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LABOR LAW II

NLRC – National Labor Relations Commission

TERMINATION OF EMPLOYMENT

Authorized Causes for dismissal of employee refer to those lawful grounds for termination which in general do not arise from fault or negligence of the employee.

Just Causes are always based on acts attributable to the employee's own fault or negligence.

Mandate, Mission, Vision

MANDATE The National Labor Relations Commission is a quasi-judicial body tasked to promote and maintain industrial peace by resolving labor and
management disputes involving both local and overseas workers through compulsory arbitration and alternative modes of dispute resolution. It is attached to the
Department of Labor and Employment for program and policy coordination.

JURISDICTION

Regional Arbitration Branches:

 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 employer-employee relations
 Cases arising from any violation of Article 264 of the Labor Code, as amended, including questions involving the legality of strikes and lockouts
 Except claims for employees compensation not included in the next succeeding paragraph, 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), whether or not accompanied with a claim for reinstatement
 Wage distortion disputes in unorganized establishments not voluntarily settled by the parties pursuant to Republic Act No. 6727
 Enforcement of compromise agreements when there is non-compliance by any of the parties pursuant to Article 227 of the Labor Code, as amended
 Money claims arising out of employer-employee relationship or by virtue of any law or contract, involving Filipino workers for overseas deployment, including
claims for actual, moral, exemplary and other forms of damages as provided by Section 10 of Republic Act No. 8042, as amended by Republic Act No. 10022
 Other cases as may be provided by law

Commission Proper:
 Cases decided by the Labor Arbiter
 Cases decided by the Regional Director or hearing officer on small money claims

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 Cases of national interest certified to by the Secretary of Labor

 Petitions for injunctions or temporary restraining order under Article 218 (e) of the Labor Code, as amended
 Petition to annul or modify the order or resolution (including those issued during execution proceedings) of the Labor Arbiter

VISION To deserve public trust as a quasi-judicial agency by way of a fair, speedy, equitable disposition of labor cases at lesser cost.

MISSION To resolve labor disputes in the fairest, quickest, least expensive and most effective way possible.

 What is the constitutional provision on protection to labor?

“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 on investments, and to expansion and growth.”

 What rules govern the proceedings before the Labor Arbiters and the NLRC?

The proceedings before the Labor Arbiters and the NLRC are governed by the Labor Code, as amended, the 2011 NLRC Rules of Procedure, and suppletorily, the
Rules of Court.

 What is the nature of the proceedings before the Labor Arbiter?

The NLRC Rules describe the proceedings before the Labor Arbiter as non-litigious. Subject to the requirements of due process, the technicalities of law and
procedure in the regular courts do not apply in the labor arbitration proceedings.

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 What are the cases falling under the jurisdiction of the Labor Arbiters?

Under Article 217 of the Labor Code, Labor Arbiters have jurisdiction over the following cases:

1. Unfair labor practice (ULP) cases;

2. Termination disputes (or illegal dismissal cases);

3. 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;

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

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

6. Except claims for employees compensation not included in the next succeeding paragraph, 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), whether or not accompanied with a claim for reinstatement;

7. Wage distortion disputes in unorganized establishments not voluntarily settled by the parties pursuant to Republic Act No. 6627;

8. Enforcement of compromise agreements when there is non-compliance by any of the parties pursuant to Article 227 of the Labor Code, as amended;

9. Money claims arising out of employer-employee relationship or by virtue of any law or contract, involving Filipino workers for overseas employment, including
claims for actual, moral, exemplary and other forms of damages as provided by Section 10 of R.A. No. 8042, as amended by R.A. No. 10022;

10.Contested cases under the exception clause of Article 128(b) of the Labor Code, as amended by R.A. 7730; and

11.Other cases as may be provided by law.

 May a non-lawyer appear in any of the proceedings before the Labor Arbiter or Commission?

Yes. A non-lawyer may appear in any of the proceedings before the Labor Arbiter or Commission only under the following conditions:

1. he/she represents himself/herself as party to the case;

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2. he/she represents a legitimate labor organization, as defined under Article 212 and 242 of the Labor Code, as amended, which is a party to the case: Provided,
that he/she presents to the Commission or Labor Arbiter during the mandatory conference or initial hearing: (i) a certification from the Bureau of Labor Relations
(BLR) or Regional Office of the Department of Labor and Employment attesting that the organization he/she represents is duly registered and listed in the roster of
legitimate labor organizations; (ii) a verified certification issued by the secretary and attested to by the president of the said organization stating that he/she is
authorized to represent the said organization in the said case; and (iii) a copy of the resolution of the board of directors of the said organization granting him such
authority;

3. he/she represents a member or members of a legitimate labor organization that is existing within the employer’s establishment, who are parties to the case:
Provided, that he/she presents: (i) a verified certification attesting that he/she is authorized by such member or members to represent them in the case; and (ii) a
verified certification issued by the secretary and attested to by the president of the said organization stating that the person or persons he/she is representing are
members of their organization which is existing in the employer’s establishment;

4. he/she is a duly-accredited member of any legal aid office recognized by the Department of Justice or Integrated Bar of the Philippines: Provided, that he/she
(i) presents proof of his/her accreditation; and (ii) represents a party to the case;

5. he/she is the owner or president of a corporation or establishment which is a party to the case: Provided, that he/she presents: (i) a verified certification
attesting that he/she is authorized to represent said corporation or establishment; and (ii) a copy of the resolution of the board of directors of said corporation, or
other similar resolution or instrument issued by said establishment, granting him/her such authority.

