LABOR RELATIONS (Arts.
226-292, Labor Code of the Philippines) 1
LABOR CODE OF THE PHILIPPINES
BOOK FIVE
LABOR RELATIONS
TITLE III
BUREAU OF LABOR RELATIONS
Art. 226. Bureau of Labor Relation -- The Bureau of LaborRelations 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 laborcases before
it, subject to extension by agreement of the parties.
COMMENT:
- EO No. 126: Transferred the conciliation, mediation, and voluntary
arbitration functions of the BLR to the National Conciliation and
Mediation Board (NCMB).
- Principal task of BLR is now limited to handling inter-union and intra-
union conflicts, registration and cancellation of registration of labor
organizations, particularly those involving federations, national unions or
industry unions.
Intra-Union Disputes:
- A controversy between and among union members.
- Includes grievances from:
o Any violation of the rights and conditions of union membership;
o Violation or disagreement over any provision of the union’s
constitution and by-laws; or
o Disputes arising from chartering or affiliation of union.
Case: Ilaw at Buklod Ng Manggagawa vs. NLRC (219 SCRA 536)
FACTS: On December 3, 1986, IBM, the sole and exclusive bargaining
representative of all daily-paid workers of the Metro Manila plants of San Miguel
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Corporation, entered into a collective bargaining agreement with San Miguel
Corporation. Said collective bargaining agreement was ratified by the general
membership. Thereafter, IBM assessed each member the amount of P1,098.00
to be deducted from the lump sum of P10,980.00 of which each employee was to
receive under the CBA. Several employees protested and refused to sign the
authorization slip for the deduction. As a result, the said employees were
expelled from the union. The affected employees then filed a complaint with the
Arbitration Branch of the NLRC for illegal and exorbitant deduction and illegal
expulsion.
ISSUE: Does the Arbitration Branch of the NLRC have jurisdiction?
HELD: NO. The NLRC has no jurisdiction because the subject matter of the suit
is an INTRA-UNION DISPUTE. This is an intra-union dispute – a dispute
between the labor union and its members. Art. 226 of the Labor Code vests on
the BLR the jurisdiction to act on all inter-union or intra-union disputes.
Inter-Union Disputes:
- A controversy between and among legitimate labor unions.
Effect of Pendency of Inter-Union or Intra-Union Disputes
- On the rights and obligations of the PARTIES:
o The rights, relationships and obligations of the parties-litigants
against each other and other parties-in-interest prior to the
filing of the petition continue to remain until the finality of the
decision.
- On a Petition for Certification Election:
o The pendency of an inter-union or intra-union dispute or other
related labor relations dispute is not a prejudicial question to a
petition for certification election.
o Thus, pendency is not a ground for suspension or dismissal of
the petition for certification election.
Related Labor Relations Disputes:
- Any conflict between a labor union and the employer or any individual,
entity or group that is not a labor organization or workers’ association is
a related labor relations disputes.
o Example: Cancellation of union registration and interpleader.

The National Conciliation and Mediation Board:
- Composed of an Administrator and two (2) Deputy Administrators and
as many Conciliators-Mediators as the needs of the public service
requires.
- It exercises the following functions:
o Formulate policies, programs, standards, procedures, manuals
of operation, and guidelines pertaining to effective mediation
and conciliation of labor disputes;
o Perform preventive mediation and conciliation functions;
o 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;
o 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;
o Administer the voluntary arbitration program; maintain/update a
list of voluntary arbitrators; compile arbitration awards and
decisions;
o Provide counselling and preventive mediation assistance
particularly in the administration of collective agreements;
o Monitor and exercise technical supervision over the Board
programs being implemented in the regional offices; and
o Perform such other functions as may be provided by law or
assigned by the Secretary of Labor and Employment.
Art. 227. Compromise Agreements -- Any compromise settlement, including
those involving labor standard laws, voluntarily agreed upon by the parties
with the assistance of the Bureau or theregional office of the Department
of Labor, shall be final and binding upon the parties. The
National LaborRelations Commission or any court, shall not assume
jurisdiction over issues involved therein except in case of non-compliance
thereof or if there is prima facie evidence that the settlement was obtained
through fraud, misrepresentation, or coercion.
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COMMENT:
Compromise Agreement:
- “Compromise”: A contract whereby the parties by making reciprocal
concessions, avoid a litigation or put an end to one already
commenced.
o The nature of compromise is such that a party must give
up some of the rights that he has in consideration of the
same act on the part of the other side.
- Labor Code recognizes compromise settlement as a mode of settling
labor or industrial disputes.
- Parties can validly enter into a compromise not only on controversies
involving labor standards, but also on other labor disputes.
Conclusiveness of Compromise:
- A compromise is conclusive and binding even if it is not judicially
approved.
- NLRC or any court shall not assume jurisdiction over issues that have
been subject of a compromise settlement, except in case of non-
compliance thereof or if there is prima facie evidence that the settlement
was obtained through fraud, misrepresentation, or coercion.
- A compromise cannot later be disowned or set aside merely because a
party has changed his mind.
o However, if the consideration for the compromise was very
much less than the amount which the employee was
entitled, it may be set aside for being contrary to law,
morals or public policy.
Case: Olaybar vs. NLRC (237 SCRA 819)
FACTS: Ten (10) employees were terminated by X Corporation on the ground of
retrenchment. Contesting the legality of their retrenchment, the 10 employees
lodged a complaint for illegal dismissal with the Regional Arbitration Branch of
the NLRC. The Labor Arbiter dismissed the complaint but ordered X Corporation
to pay the 10 employees their respective separation pay. Unsatisfied, the
employees appealed to the NLRC. Pending appeal, the employees executed
separate affidavits stating, among others, their intention to withdraw their appeal
since they had already received the separation pay decreed in the decision of the
Labor Arbiter. These affidavits were not, however, submitted to the NLRC. For
some inexplicable reason, neither the 10 employees nor X Corporation brought
to the attention of the NLRC the crucial fact that they had already amicably

settled their dispute. Unaware of the settlement, the NLRC rendered a decision in
favour of the 10 employees by ordering their reinstatement with back wages. The
employees then moved for the execution of the NLRC decision which X
Corporation opposed on the ground that the decision has been rendered moot
and academic by the amicable settlement of the case.
ISSUE: Whether or not the NLRC acted correctly in denying the motion for
execution?
HELD: YES. It is true that the NLRC reversed the Labor Arbiter’s decision on
appeal, but when the NLRC rendered its decision, it unknowingly adjudicated a
case which, for all intents and purposes, had already been closed and terminated
by the parties themselves when they agreed on a settlement. This is the clear
import of the rule that compromises and settlements have the effect and
conclusiveness of res judicata upon the parties.
Compromise Through Lawyer or Representative:
- A compromise entered into through a lawyer or representative is
conclusive or binding only:
o When the client has expressed his consent to compromise; or
o When the lawyer or representative is equipped with a special
power of attorney.
- Without such express consent or special power of attorney, any
compromise entered into by a lawyer or representative will not bind the
party concerned, unless the latter signs or avails of the benefits under
the compromise agreement.
Case: Jag &Haggar Jeans and Sportswear Corp. vs. NLRC (241 SCRA 635)
FACTS: A decision was rendered by the NLRC ordering the reinstatement of 114
employees. The Company filed a motion of reconsideration. During the pendency
of the motion for reconsideration, the Company and the Union entered into a
compromise agreement whereby the Company and the Union agreed that the
affected employees will just be paid separation pay. Of the 114 affected
employees, 102 availed of the benefits provided for under the Compromise
Agreement. The 12 remaining employees then moved for the execution of the
NLRC decision. The Company opposed the motion contending that the
Compromise Agreement was deemed ratified by the union members.
ISSUE: Whether or not the Compromise Agreement entered into by the company
and the Union is binding upon the employees?
HELD: NO. The Compromise Agreement is not binding upon the 12 employees
who neither signed the compromise agreement nor availed of its benefits.
Inasmuch as what was being waived under the Compromise Agreement was the
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right of the affected employees to reinstatement, such waiver must be exercised
personally by the employees concerned.
Compromise on a Final Judgment:
- The law does not limit compromises to cases about to be filed or cases
already pending on court.
- Valid for the parties to enter into a compromise despite the fact that a
final judgment has already been rendered.
Remedy if the Compromise is Violated:
- The aggrieved party can avail of the following remedies:
o In case of violation of a Compromise Agreement, the
aggrieved party can:
(a) File the necessary action action or motion to enforce the
compromise; or
(b) Regard the compromise as rescinded and insist upon his
original demand.
- In case of violation of a Compromise Judgment:
(a) File a motion for execution, in case of non-compliance;
(b) File an action to annul the compromise judgment on the
ground of mistake, fraud, violence, intimidation, undue
influence, or falsity in the execution of the compromise
embodied in the judgmentl or
(c) File a petition for relief from judgment under Rule 38 of the
Rules of Court on the ground that the judgment was
obtained through fraud, mistake or excusable negligence.
Reduction of Attorney’s Fees – Not a Bar to Approval of Compromise:
- Lawyer’s rights may not be invoked as a ground for disapproving a
compromise.
- Lawyer affected can always enforce his right in a proper proceeding but
said right may not be used to prevent the approval of the compromise.
Quitclaim:
- A quitclaim executed in favour of a company by an employee amounts
to a valid and binding compromise agreement.
- The current doctrinal policy of the Supreme Court is that not all waivers
and quitclaims are invalid as against public policy.
- Once an employee executes a quitclaim in favour of the employer, he is
thereby estopped from filing any further claim against his employer
arising from his employment.

