STUDY GUIDE

LABOR LAW

1. THE EMPLOYER-EMPLOYEE RELATIONSHIP

The existence of an EMPLOYER-EMPLOYEE relationship is the condition sine qua non for
the application of the Labor Code, specifically. Book in (Articles 83-96) on Conditions of
Employment to apply. Likewise, the jurisdiction of labor tribunals is premised on the relationship.
Excluded employees; Government employees. Managerial employees, Other officers or members
of the managerial staff, and Domestic servants and persons in the personal service of another.

The term "EMPLOYER" refers to one who engages the services of a worker or employee
and pays his wages or salaries. It includes not only the principal employer but any person acting in
his interest, directly or Indirectly. A labor organization, or any of its officers and agents is not an
employer except when acting as such.

An 'EMPLOYEE" is one who renders service to another under a contract for hire, express
or implied, oral or written, and is compensated for his labor or service by wages.

An Individual whose, work has ceased as a result of, or in connection with any unfair labor
practice or a current labor dispute. Including those who participate In a ULP or economic strike is
still considered an employee.

The employment relationship is essentially CONTRACTUAL and VOLUNTARY. The

relationship cannot be imposed on either the employer or the employee. The worker is free to sell
his labor to anybody just as the employer can purchase labor from anyone he chooses. To compel
the employee to work against his will is involuntary servitude; it is oppression to force an unwilling
employer to give work to a worker.

2. TEST TO DETERMINE EXISTENCE OF RELATIONSHIP

Four-fold test or “control test”

Starting with the case of Viana v. Al Lagadan 99 Phil 408, the Supreme Court used the
following criteria in determining the existence of employer-employee relationship:
a) selection and engagement of the employee;

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 b) payment of wages;
c) power of dismissal; and
d) power to control employee's conduct.

The "control test" is whether the employer controls or has reserved the right to control the
employee not only as to the result of the work to be done but also as to the means and methods by
which the same is to be accomplished.
The power of control refers 'merely to the "existence" of the power and not to the "actual
exercise" thereof.
Not every form of control that a party reserves to himself over the conduct of the other
party in relation to services being rendered may be accorded the effect of establishing an
employer-employee relationship. Rules that merely serve as guidelines towards the achievement of
the mutually desired result and do not control or fix the methodology or restrict the party hired to
use such means do not establish an employer-employee relationship.

Economic reality test

In the early case of Sunripe Coconut Products v. CIR 83 Phil. 518, the Supreme Court
used the “economic facts of the relation” in determining the existence of employer-employee
relationship.
In Sevilla v. Court of Appeals,1 the Supreme Court observed the need to consider the
existing economic conditions prevailing between the parties, in addition to the standard of right-of-
control like the inclusion of the employee in the payrolls, to give a clearer picture in determining the
existence of an employer-employee relationship based on an analysis of the totality of economic
circumstances of the worker.
Thus, the determination of the relationship between employer and employee depends
upon the circumstances of the whole economic activity,2 such as: (1) the extent to which the
services performed are an integral part of the employer’s business; (2) the extent of the worker’s
investment in equipment and facilities; (3) the nature and degree of control exercised by the
employer; (4) the worker’s opportunity for profit and loss; (5) the amount of initiative, skill, judgment
or foresight required for the success of the claimed independent enterprise; (6) the permanency
and duration of the relationship between the worker and the employer; and (7) the degree of
dependency of the worker upon the employer for his continued employment in that line of
business.3
The proper standard of economic dependence is whether the worker is dependent on the
alleged employer for his continued employment in that line of business. 4 In the United States, the
touchstone of economic reality in analyzing possible employment relationships for purposes of the
Federal Labor Standards Act is dependency.5 By analogy, the benchmark of economic reality in
analyzing possible employment relationships for purposes of the Labor Code ought to be the
economic dependence of the worker on his employer.

1
G.R. Nos. L-41182-3, April 15, 1988, 160 SCRA 171, 179-180, citing Visayan Stevedore Transportation
Company v. Court of Industrial Relations, 125 Phil. 817, 820 (1967).
2
Rutherford Food Corporation v. McComb, 331 U.S. 722, 727 (1947); 91 L.Ed. 1772, 1777 (1946).
3
See Brock v. Lauritzen, 624 F.Supp. 966 (E.D. Wisc. 1985); Real v. Driscoll Strawberry Associates, Inc.,
603 F.2d 748 (9th Cir. 1979); Goldberg v. Whitaker House Cooperative, Inc., 366 U.S. 28, 81 S.Ct. 933, 6
L.Ed.2d 100 (1961); Bartels v. Birmingham, 332 U.S. 126, 67 S.Ct. 1547, 91 L.Ed. 1947 (1947).
4
Halferty v. Pulse Drug Company, 821 F.2d 261 (5th Cir. 1987).
5
Weisel v. Singapore Joint Venture, Inc., 602 F.2d. 1185 (5th Cir. 1979).

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Two-tiered test

In Fransisco v. NLRC, G.R. No. 170087, August 31, 2006, the Supreme Court held:
“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. There are instances when, aside from the employer’s
power to control the employee with respect to the means and methods by which the work is to be
accomplished, economic realities of the employment relations help provide a comprehensive
analysis of the true classification of the individual, whether as employee, independent contractor,
corporate officer or some other capacity.
“The better approach would therefore be to adopt a two-tiered test involving: (1) the
putative employer’s power to control the employee with respect to the means and methods by
which the work is to be accomplished; and (2) the underlying economic realities of the activity or
relationship.
“This two-tiered test would provide us with a framework of analysis, which would take
into consideration the totality of circumstances surrounding the true nature of the relationship
between the parties. This is especially appropriate in this case where there is no written
agreement or terms of reference to base the relationship on; and due to the complexity of the
relationship based on the various positions and responsibilities given to the worker over the
period of the latter’s employment.”

3. STATUS OF EMPLOYMENT

Art. 279. Security of tenure. In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee 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. (As amended by Section 34, Republic Act No. 6715, March 21, 1989)

Art. 280. Regular and casual employment. The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer, except where the employment has been fixed for a
specific project or undertaking the completion or termination of which has been determined at the time of the
engagement of the employee or where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That
any employee who has rendered at least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which he is employed and his
employment shall continue while such activity exists.

Art. 281. Probationary employment. Probationary employment shall not exceed six (6) months from the
date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer
period. The services of an employee who has been engaged on a probationary basis may be terminated for
a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards
made known by the employer to the employee at the time of his engagement. An employee who is allowed
to work after a probationary period shall be considered a regular employee.

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REGULAR
A regular employee enjoys security of tenure and the right to seIf-organization.
The following are considered regular employees:
1. Those who are engaged to perform activities which are usually necessary or desirable
in the usual trade or business of the employer.

2. Those "probationary" employees who continue or are suffered to work after the
probationary period.

3. Those "casual" employees who have rendered at least one (1) year of service,
whether continuous or broken, shall be considered regular with respect to me activity In
which he Is employed and this employment shall continue while such activity exists.
4. Employees of a "labor-only" contractor.

CONTRACTUAL: Contractual employees only have limited right to security of tenure and self-
organization.

1. PROJECT/FIXED – PERIOD EMPLOYMENT, where the employment has been fixed

for a specific project or undertaking the completion or termination of which has been
determined at the time of engagement.
2. SEASONAL EMPLOYMENT, where the work or service to be performed is seasonal in
nature and the employment is for the duration of the season. (Seasonal employees are
regular but during the off-season, the employment is merely suspended; the seasonal
employees are merely temporarily laid-off)
REGULAR SEASONAL EMPLOYMENT
In Mercado vs. NLRC, Sept. 5,1991, the Supreme Court held that even if the
seasonal workers had rendered more than one year of service, they could not be
considered as regular employees. “Petitioners, being project employees, or, to use the
correct term, seasonal employees, their employment legally ends upon the completion of
the project or the season. The termination of their employment cannot and should not
constitute an illegal dismissal.”
However, in subsequent cases, the Supreme Court ruled otherwise. Seasonal
employees may attain regularity in employment. Once they attained a regular status, they
are called “regular seasonal employees.” Seasonal employees are regular but during the
off-season, the employment is merely suspended; the seasonal employees are merely
temporarily laid-off (Abasolo vs. NLRC, G.R. No. 118475, Nov. 29, 2000).
In Benares vs. Pancho, April 29, 2005, the Supreme Court clarified and explained
its seemingly conflicting rulings. In Mercado case, the workers were engaged to do a
particular phase of agricultural work, after which they would be free to render services to
other farm owners who need their services. In the Hacienda Fatima case (G.r. No.
149440, Jan. 28, 2003), the workers performed the same tasks for petitioners every
season for several years. They were considered regular employees for their respective
tasks.
3. CASUAL EMPLOYMENT, where employment is neither regular, project or seasonal.
4. PROBATIONARY EMPLOYMENT, where the employee is on trial or probation during
which the employer determines the employee’s qualifications and fitness for regular
employment. (the apprenticeship agreement may stipulate a period longer than 6 months)

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4. JOB / LABOR CONTRACTING

4.1. PERMISSIBLE JOB CONTRACTING

4.1.1. The contractor carries on an independent business and undertakes the contract
work on his own account under his own responsibility according to his own manner
and method, free from control and direction of his employer or principal in all
matters connected with the performance of the work except as to the results
thereof.
4.1.2. The contractor has substantial capital or investment in the form of tools/equipment,
machineries, work premises and other materials, which are necessary in me
conduct of business.

4.1 CONDITIONS FOR PERMISSIBLE JOB CONTRACTING

4.1.3. The contractor must be duly licensed by DOLE

4.1.4. There should be a written contract between the contractor and the principal that
will assure the employees at least the minimum labor standards and benefits
provided by existing laws.

4.2 PROHIBITED ACTIVITIES

4.2.1. Labor-only contracting.

4.2.2. Contracting out of work or service performed by union members that interferes
with, restrains or coerces employees in the exercise of their right to self-
organization
4.2.3. Contracting out of work that will either displace employees of the principal
employer or reduce their work hours and/or take-home pay.

4.2.4. Contracting out of work or service that is directory related to the business and
operation of the employer during the existence of a labor dispute involving his
employees, regardless of whether the dispute directly involves work stoppages,
except when authorized by competent authority when justified by public Interest.
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4.2.5. Contracting out with a recruitment, placement or any other agency which is not
duly licensed as contractor.

