LC are to enable
the DOLE to exert efforts to amicably settle the
controversy and for the parties to review and
reconsider their respective positions during
the cooling-off periods. But the LC also
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
200
provides that if the dismissal constitutes union
busting, the union may strike immediately.
2. Yes. The conduct of the strike action without a
strike vote violates Art. 263 (f) In every case,
the union or the Er shall furnish the DOLE the
results of the voting at least 7days before the
intended strike to enable the DOLE and the
parties to exert the last effort to settle the
dispute without strike action.
Q: NFSW, the bargaining agent of Central
Azucarera de la Carlota (CAC) rank and file
employees, filed a notice of strike based on
non-payment of the 13th month pay and 6 days
thereafter they held the strike. A day after the
commencement of the strike, a report of the
strike-vote was filed by NFSW with DOLE. CAC
filed a petition to declare the strike illegal due
to non-compliance with the 15-day cooling off
period and the strike was held before the lapse
of 7 days from the submission to the DOLE of
the result of the strike vote. Was the strike held
by NFSW legal?
A: No. The cooling-off period in Art. 264(c), LC and
the 7-day strike ban after the strike-vote report
prescribed in Art. 264(f) of the LC were meant to
be mandatory. The law provides that the labor
union may strike should the dispute remain
unsettled until the lapse of the requisite number of
days from the filing of the notice, this clearly
implies that the union may not strike before the
lapse of the cooling-off period. The cooling-off
period is for the MOLE to exert all efforts at
mediation and conciliation to effect a voluntary
settlement.
The mandatory character of the 7-day strike ban is
manifest in the provision that in every case the
union shall furnish the DOLE with the results of the
voting at least 7 days before the intended strike.
This period is to give time to verify that a strike
vote was actually held (NFSW v. Ovejera, G.R. No. L-
59743, May 31, 1982).
Purpose of giving notice of the conduct of a
strike vote to the NCMB at least 24 hours before
the meeting for the said notice
1. Inform the NCMB of the intent of the union
to conduct a strike vote;
2. Give the NCMB ample time to decide on
whether or not there is a need to supervise
the conduct of the strike vote to prevent any
acts of violence and/or irregularities;
3. Ample time to prepare for the deployment of
the requisite personnel (Capitol Medical Center
v. NLRC, G.R. No. 147080, April 26, 2005).
 LABOR RELATIONS
Legality of no strike/lockout clause
A no strike/lockout clause is legal but it is
applicable only to economic strikes, not ULP
strikes. As a provision in the CBA, it is a valid
stipulation although the clause may be invoked by
an Er only when the strike is economic in nature or
one which is conducted to force wage or other
concessions from the Er that are not mandated to
be granted by the law itself. It would be
inapplicable to prevent a strike which is grounded
on ULP (Panay Electric Co. v. NLRC, G.R. No. 102672,
October 4, 1995); (Malayang Samahan ng mga
Manggagawa sa Greenfield v. Ramos, G.R. No.
113907, February 28, 2000).
Preventive mediation case
It involves labor disputes which are the subject of a
formal or informal request for conciliation and
mediation assistance sought by either or both
parties or upon the initiative of the NCMB [IRR,
Book V, Rule I, Sec. 1 (mm)].
NOTE: The regional branch may treat the notice as
preventive mediation case upon agreement of the
parties.
Legal basis for the conversion of a notice of
strike to preventive mediation
It is in pursuance of the NCMBs duty under the
Rules Implementing the Labor Code to exert all
efforts at mediation and conciliation to enable the
parties to settle the dispute amicably and in line
with the state policy of favoring voluntary modes
of settling labor disputes. And a strike mounted by
the union after the NCMB dropped the notice of
strike from its docket of notice of strikes and
during the pendency of preventive mediation
proceedings would be illegal (San Miguel
Corporation v. NLRC et al., G.R. No. 119293, June 10
,2003).
Duty to declare that the notice of strike or
lockout has been converted into preventive
mediation case
Upon the recommendation of the conciliator or
mediator handling the labor dispute, the Director
of the Regional Branch of the NCMB which has
jurisdiction over the labor dispute has the duty to
declare and inform the parties that the issues
raised or the actual issues involved are not proper
subjects of a Notice of Strike or Lockout has been
converted into a Preventive Mediation Case
without prejudice to further conciliation or upon
the request of either or both parties.
201
Contents of the notice of strike or lockout
1. Name and addresses of Er
2. Union involved
3. Nature of the industry to which the Er
belongs
4. Number of union members
5. Workers in the bargaining unit
6. Other relevant date
7. In case of bargaining deadlocks:unresolved
issues, written proposals of the union,
counter-proposals of the Er and proof of
request for conference to settle differences
8. In case of ULP: The acts complained of, and
the efforts taken to resolve the dispute
NOTE: NCMB shall inform the concerned party in
case notice does not conform to the requirements.
Action taken by the NCMB on the notice of
strike of strike or lockout
1. Upon receipt of notice, the regional branch of
the NCMB shall exert all efforts at mediation
and conciliation to enable the parties to
settle the dispute amicably. It shall also
encourage the parties to submit the dispute
to voluntary arbitration.
2. The regional branch of the NCMB may, upon
agreement of the parties, treat a notice as a
preventive mediation case.
3. During the proceedings, the parties shall not
do any act which may disrupt or impede the
early settlement of the dispute. They are
obliged, as part of their duty to bargain
collectively in good faith and to participate
fully and promptly in conciliation meetings
called by the regional branch of the NCMB.
4. A notice, upon agreement of the parties, may
be referred to alternative modes of dispute
resolution, including voluntary arbitration.
Q: Was the strike held by the union legal based
on the fact that the notice of strike only
contained general allegations of ULP?
A: No. In cases of ULP, the notice of strike shall as
far as practicable, state the acts complained of and
the efforts to resolve the dispute amicably (Tiu v.
NLRC, G.R. No. 123276, August 18, 1997).
Q: Fil Transit Employees Union filed a notice of
strike with the Bureau of Labor Relations
because of alleged ULP of the company. Because
of failure to reach an agreement the union went
on strike. Several employees were dismissed
because of the strike. The union filed another
notice of strike alleging ULP, massive dismissal
of officers and members, coercion of employees
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
and violation of workers rights to self- 2. Wildcat strike A It fails to comply with
organization. The DOLE after assuming work stoppage that certain requirements of
jurisdiction over the dispute, ordered all violates the labor the law, to wit: notice of
striking employees including those who were contract and is not strike, vote and report
dismissed to return to work. The company authorized by the on strike vote.
however countered that no strike vote had union membership.
been obtained before the strike was called and 3. Slowdown Strike Ees work on their own
the result of the strike vote was not reported to on an instalment terms; while the Ees
DOLE. Was the strike held by the union illegal plan; an activity by continue to work and
for failure to hold a strike vote? which workers, remain in their
without complete positions and accept
A: Yes. There is no evidence to show that a strike stoppage of work, wages paid to them,
vote had in fact been taken before a strike was retard production or they at the same time
called. Even if there was a strike vote held, the their performance of select what part on
strike called by the union was illegal because of duties and functions their allotted tasks they
non-observance by the union of the mandatory 7- to compel care to perform on their
day strike ban counted from the date the strike management to own volition or refuse
vote should have been reported to the DOLE (First grant their openly or secretly.
City Interlink Transportation Co., Inc. v. Confessor, demands.
G.R. No. 106316, May 5, 1997). 4. Sympathetic strike There is no labor
Work stoppages of dispute between the
Effect of non-compliance with the requisites of workers of one workers who are
a strike company to make joining the strikers and
common cause with the latters Er.
The strike may be declared illegal. other strikers or
other companies
Tests in determining the legality of strike without demands or
grievances of their
The following must concur: own against the Er.
5. Secondary strike There is no labor
1. Purpose test The strike must be due to Work stoppages of dispute involved.
either bargaining deadlock and/or the ULP workers of one
2. Compliance with the procedural and company to exert
substantive requirements of the law. (See pressure on their Er
requisites of a valid strike) so that the latter will
3. Means employed test It states that a in turn bring
strike may be legal at its inception but pressure upon the
eventually be declared illegal if the strike is Er of another
accompanied by violence which is company with
widespread, pervasive and adopted as a whom another
matter of policy and not mere violence which union has a labor
is sporadic and which normally occurs in a dispute.
strike area. 6. General strike It is a political rally.
(cause oriented
Examples of strike and their illegality strike) A type of
political
EEXAMPLE OF STRIKE REASON FOR ITS sympathetic strike
ILLEGALITY and therefore there
1. Sit-down strike Amounts to a criminal is neither a
Characterized by a act because of the Ees bargaining deadlock
temporary work trespass on the nor any ULP. e.g.
stoppage of workers premises of the Er. Welga ng bayan.
who seize or occupy 7. Quickie strikes Failure to comply with
property of the Er or Brief and notice requirements
refuse to vacate the unannounced and etc.
premises of the Er. temporary work
stoppage.

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 LABOR RELATIONS
Q: A is a member of the labor union duly
recognized as the sole bargaining
representative of his company. Due to a
bargaining deadlock, 245 members of the 500-
strong union voted on March 13, 2010 to stage
a strike. A notice of strike was submitted to the
NCMB on March 16, 2010. Seven days later the
workers staged a strike. In the course of which,
A had to leave to attend to his wife who just
gave birth. The union members later
intimidated and barred other employees from
entering the work premises, thus paralyzing
the business operations of the company. A was
dismissed from employment as a consequence
of the strike.
1. Was the strike legal? Explain.
2. Was As dismissal valid? Why or why
not? (2010 Bar Question)
A:
1. No. First, the union failed to satisfy the
required majority vote of the union
membership approving the conduct of a
strike [LC, Art. 263 (f); D.O. No. 40-03, Rule
XII, Sec. 10]. Second, the strike was illegal
due to the non-observance of the 30-day
cooling off period by the union [LC, Art.
263 (c)].
2. No. A, as an ordinary striking worker, may
not be declared to have lost his
employment status by mere participation
in an illegal strike, unless there is proof
that he knowingly participated in the
commission of illegal acts during the strike
(LC, Art. 264; Arellano University Employees
and Workers Union v. Court of Appeals, 502
SCRA 219).
Q: Two unions, joined a welga ng bayan. The
unions, led by their officers, staged a work
stoppage which lasted for several days,
prompting FILFLEX and BIFLEX Corporations to
file a petition to declare the work stoppage
illegal for failure to comply with procedural
requirements. Did the employees commit an
illegal work stoppage?
A: Yes. Ees, who have no labor dispute with their
Er but who, on a day they are scheduled to work,
refuse to work and instead join a welga ng bayan
commit an illegal work stoppage. There being no
showing that the two unions notified the
corporations of their intention, or that they were
allowed by the corporations, to join the welga ng
bayan, their work stoppage is beyond legal
protection [BIFLEX Phils. Inc. Labor Union (NAFLU)
203
vs. FILFLEX Industrial and Manufacturing Corp., G.R.
No. 155679, December 19, 2006].
Enjoinment of strike
GR: No strikes arising from a labor dispute may be
enjoined.
XPNs:
1. Assumption order by SLE [LC, Art. 263(g)].
2. Enjoining or restraining any actual or
threatened commission of any unlawful act
in any labor dispute [LC, Art. 218(e)].
REQUISITES FOR LAWFUL PICKETING
Requisites for lawful picketing
The following are the requisites
1. It should be peacefully carried out;
2. There should be no act of violence, coercion
or intimidation;
3. The ingress to (entrance) or egress from
(exit) the company premises should not be
obstructed;
4. Public thoroughfares should not be impeded.
Effect of the absence of Employee-Employer
relationship on picketing
If peacefully carried out, picketing cannot be
prohibited even in the absence of Ee-Er
relationship (PAFLU v. CFl, G.R.L-49580, January 17,
1983).
Right to picket not an absolute right
While peaceful picketing is entitled to protection as
an exercise of free speech, the courts are not
without power to confine or localize the sphere of
communication or the demonstration to the parties
to the labor dispute, including those with related
interests, and to insulate establishments or
persons with no industrial connection or having
interest totally foreign to the context of the dispute
(Liwayway Pub., Inc. v. Permanent Concrete Workers
Union, G.R. No. L-25003, October 23, 1981).
The right to peaceful picketing shall be exercised
by the workers with due respect for the rights of
others. No person engaged in picketing shall
commit any act of violence, coercion or
intimidation. Stationary picket, the use of means
like placing of objects to constitute permanent
blockade or to effectively close points of entry or
exit in company premises are prohibited by law.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Strike v. picketing specified otherwise. The parties to the case
should inform the SLE of pendency thereof.
STRIKE PICKETING
To withhold or to stop To march to and from the Extent of the power of the President or the
work by concerted employers premises, Secretary of Labor and Employment to issue
action of Ees as a usually accompanied by assumption and certification orders
result of an industrial the display of placards
or labor dispute. The and other signs making The power to issue assumption and certification
work stoppage may be known the facts involved orders is an extraordinary authority strictly limited
accompanied by in a labor dispute. It is a to national interest cases and granted to the
picketing by the strike activity separate President or to the SLE, which can justifiably rest
striking employees and different from actual on his own consideration of the exigency of the
outside of the stoppage of work. situation in relation to the national interest.
company compound.
Focuses on stoppage Focuses on publicizing Under the LC, as amended, the SLE is vested with
of work the labor dispute and its the discretionary power to decide not only the
incidents to inform the question of whether to assume jurisdiction over a
public of what Is given labor dispute or certify the same to the NLRC,
happening in the but also the determination of the industry
company struck against. indispensable to national interest.

NOTE: A strike conducted by a union which
acquired its legal personality after the filing of its
notice of strike and the conduct of the strike vote is
illegal.
ASSUMPTION OF JURISDICTION BY THE
SECRETARY OF LABOR OR CERTIFICATION OF
THE LABOR DISPUTE TO THE NLRC FOR
COMPULSORY ARBITRATION
Power of the SLE to assume jurisdiction over a
labor dispute or certify it to the NLRC for
compulsory arbitration
The President shall not be precluded from
intervening at any time and assuming jurisdiction
over any labor dispute involving industries
indispensable to national interest in order to settle
or terminate the same.
Under the LC, as amended, the SLE may suspend
the effects of the termination pending resolution of
the dispute in the event of a prima facie finding by
the appropriate official of the DOLE before whom
such dispute is pending that the termination may
cause a serious labor dispute or is in the
implementation of a mass lay-off.

The SLE may assume jurisdiction over a labor
dispute, or certify it to the NLRC for compulsory
arbitration, if, in his opinion, it may cause or likely
to cause a strike or lockout in an industry
indispensable to the national interest. The
President may also exercise the power to assume
jurisdiction over a labor dispute.
When a dispute is assumed by the President or
SLE, or certified to the NLRC for compulsory
arbitration
The assumption or certification shall have the
effect of automatically enjoining the intended or
impending strike or lockout.