 Does the counsel or authorized representatives have the authority to bind their clients?

Yes. Counsel or other authorized representatives of parties shall have authority to bind their clients in all matter of procedure. However, they cannot, without a
special power of attorney or express consent, enter into a compromise agreement with the opposing party in full or partial discharge of a client’s claim.

 What is the purpose of mandatory conciliation and mediation conference?

The mandatory conciliation and mediation conference shall be called for the purpose of (1) amicably settling the case upon a fair compromise; (2) determining the
real parties in interest; (3) determining the necessity of amending the complaint and including all causes of action; (4) defining and simplifying the issues in the
case; (5) entering into admissions or stipulations of facts; and (6) threshing out all other preliminary matters.

 What is the effect of non-appearance of the parties in the mandatory conciliation and mediation conference?

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The non-appearance of the complainant or petitioner during the two (2) settings for mandatory conciliation and mediation conference scheduled in the summons,
despite due notice thereof, shall be a ground for the dismissal of the case without prejudice.

In case of non-appearance by the respondent during the first scheduled conference, the second conference as scheduled in the summons shall proceed. If the
respondent still fails to appear at the second conference despite being duly served with summons, he/she shall be considered to have waived his/her right to file
position paper. The Labor Arbiter shall immediately terminate the mandatory conciliation and mediation conference and direct the complainant or petitioner to file
a verified position paper and submit evidence in support of his/her causes of action and thereupon render his/her decision on the basis of the evidence on record.

 What is the role of the Labor Arbiter in hearing and clarificatory conference?

The Labor Arbiter shall take full control and personally conduct the hearing or clarificatory conference and may ask questions for the purpose of clarifying points of
law or facts involved in the case. The Labor Arbiter may allow the presentation of testimonial evidence with right of cross-examination by the opposing party and
shall limit the presentation of evidence to matters relevant to the issue before him/her and necessary for a just and speedy disposition of the case.

The Labor Arbiter shall make a written summary of the proceedings, including the substance of the evidence presented, in consultation with the parties. The
written summary shall be signed by the parties and shall form part of the records.

 What is the period within which to conduct clarificatory conference?

The parties and their counsels appearing before the Labor Arbiter shall be prepared for continuous hearing or clarificatory conference. No postponement or
continuance shall be allowed by the Labor Arbiter, except upon meritorious grounds and subject to the requirement of expeditious disposition of cases. The
hearing or clarificatory conference shall be terminated within thirty (30) calendar days from the date of the initial clarificatory conference. In cases involving
overseas Filipino workers, the aggregate period for conducting the mandatory conciliation and mediation conference, including hearing on the merits or clarificatory
conference, shall not exceed sixty (60) days, which will be reckoned from the date of acquisition of jurisdiction by the Labor Arbiter over the person of the
respondents.

 What is the effect of non-appearance of the parties during clarificatory conference?

In case of non-appearance of any of the parties during the hearing or clarificatory conference despite due notice, proceedings shall be conducted ex parte.
Thereafter, the case shall be deemed submitted for decision.
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 What is the period within which to file a motion for postponement?

No motion for postponement shall be entertained except on meritorious grounds and when filed at least three (3) days before the scheduled hearing.

1. What is the period within which to cause an amendment of the complaint or petition?

No amendment of the complaint or petition shall be allowed after the filing of position papers, unless with leave of the Labor Arbiter.

 What are the prohibited pleadings and motions?

The following pleadings and motions shall not be allowed and acted upon nor elevated to the Commission: (a) Motion to dismiss the complaint except on the
ground of lack of jurisdiction over the subject matter, improper venue, res judicata, prescription and forum shopping; (b) Motion for a bill of particulars; (c) Motion
for new trial; (d) Petition for Relief from Judgment; (e) Motion to declare respondent in default; (f) Motion for reconsideration of any decision or any order of the
Labor Arbiter; (g) Appeal from any interlocutory order of the Labor Arbiter, such as but not limited to, an order: denying a motion to dismiss, denying a motion to
inhibit; denying a motion for issuance of writ of execution, or denying a motion to quash writ of execution; (h) Appeal from the issuance of a certificate of finality of
decision by the Labor Arbiter; (i) Appeal from orders issued by the Labor Arbiter in the course of execution proceedings; and (j) Such other pleadings, motions and
petitions of similar nature intended to circumvent above provisions.

 May the Commission blacklist bonding companies?

Yes. The Commission through the Chairman may on justifiable grounds blacklist a bonding company, notwithstanding its accreditation by the Supreme Court.
Upon verification by the Commission that the bond is irregular or not genuine, the Commission shall cause the immediate dismissal of the appeal, and censure the
responsible parties and their counsels, or subject them to reasonable fine or penalty, and the bonding company may be blacklisted.

 May a party file a motion to revive and re-open a case dismissed without prejudice?