4.2.6. Contracting outof positions vacated by regular employee.

4.3 DISTINCTIONS BETWEEN JOB AND LABOR-ONLY CONTRACTING

4.3.1 In Job Contracting, there is no employer-employee relationship between the

principal and the employees of the contractor; while in Labor-only Contracting,
such relationship exists.

4.3.2 In Job Contracting, the principal Is considered only an "indirect'' employer under
Article 107; of the Labor Code; while the principal is considered the direct
employer under Article 106 in Labor-only Contracting.

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 4.3.3 The principal in Job Contracting .is made jointly and severally liable only, for the
payment of wages. Other claims are not included, unlike in labor-only contracting.

4.3.4 In Job Contracting, the contractor provides specific services or undertakes a specific
job while in Labor-only Contractor, what is provided is only manpower or personnel
to work for the principal.

5. KINDS OF EMPLOYEES

5.1 MANAGERIAL EMPLOYEES (ARTICLE 212[m]): primary duty consists of

management of establishment or department therein; customarily and regularity
direct the work of two or more employees therein; have authority to hire and fire, or
their suggestions as to hiring, firing, promotion or change of employees status are
given particular weight.

5.2 SUPERVISORY EMPLOYEES (ARTICLE 212[m]): those who in the interest of the
employer 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.

5.3 MANAGERIAL STAFF: primary duty consists of the performance of work directly
related to management policies of their employer; customarily and regularly exercise
discretion and independent judgment; regularly assist proprietor or managerial
employee, execute under general supervision work along specialize lines or
technical lines requiring special training, experience or knowledge, execute special
assignments or tasks; do not devote more than 20% of their time to other activities
not enumerated above.

5.4 PIECE-RATE WORKERS: those paid a fixed amount for performing work
irrespective of time consumed.

5.5 NON-AGRICULTURAL FIELD PERSONNEL: regularly perform their duties away

from the principal or branch office or place of business of the employer and whose
actual hours of work in the field cannot be determined with reasonable certainty.

5.6 DOMESTIC SERVANTS/HOUSEHELPERS (ARTICLE 141): those rendering service

in the employer's home which is usually necessary or desirable for the maintenance
and enjoyment thereof and includes ministering to the personal comfort and
convenience of the members of the employer's household, including the services of
family drivers.

LABOR RELATIONS

Coverage of the right to self-organization

Art. 243. Coverage and employees’ right to self-organization. All persons employed
in commercial, industrial and agricultural enterprises and in religious, charitable, medical, or
educational institutions, whether operating for profit or not, shall have the right to self-organization
and to form, join, or assist labor organizations of their own choosing for purposes of collective
bargaining. Ambulant, intermittent and itinerant workers, self-employed people, rural workers and

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those without any definite employers may form labor organizations for their mutual aid and
protection. (As amended by Batas Pambansa Bilang 70, May 1, 1980)

Art. 244. Right of employees in the public service. Employees of government

corporations established under the Corporation Code shall have the right to organize and to
bargain collectively with their respective employers. All other employees in the civil service shall
have the right to form associations for purposes not contrary to law. (As amended by Executive
Order No. 111, December 24, 1986)

Art. 245. Ineligibility of managerial employees to join any labor organization; right
of supervisory employees. Managerial employees are not eligible to join, assist or form any
labor organization. Supervisory employees shall not be eligible for membership in a labor
organization of the rank-and-file employees but may join, assist or form separate labor
organizations of their own. (As amended by Section 18, Republic Act No. 6715, March 21, 1989)

Art. 246. Non-abridgment of right to self-organization. It shall be unlawful for any

person to restrain, coerce, discriminate against or unduly interfere with employees and workers in
their exercise of the right to self-organization. Such right shall include the right to form, join, or
assist labor organizations for the purpose of collective bargaining through representatives of their
own choosing and to engage in lawful concerted activities for the same purpose for their mutual aid
and protection, subject to the provisions of Article 264 of this Code. (As amended by Batas
Pambansa Bilang 70, May 1, 1980)

1. QUALIFIED TO FORM, ASSIST, JOIN UNIONS

1.1. RANK-AND-FILE employees of Commercial, industrial, agricultural enterprises and
Religious, charitable, medical or educational institutions whether profit or non-profit.

1.2. SUPERVISORY EMPLOYEES

1.3. SECURITY PERSONNEL/CONFIDENTIAL/TECHNICAL

1.4. GOVERNMENT EMPLOYEES except AFP and PNP personnel

1.5. EMPLOYEES OF GOCCs

1.6. ALIENS WITH EMPLOYMENT PERMITS, subject to reciprocity

2. DISQUALIFIED

2.1. MANAGERIAL EMPLOYEES are ineligible to joint, assist or form any labor
organization. Under the DOCTRINE OF NECESSARY IMPLICATION, members of
the managerial staff are under the same prohibition.
2.2. SUPERVISORY EMPLOYEES cannot join the union of rank-and-file employees.
2.3. CONFIDENTIAL EMPLOYEES who have access to confidential data and information
relating to labor relations matters are also disqualified to join the union of rank-
and-filers, although they may form their own union.
2.4. SUBVERSIVES
2.5. MEMBER-EMPLOYEES OF COOPERATIVES
2.6. EMPLOYEES EXCLUDED FROM BARGAINING UNIT

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BUREAU OF LABOR RELATIONS

Art. 226. Bureau of Labor Relations. The Bureau of Labor Relations and the Labor
Relations Divisions in the regional offices of the Department of Labor, shall have original and
exclusive authority to act, at their own initiative or upon request of either or both parties, on all
inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or
affecting labor-management relations in all workplaces, whether agricultural or non-agricultural,
except those arising from the implementation or interpretation of collective bargaining agreements
which shall be the subject of grievance procedure and/or voluntary arbitration.

The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to
extension by agreement of the parties. (As amended by Section 14, Republic Act No. 6715, March
21, 1989).

Art. 227. Compromise agreements. Any compromise settlement, including those

involving labor standard laws, voluntarily agreed upon by the parties with the assistance of the
Bureau or the regional office of the Department of Labor, shall be final and binding upon the
parties. The National Labor Relations Commission or any court, shall not assume jurisdiction over
issues involved therein except in case of non-compliance thereof or if there is prima facie evidence
that the settlement was obtained through fraud, misrepresentation, or coercion.

[Art. 228. Indorsement of cases to Labor Arbiters.

a. Except as provided in paragraph (b) of this Article, the Labor Arbiter shall entertain
only cases endorsed to him for compulsory arbitration by the Bureau or by the Regional Director
with a written notice of such indorsement or non-indorsement. The indorsement or non-
indorsement of the Regional Director may be appealed to the Bureau within ten (10) working days
from receipt of the notice.

b. The parties may, at any time, by mutual agreement, withdraw a case from the
Conciliation Section and jointly submit it to a Labor Arbiter, except deadlocks in collective
bargaining.] (Repealed by Section 16, Batas Pambansa Bilang 130, August 21, 1981)

Art. 229. Issuance of subpoenas. The Bureau shall have the power to require the
appearance of any person or the production of any paper, document or matter relevant to a labor
dispute under its jurisdiction, either at the request of any interested party or at its own initiative.

Art. 230. Appointment of bureau personnel. The Secretary of Labor and Employment
may appoint, in addition to the present personnel of the Bureau and the Industrial Relations
Divisions, such number of examiners and other assistants as may be necessary to carry out the
purpose of the Code. (As amended by Section 15, Republic Act No. 6715, March 21, 1989)

Art. 231. Registry of unions and file of collective bargaining agreements. The
Bureau shall keep a registry of legitimate labor organizations. The Bureau shall also maintain a file
of all collective bargaining agreements and other related agreements and records of settlement of
labor disputes and copies of orders and decisions of voluntary arbitrators. The file shall be open
and accessible to interested parties under conditions prescribed by the Secretary of Labor and
Employment, provided that no specific information submitted in confidence shall be disclosed
unless authorized by the Secretary, or when it is at issue in any judicial litigation, or when public
interest or national security so requires.

Within thirty (30) days from the execution of a Collective Bargaining Agreement, the parties
shall submit copies of the same directly to the Bureau or the Regional Offices of the Department of

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Labor and Employment for registration, accompanied with verified proofs of its posting in two
conspicuous places in the place of work and ratification by the majority of all the workers in the
bargaining unit. The Bureau or Regional Offices shall act upon the application for registration of
such Collective Bargaining Agreement within five (5) calendar days from receipt thereof. The
Regional Offices shall furnish the Bureau with a copy of the Collective Bargaining Agreement within
five (5) days from its submission.

The Bureau or Regional Office shall assess the employer for every Collective Bargaining
Agreement a registration fee of not less than one thousand pesos (P1,000.00) or in any other
amount as may be deemed appropriate and necessary by the Secretary of Labor and Employment
for the effective and efficient administration of the Voluntary Arbitration Program. Any amount
collected under this provision shall accrue to the Special Voluntary Arbitration Fund.

The Bureau shall also maintain a file and shall undertake or assist in the publication of all
final decisions, orders and awards of the Secretary of Labor and Employment, Regional Directors
and the Commission. (As amended by Section 15, Republic Act No. 6715, March 21, 1989)

Art. 232. Prohibition on certification election. The Bureau shall not entertain any
petition for certification election or any other action which may disturb the administration of duly
registered existing collective bargaining agreements affecting the parties except under Articles 253,
253-A and 256 of this Code. (As amended by Section 15, Republic Act No. 6715, March 21, 1989)

Art. 233. Privileged communication. Information and statements made at conciliation

proceedings shall be treated as privileged communication and shall not be used as evidence in the
Commission. Conciliators and similar officials shall not testify in any court or body regarding any
matters taken up at conciliation proceedings conducted by them.

RIGHT TO SELF-ORGANIZATION

LABOR ORGANIZATIONS

Art. 234. Requirements of registration. Any applicant labor organization, association or group
of unions or workers shall acquire legal personality and shall be entitled to the rights and privileges granted
by law to legitimate labor organizations upon issuance of the certificate of registration based on the following
requirements.

a. Fifty pesos (P50.00) registration fee;

b. The names of its officers, their addresses, the principal address of the labor organization, the
minutes of the organizational meetings and the list of the workers who participated in such
meetings;

c. The names of all its members comprising at least twenty percent (20%) of all the employees in
the bargaining unit where it seeks to operate; (As amended by Executive Order No. 111, December
24, 1986)

d. If the applicant union has been in existence for one or more years, copies of its annual
financial reports; and

e. Four (4) copies of the constitution and by-laws of the applicant union, minutes of its adoption
or ratification, and the list of the members who participated in it. (As amended by Batas Pambansa
Bilang 130, August 21, 1981)

Art. 235. Action on application. The Bureau shall act on all applications for registration within
thirty (30) days from filing.

