Part 1 Labor Relations Policy

A. Constitution

ART III Bill of Rights

Section 8. The right of the people, including those employed in the public and private sectors,
to form unions, associations, or societies for purposes not contrary to law shall not be abridged.

B. Statutory

1. Methods of Dispute Settlement

ARTICLE XIII LABOR

Section 3. The State shall afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and
negotiations, and peaceful concerted activities, including the right to strike in accordance with
law. They shall be entitled to security of tenure, humane conditions of work, and a living wage.
They shall also participate in policy and decision-making processes affecting their rights and
benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workers and employers
and the preferential use of voluntary modes in settling disputes, including conciliation, and shall
enforce their mutual compliance therewith to foster industrial peace.

The State shall regulate the relations between workers and employers, recognizing the right of
labor to its just share in the fruits of production and the right of enterprises to reasonable
returns to investments, and to expansion and growth.

Art. 211. Declaration of Policy.

A. It is the policy of the State:

a. To promote and emphasize the primacy of free collective bargaining and negotiations,
including voluntary arbitration, mediation and conciliation, as modes of settling labor or
industrial disputes;

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b. To promote free trade unionism as an instrument for the enhancement of democracy andthe
promotion of social justice and development;

Art. 263. Strikes, picketing and lockouts.

g. When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout
in an industry indispensable to the national interest, the Secretary of Labor and Employment
may assume jurisdiction over the dispute and decide it or certify the same to the Commission
for compulsory arbitration. Such assumption or certification shall have the effect of
automatically enjoining the intended or impending strike or lockout as specified in the
assumption or certification order. If one has already taken place at the time of assumption or
certification, all striking or locked out employees shall immediately return-to-work and the
employer shall immediately resume operations and readmit all workers under the same terms
and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment
or the Commission may seek the assistance of law enforcement agencies to ensure compliance
with this provision as well as with such orders as he may issue to enforce the same.

In line with the national concern for and the highest respect accorded to the right of patients to
life and health, strikes and lockouts in hospitals, clinics and similar medical institutions shall, to
every extent possible, be avoided, and all serious efforts, not only by labor and management
but government as well, be exhausted to substantially minimize, if not prevent, their adverse
effects on such life and health, through the exercise, however legitimate, by labor of its right to
strike and by management to lockout. In labor disputes adversely affecting the continued
operation of such hospitals, clinics or medical institutions, it shall be the duty of the striking
union or locking-out employer to provide and maintain an effective skeletal workforce of
medical and other health personnel, whose movement and services shall be unhampered and
unrestricted, as are necessary to insure the proper and adequate protection of the life and
health of its patients, most especially emergency cases, for the duration of the strike or lockout.
In such cases, therefore, the Secretary of Labor and Employment may immediately assume,
within twenty four (24) hours from knowledge of the occurrence of such a strike or lockout,
jurisdiction over the same or certify it to the Commission for compulsory arbitration. For this
purpose, the contending parties are strictly enjoined to comply with such orders, prohibitions
and/or injunctions as are issued by the Secretary of Labor and Employment or the Commission,
under pain of immediate disciplinary action, including dismissal or loss of employment status or
payment by the locking-out employer of backwages, damages and other affirmative relief, even
criminal prosecution against either or both of them.

The foregoing notwithstanding, the President of the Philippines shall not be precluded from
determining the industries that, in his opinion, are indispensable to the national interest, and

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from intervening at any time and assuming jurisdiction over any such labor dispute in order to
settle or terminate the same.

Art. 124. Standards/Criteria for minimum wage fixing.

In cases where there are no collective agreements or recognized labor unions, the employers
and workers shall endeavor to correct such distortions. Any dispute arising therefrom shall be
settled through the National Conciliation and Mediation Board and, if it remains unresolved
after ten (10) calendar days of conciliation, shall be referred to the appropriate branch of the
National Labor Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct
continuous hearings and decide the dispute within twenty (20) calendar days from the time
said dispute is submitted for compulsory arbitration.

Article 99. Regional minimum wages. The minimum wage rates for agricultural and non-
agricultural employees and workers in each and every region of the country shall be those
prescribed by the Regional Tripartite Wages and Productivity Boards. (As amended by Section 3,
Republic Act No. 6727, June 9, 1989).

Kiok Loy v. NLRC, 141 SCRA 179 (1986)

FACTS: In a certification election held on October 3, 1978, the Pambansang Kilusang Paggawa
(Union for short) was subsequently certified in a resolution dated November 29, 1978 by the
Bureau of Labor Relations as the sole and exclusive bargaining agent of the rank-and-file
employees of Sweden Ice Cream Plant (Company for short). The Company's motion for
reconsideration of the said resolution was denied on January 25, 1978.

December 7, 1978, the Union furnished the Company with two copies of its proposed collective
bargaining agreement. It also requested the Company for its counter proposals. Both requests
were ignored and remained unacted upon by the Company.

The Union, on February 14, 1979, filed a "Notice of Strike", with the Bureau of Labor Relations
(BLR) on ground of unresolved economic issues in collective bargaining.

Conciliation proceedings then followed during the thirty-day statutory cooling-off period.

The Bureau of Labor Relations to certify the case to the National Labor Relations Commission
for compulsory arbitration.

The labor arbiter set the initial hearing for April 29, 1979. For failure however, of the parties to
submit their respective position papers as required, the said hearing was cancelled and reset to
another date.

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The Union submitted its position paper.

On July 20, 1979, the National Labor Relations Commission rendered its decision declaring the
respondent guilty of unjustified refusal to bargain

Petitioner contends that the National Labor Relations Commission acted without or in excess of
its jurisdiction or with graveabuse of discretion amounting to lack of jurisdiction in rendering
the challenged decision.

Petitioner further contends that the National Labor Relations Commission's finding of unfair
labor practice for refusal to bargain is not supported by law

ISSUE/S: WON the respondent is guilty of unjustified refusal to bargain

HELD: YES. Unfair labor practice is committed when it is shown that the respondent employer,
after having been served with a written bargaining proposal by the petitioning Union, did not
even bother to submit an answer or reply to the said proposal

Ratio Unfair labor practice is committed when it is shown that the respondent employer, after
having been served with a written bargaining proposal by the petitioning Union, did not even
bother to submit an answer or reply to the said proposal

Reasoning Collective bargaining which is defined as negotiations towards a collective

agreement, is one of the democratic frameworks under the New Labor Code, designed to
stabilize the relation between labor and management and to create a climate of sound and
stable industrial peace. It is a mutual responsibility of the employer and the Union and is
characterized as a legal obligation. So much so that Article 249, par. (g) of the Labor Code
makes it an unfair labor practice for an employer to refuse "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 grievance or question arising under such an agreement and executing a contract
incorporating such agreement, if requested by either party.

While it is a mutual obligation of the parties to bargain, the employer, however, is not under
any legal duty to initiate contract negotiation.The mechanics of collective bargaining is set in
motion only when the following jurisdictional preconditions are present, namely, (1) possession
of the status of majority representation of the employees' representative in accordance with
any of the means of selection or designation provided for by the Labor Code; (2) proof of
majority representation; and (3) a demand to bargain under Article 251, par. (a) of the New
Labor Code .

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From the over-all conduct of petitioner company in relation to the task of negotiation, there
can be no doubt that the Union has a valid cause to complain against its (Company's) attitude,
the totality of which is indicative of the latter's disregard of, and failure to live up to, what is
enjoined by the Labor Code to bargain in good faith.

DISPOSITION: Petition dismissed

Manila Diamond Hotel Employees Union v CA 447 SCRA 97 (2004)

Petitioner Manila Diamond Hotel Employees Union

Respondent The Hon. Court of Appeals, The Secretary of Labor and Employment, and The
Manila Diamond Hotel

Ponente Justice Azcuna, First Division

Significance of the Case

In this case, the Supreme Court explained the legislative intendment or purpose behind Article
236 (g) of the Labor Code, and reiterated the rule that payroll reinstatement in lieu of actual
reinstatement is not sanctioned under the provision of the said article.

Facts

On November 11, 1996, the Union filed a petition for a certification election so that it may be
declared the exclusive bargaining representative of the Hotels employees for the purpose of
collective bargaining. The petition was dismissed by the Department of Labor and Employment
(DOLE) on January 15, 1997.

After a few months, despite the dismissal of their petition, the Union sent a letter to the Hotel
informing the latter of its desire to negotiate for a collective bargaining agreement. The Hotel,
however, refused to negotiate with the Union, citing the earlier dismissal of the Unions
petition for certification by DOLE.

Failing to settle the issue, the Union staged a strike against the Hotel. Numerous confrontations
followed, further straining the relationship between the Union and the Hotel. The Hotel claims
that the strike was illegal and dismissed some employees for their participation in the allegedly
illegal concerted activity. The Union, on the other hand, accused the Hotel of illegally dismissing
the workers.

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A Petition for Assumption of Jurisdiction under Article 263(g) of the Labor Code was later filed
by the Union before the Secretary of Labor. Thereafter, Secretary of Labor Trajano issued an
Order directing the striking officers and members of the Union to return to work within twenty-
four (24) hours and the Hotel to accept them back under the same terms and conditions
prevailing prior to the strike.

After receiving the above order the members of the Union reported for work, but the Hotel
refused to accept them and instead filed a Motion for Reconsideration of the Secretarys Order.

Acting on the motion for reconsideration, then Acting Secretary of Labor Espaol modified the
one earlier issued by Secretary Trajano and instead directed that the strikers be reinstated only
in the payroll.

This is where the controversy arose. The union alleged that the Secretary of Labor committed
grave abuse of discretion for modifying its earlier order and requiring instead the reinstatement
of the employees in the payroll.

The Court of Appeals dismissed the Unions petition and affirmed the Secretary of Labors
Order for payroll reinstatement. It held that the challenged order is merely an error of
judgment and not a grave abuse of discretion and that payroll reinstatement is not prohibited
by law, but may be called for under certain circumstances. The CA cited University of Santo
Tomas vs. NLRC as basis for its ruling.

Ruling

The Supreme Court reversed the decision of the CA, and ruled that the Secretary of Labor
committed grave abused of discretion in ordering payroll reinstatement in lieu of actual
reinstatement. The Court noted the difference between UST case and the instant case. In UST
case the teachers could not be given back their academic assignments since the order of the
Secretary for them to return to work was given in the middle of the first semester of the
academic year. The NLRC was, therefore, faced with a situation where the striking teachers
were entitled to a return to work order, but the university could not immediately reinstate
them since it would be impracticable and detrimental to the students to change teachers at
that point in time.

In the present case, there is no similar compelling reason that called for payroll reinstatement
as an alternative remedy. A strained relationship between the striking employees and
management is no reason for payroll reinstatement in lieu of actual reinstatement.

Under Article 263(g), all workers must immediately return to work and all employers must
readmit all of them under the same terms and conditions prevailing before the strike or

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lockout. The Court pointed out that the law uses the precise phrase of under the same terms
and conditions, revealing that it contemplates only actual reinstatement. This is in keeping
with the rationale that any work stoppage or slowdown in that particular industry can be
inimical to the national economy.

The Court reiterates that Article 263(g) was not written to protect labor from the excesses of
management, nor was it written to ease management from expenses, which it normally incurs
during a work stoppage or slowdown. This law was written as a means to be used by the State
to protect itself from an emergency or crisis. It is not for labor, nor is it for management.