Yes. A party may file a motion to revive or re-open a case dismissed without prejudice, within ten (10) calendar days from receipt of notice of the order dismissing
the same; otherwise, the only remedy shall be to re-file the case. A party declared to have waived his/her right to file position paper may, at any time after notice

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thereof and before the case is submitted for decision, file a motion under oath to set aside the order of waiver upon proper showing that his/her failure to appear
was due to justifiable and meritorious grounds.

 What is the effect of rehabilitation receivership on monetary claims of workers?

Rehabilitation receivership of a company has the effect of suspending all proceedings – at whatever stage it may be found - in all judicial or quasi-judicial bodies.
The NLRC may not proceed with hearing of monetary claims. If already decided, the monetary awards cannot be executed. If due for execution, no such execution
may be had. Only when there is liquidation that the monetary claims may be asserted. The suspension of the proceedings is necessary to enable the rehabilitation
receiver to effectively exercise its powers free from any judicial or extra-judicial interference that might unduly hinder the rescue of the distressed company. Once
the receivership proceedings have ceased and the receiver/liquidator is given the imprimatur to proceed with corporate liquidation, the SEC order becomes functus
officio. Thus, there is no legal impediment for the execution of the decision of the Labor Arbiter for the payment of separation pay by presenting it with the
rehabilitation receiver and liquidator, subject to the rules on preference of credits.

 What are the two kinds of jurisdiction of the NLRC?

The National Labor Relations Commission exercises two (2) kinds of jurisdiction: (1) Original jurisdiction; and (2) Exclusive appellate jurisdiction.

1. Original jurisdiction:
1. Injunction in ordinary labor disputes to enjoin or restrain any actual or threatened commission of any or all prohibited or unlawful acts or to require the
performance of a particular act in any labor dispute which, if not restrained or performed forthwith, may cause grave or irreparable damage to any party;
2. Injunction in strikes or lockouts under Article 264 of the Labor Code; and
3. Certified labor disputes causing or likely to cause a strike or lockout in an industry indispensable to the national interest, certified to it by the Secretary of
Labor and Employment for compulsory arbitration.

2. Exclusive appellate jurisdiction:

1. All cases decided by the Labor Arbiters including contempt cases; and
2. Cases decided by the DOLE Regional Directors or his duly authorized Hearing Officers (under Article 129) involving recovery of wages, simple money claims
and other benefits not exceeding P5,000 and not accompanied by claim for reinstatement.

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 What is the power to assume jurisdiction or certify “national interest” labor disputes to NLRC?

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.

 In case of conflict, who has jurisdiction over termination disputes, Labor Arbiter or Voluntary Arbitrator?

Jurisdiction over termination disputes belongs to Labor Arbiters and not with the grievance machinery or Voluntary Arbitrator. Under Article 262, the Voluntary
Arbitrator may assume jurisdiction only when agreed upon by the parties. Policy Instructions No. 56 issued by DOLE Secretary Confesor clarifying the jurisdiction
of Labor Arbiters and Voluntary Arbitrations does not apply. It reiterated the ruling that dismissal is not a grievable issue.

 What is the mode of appeal from the decision of the Labor Arbiters?

Appeal from the decision of the Labor Arbiter is brought by ordinary appeal to the NLRC within ten (10) calendar days from receipt by the party of the decision.
From the decision of the NLRC, there is no appeal. The only way to elevate the case to the Court of Appeals is by way of the special civil action of certiorari under
Rule 65 of the Rules of Civil Procedure. From the ruling of the Court of the Appeals, it may be elevated to the Supreme Court by way of ordinary appeal under
Rule 45 of the Rules of Civil Procedure.

 What are the grounds for appeal?

There are four (4) grounds, to wit:

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

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

(c) If made purely on questions of law; and

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

 What are the requisites for perfection of appeal?

The appeal shall be: (1) filed within the reglementary period provided in Section 1 of the Rule; (2) verified by the appellant himself/herself in accordance with
Section 4, Rule 7 of the Rules of Court, as amended; (3) in the form of a memorandum of appeal which shall state the grounds relied upon and the arguments in

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support thereof, the relief prayed for, and with a statement of the date the appellant received the appealed decision, award or order; (4) in three (3) legibly
typewritten or printed copies; and (5) accompanied by proof of payment of the required appeal fee and legal research fee, posting of a cash or surety bond as
provided in Section 6 of this Rule, and proof of service upon the other parties.

 What is the reinstatement aspect of the Labor Arbiter’s decision?

If reinstatement is ordered by the Labor Arbiter in an illegal dismissal case, it is immediately executory even pending appeal. Such award does not require a writ of
execution.

 Is posting a bond stay the execution of immediate reinstatement?

No. The posting of a bond by the employer does not have the effect of staying the execution of the reinstatement aspect of the decision of the Labor Arbiter.

 Can the Labor Arbiter issue a partial writ pending appeal?

Yes. In case the decision includes an order of reinstatement and the employer disobeys it or refuses to reinstate the dismissed employee, the Labor Arbiter should
immediately issue a writ of execution, even pending appeal, directing the employer to immediately reinstate the dismissed employee either physically or in the
payroll, and to pay the accrued salaries as a consequence of such reinstatement at the rate specified in the decision. The Sheriff should serve the writ of execution
upon the employer or any other person required by law to obey the same. If he disobeys the writ, such employer or person may be cited for contempt. While the
perfection of appeal will stay the execution of the decision of a Labor Arbiter, the partial execution for reinstatement pending appeal is not affected by such
perfection.