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 All requisite documents and papers shall be certified under oath by the secretary or the treasurer of
the organization, as the case may be, and attested to by its president.

Art. 236. Denial of registration; appeal. The decision of the Labor Relations Division in the
regional office denying registration may be appealed by the applicant union to the Bureau within ten (10)
days from receipt of notice thereof.

Art. 237. Additional requirements for federations or national unions. Subject to Article 238, if
the applicant for registration is a federation or a national union, it shall, in addition to the requirements of the
preceding Articles, submit the following:

a. Proof of the affiliation of at least ten (10) locals or chapters, each of which must be a duly
recognized collective bargaining agent in the establishment or industry in which it operates,
supporting the registration of such applicant federation or national union; and

b. The names and addresses of the companies where the locals or chapters operate and the list
of all the members in each company involved.

[Art. 238. Conditions for registration of federations or national unions. No federation or

national union shall be registered to engage in any organization activity in more than one industry in any
area or region, and no federation or national union shall be registered to engage in any organizational
activity in more than one industry all over the country.

The federation or national union which meets the requirements and conditions herein prescribed
may organize and affiliate locals and chapters without registering such locals or chapters with the Bureau.

Locals or chapters shall have the same rights and privileges as if they were registered in the
Bureau, provided that such federation or national union organizes such locals or chapters within its assigned
organizational field of activity as may be prescribed by the Secretary of Labor.

The Bureau shall see to it that federations and national unions shall only organize locals and
chapters within a specific industry or union.] (Repealed by Executive Order No. 111, December 24, 1986)

Art. 238. Cancellation of registration; appeal. The certificate of registration of any legitimate
labor organization, whether national or local, shall be cancelled by the Bureau if it has reason to believe,
after due hearing, that the said labor organization no longer meets one or more of the requirements herein
prescribed.

[The Bureau upon approval of this Code shall immediately institute cancellation proceedings and
take such other steps as may be necessary to restructure all existing registered labor organizations in
accordance with the objective envisioned above.] (Repealed by Executive Order No. 111, December 24,
1986)

Art. 239. Grounds for cancellation of union registration. The following shall constitute
grounds for 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. Failure to submit the documents mentioned in the preceding paragraph within thirty (30) days
from adoption or ratification of the constitution and by-laws or amendments thereto;

c. Misrepresentation, false statements or fraud in connection with the election of officers, minutes

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 of the election of officers, the list of voters, or failure to submit these documents together with the
list of the newly elected/appointed officers and their postal addresses within thirty (30) days from
election;

d. Failure to submit the annual financial report to the Bureau within thirty (30) days after the
closing of every fiscal year and misrepresentation, false entries or fraud in the preparation of the
financial report itself;

e. Acting as a labor contractor or engaging in the "cabo" system, or otherwise engaging in any
activity prohibited by law;

f. Entering into collective bargaining agreements which provide terms and conditions of
employment below minimum standards established by law;

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

h. Other than for mandatory activities under this Code, checking off special assessments or any
other fees without duly signed individual written authorizations of the members;

i. Failure to submit list of individual members to the Bureau once a year or whenever required by
the Bureau; and

j. Failure to comply with requirements under Articles 237 and 238.

Art. 240. Equity of the incumbent. All existing federations and national unions which meet the
qualifications of a legitimate labor organization and none of the grounds for cancellation shall continue to
maintain their existing affiliates regardless of the nature of the industry and the location of the affiliates.

LABOR ORGANIZATIONS: a union or association of employees which exists in whole or

in part for the purpose of COLLECTIVE BARGAINING and DEALING WITH EMPLOYERS
concerning terms and conditions of employment. A LEGITIMATE LABOR ORGANIZATION is one
that is duly registered with the DOLE.

RIGHTS OF LEGITIMATE LABOR ORGANIZATIONS (ARTICLE 242)

1. Right to represent members for Collective Bargaining

2. Right to be certified as Collective Bargaining Agent
3. Right to be furnished Audited Financial Statements
4. Right to own property
5. Right to sue and be sued
6. Right to organize and operate cooperatives, housing, welfare, and other projects, etc.

UNION AFFILIATION:

A LOCAL UNION is any labor organization operating at the company/establishment level; a

NATIONAL UNION/FEDERATION is any labor organization with at least TEN (10) AFFILIATES
(local unions or local chapters) each of which must be a duly recognized collective bargaining
agent.
Workers may form independent local unions or join national unions or federations either as
affiliates or chapters. Affiliation is intended to strengthen the collective bargaining leverage of local
unions. The relationship between affiliate and federation/national union is one of PRINCIPAL-
AGENT.
Once affiliation is effected, the affiliate becomes subject to the rules and laws of the parent

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organization or mother union under whose charter or authority the local union exists and functions.
The local union, however, remains the basic unit of association, free to serve its own and the
common interest of all, subject to the restraints and limitations imposed by the constitution and by-
laws of the parent organization, and free to renounce the affiliation for mutual welfare.

The affiliate his the constitutionally guaranteed right to DISAFFILIATE from the national
union/federation, generally during the SIXTY-(60)-DAY FREEDOM PERIOD. However, under
certain circumstances, the disaffiliation may be effected at any time provided the majority of the
members of the bargaining unit approve the same.

CANCELLATION OF REGISTRATION
1. Misrepresentation as to the Constitution and By-laws
2. Failure to submit proof of ratification of Constitution
3. Misrepresentation and fraud in election of officers
4. Acting as labor-only contractor
5. Entering into CBA violating Labor Standards
6. Asking or accepting Attorney’s Fees
7. Violation of Check-Off provisions
8. Failure to submit list of members
9. Failure to comply with reporting and other requirements

RIGHTS AND CONDITIONS OF MEMBERSHIP

Art. 241. Rights and conditions of membership in a labor organization. The

following are the rights and conditions of membership in a labor organization:

a. No arbitrary or excessive initiation fees shall be required of the members of a

legitimate labor organization nor shall arbitrary, excessive or oppressive fine and forfeiture
be imposed;

b. The members shall be entitled to full and detailed reports from their officers and
representatives of all financial transactions as provided for in the constitution and by-laws
of the organization;

c. The members shall directly elect their officers, including those of the national union or
federation, to which they or their union is affiliated, by secret ballot at intervals of five (5)
years. No qualification requirements for candidacy to any position shall be imposed other
than membership in good standing in subject labor organization. The secretary or any
other responsible union officer shall furnish the Secretary of Labor and Employment with a
list of the newly-elected officers, together with the appointive officers or agents who are
entrusted with the handling of funds, within thirty (30) calendar days after the election of
officers or from the occurrence of any change in the list of officers of the labor organization;
(As amended by Section 16, Republic Act No. 6715, March 21, 1989)

d. The members shall determine by secret ballot, after due deliberation, any question of
major policy affecting the entire membership of the organization, unless the nature of the
organization or force majeure renders such secret ballot impractical, in which case, the

12
board of directors of the organization may make the decision in behalf of the general
membership;

e. No labor organization shall knowingly admit as members or continue in membership

any individual who belongs to a subversive organization or who is engaged directly or
indirectly in any subversive activity;

f. No person who has been convicted of a crime involving moral turpitude shall be
eligible for election as a union officer or for appointment to any position in the union;

g. No officer, agent or member of a labor organization shall collect any fees, dues, or
other contributions in its behalf or make any disbursement of its money or funds unless he
is duly authorized pursuant to its constitution and by-laws;

h. Every payment of fees, dues or other contributions by a member shall be evidenced by

a receipt signed by the officer or agent making the collection and entered into the record of
the organization to be kept and maintained for the purpose;

i. The funds of the organization shall not be applied for any purpose or object other than
those expressly provided by its constitution and by-laws or those expressly authorized by
written resolution adopted by the majority of the members at a general meeting duly called
for the purpose;

j. Every income or revenue of the organization shall be evidenced by a record showing

its source, and every expenditure of its funds shall be evidenced by a receipt from the
person to whom the payment is made, which shall state the date, place and purpose of
such payment. Such record or receipt shall form part of the financial records of the
organization.

Any action involving the funds of the organization shall prescribe after three (3) years from
the date of submission of the annual financial report to the Department of Labor and
Employment or from the date the same should have been submitted as required by law,
whichever comes earlier: Provided, That this provision shall apply only to a legitimate labor
organization which has submitted the financial report requirements under this Code:
Provided, further, that failure of any labor organization to comply with the periodic financial
reports required by law and such rules and regulations promulgated thereunder six (6)
months after the effectivity of this Act shall automatically result in the cancellation of union
registration of such labor organization; (As amended by Section 16, Republic Act No.
6715, March 21, 1989)

k. The officers of any labor organization shall not be paid any compensation other than
the salaries and expenses due to their positions as specifically provided for in its
constitution and by-laws, or in a written resolution duly authorized by a majority of all the
members at a general membership meeting duly called for the purpose. The minutes of the
meeting and the list of participants and ballots cast shall be subject to inspection by the
Secretary of Labor or his duly authorized representatives. Any irregularities in the approval
of the resolutions shall be a ground for impeachment or expulsion from the organization;

l. The treasurer of any labor organization and every officer thereof who is responsible for
the account of such organization or for the collection, management, disbursement, custody
or control of the funds, moneys and other properties of the organization, shall render to the
organization and to its members a true and correct account of all moneys received and
paid by him since he assumed office or since the last day on which he rendered such
account, and of all bonds, securities and other properties of the organization entrusted to

13
 his custody or under his control. The rendering of such account shall be made:

1.At least once a year within thirty (30) days after the close of its fiscal year;

2.At such other times as may be required by a resolution of the majority of the
members of the organization; and

3.Upon vacating his office.

The account shall be duly audited and verified by affidavit and a copy thereof shall
be furnished the Secretary of Labor.

m. The books of accounts and other records of the financial activities of any labor
organization shall be open to inspection by any officer or member thereof during office
hours;

n. No special assessment or other extraordinary fees may be levied upon the members
of a labor organization unless authorized by a written resolution of a majority of all the
members in a general membership meeting duly called for the purpose. The secretary of
the organization shall record the minutes of the meeting including the list of all members
present, the votes cast, the purpose of the special assessment or fees and the recipient of
such assessment or fees. The record shall be attested to by the president.

o. Other than for mandatory activities under the Code, no special assessments,
attorney’s fees, negotiation fees or any other extraordinary fees may be checked off from
any amount due to an employee without an individual written authorization duly signed by
the employee. The authorization should specifically state the amount, purpose and
beneficiary of the deduction; and

p. It shall be the duty of any labor organization and its officers to inform its members on
the provisions of its constitution and by-laws, collective bargaining agreement, the
prevailing labor relations system and all their rights and obligations under existing labor
laws.