Effect of such assumption or certification of Nature of a return-to-work order

labor dispute to the NLRC
A return-to-work order is a valid statutory part and
The following are the effects: parcel of the assumption of jurisdiction and
certification orders given the predictable prejudice
a. on intended or impending strike or lockout the strike could cause not only to the parties but
automatically enjoined even if a Motion for more especially to the national interest. Stated
Reconsideration is filed; otherwise, the assumption of jurisdiction and the
b. on actual strike or lockout strikers or certification to the NLRC has the effect of
locked out Ees should immediately return to automatically enjoining the strike or lockout,
work and Er should readmit them; and whether actual or intended, even if the same has
c. on cases filed or may be filed all shall be not been categorically stated or does not appear in
subsumed/absorbed by the assumed or the assumption or certification order. It is
certified case except when the order not a matter of option or voluntariness but
of obligation. It must be discharged as a duty even

UNIVERSITY OF SANTO TOMAS

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 LABOR RELATIONS
against the workers will. The worker must return
to his job together with his co-workers so that the
operation of the company can be resumed and it
can continue serving the public and promoting its
interest. It is executory in character and shall be
strictly complied with by the parties even during
the pendency of any petition questioning their
validity precisely to maintain the status quo while
the determination is being made (Union of Filipro
Employees vs. Nestle Philippines, Inc., GR No. 88710-
13, December 19, 1990).
Industries considered as indispensable to the
national interest
1. Public utilities
2. Companies engaged in the generation or
distribution of energy
3. Banks
4. Schools
5. Hospitals; and
6. Export oriented industries
Meaning of the phrase under the same terms
and conditions
GR: It contemplates actual reinstatement and not
just payroll reinstatement. This is in keeping with
the rationale that any work stoppage or slowdown
in that particular industry can be inimical to the
national economy.
XPN: Payroll reinstatement in lieu of actual
reinstatement but there must be showing of special
circumstances rendering actual reinstatement
impracticable, or otherwise not conducive to
attaining the purpose of the law in providing for
assumption of jurisdiction by the SLE in a labor
dispute that affects the national interest (Manila
Diamond Hotel Ees Union v. SLE, G.R. No. 140518,
December 16, 2004).
Issues that the SLE may resolve when he
assumes jurisdiction over a labor dispute
1. Issues submitted to the SLE for resolution
and such issues involved in the labor dispute
itself (St. Scholasticas College v. Torres, G.R.
No. 100158, June 2, 1992).
2. SLE may subsume pending labor cases
before LAs which are involved in the dispute
and decide even issues falling under the
exclusive and original jurisdiction of LAs
such as the declaration of legality or illegality
of strike (Intl. Pharmaceuticals v. SLE, G.R.
Nos. 92981-83, January 9, 1992).
205
NOTE: Power of SLE is plenary and discretionary
(St. Lukes Medical Center v. Torres, G.R. No. 99395,
June 29, 1993).
No necessity for the SLE to issue a return-to-
work order in an assumption order
It is not necessary for the SLE to issue a return-to-
work order in an assumption order. The mere
issuance of an assumption order automatically
carries with it a return-to-work order although not
expressly stated therein (TSEU-FFW v. CA, G.R. Nos.
143013-14, December 18, 2000).
Extent of the powers of the President during
strikes/lockouts
1. May determine the industries, which are in
his opinion indispensable to national
interest
2. May intervene at any time and assume
jurisdiction over any such labor dispute in
order to settle or terminate the same [LC,
Art. 263(g)].
NOTE: The decision of the President or SLE is final
and executory after receipt thereof by the parties.
A return to work order may be validly issued
pending determination of the legality of the
strike
Where the return to work order is issued pending
the determination of the legality of the strike, it is
not correct to say that it may be enforced only if
the strike is legal and may be disregarded if illegal.
Precisely, the purpose of the return to work order
is to maintain the status quo while the
determination is being made (Sarmiento v. Tuico,
G.R. Nos. 75271-73, June 27, 1988).
Return-to-work order does not violate the
constitutional provision against involuntary
servitude
A return-to-work order is not offensive to the
constitutional provision against involuntary
servitude. It must be discharged as a duty even
against the workers will. The worker must return
to his job together with his co-workers so that the
operation of the company can be resumed and it
can continue serving the public and promoting its
interest. It is executory in character and should be
strictly complied with by the parties even during
the pendency of any petition questioning its
validity in order to maintain the status quo while
the determination is being made.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
NATURE OF ASSUMPTION ORDER OR
CERTIFICATION ORDER
Nature of the power of the SLE in assuming
jurisdiction
The assumption of jurisdiction is in the nature of a
police power measure. This is done for the
promotion of the common good considering that a
prolonged strike or lockout can be inimical to the
national economy. The SLE acts to maintain
industrial peace. Thus, his certification for
compulsory arbitration is not intended to impede
the workers right to strike but to obtain a speedy
settlement of the dispute (Philtread Workers Union
v. Confesor, G.R. No. 117169, March 12, 1997).
The provision under the LC does not interfere with
the workers right to strike but merely regulates it,
when in the exercise of such right national interest
will be affected. The LC vests upon the SLE the
discretion to determine what industries are
indispensable to national interest.
NOTE: The underlying principle embodied in Art.
264 (g), LC on the settlement of labor disputes is
that assumption and certification orders are
executory in character and are strictly complied
with by the parties even during the pendency of
any petition questioning their validity. This
extraordinary authority given to the Secretary of
Labor is aimed at arriving at a peaceful and speedy
solution to labor disputes, without jeopardizing
national interests.
Q: A notice of strike was filed by the PSBA
Employees Union-FFW, alleging union busting,
coercion of Employees and harassment on the
part of PSBA. The conciliation being ineffective,
the strike pushed through. A complaint for ULP
and for a declaration of illegality of the strike
with a prayer for preliminary injunction was
filed by PSBA against the union.
While the cases were pending, a complaint was
filed in the RTC of Manila by some PSBA
students against PSBA and the union, seeking to
enjoin the union and its members from
picketing and from barricading themselves in
front of the schools main gate. A TRO was then
issued by the RTC, which the union opposed on
the ground that the case involves a labor
dispute over which the RTC had no jurisdiction.
The Acting SLE later on assumed jurisdiction
over the labor dispute and ordered the striking
Employees to return to work.
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
206
1. Was the SLE correct in ordering the
striking Employees to return to work?
2. Does the RTC have jurisdiction to
decide on the case filed by the PSBA
students?
A:
1. Yes. In the opinion of the Acting SLE, the
labor dispute adversely affected the national
interest, affecting as it did 9,000 students. He
is authorized by law to assume jurisdiction
over the labor dispute, after finding that it
adversely affected the national interest. This
power is expressly granted by Art. 263 (g) of
the LC, as amended by B.P. Blg. 227.
2. No. The RTC was without jurisdiction over
the subject matter of the case filed by some
PSBA students. It is a labor dispute which the
labor agencies have exclusive jurisdiction.
The rule that regular courts have no
jurisdiction over labor disputes and to issue
injunctions against strikes is well-settled
(PSBA v. Noriel, G.R. No. 80648, August 15,
1988).
Q: Members of the union learned that a
redundancy program would be implemented by
PLDT. They thus filed a notice of strike on the
ground of ULP. However, the Secretary of Labor,
recognizing that PLDTs operations is
impressed with public and national interest as
communication plays a vital role in furtherance
of trade, commerce, and industry specially at
this time of globalized economy where
information is vital to economic survival,
enjoined the strike and issued a qualified
return to work order where all striking
employees except those who were terminated
due to redundancy were ordered to return to
work. Was the qualified return to work order
valid?
A: No. When the SLE exercises the powers granted
by Art. 263(g) of the LC, he is, indeed, granted great
breadth of discretion. However, the application of
this power is not without limitation, lest the SLE
would be above the law. As Art. 263(g) is clear and
unequivocal in stating that all striking or locked
out Ees shall immediately return to work and the
Er shall immediately resume operations and
readmit all workers under the same terms and
conditions prevailing before the strike or lockout,
then the unmistakable mandate must be followed
by the SLE (PLDT v. Manggagawa ng Komunikasyon
sa Pilipinas, G.R. No. 162783, July 14, 2005).
 LABOR RELATIONS
EFFECT OF DEFIANCE OF ASSUMPTION OR
CERTIFICATION ORDER
Effect of defiance to the return to work order
It shall be considered an illegal act committed in
the course of the strike or lockout and shall
authorize the SLE or the NLRC, as the case may be,
to enforce the same under pain or loss of
employment status or entitlement to full
employment benefits from the locking-out Er or
backwages, damages and/or other positive and/or
affirmative reliefs, even to criminal prosecution
against the liable parties (New Rules of Procedure of
the NLRC, Rule IX, Sec. 6; St. Scholasticas College v.
Torres, G.R. No. 100158, June 2, 1992).
Effect of a defiance of assumption or
certification orders of the SLE
The defiance by the union, its officers and
members of the SLEs assumption of jurisdiction or
certification order constitutes a valid ground for
dismissal [LC, Art. 263(g)].
NOTE: The SLE may cite the defiant party in
contempt pursuant to the power vested in him
under the provisions of the LC.
Justifications for the dismissal of a defiant
Employee
1. A strike that is undertaken after the issuance
by the SLE of an assumption or certification
order becomes a prohibited activity and thus
illegal. The striking union officers and
members, as a result, are deemed to have
lost their employment status for having
knowingly participated in an illegal strike.
2. From the moment an Ee defies a return-to-
work order, he is deemed to have abandoned
his job.
3. By staging a strike after the assumption or
certification for compulsory arbitration, the
Ee forfeit their right to be readmitted to
work, having, in effect, abandoned their
employment (Steel Corporation of the
Philippnes v. SCP Employees Union, G.R. Nos.
169829-30, August 16, 2008).
NOTE: Once the SLE assumes jurisdiction over a
labor dispute or certifies it to the NLRC for
compulsory arbitration, such jurisdiction should
not be intered with by the application of the
coercive process of a strike or lockout.
The workers defying a return-to-work order issued
in connection with the asusmption or certification
by the SLE may, in fact, be subjected not only to
207
immediate disciplinary action such as dismissal or
loss of employment status but to criminal
prosecution as well. Defiant strikers could be
validly replaced.
Q: Several employees and members of Union A
were terminated by Western Phone Co. on the
ground of redundancy. After complying with
the necessary requirements, the Union staged a
strike and picketed the premises of the
company. The management then filed a petition
for the SLE to assume jurisdiction over the
dispute. Without the benefit of a hearing, the
SLE issued an Order to assume jurisdiction and
for the parties to revert to the status quo ante
litem.
1. Was the order to assume jurisdiction
legal? Explain.
2. Under the same set of facts the Secretary
instead issued an Order directing all
striking workers to return to work within
24 hours, except those who were
terminated due to redundancy. Was the
order legal? Explain.
A:
1. Yes. The SLE has plenary power to assume
jurisdiction under Art. 263[g],LC: When in
his opinion, there exists a labor dispute
causing or likely to cause a strike or lockout
in an industry indispensable to the national
interest, the SLE may assume jurisdiction
over the dispute and decide it or certify it to
the NLRC for compulsory arbitration. This
extraordinary authority given to the SLE is
aimed at arriving at a peaceful and speedy
solution to labor disputes without
jeopardizing national interests (Steel
Corportaion v. SCP Employees Union, G.R. Nos.
169829-30, April 16, 2008). Such assumption
shall have the effect of automatically
enjoining an impending strike or lockout or
an order directing immediate return to work
and resume operations, if a strike already
took place, and for the employer to re-admit
all employees under the same terms and
conditions prevailing before the strike or
lockout [LC, Art. 263(g); D.O. No. 40-G-03,
Rule XXII, Sec. 15].
2. No. The order will be inconsistent with the
established State policy of enjoining the
parties from performing acts that
undermines the underlying principles
emodied in Art. 263(g), LC. In this case,
exempting the employees terminated due to
redundancy from those who are required to
return-to-work, the SLE comes short of his
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
duty under Art. 263(g), LC to maintain status
quo or the terms and conditions prevailing
before the strike.
ILLEGAL STRIKE
Illegal Strike
A strike is illegal where:
1. It is contrary to specific prohibition of law,
such as strike by Ees performing
governmental functions;
2. Violates a specific requirement of law;
3. Declared for an unlawful purpose, such as
inducing the Er to commit ULP against non-
union Ees;
4. Employs unlawful means in the pursuit of its
objective, such as widespread terrorism of
non-strikers;
5. Declared in violation of an existing
injunction;
6. Contrary to an existing agreement, such as a
no strike clause or conclusive arbitration
clause
Good Faith Strike Doctrine
Strike declared in good faith A strike may be
considered legal when the union believed that the
respondent company committed unfair labor acts
and the circumstances warranted such belief in
good faith although subsequently such allegation of
unfair labor practices are found out as not true
(PICEWO-FFW v. Peoples Industrial and
Commercial Corp., 112 Scra 440).
It must be stressed, however, that with the
enactment of R.A. 6715 which took effect on March
21, 1989, the rule now is that such requirements as
the filing of a notice of strike, strike vote, and
notice given to the DOLE are mandatory in nature.
Thus, even if the union acted in good faith in the
belief that the company was committing an unfair
labor practice, if no notice of strike and a strike
vote were conducted, the said strike is illegal. Claim
of Good faith is not a valid excuse (defense) to
dispense with the procedural steps for a lawful
strike (Grand Boulevard Hotel v. Dacanay, G.R. No.
153665, 18 July 2003; Poquiz, Vol. II).
Strike may be declared illegal on the ground of
non-compliance with the strict and mandatory
requirements for a valid conduct of a strike
The requirements of law and its implementing
rules are mandatory and failure of a union to
comply renders the strike illegal (Magdala
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
208
Multipurpose & Livelihood Cooperative v. Kilusang
Manggagawa ng LGS, G.R. Nos. 191138-39, October
19, 2011).
Employees who staged an illegal strike are not
entitled to backwages
Contemplating two causes for the dismissal of an
Ee(a) unlawful lockout, and (b) participation in
an illegal strikethe third paragraph of Art. 264(a)
authorizes the award of full backwages only when
the termination of employment is a consequence of
an unlawful lockout. On the consequences of an
illegal strike, the provision distinguishes between a
union officer and a union member participating in
an illegal strike. A union officer who knowingly
participates in an illegal strike is deemed to have
lost his employment status, but a union member
who is merely instigated or induced to participate
in the illegal strike is more benignly treated. Part of
the explanation for the benign consideration for
the union member is the policy of reinstating rank-
and-file workers who are misled into supporting
illegal strikes, absent any finding that such workers
committed illegal acts during the period of the
illegal strikes.
As a general rule, backwages are granted to
indemnify a dismissed Ee for his loss of earnings
during the whole period that he is out of his job.
Considering that an illegally dismissed Ee is not
deemed to have left his employment, he is entitled
to all the rights and privileges that accrue to him
from the employment. That backwages are not
granted to Ees participating in an illegal strike
simply accords with the reality that they do not
render work for the Er during the period of the
illegal strike under the principle of a fair days
wage for a fair days labor.
With respect to backwages, the principle of fair
days wage for a fair days labor remains as the
basic factor in determining the award thereof. If
there is no work performed by the employee there
can be no wage or pay unless, of course, the laborer
was able, willing and ready to work but was
illegally locked out, suspended or dismissed or
otherwise illegally prevented from working.
However, for this exception to apply, it is required
that the strike be legal (Danilo Escario v. NLRC, G.R.
No. 160302, September 27, 2010).
Q: X was dismissed for joining an illegal strike
but was reinstated because he is only a member
of the union who did not commit any illegal act.
Is X entitled for backwages for the period of
strike?
 LABOR RELATIONS
A: No. Conformably with the long honored 2. Any striker or union who knowingly
principle of a fair days wage for a fair days labor, participates in the commission of illegal acts
Ees dismissed for joining illegal strike are not during the strike
entitled to backwages for the period of the strike
even if they are reinstated by virtue of their being NOTE: Those union members who have joined an
merely members of the striking union who did not illegal strike but have not committed any illegal act
commit any illegal act during the strike (Escario v. shall be reinstated but without backwages.
NLRC, G.R. 124055, June 8, 2000).
The responsibility for the illegal acts committed
LIABILITY OF UNION OFFICERS v. LIABILITY OF during the strike must be on an individual and not
ORDINARY WORKERS on a collective basis (First City Interlink
Transportation Co., Inc. v. Confesor, G.R. No. 106316,
Basis Union Officer Ordinary May 5, 1997).
worker
May be Cannot be Rule in strikes in hospitals
declared to terminated
have lost his 1. It shall be the duty of the striking Ees or
employment NOTE: The LC locking-out Er to provide and maintain an
status protects effective skeletal workforce of medical and
ordinary, rank- health personnel for the duration of the
and-file union strike or lockout.
Knowingly members who 2. SLE may immediately assume jurisdiction
participating participated in within 24 hours from knowledge of the
in an illegal such a strike occurrence of such strike or lockout certify it
strike from losing to the NLRC for compulsory arbitration.
their jobs
provided that Q: More or less 1400 employees of the company
they did not staged a mass walk-out, allegedly without
commit illegal anybody leading them as it was a simultaneous,
acts during the immediate and unanimous group action and
strike. decision, to protest the non-payment of their
salaries and wages. The SLE who found the
Knowingly May be May be strike to be illegal granted the clearance to
participating terminated terminated terminate the employment of those who were
in the instigators in the illegal strike. Was the
commission decision of the Secretary in granting the
of illegal acts clearance correct?
during strike
A: No. A mere finding of the illegality of a strike
(Samahang Manggagawa Sa Sulpicio Lines, Inc.
should not be automatically followed by wholesale
Naflu et al. v. Sulpicio Lines, Inc., G.R. No. 140992,
dismissal of the strikers from their employment.
March 25, 2004).
While it is true that administrative agencies
exercising quasi-judicial functions are free from the
Rule on reinstatement of striking workers
rigidities of procedure, it is equally well-settled
that avoidance of technicalities of law or procedure
Striking Ees are entitled to reinstatement,
in ascertaining objectively the facts in each case
regardless of whether or not the strike was the
should not, however, cause denial of due process
consequence of the Ers ULP because while out on
(Bacus v. Ople, G.R. No. L-56856, October 23, 1984).
strike, the strikers are not considered to have
abandoned their employment, but rather have only
Q: Two days after the union struck, the
ceased from their labor; the declaration of a strike
Secretary of LE ordered the striking workers to
is not a renunciation of employment relation.
return to work within 24 hours. But the
striking union failed to return to work and
Persons not entitled to reinstatement
instead they continued their pickets. As a
result, violence erupted in the picket lines. The
1. Union officers who knowingly participate in
service bus ferrying non-striking workers was
the illegal strike
stoned causing injuries to its passengers.
Threats, defamation, illegal detention, and
physical injuries also occurred. The company