 Is the award of reinstatement pending appeal by the Labor Arbiter self-executory?

Yes. An award or order of reinstatement is self-executory and, therefore, does not require a writ of execution to implement and enforce it. To require the
application for and issuance of a writ of execution as pre-requisite for the execution of a reinstatement award would certainly betray and run counter to the very
object and intent of Article 223, i.e., the immediate execution of a reinstatement order. The reason is simple. An application for a writ of execution and its issuance
could be delayed for numerous reasons. A mere continuance or postponement of a scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter
or the NLRC, could easily delay the issuance of the writ thereby setting at naught the strict mandate and noble purpose envisioned by Article 223.

 What is the period within which to conduct pre-execution conference?

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Within two (2) working days from receipt of a motion for the issuance of a writ of execution which shall be accompanied by a computation of a judgment award, if
necessary, the Commission or the Labor Arbiter may schedule a pre-execution conference to thresh out matters relevant to execution including the final
computation of monetary award. The pre-execution conference shall not exceed fifteen (15) calendar days from the initial schedule, unless the parties agreed to an
extension. Any order issued by the Labor Arbiter in the pre-execution conference is not appealable, subject to the remedies available under Rule XII (Extraordinary
Remedies).

 Is writ of execution necessary in case reinstatement is ordered by the NLRC on appeal?

Yes. While it is now well-settled that a writ of execution is not necessary to implement the reinstatement order issued by a Labor Arbiter upon a finding of illegality
of dismissal since it is self-executory, however, if the reinstatement order is issued by the NLRC on appeal, there is a need to secure a writ of execution from the
Labor Arbiter a quo to enforce the reinstatement of the employee.

 What is the lifetime or effectivity of the writ of execution?

Five (5) years. In case of partial satisfaction of judgment during the lifetime of the writ, the Labor Arbiter shall motu proprio issue an updated writ reflecting the
amount collected and the remaining balance.

 What is the effect of refusal of the bonding company or bank holding the cash deposit of the losing party to release the garnished amount?

If the bonding company refuses to pay or the bank holding the cash deposit of the losing party refuses to release the garnished amount despite the order or
pertinent processes issued by the Labor Arbiter or the Commission, the president or the responsible officers or authorized representatives of the said bonding
company or the bank who resisted or caused the non-compliance shall be either cited for contempt, or held liable for resistance and disobedience to a person in
authority or the agents of such person as provided under the pertinent provision of the Revised Penal Code. This rule shall likewise apply to any person or party
who unlawfully resists or refuses to comply with the break open order issued by the Labor Arbiter or the Commission.

 What is the power of the DOLE Secretary to assume jurisdiction over a labor dispute or certify it to the NLRC for compulsory arbitration?

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The DOLE Secretary may assume jurisdiction over a labor dispute, or certify it to the NLRC for compulsory arbitration, if, in his opinion, it may cause or likely to
cause a strike or lockout in an industry indispensable to the national interest. The President may also exercise the power to assume jurisdiction over a labor
dispute.

 What is the effect of such assumption or certification of labor dispute to the NLRC?

The following are the effects: (a) on intended or impending strike or lockout– automatically enjoined even if a Motion for Reconsideration is filed; (b) on
actual strike or lockout– strikers or locked out employees should immediately return to work and employer should readmit them back; and (c) on cases filed or
may be filed – all shall be subsumed/absorbed by the assumed or certified case except when the order specified otherwise. The parties to the case should inform
the DOLE Secretary of pendency thereof.

 May an injunction be issued in strike or lockout cases?

As a general rule, strikes and lockouts validly declared, enjoy the protection of law and cannot be enjoined unless illegal acts are committed or threatened to be
committed in the course of such strikes or lockouts. Ordinarily, the law vests in the NLRC the authority to issue injunctions to restrain the commission of illegal acts
during the strikes and pickets. This policy applies even if the strike appears to be illegal in nature. The rationale for this policy is the protection extended to the right
to strike under the constitution and the law. It is basically treated as a weapon that the law guarantees to employees for the advancement of their interest and for
their protection.

 What is the effect of defiance of assumption or certification order or return-to-work order?

Non-compliance with the assumption/certification order of the Secretary of Labor and Employment or a return-to-work order issued pursuant thereto by either the
Secretary or the NLRC to which a labor dispute is certified, is considered an illegal act committed in the course of the strike or lockout.

 What is the prescriptive period for offenses penalized under the Labor Code?

As a rule, the prescriptive period of all criminal offenses penalized under the Labor Code and the Rules to Implement the Labor Codeis three (3) years from the
time of commission thereof. However, criminal cases arising from ULP which prescribe within one (1) year from the time the acts complained of were committed;
otherwise, they shall be forever barred. The running of the 1 year period, however, is interrupted during the pendency of the labor case.

 What is the prescriptive period for money claims?

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Prescriptive period is three (3) years from accrual of cause of action.

 What is the prescriptive period for claims for allowances and other benefits?

In cases of nonpayment of allowances and other monetary benefits, if it is established that the benefits being claimed have been withheld from the employee for a
period longer than three (3) years, the amount pertaining to the period beyond the three-year prescriptive period is barred by prescription. The amount that can
only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within three (3) years before the filing of the complaint.