For this purpose, registered labor organizations may assess reasonable dues to finance
labor relations seminars and other labor education activities.

Any violation of the above rights and conditions of membership shall be a ground for
cancellation of union registration or expulsion of officers from office, whichever is
appropriate. At least thirty percent (30%) of the members of a union or any member or
members specially concerned may report such violation to the Bureau. The Bureau shall
have the power to hear and decide any reported violation to mete the appropriate penalty.

Criminal and civil liabilities arising from violations of above rights and conditions of
membership shall continue to be under the jurisdiction of ordinary courts.

FINANCIAL RIGHTS

1. No arbitrary or excessive fees, fines, etc,

2. No unauthorized special assessments
3. No check-off except for dues and mandatory activities
4. Right to be Issued receipts for payments 1.2*1.5. No unauthorized collection or
disbursement of funds 1.2.1.6. Officers are only entitled to salaries/expenses duly
authorized under the Constitution or majority of members

14
RIGHT TO INFORMATION

1. Recording of income and expenditures

2. Accounting of all organizational funds
3. Inspection of Books of Accounts/Financial Records
4. Information on rights/duties of members under the Union Constitution and By-laws,
CBA, labor laws and jurisprudence.

POLITICAL RIGHTS

1. Direct election of officers every FIVE (5) years

2. Participate by secret ballot in policy-making
3. Right against admission of subversives and engaging in subversive activity
4. Right against election of persons convicted of crimes involving moral turpitude to
elective administrative posts.

RIGHTS OF LEGITIMATE LABOR ORGANIZATIONS

Art. 242. Rights of legitimate labor organizations. A legitimate labor organization shall
have the right:

a. To act as the representative of its members for the purpose of collective bargaining;

b. To be certified as the exclusive representative of all the employees in an appropriate

bargaining unit for purposes of collective bargaining;

c. To be furnished by the employer, upon written request, with its annual audited financial
statements, including the balance sheet and the profit and loss statement, within thirty (30)
calendar days from the date of receipt of the request, after the union has been duly
recognized by the employer or certified as the sole and exclusive bargaining
representative of the employees in the bargaining unit, or within sixty (60) calendar days
before the expiration of the existing collective bargaining agreement, or during the
collective bargaining negotiation;

d. To own property, real or personal, for the use and benefit of the labor organization and
its members;

e. To sue and be sued in its registered name; and

f. To undertake all other activities designed to benefit the organization and its members,
including cooperative, housing, welfare and other projects not contrary to law.

Notwithstanding any provision of a general or special law to the contrary, the income
and the properties of legitimate labor organizations, including grants, endowments, gifts,
donations and contributions they may receive from fraternal and similar organizations,
local or foreign, which are actually, directly and exclusively used for their lawful purposes,
shall be free from taxes, duties and other assessments. The exemptions provided herein
may be withdrawn only by a special law expressly repealing this provision. (As amended
by Section 17, Republic Act No. 6715, March 21, 1989)

15
COLLECTIVE BARGAINING

COLLECTIVE BARGAINING AND ADMINISTRATION OF AGREEMENTS

Art. 250. Procedure in collective bargaining. The following procedures shall be

observed in collective bargaining:

a. When a party desires to negotiate an agreement, it shall serve a written notice upon
the other party with a statement of its proposals. The other party shall make a reply thereto
not later than ten (10) calendar days from receipt of such notice;

b. Should differences arise on the basis of such notice and reply, either party may
request for a conference which shall begin not later than ten (10) calendar days from the
date of request.

c. If the dispute is not settled, the Board shall intervene upon request of either or both
parties or at its own initiative and immediately call the parties to conciliation meetings. The
Board shall have the power to issue subpoenas requiring the attendance of the parties to
such meetings. It shall be the duty of the parties to participate fully and promptly in the
conciliation meetings the Board may call;

d. During the conciliation proceedings in the Board, the parties are prohibited from doing
any act which may disrupt or impede the early settlement of the disputes; and

e. The Board shall exert all efforts to settle disputes amicably and encourage the parties
to submit their case to a voluntary arbitrator. (As amended by Section 20, Republic Act No.
6715, March 21, 1989)

Art. 251. Duty to bargain collectively in the absence of collective bargaining

agreements. In the absence of an agreement or other voluntary arrangement providing for a more
expeditious manner of collective bargaining, it shall be the duty of employer and the
representatives of the employees to bargain collectively in accordance with the provisions of this
Code.

Art. 252. Meaning of 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.

Art. 253. Duty to bargain collectively when there exists a collective bargaining
agreement. When there is a collective bargaining agreement, 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 sixty
(60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and
to continue in full force and effect the terms and conditions of the existing agreement during the 60-
day period and/or until a new agreement is reached by the parties.

Art. 253-A. Terms of a collective bargaining agreement. Any Collective Bargaining

16
Agreement that the parties may enter into shall, insofar as the representation aspect is concerned,
be for a term of five (5) years. No petition questioning the majority status of the incumbent
bargaining agent shall be entertained and no certification election shall be conducted by the
Department of Labor and Employment outside of the sixty-day period immediately before the date
of expiry of such five-year term of the Collective Bargaining Agreement. All other provisions of the
Collective Bargaining Agreement shall be renegotiated not later than three (3) years after its
execution. Any agreement on such other provisions of the Collective Bargaining Agreement
entered into within six (6) months from the date of expiry of the term of such other provisions as
fixed in such Collective Bargaining Agreement, shall retroact to the day immediately following such
date. If any such agreement is entered into beyond six months, the parties shall agree on the
duration of retroactivity thereof. In case of a deadlock in the renegotiation of the Collective
Bargaining Agreement, the parties may exercise their rights under this Code. (As amended by
Section 21, Republic Act No. 6715, March 21, 1989)

Art. 254. Injunction prohibited. No temporary or permanent injunction or restraining

order in any case involving or growing out of labor disputes shall be issued by any court or other
entity, except as otherwise provided in Articles 218 and 264 of this Code. (As amended by Batas
Pambansa Bilang 227, June 1, 1982)

Art. 255. Exclusive bargaining representation and workers’ participation in policy

and decision-making. The labor organization designated or selected by the majority of the
employees in an appropriate collective bargaining unit shall be the exclusive representative of the
employees in such unit for the purpose of collective bargaining. However, an individual employee
or group of employees shall have the right at any time to present grievances to their employer.

Any provision of law to the contrary notwithstanding, workers shall have the right, subject
to such rules and regulations as the Secretary of Labor and Employment may promulgate, to
participate in policy and decision-making processes of the establishment where they are employed
insofar as said processes will directly affect their rights, benefits and welfare. For this purpose,
workers and employers may form labor-management councils: Provided, That the representatives
of the workers in such labor-management councils shall be elected by at least the majority of all
employees in said establishment. (As amended by Section 22, Republic Act No. 6715, March 21,
1989)

Art. 256. Representation issue in organized establishments. In organized

establishments, when a verified petition questioning the majority status of the incumbent bargaining
agent is filed before the Department of Labor and Employment within the sixty-day period before
the expiration of the collective bargaining agreement, the Med-Arbiter shall automatically order an
election by secret ballot when the verified petition is supported by the written consent of at least
twenty-five percent (25%) of all the employees in the bargaining unit to ascertain the will of the
employees in the appropriate bargaining unit. To have a valid election, at least a majority of all
eligible voters in the unit must have cast their votes. The labor union receiving the majority of the
valid votes cast shall be certified as the exclusive bargaining agent of all the workers in the unit.
When an election which provides for three or more choices results in no choice receiving a majority
of the valid votes cast, a run-off election shall be conducted between the labor unions receiving the
two highest number of votes: Provided, that the total number of votes for all contending unions is at
least fifty percent (50%) of the number of votes cast.

At the expiration of the freedom period, the employer shall continue to recognize the
majority status of the incumbent bargaining agent where no petition for certification election is filed.

17
(As amended by Section 23, Republic Act No. 6715, March 21, 1989)

Art. 257. Petitions in unorganized establishments. In any establishment where there

is no certified bargaining agent, a certification election shall automatically be conducted by the
Med-Arbiter upon the filing of a petition by a legitimate labor organization. (As amended by Section
24, Republic Act No. 6715, March 21, 1989)

Art. 258. When an employer may file petition. When requested to bargain collectively,
an employer may petition the Bureau for an election. If there is no existing certified collective
bargaining agreement in the unit, the Bureau shall, after hearing, order a certification election.

All certification cases shall be decided within twenty (20) working days.

The Bureau shall conduct a certification election within twenty (20) days in accordance with
the rules and regulations prescribed by the Secretary of Labor.

Art. 259. Appeal from certification election orders. Any party to an election may
appeal the order or results of the election as determined by the Med-Arbiter directly to the
Secretary of Labor and Employment on the ground that the rules and regulations or parts thereof
established by the Secretary of Labor and Employment for the conduct of the election have been
violated. Such appeal shall be decided within fifteen (15) calendar days. (As amended by Section
25, Republic Act No. 6715, March 21, 1989)

COLLECTIVE BARGAINING AGREEMENT

Collective Bargaining Agreement refers to the negotiated contract between a duly

recognized or certified exclusive bargaining agent of workers and the employer concerning wages,
hours of work and all other terms and conditions of employment in the appropriate bargaining unit,
including mandatory provisions for grievances and arbitration machineries.

BARGAINING UNIT

A group of employees of a gjven employer comprised of all or less than of the entire body
of employees, consistent with equity to the employer, indicated to be best suited to serve the
reciprocal rights and duties of the parties under the collective bargaining provisions of the law.
There can only be ONE EXCLUSIVE BARGAINING AGENT in a bargaining unit even if there are
more than one union therein. The PRINCIPLES OR FACTORS In determining the appropriate
bargaining may be:

1. SUBSTANTIAL MUTUAL INTERESTS: similarity of employment status, duties and

responsibilities, similar compensation scheme and working conditions.
2. GLOBE DOCTRINE: will or desire of the employees to be joined together in one
bargaining unit.
3. COLLECTIVE BARGAINING HISTORY: prior collective bargaining history or affinity of
the employees.
4. EMPLOYMENT STATUS: category or kind of employment.