UNIVERSITY OF SANTO TOMAS

209 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
was directed to accept back all striking
workers, except the union officers, shop
stewards, and those with pending criminal
charges. Was the SLE correct in not including
the union officers, shop stewards and those
with pending criminal charges in the return-to-
work order?
A: No. To exclude union officers, shop stewards
and those with pending criminal charges in the
directive to the company to accept back the
striking workers without first determining
whether they knowingly committed illegal acts
would be tantamount to dismissal without due
process of law (Telefunken Semiconductors Ees
Union-FFW v. SLE, G.R. No. 122743 & 127215,
December 12, 1997).
Employees who abandoned a legal strike but
were refused reinstatement can be awarded
backwages
Provided the following requisites are present:
1. The strike was legal
2. There was an unconditional offer to return
to work as when the strikers manifested
their willingness to abide by the CIR back-to-
work order and even sought the aid of
competent authorities to effect their return
3. The strikers were refused reinstatement
such as when they have not been re-
admitted to their former position (Philippine
Marine Officers' Guild v. Compaia Maritima
et al., G.R. Nos. L-20662 and L-20662, March
27, 1971).
NOTE: No backwages will be awarded to union
members as a penalty for their participation in the
illegal strike. As for the union officers, for
knowingly participating in an illegal strike, the law
mandates that a union officer may be terminated
from employment and they are not entitled to any
relief (Gold City Integrated Port Services, Inc. v.
NLRC ,G.R. No. 86000, September 21, 1990).
LIABILITY OF EMPLOYER
Entitlement of strikers to their backwages or
strike duration pay
GR: Strikers are not entitled to their backwages or
strike duration pay even if such strike was legal.
XPN:
1. Where the strikers voluntarily and
unconditionally offered to return to work,
but the Er refused to accept the offer Ers
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
210
are entitled to backwages from the date their
offer was made
2. When there is a return-to-work order and
the Ees are discriminated against other Ees,
workers are entitled to backwages from the
date of discrimination
3. In case of a ULP strike, in the discretion of
the authority deciding the case
4. When the Ees were illegally locked out and
thus compel them to stage a strike.
Q: By reason of a deadlock in collective
bargaining, the union, after the lapse of the
cooling-off period, declares a strike. The strike
is peaceful but fruitless; the management is
adamant. So after 60 days, the strikers abandon
their strike and offer to return to work. Is the
company bound to readmit them? Why?
A: Yes. By going on strike, the Ees are not deemed
to have abandoned their work; they are merely
utilizing a weapon given to them by law to seek
better terms and conditions of employment and to
protect their rights. An Er who refuses to readmit
the strikers, excepting those who have forfeited
their employment status because of illegal acts
committed in the course of the strike would be
discriminating against them for have exercised
their right to engage in a concerted action; it
commits a ULP (Cromwell Commercial Employees
and Laborers Union v. CIR, et al., G.R. No. L-19778,
September 30, 1964).
Mere participation of an Ee in a lawful strike
shall not constitute sufficient ground for
termination of his employment
If by reason of the prolonged strike, the company
was compelled to hire replacements this would not
constitute as sufficient reason for it not to readmit
the strikers. Under Art. 264 of the LC, mere
participation of an Ee in a lawful strike shall not
constitute sufficient ground for termination of his
employment, even if a replacement had been hired
by the Er during such lawful strike. A contrary rule
would enable the Er to dismiss an Ee by the simple
expedient of hiring a replacement.
The illegal acts of a readmitted striker is
deemed to have been condoned
If an employer knowingly readmits to work a
striker who committed illegal acts during a strike,
it cannot later on seek the dismissal of the
employee by reason of such acts.
 LABOR RELATIONS
WAIVER OF ILLEGALITY OF STRIKE
Instance when there is a waiver of the illegality
of a strike by the employer
When an Er accedes to the peaceful settlement
brooked by the NLRC by agreeing to accept all Ees
who had not yet returned to work, it waives the
issue of the illegality of the strike (Reformist Union
v. NLRC, G.R. No. 120482, January 27, 1997).
Effect of compliance with the return-to-work
order to the legality of strike
GR: A return-to-work order does not have the
effect of rendering the issue of the legality of the
strike as moot and academic (Insurefco Paper Pulp
and Project Workers Union v. Insular Sugar Refining
Corp., 95 Phil. 761).
XPN: Er may be considered to have waived its right
to proceed against the striking Es for alleged
commission of illegal acts during the strike when,
during a conference before the Chairman of the
NLRC, it agreed to reinstate them and comply with
the return-to-work order issued by the SLE (TASLI-
ALU v. Court of Appeals, G.R. No. 145428, July 7,
2004).
Defiance of Return-to-work order
Not only union officers but also union members
who defy a return-to-work order are subject to
dismissal. They are deemed to have participated in
an illegal act (St. Scholasticas College v. Ruben
Torres, G.R. No. 100158, June 29, 1992).
INJUNCTIONS
Injunction
It is an order or a writ that commands a person to
do or not to do a particular act. It may be a positive
(mandatory) or a negative (prohibitory) command.
Q: Company C, a toy manufacturer, decided to
ban the use of cell phones in the factory
premises. In the pertinent Memorandum,
management explained that too much texting
and phone-calling by employees disrupted
company operations. Two employee-members
of Union X were terminated from employment
due to violation of the memorandum-policy.
The union countered with a prohibitory
injunction case (with prayer for the issuance of
a temporary restraining order) filed with the
RTC challenging the validity and
constitutionality of the cell phone ban. The
company filed a motion to dismiss, arguing that
211
the case should be referred to the grievance
machinery pursuant to an existing CBA with
Union X, and eventually to Voluntary
Arbitration. Is the company correct? Explain.
(2010 Bar Question)
A: No. The RTC has jurisdiction to hear and decide
the prohibitory injunction case filed by Union X
against Company C to enjoin the latter from
implementing the memorandum-policy against the
use of cell phones in the factory. The issue in this
case is the validity and constitutionality of the cell
phone ban being implemented by Company C. The
issue, therefore, does not involve the interpretation
of the memorandum-policy, but its intrinsic
validity (Haliguefla v. PAL 602 SCRA 297).
REQUISITES FOR LABOR INJUNCTIONS
Injunction in labor disputes
GR: No temporary or permanent injunction or
restraining order in any case involving or growing
out of labor disputes shall be issued by any court
(LC, Art. 254).
XPNs:
1. Injunction power of the NLRC (LC, Art. 218)
2. Prohibited activities during a strike or
lockout (LC, Art. 264)
3. Assumption or certification power of the SLE
in national interest cases [LC, Art. 263(g)]
Requisites in issuing an injunction in labor
cases (LC, Sec. 218(e))
1. There is an actual or threatened commission
of any or all prohibited or unlawful acts in
any labor dispute
2. There is a need to enjoin or restrain such
acts or to require the performance of a
particular act
3. If not restrained or performed forthwith,
may cause grave or irreparable damage to
any party or render ineffectual any decision
in favor of such party [LC, Sec. 218(e)].
Provided, That no temporary or permanent
injunction in any case involving or growing out of a
labor dispute as defined in this Code shall be issued
except after hearing the testimony of witnesses,
with opportunity for cross-examination, in support
of the allegations of a complaint made under oath,
and testimony in opposition thereto, if offered, and
only after a finding of fact by the Commission, to
the effect:
1. That prohibited or unlawful acts have been
threatened and will be committed and will
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
be continued unless restrained, but no
injunction or temporary restraining order
shall be issued on account of any threat,
prohibited or unlawful act, except against
the person or persons, association or
organization making the threat or
committing the prohibited or unlawful act or
actually authorizing or ratifying the same
after actual knowledge thereof;
2. That substantial and irreparable injury to
complainants property will follow;
3. That as to each item of relief to be granted,
greater injury will be inflicted upon
complainant by the denial of relief than will
be inflicted upon defendants by the granting
of relief;
4. That complainant has no adequate remedy at
law; and
5. That the public officers charged with the
duty to protect complainants property are
unable or unwilling to furnish adequate
protection.
NOTE: "Labor dispute" includes any controversy or
matters concerning terms or conditions of
employment or the association or representation
of persons in negotiating, fixing, maintaining,
changing or arranging the terms and conditions of
employment, regardless of whether the disputants
stand in the proximate relation of Er and Ee (LC,
Sec. 212).
Injunction in picketing
GR: Injunction is not available in picketing because
picketing is part of the freedom of speech duly
protected by the Constitution.
XPNs:
1. Where picketing is carried out through the
use of illegal means
2. Where picketing involves the use of violence
and other illegal acts
3. Where picketing affects the rights of third
parties (Er) and injunction become
necessary to protect such rights.
INNOCENT BYSTANDER RULE
Innocent bystander
They are the third party in a picketing who has no
existing connection or interest with and the
picketing union (MSF Tire & Rubber v. CA, G.R. No.
128632, August 5, 1999).
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
212
NOTE: While peaceful picketing is entitled to
protection as an exercise of free speech, the courts
are not without power to confine or localize the
sphere of communication or the demonstration to
the parties to the labor dispute, including those
with related interest, and to insulate
establishments or persons with no industrial
connection or having interest totally foreign to the
context of the dispute. Thus the right may be
regulated at the instance of third parties or
"innocent bystanders" if it appears that the
inevitable result of it is to create an impression that
a labor dispute with which they have no
connection or interest exists between them and the
picketing union or constitute an invasion of their
rights (Ibid.).
Required proof to be established by an
innocent bystander before a court enjoins a
labor strike
The innocent by stander must show
1. Compliance with the grounds specified in
Rule 58 of the Rules of Court, and
2. That it is entirely different from, without any
connection whatsoever to, either party to the
dispute and, therefore, its interests are
totally foreign to the context thereof (MSF
Tire & Rubber v. CA, G.R. No. 128632, August
5, 1999).
Q: May the RTC take cognizance of the
complaint which is incidental to a labor
dispute?
A: No. The RTC has no jurisdiction to act on labor
cases or various incidents arising therefrom,
including the execution of decisions, awards or
orders where the subject matter of the 3rd party
claim is only incidental to a labor case.
A party, by filing its 3rd party claim with the deputy
sheriff, it submitted itself to the jurisdiction of the
NLRC acting through the LA.
The broad powers granted to the LA and to the
NLRC by Arts. 217, 218 and 224 of the LC can only
be interpreted as vesting in them jurisdiction over
incidents arising from, in connection with or
relating to labor disputes, as the controversy under
consideration, to the exclusion of the regular
courts. The RTC, being a co-equal body of the
NLRC, has no jurisdiction to issue any restraining
order or injunction to enjoin the execution of any
decision of the latter (Deltaventures v. Cabato, G.R.
No. 118216, March 9, 2000).
 LABOR RELATIONS
Q: Liwayway Publication Inc. is a second sub
lessee of a part of the premises of the
Permanent Concrete Products, Inc. It has a
bodega for its newsprint in the sublet property
which it uses for its printing and publishing
business. The daily supply of newsprint needed
to feed its printing plant is taken from its
warehouse. The employees of the Permanent
Concrete Products Inc. declared a strike against
their company. The union members picketed,
stopped and prohibited Liwayways trucks
from entering the compound to load newsprint
from its bodega.

Does the lower court have jurisdiction to issue

a writ of preliminary injunction considering
that there was a labor dispute between
Permanent Concrete Products, Inc. and the
union?

A: Yes. Liwayway Publication Inc. is not in any way

related to the striking union except for the fact that
it is the sub- lessee of a bodega in the companys
compound.

The business of Liwayway is exclusively the

publication of magazines which has absolutely no
relation or connection whatsoever with the cause
of the strike of the union against their company,
much less with the terms, conditions or demands
of the strikers. Liwayway is merely a 3rd person or
an innocent by-stander (Liwayway Pub., Inc. v.
Permanent Concrete Workers Union, G.R. No. L-
25003, October 23, 1981).

Q: The employer filed with the RTC a complaint

for damages with preliminary mandatory
injunction against the union, the main purpose
of which is to dispense the picketing of the
members of the union. The union filed a motion
to dismiss on the ground of lack of jurisdiction.
The RTC denied the motion to dismiss and
enjoined the picketing, it said that mere
allegations of Employer-Employee relationship
does not automatically deprive the court of its
jurisdiction and even the subsequent filing of
charges of ULP, as an afterthought, does not
deprive it of its jurisdiction. Was the issuance
by the RTC of the injunction proper?