2. Trade Unionism

Art 211. Declaration of Policy

b. To promote free trade unionism as an instrument for the enhancement of democracy and
the promotion of social justice and development;
c. To foster the free and voluntary organization of a strong and united labor movement;

3. Worker Enlightenment

Art 211. Declaration of Policy

d. To promote the enlightenment of workers concerning their rights and obligations as union
members and as employees;

Art. 277. Miscellaneous provisions.

h. In establishments where no legitimate labor organization exists, labor-management

committees may be formed voluntarily by workers and employers for the purpose of promoting
industrial peace. The Department of Labor and Employment shall endeavor to enlighten and
educate the workers and employers on their rights and responsibilities through labor education
with emphasis on the policy thrusts of this Code. (As amended by Section 33, Republic Act No.
6715, March 21, 1989)

Art. 241. Rights and conditions of membership in a labor organization. The following are the
rights and conditions of membership in a labor organization:
o. Other than for mandatory activities under the Code, no special assessments, attorneys 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;

VICTORIA V INCIONG

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157 SCRA 339

FERNAN; January 26, 1988

NATURE

Review of Order of Labor Secretary reversing decision of NLRC

FACTS

- Complainant Saturno Victoria is the president of the Far East Broadcasting Company
Employees Union. On September 8, 1972, the said union declared a strike against respondent
company for refusal to recognize them. On September 11, 1972, respondent filed with the
Court of First Instance of Bulacan, Civil Case No. 750-V, for the issuance of an injunction and a
prayer that the strike be declared illegal.

- Strikers filed case with NLRC for reinstatement. Reinstatement granted without prejudice to
outcome of Civil Case 750-V.

- Strike was declared illegal because company was a non-profit organization. Company
dismissed complainant.

- Complainant filed for illegal dismissal. NLRC granted. Sec. Inciong reversed.

ISSUE/S

1. WON company should obtain clearance under Art. 267 before dismissing complainant.

HELD

1. NO

The purpose in requiring a prior clearance from the Secretary of Labor in cases of shutdown or
dismissal of employees, is to afford the Secretary ample opportunity to examine and determine
the reasonableness of the request. Consequently, private respondent acted in good faith when
it terminated the employment of petitioner upon a declaration of illegality of the strike.

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Ratio This is a matter of responsibility and of answerability. Petitioner as a union leader, must
see to it that the policies and activities of the union in the conduct of labor relations are within
the precepts of law and any deviation from the legal boundaries shall be imputable to the
leader. He bears the responsibility of guiding the union along the path of law and to cause the
union to demand what is not legally demandable, would foment anarchy which is a prelude to
chaos.

Reasoning As a strike is an economic weapon at war with the policy of the Constitution and the
law at that time, a resort thereto by laborers shall be deemed to be a choice of remedy
peculiarly their own and outside of the statute, and as such, the strikers must accept all the
risks attendant upon their choice. If they succeed and the employer succumbs, the law will not
stand in their way in the enjoyment of the lawful fruits of their victory. But if they fail, they
cannot thereafter invoke the protection of the law for the consequences of their conduct unless
the right they wished vindicated is one which the law will, by all means, protect and enforce.

Disposition WHEREFORE, the petition is dismissed. The decision of the acting Secretary of Labor
is AFFIRMED in toto.

4. Machinery Dispute Settlement

Art 211. Declaration of Policy

e. To provide an adequate administrative machinery for the expeditious settlement of labor or

industrial disputes;

Article 213. National Labor Relations Commission. There shall be a National Labor Relations
Commission which shall be attached to the Department of Labor and Employment for program
and policy coordination only, composed of a Chairman and fourteen (14) Members.

Five (5) members each shall be chosen from among the nominees of the workers and
employers organizations, respectively. The Chairman and the four (4) remaining members shall
come from the public sector, with the latter to be chosen from among the recommendees of
the Secretary of Labor and Employment.

Upon assumption into office, the members nominated by the workers and employers
organizations shall divest themselves of any affiliation with or interest in the federation or
association to which they belong.

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The Commission may sit en banc or in five (5) divisions, each composed of three (3) members.
Subject to the penultimate sentence of this paragraph, the Commission shall sit en banc only
for purposes of promulgating rules and regulations governing the hearing and disposition of
cases before any of its divisions and regional branches, and formulating policies affecting its
administration and operations. The Commission shall exercise its adjudicatory and all other
powers, functions, and duties through its divisions. Of the five (5) divisions, the first, second and
third divisions shall handle cases coming from the National Capital Region and the parts of
Luzon; and the fourth and fifth divisions, cases from the Visayas and Mindanao, respectively;
Provided that the Commission sitting en banc may, on temporary or emergency basis, allow
cases within the jurisdiction of any division to be heard and decided by any other division
whose docket allows the additional workload and such transfer will not expose litigants to
unnecessary additional expense. The divisions of the Commission shall have exclusive appellate
jurisdiction over cases within their respective territorial jurisdictions. [As amended by Republic
Act No. 7700].

The concurrence of two (2) Commissioners of a division shall be necessary for the
pronouncement of judgment or resolution. Whenever the required membership in a division is
not complete and the concurrence of two (2) commissioners to arrive at a judgment or
resolution cannot be obtained, the Chairman shall designate such number of additional
Commissioners from the other divisions as may be necessary.

The conclusions of a division on any case submitted to it for decision shall be reached in
consultation before the case is assigned to a member for the writing of the opinion. It shall be
mandatory for the division to meet for purposes of the consultation ordained herein. A
certification to this effect signed by the Presiding Commissioner of the division shall be issued
and a copy thereof attached to the record of the case and served upon the parties.

The Chairman shall be the Presiding Commissioner of the first division and the four (4) other
members from the public sector shall be the Presiding Commissioners of the second, third,
fourth and fifth divisions, respectively. In case of the effective absence or incapacity of the
Chairman, the Presiding Commissioner of the second division shall be the Acting Chairman.

The Chairman, aided by the Executive Clerk of the Commission, shall have administrative
supervision over the Commission and its regional branches and all its personnel, including the
Executive Labor Arbiters and Labor Arbiters.

The Commission, when sitting en banc shall be assisted by the same Executive Clerk and, when
acting thru its Divisions, by said Executive Clerks for the second, third, fourth and fifth Divisions,
respectively, in the performance of such similar or equivalent functions and duties as are

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discharged by the Clerk of Court and Deputy Clerks of Court of the Court of Appeals. (As
amended by Section 5, Republic Act No. 6715, March 21, 1989)

Article 214. Headquarters, Branches and Provincial Extension Units. The Commission and its
First, Second and Third divisions shall have their main offices in Metropolitan Manila, and the
Fourth and Fifth divisions in the Cities of Cebu and Cagayan de Oro, respectively. The
Commission shall establish as many regional branches as there are regional offices of the
Department of Labor and Employment, sub-regional branches or provincial extension units.
There shall be as many Labor Arbiters as may be necessary for the effective and efficient
operation of the Commission. Each regional branch shall be headed by an Executive Labor
Arbiter. (As amended by Section 6, Republic Act No. 6715, March 21, 1989)

Article 215. Appointment and Qualifications. The Chairman and other Commissioners shall be
members of the Philippine Bar and must have engaged in the practice of law in the Philippines
for at least fifteen (15) years, with at least five (5) years experience or exposure in the field of
labor-management relations, and shall preferably be residents of the region where they are to
hold office. The Executive Labor Arbiters and Labor Arbiters shall likewise be members of the
Philippine Bar and must have been engaged in the practice of law in the Philippines for at least
seven (7) years, with at least three (3) years experience or exposure in the field of labor-
management relations: Provided, However, that incumbent Executive Labor Arbiters and Labor
Arbiters who have been engaged in the practice of law for at least five (5) years may be
considered as already qualified for purposes of reappointment as such under this Act. The
Chairman and the other Commissioners, the Executive Labor Arbiters and Labor Arbiters shall
hold office during good behavior until they reach the age of sixty-five years, unless sooner
removed for cause as provided by law or become incapacitated to discharge the duties of their
office.

The Chairman, the division Presiding Commissioners and other Commissioners shall be
appointed by the President, subject to confirmation by the Commission on Appointments.
Appointment to any vacancy shall come from the nominees of the sector which nominated the
predecessor. The Executive Labor Arbiters and Labor Arbiters shall also be appointed by the
President, upon recommendation of the Secretary of Labor and Employment and shall be
subject to the Civil Service Law, rules and regulations.

The Secretary of Labor and Employment shall, in consultation with the Chairman of the
Commission, appoint the staff and employees of the Commission and its regional branches as
the needs of the service may require, subject to the Civil Service Law, rules and regulations, and
upgrade their current salaries, benefits and other emoluments in accordance with law. (As
amended by Section 7, Republic Act No. 6715, March 21, 1989)

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Article 216. Salaries, benefits and other emoluments. The Chairman and members of the
Commission shall receive an annual salary at least equivalent to, and be entitled to the same
allowances and benefits as those of the Presiding Justice and Associate Justices of the Court of
Appeals, respectively. The Executive Labor Arbiters shall receive an annual salary at least
equivalent to that of an Assistant Regional Director of the Department of Labor and
Employment and shall be entitled to the same allowances and benefits as that of a Regional
Director of said Department. The Labor Arbiters shall receive an annual salary at least
equivalent to, and be entitled to the same allowances and benefits as that of an Assistant
Regional Director of the Department of Labor and Employment. In no case, however, shall the
provision of this Article result in the diminution of existing salaries, allowances and benefits of
the aforementioned officials. (As amended by Section 8, Republic Act No. 6715, March 21,
1989)

Chapter II
POWERS AND DUTIES

Article 217. Jurisdiction of the Labor Arbiters and the Commission.

Except as otherwise provided under this Code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission
of the case by the parties for decision without extension, even in the absence of stenographic
notes, the following cases involving all workers, whether agricultural or non-agricultural:

Unfair labor practice cases;

Termination disputes;

If accompanied with a claim for reinstatement, those cases that workers may file involving
wages, rates of pay, hours of work and other terms and conditions of employment;

Claims for actual, moral, exemplary and other forms of damages arising from the employer-
employee relations;

Cases arising from any violation of Article 264 of this Code, including questions involving the
legality of strikes and lockouts; and

Except claims for Employees Compensation, Social Security, Medicare and maternity benefits,
all other claims arising from employer-employee relations, including those of persons in
domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00)
regardless of whether accompanied with a claim for reinstatement.

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The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor
Arbiters.

Cases arising from the interpretation or implementation of collective bargaining agreements

and those arising from the interpretation or enforcement of company personnel policies shall
be disposed of by the Labor Arbiter by referring the same to the grievance machinery and
voluntary arbitration as may be provided in said agreements. (As amended by Section 9,
Republic Act No. 6715, March 21, 1989)

Article 218. Powers of the Commission. The Commission shall have the power and authority:

To promulgate rules and regulations governing the hearing and disposition of cases before it
and its regional branches, as well as those pertaining to its internal functions and such rules and
regulations as may be necessary to carry out the purposes of this Code; (As amended by Section
10, Republic Act No. 6715, March 21, 1989)

To administer oaths, summon the parties to a controversy, issue subpoenas requiring the
attendance and testimony of witnesses or the production of such books, papers, contracts,
records, statement of accounts, agreements, and others as may be material to a just
determination of the matter under investigation, and to testify in any investigation or hearing
conducted in pursuance of this Code;

To conduct investigation for the determination of a question, matter or controversy within its
jurisdiction, proceed to hear and determine the disputes in the absence of any party thereto
who has been summoned or served with notice to appear, conduct its proceedings or any part
thereof in public or in private, adjourn its hearings to any time and place, refer technical
matters or accounts to an expert and to accept his report as evidence after hearing of the
parties upon due notice, direct parties to be joined in or excluded from the proceedings,
correct, amend, or waive any error, defect or irregularity whether in substance or in form, give
all such directions as it may deem necessary or expedient in the determination of the dispute
before it, and dismiss any matter or refrain from further hearing or from determining the
dispute or part thereof, where it is trivial or where further proceedings by the Commission are
not necessary or desirable; and

To hold any person in contempt directly or indirectly and impose appropriate penalties therefor
in accordance with law.