 What is the prescriptive period for illegal dismissal?

An action for illegal dismissal prescribes in four (4) years from accrual of cause of action.

 What is the remedy of the party aggrieved by an order or resolution of the Labor Arbiter?

A party aggrieved by any order or resolution of the Labor Arbiter including those issued during execution proceedings may file a verified petition to annul or modify
such order or resolution. The petition may be accompanied by an application for the issuance of a temporary restraining order and/or writ of preliminary or
permanent injunction to enjoin the Labor Arbiter, or any person acting under his/her authority, to desist from enforcing said resolution or order.

 What are the grounds of the petition for extraordinary remedies?

The petition filed under this Rule may be entertained only on any of the following grounds: (a) if there is prima facie evidence of abuse of discretion on the part of
the Labor Arbiter; (b) if serious errors in the findings of facts are raised which, if not corrected, would cause grave or irreparable damage or injury to the petitioner;
(c) if a party by fraud, accident, mistake or excusable negligence has been prevented from taking an appeal; (d) if made purely on questions of law; or (e) if the
order or resolution will cause injustice if not rectified.

 What are the requisites of the petition for extraordinary remedies?

The petition for extraordinary remedies shall: (a) be accompanied by a clear original or certified true copy of the order or resolution assailed, together with clear
copies of documents relevant or related to the said order or resolution for the proper understanding of the issue/s involved; (b) contain the arbitral docket number
and appeal docket number, if any; (c) state the material date showing the timeliness of the petition; (d) be verified by the petitioner himself/herself in accordance
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with Section 4, Rule 7 of the Rules of Court, as amended; (e) be in the form of a memorandum which shall state the ground/s relied upon, the argument/s in
support thereof and the reliefs prayed for; (f) be in three (3) legibly written or printed copies; and (g) be accompanied by certificate of non-forum shopping, proof of
service upon the other party/ies and the Labor Arbiter who issued the order or resolution being assailed or questioned; and proof of payment of the required fees.

 What is unfair labor practice?

An unfair labor practice act violates the right of workers to self-organization, is inimical to the legitimate interests of both labor and management, including their
right to bargain collectively and otherwise deal with each other in an atmosphere of freedom and mutual respect, disrupts industrial peace and hinders the
promotion of healthy and stable labor-management relations.

 May elimination or diminution of benefits constitute demotion?

Yes. The illegal and unjustified elimination or diminution of certain benefits may result in illegal demotion. Under established jurisprudence, there is demotion
where the act of the employer results in the lowering in position or rank or reduction in salary of the employee. It involves a situation where an employee is
relegated to a subordinate or less important position constituting a reduction to a lower grade or rank with a corresponding decrease in duties and responsibilities
and usually accompanied by a decrease in salary.

 May elimination or diminution of benefits constitute constructive dismissal?

Yes. Elimination or diminution of certain benefits may result in the constructive dismissal of an employee. Constructive dismissal is an involuntary resignation
resorted to when continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank and/or a diminution in pay; or when a
clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee that it could foreclose any choice by him except to forego his
continued employment.

THE NLRC
The National Labor Relations Commission (NLRC) is a quasi-judicial body which symbolizes the common front organized by government,
labor and management to expeditiously resolve labor disputes thru the process of mediation, conciliation and compulsory arbitration. The
NLRC is attached to the Department of Labor and Employment for program and policy coordination. It plays a vital role in the government's
program of promoting and maintaining industrial peace thru the speedy dispensation of labor justice and development of an effective
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dispute settlement machinery.

STATUTORY HISTORY

Labor dispute adjudication started during the Commonwealth period when the "contract labor law" act was passed by the U.S. Congress
on January 23, 1885 and was enforced in the Philippines on June 6, 1899. The law initially placed labor cases under the jurisdiction of the
Court of First Instance

COURT OF INDUSTRIAL RELATIONS

THE INTERIM NLRC
THE NLRC UNDER P.D. 442
THE NLRC UNDER EO's 47 AND 252
THE NLRC UNDER R.A. 6715
R.A. 7700
R.A. 8042

COURT OF INDUSTRIAL RELATIONS

On 29 October 1936, the National Assembly through Commonwealth Act No. 103, created the Court of Industrial Relations (CIR), and
vested therein jurisdiction over labor cases.

The CIR was placed under the executive supervision of the Department of Justice (Sec. 1, CA 103). The Court consisted of a Presiding
Judge and four Associate Judges to be appointed by the President of the Philippines with the consent of the Commission on
Appointments of the National Assembly.

The Judges of the Court were required to have the same qualifications as those provided in the Constitution for members of the Supreme
Court. Their annual compensations were equal to that given the Judges of Court of First Instance.

Its jurisdiction, as amended by CA 254, 355, 559, 3035, among others, were: decide, investigate, and/or settle dispute arising between
and/or affecting employers and employees or laborers; disputes arising between and/or affecting landlords and tenants or farm-laborers
(tenancy disputes). Like the NLRC, the CIR adopted its own rules of procedure with the Rules of Court having a suppletory effect. Its
decisions were reviewable by the Supreme Court by Petition for Certiorari on questions of law.