A: No. The concerted action taken by the members

of the union in picketing the premises of the
department store, no matter how illegal, cannot be
regarded as acts not arising from a labor dispute
over which the RTCs may exercise jurisdiction
(Samahang Manggagawa ng Liberty Commercial v.
Pimentel, G.R. No. L-78621, December 2, 1987).

UNIVERSITY OF SANTO TOMAS

213 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
PROCEDURE AND JURISDICTION
LABOR ARBITER
JURISDICTION
Nature of jurisdiction of labor arbiters
LAs only have original and exclusive jurisdiction.
They have no appellate jurisdiction.
Cases falling under the jurisdiction of labor
arbiters
Exclusive and original jurisdiction to hear and
decide the following cases involving all workers:
1. ULP cases
2. Termination disputes
3. If accompanied with a claim for
reinstatement, those that workers file
involving wages, rates of pay, hours of work
and other terms and conditions of
employment
4. Claims for actual, moral, exemplary and
other forms of damages arising from Er-Ee
relations
5. Cases arising from any violation of Art. 264,
LC including questions involving the legality
of strikes and lockouts except claims for
Employment Compensation, Social Security,
Philhealth and maternity benefits, all other
claims arising from Er-Ee relations, including
those of persons in domestic or household
service, involving an amount exceeding
P5000 regardless of whether accompanied
with a claim for reinstatement
6. Monetary claims of overseas contract
workers arising from Er-Ee relations under
the Migrant Workers Act of 1995 as
amended by RA 10022
7. Wage distortion disputes in unorganized
establishments not voluntarily settled by the
parties pursuant to RA 6727
8. Enforcement of compromise agreements
when there is non-compliance by any of the
parties pursuant to Art. 227 of the LC, as
amended; and
9. Other cases as may be provided by law
NOTE: Although the provision speaks of exclusive
and original jurisdiction of LAs, the cases
enumerated may instead be submitted to a
voluntary arbitrator by agreement of the parties
under Art. 262 of the LC. The law prefers voluntary
over compulsory arbitration.
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
214
Nature of the cases which the labor arbiter may
resolve
The cases that an LA can hear and decide are
employment related. Where no Er-Ee relationship
exists between the parties and no issue is involved
which may be resolved by reference to the LC,
other labor statutes, or any CBA, it is the RTC that
has jurisdiction (Lapanday Agricultural Devt. Corp
v. CA, G.R. No. 112139, January 31, 2000).
The LA has jurisdiction over controversies
involving Ers and Ees only if there is a reasonable
causal connection between the claim asserted and
the Er-Ee relations. Absent such link, the complaint
is cognizable by the regular court (Eviota v. CA, G.R.
No. 152121, July 29, 2003).
Labor arbiters exercise concurrent jurisdiction
with the NLRC
With respect to contempt cases, Las exercise
concurrent jurisdiction with the NLRC.
Extent of the jurisdiction of the labor arbiter if
there are unresolved matters arising from the
interpretation of the CBA
GR: LAs have no jurisdiction over unresolved or
unsettled grievances arising from the
interpretation or implementation of the CBA and
those arising from the interpretation or
enforcement of company personnel policies.
XPN: Actual termination disputes
NOTE: Where the dispute is just in the
interpretation, implementation or enforcement
stage of the termination, it may be referred to the
grievance machinery set up by the CBA or by
voluntary arbitration. Where there was already
actual termination, i.e., violation of rights, it is
already cognizable by the LA (Maneja v. NLRC, G.R.
No. 124013, June 5, 1998).
Usage of the word may in the provisions of the
Grievance Procedure allow the alternative
submission of the case before the labor arbiter
The use of the word may shows the intention of
the parties to reserve the right to submit the illegal
termination dispute to the jurisdiction of the LA,
rather than to a voluntary arbitrator. Petitioner
validly exercised his option to submit his case to a
LA when he filed his complaint before the proper
government agency. Voluntary arbitration is
mandatory in character only if there is a specific
agreement between the parties to that effect. In the
case at bar, however, the use of the word may
 PROCEDURE AND JURISDICTION
shows the intention of the parties to reserve the LABOR ARBITER v. REGIONAL DIRECTOR
right of recourse to LAs (Vivero v. CA, G.R. No.
138938, October 24, 2000). Powers of the Secretary of Labor and
Employment v. Regional Director v. Labor
Cases which do not fall under the jurisdiction of Arbiter
the Labor Arbiters
Visitation and
1. Foreign governments (JUSMAG-Phils. v. Enforcement
NLRC, G.R. No. 108813, December 15, 1994). Power of Regional
Labor Arbiter
2. International agencies (Lasco v. NLRC, G.R. Secretary of Director
Nos. 109095-109107, February 23, 1995). Labor and
Employment
3. Intra-corporate disputes which fall under
LA exercises
P.D. 902-A and now falls under the original and
jurisdiction of the regular courts pursuant to exclusive
the new Securities Regulation Code (Nacpil v. jurisdiction on
IBC,G.R. No. 144767, March 21, 2002). cases involving :
4. Executing money claims against government
(Dept. of Agriculture v. NLRC, G.R. No. a. ULP ;
b. termination
104269, November 11, 1993).
disputes ;
5. Cases involving GOCCs with original charters c. wages ;
which are governed by civil service law, d. rates of pay;
a) Inspection of
rules or regulations (1987 Constitution, Art. e. hours of
establishments;
IX-B, Sec. 2(1)). work ;
and
6. Local water district (Tanjay Water District v. f. other terms
Adjudication of
Gabaton, G.R. No. L-63742, April 17, 1989) b) Issuance of
of Ees claims employment,
except where NLRC jurisdiction is invoked orders to
for wages and claims for
(Zamboanga City Water District v. Buat, G.R. compel
benefits damages
No. 104389, May 27, 1994). compliance with
arising from
labor standards,
7. The aggregate money claim does not exceed Er-Ee
wage orders and
P5000 and without claim for reinstatement relationship,
other labor laws
(Rajah Humabon Hotel, Inc. v. Trajano, G.R. legality of
strikes and
Nos. 100222-23 September 14,1993).
lockouts, and
8. Claim of Ee for cash prize under the g. all other
Innovation Program of the company, claims arising
although arising from Er-Ee relationship, is from Er-Ee
one requiring application of general civil law relationship
on contracts which is within the jurisdiction involving an
of the regular courts (SMC v. NLRC, G.R. No. amount
exceeding
80774, May 31, 1988).
Php 5,000.00
9. Cause of action based on quasi-delict or tort Enforcement of Limited to All other claims
which has no reasonable connection with labor legislation monetary arising from Er-
any of the claims enumerated in Art.217, LC in general claims Ee relations
(Ocheda v. CA, G.R. No. 85517, October 16, LA decides case
1992). Initiated by within 30
10. Complaint arising from violation of training Proceeding is an sworn calendar days
offshoot of complaints after
agreement (Singapore Airlines v. Pano, G.R.
routine filed by any submission of
No. L-47739, June 22 1983). inspections interested the case by the
party parties for
decision

UNIVERSITY OF SANTO TOMAS

215 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Jurisdictional Not every controversy or money claim by an Ee
requirements: against the Er or vice-versa is within the exclusive
jurisdiction of the LA. Actions between Ees and Er
1) Complaint where the Er-Ee relationship is merely incidental
1) All other
arises from and the cause of action precedes from a different
claims arising
Er-Ee source of obligation is within the exclusive
from Er-Ee
relationship jurisdiction of the regular court. Here, the Er-Ee
relations
relationship between the parties is merely
2) Claimant is incidental and the cause of action ultimately arose
2) Including
an Ee or from different sources of obligation, i.e., the
those of persons
person Constitution and CEDAW (Halaguena vs. PAL
in domestic or
employed in Incorporated, G.R. No. 172013, October 2, 2009).
household
domestic or
service
No jurisdictional household REINSTATEMENT PENDING APPEAL
requirements service or a
3) Involving an
HH Effect of perfection of an appeal on execution
amount
3) Complaint
exceeding
does NOT The perfection of an appeal shall stay the execution
P5,000
include a of the decision of the LA on appeal, except
claim for execution for reinstatement pending appeal.
4) Whether or
reinstatement
not
NOTE: Art. 223 of LC is clear that an award by the
accompanied
4) Aggregate LA for reinstatement shall be immediately
with a claim for
money claim executory even pending appeal and the posting of a
reinstatement
of EACH bond by the employer shall not stay the execution
claimant does for reinstatement (Pioneer Texturizing Corp. v.
not exceed NLRC, G.R. No. 118651, October 16, 1997).
P5,000
Appealable to Ministerial duty of labor arbiter to implement
SLE (In case reinstatement orders
compliance Appealable to Appealable to
order is issued NLRC NLRC Unless there is a restraining order, it is ministerial
by Regional upon the LA to implement the order of
Office) reinstatement and it is mandatory on the Er to
comply therewith (Garcia v. PAL, G.R. No. 164856,
Q: FASAP, the sole and exclusive bargaining January 20, 2009).
representative of the flight attendants, flight
stewards and pursers of PAL, and respondent Jurisdiction of NLRC v. Jurisdiction of LA
PAL entered into a CBA incorporating the terms
and conditions of their agreement for the years 1. The NLRC has exclusive appellate
01-05. Sec. 144, Part A of the CBA provides that jurisdiction on all cases decided by the LA.
compulsory retirement shall be 55 y.o. for 2. The NLRC does not have original jurisdiction
females and 60 y.o. for males. FASAP filed an on the cases over which the LA have original
action with the RTC claiming that the CBA and exclusive jurisdiction.
provision is discriminatory and hence 3. The NLRC cannot have appellate jurisdiction
unconstitutional. RTC issued a TRO. The if a claim does not fall within the exclusive
appellate court ruled that the RTC has no original jurisdiction of the LA.
jurisdiction over the case at bar. Does the RTC
have jurisdiction over the petitioners' action REQUIREMENTS TO PERFECT APPEAL FROM LA
challenging the legality of the provisions on the TO NLRC
compulsory retirement age contained in the
CBA? a. Filedwithinthereglementaryperiod of 10
calendar days from receipt if it involves a
A: Yes. The subject of litigation is incapable of decision, award, or order of the LA, or 5
pecuniary estimation, exclusively cognizable by the calendar days from receipt if it involves a
RTC, pursuant to Sec. 19(1) of BP Blg. 129, as decision or resolution of the RD
amended. Being an ordinary civil action, the same
is beyond the jurisdiction of labor tribunals.