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KINDS OF BARGAINING
1. Single-enterprise bargaining – involves negotiation between one certified labor union and
one employer;
2. Multi-employer bargaining – involves negotiation between and among several certified
labor unions and employers;

REQUISITES OF COLLECTIVE BARGAINING

1. Employer-employee relationship
2. Proof of majority status of the
3. Demand to Bargain Collectively

DETERMINATION OF MAJORITY STATUS

1. VOLUNTARY RECOGNITION: In UNORGANIZED ESTABLISHMENTS, when

there is only one legitimate labor organization in the bargaining unit.
2. CERTIFICATION, RUN-OFF, CONSENT ELECTION: In ORGANIZED
ESTABLISHMENTS, when the majority status of the incumbent bargaining agent is
challenged; or In UNORGANIZED ESTABLISHMENTS, when a petition is filed by a
union or the employer.

CERTIFICATION ELECTION (ARTICLE 256 TO 259)

CONCEPT: Non-adversary fact-finding process/investigation to determine the will of the

employees if they wish to have a collecting bargaining agent/representative in the appropriate
bargaining unit for the purpose of collective bargaining. All employees, whether probationary or
permanent, regular or otherwise may be allowed to participate, subject to the exclusion-inclusion
proceedings. The employer is simply a bystander in certification election proceedings.

REQUISITES FOR PETITIONS

In ORGANIZED ESTABLISHMENTS: Verified petition questioning the majority status of the

incumbent bargaining agent filed by at least TWENTY-FIVE (25%) PER CENT of all the employees
in the bargaining unit/during the FREEDOM PERIOD (SIXTY [60] DAYS prior to expiration of term
of CBA)). If no petition is filed during this period, the employer shall continue to recognize the
majority status of the bargaining union.

In UNORGANIZED ESTABLISHMENTS: A certification election shall be conducted upon

filing the petition by the union or the employer in case there is a demand for collective bargaining
unless there is voluntary recognition.

ELECTION BAN
1. CONTRACT BAR RULE: when there is still a valid and binding CBA, except during the
Freedom Period.

19
 2. CERTIFICATION YEAR RULE: within ONE (1) YEAR from the date of the issuance of the
final certification election result.
3. DEADLOCK BAR RULE: where on-going CBA negotiations result in a deadlock that has
been' submitted for conciliation or mediation or has become the subject of a notice of strike
or lockout.

RUN-OFF ELECTION: when there are three or more choices in the certification election
(including NO UNION) and none gets the majority vote, a run-off shall be held within five (5) days
between the two (2) unions receiving the highest votes, provided that the total number of votes for
all the contending unions is at least FIFTY (50%) PERCENT of the total votes cast.

CONSENT ELECTION: By agreement between two or more contending unions within the
bargaining unit to determine who has the majority status even outside of the Freedom Period.

COLLECTIVE BARGAINING PROPER

CONCEPT: The duty to bargain collectively involves:

1. The performance of the mutual obligation TO MEET AND CONVENE promptly,

expeditiously and in good faith.
2. To NEGOTIATE an agreement with respect wages, hour% of work and all other terms
and conditions of employment, including proposals for grievance machinery.
3. However, this duty does not compel any party to agree to a proposal or to make
concessions.

MANDATORY SUBJECTS OF BARGAINING: wages, work hours/days, vacations/holidays,

bonuses, retirement, seniority, layoffs/transfers, workloads, operating/disciplinary rules and
regulations, union security arrangements.

COMMON STIPULATIONS AND CLAUSES IN A CBA

1. Title;
2. Description of the parties;
3. Preliminary statement of principles;
4. Description of bargaining unit;
5. Exclusionary clause;
6. Check off of union dues, agency fees and other assessments;
7. Statement of management prerogatives;
8. Union commitment;
9. Economic and other fringe benefits;
10. Grievance Machinery;
11. Voluntary Arbitration;

20
 12. No-strike, No-lockout clause;
13. Family planning, health and safety, cooperative, recreation and sports;
14. Waiver and completeness of Agreement;
15. Duration and effectivity of agreement.

Collective Bargaining Process

1. Preliminary Process
2. Negotiation Process
3. Execution Process
4. Publication Process
5. Ratification Process
6. Registration Process
7. Administration Process
8. Interpretation and application process

SUBSTITUTIONARY DOCTRINE: employees cannot revoke the validity of the executed CBA by
the simple expediency of changing their collective bargaining agent. New bargaining agent must
respect existing CBA although it may negotiate with the employer for the shortening of the term
thereof.

WILEY DOCTRINE: loss of personality by a legal/valid merger or consolidation of a corporation

with an existing CBA with the union does not automatically terminate all the rights of the covered
employees.
ABSORPTION DOCTRINE: “accretion doctrine” applies when there is absorption and integration
by one entity of one or more establishments having the same kind and line of business and having
their respective collective bargaining agreements with different labor union existing therein; the
duty to bargain which originally devolves upon the selling party is transferred to the buying entity.

AUTOMATIC RENEWAL CLAUSE

It shall be the duty of both parties to keep the status quo and to continue in full force and
effect the terms and conditions of the existing agreement during the 60-day period and/or until a
new agreement is reached by the parties. ( Art. 253)

RETROACTIVITY OF CBA
Any agreement on such other provisions of the Collective Bargaining Agreement entered
into within six (6) months from the date of expiry of the term of such other provisions as fixed in
such Collective Bargaining Agreement, shall retroact to the day immediately following such date. If

21
any such agreement is entered into beyond six months, the parties shall agree on the duration of
retroactivity thereof. In case of a deadlock in the renegotiation of the Collective Bargaining
Agreement, the parties may exercise their rights under this Code. ( Art. 253-A)
The retroactivity provision under Art. 253-A applies only in cases where the CBA is
voluntarily concluded by and between the parties and not through arbitral awards. In Meralco vs.
Quisumbing [G.R. No. 127598] August 1, 2000, the Supreme Court held that the arbitral award
should retroact to the first day after the six-month period following the expiration of the last day of
the CBA.

SUSPENSION OF CBA
In the case of Rivera vs. Espiritu, G.R. No. 135547, January 23, 2002, the Supreme Court
held as valid the agreement between PAL and the PALEA to suspend the CBA for a period of ten
(10) years subject to certain safeguards. The Supreme Court held, “In the instant case, it was
PALEA, as the exclusive bargaining agent of PAL’s ground employees, that voluntarily entered into
the CBA with PAL. It was als PALEA that voluntarily opted for the 10-year suspension of the CBA.
Either case was the union’s exercise of its right to collective bargaining. The right to free collective
bargaining, after all, includes the right to suspend it. xxx xxx In sum, we are of the view that
the PAL-PALEA agreement dated September 27, 1998, is a valid exercise of the freedom to
contract. Under the principle of inviolability of contracts guaranteed by the Constitution, the
contract must be upheld.”

1.4. UNFAIR LABOR PRACTICE (ULP) (ARTICLE 247 TO 249)

1.4.1. CONCEPT: ULP is a violation of the right to self-organization and is inimical to

the interest of both labor and management, i.e., collective bargaining dealing with each
with freedom and mutual respect, disrupts industrial peace and hinder the promotion of
a healthy and stable labor-management relations. ULP is not only a violation of civil
rights but is also a criminal offense against the State, subject to prosecution and
punishment. Prescriptive period for filing ULP with labor tribunals is ONE (1) YEAR
from accrual of cause of action (commission) for criminal prescriptions, THREE (3)
YEARS from final judgment by labor tribunals that ULP was committed.

1.4.2. ELEMENTS
1.4.2.1. Existence of an employer-employee relationship
1.4.2.2. Act complained of must be expressly mentioned and defined In the Labor
Code as a ULP (Articles 248 and 249)

1.4.3. ULP COMITTED BY EMPLOYER (ARTICLE 248)

22
 1.4.3.1. Interfere, restrain coerce right of employees to organize
1.4.3.2. Require person NOT to join union or WITHDRAW from one
1.4.3.3. Contract out services rendered by union members
1.4.3.4. Initiate, dominate, assist a union
1.4.3.5. Discrimination to encourage/discourage union membership
1.4.3.6. Dismiss employee for giving testimony
1.4.3.7. Violate duty to bargain collectively
1.4.3.8. Pay negotiation/attorney's fees as part of settlement
1.4.3.9. Flagrant violation with terms and conditions of CBA

1.4.4. ULP COMMITTED BY UNION (ARTICLE 249)

1.4.4.1 Restrain and coerce employees to organize
1.4.4.2. Cause employer to discriminate
1.4.4.3. Violate duty to bargain collectively
1.4.4.4. Cause employee to pay for services not rendered
1.4.4.5. Ask for negotiation/attorneys fees as part of settlement
1.4.4.6. Flagrant violation of CBA

1.8.4. UNION SECURITY ARRANGEMENTS

1.8.4.1. CLOSED SHOP: only members OF THE BARGAINING AGENT can be
hired and they must remain union members as a condition of continued
employment.

1.8.4.2. UNION SHOP: Once hired, a person must become a member of the
bargaining agent and must remain so during the period of the CBA for continued
employment.

1.8.4.3. MODIFIED UNION SHOP: employees who are not members of the
bargaining union upon execution of the CBA are not required to join the union;
only those hired after are required.
1.8.4.4. AGENCY SHOP: non-members are not required to join the bargaining
union but they should pay an AGENCY FEE to the union as a condition for
continued employment.

1.8.4.5. MAINTENANCE OF MEMBERSHIP: requires members of the bargaining

union to maintain their membership therein for continued employment. Non-union
members are not required to join.

1.8.4.6. PREFERENTIAL HIRING AGREEMENT: preference in hiring is given to

members of the bargaining union who are thereafter required to maintain their

23
 membership for continued employment.

1.8.5. TERM OF CBA: FIVE (5) YEARS; however, economic provisions shall be
renegotiated not later than THREE (3) YEARS after execution; if a new CBA is
concluded within SIX (6) MONTHS from expiration, the effectivity of the CBA shall
retroact to the day following the expiry date; otherwise, the effectivity of the new CBA
shall be subject to negotiation and mutual agreement.
1.8.6. FORMAL REQUIREMENTS: within THIRTY (30) DAYS from execution thereof,
the parties shall submit copies of the CBA directly to the Bureau of Labor Relations
(BLR) or with the DOLE Regional Office with verified proof of Its POSTING In two
conspicuous and its RATIFICATION by majority of the workers in the bargaining unit.
1.8.7. SUBSTITUTIONARY DOCTRINE: employees cannot revoke the validity of the
executed CBA by the simple expediency of changing their collective bargaining agent.
New bargaining agent must respect existing CBA although it may negotiate with the
employer for the shortening of the term thereof.