Art. 228. (Repealed by B.P. 130)
Art. 229. Issuance of subpoenas. - The Bureau shall have the power to
require the appearance of any person or the production of any paper,
document or matter relevant to a labordispute under its jurisdiction, either
at the request of any interested party or at its own initiative.
COMMENT:
Power of the Bureau of Labor Relations to Issue Subpoena:
- Extends only to matters relevant to the labor dispute under its
jurisdiction.
Art. 230. Appointment of Bureau Personnel. - The Secretary of Labor and
Employment may appoint, in addition to the present personnel of the
Bureau and the Industrial Relations Divisions, such number of examiners
and other assistants as may be necessary to carry out the purpose of the
Code.
COMMENT:
Authority to Appoint Personnel:
- Authority to the Secretary of Labor and Employment to appoint
personnel as may be needed by the Bureau of Labor Relations in
carrying out the purposes of the Labor Code.
Art. 231. Registry of Unions and File of Collective Bargaining Agreements -The
Bureau shall keep a registry of legitimatelabor organizations. The Bureau
shall also maintain a file of all collective bargaining agreements and other
related agreements and records of settlement of labor disputes and copies
of orders and decisions of voluntary arbitrators. The file shall be open and
accessible to interested parties under conditions prescribed by the
Secretary of Labor and Employment, provided that no specific information
submitted in confidence shall be disclosed unless authorized by the
Secretary, or when it is at issue in any judicial litigation, or when public
interest or national security so requires.
Within thirty (30) days from the execution of a Collective Bargaining
Agreement, the parties shall submit copies of the same directly to the
Bureau or the Regional Offices of the Department of Labor and
Employment for registration, accompanied with verified proofs of its
posting in two conspicuous places in the place of work and ratification by
the majority of all the workers in the bargaining unit. The Bureau or
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Regional Offices shall act upon the application for registration of such
Collective Bargaining Agreement within five (5) calendar days from receipt
thereof. The Regional Offices shall furnish the Bureau with a copy of the
Collective Bargaining Agreement within five (5) days from its submission.
The Bureau or Regional Office shall assess the employer for every
Collective Bargaining Agreement a registration fee of not less than one
thousand pesos (P1,000.00) or in any other amount as may be deemed
appropriate and necessary by the Secretary of Labor and Employment for
the effective and efficient administration of the Voluntary Arbitration
Program. Any amount collected under this provision shall accrue to the
Special Voluntary Arbitration Fund.
The Bureau shall also maintain a file and shall undertake or assist in the
publication of all final decisions, orders and awards of the Secretary
of Labor and Employment, Regional Directors and the Commission.
COMMENT:
Registration of Collective Bargaining Agreements:
- Purpose of Registration:
o To put notice on the existence of such agreement in order to
promote its stable and undisturbed administration.
- Legal effect of Registration:
o Registration of a collective bargaining agreement is not
essential to its validity.
o Even if not registered, CBA is still valid and binding between
the parties, regardless of whether or not the same has been
certified by the BLR. (Liberty Flour Mills Employees vs. Liberty
Flour Mills)
- Registration Procedure:
o An application for registration should be filed with the Regional
Office of the DOLE which issued the union’s certificate of
registration or certificate of creation of chartered local.
o If the certification of creation of the chartered local was issued
by the BLR, application shall be field with the Regional Office
of the DOLE which has jurisdiction over the place where it
principally operates.

o Application for registration of multi-employer collective
bargaining agreements shall be filed with the BLR.
- Period within which to Register:
o Within thirty (30) days from execution.
- Supporting Documents:
o Application shall be accompanied by two (2) copies of the
following documents:
(a) Collective bargaining agreement;
(b) Statement that the collective bargaining agreement was
posted in at least two (2) conspicuous places in the
establishment for at least five (5) days before its
ratification; and
(c) Statement that the collective bargaining agreement was
ratified by the majority of the employees in the bargaining
unit.
- Posting of CBA
o The collective bargaining agreement must be posted within five
(5) days prior to its ratification, in at least two (2) conspicuous
places in the establishment.
o This is a mandatory requirement.
o Purpose: To inform employees in the bargaining unit of the
contents of the agreement so that they could intelligently
decide on whether to accept the same or not.(Associated
Labor Union vs. FerrerCalleja)
o If the collective bargaining agreement was not posted in
accordance with the rules, the application for registration shall
be disapproved.
Remedy from denial of CBA registration:
- Re-Filing:
o If the application for registration was denied for failure to
complete the registration requirements within the ten-day
period from notice, the remedy is to re-file the application with
complete supporting documents.
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- Appeal:
o If the application for registration is denied on other grounds,
the remedy is to appeal the order of denial within ten (10) days
from receipt to:
(a) Bureau of Labor Relations – if the order of denial
was issued by the Regional Office of the DOLE; or
(b) Office of the Secretary of Labor and Employment
– if the order of denial was issued by the BLR.
Art. 232. Prohibition on Certification Election - The Bureau shall not entertain
any petition for certification election or any other action which may disturb
the administration of duly registered existing collective bargaining
agreements affecting the parties except under Articles 253, 253-A and 256
of this Code.
COMMENT:
The Contract-Bar Principle
- The existence of a duly registered CBA will bar the holding of a
certification election.
- Purpose: To promote stability and fairness in collective bargaining
agreements.
- If there is a duly registered CBA, a petition for certification election can
only be entertained within the 60-day period prior to the expiration of the
5-year term of the CBA.
- A petition for certification election field outside of the 60-day period prior
to the expiration of the term of a duly registered CBA will have to be
dismissed because it will disturb the administration of duly registered
existing CBAs.
Exceptions to the Contract-Bar Principle:
- There are certain type of collective bargaining agreements which do not
fall within the operation of the contract-bar principle, namely:
(a) Those entered into with a labor organization which has not been
certified as the sole and exclusive collective bargaining
representative but merely accorded voluntary recognition by the
management despite the existence of another labor organization
seeking recognition.
(b) Those which are not duly registered with the Bureau of Labor
Relations or the appropriate regional office of the DOLE.

(c) Those which are incomplete, specifically those which do not
provide for economic benefits to employees.
(d) Those hastily entered into prior to or during the sixty-day freedom
period.
(e) Those which can no longer foster industrial peace and stability
because of the schism in the union.
Illustrative Cases:
Associated Labor Union vs. Ferrer-Calleja (173 SCRA 178)
FACTS: On May 7, 1986, ALU demanded that it be recognized as the sole and
exclusive bargaining representative of the employees of GAW Trading. On May
9, 1986, another union (SPFL), who was also demanding recognition, staged a
strike against GAW Trading. On May 12, 2986, GAW Trading voluntarily
recognized ALU as the sole and exclusive bargaining representative of the
employees. ALU and Gaw Trading signed and executed a CBA, but the
registration was done without the CBA being posted in at least two (2)
conspicuous places in the establishment five days before its ratification. ALU
justified the omission by saying it could not post the CBA because of the strike
staged by SPFL. On May 28. 1986, SPFL filed a petition for certification election.
ALU sought the dismissal of the petition by invoking the contract-bar principle.
ISSUE: Will the CBA between ALU and GAW Trading bar the holding of a
certification election?
HELD: NO. The CBA will not bar the holding of a certification election because it
was entered into with the labor union that was merely accorded voluntary
recognition by the GAW Trading despite the presence of another union that was
also seeking recognition. ALU’s standing as an exclusive bargaining
representative is dubious. Hence, a certification election could be properly
ordered. Additionally, the posting requirement was not complied with. Hence, the
CBA is defective. Even if it was registered with the DOLE, it cannot be
considered as duly registered.
Buklod Ng Saulog Transit vs. Cassalla (99 Phil. 16)
FACTS: On December 7, 1953, a petition for certification election among the
employees of Saulog Transit was filed. Said petition was opposed by the
BuklodngSaulog Transit on the ground that it had already entered into a
collective bargaining agreement with Saulog Transit on July 15, 1953. One
month after the filing of the petition for certification election, the Buklod Ng
Saulog Transit and Saulog Transit executed a Supplementary Agreement. The
Supplementary Agreement, however, has no clear-cut stipulation on the rates of
pay, wages, hours of work and other conditions of employment.
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ISSUE: Whether or not the collective bargaining agreement and the
supplementary agreement will bar the holding of a certification election?
HELD: NO. The CBA will not bar the holding of a certification election because it
is incomplete, considering it does not touch in substantial terms the rates of pay,
wages, hours of work and other terms and conditions of employment but seeks
merely to establish a grievance procedure for drivers, conductors and inspectors
who are members of Buklod Ng Saulog. Neither can the supplementary
agreement bar the holding of a certification election for it was entered into after
the filing of the petition for certification election.
Associated Trade Unions vs. Noriel (88 SCRA 96)
FACTS: ATU and Synthetic Marketing had a CBA which was due to expire on
October 31, 1977. The said CBA was renewed five months and twenty-one days
prior to the expiration of the old CBA. The new CBA was registered with the BLR.
Within the sixty-day freedom period, a petition for certification election was filed
by FFW. ATU opposed the petition on the ground that it is contract-barred by
virtue of the existence of a duly registered CBA. FFW assailed the validity of the
said CBA on the ground that it had been executed 5 months and 21 days prior to
the expiration of the old CBA and that it was not ratified by the members of the
bargaining unit.
ISSUE: Whether or not the new CBA will bar the holding of a certification
election?
HELD: NO. The new CBA was hastily and prematurely entered into precisely for
the purpose of avoiding the holding of a certification election. The new CBA was
not yet in existence when the petition for certification election was filed. Clearly,
the contract-bar principle will not apply.
Firestone vs. Estrella (81 SCRA 49)
FACTS: ALU and Firestone had a CBA which was to be effective from February
1, 1973 to January 31, 1976. On February 1, 1974, ALU and Firestone entered
into a Supplementary Agreement extending the life of the CBA for one (1) year.
The extension was neither ratified nor submitted to the DOLE. On February 10,
1976, ten (10) days after the original expiry date of the CBA, the Firestone Tire
and Rubber Company Employees Union filed a petition for certification election.
ALU moved for the dismissal of the petition by invoking the contract-bar principle.
ISSUE: Is the contract-bar principle applicable?
HELD: NO. A collective bargaining agreement does not operate as a bar to
representation proceeding, where it is shown that because of a schism in the
union, the contract can no longer serve to promote industrial stability and the

direction of the election is in the interest of industrial stability as well as in the
interest of the employees’ right in the selection of their bargaining agreement.
Basic to the contract-bar rule is the proposition that the delay of the right to select
representative can be justified only where stability is deemed paramount.
Excepted from the contract-bar rule are certain types of contracts which do not
foster industrial stability.
Effect of Automatic Renewal Clause:
- A collective bargaining agreement which provides for automatic renewal in the
absence of notice by one of the contracting parties of intention to alter, modify or
terminate it prior to a specific period preceding the termination will operate as a
bar to certification election.
- This rule does not apply where a contesting union has given a timely notice to
the employer or has seasonably filed a petition for certification election prior to
the specified date for automatic renewal.
Art. 233. Privileged communication. - Information and statements made at
conciliation proceedings shall be treated as privileged communication and
shall not be used as evidence in the Commission. Conciliators and similar
officials shall not testify in any court or body regarding any matters taken
up at conciliation proceedings conducted by them.
COMMENT:
The Philosophy Behind the Privilege:
- To encourage the parties to make full disclosure of facts and
circumstances without fear in order to facilitate the settlement of labor
disputes in line with the policy of the State to promote and emphasize
mediation and conciliation as modes of settling labor or industrial
disputes.
TITLE IV
LABOR ORGANIZATIONS
CHAPTER I
REGISTRATION AND CANCELLATION
Art. 234. Requirements of Registration - A federation, national union or
industry or trade union center or an independent union shall acquire legal
personality and shall be entitled to the rights and privileges granted by law
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to legitimate labor organizations upon issuance of the certificate of
registration based on the following requirements:
(a) Fifty pesos (P50.00) registration fee;
(b) The names of its officers, their addresses, the principal address of
the labor organization, the minutes of the organizational meetings and the
list of the workers who participated in such meetings;
(c) In case the applicant is an independent union, the names of all its
members comprising at least twenty percent (20%) of all the employees in
the bargaining unit where it seeks to operate;
(d) If the applicant union has been in existence for one or more years,
copies of its annual financial reports; and
(e) Four copies of the constitution and by-laws of the applicant union,
minutes of its adoption or ratification, and the list of the members who
participated in it.
COMMENT:
Labor Organization:
- A 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.
Significance of Registration:
- Registration of a labor organization is necessary for it to acquire legal
personality and enjoy the rights and privileges enumerated in Art. 242 of
the Labor Code.
Purpose of Registration:
- To protect both labor and public against abuses, fraud or impostors who
pose as organizers, although not truly accredited agents of the union
they purport to represent.
Constitutionality:
- The law requiring the registration of labor organizations is not
unconstitutional because it is a valid exercise of the police power.