A person guilty of misbehavior in the presence of or so near the Chairman or any member of
the Commission or any Labor Arbiter as to obstruct or interrupt the proceedings before the
same, including disrespect toward said officials, offensive personalities toward others, or
refusal to be sworn, or to answer as a witness or to subscribe an affidavit or deposition when

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lawfully required to do so, may be summarily adjudged in direct contempt by said officials and
punished by fine not exceeding five hundred pesos (P500) or imprisonment not exceeding five
(5) days, or both, if it be the Commission, or a member thereof, or by a fine not exceeding one
hundred pesos (P100) or imprisonment not exceeding one (1) day, or both, if it be a Labor
Arbiter.

The person adjudged in direct contempt by a Labor Arbiter may appeal to the Commission and
the execution of the judgment shall be suspended pending the resolution of the appeal upon
the filing by such person of a bond on condition that he will abide by and perform the judgment
of the Commission should the appeal be decided against him. Judgment of the Commission on
direct contempt is immediately executory and unappealable. Indirect contempt shall be dealt
with by the Commission or Labor Arbiter in the manner prescribed under Rule 71 of the Revised
Rules of Court; and (As amended by Section 10, Republic Act No. 6715, March 21, 1989)

To enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful
acts or to require the performance of a particular act in any labor dispute which, if not
restrained or performed forthwith, may cause grave or irreparable damage to any party or
render ineffectual any decision in favor of such party: Provided, That no temporary or
permanent injunction in any case involving or growing out of a labor dispute as defined in this
Code shall be issued except after hearing the testimony of witnesses, with opportunity for
cross-examination, in support of the allegations of a complaint made under oath, and testimony
in opposition thereto, if offered, and only after a finding of fact by the Commission, to the
effect:

That prohibited or unlawful acts have been threatened and will be committed and will be
continued unless restrained, but no injunction or temporary restraining order shall be issued on
account of any threat, prohibited or unlawful act, except against the person or persons,
association or organization making the threat or committing the prohibited or unlawful act or
actually authorizing or ratifying the same after actual knowledge thereof;

That substantial and irreparable injury to complainants property will follow;

That as to each item of relief to be granted, greater injury will be inflicted upon complainant by
the denial of relief than will be inflicted upon defendants by the granting of relief;

That complainant has no adequate remedy at law; and

That the public officers charged with the duty to protect complainants property are unable or
unwilling to furnish adequate protection.

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Such hearing shall be held after due and personal notice thereof has been served, in such
manner as the Commission shall direct, to all known persons against whom relief is sought, and
also to the Chief Executive and other public officials of the province or city within which the
unlawful acts have been threatened or committed, charged with the duty to protect
complainants property: Provided, however, that if a complainant shall also allege that, unless a
temporary restraining order shall be issued without notice, a substantial and irreparable injury
to complainants property will be unavoidable, such a temporary restraining order may be
issued upon testimony under oath, sufficient, if sustained, to justify the Commission in issuing a
temporary injunction upon hearing after notice. Such a temporary restraining order shall be
effective for no longer than twenty (20) days and shall become void at the expiration of said
twenty (20) days. No such temporary restraining order or temporary injunction shall be issued
except on condition that complainant shall first file an undertaking with adequate security in an
amount to be fixed by the Commission sufficient to recompense those enjoined for any loss,
expense or damage caused by the improvident or erroneous issuance of such order or
injunction, including all reasonable costs, together with a reasonable attorneys fee, and
expense of defense against the order or against the granting of any injunctive relief sought in
the same proceeding and subsequently denied by the Commission.

The undertaking herein mentioned shall be understood to constitute an agreement entered

into by the complainant and the surety upon which an order may be rendered in the same suit
or proceeding against said complainant and surety, upon a hearing to assess damages, of which
hearing, complainant and surety shall have reasonable notice, the said complainant and surety
submitting themselves to the jurisdiction of the Commission for that purpose. But nothing
herein contained shall deprive any party having a claim or cause of action under or upon such
undertaking from electing to pursue his ordinary remedy by suit at law or in equity: Provided,
further, That the reception of evidence for the application of a writ of injunction may be
delegated by the Commission to any of its Labor Arbiters who shall conduct such hearings in
such places as he may determine to be accessible to the parties and their witnesses and shall
submit thereafter his recommendation to the Commission. (As amended by Section 10,
Republic Act No. 6715, March 21, 1989)

Article 219. Ocular inspection. The Chairman, any Commissioner, Labor Arbiter or their duly
authorized representatives, may, at any time during working hours, conduct an ocular
inspection on any establishment, building, ship or vessel, place or premises, including any work,
material, implement, machinery, appliance or any object therein, and ask any employee,
laborer, or any person, as the case may be, for any information or data concerning any matter
or question relative to the object of the investigation.

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Article 220. Compulsory arbitration. The Commission or any Labor Arbiter shall have the power
to ask the assistance of other government officials and qualified private citizens to act as
compulsory arbitrators on cases referred to them and to fix and assess the fees of such
compulsory arbitrators, taking into account the nature of the case, the time consumed in
hearing the case, the professional standing of the arbitrators, the financial capacity of the
parties, and the fees provided in the Rules of Court.] (Repealed by Section 16, Batas Pambansa
Bilang 130, August 21, 1981)

Article 221. Technical rules not binding and prior resort to amicable settlement. In any
proceeding before the Commission or any of the Labor Arbiters, the rules of evidence prevailing
in courts of law or equity shall not be controlling and it is the spirit and intention of this Code
that the Commission and its members and the Labor Arbiters shall use every and all reasonable
means to ascertain the facts in each case speedily and objectively and without regard to
technicalities of law or procedure, all in the interest of due process. In any proceeding before
the Commission or any Labor Arbiter, the parties may be represented by legal counsel but it
shall be the duty of the Chairman, any Presiding Commissioner or Commissioner or any Labor
Arbiter to exercise complete control of the proceedings at all stages.

Any provision of law to the contrary notwithstanding, the Labor Arbiter shall exert all efforts
towards the amicable settlement of a labor dispute within his jurisdiction on or before the first
hearing. The same rule shall apply to the Commission in the exercise of its original jurisdiction.
(As amended by Section 11, Republic Act No. 6715, March 21, 1989)

Article 222. Appearances and Fees.

Non-lawyers may appear before the Commission or any Labor Arbiter only:

If they represent themselves; or

If they represent their organization or members thereof.

No attorneys fees, negotiation fees or similar charges of any kind arising from any collective
bargaining agreement shall be imposed on any individual member of the contracting union:
Provided, However, that attorneys fees may be charged against union funds in an amount to
be agreed upon by the parties. Any contract, agreement or arrangement of any sort to the
contrary shall be null and void. (As amended by Presidential Decree No. 1691, May 1, 1980)

Chapter III
APPEAL

Article 223. Appeal. Decisions, awards, or orders of the Labor Arbiter are final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days from

16
receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the
following grounds:

If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter;

If the decision, order or award was secured through fraud or coercion, including graft and
corruption;

If made purely on questions of law; and

If serious errors in the findings of facts are raised which would cause grave or irreparable
damage or injury to the appellant.

In case of a judgment involving a monetary award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award in the
judgment appealed from.

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee,
insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending
appeal. The employee shall either be admitted back to work under the same terms and
conditions prevailing prior to his dismissal or separation or, at the option of the employer,
merely reinstated in the payroll. The posting of a bond by the employer shall not stay the
execution for reinstatement provided herein.

To discourage frivolous or dilatory appeals, the Commission or the Labor Arbiter shall impose
reasonable penalty, including fines or censures, upon the erring parties.

In all cases, the appellant shall furnish a copy of the memorandum of appeal to the other party
who shall file an answer not later than ten (10) calendar days from receipt thereof.

The Commission shall decide all cases within twenty (20) calendar days from receipt of the
answer of the appellee. The decision of the Commission shall be final and executory after ten
(10) calendar days from receipt thereof by the parties.

Any law enforcement agency may be deputized by the Secretary of Labor and Employment or
the Commission in the enforcement of decisions, awards or orders. (As amended by Section 12,
Republic Act No. 6715, March 21, 1989)

Article 224. Execution of decisions, orders or awards.

The Secretary of Labor and Employment or any Regional Director, the Commission or any Labor
Arbiter, or Med-Arbiter or Voluntary Arbitrator may, motu proprio or on motion of any

17
interested party, issue a writ of execution on a judgment within five (5) years from the date it
becomes final and executory, requiring a sheriff or a duly deputized officer to execute or
enforce final decisions, orders or awards of the Secretary of Labor and Employment or regional
director, the Commission, the Labor Arbiter or med-arbiter, or voluntary arbitrators. In any
case, it shall be the duty of the responsible officer to separately furnish immediately the
counsels of record and the parties with copies of said decisions, orders or awards. Failure to
comply with the duty prescribed herein shall subject such responsible officer to appropriate
administrative sanctions.

The Secretary of Labor and Employment, and the Chairman of the Commission may designate
special sheriffs and take any measure under existing laws to ensure compliance with their
decisions, orders or awards and those of the Labor Arbiters and voluntary arbitrators, including
the imposition of administrative fines which shall not be less than P500.00 nor more than
P10,000.00. (As amended by Section 13, Republic Act No. 6715, March 21, 1989)

Article 225. Contempt powers of the Secretary of Labor. In the exercise of his powers under this
Code, the Secretary of Labor may hold any person in direct or indirect contempt and impose
the appropriate penalties therefor.

Title III
BUREAU OF LABOR RELATIONS

Article 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).

Article 260. Grievance machinery and voluntary arbitration. The parties to a Collective
Bargaining Agreement shall include therein provisions that will ensure the mutual observance
of its terms and conditions. They shall establish a machinery for the adjustment and resolution
of grievances arising from the interpretation or implementation of their Collective Bargaining
Agreement and those arising from the interpretation or enforcement of company personnel
policies.

18
All grievances submitted to the grievance machinery which are not settled within seven (7)
calendar days from the date of its submission shall automatically be referred to voluntary
arbitration prescribed in the Collective Bargaining Agreement.

For this purpose, parties to a Collective Bargaining Agreement shall name and designate in
advance a Voluntary Arbitrator or panel of Voluntary Arbitrators, or include in the agreement a
procedure for the selection of such Voluntary Arbitrator or panel of Voluntary Arbitrators,
preferably from the listing of qualified Voluntary Arbitrators duly accredited by the Board. In
case the parties fail to select a Voluntary Arbitrator or panel of Voluntary Arbitrators, the Board
shall designate the Voluntary Arbitrator or panel of Voluntary Arbitrators, as may be necessary,
pursuant to the selection procedure agreed upon in the Collective Bargaining Agreement, which
shall act with the same force and effect as if the Arbitrator or panel of Arbitrators has been
selected by the parties as described above.

Article 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. The

Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive
jurisdiction to hear and decide all unresolved grievances arising from the interpretation or
implementation of the Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies referred to in the immediately
preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those
which are gross in character, shall no longer be treated as unfair labor practice and shall be
resolved as grievances under the Collective Bargaining Agreement. For purposes of this article,
gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal
to comply with the economic provisions of such agreement.

The Commission, its Regional Offices and the Regional Directors of the Department of Labor
and Employment shall not entertain disputes, grievances or matters under the exclusive and
original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall
immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration
provided in the Collective Bargaining Agreement.

Article 262. Jurisdiction over other labor disputes. The Voluntary Arbitrator or panel of
Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide all other labor
disputes including unfair labor practices and bargaining deadlocks.

Art 277. Miscellaneous Provisions

i. To ensure speedy labor justice, the periods provided in this Code within which decisions or
resolutions of labor relations cases or matters should be rendered shall be mandatory. For this
purpose, a case or matter shall be deemed submitted for decision or resolution upon the filing
of the last pleading or memorandum required by the rules of the Commission or by the

19
Commission itself, or the Labor Arbiter, or the Director of the Bureau of Labor Relations or
Med-Arbiter, or the Regional Director.