UNIVERSITY OF SANTO TOMAS

2015 GOLDEN NOTES
216
 PROCEDURE AND JURISDICTION
b. Verified by the appellant himself in accordance
with Sec. 4, Rule 7 of the Rules of Court, as
amended.
c. In the form of a memorandumofappeal which
shall state the grounds relied upon and
arguments in support thereof, the relief prayed
for, and with a statement of the date the
appellant received the appealed decision,
resolution or order
d. In three (3) legibly typewritten or printed
copies
e. Accompaniedby (i) proof of payment of the
required appeal fee; (ii) posting of a cash or
surety bond as provided in Sec. 6 of this Rule;
(iii) a certificate of non-forum shopping; and
(iv) proof of service upon the other parties
(NLRC 2011 Rules of Procedure, Rule VI, Sec. 4).
NOTE: Mere notice of appeal without
complying with the aforementioned requisites
shall not stop the running of the period for
perfecting an appeal.
Grounds for filing an appeal
The appeal may be entertained only on any of the
following grounds:
1. If there is prima facie evidence of abuse of
discretion on the part of the LA or RD;
2. If the decision, award or order was secured
through fraud or coercion, including graft
and corruption;
3. If made purely on questions of law; and/or
4. If serious errors in the findings of facts are
raised which, if not corrected, would cause
grave or irreparable damage or injury to the
appellant (NLRC 2011 Rules of Procedure,
Rule VI, Sec. 2).
Posting of an appeal bond required to perfect
an appeal from a LAs decision involving
monetary award
In case the decision of the LA or the RD involves a
monetary award, an appeal by the Er may be
perfected only upon the posting of a bond (NLRC
2011 Rules of Procedure, Rule VI, Sec. 6).
Forms of the appeal bond
It shall either be in the form of cash deposit or
surety bond equivalent in amount to the monetary
award, exclusive of damages and attorney's fees
(NLRC 2011 Rules of Procedure Rule VI, Sec. 6).
217
Issuance of a surety bond
It shall be issued by a reputable bonding company
duly accredited by the Commission or the SC, and
shall be accompanied by original or certified true
copies of the following:
1. A joint declaration under oath by the Er, his
counsel, and the bonding company, attesting
that the bond posted is genuine, and shall be
in effect until final disposition of the case;
2. An indemnity agreement between the Er-
appellant and bonding company;
3. Proof of security deposit or collateral
securing the bond: provided, that a check
shall not be considered as an acceptable
security;
4. A certificate of authority from the Insurance
Commission;
5. Certificate of registration from the SEC;
6. Certificate of authority to transact surety
business from the Office of the President;
7. Certificate of accreditation and authority
from the SC; and
8. A notarized board resolution or secretary's
certificate from the bonding company
showing its authorized signatories and their
specimen signatures (NLRC 2011 Rules of
Procedure, Rule VI, Sec. 6).
NOTE: The appellant shall furnish the appellee
with a certified true copy of the said surety bond
with all the above-mentioned supporting
documents.
Period within which a cash or surety bond shall
be valid and effective
From the date of deposit or posting, until the case
is finally decided, resolved or terminated, or the
award satisfied. This condition shall be deemed
incorporated in the terms and conditions of the
surety bond, and shall be binding on the appellants
and the bonding company (NLRC 2011 Rules of
Procedure, Rule VI, Sec. 6).
Effect if the bond is verified to be irregular or
not genuine
The Commission shall cause the immediate
dismissal of the appeal, and censure or cite in
contempt the responsible parties and their
counsels, or subject them to reasonable fine or
penalty (NLRC 2011 Rules of Procedure, Rule VI, Sec.
6).
NOTE: The appellee shall verify the regularity and
genuineness of the bond and immediately report
any irregularity to the NLRC.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Reduction of bond
GR: Bond cannot be reduced.
XPN: On meritorious grounds, and only upon the
posting of a bond in a reasonable amount in
relation to the monetary award.
NOTE: The mere filing of a motion to reduce bond
without complying with the requisites in the
preceding paragraphs shall not stop the running of
the period to perfect an appeal (NLRC 2011 Rules of
Procedure, Rule VI, Sec. 6).
Q: Company A, within the reglementary period,
appealed the decision of a Labor Arbiter
directing therein statement of an employee and
awarding backwages. However, As cash bond
was filed beyond the ten day period. Should the
NLRC entertain the appeal? Why? (2001 Bar
Question)
A: No. The NLRC should not entertain the appeal,
as the same was not perfected due to failure to file
a bond. An appeal may be perfected only upon the
posting of cash or surety bond, issued by reputable
bonding company duly accredited by the
Commission the amount equivalent to the
monetary award in the judgment appealed from
(Aba v. NLRC, G.R No. 122627, July 28, 1999).
Motion for reconsideration (MR) of the NLRC
decision required before certiorari may be
availed
A motion for reconsideration is required to enable
NLRC to correct its mistakes. If no MR is filed,
NLRCs decision becomes final and executory.
Remedy in case of denial of the MR
If the motion is denied, the aggrieved party may file
a petition for certiorari not later than 60 days from
notice of the judgment, order or resolution. In case
a motion for reconsideration or new trial is timely
filed, whether such motion is required or not, the
60 day period shall be counted from notice of the
denial of said motion. No extension of time to file
the petition shall be granted except for compelling
reason and in no case exceeding 15 days(Rules of
Court, Rule 65, Sec. 4).
Effect if no service of summons was made
In the absence of service of summons or a valid
waiver thereof, the hearings and judgment
rendered by the LA is null and void.
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
218
Compulsory arbitration
The process of settlement of labor disputes by a
government agency which has the authority to
investigate and make an award binding on all the
parties.
Labor Arbiter conducts compulsory arbitration
Under the LC, it is the LA who is clothed with the
authority to conduct compulsory arbitration on
cases involving termination disputes (PAL v. NLRC,
G.R. No. 55159, December 22, 1989).
Rules on venue of filing cases
1. All cases which the LAs have authority to
decide may be filed in the Regional
Arbitration Branch (RAB) having jurisdiction
over the workplace of the complainant
/petitioner.
NOTE: Workplace is understood to be the
place or locality where the Ee is regularly
assigned when the cause of action arose. It
shall include the place where the Ee is
supposed to report back after a temporary
detail, assignment or travel.
In case of field Ees, as well as ambulant or
itinerant workers, their workplace is where
they are:
a. Regularly assigned
b. Supposed to regularly receive their
salaries and wages
c. Receive their work instructions from
d. Reporting the results of their
assignment to their Er
2. Where 2 or more RABs have jurisdiction
over the workplace, the first to acquire
jurisdiction shall exclude others.
3. Improper venue when not objected to before
filing of position papers shall be deemed
waived.
4. Venue may be changed by written
agreement of the parties or when the NLRC
or the LA so orders, upon motion by the
proper party in meritorious cases.
5. For Overseas Contract Workers where the
complainant resides or where the principal
office of the respondent Er is located, at the
option of the complainant.
NOTE: The Rules of Procedure on Venue is
merely permissive, allowing a different
venue when the interest of substantial
justice demands a different one (Dayag v.
Canizares, GR. No. 124193, March 6, 1998).
 PROCEDURE AND JURISDICTION
NATIONAL LABOR RELATIONS COMMISSION
It is an administrative body with quasi-judicial
functions and the principal government agency
that hears and decides labor-management
disputes; it is attached to the DOLE solely for
program and policy coordination only.
Allocation of the powers and functions of the
NLRC
1. En Banc
a. Promulgating rules and regulations and
governing the hearings and disposition of
cases before any of its divisions and
regional branches.
b. Formulating policies affecting its
administration and operations.
c. On temporary or emergency basis, to allow
cases within the jurisdiction of any division
to be heard and decided by any other
division whose docket allows the
additional workload and such transfer will
not expose litigants to unnecessary
additional expense.
2. Division (8 Divisions with 3 members)
a. Adjudicatory;
b. All other powers, functions and duties;
c. Exclusive appellate jurisdiction over cases
within their respective territorial
jurisdiction.
Individual Commissioner does not have
adjudicatory power
The law lodges the adjudicatory power on each of
the eight divisions, neither on the individual
commissioners nor on the whole commission. The
division is a legal identity, not the person who sits
in it. Hence, an individual commissioner has no
adjudicatory power, although of course, he can
concur or dissent in deciding a case.
JURISDICTION
Kinds of jurisdiction of the NLRC
1. Exclusive Original Jurisdiction
a. Certified labor disputes causing or likely
to cause a strike or lockout in an
industry indispensable to national
interest, certified to it by the SLE or the
President for compulsory arbitration
b. Injunction in ordinary labor disputes to
enjoin or restrain any actual or
threatened commission of any or all
prohibited or unlawful acts or to require
219
the performance of a particular act in
any labor dispute which, if not
restrained or performed forthwith, may
cause grave or irreparable damage to
any party
c. Injunction in strikes or lockouts under
Art. 264 of the LC
d. Contempt cases
2. Exclusive Appellate Jurisdiction
a. All cases decided by the LA under Art.
217(b) of the LC and Sec. 10 of R.A.8042
(Migrant Workers Act); and
b. Cases decided by the Regional Offices of
DOLE in the exercise of its adjudicatory
function under Art.129 of the LC over
monetary claims of workers amounting
to not more than P5000 and not
accompanied by claim for reinstatement.
Composition of the NLRC
1. Chairman
2. 23 Members
a. 8 members each of whom shall be chosen
only from among the nominees of the
workers and Er organization
respectively.
b. The Chairman and the 7 remaining
members shall come from the public
sector, with the latter to be chosen
preferably from among the incumbent
LAs.
c. Upon assumption into office, the
members nominated by the workers and
Ers organization shall divest themselves
of any affiliation with or interest in the
federation or association to which they
belong.
NOTE: There is no need for the Commission on
Appointments to confirm the positions in the NLRC.
Such requirement has no constitutional basis
(Calderon v. Carale, GR. No. 91636, April 23, 1992).
Adjudication of cases by the NLRC
1. The NLRC adjudicates cases by division. A
concurrence of 2 votes is needed for a valid
judgment.
NOTE: Whenever the required membership
in a division is not complete and the
concurrence of the Commissioners to arrive
at judgment or resolution cannot be obtained,
the Chairman shall designate such number of
additional Commissioners from the other
divisions as may be necessary.
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
2. It shall be mandatory for the division to meet
for purposes of consultation.
NOTE: The conclusion of a division on any
case submitted to it for decision should be
reached in consultation before the case is
assigned to a member for the writing of the
opinion.
3. A certification that a consultation has been
conducted, signed by the presiding
commissioner of the division, shall be issued
(copy attached to the record of case and
served upon the parties).
Qualifications of the Chairman and the
Commissioners
1. Member of the Philippine Bar
2. Engaged in the practice of law in the
Philippines for at least 15 years
3. At least 5 years of experience or exposure in
handling labor management relations
4. Preferably a resident of the region where he
is to hold office
Qualifications of an Executive Labor Arbiter
1. Member of the Philippine Bar
2. Engaged in the practice of law in the
Philippines for at least 10 years
3. At least 5 years of experience or exposure in
handling labor management relations
Terms of office of the Chairman, Commissioners
and Labor Arbiters
They shall hold office during good behavior until
they reach the age of 65 unless removed for causes
as provided by law or become incapacitated to
discharge the function of his office.
Provided, however, that the President of the
Philippines may extend the services of the
Commissioners and LAs up to the maximum age of
70 years upon the recommendation of the
Commission en banc.
Q: Some disgruntled members of Bantay
Labor Union filed with the Regional Office of the
DOLE a written complaint against their union
officers for mismanagement of union funds. The
RD did not rule in the complainants' favor. The
latter elevated the RDs decision to the NLRC.
The union officers moved to dismiss on the
ground of lack of jurisdiction. Are the union
officers correct? Why? (2001 Bar Question)
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
220
A: Yes. The union officers are correct in claiming
that the NLRC has no jurisdiction over the appealed
ruling of the RD. In Barles v. Bitonio (G.R. No.
120220, June 16, 1999), the SC ruled that Appellate
authority over decisions of the RD involving
examination of union account is expressly
conferred on the BLR under the Rule of Procedure
on Mediation-Arbitration.
Sec. 4. Jurisdiction of the BLR(b) The BLR
shall exercise appellate jurisdiction over all
cases originating from the RD involving
complaints for examination of union books of
accounts.
Q: Company "A" and Union "B" could not
resolve their negotiations for a new CBA. After
conciliation proceedings before the NCMB
proved futile, B went on strike. Violence
during the strike prompted A to file charges
against striker-members of B for their illegal
acts. The SLE assumed jurisdiction, referred
the strike to the NLRC and issued a return-to-
work order. The NLRC directed the parties to
submit their respective position papers and
documentary evidence. At the initial hearing
before the NLRC, the parties agreed to submit
the case for resolution after the submission of
the position papers and evidence.
Subsequently, the NLRC issued an arbitral
award resolving the disputed provisions of the
CBA and ordered the dismissal of certain
strikers for having knowingly committed illegal
acts during the strike. The dismissed employees
elevated their dismissal to the CA claiming that
they were deprived of their right to due process
and that the affidavits submitted by A were self-
serving and of no probative value. Should the
appeal prosper? State the reason(s) for your
answer clearly. (2001 Bar Question)
A:No. The SC, in many cases, has ruled that
decisions made by the NLRC may be based on
position papers. In the question, it is stated that the
parties agreed to submit the case for resolution
after the submission of position papers and
evidence. Given this fact, the striker-members of B
cannot now complain that they were denied due
process. They are in estoppel. After voluntarily
submitting a case and encountering an adverse
decision on the merits, it is too late for the loser to
question the jurisdiction or power of the court. A
party cannot adopt a posture of double dealing
(Marquez vs. Secretary of Labor, G.R. No. 80685,
March 16, 1989).
 PROCEDURE AND JURISDICTION
Barangay conciliation not available in labor
cases
Labor cases are not subject to barangay
conciliation since ordinary rules of procedure are
merely suppletory in character vis--vis labor
disputes which are primarily governed by labor
laws (Montoya v. Escayo, G.R. No. 82211-12, March
21, 1989).
Powers of the NLRC
1. Rulemaking power Promulgation of rules
and regulations:
a. Governing disposition of cases before
any of its division/regional offices.
b. Pertaining to its internal functions
c. As may be necessary to carry out the
purposes of the LC.
2. Power to issue compulsory processes
(administer oaths, summon parties, issue
subpoenas)
3. Power to investigate matters and hear
disputes within its jurisdiction (adjudicatory
power original and appellate jurisdiction
over cases)
4. Contempt power
5. Ocular Inspection
6. Power to issue injunctions and restraining
orders
EFFECT OF NLRC REVERSAL OF LABOR
ARBITERS ORDER OF REINSTATEMENT
Dismissed employees may collect wages during
the period between the Labor Arbiters order of
reinstatement pending appeal and the NLRCs
decision overturning that of the LAs
The LC provides that the decision of the LA
reinstating a dismissed or separated Ee, insofar as
the reinstatement aspect is concerned, shall
immediately be executory, pending appeal.
Even if the order of reinstatement of the LA is
reversed on appeal, it is obligatory on the part of
the Er to reinstate and pay the wages of the
dismissed Ee during the period of appeal until
reversal by the higher court. On the other hand, if
the Ee has been reinstated during the appeal
period and such reinstatement order is reversed
with finality, the Ee is not required to reimburse
whatever salary he received for he is entitled to
such, more so if he actually rendered services
during the period (Pfizer v. Velasco, G.R. No. 177467,
March 9, 2011).
221
REMEDIES
Availability of judicial review of the NLRCs
decision
Judicial review of NLRCs decision is available
through a petition for certiorari (Rule 65) which
should be initially filed with the CA in strict
observance of the doctrine on the hierarchy of
courts as the appropriate forum for the relief
desired. The CA is procedurally equipped to
resolve unclear or ambiguous factual finding, aside
from the increased number of its component
divisions (St. Martin Funeral Home v. NLRC, G.R. No.
130866, September 16, 1998).
Injunction or a temporary restraining order
(TRO)
The power of the NLRC to enjoin or restrain any
actual or threatened commission from any or all
prohibited or unlawful acts under Art. 218 of LC
can only be exercised in labor disputes.
NOTE: A restraining order is generally regarded as
an order to maintain the subject of controversy in
status quo until the hearing of an application for a
temporary injunction (BF Homes v. Reyes, G.R. No.
L-30690, November 19, 1982).
Persons authorized to issue a TRO
1. President [LC, Art.263(g)]
2. Secretary of Labor [LC, Art.263(g)]
3. NLRC (LC, Art.218)
NOTE: Art. 218 of the LC limits the grant of
injunctive power to the NLRC. The LA is
excludedstatutorily. Hence, no NLRC Rules can
grant him that power.
Procedure for issuance of restraining
order/injunction
1. Filing of a verified petition
2. Hearing after due and personal notice has
been served in such manner as the
Commission shall direct to:
a. All known persons against whom relief
is sought
b. Also the President or other public
officials of the province or city within
which the unlawful acts have been
threatened or commercial charged with
the duty to protect the complainants
property.
3. Reception at the hearing of the testimonies
of the witnesses with opportunity for cross-
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
examination, in support of the allegations of
the complaint made under oath as well as
testimony in opposition thereto.
4. Finding of fact of the Commission to the
effect that:
a. Prohibited or unlawful acts have been
threatened and will be committed, or
have been and will be continued unless
restrained, but no injunction or TRO
shall be issued on account of any threat,
prohibited or unlawful act, except
against the persons, association or
organization making the threat or
committing the prohibited or unlawful
act or actually authorizing or ratifying
the same after actual knowledge thereof.
b. The substantial and irreparable injury to
the complainants property.
NOTE: Irreparable Injury- an injury
which cannot be adequately
compensated in damages due to the
nature of the injury itself or the nature
of the right or property injured or when
there exist no pecuniary standard for the
measurement of damages.
c. That as to each item of relief to be
granted, greater injury will be inflicted
upon the complainant by the denial of
the relief than will be inflicted upon the
defendants by the granting of the relief.
d. That complainant has no adequate
remedy at law
NOTE: Adequate remedy one that
affords relief with reference to the
matter in controversy and which is
appropriate to the particular
circumstances of the case if the remedy
is specifically provided by law (PAL v.
NLRC, GR. No. 120567, March 20, 1998).
e. That public officers charged with the
duty to protect complainants property
are unable or unwilling to furnish
adequate protection.
5. Posting of a bond.
CERTIFIED CASES
Certified cases
These are cases certified or referred to the
Commission for compulsory arbitration under Art.
263(g) of the LC dealing about national interest
cases.
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222
A national interest dispute may be certified to the
NLRC even before a strike is declared since Art.
263(g) of the LC does not require the existence of a
strike, but only of an industrial dispute
[Government Service Insurance System Employees
Association (GSISEA), et al. v. Court of Industrial
Relations, G.R. No. L-18734, December 30, 1961].
Function of the NLRC in certified cases
When sitting in a compulsory arbitration certified
to by the SLE, the NLRC is not sitting as a judicial
court but as an administrative body charged with
the duty to implement the order of the SLE. As an
implementing body, its authority does not include
the power to amend the Secretarys order (UST v.
NLRC and UST Faculty Union, G. R. No. 89920,
October 18, 1990).
Effect of defiance from the certification order
Non-compliance with the certification order of the
SLE shall be considered as an illegal act committed
in the course of the strike or lockout and shall
authorize the Commission to enforce the same
under pain of immediate disciplinary action,
including dismissal or loss of employment status or
payment by the locking-out Er of backwages,
damages and/or other affirmative relief, even
criminal prosecution against the liable parties
(NLRC 2011 Rules, Rule VIII, Sec. 4).
Procedure in deciding certified cases
1. Unless there is a necessity to conduct a
clarificatory hearing, the Commission shall
resolve all certified cases within 30 calendar
days from receipt by the assigned
Commissioner of the complete records,
which shall include the position papers of
the parties and the order of the SLE denying
the motion for reconsideration of the
certification order, if such motion has been
filed.
2. Where a clarificatory hearing is needed, the
Commission shall, within five days from
receipt of the records, issue a notice to be
served on the parties through the fastest
means available, requiring them to appear
and submit additional evidence, if any.
3. Notwithstanding the necessity for a
clarificatory hearing, all certified cases shall
be resolved by the Commission within 60
calendar days from receipt of the complete
records.
4. No motion for postponement or extension
shall be entertained (NLRC 2005 Rules, Rule
VIII, Sec. 5).
 PROCEDURE AND JURISDICTION
BUREAU OF LABOR RELATIONS 7. Opposition to application for union or CBA
MEDIATOR-ARBITERS registration
8. Violations of or disagreements over any
JURISDICTION (ORIGINAL AND APPELLATE) provision of the constitution and by-laws of
union or workers association
Coverage of the BLRs jurisdiction and functions 9. Disagreements over chartering or
registration of labor organizations or the
The BLR no longer handles all labor management registration of CBAs;
disputes; rather its functions and jurisdiction are 10. Violations of the rights and conditions of
largely confined to: membership in a union or workers
association;
1. Union matters 11. Violations of the rights of LLO, except
2. Collective bargaining registry and interpretation of CBAs;
3. Labor education. 12. Validity/invalidity of impeachment/
expulsion/suspension or any disciplinary
NOTE: Jurisdiction over labor management action meted against any officer and
problems or disputes is also exercised by other member, including those arising from non-
offices: compliance with the reportorial
requirements under Rule V;
1. DOLE Regional Offices 13. Such other disputes or conflicts involving the
2. Office of the Secretary of Labor rights to self-organization, union
3. NLRC membership and CB
4. POEA a. Between and among LLO and
5. OWWA b. Between and among members of a union
6. SSS-ECC or workers association (IRR as amended
7. RTWPB by D.O. 40-F-03, Book V, Rule XI, Sec. 1).
8. NWPC
9. Regular courts over intra-corporate Coverage of the phrase other related labor
disputes. relations disputes

Mediator-arbiter 1. Any conflict between

a. A labor union and the Er; or
An officer in the Regional Office or Bureau b. A labor union and a group that is not a
authorized to hear, conciliate and decide LO; or
representation cases or assist in the disposition of c. A labor union and an individual who is
intra or inter-union disputes. not a member of such union

Kinds of cases that fall within BLRs jurisdiction
The BLR has original and exclusive jurisdiction
over:
1. Inter-union disputes
2. Intra-union disputes
3. Other related labor relations disputes
2. Cancellation of registration of unions and
workers associations filed by individual/s
other than its members, or group that is not
a LO.
3. A petition for Interpleader involving labor
relations (IRR as amended by D.O. 40-F-03,
Book Vi, Rule XI, Sec. 2).