The powers of the CIR were enlarged by R.A. No. 875, otherwise known as Industrial Peace Act, and enacted on 15 June 1953, to
include unfair labor practice issues; matters relating to labor disputes in industries indispensable to the national interest; questions
concerning representation of employees; and claims under the minimum wage law and hours of work. It instituted free collective
bargaining as the principal mode of labor dispute settlement.

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THE INTERIM NLRC

On 14 October 1972, President Ferdinand E. Marcos, during Martial Law period and by virtue of Proclamation 1081, issued P.D. 21,
creating, among others, an interim National Labor Relations Commission composed of three (3) members, with the Undersecretary of
Labor or duly authorized representative as Chairman and the Director of Labor Relations and the Director of Labor Standards or their duly
authorized representative, as members.

The Interim Commission exercised original and exclusive jurisdiction over all matters involving employer-employee relations including all
disputes and grievances which may otherwise lead to strikes and lock-outs under R.A. 875; all strikes overtaken by Proclamation 1081;
and all pending cases in the Bureau of Labor Relations.

The interim NLRC existed for two (2) years, until the passage of P.D. 442.

THE NLRC UNDER PRESIDENTIAL DECREE 442

Because of short and inadequate rules, most of the tempo of CIR proceedings under R.A. 875, was dictated by the Rules of Court often to
the disadvantage of the working man. This was especially so in labor cases involving unfair labor practice (ULP) which was criminal in
nature under the law.

It was for that reason that P.D. 442, abolishing the CIR and the Interim NLRC, was issued on November 1, 1974.

The NLRC, under P.D. 442, is under the administrative supervision of the Secretary of Labor and was composed of a Chairman
representing the public, two members representing the workers and two members representing the employers (Art. 261, P.D. 442). The
Commission has the exclusive appellate jurisdiction over all cases decided by the Labor Arbiters (which are under the administrative
supervision of the Chairman) and compulsory arbitrators (Art. 265, P.D. 442).

The decisions of the Commission, although final and unappealable, can be elevated to the Supreme Court by petition for certiorari on
questions of law; and in cases where national interest is involved, appealable to the Office of the President upon the recommendation of
the Secretary of Labor (Art. 302, P.D. 442).

But before P.D. 442 became effective on November 1, 1974, it was further amended by P.D. 570-A on November 1, 1974 which provided
the following features :

 The composition of the Commission was increased to seven members, enabling it to sit in two (2) Divisions. It was composed of a
Chairman, two (2) members representing the public and two (2) members representing the employers. The Divisions were each
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chaired by a government representative.

 It added to the Commission the power "to enjoin any or all acts involving or arising from any case pending before it; which, if not
restrained forthwith, may cause grave or irreparable damage to any of the parties to the case or seriously affect social or
economic stability."
 The power of the Commission over strike and lockout disputes certified to it by the Minister of Labor and Employment; petitions
for injunctions in strike and lockout disputes; and contempt cases involving the Commission itself or any of its members. It also
exercised exclusive appellate jurisdiction over all cases decided by Labor Arbiters and case involving overseas Filipino workers
decided by the Philippine Overseas Employment Administration (POEA).
 The original and exclusive jurisdiction of Labor Arbiters over ULP cases; those that workers may file involving wages, hours of
work and other terms and conditions of employment; all money claims of the worker, including those based on non-payment or
underpayment of wages, overtime compensation, separation pay and other benefits provided by law or appropriate agreement,
except claims for employees' compensation, social security, medicare and maternity benefits; violation of labor standard laws;
cases involving household services; termination cases; and cases arising from any violation of Art. 265 of the Labor Code,
including questions involving the legality of strikes and lockouts.

Other amendatory laws passed affecting the NLRC were:

a. P.D. No. 643, effective January 21, 1975, which made decisions of the Commission appealable to the Secretary of Labor and the
decisions of the latter in turn, appealable to the President of the Philippines;
b. P.D. No. 823, effective November 3, 1975, which allowed the Secretary of Labor to assume jurisdiction over cases pending before
the Commission that had not been decided within the reglementary period;
c. P.D. No. 849, effective December 16, 1975, which granted to the Commission jurisdiction over strike disputes certified to it by the
President of the Philippines or his duly authorized representative;
d. P.D. No. 850, effective December 16, 1975, which removed from the statement of jurisdiction of Labor Arbiters under Art. 216, the
phrase, "violation of labor standard laws";
e. P.D. No. 1367, effective May 1, 1978, which further reduced to only three (3) the types of cases or matters subject to covered
under jurisdiction over "moral and other forms of damages";
f. P.D. No. 1391, effective May 29, 1978, which removed the Labor Arbiters from the administrative supervisions of the Commission
and integrated them into the Regional Offices of the Department of Labor; made the Secretary of Labor as Chairman of the
Commission; increased the members of the Commission to ten (10) including the Secretary, in effect creating a 3rd Division of the
Commission; made the Chairman of the 1st Division Vice-Chairman of the Commission; and eliminated appeals from the
Commission to the Secretary of Labor.
g. P.D. No. 1691, effective May 1, 1980, which made decisions of the Bureau of Employment Services and the National Seaman's
Board in cases involving Filipino workers appealable to the Commission, and restored to five (5) the types of cases subject to the
jurisdiction of Labor Arbiters, removing the injunction against their entertaining claims for "moral or other forms of damages";
h. B.P. Blg. 70, effective May 1, 1980, which expressly authorized Labor Arbiters jurisdiction to grant claims for damages as an
administrative relief in ULP cases;
i. B.Ps. Blg. 130 and 227, effective August 17, 1981 and May 31, 1982 respectively, defined the powers of the Commission in strike
disputes and restored the administrative supervision of the Commission over the regional branches and the Labor Arbiters to the
Commission as integral parts thereof."