1987 Administrative Code of the Philippines

Title VII Labor and Employment

Section 23. National Conciliation and Mediation Board. - The National Conciliation and
Mediation Board, shall absorb the conciliation, mediation and voluntary arbitration functions of
the Bureau of Labor Relations. The Board shall be composed of an Administrator and two (2)
Deputy Administrators. It shall be an attached agency under the administrative supervision of
the Secretary of Labor and Employment.

The Administrator and the Deputy Administrators shall be appointed by the President upon
recommendation of the Secretary of Labor and Employment. There shall be as many
Conciliators-Mediators as the needs of the public service require, who shall have at least three
(3) years of experience in handling labor relations and who shall be appointed by the Secretary.
The Board shall have its main office in Metropolitan Manila and its Administrator shall exercise
supervision over Conciliators-Mediators and all its personnel. It shall establish as many
branches as there are administrative regions in the country, with as many Conciliators-
Mediators as shall be necessary for its effective operation. Each branch of the Board shall be
headed by an Executive Conciliator-Mediator.

The Board shall have the following functions:

(1) Formulate policies, programs, standards, procedures, manuals of operation and

guidelines pertaining to effective mediation and conciliation of labor disputes;

(2) Perform preventive mediation and conciliation functions;

(3) Coordinate and maintain linkages with other sectors or institutions, and other
government authorities concerned with matters relative to the prevention and
settlement of labor disputes;

(4) Formulate policies, plans, programs, standards, procedures, manuals of operation

and guidelines pertaining to the promotion of cooperative and non-adversarial schemes,
grievance handling, voluntary arbitration and other voluntary modes of dispute
settlement;

(5) Administer the voluntary arbitration program; maintain or update a list of voluntary
arbitrations; compile arbitration awards and decisions;

(6) Provide counselling and preventive mediation assistance particularly in the

administration of collective agreements;

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 (7) Monitor and exercise technical supervision over the Board programs being
implemented in the regional offices; and

(8) Perform such other functions as may be provided by law or assigned by the
Secretary.

The Tripartite Voluntary Arbitration Advisory Council, which is attached to the National
Conciliation and Mediation Board, shall advise the National and Conciliation and
Mediation Board on matters pertaining to the promotion of voluntary arbitration as the
preferred mode of dispute settlement.

The Tripartite Voluntary Arbitration Advisory Council shall consist of the Administrator
of the National Conciliation and Mediation Board as Chairman, one other member from
the government, two (2) members representing labor, and two (2) other members
representing management. The members shall be appointed by the President to serve
for a term of three (3) years. The Chairman and Members shall serve without
compensation.

5. Industrial Peace

Art 211
f. To ensure a stable but dynamic and just industrial peace

Art. 273. Study of labor-management relations. The Secretary of Labor shall have the power
and it shall be his duty to inquire into:
a. the existing relations between employers and employees in the Philippines;
b. the growth of associations of employees and the effect of such associations upon employer
employee relations;
c. the extent and results of the methods of collective bargaining in the determination of terms
and conditions of employment;
d. the methods which have been tried by employers and associations of employees for
maintaining mutually satisfactory relations;
e. desirable industrial practices which have been developed through collective bargaining and
other voluntary arrangements;
f. the possible ways of increasing the usefulness and efficiency of collective bargaining for
settling differences;
g. the possibilities for the adoption of practical and effective methods of labor-management
cooperation;
h. any other aspects of employer-employee relations concerning the promotion of harmony
and understanding between the parties; and
i. the relevance of labor laws and labor relations to national development.

The Secretary of Labor shall also inquire into the causes of industrial unrest and take all the
necessary steps within his power as may be prescribed by law to alleviate the same, and shall

21
from time to time recommend the enactment of such remedial legislation as in his judgment
may be desirable for the maintenance and promotion of industrial peace.

6. Workers Participation in Decision-Making

Art 211.
g. To ensure the participation of workers in decision and policy-making processes affecting their
rights, duties and welfare.

Article 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 277.
g. The Ministry shall help promote and gradually develop, with the agreement of labor
organizations and employers, labor-management cooperation programs at appropriate levels of
the enterprise based on the shared responsibility and mutual respect in order to ensure
industrial peace and improvement in productivity, working conditions and the quality of
working life. (Incorporated by Batas Pambansa Bilang 130, August 21, 1981)

h. In establishments where no legitimate labor organization exists, labor-management

committees may be formed voluntarily by workers and employers for the purpose of promoting
industrial peace. The Department of Labor and Employment shall endeavor to enlighten and
educate the workers and employers on their rights and responsibilities through labor education
with emphasis on the policy thrusts of this Code. (As amended by Section 33, Republic Act No.
6715, March 21, 1989)

Philippine Airlines v. NLRC, 225 SCRA 301 (1993)

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FACTS: On March 15, 1985, PAL completely revised its 1966 Code of Discipline. The Code was
circulated among the employees and was immediately implemented, and some employees
were subjected to the disciplinary measures.

The Philippine Airlines Employees Association (PALEA) filed a complaint before the NLRC
contending that PAL, by its unilateral implementation of the Code, was guilty of unfair labor
practice, specifically Paragraphs E and G of Art 249 and Art 253 of the Labor Code. PALEA
alleged that copies of the Code had been circulated in limited numbers; that being penal in
nature the Code must conform with the requirements of sufficient publication, and that the
Code was arbitrary, oppressive, and prejudicial to the rights of the employees. It prayed that
implementation of the Code be held in abeyance; that PAL should discuss the substance of the
Code with PALEA; that employees dismissed under the Code reinstated and their cases
subjected to further hearing; and that PAL be declared guilty of unfair labor practice and be
ordered to pay damages.

PAL filed a MTD, asserting its prerogative as an employer to prescribe rules and regulations
regarding employees' conduct in carrying out their duties and functions, and alleging that it had
not violated the CBA or any provision of the Labor Code.

ISSUE: WON the formulation of a Code of Discipline among employees is a shared responsibility
of the employer and the employees

HELD: YES.

Ratio Employees have a right to participate in the deliberation of matters which may affect
their rights and the formulation of policies relative thereto and one such matter is the
formulation of a code of discipline.

Reasoning It was only on March 2, 1989, with the approval of RA 6715, amending Art 211 of
the Labor Code, that the law explicitly considered it a State policy "to ensure the participation
of workers in decision and policy-making processes affecting their rights, duties and welfare."
However, even in the absence of said clear provision of law, the exercise of management
prerogatives was never considered boundless. Thus, in Cruz vs. Medina, it was held that
management's prerogatives must be without abuse of discretion.

In San Miguel Brewery Sales Force Union vs. Ople, we upheld the company's right to implement
a new system of distributing itsproducts, but gave the following caveat: So long as a company's
management prerogatives are exercised in good faith for the advancement the employer's
interest and not for the purpose of defeating or circumventing the rights of the employee,
under special laws or under valid agreements, this Court will uphold them.

23
All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It
is circumscribed by limitations found in law, a CBA, or the general principles of fair play and
justice. Moreover, it must be duly established that the prerogative being invoked is clearly a
managerial one.

Verily, a line must be drawn between management prerogatives regarding business operations
per se and those which affect the rights of the employees. In treating the latter, management
should see to it that its employees are at least properly informed of its decisions or modes of
action. PAL asserts that all its employees have been furnished copies of the Code, the LA and
the NLRC found to the contrary, which finding, is entitled to great respect.

PALEA recognizes the right of the Company to determine matters of management policy and
Company operations and to direct its manpower. Management of the Company includes the
right to organize, plan, direct and control operations, to hire, assign employees to work,
transfer employees from one department to another, to promote, demote, discipline, suspend
or discharge employees for just cause; to lay-off employees for valid and legal causes, to
introduce new or improved methods or facilities or to change existing methods or facilities and
the right to make and enforce Company rules and regulations to carry out the functions of
management. The exercise by management of its prerogative shall be done in a just,
reasonable, humane and/or lawful manner.

Such provision in the CBA may not be interpreted as cession of employees' rights to participate
in the deliberation of matters which may affect their rights and the formulation of policies
relative thereto. And one such matter is the formulation of a code of discipline. Industrial peace
cannot be achieved if the employees are denied their just participation in the discussion of
matters affecting their rights.

Disposition Petition is DISMISSED.

MERALCO v. Quisumbing, 302 SCRA 173 (1999)

Facts: An arbitral award has been granted by the Secretary of Labor to the MERALCO Union.

Petition had its origin in the renegotiation of the parties' 1992-1997 CBA, insofar as the last
two-year period thereof is concerned.

A letter from MERALCOs Chairman of the Board and its President addressed to their
stockholders, which states that the CBA "for the rank-and-file employees covering the period
December 1, 1995 to November 30, 1997 is still with the Supreme Court," as indicative of
petitioner's recognition that the CBA award covers the said period.

24
Issue:The parties dispute the reckoning period when retroaction of the arbitral awards by the
Secretary of Labor should commence.

Held: The period is herein set at two (2) years from 01 December 1995 to 30 November 1997.

The arbitral award can be considered as an approximation of a CBA which would

otherwise have been entered into by the parties. The terms or periods set forth in Article 253-A
pertains explicitly to a CBA. But there is nothing that would prevent its application by analogy to
an arbitral award by the Secretary considering the absence of an applicable law.

Despite the silence of the law, the Court ruled that CBA arbitral awards granted after six
months from the expiration of the last CBA shall retroact to such time agreed upon by both
employer and the employees or their union.

If there is no such agreement, the award shall retroact to the first day after the six months
following the last day of the CBA.

In the absence of a CBA, the Secretarys determination of the retroactivity date shall control.

Rule RE CBA retroactivity: (Art. 253-A)

If a CBA is renewed within 6 months from its expiry, it will be retroactive from the day
immediately following the expiry of the original CBA. For instance, a CBA expires on December
31 and its renegotiation is finished within 6 months, then the renewed CBA dates back to
January 01.

If there is no new CBA concluded within 6 months, then there will be no automatic retroaction;
both the retroaction (if any) and the effectivity date of the new CBA will be left to the parties to
agree on.

Meralco v. Quisumbing, supra.

Facts: An arbitral award has been granted by the Secretary of Labor to the MERALCO Union.

Petition had its origin in the renegotiation of the parties' 1992-1997 CBA, insofar as the last
two-year period thereof is concerned.

A letter from MERALCOs Chairman of the Board and its President addressed to their
stockholders, which states that the CBA "for the rank-and-file employees covering the period
December 1, 1995 to November 30, 1997 is still with the Supreme Court," as indicative of
petitioner's recognition that the CBA award covers the said period.

Issue: The parties dispute the reckoning period when retroaction of the arbitral awards by the
Secretary of Labor should commence.

25
Held: The period is herein set at two (2) years from 01 December 1995 to 30 November 1997.

The arbitral award can be considered as an approximation of a CBA which would

otherwise have been entered into by the parties. The terms or periods set forth in Article 253-A
pertains explicitly to a CBA. But there is nothing that would prevent its application by analogy to
an arbitral award by the Secretary considering the absence of an applicable law.

Despite the silence of the law, the Court ruled that CBA arbitral awards granted after six
months from the expiration of the last CBA shall retroact to such time agreed upon by both
employer and the employees or their union.

If there is no such agreement, the award shall retroact to the first day after the six months
following the last day of the CBA.

In the absence of a CBA, the Secretarys determination of the retroactivity date shall control.

Rule RE CBA retroactivity: (Art. 253-A)

If a CBA is renewed within 6 months from its expiry, it will be retroactive from the day
immediately following the expiry of the original CBA. For instance, a CBA expires on December
31 and its renegotiation is finished within 6 months, then the renewed CBA dates back to
January 01.

If there is no new CBA concluded within 6 months, then there will be no automatic retroaction;
both the retroaction (if any) and the effectivity date of the new CBA will be left to the parties to
agree on.