Coverage of inter/intra-union disputes Filing a complaint or petition involving

They shall include:
1. Conduct or nullification of election of union
and workers association officers
2. Audit/accounts examination of union or
workers association funds
3. Deregistration of CBAs
4. Validity/invalidity of union affiliation or
disaffiliation
5. Validity/invalidity of acceptance/ non-
acceptance for union membership
6. Validity/invalidity of voluntary recognition
intra/inter-union disputes
A legitimate labor organization or its members
may file a complaint or petition involving
intra/inter-union disputes (D.O. 40-03, Rule XI, Sec.
5).
Filing a complaint or petition if the issue
involves the entire membership
The complaint must be signed by at least 30% of
the entire membership of the union.

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223 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
Filing a complaint or petition if the issue
involves a member only
Only the affected member may file the complaint
(D.O. 40-03, Rule XI, Sec. 5).
GR: Redress must first be sought within the union
itself in accordance with its constitution and by-
laws.
XPNs:
1. Futility of intra-union remedies;
2. Improper expulsion procedure;
3. Undue delay in appeal as to constitute
substantial injustice;
4. The action is for damages;
5. Lack of jurisdiction of the investigating body;
action for the administrative agency is
patently illegal, arbitrary and oppressive;
6. Issue is purely a question of law;
7. Where the administrative agency had
already prejudged the case; and
8. Where the administrative agency was
practically given the opportunity to act on
the case but it did not.
Appeal of a decision in inter/intra-union
dispute
A decision in an inter/intra-union dispute may be
appealed.
Rules on appeal in intra/inter-union disputes
1. Formal Requirements
a. Under oath
b. Consist of a memorandum of appeal
c. Based on either of the following
grounds:
i. Grave abuse of discretion
ii. Gross violation of the rules
iii. With supporting arguments and
evidence
2. Period Within 10 days from receipt of
decision (D.O. 40-03, Rule XI, Sec. 16).
3. To whom appealable
a. BLR If the case originated from the
Med-Arbiter/Regional Director.
b. SLE If the case originated from the
BLR.
4. Where Filed Regional Office or to the BLR,
where the complaint originated. Records are
transmitted to the BLR or Sec. within 24
hours from the receipt of the memorandum
of appeal (D.O. 40-03, Rule XI, Sec. 17).
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224
Extent of authority of the Bureau of Labor
Relations
1. It may hold a referendum election among the
members of a union for the purpose of
determining whether or not they desire to be
affiliated with a federation.
2. But the BLR has no authority to:
a. Order a referendum among union
members to decide whether to expel or
suspend union officers.
b. Forward a case to the Trade Union
Congress of the Philippines for
arbitration and decision.
Administrative functions of the Bureau of Labor
Relations
1. Regulation of the labor unions
2. Keeping the registry of labor unions
3. Maintenance of a file of the CBA
4. Maintenance of a file of all settlements or
final decisions of the SC, CA, NLRC and other
agencies on labor disputes
Effects of filing or pendency of inter/intra-
union dispute and other labor relations
disputes
1. The rights relationships and obligations of
the party-litigants against each other and
other parties-in-interest prior to the
institution of the petition shall continue to
remain during the pendency of the petition
and until the date of the decision rendered
therein. Thereafter, they shall be governed
by the decision ordered.
2. The filing or pendency of any inter/intra
union disputes is not a prejudicial question
to any petition for certification election,
hence it shall not be a ground for the
dismissal of a petition for certification of
election or suspension of the proceedings for
the certification of election (Rule XI, DO 40-
03, Rule XI, Sec. 3).
NATIONAL CONCILIATION AND MEDIATION
BOARD (NCMB)
NATURE OF PROCEEDINGS
Alternative modes of settlement of labor
dispute
1. Voluntary Arbitration
2. Conciliation
3. Mediation
 PROCEDURE AND JURISDICTION
Nature of the proceedings Tripartism

The proceedings are non-litigious. It is the representation of 3 sectors in policy-

All labor disputes are required to be submitted
to mandatory conciliation-mediation
GR: All issues arising from labor and employment
shall be subject to mandatory conciliation-
mediation. The LA or the appropriate DOLE agency
or office that has jurisdiction over the dispute shall
entertain only endorsed or referred cases by the
duly authorized officer [LC as amended by R.A.
103960, Art. 228(a)].
XPNs:
1. Grievance machinery and Voluntary
Arbitration, in which case, their agreement
will govern
2. When excepted by the SLE (Ibid.)
making bodies of the government. These are:
1. The public or the government
2. The employers
3. The workers
Workers cannot insist that they be represented
in the policy making in the company
Such kind of representation in the policy-making
bodies of private enterprises is not ordained, not
even by the Constitution. What is provided for is
workers participation in policy and decision-
making process directly affecting their rights,
benefits, and welfare.
CONCILIATION v. MEDIATION

NOTE: Any or both parties involved in the dispute CONCILIATION MEDIATION

may pre-terminate the conciliation-mediation Conceived of as a mild
proceedings and request referral or endorsement form of intervention by a
to the appropriate DOLE agency or office which has neutral third party
jurisdiction over the dispute, or if both parties so The conciliator-
agree, refer the unresolved issues to voluntary Mediator, relying on his
arbitration [LC as amended by R.A. 103960, Art. persuasive expertise,
228(a)]. who takes an active role
in assisting parties by
Arbitration trying to keep disputants
talking, facilitating other
It is the submission of a dispute to an impartial procedural niceties,
person for determination on the basis of evidence carrying messages back
and arguments of the parties. The arbiters decision and forth between the
or award is enforceable upon the disputants. It may parties, and generally
be voluntary by agreement, or compulsory which is being a good fellow who
required by statutory provision (Luzon Devt Bank tries to keep things calm
v. Assn of Luzon Devt Bank Employees, G.R. No. and forward-looking in a
120319 October 6, 1995). tense situation
It is the process where a
Court cannot fix resort to voluntary arbitration disinterested 3rd party
meets with management
Resort to VA dispute should not be fixed by the and labor, at their
court but by the parties relying on their strengths request or otherwise,
and resources. during a labor dispute or
in CB conferences, and
Parties to labor relations cases by cooling tempers, aids
in reaching an
1. Employees organization agreement
2. Management
3. The public Legal basis of conciliation and mediation
Mild intervention by
a neutral third party
The conciliator-
mediator, whereby
he starts advising
the parties or
offering solutions or
alternatives to the
problems with the
end in view of
assisting them
towards voluntarily
reaching their own
mutually acceptable
settlement of the
dispute
It is when a 3rd
party studies each
side of the dispute
then makes
proposals for the
disputants to
consider. The
mediator cannot
make an award nor
render a decision

NOTE: Er and Ees are active parties while the
public and the State are passive parties (Poquiz,
2006).
The State shall promote xxx the preferential use
of voluntary modes of settling disputes including
conciliation and shall ensure mutual compliance
by the parties thereof in order to foster
industrial peace (1987 Constitution, Art. 13, Sec. 3).