- Not a limitation on the right of assembly or association, considering that
the right of assembly or association may be exercised with or without
registration.
Legal Personality of Labor Organizations:
- A labor organization acquires legal personality and attains the status of
legitimacy upon the issuance in its name of a Certificate of Registration.
- An unregistered labor organization can acquire legal personality and
attain the status of legitimacy by affiliating with a duly registered
Federation or National Union; becomes a Chartered Local.
- A Chartered Local, therefore, need not be independently registered.
Effect of Incorporation:
- A labor union organized under the Corporation Law merely gives it
juridical personality before the regular courts, but it will not entitle such
union to the rights and privileges accorded by law to legitimate labor
organizations.
- Registration with the DOLE makes a labor organization legitimate.
Registration of Independent Union:
- Independent Union: a labor organization operating at the enterprise
level whose legal personality is derived through independent
registration.
- To register an independent union, an application for registration should
be filed with the Regional Office of the DOLE where it principally
operates.
- The application for registration should be supported by the following
documents:
(a) Name of the applicant labor union, its principal address,
the names of its officers and their respective addresses,
approximate number of employees in the bargaining unit
where it seeks to operate, and a statement that it is not
reported as a chartered local of any federation or local
union;
(b) Minutes of the organizational meetings and the list of
workers who participated in such meetings;
(c) Names of all its members comprising at least twenty
percent (20%) of the employees in the bargaining unit;
(d) Annual financial reports if the applicant has been in
existence for one or more years; and
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(e) Constitution and By-Laws, minutes of its adoption or
ratification, and the list of the members who participated in
it.
Registration of Workers’ Association:
- Workers’ Association: An organization of workers created for the mutual
aid and protection of its members for any legitimate purpose other than
collective bargaining.
- To register a workers’ association, an application should be filed with
the Regional Office of the DOLE where it principally operates.
- The application should be supported by the following documents:
(a) Name of the applicant association, its principal address,
the names of its officers and their addresses;
(b) Minutes of the organizational meeting, and the names of
the individual members who participated therein; and
(c) Constitution and By-Laws to which must be attached the
names of ratifying members, the minutes of adoption or
ratification of the constitution and by-laws and the date
when the ratification was made, unless ratification was
done in the organizational meeting, in which case such
fact shall be reflected in the minutes of the organizational
meeting.
Change of Name of Labor Organization:
- A Notice of Change of Name shall be filed with the BLR or the Regional
Office of the DOLE where the labor organization’s certificate of
registration or certificate of creation of a chartered local was issued.
- The notice of change of name shall be accompanied by the following
documents:
(a) Proof of approval or ratification of change of name; and
(b) Amended constitution and by-laws.
- The change of name of a labor organization does not affect its legal
personality
Merger or Consolidation of Labor Organization:
- A Notice of Merger or Consolidation shall be filed with:
(a) Regional Office of the DOLE that issued the Certificate of
Registration – in case of independent labor unions and
workers’ associations;

(b) Regional Office of the DOLE that issued the Certificate of
Creation of Chartered Local – in case of chartered locals;
or
(c) Bureau of Labor Relations – in case of federations or
national unions.
- Supporting Documents for Merger:
o Notice of merger shall be accompanied by the following
documents:
(a) Minutes of merger convention or general membership
meeting of all the merging labor organizations, and list of
their respective members who approved the same; and
(b) Amended constitution and by-laws and minutes of its
ratification, unless ratification transpired during the merger
convention, which fact shall be indicated accordingly.
- Supporting Documents for Consolidation:
o Notice of consolidation shall be accompanied by the following
documents:
(a) Minutes of consolidation convention of all the
consolidating labor organizations and list of their
respective members who approved the same; and
(b) Amended constitution and by-laws and mintues of its
ratification, unless ratification transpired during the
consolidation convention, which fact shall be indicated
accordingly.
- Effect of Merger:
o The legal existence of the absorbed labor organization ceases,
while the legal existence of the absorbing labor organization
subsists.
o All rights, interests and obligations of the absorbed labor
organizations are transferred to the absorbing organization.
- Effect of Consolidation:
o The legal existence of the consolidating labor organization
shall cease and a new labor organization is created.
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Remedy:
- Re-Filing of Application
o Re-file application or notice with complete supporting
documents.
Art. 235. Action on the Application - The Bureau shall act on all applications
for registration within thirty (30) days from filing.
All requisite documents and papers shall be certified under oath by the
secretary or the treasurer of the organization, as the case may be, and
attested to by its president.
COMMENT:
Significance of the 30-Day Period:
- The BLR shall act on all applications for registration within thirty (30)
days from filing.
- The mere filing of the requisite documents and papers does not
automatically oblige the BLR to issue a certificate of registration.
- The BLR is duty bound to further check if the registration requirements
under Art. 234 have been sedulously complied with.
Certification and Attestation of Documents:
- Application for registration and all its supporting documents are required
to be:
(a) Certified under oath by the Secretary Treasurer of the
organization; and
(b) Attested to by the President.
- Both requirements must be strictly complied with.
- Mandatory attestation requirement also applies to notice of change of
name, notice of merger, and notice of consolidation and all their
supporting documents.
Case: Progressive Development Corporation vs. Secretary of Labor (205
SCRA 802)
FACTS: KILUSAN filed a petition for certification election among the rank and file
employees of PDC, alleging that it is a legitimate labor federation. PDC sought
the dismissal of the petition on the ground that the constitution and by-laws was
merely attested to by the union president but it was not certified under oath by
the union secretary or the union treasurer, hence not acquiring legal personality.
According to the Med-Arbiter, the mere issuance of a Charter Certificate by the
federation was sufficient compliance with the rules.

ISSUE: Is the Med-Arbiter correct?
HELD: NO. A local chapter will become a legitimate labor organization only if the
required documents and papers are certified under oath by the secretary or
treasurer of the organization and attested to by its president. Hence PDEU did
not acquire legal personality. Consequently, it cannot file a petition for
certification election.
Purpose of Certification and Attestation:
- Preventive measures against the commission of fraud.
Remedies:
- Mandamus:
o If registration is refused despite compliance with all the legal
requirements for registration, the remedy of mandamus can be
availed of to compel the registration of the labor organization.
- Petition for Cancellation of Registration:
o If the registration is granted, a petition for cancellation of
registration may be filed on any of the grounds provided for in
Art. 239 of the Labor Code.
o The remedy of certiorari is not available because the act of
approving an application for registration of a labor organization
is not a judicial function but a ministerial duty.
Art. 236. Denial of Registration; Appeal - The decision of the Labor Relations
Division in the regional office denying registration may be appealed by the
applicant union to the Bureau within ten (10) days from receipt of notice
thereof.
COMMENT:
Grounds for Denial of Registration:
(a) Falsification or serious irregularities in the application for registration or
its supporting documents;
(b) Non-compliance with the requirements for registration, particularly the
certification and attestation requirements; or
(c) Failure to complete the registration requirements within thirty (30) days
from notice.
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Remedy From Denial of Registration:
- Appeal:
o If the application for registration is denied on grounds other
than failure to submit the complete requirements, the remedy is
to appeal the order within ten (10) days from receipt to the:
(a) Bureau of Labor Relations – if the order of denial
was issued by the Regional Office of the DOLE;
or
(b) Office of the Secretary of Labor and Employment
– if the order of denial was issued by the BLR.
Art. 237. Additional Requirements For Federation or National Unions - Subject
to Article 238, if the applicant for registration is a federation or a national
union, it shall, in addition to the requirements of the preceding Articles,
submit the following:
(a) Proof of the affiliation of at least ten (10) locals or chapters, each of
which must be a duly recognized collective bargaining agent in the
establishment or industry in which it operates, supporting the registration
of such applicant federation or national union; and
(b) The names and addresses of the companies where the locals or
chapters operate and the list of all the members in each company involved.
COMMENT:
Federation or National Union:
- A labor organization with at least ten (10) affiliates or chartered locals,
each of which must be a duly recognized or certified collective
bargaining agent.
Registration of Federation or National Union:
- Application for registration should be filed with the BLR.
- The application should be supported by the following documents:
(a) Statement indicating the name of the applicant federation
or national union, its principal address, the names of its
officers and their respective addresses;
(b) Minutes of the organizational meetings and the list of
workers who participated in such meetings;
(c) Annual financial reports if the applicant has been in
existence for one or more years;

(d) Constitution and by-laws, minutes of its adoption or
ratification, and the list of the members who participated in
it.
(e) Resolution of affiliation of at least ten (10) legitimate labor
organization, whether independent or chartered locals,
each of which must be a recognized or certified bargaining
representative on the establishment where it seeks to
operate; and
(f) Names and addresses of the companions where the
affiliates operates and list of all the members in each
company involved.
Composition of a Federation or National Union:
- Affiliates:
o Independently registered unions, hence, they have a legal
personality of their own, separate and distinct from that of the
mother union.
Chartered Locals:
- Not independently registered unions – their legal personality is derived
from their mother union or federation, upon issuance of a Certificate of
Creation of Chartered Local.
Nature of Relationship Between Federation and Local Union:
- Principal-agent
- The local union or affiliate is the principal, while the federation is the
agent.
- Principal-agent relationship exists even if the local union is not
independently registered.
Case: Filipino Pipe & Foundry vs. NLRC (318 SCRA 68)
FACTS: NLU, a national federation of labor unions, filed in behalf of its local
chapter, the FPWU-NLU, a notice of strike signed by the president of the
federation. Without waiting for the outcome of the conciliation conference,
FPWU-NLU staged the strike. Upon petition of the company, the NLRC declared
the strike illegal. NLU claimed that it cannot be held liable for damages because
it is a mere agent of the local union.
ISSUE: Who is liable for damages, NLU (federation) or FPWU-NLU (local
union)?
HELD: The local union (FPW-NLU) is liable for the damages sustained by the
company as a result of the illegal strike. As the local union, it is considered as the
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principal. Being just an agent, the notice of strike filed by the NLU is deemed to
have been filed by its principal, the FPWU-NLU. This is so even if FPWU-NLU is
not independently registered.
Case: Elisco-Elirol Labor Union vs. Noriel (80 SCRA 682)
FACTS: Elisco-Elirol Labor Union affiliated itself with the National Federation of
Labor Union (NAFLU). In February 1974, the Elisco-Elirol Labor Union-NAFLU
entered into a collective bargaining agreement with the company. On May 28,
1975, the members of Elisco-Elirol Labor Union-NAFLU disaffiliated from NAFLU
and formed themselves into an independent union.
ISSUE: Which of the two unions has the right to be recognized as the collective
bargaining representative and ultimately administer the collective bargaining
agreement – NAFLU or Elisco-Elirol Labor Union?
HELD: Elisco-Elirol Labor Union has the right to be recognized as the collective
bargaining representative and ultimately administer the CBA. As the local union,
Elisco-Elirol Labor Union is the principal party to the CBA. The disaffiliation of
Elisco-Elirol Labor Union from NAFLU did not create a new union but merely
detached the local union from its mother federation.
Creation of a Chartered Local:
- A duly registered federation or national union may directly create a
chartered local by submitting to the Regional Office of the DOLE two (2)
copies of the following documents:
(a) Charter Certificate issued by the federation or national
union indicating the creation or establishment of the
local/chapter;
(b) Names of the local/chapter’s offices, their addresses, and
the principal office of the local/chapter;
(c) Constitution and by-laws of the local/chapter.
- Documents should be certified under oath by the Secretary or Treasurer
of the local/chapter and attested by its president.
Affiliation of an Independent Union:
- An independent union may affiliate with a federation or national union by
obtaining the following:
(a) Approval of the majority of the union members in a general
membership meeting duly called for the purpose; and
(b) Resolution of affiliation from the board of directors of the
union.