7. Wage Fixing

Art 211.
b. To promote free trade unionism as an instrument for the enhancement of democracy and
the promotion of social justice and development;

Art. 263. Strikes, picketing and lockouts.

g. When, in his opinion, there exists a labor dispute causing or likely to cause a strike or lockout
in an industry indispensable to the national interest, the Secretary of Labor and Employment
may assume jurisdiction over the dispute and decide it or certify the same to the Commission
for compulsory arbitration. Such assumption or certification shall have the effect of
automatically enjoining the intended or impending strike or lockout as specified in the
assumption or certification order. If one has already taken place at the time of assumption or

26
certification, all striking or locked out employees shall immediately return-to-work and the
employer shall immediately resume operations and readmit all workers under the same terms
and conditions prevailing before the strike or lockout. The Secretary of Labor and Employment
or the Commission may seek the assistance of law enforcement agencies to ensure compliance
with this provision as well as with such orders as he may issue to enforce the same.

In line with the national concern for and the highest respect accorded to the right of patients to
life and health, strikes and lockouts in hospitals, clinics and similar medical institutions shall, to
every extent possible, be avoided, and all serious efforts, not only by labor and management
but government as well, be exhausted to substantially minimize, if not prevent, their adverse
effects on such life and health, through the exercise, however legitimate, by labor of its right to
strike and by management to lockout. In labor disputes adversely affecting the continued
operation of such hospitals, clinics or medical institutions, it shall be the duty of the striking
union or locking-out employer to provide and maintain an effective skeletal workforce of
medical and other health personnel, whose movement and services shall be unhampered and
unrestricted, as are necessary to insure the proper and adequate protection of the life and
health of its patients, most especially emergency cases, for the duration of the strike or lockout.
In such cases, therefore, the Secretary of Labor and Employment may immediately assume,
within twenty four (24) hours from knowledge of the occurrence of such a strike or lockout,
jurisdiction over the same or certify it to the Commission for compulsory arbitration. For this
purpose, the contending parties are strictly enjoined to comply with such orders, prohibitions
and/or injunctions as are issued by the Secretary of Labor and Employment or the Commission,
under pain of immediate disciplinary action, including dismissal or loss of employment status or
payment by the locking-out employer of backwages, damages and other affirmative relief, even
criminal prosecution against either or both of them.

The foregoing notwithstanding, the President of the Philippines shall not be precluded from
determining the industries that, in his opinion, are indispensable to the national interest, and
from intervening at any time and assuming jurisdiction over any such labor dispute in order to
settle or terminate the same.

Article 99. Regional minimum wages. The minimum wage rates for agricultural and non-
agricultural employees and workers in each and every region of the country shall be those
prescribed by the Regional Tripartite Wages and Productivity Boards. (As amended by Section 3,
Republic Act No. 6727, June 9, 1989).

Article 124. Standards/Criteria for minimum wage fixing. The regional minimum wages to be
established by the Regional Board shall be as nearly adequate as is economically feasible to
maintain the minimum standards of living necessary for the health, efficiency and general well-

27
being of the employees within the framework of the national economic and social development
program. In the determination of such regional minimum wages, the Regional Board shall,
among other relevant factors, consider the following:

The demand for living wages;

Wage adjustment vis--vis the consumer price index;

The cost of living and changes or increases therein;

The needs of workers and their families;

The need to induce industries to invest in the countryside;

Improvements in standards of living;

The prevailing wage levels;

Fair return of the capital invested and capacity to pay of employers;

Effects on employment generation and family income; and

The equitable distribution of income and wealth along the imperatives of economic and social
development.

The wages prescribed in accordance with the provisions of this Title shall be the standard
prevailing minimum wages in every region. These wages shall include wages varying with
industries, provinces or localities if in the judgment of the Regional Board, conditions make
such local differentiation proper and necessary to effectuate the purpose of this Title.

Any person, company, corporation, partnership or any other entity engaged in business shall
file and register annually with the appropriate Regional Board, Commission and the National
Statistics Office, an itemized listing of their labor component, specifying the names of their
workers and employees below the managerial level, including learners, apprentices and
disabled/handicapped workers who were hired under the terms prescribed in the employment
contracts, and their corresponding salaries and wages.

Where the application of any prescribed wage increase by virtue of a law or wage order issued
by any Regional Board results in distortions of the wage structure within an establishment, the
employer and the union shall negotiate to correct the distortions. Any dispute arising from
wage distortions shall be resolved through the grievance procedure under their collective
bargaining agreement and, if it remains unresolved, through voluntary arbitration. Unless
otherwise agreed by the parties in writing, such dispute shall be decided by the voluntary

28
arbitrators within ten (10) calendar days from the time said dispute was referred to voluntary
arbitration.

In cases where there are no collective agreements or recognized labor unions, the employers
and workers shall endeavor to correct such distortions. Any dispute arising therefrom shall be
settled through the National Conciliation and Mediation Board and, if it remains unresolved
after ten (10) calendar days of conciliation, shall be referred to the appropriate branch of the
National Labor Relations Commission (NLRC). It shall be mandatory for the NLRC to conduct
continuous hearings and decide the dispute within twenty (20) calendar days from the time
said dispute is submitted for compulsory arbitration.

The pendency of a dispute arising from a wage distortion shall not in any way delay the
applicability of any increase in prescribed wage rates pursuant to the provisions of law or wage
order.

As used herein, a wage distortion shall mean a situation where an increase in prescribed wage
rates results in the elimination or severe contraction of intentional quantitative differences in
wage or salary rates between and among employee groups in an establishment as to effectively
obliterate the distinctions embodied in such wage structure based on skills, length of service, or
other logical bases of differentiation.

All workers paid by result, including those who are paid on piecework, takay, pakyaw or task
basis, shall receive not less than the prescribed wage rates per eight (8) hours of work a day, or
a proportion thereof for working less than eight (8) hours.

All recognized learnership and apprenticeship agreements shall be considered automatically

modified insofar as their wage clauses are concerned to reflect the prescribed wage rates. (As
amended by Republic Act No. 6727, June 9, 1989)

8. Labor Injunction

Article 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. 218. Powers of the Commission. The Commission shall have the power and authority:

e. To enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful
acts or to require the performance of a particular act in any labor dispute which, if not

29
restrained or performed forthwith, may cause grave or irreparable damage to any party or
render ineffectual any decision in favor of such party: Provided, That no temporary or
permanent injunction in any case involving or growing out of a labor dispute as defined in this
Code shall be issued except after hearing the testimony of witnesses, with opportunity for
cross-examination, in support of the allegations of a complaint made under oath, and testimony
in opposition thereto, if offered, and only after a finding of fact by the Commission, to the
effect:

1. That prohibited or unlawful acts have been threatened and will be committed and will be
continued unless restrained, but no injunction or temporary restraining order shall be issued on
account of any threat, prohibited or unlawful act, except against the person or persons,
association or organization making the threat or committing the prohibited or unlawful act or
actually authorizing or ratifying the same after actual knowledge thereof;

2. That substantial and irreparable injury to complainants property will follow;

3. That as to each item of relief to be granted, greater injury will be inflicted upon complainant
by the denial of relief than will be inflicted upon defendants by the granting of relief;

4. That complainant has no adequate remedy at law; and

5. That the public officers charged with the duty to protect complainants property are unable
or unwilling to furnish adequate protection.

Article 264. Prohibited activities.

No labor organization or employer shall declare a strike or lockout without first having
bargained collectively in accordance with Title VII of this Book or without first having filed the
notice required in the preceding Article or without the necessary strike or lockout vote first
having been obtained and reported to the Ministry.

No strike or lockout shall be declared after assumption of jurisdiction by the President or the
Minister or after certification or submission of the dispute to compulsory or voluntary
arbitration or during the pendency of cases involving the same grounds for the strike or
lockout.

Any worker whose employment has been terminated as a consequence of any unlawful lockout
shall be entitled to reinstatement with full backwages. Any union officer who knowingly
participates in an illegal strike and any worker or union officer who knowingly participates in
the commission of illegal acts during a strike may be declared to have lost his employment
status: Provided, That mere participation of a worker in a lawful strike shall not constitute
sufficient ground for termination of his employment, even if a replacement had been hired by
the employer during such lawful strike.

30
No person shall obstruct, impede, or interfere with, by force, violence, coercion, threats or
intimidation, any peaceful picketing by employees during any labor controversy or in the
exercise of the right to self-organization or collective bargaining, or shall aid or abet such
obstruction or interference.

No employer shall use or employ any strike-breaker, nor shall any person be employed as a
strike-breaker.

No public official or employee, including officers and personnel of the New Armed Forces of the
Philippines or the Integrated National Police, or armed person, shall bring in, introduce or
escort in any manner, any individual who seeks to replace strikers in entering or leaving the
premises of a strike area, or work in place of the strikers. The police force shall keep out of the
picket lines unless actual violence or other criminal acts occur therein: Provided, That nothing
herein shall be interpreted to prevent any public officer from taking any measure necessary to
maintain peace and order, protect life and property, and/or enforce the law and legal order. (As
amended by Executive Order No. 111, December 24, 1986)

No person engaged in picketing shall commit any act of violence, coercion or intimidation or
obstruct the free ingress to or egress from the employers premises for lawful purposes, or
obstruct public thoroughfares. (As amended by Batas Pambansa Bilang 227, June 1, 1982)

RA 8791

AN ACT PROVIDING FOR THE REGULATION OF THE ORGANIZATION AND OPERATIONS OF

BANKS, QUASI-BANKS, TRUST ENTITIES AND FOR OTHER PURPOSES

Section 22. Strikes and Lockouts. - The banking industry is hereby declared as indispensable to
the national interest and, notwithstanding the provisions of any law to the contrary, any strike
or lockout involving banks, if unsettled after seven (7) calendar days shall be reported by the
Bangko Sentral to the secretary of Labor who may assume jurisdiction over the dispute or
decide it or certify the sane to the National Labor Relations Commission for compulsory
arbitration. However, the President of the Philippines may at any time intervene and assume
jurisdiction over such labor dispute in order to settle or terminate the same. (6-E)

9. Tripartism

Article 275. Tripartism and tripartite conferences.

Tripartism in labor relations is hereby declared a State policy. Towards this end, workers and
employers shall, as far as practicable, be represented in decision and policy-making bodies of
the government.

31
The Secretary of Labor and Employment or his duly authorized representatives may, from time
to time, call a national, regional, or industrial tripartite conference of representatives of
government, workers and employers for the consideration and adoption of voluntary codes of
principles designed to promote industrial peace based on social justice or to align labor
movement relations with established priorities in economic and social development. In calling
such conference, the Secretary of Labor and Employment may consult with accredited
representatives of workers and employers. (As amended by Section 32, Republic Act No. 6715,
March 21, 1989)

II. DEFINITION OF TERMS

A. Statutory Reference

Article 212. Definitions.

"Commission" means the National Labor Relations Commission or any of its divisions, as the
case may be, as provided under this Code.

"Bureau" means the Bureau of Labor Relations and/or the Labor Relations Divisions in the
regional offices established under Presidential Decree No. 1, in the Department of Labor.

"Board" means the National Conciliation and Mediation Board established under Executive
Order No. 126.

"Council" means the Tripartite Voluntary Arbitration Advisory Council established under
Executive Order No. 126, as amended.

"Employer" includes any person acting in the interest of an employer, directly or indirectly.
The term shall not include any labor organization or any of its officers or agents except when
acting as employer.

"Employee" includes any person in the employ of an employer. The term shall not be limited
to the employees of a particular employer, unless the Code so explicitly states. It shall include
any individual whose work has ceased as a result of or in connection with any current labor
dispute or because of any unfair labor practice if he has not obtained any other substantially
equivalent and regular employment.

32
"Labor organization" means any union or association of employees which exists in whole or
in part for the purpose of collective bargaining or of dealing with employers concerning terms
and conditions of employment.