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THE NLRC UNDER EO'S 47 AND 252

Executive Order No. 47 enacted on 10 September 1986, further amended Articles 213, 214, 215 and 216 of the Labor Code. Under said
Order, "the NLRC shall be composed of the Minister of Labor and Employment as ex-officio Chairman and nine (9) Commissioners. In the
absence of the Minister, his "duly authorized Deputy Minister shall act as Chairman."

The Order further stated that "the Commission may sit en banc or in three divisions, each composed of three (3) members. It shall
determine, by rules approved by the Chairman, the cases to be decided en banc and by a Division. The decision of a Division shall have
the same force and effect as that of the Commission."

The Minister of Labor and Employment exercises administrative supervision over the Commission, its regional branches and their
personnel. The Presiding Commissioner of the First Division shall act as Vice-Chairman of the Commission and shall be its day-to-day
Administrator.

The objective of E.O. 47 was to professionalize the labor dispute settlement machinery and to clean up the organization of sectoral
interests. To attain this, the positions of Commissioner, Executive Labor Arbiter and Labor Arbiter were upgraded requiring the appointees
to be members of the bar. The Commissioners were required to have at least five (5) years experience in handling labor-management
relations to qualify and the ELAs and LAs must have at least two (2) years experience in the same field.

Before, the NLRC was a tripartite body exercising a "tripartite approach' to the solution of labor disputes. The Minister of Labor and
Employment as Chairman, a Vice-Chairman and two other Commissioners represented the public sector, three other Commissioners
represented the act as such with the abolition of sectoral representations.

On 25 July 1987, because of the pressing need to "strengthen further the labor dispute settlement machinery and to prevent undue delays
as well as to ensure the just and efficient resolution of labor cases, "E.O. 252 was issued, amending further Articles 213, 214 and 215 of
P.D. 442.

Under E.O. 252, the Commission shall be composed of the Secretary of Labor and Employment and fifteen (15) Commissioners. The
Commission may sit en banc or in five (5) Divisions, each composed of three (3) members. It shall determine, by rules approved by the
Chairman, the cases it shall decide en banc and those which a Division shall decide. The decision of a Division shall have the force and
effect of a decision of the Commission.

The tripartite approach that was abolished under E.O. 47 was restored under this E.O. 252.

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THE NLRC UNDER R.A. 6715

Two years and 21 days after September 10, 1986, the NLRC again shed off its structural organization and composition with the
enactment of Republic Act 6715 which took effect on March 21, 1989.

R.A. 6715 defined clearly the relationship between the Commission and the Department of Labor and Employment (DOLE) to that of
being an attached agency of the Department "for program and policy" coordination only. The NLRC today has its own full time Chairman,
(who is also the Presiding Commissioner of the First Division), and fourteen (14) Commissioners.

The Commission reverted to its tripartite composition taken away by Executive Order 47, giving back to the public, workers, and
employers' sectors equal representation in its membership.

The three sectors are represented in the five Divisions of the Commission with the public sector representative acting as Presiding
Commissioner.

The law also stipulates that the effect of a decision of each Division shall have the force and effect of a decision of the Commission.

The commission en banc sits 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 is regionalized. The First and Second Divisions, with main offices in Metro Manila, handling cases coming from the
National Capital Region. The Third Division also with offices in Manila handles cases from Luzon except the NCR. The Fourth Division
which sits in Cebu City handles cases from the Visayas, while the Fifth Division which sits in Cagayan de Oro City handles cases from
Mindanao.

Under this new structure, the status of the Commission has been elevated similar to that of the Court of Appeals. In keeping with this
raised status, the qualifications for the Chairman and members of the Commission have been raised, i.e., they must have been engaged
in the practice of law in the Philippines for at at least 15 years with five (5) years experience or exposure in labor-management relations.
The Chairman has a salary grade of 31 and grade 30 for Commissioners.

Likewise, the qualifications of the Executive Labor Arbiters and Labor Arbiters were also upgraded. They shall 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 exposure in the field of labor-management relations.

To ensure the independence of the Commission, the Executive Labor Arbiters and the Labor Arbiters, now have security of tenure. Like
members of the judiciary, they shall "hold office during good behavior" until they reach the age of 65.

The Chairman, Division Presiding Commissioners and other Commissioners, including Executive Labor Arbiters and Labor Arbiters shall

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all be appointed by the President, subject to Civil Service law, rules and regulation.

The jurisdiction of the Labor Arbiters and the Commission are specifically defined under Article 217 of the Labor Code as amended by
R.A. 6715 and the latest, R.A. 8042 (vesting further jurisdiction to hear and decide labor disputes involving money claims of overseas
Filipino workers).

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 or the Supreme Court ) in the amount equivalent to the
monetary award in the judgment appealed from.

R.A. 6715 has made the NLRC functionally and structurally, unique, closely comparable to the Court of Appeals. Functionally, because its
duties are to review decisions of the Labor Arbiters and the POEA.