The legal effect of Affiliation:
- When a labor union affiliates with a federation, it becomes subject to the
laws of the federation.
- The constitution and by-laws of the federation governs the relationship
between the federation and the affiliate or local union.
- An independent union which affiliates with a federtation or national
union does not lose its legal personality.
Case: Chrysler Philippines vs. Estrella (86 SCRA 338)
FACTS: CPLU is a labor union. Sometime in March 1974, CPLU affiliated with a
labor federation named ALU. During the affiliation, CPLU-ALU entered into a
CBA with CPC. Thereafter, CPLU disaffiliated from ALU. Subsequently, CPLU
filed a Petition for Direct Certification praying that it be directly certified as the
exclusive collective bargaining agent of the hourly-paid workers of CPC. CPLU-
ALU sought to dismiss the petition on the ground that CPLU is a non-existing
union since it has been superseded by CPLU-ALU.
ISSUE: Whether or not CPLU has lost its legal personality as a labor
organization when it affiliated with its mother union, ALU?
HELD: NO. While it is true that its name was changed to CPLU-ALU, such
change was only a matter of form designed to convey the idea that CPLU had
affiliated with ALU, but it did not affect the legal personality of the affiliating union.
The only way by which a labor organization could be disenfranchised is
cancellation of its registration.
Case: Adamson & Adamson, Inc., vs. CIR (127 SCRA 268)
FACTS: The Adamson & Adamson, Inc. Salesmen Association is the union at
Adamson & Adamson, Inc. it is affiliated with the FFW. Subsequently, the
supervisors of Adamson& Adamson organized themselves into a union named
Adamson & Adamson, Inc. Supervisory Union. It is likewise affiliated with FFW.
The rank-and-file employees also organized themselves into a union named
Adamson & Adamson Independent Workers Union, and affiliated with the FFW.
Adamson & Adamson, Inc. questioned the affiliation of the unions with FFW,
arguing that the affiliation of the three unions with the same federation transforms
them into one union because the three unions would now be governed by the
constitution and by-laws of the federation.
ISSUE: Is the contention valid?
HELD: NO. The three unions remained a basic unit free to serve the common
interest of all its members. The inclusion of the name FFW after the name of the
local unions does not mean that the local unions cannot stand on their own.
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Report of Affiliation:
- The affiliation of an independently registered labor union with a
federation or national union shall be reported to the Regional Office of
the DOLE that issued its certificate of registration.
- The Report of Affiliation shall be accompanied by the following
documents:
(a) Resolution of the labor union’s board of directors
approving the affiliation;
(b) Minutes of the general membership meeting approving the
affiliation;
(c) Total numbers of members comprising the labor union and
the names of members who approved the affiliation;
(d) Certificate of affiliation issued by the federation in favour
the independently registered labor union; and
(e) Written notice to the employer concerned if the affiliating
union is the incumbent bargaining agent.
Disaffiliation:
- A local union has the right to disaffiliate from its mother federation.
- The right of a local union to disaffiliate from the mother federation is
primarily dependent upon the constitution and by-laws of the federation.
- Proper time for Disaffiliation:
o Generally, during the 60-day freedom period immediately
preceding the expiration of the CBA.
o Exceptionally, disaffiliation may be carried out before the onset
of the freedom period, if there is a substantial shift of
allegiance on the part of the majority of the members of the
union.
- Effect of Disaffiliation:
o On the Relationship Between the Local Union and the
Federation – Disaffiliation severs the relationship between the
local union and the mother federation. It divests the federation
of any and all power to act in representation of the local union.
o On the Collective Bargaining Agreement – Disaffiliation does
not disturb the enforceability and administration of the CBA
executed by and between an employer and the federation. The
reason is because the local union continues to represent the
employees notwithstanding the disaffiliation.

o On the Legal Personality of the Local Union – An independent
union that disaffiliates from its mother federation does not lose
its legal personality because it has its own registration. A
chartered local that disaffiliates from its mother federation
loses its legal personality because it has no registration of its
own.
Art. 238. Cancellation of Registration – The certificate of registration of any
labor organization, whether national or local, may be cancelled by the
Bureau if it has reason to believe, after due hearing, that the said labor
organization no longer meets one or more of the requirements herein
prescribed.
COMMENT:
Administrative Cancellation of Registration:
- The certificate of registration of a labor organization may be cancelled
administratively for failure to submit to the Regional Office of the DOLE
or the BLR which issued its certificate or registration or certificate of
creation of chartered local the following documents:
(a) Any amendment to its constitution and by-laws and the
minutes of adoption or ratification of such amendments;
(b) Annual financial reports;
(c) Updated list of newly-elected officers, together with the
appointive officers or agents who are entrusted with the
handling of funds;
(d) Updated list of individual members;
(e) Updated list of its chartered locals and affiliates or
member organizations, CBAs executed and their effectivity
period, including an updated list of authorized
representatives, agents or signatories in different regions
of the country, in case of federations or national unions.
- No certificate of registration shall be administratively cancelled due to
non-compliance with the reportorial requirements unless:
(a) Non-compliance is for a continuous period of five (5)
years;
(b) The procedural rules were complied with; and
(c) The labor organization concerned has not responded to
any of the notices sent or the notices were returned
unclaimed.
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Art. 239. Grounds for cancellation of union registration. – The following shall
constitute grounds for cancellation of union registration:
a. Misrepresentation, false statement or fraud in connection with the
adoption or ratification of the constitution and by-laws or
amendments thereto, the minutes of ratification and the list of
members who took part in the ratification;
b. Failure to submit the documents mentioned in the preceding
paragraph within thirty (30) days from adoption or ratification of
the constitution and by-laws or amendments thereto;
c. Misrepresentation, false statements or fraud in connection with the
election of officers, minutes of the election of officers, the list of
voters, or failure to submit these documents together with the list
of the newly elected/appointed officers and their postal addresses
within thirty (30) days from election;
d. Failure to submit the annual financial report to the Bureau within
thirty (30) days after the closing of every fiscal year and
misrepresentation, false entries or fraud in the preparation of the
financial report itself;
e. Acting as a labor contractor or engaging in the "cabo" system, or
otherwise engaging in any activity prohibited by law;
f. Entering into collective bargaining agreements which provide
terms and conditions of employment below minimum standards
established by law;
g. Asking for or accepting attorney’s fees or negotiation fees from
employers;
h. Other than for mandatory activities under this Code, checking off
special assessments or any other fees without duly signed
individual written authorizations of the members;
i. Failure to submit list of individual members to the Bureau once a
year or whenever required by the Bureau; and
j. Failure to comply with requirements under Articles 237 and 238.

Grounds for Cancellation of Union Registration
1.1 Fraudulent Acts
May be cancelled on the ground of MISREPRESENTATION, FALSE
STATEMENT or FRAUD in connection with:
a. Adoption or ratification of the constitution and by-laws or
amendments thereto, the minutes of ratification and the list of
members who took part in the ratification
b. Election of officers, minutes of the election of officers, the list of
voters; and
c. Preparation of the financial report itself.
1.2 Unlawful Acts
a. Acting as a labor contractor or engaging in the "cabo" system
b. Entering into collective bargaining agreements which provide terms
and conditions of employment below minimum standards
established by law;
c. Asking for or accepting attorney’s fees or negotiation fees from
employers;
d. Checking off special assessments or other fees without individual
written check- off authorization, except for mandatory activities
under the Labor Code;
e. Violation of Article 241 of the Labor Code regarding rights and
conditions of membership in a labor organization.
1.3 Non- compliance with Certain Requirements
a. Failure to submit its constitution and by-laws or amendments
thereto, the minutes of ratification and the list of members who took
part in the ratification within thirty (30) days from adoption or
ratification.
b. Failure to submit the list of the newly elected/appointed officers and
their postal addresses within thirty (30) days from election;
c. Failure to submit the annual financial report to the Bureau within
thirty (30) days after the closing of every fiscal year.
d. Failure to submit list of individual members to the Bureau once a
year or whenever required by the Bureau.
e. Failure to comply with requirements under Articles 234 and 237.
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2. Cancellation Procedure
General Rule: The registration of a labor organization can only be
questioned DIRECTLY through a petition for cancellation of registration.
COLLATERAL ATTACK is not allowed.
EXCEPTION: Administrative cancellation is proper.
2.1 The Proper Party
GENERAL RULE: Any party-in-interest.
EXCEPTION: If the ground for cancellation is based on a violation of Article
241 of the LC, only members of the labor organization or workers’
association concerned can file the petition for cancellation.
2.2 Form of Petition
The complaint or petition shall be in WRITING, VERIFIED UNDER OATH
and shall contain the following:
(a) name, address and other personal circumstances of the
complainant(s) or petitioner(s);
(b) name, address and other personal circumstances of the
respondent(s) or person(s) charged;
(c) nature of the complaint or petition;
(d) facts and circumstances surrounding the complaint or petition;
(e) cause(s) of action or specific violation(s) committed;
(f) a statement that the administrative remedies provided for in the
constitution and by-laws have been exhausted or such remedies
are not readily available to the complainant(s) or petitioner(s)
through no
(g) fault of his/her/their own, or compliance with such administrative
remedies does not apply to complainant(s) or petitioner(s);
(h) relief(s) prayed for;
(i) certificate of non-forum shopping; and
(j) other relevant matters.
2.3 VENUE
INDEPENDENT UNION, CHARTERED LOCAL, or WORKERS’
ASSOCIATION: Regional Office of DOLE that issued its certificate of creation or
chartered local.
NATIONAL UNION, INDUSTRY UNION, TRADE UNION CENTERS: Bureau of
Labor Relations.