1.8.8. WILEY DOCTRINE: loss of personality by a legal/valid merger or consolidation

of a corporation with an existing CBA with the union does not automatically terminate
all the rights of the covered employees.

1.9. GRIEVANCE MACHINERY AND VOLUNTARY ARBITRATION (ARTICLE 260)

1.9.1. CONCEPT: The constitution promotes the preferential use of voluntary modes in
settling disputes, including conciliation, and shall enforce compliance therewith to
foster industrial peace (Section 3, Article XII). The GRIEVANCE
PROCEDURE/MACHINERY refers to the internal rules of procedure established by
the parties in their CBA intended to resolve all issues arising from the implementation
and interpretation of their CBA with VOLUNTARY ARBITRATION as the final step, It
includes the mechanism for the adjustment and resolution of grievances arising from
the interpretation and/or implementation of the CBA and the enforcement of company
personnel policies.

1.9.2. VOLUNTARY ARBITRATION/ARBITRATOR: refers to the mode of settling labor-

management disputes by which the parties select a competent, trained and impartial
ARBITRATOR duly accredited by the National Conciliation and Mediation Board
(NCMB), to decide the merits thereof.

1.9.3. JURISDICTION OF VOLUNTARY ARBITRATORS

1.9.3.1. ORIGINAL AND EXCLUSIVE: all unresolved grievances arising from

interpretation or implementation of the CBA and company personnel policies.
1.9.3.2. GENERAL: all disputes that may be referred by the parties including ULP
and bargaining deadlocks.

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 STRIKES/PICKETING, LOCKOUTS

1. CONCEPTS

1.1. A STRIKE is any temporary stoppage of work by the concerted action of the employees
as a result of a labor dispute. It includes slowdowns, mass leaves, sit-downs, attempts to
damage or sabotage the employer's operations, equipment and facilities, and other similar
activities.

1.2. PICKETING is peaceably marching to and fro before an establishment to publicly make
known the existence of a labor dispute usually by the display of placards, banners and other
propaganda materials and activities.

25
1.3. LOCKOUT means the temporary refusal of an employer to furnish work as a resuIt of a
labor dispute.

1.4. INDUSTRIAL/LABOR DISPUTE includes any controversy or matter concerning terms and
conditions of employment or the association or representation of persons in negotiating the
fixing, maintaining, changing or arranging the terms and conditions of employment, regardless
of whether the disputants stand in the proximate relationship of employer and employee.

1.5. INTER-UNION DISPUTE is a dispute between two or more unions seeking to represent
the employees in a bargaining unit.
1.6. INTRA-UNION DISPUTE is one involving the internal affairs of the union such as
accounting of funds, disloyalty of members, etc.
1.7. "NO STRIKE, NO LOCKOUT CLAUSE": a standard provision in the CBA that
prohibits resort to strike/lockout as a means to resolve a controversy. The prohibition
applies only to an economic strike and not to a ULP strike.
1.6. NOTICE OF STRIKE refers to the notification filed a duly registered labor union with the
appropriate NCMB Regional Branch informing the latter of the former’s intention to go on strike
because of deadlock in collective bargaining or the commission of ULP by the employer. A
copy of the notice must be duly served on the employer by personal service or by registered
mail. However, if the notice is sent by Registered Mail, the cooling-off period shall begin from
the date of receipt by the employer of the notice.

1.9. COOLING-OFF PERIOD refers to period designed by the law to afford the parties the
opportunity to amicably resolve this dispute with the assistance of the NCMB. The period may
either be THIRTY (30) DAYS in case of ECONOMIC STRIKE, or FIFTEEN (15) DAYS for a
ULP. STRIKE. The cooling-off period is dispensed with if the ground for the strike is UNION
BUSTING or DISMISSAL OF UNION OFFICERS.

1.10. STRIKE VOTE/LOCKOUT VOTE refers to the approval of the decision to strike/lockout
by a majority of the total union membership in the bargaining unit or the Board of Directors of
the employer corporation, concerned obtained by secret ballot.

1.11. STRIKE BAN is the period of SEVEN (7) DAYS after the report of the strike vote result to
the NCMB/DOLE within which the strike cannot be staged in all kinds of strike. If the strike vote
is held arid the result^ thereof is submitted during the cooling-off period, the 7-day ban shall be
reckoned from the expiration of the cooling-off period. The purpose of the strike ban is to
enable the NCMB/DOLE the opportunity to verify whether or not the projected strike was
approved by the majority o the union members.

1.12. STRIKE AREA means the establishment, warehouse, depots, plants or office, including
the sites or premises used as run-away shops of the employer struck against as well as the
immediate vicinity actually used by picketing-strikers in moving to and fro before all points of
entrance or exit from said establishments

1.13. IMPROVED/REDUCED OFFER BALLOTING: referendum by secret ballot on the

improved offer of the employer or reduced offer by the union conducted by the NCMB on or
before the 30th day of the strike.

1.14. PREVENTIVE MEDIATION CASE is a potential labor dispute that is the subject of a
formal or informal request for conciliation and mediation and mediation assistance sought by
either or both parties or upon the initiative of the NCMB to avoid the occurrence of an actual

26
 labor dispute.

1.15. ASSUMPTION/CERTIFICATION ORDER; Under Article 263[g] of the Labor Code, when in
the opinion of the Secretary of DOLE, the labor dispute causes or will likely cause a strike or
lockout in an industry indispensable to the national interest, he is empowered to do either of two
things:

1.15.1. Assume jurisdiction over the labor dispute and decide it himself;
1.15.2. Certify the labor dispute to the NLRC for compulsory/arbitration (CERTIFIED
CASE)

1.16 RETURN-TO-WORK ORDER is the consequence of an Assumption/Certification

Order where the striking workers are directed to return to work, and the employer to accept
them back, under the same terms and conditions prevailing before the dispute. If no strike has
been staged yet, the Impending strike or lockout is automatically enjoined. Defiance of the
ASSUMPTION/CERTIFICATION/RETURN-TO- WORIK ORDER will render the strike/lockout
illegal.

2. REQUISITES OF A VALID STRIKE

2.1 Strike must be based on a valid and factual ground
2.1.1. Collective Bargaining Deadlock
2.1.2. Unfair Labor Practice (ULP)
2.1.3. Conduct of Strike Vote
2.1.4. Submlsslon of Strike Vote Report/Result
2.1.5. Observance of 15-Day or 30- Day Cooling-Off Period
2.1.6. Observance of 7-Day Strike Ban

3. ILLEGAL STRIKE

3.1. Failure to comply with requirements/requisites

3.2. Based oh non-strikeable issues/unlawful purpose

3.3. Issues have already been submitted for arbitration

3.4. Commission of prohibited acts

3.5. Notice of Strike has already been converted to Preventive Mediation
3.6. Violation of "NO STRIKE, NO LOCKOUT” clause of the CBA, except ULP
3.7. Defiance of Assumption/Certiflcation/Injunctlon Order

4. PROHIBITED ACTS AND PRACTICES

4.1. Declaring a strike/lockout on grounds involving inter-union or Intra-union disputes, or on

27
 issues brought to voluntary or compulsory arbitration.

4.2. Declaring a strike/lockout without first having bargained collectively or without first having
filed the required notice of strike or without the strike or lockout vote.
4.3. Strike in defiance of Return-to-Work Order or after assumption of jurisdiction or •
certification of dispute to NLRC. ^
4.4. Obstructing, impeding or interfering with by force, violence, coercion, threats or
intimidation, or abetting any such obstruction or interference, any peaceful picketing or
exercise of the right to self-organization or collective bargaining.
4.5. Employing a strikebreaker or being employed as such.
4.6. No public official or employee including officers and personnel of the AFP and PNP shall
bring in. Introduce or escort in any manner any individual who seeks to replace strikers in
entering or leaving the strike area; or, to work In place of the strikers.
4.7. Stationary pickets or permanent blockades
4.8. Violence, coercion and Intimidation employed by a striker/picketer
4.9. Obstruction of free jngress or egress from the employer’s premises.
4.10. Obstruction of public thoroughfares.

5. EFFECTS OF PARTICIPATION IN AN ILLEGAL STRIKE; any union officer who knowingly

participates in an illegal strike and any worker who knowingly participates in the commission of
illegal acts during the strike may be declared to have lost their employment status. However in case
of DEFIANCE of a (retum-to-work order, it is immaterial whether the violator is a union officer or an
ordinary member.

6. SUSPENSION OF EFFECTS OF TERMINATION: Under Article 277 [b] of the Labor Code, the
DOLE Secretary may suspend the effects of termination of employees pending the resolution of
dispute in the event of a prima facie finding by the appropriate official before whom such is dispute
is pending, that the termination may cause a serious labor dispute or Is In the Implementation of a
mass lay-off.

7. STRIKES IN HOSPITALS, CLINICS ETC.

7.1. It shall be the duty of the striking union or locking-out employer to provide and maintain an
effective skeletal workforce of medical and other health personnel whose movement shall and
services shall be unhampered and unrestricted, as are necessary to insure the proper and
adequate protection of the life and health of the patients, most especially emergency cases,
during the strike or lockout.

7.2. The DOLE Secretary shall either assume jurisdiction or certify the labor dispute to the
NLRC within TWENTY-FOUR (24) HOURS from knowledge of the occurrence of such strike or
lockout.

8. CONCERTED ACTIVITIES AND STRIKES BY GOVERNMENT EMPLOYEES

8.1. Government employees are not allowed declare any strike for the purpose of changing
the terms and conditions of employment. Negotiation is not also allowed on those matters that

28
 require appropriation of funds, those fixed by law, and those involving the exercise of
management prerogatives.
8.2. Employees of GOCCs organized under the Corporation Code shall have the right to
organize and bargain collectively with their respective employers. All other employees in the
Civil Service shall have the right to form associations for purpose not contrary to law. .