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225 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
NOTE: A similar provision is echoed in the
Declaration of Policy under Art. 211(a) of the LC,
as amended.
Persons who can avail of conciliation and
mediation services of the NCMB
Any party to a labor dispute, either the union or
management, may seek the assistance of NCMB
or any of its Regional Branches by means of
formal request for conciliation and preventive
mediation. Depending on the nature of the
problem, a request may be filed in the form of
consultation, notice of preventive mediation or
notice of strike/lockout.
Where to file a request for conciliation and
mediation
An informal or formal request for conciliation
and mediation service can be filed at the NCMB
Central Office or any of its Regional Branches.
There are at present 14 regional offices of the
NCMB which are strategically located all over the
country for the convenient use of prospective
clients.
PREVENTIVE MEDIATION
Preventive mediation case
Preventive mediation case refers to the potential
labor dispute which is the subject of a formal or
informal request for conciliation and mediation
assistance sought by either or both parties or
upon the initiative of the NCMB to avoid the
occurrence of an actual labor dispute.
Persons who may file a notice for preventive
mediation
Any certified or duly recognized bargaining
representative may file a notice or declare a strike
or request for preventive mediation in cases of
bargaining deadlocks and ULPs. The Er may file a
notice or declare a lockout or request for
preventive mediation in the same cases. In the
absence of a certified or duly recognized
bargaining representative, any LLO in the
establishment may file a notice, request preventive
mediation or declare a strike, but only on grounds
of ULP (NCMB Manual of Procedure, Rule IV, Sec. 3).
NOTE: Only a certified or duly recognized
bargaining agent may file a notice or request for
preventive mediation. If the notice was filed not by
the Union but by its individual members, the NCMB
had no jurisdiction to entertain it.
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226
Moreover, the notice or request for preventive
mediation cannot be filed by the Federation on
behalf of its local/chapter. A local union does not
owe its existence to the federation with which it is
affiliated. It is a separate and distinct voluntary
association owing its creation to the will of its
members. Mere affiliation does not divest the local
union of its own personality; neither does it give
the mother federation the license to act
independently of the local union. It only gives rise
to a contract of agency, where the former acts in
representation of the latter. Hence, local unions are
considered principals while the federation is
deemed to be merely their agent (Insular Hotel
Employees Union-NFL v. Waterfront Insular Hotel
Davao, G.R. Nos. 174040-41, September 22, 2010).
Valid issues for a notice of strike/lockout or
preventive mediation
A notice of strike or lockout maybe filed on
ground of ULP acts, gross violation of the CBA, or
deadlock in CBAs. A complaint on any of the
above grounds must be specified in the NCMB
Form or the proper form used in the filing of
complaint.
In case of preventive mediation, any issue
may be brought before the NCMB Central Office
or its regional offices for conciliation and
possible settlement through a letter. This
method is more preferable than a notice of
strike/lockout because of the non-adversarial
atmosphere that pervades during the
conciliation conferences.
Advantages that can be derived from
conciliation and mediation services
Conciliation and mediation is non-litigious/non-
adversarial, less expensive, and
expeditious. Under this informal set-up, the
parties find it more expedient to fully ventilate
their respective positions without running
around with legal technicalities and, in the
course thereof, afford them wider latitude of
possible approaches to the problem.
Parties are bound by the agreement entered
into
The parties are bound to honor any agreement
entered into by them. It must be pointed out that
such an agreement came into existence as a
result of painstaking efforts among the union,
management, and the Conciliator-
Mediator. Therefore, it is only logical to assume
that the Conciliator assigned to the case has to
 PROCEDURE AND JURISDICTION
follow up and monitor the implementation of the
agreement.
Conciliation and mediation service still
possible during actual strike or lockout
It is possible to subject an actual strike or actual
lockout to continuing conciliation and mediation
services. In fact, it is at this critical stage that
such conciliation and mediation services be fully
given a chance to work out possible solution to
the labor dispute. With the ability of the
Conciliator-Mediator to put the parties at ease
and place them at a cooperative mood, the final
solutions of all the issues involved may yet be
effected and settled.
Possibility of remanding the dispute already
been assumed or certified to the NLRC to
conciliation and mediation
The parties are not precluded from availing the
services of an NCMB Conciliator-Mediator as the
duty to bargain collectively subsists until the
final resolution of all issues involved in the
dispute. Conciliation is so pervasive in
application that, prior to a compulsory
arbitration award, the parties are encouraged to
continue to exhaust all possible avenues of
mutually resolving their dispute, especially
through conciliation and mediation services.
Benefits that the parties can have in
appearing during conciliation conferences
Generally speaking, any party appearing during
scheduled conciliation conferences has the
advantage of presenting its position on the labor
controversy. The issue raised in the complaint can
be better ventilated with the presence of the
concerned parties. Moreover, the parties can
observe a norm of conduct usually followed in like
forum.
DOLE REGIONAL DIRECTORS
JURISDICTION
Money claims falling under the jurisdiction of
the DOLE Regional Directors
Under Art. 129 of the LC, the RDs or any of the duly
authorized hearing officers of DOLE have
jurisdiction over claims for recovery of wages,
simple money claims and other benefits, provided
that:
1. The claim must arise from Er-Ee
relationship;
227
2. The claimant does not seek reinstatement;
and
3. The aggregate money claim of each
employee does not exceed Php 5,000.00.
NOTE: In the absence of any of the above
requisites, it is the LA who shall have the
jurisdiction over the claims arising from Er-Ee
relations, except claims for Ees compensation, SSS,
Philhealth, and maternity benefits, pursuant to
Art.217 of the LC.
The proceedings before the Regional Office shall be
summary and non-litigious in nature.
Adjudicatory power of the Regional Director
The RD or any of his duly authorized hearing
officers is empowered through summary
proceeding and after due notice, to hear and decide
cases involving recovery of wages and other
monetary claims and benefits, including legal
interests.
DOLE SECRETARY
VISITORIAL AND ENFORCEMENT POWERS
Powers of the SLE
1. Visitorial powers
2. Enforcement powers
3. Appellate or power to review
Visitorial power
It constitutes:
1. Access to Ers records and premises at any
time of the day or night, whenever work is
being undertaken
2. To copy from said records
3. Question any Ee and investigate any fact,
condition or matter which may be necessary
to determine violations or which may aid in
the enforcement of the LC and of any wage
order, or rules and regulation issued
pursuant thereto.
Instances where the visitorial power of the SLE
may be exercised under the LC
Power to:
1. Inspect books of accounts and records of any
person or entity engaged in recruitment and
placement, require it to submit reports
regularly on prescribed forms and act in
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
violations of any provisions of the LC on
recruitment and placement (Art. 37).
2. Have access to Ers records and premises to
determine violations of any provisions of the
LC on recruitment and placement (Art. 128).
3. Conduct industrial safety inspections of
establishments (Art. 165).
4. Inquire into the financial activities of LLO
and examine their books of accounts upon
the filing of the complaint under oath and
duly supported by the written consent of at
least 20% of the total membership of the LO
concerned.
Enforcement power
It is the power of the SLE to:
1. Issue compliance orders
2. Issue writs of execution for the enforcement
of their orders, except in cases where the Er
contests the findings of the labor officer and
raise issues supported by documentary
proof which were not considered in the
course of inspection
3. Order stoppage of work or suspension of
operation when non-compliance with the
law or implementing rules and regulations
poses grave and imminent danger to health
and safety of workers in the workplace
4. Require Ers to keep and maintain such
employment records as may be necessary in
aid to the visitorial and enforcement powers
5. Conduct hearings within 24 hours to
determine whether:
a. An order for stoppage of work or
suspension of operations shall be lifted
or not; and
b. Er shall pay the concerned Ees their
salaries in case the violation is
attributable to his fault (As amended by
RA 7730; (Guico v. Secretary, G.R. No.
131750, November 16, 1998).
Violations under Art. 128 of the LC
1. Obstruct, impede, delay or otherwise render
ineffective the orders of the SLE or his
authorized representatives
2. Any government employee found guilty of,
or abuse of authority, shall be subject to
administrative investigation and summary
dismissal from service.
Limitations to other courts
In relation to enforcement orders issued under Art.
128 of the LC, no inferior court or entity shall:
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
228
1. Issue temporary or permanent injunction or
restraining order; or
2. Assume jurisdiction over any case
Instances when Enforcement power may not be
used
1. Case does not arise from the exercise of
visitorial power
2. When Er-Ee relationship ceased to exist at
the time of the inspection
3. If Er contests the finding of the Labor
Regulation Officer and such contestable
issue is not verifiable in the normal course of
inspection
SLE does not have the power to determine the
existence of an employer-employee
relationship in the exercise of its visitorial and
enforcement powers under Art. 128 of the LC
The visitorial and enforcement powers of the SLE
come into play only in cases when the relationship
of Er-Ee still exists. The SLEs power does not
apply in two instances, namely: (a) where the Er-
Ee relationship has ceased; and (b) where no such
relationship has ever existed. The question of Er-Ee
relationship becomes a battle of evidence, the
determination of which should be comprehensive
and intensive and therefore best left to the
specialized quasi-judicial body that is the NLRC
(Peoples Broadcasting v. The Secretary of the
Department of Labor and Employment, G.R. No.
179652, May 8, 2009).
POWER TO SUSPEND EFFECTS OF
TERMINATION
SLE has the power to suspend the effects of
termination
The SLE may suspend the effects of the termination
pending resolution of the dispute in the event of a
prima facie finding by the appropriate official of the
DOLE before whom such dispute is pending that
the termination may cause serious labor dispute or
is in implementation of a mass layoff [LC, Art.
277(b)].
NOTE: Art. 277 (b) of LC is applicable on
suspension of the effects of termination if there is a
showing that the termination may cause serious
labor dispute within the company while Art. 263
(g) of LC on assumption of jurisdiction is applicable
in cases of strike in establishments affecting
national interest, not just the company.
 PROCEDURE AND JURISDICTION
ASSUMPTION OF JURISDICTION
SLE can assume jurisdiction over a labor
dispute
When there is a labor dispute causing or likely to
cause a strike affecting national interest, the SLE,
on his own initiative or upon petition by any of the
parties, may either assume jurisdiction or certify
the dispute to the NLRC for compulsory arbitration.
NOTE: Art. 263(g) of the LC is both an
extraordinary and a preemptive power to address
an extraordinary situation (a strike or lockout in an
industry indispensable to the national interest). As
the term assume jurisdiction connotes the intent
of the law is to give the SLE full authority to resolve
all matters within the dispute that gave rise to or
which arose out of the strike or lockoutit
includes and extends to all questions and
controversies arising from or related to the
dispute, including cases over which the Labor
Arbiter has exclusive jurisdiction (Bagong
Pagkakaisa ng Manggagawa ng Triumph
International v. Secretary of the Department of
Labor and Employment, G.R. No. 167401, July 5,
2010).
Effect of the assumption or certification
It automatically enjoins the intended or impending
strike or lockout as specified in the assumption or
certification order. If one has already taken place at
the time of the assumption or certification, all
striking or locked out Ees shall immediately return
to work and the Er shall immediately resume
operations and readmit all workers under the same
terms and conditions prevailing before the strike
or lockout.
Assumption of jurisdiction can be exercised
without the necessity of prior notice or hearing
given to any of the party disputants
The rationale for the SLEs assumption of
jurisdiction can justifiably rest on his own
consideration of the exigency of the situation in
relation to the national interests (Capitol Medical
Center v. Trajano, G.R. No. 155690, June 30, 2005).
APPELLATE JURISDICTION
Cases within the appellate jurisdiction of the
SLE
1. Appeal from and adverse decision of the
POEA (2003 POEA Rules and Regulations,
Rule V, Part VII, Sec. 1; Eastern Mediterranean
Maritime Ltd. And Agemar Manning Agency
229
Inc., v. Surio et. al., G.R. No. 154213, August 23,
2012).
2. Appeal the order or results of a certification
election on the ground that the Rules and
Regulations or parts thereof established by
the SLE for the conduct of election have been
violated (LC, Art. 259).
3. A review of cancellation proceedings decided
by the BLR in the exercise of its exclusive
and original jurisdiction (Abbott
Laboratories Philippines, Inc. v. Abbott
Laboratories Employees Union, G.R.
No.131374, January 26, 2000).
NOTE: The SLE has no jurisdiction over decisions
of the BLR rendered in the exercise of its appellate
power to review the decision of the RD in a petition
to cancel the union's certificate of registration, said
decisions being final and unappealable (Ibid.)
Secs. 7 to 9 of Rule II, Book V of the IRR of the LC
provides for two situations
a. The first situation involves a petition for
cancellation of union registration which is filed
with a Regional Office. A decision of a Regional
Office cancelling a union's certificate of
registration may be appealed to the BLR whose
decision on the matter shall be final and
unappealable.
b. The second situation involves a petition for
cancellation of certificate of union registration
which is filed directly with the BLR. A decision
of the BLR cancelling a union's certificate of
registration may be appealed to the SLE whose
decision on the matter shall be final and
unappealable (Ibid.)
SLE has no appellate jurisdiction over decisions of
RD involving petitions for examinations of union
accounts. It is the BLR which exercises appellate
jurisdiction in such case (Barles v. Bitonio, G.R. No.
120270, June 16, 1999).
VOLUNTARY ARBITRATION POWERS
Powers of SLE regarding voluntary arbitration
The SLE may authorize any official to act as
Voluntary Arbitrator upon the written request and
agreement of the parties to a labor dispute [LC, Art.
212 (n)]. He shall also approve, upon
recommendation of the NCMB the guidelines in
administering the Voluntary Arbitration Fund [LC,
Art. 276 (f)].
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
GRIEVANCE MACHINERY AND VOLUNTARY
ARBITRATION
Grievance
Any question by either the Er or the union
regarding the interpretation or application of the
CBA or company personnel policies or any claim by
either party that the other party is violating any
provision of the CBA or company personnel
policies.
Grievance machinery
It refers to the mechanism for the adjustment and
resolution of grievances arising from the
interpretation or implementation of a CBA and
those arising from the interpretation or
enforcement of company personnel policies. It is
part of the continuing process of CB.
Grievance procedure
It is the internal rules of procedure established by
the parties in their CBA with voluntary arbitration
as the terminal step, which are intended to resolve
all issues arising from the implementation and
interpretation of their CBA.
It refers to the system of grievance settlement at
the plant level as provided in the CBA. It usually
consists of successive steps starting at the level of
the complainant and his immediate supervisor and
ending, when necessary, at the level of the top
union and company officials.
SUBJECT MATTER OF GRIEVANCE
Cases falling under the jurisdiction of the
Grievance Machinery
Any grievance arising from:
1. The interpretation or implementation of the
CBA; and
2. The interpretation or enforcement of
company personnel policies
NOTE: Art. 217(c) of the LC requires LAs to refer
cases involving the implementation of CBAs to the
grievance machinery provided therein and to
voluntary arbitration. Likewise, Art. 260 of the LC
clarifies that such disputes must be referred first to
the grievance machinery and, if unresolved within
seven days, they shall automatically be referred to
voluntary arbitration (Miguela Santuyo v. Remerco
Garments Manufacturing, Inc., G.R. No. 174420,
March 22, 2010).
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
230
VOLUNTARY ARBITRATOR
JURISDICTION
Jurisdiction of the Voluntary Arbitrators
Generally, the arbitrator is expected to decide only
those questions expressly delineated by the
submission agreement. Nevertheless, the
arbitrator can assume that he has the necessary
power to make a final settlement since arbitration
is the final resort for the adjudication of the
disputes (Ludo and Luym Corp. v. Saornido, G.R. No.
140960, January 20, 2003).
Cases within the jurisdiction of VA
Original and exclusive jurisdiction over
1. All unresolved grievances arising from the:
a. Implementation or interpretation of the
CBA
b. Interpretation or enforcement of company
personnel policies
NOTE: Under Art. 217, it is clear that a LA has
original and exclusive jurisdiction over
termination disputes. However, under Art. 261,
a VA has original and exclusive jurisdiction
over grievances arising from the interpretation
or enforcement of company policies. As a
general rule then, termination disputes should
be brought before a LA, except when the
parties unmistakably express that they agree
to submit the same to voluntary arbitration
(Negros Metal Corporation v. Armelo Lamayo,
G.R. No. 186557, August 25, 2010).
2. Wage distortion issues arising from the
application of any wage orders in organized
establishments
3. Those arising from interpretation and
implementation of productivity incentive
programs under R.A. 6971
4. Violations of CBA provisions which are not
gross in character are no longer treated as ULP
and shall be resolved as grievances under the
CBA
NOTE: Gross violation of CBA provisions shall
mean flagrant and/or malicious refusal to
comply with the economic provisions of such
agreement.
5. Any other labor disputes upon agreement by
the parties including ULP and bargaining
deadlock (LC, Art. 262).
 PROCEDURE AND JURISDICTION
NLRC and DOLE cannot entertain 2. Include in the agreement a procedure for the
disputes/grievances/matters under the selection of such VA or panel of VAs,
exclusive and original jurisdiction of the preferably from the listing of qualified VAs
voluntary arbitrator duly accredited by the NCMB [LC, Art.260
(3)].
They must immediately dispose and refer the same
to the grievance machinery or voluntary Who will designate the voluntary arbitrator
arbitration provided in the CBA. /panel in case the parties fail to select one

The parties may choose to submit the dispute to
voluntary arbitration proceedings before or at the
stage of compulsory arbitration proceedings.
Jurisdiction over actual termination disputes
and complaints for illegal dismissal
The Labor Arbiter has jurisdiction over actual
termination disputes and complaints for illegal
dismissal filed by workers pursuant to the union
security clause and not the grievance machinery.
PROCEDURE
How to initiate arbitration
It is the NCMB that shall designate the VA panel
based on the selection procedure provided by the
CBA (Manila Central Line Free Workers Union v.
Manila Central Line Corp., G.R. No. 109383, June 15,
1998).
Labor Arbiters can be designated as voluntary
arbitrators
There is nothing in the law that prohibits LAs from
also acting as voluntary arbitrators as long as the
parties agree to have him hear and decide their
dispute (Manila Central Line Free Workers Union v.
Manila Central Line Corp., G.R. No. 109383, June 15,
1998).

1. Submission Agreement Where the parties
define the disputes to be resolved
2. Demand notice Invoking collective
agreement arbitration clause
Voluntary arbitrator (VA)
1. Any person accredited by the NCMB as such
2. Any person named or designated in the CBA
by the parties to act as their VA
3. One chosen with or without the assistance of
the NCMB, pursuant to a selection procedure
agreed upon in the CBA
4. Any official that may be authorized by the
SLE to act as VA upon the written request
and agreement of the parties to a labor
dispute (LC, Art. 262).
Powers of a voluntary arbitrator
1. Hold hearings
2. Receive evidence
3. Take whatever action necessary to resolve
the dispute including efforts to effect a
voluntary settlement between parties (LC,
Art. 262-A).
Effect of the award of voluntary arbitrator
The decision or award of the voluntary arbitrator
acting within the scope of its authority shall
determine the rights of the parties and their
decisions shall have the same legal effects as
judgment of the courts. Such matters on fact and
law are conclusive.
Both the employer and the bargaining
representative of the employees are required
to go through the grievance machinery
It is but logical, just and equitable that whoever is
aggrieved should initiate settlement of grievance
through the grievance machinery. To impose
compulsory procedure on Ers alone would be
oppressive of capital.
Nature of power of the voluntary arbitrator
Arbitrators by the nature of their functions act in a
quasi-judicial capacity (BP 129, as amended by R.A.
9702); where a question of law is involved or there
is abuse of discretion, courts will not hesitate to
pass upon review of their acts.

Procedure for choosing voluntary REMEDIES

arbitrator/panel
Decisions of voluntary arbitrators appealable
1. The parties in a CBA shall designate in
advance a VA/panel, preferably from the GR: Decisions of VA are final and executory after
listing of qualified VAs duly accredited by the 10 calendar days from receipt of the copy of the
NCMB, or award or decision by the parties (LC, Art. 262-A).