2.4 Appeal
Appealable within TEN (10) days from receipt to the following agencies:
a. BUREAU OF LABOR RELATIONS: if the case was decided by the
REGIONAL DIRECTOR of DOLE.
b. SECRETARY OF LABOR AND EMPLOYMENT: if the case was
decided by the BUREAU OF LABOR RELATIONS in the exercise
of its ORIGINAL JURISDICTION.
2.4 Finality of Decision Rendered on Appeal
 Decisions of Sec of Labor and Employment are FINAL and
EXECUTORY
 Decisions of BLR in the exercise of its appellate jurisdiction are
FINAL and EXECUTORY (Not appealable to the Sec of Labor and
Employment)
CASE: Abbott Laboratories vs. ALEU (323 SCRA 392)
FACTS: ALEU applied for union registration, the application was approved.
Abbott Laboratories filed for its cancellation of ALEU on the ground that the
application was not signed by atleast 20% of the rank-and-file employees.
The Regional Director of DOLE ordered the cancellation of the registration.
ALEU appealed to the BLR, rendered a decision reversing the order of the
Regional Director. Abbot appealed the decision to Secretary of Labor and
Employment, refused due to lack of jurisdiction.
ISSUE: Whether Sec of Labor and Employment has jurisdiction?
Held: No. the appellate jurisdiction of the Sec of labor and Employment is
limited only to a review of cancellation proceedings decided by BLR in the
exercise of its EXLUSIVE and ORIGINAL Jurisdiction.
3. Effect of Cancellation Proceedings
 During pendency the labor organization continues to enjoy all rights
accorded to a legitimate labor organization.
o Can still file for certification
 Certificate of election proceedings be suspended
until the issue have been resolved. (failure:
Grave abuse of Discretion)
 FINAL ORDER of CANCELLATION: strip a legitimate labor
organization of its rights.
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Art. 240. Equity of the incumbent. – All existing federations and national
unions which meet the qualifications of a legitimate labor organization
and none of the grounds for cancellation shall continue to maintain
their existing affiliates regardless of the nature of the industry and the
location of the affiliates.
1. The Import of the Law
 Proclaims the right of federation or national union.
 It does not in any way prohibit the disaffiliation of a local union from
a federation or national union.
CHAPTER II
RIGHTS AND CONDITIONS OF MEMBERSHIP
Art. 241. Rights and conditions of membership in a labor organization. – The
following are the rights and conditions of membership in a labor
organization:
a. No arbitrary or excessive initiation fees shall be required of the
members of a legitimate labor organization nor shall arbitrary,
excessive or oppressive fine and forfeiture be imposed;
b. The members shall be entitled to full and detailed reports from
their officers and representatives of all financial transactions as
provided for in the constitution and by-laws of the organization;
c. The members shall directly elect their officers, including those of
the national union or federation, to which they or their union is
affiliated, by secret ballot at intervals of five (5) years. No
qualification requirements for candidacy to any position shall be
imposed other than membership in good standing in subject labor
organization. The secretary or any other responsible union officer
shall furnish the Secretary of Labor and Employment with a list of
the newly-elected officers, together with the appointive officers or
agents who are entrusted with the handling of funds, within thirty
(30) calendar days after the election of officers or from the
occurrence of any change in the list of officers of the labor
organization; (As amended by Section 16, Republic Act No. 6715,
March 21, 1989)

d. The members shall determine by secret ballot, after due
deliberation, any question of major policy affecting the entire
membership of the organization, unless the nature of the
organization or force majeure renders such secret ballot
impractical, in which case, the board of directors of the
organization may make the decision in behalf of the general
membership;
e. No labor organization shall knowingly admit as members or
continue in membership any individual who belongs to a
subversive organization or who is engaged directly or indirectly in
any subversive activity;
f. No person who has been convicted of a crime involving moral
turpitude shall be eligible for election as a union officer or for
appointment to any position in the union;
g. No officer, agent or member of a labor organization shall collect
any fees, dues, or other contributions in its behalf or make any
disbursement of its money or funds unless he is duly authorized
pursuant to its constitution and by-laws;
h. Every payment of fees, dues or other contributions by a member
shall be evidenced by a receipt signed by the officer or agent
making the collection and entered into the record of the
organization to be kept and maintained for the purpose;
i. The funds of the organization shall not be applied for any purpose
or object other than those expressly provided by its constitution
and by-laws or those expressly authorized by written resolution
adopted by the majority of the members at a general meeting duly
called for the purpose;
j. Every income or revenue of the organization shall be evidenced by
a record showing its source, and every expenditure of its funds
shall be evidenced by a receipt from the person to whom the
payment is made, which shall state the date, place and purpose of
such payment. Such record or receipt shall form part of the
financial records of the organization.
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Any action involving the funds of the organization shall prescribe
after three (3) years from the date of submission of the annual
financial report to the Department of Labor and Employment or
from the date the same should have been submitted as required by
law, whichever comes earlier: Provided, That this provision shall
apply only to a legitimate labor organization which has submitted
the financial report requirements under this Code: Provided,
further, that failure of any labor organization to comply with the
periodic financial reports required by law and such rules and
regulations promulgated thereunder six (6) months after the
effectivity of this Act shall automatically result in the cancellation
of union registration of such labor organization; (As amended by
Section 16, Republic Act No. 6715, March 21, 1989)
k. The officers of any labor organization shall not be paid any
compensation other than the salaries and expenses due to their
positions as specifically provided for in its constitution and by-
laws, or in a written resolution duly authorized by a majority of all
the members at a general membership meeting duly called for the
purpose. The minutes of the meeting and the list of participants
and ballots cast shall be subject to inspection by the Secretary of
Labor or his duly authorized representatives. Any irregularities in
the approval of the resolutions shall be a ground for impeachment
or expulsion from the organization;
l. The treasurer of any labor organization and every officer thereof
who is responsible for the account of such organization or for the
collection, management, disbursement, custody or control of the
funds, moneys and other properties of the organization, shall
render to the organization and to its members a true and correct
account of all moneys received and paid by him since he assumed
office or since the last day on which he rendered such account,
and of all bonds, securities and other properties of the
organization entrusted to his custody or under his control. The
rendering of such account shall be made:

1. At least once a year within thirty (30) days after the close
of its fiscal year;
2. At such other times as may be required by a resolution of
the majority of the members of the organization; and
3. Upon vacating his office.
The account shall be duly audited and verified by affidavit and a
copy thereof shall be furnished the Secretary of Labor.
m. The books of accounts and other records of the financial activities
of any labor organization shall be open to inspection by any officer
or member thereof during office hours;
n. No special assessment or other extraordinary fees may be levied
upon the members of a labor organization unless authorized by a
written resolution of a majority of all the members in a general
membership meeting duly called for the purpose. The secretary of
the organization shall record the minutes of the meeting including
the list of all members present, the votes cast, the purpose of the
special assessment or fees and the recipient of such assessment
or fees. The record shall be attested to by the president.
o. Other than for mandatory activities under the Code, no special
assessments, attorney’s fees, negotiation fees or any other
extraordinary fees may be checked off from any amount due to an
employee without an individual written authorization duly signed
by the employee. The authorization should specifically state the
amount, purpose and beneficiary of the deduction; and
p. It shall be the duty of any labor organization and its officers to
inform its members on the provisions of its constitution and by-
laws, collective bargaining agreement, the prevailing labor
relations system and all their rights and obligations under existing
labor laws.
For this purpose, registered labor organizations may assess reasonable
dues to finance labor relations seminars and other labor education
activities.
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Any violation of the above rights and conditions of membership shall be a
ground for cancellation of union registration or expulsion of officers from
office, whichever is appropriate. At least thirty percent (30%) of the
members of a union or any member or members specially concerned may
report such violation to the Bureau. The Bureau shall have the power to
hear and decide any reported violation to mete the appropriate penalty.
Criminal and civil liabilities arising from violations of above rights and
conditions of membership shall continue to be under the jurisdiction of
ordinary courts.
1. Rights of Union Members
1.1 RIGHT TO RESIGN FROM THE UNION
 Any member may leave and cancel his union membership at
ANYTIME.
 This right may be restricted by a CLOSED-SHOP agreement,
the employee concerned must keep his union membership
until the freedom period.
1.2 RIGHT TO FAIR DEALING
 The relationship between the union and the union member is
fiduciary in nature and arises out of (2) Two factors:
1. The degree of dependence of the individual employee on
the labor organization;
2. the comprehensive power vested in the union with respect
to the individual.
Heirs of Teodulo Cruz vs. CIR (30 SCRA 917)
FACTS: The UNION inbehalf of its members file a complaint against SRM.
CIR rendered a decision ordering SRM to pay the union member the amount
of P423, 756. 74. During the execution stage, SRM negotiated with the
Union for the settlement of the case in the amount of P110,000.00 the union
president and BOD of the union accepted to offer despite 49 members and 1
board member objected to the settlement. The CIR approved the settlement.
HELD: the union leadership was recreant in its duty towards the union
members in failing to disclose to the union member the full situation of their
judgment credit against SRM.

1.3 RIGHT TO INFORMATION
 The union is considered agent of its members, it is under obligation
to give the members as its principal, all information relevant to
union and labor matters.
o Information regarding the provisions of the constitution
and by-laws of the union,
o Collective bargaining agreement
o The prevailing labor relations system
o All rights and obligation under existing laws
o Full and detailed reports of all financial transactions
o Books of accounts and other financial records shall be
open to inspection during office hours.
1.4 RIGHT TO DETERMINE MAJOR UNION POLICIES
GENERAL RULE:
Union members have the right to determine by SECRET BALLOT, any
question of MAJOR POLICY affecting the entire membership
EXCEPTIONS: the nature of the organization or force majure renders
such secret balloting impractical.
The BOD of the organization may make the decision in behalf of the
general membership.
1.5 RIGHT TO ELECT UNION OFFICERS
o Including national union or federation which their union is affiliated.
1.6 RIGHT TO SEEK INVESTIGATION OF IRREGULARITIES
o Union member who invokes his right cannot be considered to have
committed misconduct, negligence or disloyalty, and therefore,
unlawful to expel such member from the union.
2. Conditions of Union Membership
2.1 Non- membership in subversive Organization
o No union shall knowingly admit as member or continue
membership any individual who is engaged directly or indirectly in
subversive activity.
2.2 No Arbitrary or Excessive Initiation Fees
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2.3 No levy of special assessment without written resolution
o UNLESS: authorized by a written resolution of a majority of all the
members at a general membership meeting duly called for the
purpose.
2.3.1 REQUISITES FOR VALID LEVY OF SPECIAL ASSESSMENT
a. Written resolution by the majority of all the union members;
b. Written resolution must be passed in a general membership
meeting duly called for the purpose;
c. The minutes of the meeting, including the list of all members
present, the votes cast, and the purpose of the special assessment
should be recorded by the secretary of the labor organization.
d. The record shall be attested to by the president of the labor
organization.
STRICT COMPLIANCE WITH THE REQUIREMENTS IS REQUIRED.
Failure will invalidate the special assessment. SUBSTANTIAL
COMPLIANCE will not suffice.
2.4 No Check-off without Individual Written Authorization
General rule: No Special assessment, Attorney’s fees or other
extraordinary fees may be checked off from any amount due to an
employee without an individual written authorization signed by the
employee.
Exception: MANDATORY ACTIVITIES
 Labor relation seminars
 Labor education activities
PURPOSE: to protect employees from unwarranted practices that
diminishes their compensation without their consent.
NOTE: Compulsory arbitration of collective bargaining deadlock is NOT a
mandatory activity. It is a judicial process of settling labor dispute.
PALACOL vs. FERRER- CALLEJA (182 SCRA 710)
Facts: As a result of new CBA, the president of the Union submitted to the
Company the ratification by the union members of the new CBA and
authorization for the Company to deduct union dues equivalent to P10.00
every payday or P20.00 every month and, in addition, 10% by way of special
assessment, from the CBA lump-sum pay granted to the union members.
The purpose of the special assessment sought to be levied is "to put up a