"Legitimate labor organization" means any labor organization duly registered with the
Department of Labor and Employment, and includes any branch or local thereof.

"Company union" means any labor organization whose formation, function or administration
has been assisted by any act defined as unfair labor practice by this Code.

"Bargaining representative" means a legitimate labor organization whether or not employed

by the employer.

"Unfair labor practice" means any unfair labor practice as expressly defined by the Code.

"Labor dispute" includes any controversy or matter concerning terms and conditions of
employment or the association or representation of persons in negotiating, fixing,
maintaining, changing or arranging the terms and conditions of employment, regardless of
whether the disputants stand in the proximate relation of employer and employee.

"Managerial employee" is one who is vested with the powers or prerogatives to lay down
and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge,
assign or discipline employees. Supervisory employees are 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. All
employees not falling within any of the above definitions are considered rank-and-file
employees for purposes of this Book.

"Voluntary Arbitrator" means any person accredited by the Board as such or any person
named or designated in the Collective Bargaining Agreement by the parties to act as their
Voluntary Arbitrator, or one chosen with or without the assistance of the National
Conciliation and Mediation Board, pursuant to a selection procedure agreed upon in the
Collective Bargaining Agreement, or any official that may be authorized by the Secretary of
Labor and Employment to act as Voluntary Arbitrator upon the written request and
agreement of the parties to a labor dispute.

"Strike" means any temporary stoppage of work by the concerted action of employees as a
result of an industrial or labor dispute.

"Lockout" means any temporary refusal of an employer to furnish work as a result of an

industrial or labor dispute.

33
"Internal union dispute" includes all disputes or grievances arising from any violation of or
disagreement over any provision of the constitution and by laws of a union, including any
violation of the rights and conditions of union membership provided for in this Code.

"Strike-breaker" means any person who obstructs, impedes, or interferes with by force,
violence, coercion, threats, or intimidation any peaceful picketing affecting wages, hours or
conditions of work or in the exercise of the right of self-organization or collective bargaining.

"Strike area" means the establishment, warehouses, depots, plants or offices, including the
sites or premises used as runaway 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 to and exit from said establishment. (As amended by Section 4, Republic Act No.
6715, March 21, 1989)

B. Significance- Means and includes

FEATI UNIVERSITY V. BAUTISTA

18 SCRA 1191 ZALDIVAR, J.

FACTS

1. On January 14, 1963, the President of the respondent Feati University Faculty Club- PAFLU
wrote a letter to the President of petitioner Feati University informing her of the organization
of the Faculty Club into a registered labor union.

2. The Faculty Club is composed of members who are professors and/or instructors of the
University.

3. The President of the Faculty Club sent another letter containing twenty-six demands that
have connection with the employment of the members of the Faculty Club by the University.

4. The University administration refused to bargain collectively and so PAFLUs president filed a
notice of strike with the Bureau of Labor. Thereafter, the members of the Faculty Club declared
a strike resulting to disruption of classes.

5. Despite further efforts of the officials of the Department of Labor, no settlement can be
reached between the parties. Subsequently, the President of the Philippines certified to the
Court of Industrial Relations the dispute between the management of the University and the
Faculty Club.

6. The University filed a motion to dismiss the case upon the ground that CIR has no jurisdiction
over the case because the Industrial Peace Act is not applicable to the faculty members, they

34
being independent contractors and not employees. The respondent judge denied the motion
but ordered the strikers to return to work and the University to take them back.

ISSUE

Whether or not a charitable institution or one organized for profit is included in the definition
of employer?

HELD

YES. The term employer encompasses all employers except those specifically excluded in the
Industrial Peace Act. The Act itself specifically enumerated those who are not included in term
employer namely: (1) labor organization; (2) anyone acting in the capacity of officer or agent of
such labor organization (3) the Government and any political subdivision or instrumentality.
Among these statutory exemptions, educational institutions are not included; hence they can
be included in the term employer.

The Industrial Court has jurisdiction over unfair labor practice charges against institutions that
are organized, operated and maintained for profit. The Industrial Peace Act is applicable to any
organization or entity whatever may be its purpose when it was created that is operated for
profit or gain.

-RA 875, Section 2 (d): The term "employee" shall include any employee and shall not be limited
to the employee of a particular employer unless the act explicitly states otherwise and shall
include any individual whose work has ceased as a consequence of, or in connection with, any
current labor dispute or because of any unfair labor practice and who has not obtained any
other substantially equivalent and regular employment.

-This definition, by the use of the term include is again complementary. This Court has
defined the term "employer" as "one who employs the services of others; one for whom
employees work and who pays their wages or salaries. Correlatively, an employee must be one
who is engaged in the service of another; who performs services for another; who works for
salary or wages.

-It is admitted by the University that the striking professors and/or instructors are under
contract to teach particular courses and that they are paid for their services. They are,
therefore, employees of the University.

-The contention of the University that the professors and/or instructors are independent
contractors, because the University does not exercise control over their work, is likewise
untenable. This Court takes judicial notice that a university controls the work of the members of
its faculty; that a university prescribes the courses or subjects that professors teach, and when

35
and where to teach; that the professors' work is characterized by regularity and continuity for a
fixed duration; that professors are compensated for their services by wages and salaries, rather
than by profits; that the professors and/or instructors cannot substitute others to do their work
without the consent of the university; and that the professors can be laid off if their work is
found not satisfactory. All these indicate that the university has control over their work; and
professors are, therefore, employees and not independent contractors.

-Moreover, even if university professors are considered independent contractors, still they
would be covered by RA 875. This law modelled after the Wagner Act, or the National Labor
Relations Act, of the United States, did not exclude "independent contractors" from the orbit of
"employees". It was in the subsequent legislation the Labor Management Relation Act (Taft-
Harley Act) that "independent contractors" together with agricultural laborers, individuals in
domestic service of the home, supervisors, and others were excluded.

A. Employer

Feati supra

NYK INTERNATIONAL KNITWEAR CORP. PHILS. V NLRC (PUBLICO)

397 SCRA 607

QUISUMBING; February 17, 2003

NATURE

Petition for review on certiorari

FACTS

- Petitioner NYK hired respondent Virginia Publico as a sewer. She was paid on a piece-rate
basis, and was required to work from 8 AM to 12 midnight.

- May 7, 1997 Publico left the work place early as she was not feeling well due to flu. Publico did
not come to work the next day. Due to this absence, Publico was informed by Stephen Ng
(owner of NYK) that she was dismissed.

36
ISSUE/S

1. WON there was illegal dismissal;

2. WON petitioners are solidarily liable to pay backwages and separation pay as there was no
malice or bad faith.

HELD

1. YES

Ratio The petitioners allegations of abandonment cannot stand the unswerving conclusion by
the NLRC and Labor Arbiter.

Reasoning Petitioners raised factual questions which are improper in a petition for review on
certiorari. Finding of facts of the NLRC, particularly in a case where the NLRC and the Labor
Arbiter are in agreement, are deemed binding and conclusive upon this Court.

2. YES

Ratio Cathy Ng falls within the meaning of an employer as contemplated by the Labor Code,
who may be held jointly and severally liable for the obligations of the corporation to its
dismissed employees.

Reasoning Since a corporation is an artificial person, it must have an officer who can be
presumed to be the employer, being the person acting in the interest of the employer. 1 In
this case, Cathy Ng, in her capacity as manager, is deemed the employer, and is thus solidarily
liable regardless of absence malice. She cannot be exonerated from her liability in the payment
to private respondent.

Disposition Instant petition is denied.

Allied Free Workers Union v. Compaia Maritima

Facts:

1 A.C. Ransom Labor union-CCLU v NLRC

37
MARITIMA is a local corporation engaged in the shipping business. Teves is its branch manager
in the port of Iligan City. And AFWU is a duly registered legitimate labor organization with 225
members.

On August 11, 1952, MARITIMA, through Teves, entered into a CONTRACT 4 with AFWU to do
and perform all the work of stevedoring and arrastre services of all its vessels or boats calling in
the port of Iligan City, beginning August 12, 1952.

During the first month of the existence of the CONTRACT, AFWU rendered satisfactory service.
So, MARITIMA, through Teves, verbally renewed the same. This harmonious relations between
MARITIMA and AFWU lasted up to the latter part of 1953 when the former complained to the
latter of unsatisfactory and inefficient service by the laborers doing the arrastre and
stevedoring work. This deteriorating situation was admitted as a fact by AFWU's president. To
remedy the situationsince MARITIMA's business was being adversely affected -Teves was
forced to hire extra laborers from among "stand-by" workers not affiliated to any union to help
in the stevedoring and arrastre work. The wages of these extra laborers were paid by
MARITIMA through separate vouchers and not by AFWU. Moreover, said wages were not
charged to the consignees or owners of the cargoes.

On July 23, 1954, AFWU presented to MARITIMA a written proposal5 for a collective bargaining
agreement. This demand embodied certain terms and conditions of employment different from
the provisions of the CONTRACT. No reply was made by MARITIMA.

AFWU sued MARITIMA for unfair labor practice saying that MARITIMA refused to bargain
collectively. CIR dismissed the case on the ground that it has no jurisdiction over the case.

Issue:

Whether or not CIR has jurisdiction over the case?

Whether or not MARITIMA can be considered an employer of the members of AFWU?

Held:

No to both.

It is true that MARITIMA admits that it did not answer AFWU's proposal for a collective
bargaining agreement. From this it does not necessarily follow that it is guilty of unfair labor
practice. Under the law the duty to bargain collectively arises only between the "employer" and
its "employees". Where neither party is an ''employer" nor an "employee" of the other, no such
duty would exist. Needless to add, where there is no duty to bargain collectively the refusal to
bargain violates no right.

38
The court a quo held that under the CONTRACT, AFWU was an independent contractor of
MARITIMA.

Neither is there any direct employment relationship between MARITIMA and the laborers. The
latter have no separate individual contracts with MARITIMA. In fact, the court a quo found that
it was AFWU that hired them. Their only possible connection with MARITIMA is through AFWU
which contracted with the latter. Hence, they could not possibly be in a better class than AFWU
which dealt with MARITIMA.

B. Employee

Producers Bank of the Philippines v. NLRC

Facts:

Prefatorily, at the time the instant controversy started, petitioner was placed by the then
Central Bank of the Philippines (now Bangko Sentral ng Pilipinas) under a conservator for the
purpose of protecting its assets. It appears that when the union sought the implementation of
Section 1, Article XI of the CBA regarding the retirement plan and Section 4, Article X thereof,
pertaining to uniform allowance, the acting conservator of the petitioner expressed her
objection to such plan, resulting in an impasse between the petitioner bank and the private
respondent union. The deadlock continued for at least six months when the union, to resolve
the issue, decided to file a case against the petitioner for unfair labor practice and for flagrant
violation of the CBA provisions.

Issue:

The petitioner asserts since the employees have retired, as a consequence of which no
employee-employer relationship exists anymore between it and the employees, the union no
longer had the personality to file the complaint for them.

Held:

Petitioner's contention in untenable. Retirement results from a voluntary agreement between

the employer and the employee whereby the latter after reaching a certain age agrees to sever
his employment with the former.14 [Soberano v. Secretary of Labor, 99 SCRA 549 (1980)] The
very essence of retirement is the termination of the employer-employee relationship.

Hence, the retirement of an employee does not, in itself, affect his employment status
especially when it involves all rights and benefits due to him, since these must be protected as
though there had been no interruption of service. It must be borne in mind that the retirement

39
scheme was part of the employment package and the benefits to be derived therefrom
constituted, as it were, a continuing consideration for services rendered, as well as an effective
inducement for remaining with the corporation. It is intended to help the employee enjoy the
remaining years of his life, releasing him from the burden of worrying for his financial support,
and are a form of reward for his loyalty.15 [Laginlin v. WCC, 159 SCRA 91 (1988)]

When the retired employees were requesting that their retirement benefits be granted, they
were not pleading for generosity but were merely demanding that their rights, as embodied in
the CBA, be recognized. Thus, when an employee has retired but his benefits under the law or
the CBA have not yet been given, he still retains, for the purpose of prosecuting his claims, the
status of an employee entitled to the protection of the Labor Code, one of which is the
protection of the labor union.