UNIVERSITY OF SANTO TOMAS

231 FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
NOTE: Art. 262-A deleted the word unappealable
from Art. 263. It makes the voluntary arbitration
award final and executory after 10 calendar days
from receipt of the copy of the award or decision
by the parties. Presumably, the decision may still
be reconsidered by the VA on the basis of a motion
for reconsideration duly filed during that period
(Albert Teng v. Alfredo Pahagac, G.R. No. 169704,
November 17, 2010).
XPN: Appeal to the CA via Rule 43 of the Rules of
Court within 15 days from the date of receipt of
VAs decision (Luzon Devt Bank v. Assn of Luzon
Devt Bank Ees, G.R. No. 120319, October 6, 1995).
NOTE: A VA by the nature of his functions acts in
quasi-judicial capacity. There is no reason why the
VAs decisions involving interpretation of law
should be beyond the SCs review. Administrative
officials are presumed to act in accordance with
law, yet the SC will not hesitate to pass upon their
work where a question of law is involved or where
a showing of abuse of authority or discretion in
their official acts is properly raised in petitions for
certiorari (Continental Marble Corporation v. NLRC,
G.R. No. L-43825, May 9, 1988).
Q: PSSLU had an existing CBA with Sanyo Phils.,
Inc. with a union security clause which provides
that: all members of the union covered by this
agreement must retain their membership in
good standing in the union as condition of
his/her continued employment with the
company. On account of anti-union activities,
disloyalty and for joining another union, PSSLU
expelled 12 employees from the union. As a
result, PSSLU recommended the dismissal of
said Ees pursuant to the union security clause.
Sanyo approved the recommendation and
considered the said Ees dismissed. Thereafter,
the dismissed Ees filed with the Arbitration
Branch of the NLRC a complaint for illegal
dismissal.
Does the voluntary arbitrator have jurisdiction
over the case?
A: No. The VA has no jurisdiction over the case.
Although the dismissal of the Ees concerned was
made pursuant to the union security clause
provided in the CBA, there was no dispute
whatsoever between PSSLU and Sanyo as regards
the interpretation or implementation of the said
union security clause. Both PSSLU and Sanyo are
united and have come to an agreement regarding
the dismissal of the Ees concerned. Thus there is
no grievance between the union and management
which could be brought to the grievance
UNIVERSITY OF SANTO TOMAS
2015 GOLDEN NOTES
232
machinery. The dispute is between PSSLU and
Sanyo. The dispute therefore, does not involve the
interpretation or implementation of a CBA (Sanyo
Philippines Workers Union-PSSLU v. Canizares, G.R.
No. 101619, June 8, 1992).
Q: X was employed as a telephone operator of
Manila Midtown Hotel. She was dismissed from
her employment for committing the following
violations of offenses subject to disciplinary
actions, namely: falsifying official documents
and culpable carelessness-negligence or failure
to follow specific instructions or established
procedures. X then filed a complaint for illegal
dismissal with the Arbitration branch of the
NLRC. The Hotel challenged the jurisdiction of
the Labor Arbitrator on the ground that the
case falls within the jurisdictional ambit of the
grievance procedure and voluntary arbitration
under the CBA.
Does the LA have jurisdiction over the case?
A: Yes. The LA has jurisdiction. The dismissal of X
does not call for the interpretation or enforcement
of company personnel policies but is a termination
dispute which comes under the jurisdiction of the
LA. The dismissal of X is not an unresolved
grievance. Neither does it pertain to interpretation
of company personnel policy (Maneja v. NLRC, G.R.
No. 124013, June 5, 1998).
Q: Sime Darby Salaried Employees Association-
ALU (SDSEA-ALU) wrote petitioner Sime Darby
Pilipinas (SDP) demanding the implementation
of a performance bonus provision identical to
the one contained in their own CBA with SDP.
Subsequently, SDP called both respondents
SDEA and SDEA-ALU to a meeting wherein SDEA
explained that it was unable to grant the
performance bonus. In a conciliation meeting,
both parties agreed to submit their dispute to
voluntary arbitration. Their agreement to
arbitrate stated, among other things, that they
were "submitting the issue of performance
bonus to voluntary arbitration."
Does the voluntary arbitrator have the power
to pass upon the question of whether to grant
the performance bonus and to determine the
amount thereof?
A: Yes. In their agreement to arbitrate, the parties
submitted to the VA the issue of performance
bonus. The language of the agreement to arbitrate
may be seen to be quite cryptic. There is no
indication at all that the parties to the arbitration
agreement regarded the issue of performance
 PROCEDURE AND JURISDICTION
bonus as a two-tiered issue, only one tier of which
was being submitted to arbitration. Possibly, Sime
Darbys counsel considered that issue as having
dual aspects and intended in his own mind to
submit only one of those aspects to the VA, if he
did, however, he failed to reflect his thinking and
intent in the arbitration agreement (Sime Darby
Phils. v. Magsalin, G.R. No. 90426, December 15,
1989).
Q: Apalisok, production chief for RPN Station,
was dismissed due to her alleged hostile,
arrogant, disrespectful, and defiant behavior
towards the Station Manager. She informed
RPN that she is waiving her right to resolve her
case through the grievance machinery provided
in the CBA. The voluntary arbitrator resolved
the case in the employees favor.
On appeal, the CA ruled in favor of RPN because
it considered Apalisoks waiver to file her
complaint before the grievance machinery as a
relinquishment of her right to avail herself of
the aid of the voluntary arbitrator. The CA said
that the waiver had the effect of resolving an
otherwise unresolved grievance, thus the
decision of the VA should be set aside for lack of
jurisdiction. Is the ruling of the CA correct?
A: No. Art. 262 of the LC provides that upon
agreement of the parties, the VA can hear and
decide all other labor disputes.
The Ees waiver of her option to submit her case to
grievance machinery did not amount to
relinquishing her right to avail herself of voluntary
arbitration.
Contrary to the finding of the CA, voluntary
arbitration as a mode of settling the dispute was
not forced upon RPN. Both parties indeed agreed
to submit the issue of validity of the dismissal of
petitioner to the jurisdiction of the VA by the
Submission Agreement duly signed by their
respective counsels. The VA had jurisdiction over
the parties controversy (Apalisok v. RPN, G.R. No.
138094, May 29, 2003).
COURT OF APPEALS
RULES OF COURT, RULE 65
Remedy of a party aggrieved by a decision of
the NLRC
File a petition for certiorari (Rule 65) which should
be initially filed with the CA in strict observance of
the doctrine on the hierarchy of courts as the
appropriate forum for the relief desired. The CA is
233
procedurally equipped to resolve unclear or
ambiguous factual finding, aside from the
increased number of its component divisions (St.
Martin Funeral Home v. NLRC, G.R. No. 130866,
September 16, 1998).
NOTE: Rule 65, Section 1, Rules of Court:
Petition for Certiorari - When any tribunal, board or
officer exercising judicial or quasi-judicial
functions has acted without or in excess of its or his
jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and
there is no appeal, or any plain, speedy, and
adequate remedy in the ordinary course of law, a
person aggrieved thereby may file a verified
petition in the proper court, alleging the facts with
certainty and praying that judgment be rendered
annulling or modifying the proceedings of such
tribunal, board or officer, and granting such
incidental reliefs as law and justice may require.
The petition shall be accompanied by a certified
true copy of the judgment, order or resolution
subject thereof, copies of all pleadings and
documents relevant and pertinent thereto, and a
sworn certification of non-forum shopping as
provided in the third paragraph of section 3, Rule
46.
Period when the petition for certiorari should
be filed with the Court of Appeals
Under Sec. 4, Rule 65 (as amended by A.M. No. 00-
2-03-SC) of the Rules of Civil Procedure, the
petition must be filed within 60 days from notice of
the judgment or from notice of the resolution
denying the petitioners motion for
reconsideration. This amendment is effective
September 1, 2000, but being curative may be
given retroactive application (Narzoles v. NLRC, G.R.
No. 141959, September 29, 2000).
Art. 224 of the LC, which requires that copies of
final decisions, orders or awards be furnished not
only the partys counsel of record but also the party
himself applies to the execution thereof and not to
the filing of an appeal or petition for certiorari. The
period within which a petition for certiorari
against a decision of the NLRC may be filed should
be computed from the date counsel of record of the
party receives a copy of the decision or resolution,
and not from the date the party himself receives a
copy thereof (Ginete v. Sunrise Manning Agency, G.R.
No. 142023, June 21, 2001).
Q: Company A was sold to Company B with the
undertaking that Company B will absorb the
formers employees. However, they were not
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
hired by Company B or given separation pay by
Company A. They thus filed an action for illegal
dismissal but was denied. When the case
reached the CA via a petition for certiorari, the
same was dismissed outrightly considering that
the verification and certification against forum
shopping was signed only by 3 out of the 228
petitioners. Was the CA correct?
A: Yes. While litigation is not a game of
technicalities, and that the rules of procedure
should not be enforced strictly at the cost of
substantial justice, still it does not follow that the
Rules of Court may be ignored at will and at
random to the prejudice of the orderly
presentation, assessment and just resolution of the
issues. The Rules of Court provide that a petition
for certiorari must be verified and accompanied by
a sworn certification of non-forum
shopping. Failure to comply with these mandatory
requirements shall be sufficient ground for the
dismissal of the petition. Considering that only 3 of
the 228 named petitioners signed the requirement,
the CA dismissed the case against them, as they did
not execute a Verification and Certification against
forum shopping. It does not involve a failure to
attach the Annexes. Rather, the procedural
infirmity consists of omission the failure to sign a
Verification and Certification against forum
shopping (Ramirez et. al. v. Mar Fishing Co., Inc. et.
al., G.R. No. 168208, June 13, 2012).
final order or resolution of the Court of Appeals,
the Sandiganbayan, the Court of Tax Appeals, the
Regional Trial Court or other courts, whenever
authorized by law, may file with the Supreme Court
a verified petition for review on certiorari. The
petition may include an application for a writ of
preliminary injunction or other provisional
remedies and shall raise only questions of law,
which must be distinctly set forth. The petitioner
may seek the same provisional remedies by
verified motion filed in the same action or
proceeding at any time during its pendency.
Policy of the Supreme Court regarding appeals
in labor cases
The Supreme Court is very strict regarding appeals
filed outside the reglementary period for filing the
same. To extend the period of the appeal is to
delay the case, a circumstance which could give the
employer the chance to wear out the efforts and
meager resources of the worker that the latter is
constrained to give up for less than what is due him
(Firestone Tire and Rubber Co. of the Philippines v.
Firestone Tire and Rubber Co. Employees Union, G.R.
No. 75363, August 4, 1992).
PRESCRIPTION OF ACTIONS
Rules as regards to the prescriptive period
provided for in the LC

XPN: The Court may recognize the merits of a case SUBJECT PRESCRIPTIVE PERIOD
by considering the special circumstances or 1 year from accrual of
compelling reasons that justifies the relaxation of such ULP; otherwise
the rule requiring verification and certification of ULP
forever barred
non-forum shopping in the interest of substantial (LC, Art. 290)
justice (Ibid.). GR: 3 years from the time
the cause of action
SUPREME COURT accrued; otherwise
forever barred (LC, Art.
RULES OF COURT, RULE 45 Money Claims
291)

How to appeal from a judgment, or final order XPN: Promissory Estoppel

or resolution, of the Court of Appeals
Within one year from the
A party desiring to appeal may file with the All money claims
date of effectivity, in
Supreme Court a verified petition for review on accruing prior to
accordance with IRR;
certiorari under Rule 45 within fifteen (15) days the effectivity of
otherwise, they shall
from notice of the judgment, final order or the LC
forever be barred
resolution appealed from (Sea Power Shipping Workmens
Enterprises, Inc. v. CA, G.R. No. 138270, June 28, Compensation Dec. 31, 1974 shall be filed
2001). claims accruing not later than Mar. 31,
prior to the 1975 before the
NOTE: Rule 45, Sec. 1, Rules of Court: effectivity of the LC appropriate regional
and between Nov. offices of the DOLE (LC,
Filing of petition with Supreme Court.A party 1, 1974-Dec. 31, Art. 291)
desiring to appeal by certiorari from a judgment, 1974

UNIVERSITY OF SANTO TOMAS

2015 GOLDEN NOTES
234
 PROCEDURE AND JURISDICTION
SUBJECT PRESCRIPTIVE PERIOD
After 3 years from the
date of submission of the
annual financial report to
the DOLE or from the date
the same should have
Union funds been submitted as
required by law,
whichever comes earlier
(Omnibus Rules
Implementing the LC, Book
VII, Rule II, Sec. 5).
4 years. It commences to
run from the date of
Illegal Dismissal
formal dismissal [Mendoza
Cases
v. NLRC, G.R. No. 122481,
(1998)].
Promissory estoppel
It may arise from the making of a promise, even
though without consideration, if it was intended
that the promise should be relied upon. If in fact it
was relied on, a refusal to enforce it would virtually
sanction the perpetration of fraud or would result
in other injustice. It presupposes the existence of a
promise on the part of one against whom estoppel
is claimed. The promise must be plain and
unambiguous and sufficiently specific so that the
court can understand the obligation assumed and
enforce the promise according to its terms.
NOTE: In order to make out a claim of promissory
estoppel, a party bears the burden of establishing
the following elements: (1) a promise was
reasonably expected to induce action or
forbearance; (2) such promise did, in fact, induce
such action or forbearance; and (3) the party
suffered detriment as a result.
Acts considered as criminal violations of the LC
Except as otherwise provided in the LC, or unless
the acts complained of hinge on a question of
interpretation or implementation of ambiguous
provisions of an existing CBA, any violation of the
provisions of the LC declared to be unlawful or
penal in nature shall be punished with a fine of not
less than Php 1,000.00 nor more than Php
10,000.00 or imprisonment of not less than three
months nor more than three years, or both such
fine and imprisonment at the discretion of the
court (LC, Art. 288).
1. Prohibition against transfer of employment -
After the issuance of an employment permit,
the alien shall not transfer to another job or
235
change his employer without prior approval
of the SLE (LC, Art. 41).
2. Violation of the provisions on learnership
(LC, Art. 77).
3. In cases of unlawful withholding of wages,
the culpable party may be assessed
attorneys fees equivalent to ten percent of
the amount of wages recovered (LC, Art.
111).
4. It shall be unlawful for any person to
demand or accept, in any judicial or
administrative proceedings for the recovery
of wages, attorneys fees which exceed ten
percent of the amount of wages recovered
(LC, Art. 111).
5. It shall be unlawful for any person, directly
or indirectly, to withhold any amount from
the wages of a worker or induce him to give
up any part of his wages by force, stealth,
intimidation, threat or by any other means
whatsoever without the workers consent
(LC, Art. 116).
6. It shall be unlawful to make any deduction
from the wages of any employee for the
benefit of the Er or his representative or
intermediary as consideration of a promise
of employment or retention in employment
(LC, Art. 116).
7. It shall be unlawful for an Er to refuse to pay
or reduce the wages and benefits, discharge
or in any manner discriminate against any
Ee who has filed any complaint or instituted
any proceeding under this Title or has
testified or is about to testify in such
proceedings (LC, Art. 118).
8. It shall be unlawful for any person to make
any statement, report, or record filed or kept
pursuant to the provisions of this Code
knowing such statement, report or record to
be false in any material respect (LC, Art.
119).
9. It shall be unlawful for any person or entity
to obstruct, impede, delay or otherwise
render ineffective the orders of the SLE or
his duly authorized representatives issued
pursuant to the authority granted under this
Article, and no inferior court or entity shall
issue temporary or permanent injunction or
restraining order or otherwise assume
jurisdiction over any case involving the
UNIVERSITY OF SANTO TOMAS
FACULTY OF CIVIL LAW
 LABOR LAW AND SOCIAL LEGISLATION
enforcement orders issued in accordance
with this Article [LC, Art. 128 (4)].
10. It shall be unlawful for any employer to
discriminate against any woman Ee with
respect to terms and conditions of
employment solely on account of her sex (LC,
Art. 135).
11. It shall be unlawful for an Er to require as a
condition of employment or continuation of
employment that a woman employee shall
not get married, or to stipulate expressly or
tacitly that upon getting married, a woman
employee shall be deemed resigned or
separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a
woman Ee merely by reason of her marriage
(LC, Art. 136).
12. It shall be unlawful for any Er:

a. to deny any woman Ee the benefits

provided for in this Chapter or to
discharge any woman employed by him
for the purpose of preventing her from
enjoying any of the benefits provided
under this Code;
b. to discharge such woman on account of
her pregnancy, or while on leave or in
confinement due to her pregnancy; or
c. to discharge or refuse the admission of
such woman upon returning to her work
for fear that she may again be pregnant.

13. Violations of rights and conditions of

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

NOTE: In addition to the penalty prescribed under

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

If the offense is committed by a corporation, trust,

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

UNIVERSITY OF SANTO TOMAS

2015 GOLDEN NOTES
236