cooperative and credit union; purchase vehicles and other items needed for
the benefit of the officers and the general membership; and for the payment
for services rendered by union officers, consultants and others." There was
also an additional proviso stating that the "matter of allocation ... shall be at
the discretion of our incumbent Union President."
This "Authorization and CBA Ratification" was obtained by the Union through
a secret referendum held in separate local membership meetings on various
dates. The total membership of the Union was about 800. Of this number,
672 members originally authorized the 10% special assessment, while 173
opposed the same.
Subsequently however, one hundred seventy (170) members of the Union
submitted documents to the Company stating that although they have
ratified the new CBA, they are withdrawing or disauthorizing the deduction of
any amount from their CBA lump sum. Later, 185 other union members
submitted similar documents expressing the same intent. These members,
numbering 355 in all (170 + 185), added to the original oppositors of 173,
turned the tide in favor of disauthorization for the special assessment, with a
total of 528 objectors and a remainder of 272 supporters.
ISSUE: Can the special assessment be checked- off?
HELD: NO. the majority of the union members have withdrawn their
individual check-off authorization. The labor code requires written resolution
passed by all members at a general meeting duly called for that purpose.
The failure of the union to comply STRICTLY invalidates the questioned
special assessment.
GALVADORES vs. TRAJANO (144 SCRA 138)
FACTS: The Executive Board of the Union passed a resolution requesting
PLDT to deduct P115.00 per employee for the legal services extended to the
Union by respondent Counsel. No individual check off authorization was
presented. Respondents Union and Counsel argue that compulsory
arbitration is a "mandatory activity" and an exception to Article 242(o) of the
Labor Code, and that the Union members approved the questioned
deduction in the plebiscite of January, 1984.
ISSUE: Attorney’s fees may be Checked-off?
HELD: This is not the "mandatory activity" under the Code which dispenses
with individual written authorizations for check-offs, notwithstanding its
"compulsory" nature. It is a judicial process of settling disputes laid down by
law. Besides, Article 222(b) does not except a CBA, later placed under
compulsory arbitration, from the ambit of its prohibition. The cardinal
principle should be borne in mind that employees are protected by law from
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unwarranted practices that diminish their compensation without their
knowledge and consent.
2.4.2 Check-off during Pendency of Representation Case
 The right to check-off union dues and agency fess subsists during
the pendency of a petition for certification election or other intra-
union or inter-union disputes.
2.4.3 Withdrawal of Check-off Authorization
 Need not be done separately or individually.
 Upon withdrawal of authorization the obligation to check-off ceases.
2.4.4. Check-off Authorization not Required for Agency Fees
 Check-off for agency fees does not apply to non-union members for
having accepted the benefits provided for in the CBA.
 Violation will be tantamount to ULP.
1. Union Officers
3.1 Qualifications of Union Officers
a. He must be an employee of the company where the union
operates.
b. He must be a member in good standing in the subject labor
organization.
c. He has not been convicted of a crime involving moral turpitude, or if
convicted, he has been granted absolute pardon.
LARAP LABOR UNION vs. VICTORIANO
97 PHIL 435
FACTS: PV ran as a candidate for president, however, was contested
on the ground that he was not an employee of Philippine Iron Mines.
Nevertheless, PV and his partisans still held a rump election which
resulted in his asserted majority votes
ISSUE: Is the election of PV valid?
HELD: NO. He was not an employee of Philippine Iron Mines. Neither
he was a member of the Union.
FLORA vs. OXIMANA
10 SCRA 212
FACTS: X was the president of Benguet-Balatoc Workers Union. It was
later discovered that X was previously convicted of the crime abusos

dishonestos. When the case was called for a hearing, the president of
the Philippines granted X full, absolute and plenary pardon for the crime
he committed.
ISSUE: is X qualified to hold position of Union president?
HELD: YES. X had already been granted an absolute pardon by the
president of the Philippines.
3.2 Election of Union Officers
 The members shall directly elect their officers including the
officers of national union or federation to which the union is
affiliated by SECRET BALLOT at intervals of FIVE (5) Years.
 Only union members are qualified to vote.
 Submission of employees’ names with the BLR as qualified
members of the union is not condition sine qua non to enable
to vote in the election.
 The question of elegibility to vote may be determined through
use of the applicable payroll period and employment status
during the applicable payroll period
o The payroll of the month preceeding the labor dispute
in case of regular employees.
o Payroll period at or near the peak operations in case
of employees in seasonal employees.
GUIDELINES:
In absence of any agreement in the constitution and by-laws:
(a) within sixty (60) days before the expiration of the term of the
incumbent officers, the president of the labor organization shall
constitute a committee on election to be composed of at least three
(3) members who are not running for any position in the election,
provided that if there are identifiable parties within the labor
organization, each party shall have equal representation in the
committee;
(b) upon constitution, the members shall elect the chairman of the
committee from among themselves, and case of disagreement, the
president shall designate the chairman;
(c) within ten (10) days from its constitution, the committee shall,
among others, exercise the following powers and duties:
1) set the date, time and venue of the election;
2) prescribe the rules on the qualification and eligibility of
candidates and voters;
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3) prepare and post the voters' list and the list of qualified
candidates;
4) accredit the authorized representatives of the
contending parties;
5) supervise the actual conduct of the election and
canvass the votes to ensure the sanctity of the ballot;
6) keep minutes of the proceedings;
7) be the final arbiter of all election protests;
8) proclaim the winners; and
9) prescribe such other rules as may facilitate the orderly
conduct of election.
3.3 Remedy if Officers do not Call for Election of New officers
 The said election can be called or conducted and the intervention of
DOLE is necessary.
 At least 30% of the members of the labor organization may file a
petition for the conduct of election.
 The petition shall be filed with the Regional Office of the DOLE that
issued its certificate of registration or certificate of creation of
chartered local.
 In case of Federation, national or industry unions and trade centers,
the petition shall be filed with the BLR.
3.4 Election Protest
 The five day period for filing a protest in a certification election
does not apply to a protest in an election of union officers.
 Election code is not applicable
 It must be filed in the regional office of DOLE where the union
is domiciled.
o Filing of protest is not invalidated when it was filed
with the office of Sec of Labor and Employment, It has
the inherent power to entertains petitions filed directly
with his office.
o In case a winning candidate is disqualified, the
candidate who obtained the second highest number
of votes should not be declared as the winner.

3.5 Election Attended by Irregularities is Invalid
Rodriguez vs. BLR
 The SC invalidated the election because of the following
irregularities:
o Conducted without prior notice to all voting members
o Held on dates different from those stated in the notice;
o Conducted in defiance of the TRO that was issued by the
Med-Arbiter;
o Conducted without any ground rules or guidelines
UST Faculty Union vs. Bitonio
The SC upheld the nullity of the election union officers:
 Notice of election was not done in a meeting duly called for the
purpose.
 No committee on elections to oversee the election,
 It was not done in secret ballot
3.6 Compensation of Union Officers
 GENERAL RULE: Shall not be paid any compensation
 EXCEPTION: Salaries and expenses due to their positions as
specifically provided for in its constitution and by-laws, or in written
resolution duly authorized by the majority of all the members in a
general membership meeting duly called for the purpose.
3.7 Expulsion/ impeachment of Union Officers
GROUNDS:
a. violation of the above rights and conditions of membership in a
labor organization as set forth in ART 241 of the LC.
b. Commission of irregularities in the approval of the resolution
regarding compensation of union officers.
c. Membership in another labor organization.
d. Culpable violation of the constitution and by-laws of the union.
 THE BLR has the power to expel or remove union officer from
office.
 If DOLE is confronted with a petition for expulsion or impeachment
of union officers, it should decide the case on its merits.
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DUYAG vs. INCIONG
98 SCRA 522
FACTS: A complaint for expulsion was filed against the union president,
treasurer and auditor. The Med- Arbiter ordered the expulsion of the
said union officers, but on appeal the director of BLR reversed the Med-
Arbiter’s decision.
ISSUE: Whether the BLR has power to expel union officers?
HELD: The BLR has the power to expel from the union any officer found
guilty of violating any rights and conditions of membership specified in
ART 242 of LC.
2. Union Funds
 No agent, officer, member may collect fees unless he is duly
authorized under the constitution and by-laws.
 Shall not be applied for any purpose or object other than those
expressly provided by its constitution and by-laws, or in written
resolution duly authorized by the majority of all the members in a
general membership meeting duly called for the purpose.
 Everything must be evidenced by a receipt signed by the officer or
agent making the collection and entered into the record.
 Every income or revenue shall be evidenced by a record showing
its source
 Every expenditure shall be evidenced by receipt from the person to
whom payment is made which shall state the place and purpose of
such payment.
4.1 Accounting of Union Funds
 The treasurer is obliged to render correct account of all money
received and paid by since he assumed office.
 Account shall be duly audited and verified by affidavit and copy
thereof shall be furnished the Sec of Labor and Employment.
 The rendering of account shall be made:
a. Atleast once a year within 30 days after the close of its fiscal
year.
b. At such other times as may be required by a written resolution
of the majority of the members
c. Upon vacating his office.