PAL v. PALEA

Facts:

Certain illegally dismissed PAL employees were ordered reinstated by the CIR which was
affirmed by the SC.

Issue:

What are the rights and privileges of reinstated employees during the layoff period?

Held:

Where, in the resolution of the CIR, it was held that the reinstated employees were entitled to
back wages from the date of their dismissal to the date of their reinstatement and without
prejudice to their seniority rights and privileges, it was held that the resolution intended to
restore the said employees to theri status immediately prior to their dismissal and this means
that they should receive Christmas bonus, accumulated sick leave privileges and transportation
allowance during the layoff period. They were treated as if they had not been absent from work
and had been uninterruptedly working during the layoff period. However, said employees are
not entitled to the free trip passes which were not given automatically or indiscriminately.

C. Labor Organization

Airline Pilots Association v. CIR

Facts:

40
There is a provision in the by-laws of ALPAP giving pilots who resigned from PAL the option to
remain as a member of the union or resign from the said union.

On January 2, 1971, the Air Line Pilots Association of the Philippines, represented by Ben Hur
Gomez who claimed to be its President, filed a petition with the Court of Industrial Relations
praying for certification as the sole and exclusive collective bargaining representative of "all the
pilots now under employment by the Philippine Air Lines, Inc. and are on active flight and/or
operational assignments." The petition which was docketed in the sala of Judge Joaquin M.
Salvador as Case 2939-MC was opposed in the name of the same association by Felix C. Gaston
(who also claimed to be its President) on the ground that the industrial court has no jurisdiction
over the subject-matter of the petition "because a certification proceeding in the Court of
Industrial Relations is not the proper forum for the adjudication of the question as to who is the
lawful president of a legitimate labor organization."

It must be noted that Gaston was originally the president of the union. Upon his resignation
from PAL (not the union), Gomez staged an election with 45 other pilots to institute him as the
president of the said union.

CIR sided with Gomez, stating that Gaston and company already resigned from PAL, as a sign of
protest in the current labor dispute, therefore cannot represent the union in collectively
bargaining with PAL. It also held that the union cannot adopt a provision in its by-laws which in
effect allows membership of non-employees of PAL.

Issue:

Whether or not non-employees can represent and be a member of a union of employees of a

certain employer?

Held:

YES.

This Court cannot likewise subscribe to the restrictive interpretation made by the court below
of the term "labor organization," which Section 2(e) of R.A. 875 defines as "any union or
association of employees which exists, in whole or in part, for the purpose of collective
bargaining or of dealing with employers concerning terms and conditions of employment." The
absence of the condition which the court below would attach to the statutory concept of a
labor organization, as being limited to the employees of a particular employer is quite evident
from the law. The emphasis of the Industrial Peace Act is clearly on the purposes for which a
union or association of employees is established rather than that membership therein should
be limited only to the employees of a particular employer. Trite to say, under Section 2(h) of

41
R.A. 875 "representative" is defined as including "a legitimate labor organization or any officer
or agent of such organization, whether or not employed by the employer or employee whom
he represents." It cannot be overemphasized likewise that a labor dispute can exist "regardless
of whether the disputants stand in the proximate relation of employer and employee." (Section
2(j), R.A. 875).

There is, furthermore, nothing in the constitution and bylaws of ALPAP which indubitably
restricts membership therein to PAL pilots alone.1 Although according to ALPAP (Gomez there
has never been an instance when a non-PAL pilot became a member of ALPAP, the complete
lack of any such precondition for ALPAP membership cannot but be interpreted as an
unmistakable authority for the association to accept pilots into its fold though they may not be
under PAL's employ.

The fundamental assumptions relied upon by the industrial court as bases for authorizing
ALPAP (Gomez) to take over the office and funds of ALPAP being, in this Court's opinion,
erroneous, and, in the absence of any serious dispute that on December 18-22, 1970 Felix C.
Gaston, and four other pilots, were elected by the required majority of ALPAP members as
officers of their association, this Court hereby rules that the mentioned authorization to ALPAP
(Gomez) to take over the office, funds and name of ALPAP was done with grave abuse of
discretion.

Moreover, this Court cannot hold as valid and binding the election of Ben Hur Gomez as
President of ALPAP. He was elected et a meeting of only 45 ALPAP members called just one day
after the election of Felix C. Gaston as President of ALPAP who, as shown, received a majority of
180 votes out of a total membership of 270. Under the provisions of section 4, article III of the
Constitution and By-Laws of ALPAP, duly elected officers of that association shall remain in
office for at least one year:

"The term of office of the officers of the Association shall start on the first day of the fiscal year
of the Association. It shall continue for one year or until they are reelected or until their
successors have been elected or appointed and takes office in accordance with the Constitution
and by-laws."

While this Court considers the ruling of the court below, on the matter of who has the exclusive
rights to the office, funds and name of ALPAP, as having been erroneously made, we cannot
hold, however, that those belonging to the group of ALPAP (Gomez) do not possess any right at
all over the office, funds and name of ALPAP of which they are also members.

In our opinion, it is perfectly within the powers and prerogatives of a labor organization,
through its duly elected officers, to authorize a segment of that organization to bargain
collectively with a particular employer, particularly where those constituting the segment share

42
a common and distinguishable interest, apart from the rest of their fellow union members, on
matters that directly affect the terms and conditions of their particular employment. As the
circumstances pertinent to the case at bar presently stand, ALPAP (Gaston) has extended
recognition to ALPAP (Gomez) to enter and conclude collective bargaining contracts with PAL.
Having given ALPAP (Gomez) this authority, it would be clearly unreasonable on the part of
ALPAP (Gaston) to disallow the former a certain use of the office, funds and name of ALPAP
when such use is necessary or would be required to enable ALPAP (Gomez) to exercise, in a
proper manner, its delegated authority to bargain collectively with PAL. Clearly, an intelligently
considered adjustment of grievances and integration of the diverse and varying interests that
not infrequently and, often, unavoidably permeate the membership of a labor organization, will
go a long way, in achieving peace and harmony within the ranks of ALPAP. Of course, in the
eventuality that the pilots presently employed by PAL and who subscribe to the leadership of
Ben Hur Gomez should consider it to their better interest to have their own separate office,
name and union funds, nothing can prevent them from setting up a separate labor union. In
that eventuality, whatever vested rights, interest or participation they may have in the assets,
including cash funds, of ALPAP as a result of their membership therein should properly be
liquidated in favor of such withdrawing members of the association.

D. Legitimate Labor Organization

CEBU SEAMEN'S ASSO., INC., V FERRER-CALLEJA

212 SCRA 50

MEDIALDEA; August 4, 1992

NATURE

Petition seeking the reversal of the resolution of the Bureau of Labor Relations which affirmed
the decision of the Med-Arbiter holding that the set of officers of Seamen's Association of the
Philippines headed by Dominica C. Nacua, as president, was the lawful set of officers entitled to
the release and custody of the union dues as well as agency fees of said association.

FACTS

-23Oct 1950: a group of deck officers and marine engineers on board vessels plying Cebu and
other ports of the Philippines organized themselves into an association and registered the same

43
as a non-stock corporation known as Cebu Seamen's Association, Inc. (CSAI), with the Securities
and Exchange Commission (SEC). Later, on 23 June 1969, the same group registered its
association with this Bureau as a labor union known as the Seamen's Association of the
Philippines, Incorporated (SAPI).

-SAPI has an existing CBA with the Aboitiz Shipping Corporation due to expire on 31 Dec 1988.
In consonance with the CBA, said company has been remitting checked-off union dues to said
union until February, 1987 when Banayoyo, et al introducing themselves to be the new set of
officers, went to the company and claimed that they are entitled to the remittance and custody
of such union dues.

-26 May 1987: another group headed by Dominica C. Nacua, claiming as the duly elected set of
union officers, filed a complaint, for and in behalf of the union, against the CSAI as represented
by Manuel Gabayoyo for the security of the aforementioned CBA, seeking such relief, among
others, as an order restraining the respondent from acting on behalf of the union and directing
the Aboitiz Shipping Corp. to remit the checked-off union dues for the months of March and
April 1987.

-CSAI filed its Answer alleging that the complainant union and CSAI are one and the same
union; that Dominica C. Nacua and Atty. Prospero Paradilla who represented the union had
been expelled as members/officers as of November 1984 for lawful causes; and, that its set of
officers headed by Manuel Gabayoyo has the lawful right to the remittance and custody of the
corporate funds (otherwise known as union dues) in question pursuant to the resolution of the
SEC dated 22 April 1987. The following day, CSAI filed MTD on the grounds, among others, that
the SEC, not the Med-Arbiter, has jurisdiction over the dispute as provided under P.D. No. 902-
A; that there can neither be a complainant nor respondent in the instant case as the parties
involved are one and the same labor union, and that Mrs. Dominica C. Nacua and Atty.
Prospero Paradilla have no personality to represent the union as they had already been
expelled as members/officers thereof in two resolutions of the Board of Directors dated
November 1984 and January 17, 1987.

-19 June 1987: the Med-Arbiter issued an Order denying said motion but directing the Aboitiz
Shipping Corporation to remit the already checked-off union dues to the complainant union
through its officers and to continue remitting any checked-off union dues until further notice.
The Med-Arbiter also set further hearing of the complaint on July 1, 1987.

-The Med-Arbiter eventually held that SAPI, headed by Nacua, was the lawful set of officers
entitled to the release and custody of the union dues as well as agency fees of said association.
CSAI headed by Gabayoyo filed an appeal with the Bureau of Labor Relations (BLR). But the

44
latter affirmed the Med-Arbiters decision. The Gabayoyo group also appealed to the Office of
the SOLE, but this was also denied for lack of merit. Hence, this petition.

ISSUES

1. WON the med-arbiter of Region VII has jurisdiction over the case

2. WON SAPI was registered as a labor federation with the BLR

3. WON Nacua and Paradilla have the personality to represent the union

HELD

1. YES

- Article 226 of the Labor Code vests upon the Bureau of Labor Relations and Labor Relations
Division the original and exclusive authority and jurisdiction to act on all inter-union and intra-
union disputes. The controversy between the aforesaid two sets of officers (Cebu Seamen's
Association headed by Gabayoyo & Seamen's Association of the Philippines headed by Nacua) is
an intra-union dispute. Both sets of officers claim to be entitled to the release of the union dues
collected by the company with whom it had an existing CBA.

2. YES.

-As stated in the findings of fact in the questioned resolution of Director Pura Ferrer-Calleja, on
October 23, 1950, a group of deck officers organized the Cebu Seamen's Association, Inc.,
(CSAI), a non-stock corporation and registered it with the Securities and Exchange Commission
(SEC). The same group registered the organization with the Bureau of Labor Relations (BLR) as
Seamen's Association of the Philippines (SAPI). It is the registration of the organization with
the BLR are not with the SEC which made it a legitimate labor organization with rights and
privileges granted under the Labor Code.

3. YES.

-CSAI, the corporation was already inoperational before the controversy in this case arose. In
fact, on August 24, 1984 the SEC ordered the CSAI to show cause why its certificate of

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registration should not be revoked for continuous inoperation. There is nothing in the records
which would show that CSAI answered said show-cause order.

-Also, before the controversy, Nacua was elected president of the labor union, SAPI. It had an
existing CBA with Aboitiz Shipping Corporation. Before the end of the Nacuas term, some union
members including Gabayoyo showed signs of discontentment with the leadership of Nacua.
This break-away group revived the moribund corporation and issued an undated resolution
expelling Nacua from association. It later held its own election of officers supervised by the SEC
and filed a case of estafa against Nacua.