1. SECURITY OF TENURE (ARTICLE 279V

1.1. MANAGEMENT PREROGATIVES: These are the collective rights of the employer In the
employment relationship.

1.1.1. REGULATE EMPLOYMENT: The employer is free to regulate all aspects of

employment (prescribe working methods, time , place, manner and other aspects of work)
according to his own judgment and discretion, the hiring, firing, transfer, demotion and
promotion is traditionally a management prerogative subject only to the limitations
established by: LAW, COLLECTIVE BARGAINING AGREEMENT, and GENERAL
PRINCIPLES OF FAIR PLAY AND JUSTICE.

1.1.2. DISCIPLINE / DISMISSAL OF EMPLOYEES: Discipline of employees is a basic

management right and prerogative. The employer cannot be compelled to maintain in his
employ undeserving or undesirable employees. The employer may demand observance of
reasonable company rules and regulations and provide appropriate penalties for violation
thereof.

1.2. REQUIREMENTS FOR VALID DISMISSAL: A regular employer may not be dismissed
except for just or authorized cause and after due process.

1.3. JUST CAUSES (ARTICLE 282)

1.3.1. SERIOUS MISCONDUCT

1.3.1.1. Intentional violation of an established or defined rule of action

1.3.1.2. grave and aggravated in character

29
 1.3.1.3. work-connected

1.3.2. WILLFUL DISOBEDIENCE

1.3.2.1. willful or intentional misconduct characterized by a wrongful or perverse

attitude
1.3.2.2. order violated is iteasonabie and lawful and made known to the employee
1.3.2.3. order must pertain or relate to duties of the employee

1.3.3. GROSS AND HABITUAL NEGLECT OF DUTIES

1.3.3.1. NEGLIGENCE MUST BE BOTH "GROSS" ( utter disregard or want of

slight care of the consequences without exerting effort to avoid them) and
“HABITUAL" (implies repetitive acts) However habituality may be disregarded
where there is grave or actual loss or prejudice suffered by the employer.

1.3.3.2. EXCESSIVE ABSENCES or ABANDONMENT is a genre of neglect of

duties.

1.3.3.3. FAILURE TO ATTAIN WORK/PRODUCTION QUOTAS may also

constitute gross and habitual neglect of duties.

1.3.4. FRAUD OR WILLFUL BREACH OF TRUST/CONFIDENCE

1.3.4.1. FRAUD is malicious non-performance of one's obligation. It connotes bad faith

and an intentional act to cause damage or prejudice to the employer thereby
breaching the employer's trust and confidence in the employee.
1.3.4.2. The basic premise for this ground is that the employee occupies a position
imbued with trust and confidence as when the employee handles cash or property of
the employer. Ordinarily, a rank-and-file employee's position is not reposed with trust
and confidence similar to a supervisor or managerial employee. However, it is the
nature of the employee's work and the scope or special character of his duties and not
his designation that determines whether or not the position is imbued with trust and
confidence.
1.3.4.3. To be a valid ground for dismissal, the loss of trust and confidence should not
be simulated; it should not be used as a subterfuge for causes which are improper.
Illegal or unjustified; it should not be arbitrarily asserted in the face of overwhelming
evidence to the contrary; and, the loss must be genuine, not a mere afterthought to
justify earlier actions taken in bad faith.
1.3.4.4. Proof beyond reasonable doubt Is not required to Justify dismissals for loss of
trust and confidence. B: is sufficient that there Is some basis or reasonable ground to
believe If not entertain the moral conviction that the employee concerned is
responsible for misconduct and his participation therein renders him unworthy of the
trust and confidence demanded by his position.

1.3.5. COMMISSION OF CRIME

1.3.5.1. To justify dismissal, the crime or felony must have been committed against
the employer, an immediate member of his family, or the employer's duly authorized

30
 representative.
1.3.5.2. Criminal conviction is not necessary to provide just cause for dismissal.
1.3.6. ANALOGOUS CAUSES: These are normally causes that have similar
connotations as the specific causes mentioned above. i.e. sexual harassment;
immorality, etc. ' '

1.4. AUTHORIZED CAUSES (ARTICLE 283, 284. 287)

.

1.4.1. INSTALLATION OF LABOR-SAVING DEVICES

1.4.1.1. It Is the employer's prerogative to use the most efficient equipment and
technology to remain competitive, streamline operations or adopt new methods and
methodology to remain competitive or maximize profits.
1.4.1.2. Business losses or reverses, whether actual or imminent, are not necessary to
justify termination of employment due to installation of labor-saving devices.

1.4.2. REDUNDANCY
1.4.2.1. Redundancy exists where the services of an employee are in excess of what
is reasonably demanded by the actual requirements of the enterprises. The stress is
on the “POSITION” and not on the “PERSON OCCUPYING" the position. The
characterization of the service / position of the employee as redundant is an exercise
of business judgment by the employer over which labor tribunals must generally
recognized and uphold.

1.4.2.2. Redundancy does not require the existence or proof of business losses. It may
be availed of by the employer as a cost-cutting measure and to streamline operations.

1.4.3. RETRENCHMENT

1.4.3.1. Retrenchment or “lay-off” is reduction of personnel in response to adverse

economic losses. Retrenchment is the only authorized cause requiring proof of actual
or imminent losses for dismissal.

1.4.3.2. “TO PREVENT LOSSES" means that retrenchment is resorted to before the
anticipated losses are actually sustained or realized. Not every asserted possibility of
loss is sufficient legal warrant for the reduction of personnel. AUDITED FINANCIAL
STATEMENTS must properly establish the actual or imminent losses.
1.4.3.3. The standards for valid retrenchment are: the losses should be substantial
and not merely de minimis in extent; the substantial loss apprehended must be
reasonably imminent, with a certain degree of urgency to reduce personnel;
retrenchment is reasonably necessary and likely to prevent the expected losses and
the reduction of personnel must be resorted to onty after the employer has taken prior
or parallel measures to forestall losses; and proof of actual or imminent losses.

1.4.4. CLOSURE OR CESSATION OF OPERATIONS

1.4.4.1. The employer may close down or cease his business operations even if he is
not suffering from financial losses or reverses. This move is purely a business

31
 judgment because no one can be compelled to do something against his will.

1.4.4.2. The prerogative to close down or cease operations extends to closing or

abolishing a department or section of the employer's establishment or operations.

1.4.5. DISEASE: The conditions for dismissal under this provision are:

1.4.5.1. The employee is suffering from a disease that makes his continued
employment either prohibited by law or prejudicial to his health or to the health of his
co-workers.
1.4.5.2. CERTIFICATION by a competent PUBLIC HEALTH AUTHORITY that the
disease is of such nature or at such stage that it cannot be cured within a period of SIX
(6) MONTHS even with prior medical treatment.

1.4.5.3. Payment of SEPARATION 'PAY In the amount equivalent to one-half (1/2)

month salary for every year of service

1.4.6. RETIREMENT (RA 7641)

1.4.6.1. The Private Retirement Law applies to all employees in the private sector
regardless of their position, designation or status and irrespective of the method by
which their wages are paid except employees of retail, service and agricultural
establishments or operations employing not more than TEN (10) employees.

1.4.6.2. The MINIMUM SERVICE REQUIREMENT is at least FIVE YEARS including

authorized absences and vacations, regular holidays and mandatory fulfillment of a
military or civic duty.

1.4.6.3. OPTIONAL RETIREMENT is at SIXTY (60) YEARS of age. COMPULSORY

RETIREMENT AGE is SIXTY-FIVE (65) YEARS.

1.4.6.4. The components of ONE-HALF MONTH SALARY are;

1.4.6.4.1. FIFTEEN (15) DAYS pay;

1.4.6.4.2. Cash Equivalent of FIVE (5) DAYS Service Incentive Leave

1.4.6.4.3. ONE-TWELFTH (1/12) of the 13th Month Pay

1.4.6.4.4. All other benefits under the employment contract or voluntary
employer policy/practice.

1.5. SUSPENSION OFOPERATIONS (ARTICLE 286)

1.5.1. BONA FIDE suspension of operations (partial or full) or the "temporary lay-off" of
employees for a period not exceeding SIX (6) MONTHS. The suspension is bona fide if not
resorted to for the purpose of defeating the rights of the employees under the law, i.e.
union-busting. The suspension may be LESS but never MORE than six months.

32
 1.5.2. The principle of "no work, no pay" applies during the suspension. However, at
the end of the six-month period, the employer must either re-open and recall the
employees or pay them the appropriate separation pay for the "constructive dismissal".
,
1.5.3. In the event of stoppage or suspension of operations of the employer because of the
latter's fault, the employer shall be liable, for the payment of the wages and benefits of the
employees during the period.

1.6. DUE PROCESS

1.6.1. DISMISSAL FOR JUST CAUSE

1.6.1.1. TWO-NOTICE RULE (charges and grounds for dismissal)

1.6:1.2. ADMINISTRATIVE HEARING / INVESTIGATION

1.6.2. DISMISSAL FOR AUTHORIZED CAUSES

1.6.2.1. AT LEAST THIRTY (30) DAYS WRITTEN NOTICE TO BOTH THE DOLE AND
THE AFFECTED EMPLOYEES

1.7. PREVENTIVE SUSPENSION

1.7.1. The employer may place the employee under preventive suspension for a period not
exceeding THIRTY (30) DAYS pending resolution of the administrative charges against
him if the continued presence of the employee In the company premises poses a serious
and imminent threat to the life or property of the employer or his co-employee.
1.7.2. Preventive Suspension is NOT a penalty but a preliminary step in an administrative
investigation. Subjecting an employee to preventive suspension does not by itself signify
that the employer has adjudged the employee guilty of the charges against him.
1.7.3. As a rule, the employee under preventive suspension is not entitled to wages under
the principle of "no work, no pay" unless there is a company policy/practice or CBA
provision mandating payment of his wages.

1.8. CONSTRUCTIVE DISMSSAL / RESIGNATION

1.8.1. "FORCED RESIGNATION" or the act of "quitting" because continued employment

is rendered impossible, unreasonable or unlikely as in the case of demotion in rank or
diminution in pay or privileges and benefits, or illegal/invalid transfers/reassignments. A
"VOLUNTARY RESIGNATION" is not constructive dismissal.

1.8.2. "FLOATING/RESERVE STATUS" is the temporary "off-detail' of security guards

pending posting or reassignment not to exceed SIX (6) MONTHS. Thereafter, the
employee is considered constructively dismissed if he is not given a new assignment or
posting.