4.2 Request for Examination of Books of Accounts
 Request shall not be treated as an intra-union dispute, in the
absence of allegation that a violation of Art 241 of the LC has been
committed.
 The appointment of an audit examiner is not appealable.
 May be filed with the following agencies by any union member with
the written consent of atleast 20% of the total members;
a. BLR: if involed is a federation, national union or trade union center.
b. Regional Office of DOLE that issued its certificate of registration or
certificate of creation of chartered local: involved is an independent
union or chartered local.
4.3 Action for Accounting/ Audit of Union Funds
 Petitions for accounting/ audit of union finds arising from
mishandling, misappropriation or non- accounting shall be resolved
by the Med- Arbiter.
 Petition shall be supported by the written consent of at least 30% of
the total union membership. However not mandatory.
o Rodriguez vs. BLR
 The use of the permissive “may” in the provision
at once negates the notion that the assent of
30% is mandatory.
 The report may be made alternatively by “any
member or members specially concerned.
 The assent of 30% is not a factor in the
acquisition of jurisdiction by the BLR is furnished
by Art 242 of LC
4.4 Appeal
 Decision granting the petition for audit is INTERLUCUTORY, hence
NOT appealable.
 Decision denying or dismissing the petition for audit/accounting of
union funds may be appealed within 10 Days to the:
a. BLR: if decision was rendered by the Regional Director of DOLE
b. Sec of Labor and Employment: if the decision was rendered by
BLR in the exercise of its original jurisdiction.
4.5 Prescription of Action
 Prescribes after 3 years from the date of submission of the
annual financial report to the DOLE or from the date the
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same should have been submitted as required by law,
whichever comes earlier.
Chapter III
RIGHTS OF LEGITIMATE LABOR ORGANIZATIONS
Art. 242. Rights of legitimate labor organizations. – A legitimate labor
organization shall have the right:
To act as the representative of its members for the purpose of
collective bargaining;
To be certified as the exclusive representative of all the employees in
an appropriate bargaining unit for purposes of collective bargaining;
To be furnished by the employer, upon written request, with its annual
audited financial statements, including the balance sheet and the profit
and loss statement, within thirty (30) calendar days from the date of
receipt of the request, after the union has been duly recognized by the
employer or certified as the sole and exclusive bargaining
representative of the employees in the bargaining unit, or within sixty
(60) calendar days before the expiration of the existing collective
bargaining agreement, or during the collective bargaining negotiation;
To own property, real or personal, for the use and benefit of the labor
organization and its members;
To sue and be sued in its registered name; and
To undertake all other activities designed to benefit the organization
and its members, including cooperative, housing, welfare and other
projects not contrary to law.
Notwithstanding any provision of a general or special law to the
contrary, the income and the properties of legitimate labor
organizations, including grants, endowments, gifts, donations and
contributions they may receive from fraternal and similar
organizations, local or foreign, which are actually, directly and
exclusively used for their lawful purposes, shall be free from taxes,
duties and other assessments. The exemptions provided herein may
be withdrawn only by a special law expressly repealing this provision.

1. The Right to Act as Collective Bargaining Representative
 Only legitimate labor organization can represent
employees in collective bargaining.
 U.E. Automotive Employees v. Noriel
- In the absence of any fatal defect to the application for
registration, there is no justification for withholding
petitioner to exercise fully its right ti freedom of
association.
2. The Right to Request for Audited Financial Statements
 The right is only available to legitimate labor organizations which
have been recognized or certified as the sole and exclusive
collective bargaining agent of the employees.
o After it has been accorded recognition by the employer or
after it has been certified as collective bargaining
representatives
o During freedom period.
o During collective bargaining negotiations.
3. The Right to Sue and Be Sued
 Cannot file in behalf of non- union member even if the non-
members signed the complaint.
 Should be brought in its own registered name.
 The union members whose benefit the action has been filed need
not joined as party.
 National Brewery and Allied Industries labor Union vs. San Miguel
Brewery.
o The union may sue thereon without joining the members
whose benefit the action has been presented.
 Where Collective bargaining process is not involved and what is at
stake are back wages already earned by the individual workers, the
real party in interest are the individual workers themselves, Union
cannot file complaint in behalf of them.
 Legal Capacity of labor union cannot be raised for the first time on
appeal. (University of pangasinan faculty union vs. University of
Pangasinan)
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4.The Right to tax Exemption
 Properties actually, directly and exclusively used for their lawful
purposes shall be free from taxes, duties and other
assessments.
Title V
COVERAGE
Art. 243. Coverage and employees’ right to self-organization. – All persons
employed in commercial, industrial and agricultural enterprises and in
religious, charitable, medical, or educational institutions, whether
operating for profit or not, shall have the right to self-organization and to
form, join, or assist labor organizations of their own choosing for purposes
of collective bargaining. Ambulant, intermittent and itinerant workers, self-
employed people, rural workers and those without any definite employers
may form labor organizations for their mutual aid and protection.
COMMENT:
1. Implications of the Right to Self- Organization
The right to self-organization carries with it the right to:
a. choose which union he would join
b. cancel his union membership anytime
c. abstain from joining a union
 B and C are not absolute, Closed Shop arrangement
Victorias Miling vs. Victorias- Manapla Workers’ Organization
9 SCRA 154
FACTS: Victorias Miling co and the free Visayan Workers’ union entered into
a CBA with a closed- shop arrangement. During the effectivity 10 employees
resigned from Free Visayan and joined another union. The company
dismissed the 10 employees?
ISSUE: Whether the dismissal valid?
HELD: YES because it was made in pursuance of the closed- shop situation
in CBA.
2. Basic Types of Organizations
a. Labor Organization

 Labor Union created for the purpose of collective bargaining or
dealing with employers concerning terms and conditions of
employment.
b. Workers’ association
 For the purpose of mutual aid and protection of its members or
for any other legitimate purpose other than collective
bargaining.
3. Kinds of Labor Union
a. NATIONAL UNION or FEDERATION- is a mother labor
organization with atleast 10 locals/chapters or affiliates.
b. LOCAL UNION- operating at the enterprise level.
c. CHARTERED LOCAL-labor organization without an
independent registration whose legal personality is derived
from its mother union or federation upon issuance of a
certificate of creation of chartered local.
d. AFFLIATE- independent registered union attached to a
national union or federation.
e. INDEPENDENT UNION- operating at the enterprise level
that acquired legal personality through independent
registration and is not affiliated with a national union or
federation.
f. INDUSTRIAL UNION- composed of workers in a particular
industry.
g. CRAFT UNION- composed of workers engaged in
aparticular trade or occupation of a kind that requires skill
and training.
h. COMPANY- TYPE UNION- composed of employees in the
same company.
i. COMPANY UNION- the formation, function or
administration of which has been assisted by any act
defined as ULP.
4. Eligibility of Membership in a Labor Organization
4.1 Essential Element
 Available only to persons who enjoy employee status.
 The existence of employer- employee relationship is a
condition sine qua non for the exercise of the constitutional
rights to join or form labor organization. ( La Suerte Cigar and
Cigarette Factory vs. Dir of BLR)
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4.2 employees Eligible for Membership in a Labor Organization
 Only RANK-AND-FILE and SUPERVISORY employees in
commercial, industrial and agricultural enterprise
 Religious, charitable, medical or educational institutions whether
operating for profit or not
 Security Guards may also form or join a labor union.
 Alien employees with valid working permits may also join or assist
labor unions if they are nationals of a country which grants the
same or similar rights to Filipino workers certified by DFA.
4.3 When an Employee Qualifies for Union Membership
 On the first day of his employment.
5. Eligibility for Membership in a Workers’ Association
 All employees, including ambulant, intermittent, self- employed,
rural workers.
 Managerial employees, but not for collective bargaining purposes.
6. Freedom of Religion and the Right to self- organization
 Freedom of Religion superior to contract rights.
Art. 244. Right of employees in the public service. – Employees of
government corporations established under the Corporation Code
shall have the right to organize and to bargain collectively with their
respective employers. All other employees in the civil service shall
have the right to form associations for purposes not contrary to law.
COMMENT:
Employees in the Public Service
A. employees of branches, subdivisions, instrumentalities and
agencies of the Government
B. employees of government-owned or controlled corporations with
original charters
C. employees of government and controlled corporation established
under corporation law.
1.1 Government Employees
 Cannot form or join labor organization, but they can form
or join an employees’ organization.

 High- level employees cannot join the organization of
rank-and-file government employees, they must form their
own association.
 Not available to members of Armed Forces of the
Philippines, policemen, firemen, and jail guards.
 They are not accorded the right to strike and the right to
bargain collectively. Reason: the terms and conditions of
employment are governed by law, only congress can
modify.
1.2 employees of government-owned or controlled corporations with
original charters
 Accorded the right to self-organization.
 They cannot form labor organization
 They cannot strike nor can they bargain collectively.
1.3 Employees of government and controlled corporation established
under corporation law
 Same rights and obligation as employees of private establishments.
 They can form or join labor organization
 Stage strike and bargain collectively.
 Governed by labor code.
EXECUTIVE ORDER NO. 180 June 1, 1987
PROVIDING GUIDELINES FOR THE EXERCISE OF THE RIGHT TO
ORGANIZE OF GOVERNMENT EMPLOYEES, CREATING A PUBLIC
SECTOR LABOR-MANAGEMENT COUNCIL, AND FOR OTHER PURPOSES
In accordance with the provisions of the 1987 Constitution, I, CORAZON C.
AQUINO, President of the Philippines, do hereby order:
I. Coverage
Sec. 1. This Executive Order applies to all employees of all branches,
subdivisions, instrumentalities, and agencies, of the Government, including
government-owned or controlled corporations with original charters. For this
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purpose, employees, covered by this Executive Order shall be referred to as
"government employees".
Sec. 2. All government employees can form, join or assist employees'
organizations of their own choosing for the furtherance and protection of their
interests. They can also form, in conjunction with appropriate government
authorities, labor-management committees, works councils and other forms of
workers' participation schemes to achieve the same objectives.
Sec. 3. High-level employees whose functions are normally considered as policy-
making or managerial or whose duties are of a highly confidential nature shall not
be eligible to join the organization of rank-and-file government employees.
Sec. 4. The Executive Order shall not apply to the members of the Armed Forces
of the Philippines, including police officers, policemen, firemen and jail guards.
II. Protection of the Right to Organize
Sec. 5. Government employees shall not be discriminated against in respect of
their employment by reason of their membership in employees' organizations or
participation in the normal activities of their organization. Their employment shall
not be subject to the condition that they shall not join or shall relinquish their
membership in the employees' organizations.
Sec. 6. Government authorities shall not interfere in the establishment,
functioning or administration of government employees' organizations through
acts designed to place such organizations under the control of government
authority.
III. Registration of Employees' Organization
Sec. 7. Government employees' organizations shall register with the Civil Service
Commission and the Department of Labor and Employment. The application
shall be filed with the Bureau of Labor Relations of the Department which shall
process the same in accordance with the provisions of the Labor Code of the
Philippines, as amended. Applications may also be filed with the Regional Offices
of the Department of Labor and Employment which shall immediately transmit
the said applications to the Bureau of Labor Relations within three (3) days from
receipt thereof.