-The expulsion of Nacua from the corporation, of which she denied being a member, has
however, not affected her membership with the labor union. In fact, in the elections of officers
for 1987-1989, she was re-elected as the president of the labor union.

-In this connection, We cannot agree with the contention of Gabayoyo that Nacua was already
expelled from the union. Whatever acts their group had done in the corporation do not bind
the labor union. Moreover, Gabayoyo cannot claim leadership of the labor group by virtue of
his having been elected as a president of the dormant corporation CSAI.

- Bureau of Labor Relations correctly ruled on the basis of the evidence presented by the parties
that SAPI, the legitimate labor union, registered with its office, is not the same association as
CSAI, the corporation, insofar as their rights under the Labor Code are concerned. Hence, the
former and not the latter association is entitled to the release and custody of union fees with
Aboitiz Shipping and other shipping companies with whom it had an existing CBA.

-It is undisputed from the records that the election of the so-called set of officers headed by
Gabayoyo was conducted under the supervision of the SEC, presumably in accordance with its
constitution and by-laws as well as the articles of incorporation of respondent CSAI, and the
Corporation Code. That had been so precisely on the honest belief of the participants therein
that they were acting in their capacity as members of the said corporation. That being the case,
the aforementioned set of officers is of the respondent corporation and not of the complainant
union. It follows, then, that any proceedings, and actions taken by said set of officers can not, in
any manner, affect the union and its members.

-The other set of officers headed by Dominica C. Nacua is the lawful set of officers of SAPI and
therefore, is entitled to the release and custody of the union dues as well as the agency fees, if
any, there be.

Disposition Petition dismissed.

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E. Company Union

F. Labor Dispute

FEATI UNIVERSITY V BAUTISTA

18 SCRA 1191

ZALDIVAR; December 27, 1966

NATURE

Consolidated cases/petitions for certiorari, prohibition w/ writ of preliminary injunction

FACTS

-Jan 14, 1963: the President of the Faculty Club wrote to the President of the University a letter
informing the latter of the organization of the Faculty Club as a labor union, duly registered
with the Bureau of Labor Relations

-Jan 22, 1963: another letter was sent, to which was attached a list of demands consisting of 26
items, and asking the President of the University to answer within ten days from date of receipt
thereof.

-The University questioned the right of the Faculty Club to be the exclusive representative of
the majority of the employees and asked proof that the Faculty Club had been designated or
selected as exclusive representative by the vote of the majority of said employees.

-Feb 1, 1963: the Faculty Club filed with the Bureau of Labor Relations a notice of strike alleging
as reason therefor the refusal of the University to bargain collectively with the representative
of the faculty members.

-Feb 18, 1963: the members of the Faculty Club went on strike and established picket lines in
the premises of the University, thereby disrupting the schedule of classes.

-March 1, 1963: the Faculty Club filed Case No. 3666-ULP for unfair labor practice against the
University, but which was later dismissed (on April 2, 1963 after Case 41-IPA was certified to
the CIR).

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-March 7, 1963: a petition for certification election, Case No. 1183-MC, was filed by the Faculty
Club in the CIR.

ISSUES

WON there is a labor dispute between the University and the Faculty Club

HELD

YES.

-RA 875 provides that the term "labor dispute" includes any controversy concerning terms,
tenure or conditions of employment, or concerning the association or representation of
persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions
of employment regardless of whether the disputants stand in proximate relation of employer
and employees.

-The test of whether a controversy comes within the definition of "labor dispute" depends on
whether the controversy involves or concerns "terms, tenure or condition of employment" or
"representation."

-All the admitted facts show that the controversy between the University and the Faculty Club
involved terms and conditions of employment, and the question of representation. Hence,
there was a labor dispute between the University and the Faculty Club, as contemplated by
Republic Act No. 875.

-Recall: RA 875, sec10: When in the opinion of the President of the Philippines there exists a
labor dispute in an industry indispensable to the national interest and when such labor dispute
is certified by the President to the Court of Industrial Relations, said Court may cause to be
issued a restraining order forbidding the employees to strike or the employer to lockout the
employees, and if no other solution to the dispute is found, the Court may issue an order fixing
the terms and conditions of employment.

-To certify a labor dispute to the CIR is the prerogative of the President under the law, and this
Court will not interfere in, much less curtail, the exercise of that prerogative. Once the
jurisdiction is acquired pursuant to the presidential certification, the CIR may exercise its broad
powers as provided in Commonwealth Act 103. All phases of the labor dispute and the
employer-employee relationship may be threshed out before the CIR, and the CIR may issue
such order or orders as may be necessary to make effective the exercise of its jurisdiction. The

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parties involved in the case may appeal to the Supreme Court from the order or orders thus
issued by the CIR.

Disposition Petition for certiorari & prohibition with preliminary injunction dismissed. Writs
prayed for therein denied. Writ of preliminary injunction dissolved. Costs against Feati
University.

SAN MIGUEL EMPLOYEES UNION V BERSAMIRA

186 SCRA 496

MELENCIO-HERRERA; June 13, 1990

NATURE

Special civil action for certiorari

FACTS

- SMC entered into contracts for merchandising services with Lipercon and D'Rite (L&D),
independent contractors duly licensed by DOLE. In said contracts, it was expressly understood
and agreed that the EEs employed by the contractors were to be paid by the latter and that
none of them were to be deemed EEs or agents of SanMig. There was to be no employer-
employee relation between the contractors and/or its workers, on the one hand, and SMC on
the other.

- Petitioner SMCEU-PTWGO (Union) is duly authorized representative of the monthly paid rank-
and-file EEs of SMC. Their CBA provides that temporary, probationary, or contract EEs are
excluded from the bargaining unit and outside scope of CBA.- Union advised SMC that some
L&D workers had signed up for union membership and sought the regularization of their
employment with SMC. Union alleged that this group of EEs, while appearing to be contractual
workers of supposedly independent contractors, have been continuously working for SMC for a
period of 6 months to 15 years and that their work is neither casual nor seasonal as they are
performing work or activities necessary or desirable in the usual business or trade of SMC, and
that there exists a "labor-only" contracting situation. It was then demanded that the
employment status of these workers be regularized. This was not acted upon by SMC, and so
Union filed a notice of strike, and then a second notice.

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- Series of pickets were staged by L&D workers in various SMC plants and offices. SMC RTC to
enjoin the Union from: representing and or acting for and in behalf of the employees of L&D for
the purposes of collective bargaining; calling for and holding a strike vote to compel plaintiff to
hire the employees or workers of L&D, among others.

- Union filed a Motion to Dismiss SMC's Complaint on the ground of lack of jurisdiction over the
case/nature of the action, which motion was opposed by SMC, which was denied by
respondent Judge. And after several hearings, issued Injunction. RTC reasoned that the absence
of ER-EE relationship negates the existence of labor dispute, so court has jurisdiction to take
cognizance of SMC's grievance. Hence, this action.

ISSUE

1. WON RTC correctly assumed jurisdiction over the controversy and properly issued the Writ of
Preliminary Injunction.

HELD

1. NO

Re: Definition of Labor Dispute (p4 of Outline)

Ratio A labor dispute can nevertheless exist regardless of whether the disputants stand in the
proximate relationship of employer and employee, provided the controversy concerns, among
others, the terms and conditions of employment or a "change" or "arrangement" thereof The
existence of a labor dispute is not negatived by the fact that the plaintiffs and defendants do
not stand in the proximate relation of employer and employee. (A212 LC)

Reasoning Crucial to the resolution of the question on jurisdiction, is the matter of whether or
not the case at bar involves, or is in connection with, or relates to a labor dispute. An
affirmative answer would bring the case within the original and exclusive jurisdiction of labor
tribunals to the exclusion of the regular Courts. In this case, the matter re terms, tenure and
conditions of EEs employment and the arrangement of those terms as well as the matter of
representation bring these issues within the scope of a labor dispute. Hence it is the labor
tribunals that have jurisdiction and not the regular courts

Re: ER Functions and ULP (p30 of Outline)

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- As the case is indisputably linked with a labor dispute, jurisdiction belongs to the labor
tribunals. So, Labor Arbiters have original and exclusive jurisdiction to hear and decide the
following cases involving all workers including: [a] unfair labor practice cases; [b] those that
workers may file involving wages, hours of work and other terms and conditions of
employment; and [c] cases arising from any violation of A265 LC, including questions involving
the legality of striker and lockouts.

- SMCs claim that the action is for damages under A19, 20 and 21 of CC is not enough to keep
the case within the jurisdictional boundaries of regular Courts. That claim for damages is
interwoven with a labor dispute. To allow the action filed below to prosper would bring about
"split jurisdiction" which is obnoxious to the orderly administration of justice.

- SC recognizes the proprietary right of SMC to exercise an inherent management prerogative

and its best business judgment to determine whether it should contract out the performance of
some of its work to independent contractors. However, the rights of all workers to self-
organization, collective bargaining and negotiations, and peaceful concerted activities, including
the right to strike in accordance with law (S3, A13, 1987 Constitution) equally call for
recognition and protection. Those contending interests must be placed in proper perspective
and equilibrium.

Disposition Petition is GRANTED.

NESTLE PHILS., INC. V NLRC (NUEZ)

195 SCRA 340 GRIO-AQUINO; March 18, 1991

NATURE Petition for certiorari

FACTS

- The private respondents, who were employed by Nestl either as sales representatives or
medical representatives, availed of the petitioner's car loan policy. Under that policy, the
company advances the purchase price of a car to be paid back by the employee through
monthly deductions from his salary, the company retaining the ownership of the motor vehicle
until it shall have been fully paid for.

- After having participated in an illegal strike, the private respondents were dismissed from
service. Nestl directed the private respondents to either settle the remaining balance of the
cost of their respective cars, or return them to the company for proper disposition.

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- Private respondents failed and refused to avail of either option, so the company filed in the
Regional Trial Court of Makati a civil suit to recover possession of the cars. The private
respondents sought a temporary restraining order in the NLRC to stop the company from
cancelling their car loans and collecting their monthly amortizations. The NLRC, en banc,
granted their petition for injunction.

- The company filed a motion for reconsideration, but it was denied for tardiness. Hence, this
petition for certiorari alleging that the NLRC acted with grave abuse of discretion amounting to
lack of jurisdiction when it issued a labor injunction without legal basis and in the absence of
any labor dispute related to the same.

ISSUE

WON there is a labor dispute between the petitioner and the private respondents

HELD

NO

Ratio Paragraph (1) of Article 212 of the Labor Code defines a labor dispute as follows:

"(1) 'Labor dispute' includes any controversy or matters concerning terms or conditions of
employment or the association or representation of persons in negotiating, fixing, maintaining,
changing or arranging the terms and conditions of employment, regardless of whether the
disputants stand in the proximate relation of employer and employee."

Nestls demand for payment of the private respondents' amortizations on their car loans, or,
in the alternative, the return of the cars to the company, is not a labor, but a civil, dispute. It
involves debtor-creditor relations, rather than employee-employer relations.

Reasoning Whether or not the private respondents remain as employees of the petitioner,
there is no escape from their obligation to pay their outstanding accountabilities to the
petitioner; and if they cannot afford it, to return the cars assigned to them. The options given to
the private respondents are civil in nature arising from contractual obligations. There is no labor
aspect involved in the enforcement of those obligations. The NLRC gravely abused its discretion

52
and exceeded its jurisdiction by issuing the writ of injunction to stop the company from
enforcing the civil obligation of the private respondents under the car loan agreements and
from protecting its interest in the cars which, by the terms of those agreements, belong to it
(the company) until their purchase price shall have been fully paid by the employee. The terms
of the car loan agreements are not in issue in the labor case. The rights and obligations of the
parties under those contracts may be enforced by a separate civil action in the regular courts,
not in the NLRC.

Disposition Petition is granted.

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