1.8.3. Bona fide suspension of operations under Article 286 exceeding six (6)
months results in constructive dismissal.

33
1.9. RELIEFS (ARTICLE 279)
1.9.1. REINSTATEMENT

1.9.1.1. An employee who is unjustly dismissed shall be entitled bo reinstatement

without loss of seniority rights and other privileges. Reinstatement is the restoration of
the employee to his employment status prior to dismissal.

1.9.1.2. "REINSTATEMENT PENDING APPEAL": In the event of an order of

reinstatement by the Labor Arbiter after a finding of illegal dismissal, the employer,
even during the pendency of an appeal, shall reinstate the employee to his work under
the same terms and conditions prevailing prior to his dismissal (ACTUAL
REINSTATEMENT); or reinstate him in the payroll without requiring the employee to
report: for work (PAYROLL REINSTATEMENT). The OPTION to reinstate either
actually or in the payroll belongs to the employer. Upon receipt of the order to reinstate
and without need for the issuance of a writ of execution, the employer is obliged to
officially inform the Labor Arbiter and the employee the option chosen.

1.9.2. BACKWAGES

1.9.2.1. The illegally dismissed employee is entitled to his FULL BACKWAGES,

inclusive of allowances and to his other benefits or their monetary equivalent from the
time his compensation was withheld from him until his actual reinstatement.

1.9.2.2. The SALARY RATE prevailing at the time of dismissal shall be the basis for
the computation of backwages. In case of appeal, the employer is required to put an
APPEAL BOND equivalent to the monetary judgment to answer for the award for
backwages, other money claims, except damages and attorney's fees.

1.9.3. SEPARATION PAY

1.9.3.1. Separation Pay may be ordered IN LIEU OF REINSTATEMENT at the rate of

ONE-MONTH PAY for every year of service using the salary prevailing at the time the
reinstatement is ordered, when such reinstatement is no longer feasible for certain
reasons, /.e. strained relations, position no longer exists , length of time etc.
1.9.3.2. In termination of employment for authorized causes, the amount of separation
is ONE MONTH PAY or at least ONE (1) MONTH PAY for every year of service in
INSTALLATION OF LABOR SAVING DEVICES or REDUNDANCY; ONE MONTH PAY
or at least ONE-HALF MONTH (1/2) PAY for every year of service In
RETRENCHMENT TO PREVENT LOSSES and CLOSURE AND OR CESSATION OF
OPERATIONS.

1.9.3.3. The employer is not obliged to pay separation pay in case of retrenchment or
closure or cessation of operations due to losses.

1.9.4. DAMAGES: The legal basis for damages as a consequence of illegal dismissal is
the CIVIL CODE not the Labor Code. Damages may be awarded in cases of dismissals
attended by malice or bad faith, or when the acts of the employer are oppressive to labor.
1.9.5. FINANCIAL ASSISTANCE; This is an equitable award given to an employee who
was valid I y dismissed for cause out of compassion taking into account the employee's
length of service, gravity of the offense and other equitable considerations. However, the
award is improper if the employee was dismissed for serious misconduct, dishonesty, fraud

34
 or willful breach of trust and confidence.

1.10. LIABILITY OF OFFICERS / DIRECTORS: As general rule, officers and directors of a

company are not answerable in their personal capacity for backwages and other related
monetary claims unless they acted in bad faith in effecting the employee’s dismissal or if the
corporation has been dissolved.

JURISDICTION, RELIEFS, REMEDIES

1. NATIONAL LABOR RELATIONS COMMISSION (NLRC)

1.1. LABOR ARBITER

1.1.1. Unfair Labor Practice (ULP)

35
 1.1.2. Termination Disputes

1.1.3. Legality of Strikes under Article 264

1.1.4. Money claims arising from employer-employee relationship domestic help / house
helpers:

1.1.4.1. Small claims less than P 5,000, accompanied by a claim for reinstatement;
l.1.4.2. Claims over P 5,000.00, whether or not accompanied with a claim for
reinstatement;
1.1.4.3. Claims for damages;

1.2. Commission Proper

1.2.1. Appellate Jurisdiction

1.2.1.1. Decisions of the Labor Arbiters: Grounds:

1.2.1.1.1. prima facie evidence of abuse of discretion on the part of the Labor
Arbiter
1.2.1.1.2. decision was secured through fraud/coercion including graft &
corruption
1.2.1.1.3. decision was made purely on questions of law
1.2.1.1.4. serious errors in the findings of facts are raised which would cause
grave or irreparable damage/injury to the appellant

1.2.1.2. Decisions of the Regional Director in small claims under Artide 129 of the
Labor Code 1.2.2. Injunction in Strikes (Article 218[e]): Issue TRO or Injunction to
restrain the commission of prohibited acts under Article 264 of th4e Labor Code during
strikes, lock-outs and other concerted activities

1.2.3. Certified Cases: Resolve all matters involved In the controversy or dispute certified to
the NLRC by the DOLE Secretary pursuant to Article 263[g] of the Labor Code.

1.2.4. Promulgate Internal Rules and Regulations and such other rules and regulations as
may be necessary to carry out the purposes of the Labor Code.

2. REGIONAL OFFICE/DIRECTOR OF DOLE

2.1. Visitorial / Enforcement Power (Article t28)

2.1.1. Conduct Routine/Complaint Inspection

2.1.2. Issue Compliance Orders for L^bor Standards Violation
2.1.3. Enforce Occupational Health and Safety Standards

2.2. Small Claims (Article 129); Power to resolve by summary proceedings small claims not
exceeding P 5,000.00 arising from employer-employee relationship/ including
domestics/househelpers, when the worker/employee no longer prays for reinstatement.

36
 2.3. Registration/Cancellation Proceedings

2.4. Med-Arbiter

2.4.1. Certification Elections

2.4.2. Inter-union/Intra-union Disputes

3. NATIONAL CONCILIATION AND MEDIATION BOARD (NCMB)

3.1. Notice of Strike

3.2. Preventive Mediation

4. BUREAU OF LABOR RELATIONS (BLR)

4.1. Registration/Cancellation Proceedings filed directly with It. In this case, the BLR's
decision is appealable to the DOLE Secretary.
4.2. Appellate Jurisdiction over decisions of the DOLE Regional Office in
registration/cancellation proceedings. The decision of the BLR in the exercise of its appellate
jurisdiction is no longer appealable to the DOLE Secretary, but to the Court of Appeals by
Certiorari proceedings.

5. PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION (POEA)

5.1. Suspension/Cancellation of License

5.2. Civil aspect of Illegal Recruitment; the criminal aspect is prosecuted before the regular
courts.

6. VOLUNTARY ARBITRATION

6.1. Grievance Machinery

6.2. Voluntary Arbitrator

7. EMPLOYEES COMPENSATION PROGRAM

7.1. STREET PERIL PRINCIPLE: Also known as the "going and coming rule"; injuries suffered
by an employee on his way to work or going home are generally not compensable under
workmen's compensation, in the absence of special circumstances, subject to the following
exceptions:

7.1.1. Direct Premises Rule: Injuries are sustained while still within the work premises;
7.1.2. Proximity Rule: Injuries are sustained when the employee is about to enter or leave
the work premises through the exclusive or usual means of Ingress/egress;
7.1.3. Special Errand Rule: Injuries sustained while the employee is on special errand;
7.1.4. Extra-Premises Rule: Injuries are sustained on board the means of transportation

37
 supplied by the employer as an incident to employment;
7.2. BUNKHOUSE PRINCIPLE: When the employee is required to stay in the premises or
quarters supplied by the employer, injuries sustained by the employee therein are
compensable regardless of the time the injuries were sustained.
7.3. WORK-CONNECTED PRINCIPLE: Injuries sustained by an innocent or non-culpable
employee in course of an assault by a co-employee or a third, person are compensable when
there is reasonable connection between the injury and a cause set in motion by the nature of
employment/ or some other condition, obligation or incident therein and not by some other
agency.
7.4. CONSEQUENTIAL INJURIES RULE; The natural/logical injuries arising from a previous
compensable injury are likewise compensable.
7.5. PERSONAL DOCTRINE; Injuries sustained within the work premises during lunch/meal
break is compensable as having arisen in the course of employment even if technically, the
interval is outside regular work hours because the employee is not entitled to wages at this
time and he is not under the control of the employer as he can use said period of time at his
pleasure.
7.6. INCREASED RISK THEORY; a disease is compensable if it is work-connecte'd and the
working conditions to which the employee is exposed increase the risk of contracting the same.
7.7. NOTORIOUS NEGLIGENCE RULE: Injuries/death sustained by the employee due to the
employee's deliberate act of disregarding his own personal safety are not compensable.

8. MISCELLANEOUS CONCERNS

8.1. TERMINATION DISPUTES remain under the original and exclusive jurisdiction of the
Labor Arbiter. Termination disputes need not go through the Grievance Machinery or Voluntary
Arbitration unless so desired by the parties.

8.2. PRESCRIPTIVE PERIODS:

8.2.1. Illegal dismissal: four (4) years

8.2.2. Money Claims: three (3) years
8.2.3. Unfair Labor Practice: (One (1) year
8.2.4. Formal Protest in Certification Elections Five (5) days from close of election
proceedings, only on grounds raised during the balloting.
8.2.5. Election Protest (Union Officers): five (5) days from dose of election proceedings
8.3. TECHNICAL RULES OF EVIDENCE/PROCEDURE are generally not binding in labor law
determinations. The underlying principle is the ascertainment of truth behind the controversy.
Summary proceedings are desired. For good cause shown, evidence may be presented at any
stage of the proceeding, even on appeal/MR in the interest of justice.

8.4. SUBMISSION OF POSITION PAPERS is generally sufficient for. the requirement of due
process. Full-blown/adversarial proceedings are not essential for the resolution of the
controversy before labor tribunals.

8.5. EXHAUSTION OF ADMINISTRATIVE REMEDIES: Appeal/Review of decisions of the

DOLE Secretary, NLRC, BLR, VA is generally to the Court of Appeals by Certiorari proceedings

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under Rule 65. It is a condition precedent that the appropriate MOTION FOR
RECONSIDERATION is first filed before judicial resort. The decision of the Court of Appeals
may be raised to the Supreme. Court on Appeal by Certiorari under Rule 45.
8.6. APPEAL BOND: Normally, an Appeal Bond equivalent to the amount of the monetary
judgment is required for appeals to the next level of administrative determination/adjudication.
In the NLRC, it is required that there shall be a certification from the surety, the appellant and
counsel that the Appeal Bond is genuine and shall remain valid and subsisting until the final
determination/resolution of the case.

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