Structurally, because its decisions, like the CA, is appealable only to the SC by Petition for Certiorari on questions of law, and is attached
to DOLE for "program and policy coordination only".

REPUBLIC ACT NO. 7700

An act providing for concurrent jurisdiction between and among the First, Second and Third Divisions of the National Labor Relations
Commission (to handle all appealed cases coming from Luzon including cases originating from the National Capital Region) to further
ensure speedy disposition of cases, amending for this purpose Article 213 of Presidential Decree No. 442, as amended and for other
purposes.

The Fourth and Fifth Divisions, shall handle 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 jurisdiction."

REPUBLIC ACT NO. 8042

AN ACT TO INSTITUTE THE POLICIES OF OVERSEAS EMPLOYMENT AND ESTABLISH A HIGHER STANDARD OF PROTECTION
AND PROMOTION OF THE WELFARE OF MIGRANT WORKERS, THEIR FAMILIES AND OVERSEAS FILIPINOS IN DISTRESS, AND
FOR OTHER PURPOSES.

This Act is also known and cited as the "Migrant Workers and Overseas Filipinos Act of 1995."

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SEC. 10. Money Claims. - Notwithstanding any provision of law to the contrary, the Labor Arbiters of the National Labor Relations
Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide, within ninety (90) calendar days after the filing of
the complaint, the claims arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino workers for
overseas deployment including claims for actual, moral, exemplary and other forms of damages.

The liability of the principal/employer and the recruitment/placement agency for any and all claims under this section shall be joint and
several. This provision shall be incorporated in the contract for overseas employment and shall be a condition precedent for its approval.
The performance bond to be filed by the recruitment/placement agency, as provided by law, shall be answerable for all money claims or
damages that may be awarded to the workers. If the recruitment/placement agency is a judicial being, the corporate officers and directors
and partners as the case may be, shall themselves be jointly and solidarily liable with the corporation or partnership for the aforesaid
claims and damages.

Such liabilities shall continue during the entire period or duration of the employment contract and shall not be affected by any substitution,
amendment or modification made locally or in a foreign country of the said contract.

Any compromise/amicable settlement or voluntary agreement on money claims inclusive of damages under this section shall be paid
within four (4) months from the approval of this settlement by the appropriate authority.

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be
entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired
portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

Noncompliance with the mandatory periods for resolutions of cases provided under this section shall subject the responsible officials to
any or all of the following penalties:

a. The salary of any such official who fails to render his decision or resolution within the prescribed period shall be, or caused to be,
withheld until the said official complies therewith;
b. Suspension for not more than ninety (90) days; or,
c. Dismissal from the service with disqualification to hold any appointive public office for five (5) years.

Provided, however, That the penalties herein provided shall be without prejudice to any liability which any such official may have incurred
under other existing laws or rules and regulations as a consequence of violating the provisions of this paragraph.

FUNCTIONS of the NLRC

The NLRC has the following basic functions:

• 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 the Labor Code;

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• 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, statements 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 the Labor Code.

• Conduct investigation for the determination of a question, matter of 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 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 of refrain from hearing further or from
determining the dispute or part thereof, where it is trivial or where further proceedings by the Commission are not necessary or desirable;

• Hold any person in contempt, directly or indirectly and impose appropriate penalties therefor in accordance with law;

• Enjoin or restrain any actual or thereatened 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, subject to certain provisions provided in the Labor Code; and

• Perform such other functions as may be provided by law or assigned by the Secretary.

JURISDICTION OF LABOR ARBITERS

Unencumbered by technical rules of evidence and procedure prevailing in courts of law, the Commissions and Labor Arbiters shall exert effort at resolving disputes
judiciously, fairly and expeditiously with prior resort to amicable settlement.

Article 217 of the Labor Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide the following cases involving all workers, whether
agricultural or non-agricultural:

a. Unfair labor practice cases;

b. Termination disputes;

c. 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;

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

e. Cases arising from any violation of Article 264 of the Labor Code, as amended, including questions involving the legality of strikes and lockouts;

f. Except claims for employees compensation not included in the next succeeding paragraph, 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), whether or not accompanied with a claim for reinstatement;

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g. Money claims arising out of employer-employee relationship or by virtue of any law or contract, involving Filipino workers for overseas deployment,
including claims for actual, moral, exemplary and other forms of damages;

h. Wage distortion disputes in unorganized establishments not voluntarily settled by the parties pursuant to Republic Act No. 6727;

i. Enforcement of compromise agreements when there is non-compliance by any of the parties pursuant to Article 227 of the Labor Code, as amended; and

j. Other cases as may be provided by law.

JURISDICTION OF THE COMMISSION

Article 217
• Decision, awards or orders of the Labor Arbiters are appealed to the Commission through its Decisions, with the First, Second and Third, handling cases
from the National Capital Region and other parts of Luzon; the Fourth and Fifth, handling cases from the Visayas and Mindanao, respectively.

Article 218
• The Commission resolves national interest cases certified to it by the Secretary of Labor, as well as petitions which seek to enjoin or restrain any actual or
threatened commission of prohibited or unlawful acts in any labor disputes.

Article 129
• Decisions of Regional Directors or hearing officers on small money claims are appealable to the Commission.

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