Sec. 8. Upon approval of the application, a registration certificate be issued to the
organization recognizing it as a legitimate employees' organization with the right
to represent its members and undertake activities to further and defend its
interest. The corresponding certificates of registration shall be jointly approved by
the Chairman of the Civil Service Commission and Secretary of Labor and
Employment.
IV. Sole and Exclusive Employees' Representatives
Sec. 9. The appropriate organizational unit shall be the employers unit consisting
of rank-and-file employees unless circumstances otherwise require.
Sec. 10. The duly registered employees' organization having the support of the
majority of the employees in the appropriate organizational unit shall be
designated as the sole and exclusive representative of the employees.
Sec. 11. A duly registered employees' organization shall be accorded voluntary
recognition upon a showing that no other employees' organization is registered or
is seeking registration, based on records of the Bureau of Labor Relations, and
that the said organizations has the majority support of the rank-and-file
employees in the organizational unit.
Sec. 12. Where there are two or more duly registered employees' organizations
in the appropriate organizational unit, the Bureau of Labor Relations shall, upon
petition, order the conduct of a certification election and shall certify the winner
as the exclusive representative of the rank-and-file employees in said
organization unit.
D. Terms and Conditions of Employment in Government Services
Sec. 13. Terms and conditions of employment or improvements thereof, except
those that are fixed by law, may be the subject of negotiations between duly
recognized employees' organizations and appropriate government authorities.
VI. Peaceful Concerted Activities and Strikes
Sec. 14. The Civil Service laws and rules governing concerted activities and
strikes in the government service shall be observed, subject to any legislation
that may be enacted by Congress.
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VII. Public Sector Labor-Management Council
Sec. 15. A Public Sector Labor Management Council, hereinafter referred to as
the Council, is hereby constituted to be composed of the following:
1) Chairman, Civil Service Commission Chairman
2) Secretary, Department of Labor and Employment Vice Chairman
3) Secretary, Department of Finance Member
4) Secretary, Department of Justice Member
5) Secretary, Department of Budget and Management Member
The Council shall implement and administer the provisions of this Executive
Order. For this purpose, the Council shall promulgate the necessary rules and
regulations to implement this Executive Order.
VIII. Settlement of Disputes
Sec. 16. The Civil Service and labor laws and procedures, whenever applicable,
shall be followed in the resolution of complaints, grievances and cases involving
government employees. In case any dispute remains unresolved after exhausting
all the available remedies under existing laws and procedures, the parties may
jointly refer the dispute to the Council, for appropriate action.
IX. Effectivity
Sec. 17. This Executive Order shall take effect immediately.
Done in the City of Manila, this 1st day of June, in the year of Our Lord, nineteen
hundred and eighty-seven.
Art. 245. Ineligibility of managerial employees to join any labor organization;
right of supervisory employees. – Managerial employees are not eligible
to join, assist or form any labor organization. Supervisory employees
shall not be eligible for membership in a labor organization of the rank-
and-file employees but may join, assist or form separate labor
organizations of their own.
 LABOR RELATIONS (Arts. 226-292, Labor Code of the Philippines) 27
Atty. Paulino Ungos

COMMENT: 4. Manages a customarily recognized department or subdivision of the

Managerial Employees establishment, customarily and regularly directing the work of other
 One who is vested with powers or prerogatives to lay down and employees therein
execute management policies and, or hire transfer, suspend, lay- 5. Has the authority to hire or discharge other employees or his
off, recall, discharge, assign or discipline employees. suggestions and recommendations as to hiring and discharging,
advancement and promotion or other change o status of other
1.1 Test of managerial status employees are given particular weight
6. As a rule, neither paid hourly wages nor subject to maximum hours of
Art. 245. Ineligibility of Managerial Employees to Join Any Labor Organization; work
Right of Supervisory Employees. – Managerial employees are not eligible to
join, assist or form any labor organization. Supervisory employees shall EXAMPLE OF MANAGERIAL POSITIONS
not be eligible for membership in a labor organization of the rank-and-file 1. Captain of a vessel
employees but may join, assist or form separate labor organizations of 2. Major patron, minor patron, chief mate and chief engineer of a vessel
their own. (As amended by Section 18, Republic Act No. 6715, March 21, 3. Department managers and assistant managers
1989) 4. Farm administrator
5. Route manager
COMMENT: 6. Accounting manager
MANAGERIAL EMPLOYEES 7. Personnel officer
 Those vested with powers prerogatives to lay down and execute
management policies and/or hire, transfer, suspend, lay-off, recall, RIGHTS OF MANAGERIAL EMPLOYEES TO SELF-ORGANIZATION
discharge, assign or discipline employees  Can form their own association for any legitimate purpose other than
collective bargaining
TEST OF MANAGERIAL STATUS o Cannot join, form or assist in the formation of a labor
 Nature of the employee’s functions organization
 The designation should be reconciled with the actual job description of o They have no collective bargaining rights
the employee, for it is the job description that determines the nature of o REASON: Conflict of interest brought about by the nature of
employment their position
 Whether the employee possesses authority to act in the interest of his
employer CONSTITUTIONALITY OF ARTICLE 245
 Whether such authority is not merely routinary or clerical in character  Not unconstitutional
but requires the use of independent judgment  It does not absolutely forbid managerial employees from exercising their
right of association
CHARACTERISTICS OF MANAGERIAL RANK o Only prohibits the right to join labor organizations
1. Not subject to the rigid observance of regular office hours
2. Work requires the consistent exercise of discretion and judgment in the SUPERVISORY EMPLOYEES
performance  Those who, in the interest of the employer, effectively recommend the
3. Output produced or the result accomplished cannot be standardized in laying down and execution of management policies and/or hiring,
relation to a given period of time transfer, suspension, lay-off, recall, discharge, assignment or discipline
of employees
o The power to recommend should be effective

Addie Celerian * Amor Venenoso * Draei Dumalanta * Ellan Cipriano * Ingrid Prado * Mary Ang * Rica Casiquin * Sam Santos

o The exercise of such authority should not be merely of a
routinary or clerical nature, but should require the use of
independent judgment
 Mere designation is not necessarily indicative of supervisory status
EXAMPLES OF SUPERVISORY POSITIONS
 An employee who exercises general supervision over a group of
executive assistants in performing a variety of research, performs,
administrative and technical duties, or is given the power to recommend
action on a variety of matters pertaining to the operation of the business
of the office and performs other duties as may be assigned to them by
the General Manager
 The mere fact that the employee also acts as liaison officer between the
Sweepstakes Office and those of Congress, the Civil Service
Commission and the Office of the President does not nullify his
supervisory status
 Foremen
o Chief and often especially-trained workmen with and
commonly are in charge of a group of employees in an
industrial plant on in construction work
RIGHT OF SUPERVISIORY EMPLOYEES TO SELF-ORGANIZATION
 Accorded the right to form or join a labor organization BUT not eligible
for membership in a labor organization of rank-and-file employees
o Should form their own separate organization
o REASON: difference in their interests
 The peculiar role of supervisors is that they act
contrary to the interests of the rank-and-file whenever
they recommend action implementing management
policy or whenever they ask for the discipline or
dismissal of subordinates
 Members of the supervisory union might refuse to
carry out disciplinary measures against their co-
member rank-and-file employees. In the area of
collective bargaining, their interest cannot be
considered identical
 GENERAL RULE: Mere affiliation of both the supervisors’ union and the
rank-and-file union with the same federation is not per se objectionable
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 EXCEPTIONS:
1. When the rank-and-file employees are directly under the
authority of supervisory employees
2. When the national federation is actively involved in union
activities in the company
 A labor organization composed of a mixture of rank-and-file and
supervisory employees is no labor organization at all
o It cannot possess any of the rights of a legitimate labor
organization, including the right to file a petition for certification
election
RANK AND FILE EMPLOYEES
 All employees who are neither managerial nor supervisory
CONFIDENTIAL EMPLOYEES
 Confidential employees are those who:
1. Assist or act in a confidential capacity
2. To persons who formulate, determine, and effectuate
management policies in the field of labor relations
 The two criteria are cumulative
o The confidential relationship must exist between the employee
and his supervisor; and the supervisor must handle the
prescribed responsibilities relating to labor relations
 KEY QUESTION – employee’s necessary access to confidential labor
relations information
RIGHT OF CONFIDENTIAL EMPLOYEES TO SELF-ORGANIZATION
 Disqualified from joining, forming or assisting in the formation of a labor
organization under the doctrine of necessary implication
 Not directly prohibited by Art. 245 of the Labor Code
 DOCTRINE OF NECESSARY IMPLICATION
o The disqualification accorded to managerial employees equally
applies to confidential employees
o REASON: In the normal course of their duties, they become
aware of management policies relating to labor relations
 BROAD RATIONALE: Employees should not be placed in a position
involving a potential conflict of interests
 Management should not be required to handle labor relations matters
through employees who are represented by the union with which the
company is required to deal with and who in the normal performance of

their duties may obtain advance information of the company’s position
with regard to contract negotiations, the disposition of grievances, or
other labor relations matters
 Confidential employees may become the source of undue advantage
o May act as spies of either party to a collective bargaining
agreement
 Confidential employees who do not have access to labor relations
information can form or join a labor union
EMPLOYEES OF COOPERATIVES
 COOPERATIVE
o Organization composed primarily of small producers and
consumers who voluntarily join together to form business
enterprises which they themselves own, control, and patronize
 EMPLOYEES WHO ARE THEMSELVES MEMBERS OF THE
COOPERATIVE
o No right to form or join a labor organization
o REASON: They are co-owners of the cooperative
 An owner cannot bargain with himself
 EMPLOYEES WHO ARE NOT MEMBERS OF THE COOPERATIVE
o Entitled to exercise their rights to self-organization and
collective bargaining
Art. 246. Non-abridgment of Right to Self-Organization. – It shall be unlawful
for any person to restrain, coerce, discriminate against or unduly interfere
with employees and workers in their exercise of the right to self-
organization. Such right shall include the right to form, join, or assist labor
organizations for the purpose of collective bargaining through
representatives of their own choosing and to engage in lawful concerted
activities for the same purpose for their mutual aid and protection, subject
to the provisions of Article 264 of this Code. (As amended by Batas
Pambansa Bilang 70, May 1, 1980)
COMMENT:
FREEDOM OF ASSOCIATION
 Stresses the freedom of association enshrined in Section 8, Article III of
the Constitution
o “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.”
Addie Celerian * Amor Venenoso * Draei Dumalanta * Ellan Cipriano * Ingrid Prado * Mary Ang * Rica Casiquin * Sam Santos
LABOR RELATIONS (Arts. 226-292, Labor Code of the Philippines) 29
Atty. Paulino Ungos
 As a matter of principle, the right to self-organization should be
subordinated to the constitutional provision protecting the sanctity of
contracts
 The right to engage in concerted activities (which is an incident of the
right to self-organization) is not absolute
o LIMITATION: Those aimed at compelling an employer to
ignore the clear mandate of the Labor Code
 The right to picket may be regulated at the instance of third parties or
“innocent by-standers” if it appears that the inevitable result of its
exercise is to create an impression that a labor dispute with which they
have no connection or interest exists between them and the picketing
union or constitute an invasion of their rights
TITLE VI
UNFAIR LABOR PRACTICES
CHAPTER I
CONCEPT
Art. 247. Concept of Unfair Labor Practice and Procedure for Prosecution
Thereof. – Unfair labor practices violate the constitutional right of workers
and employees to self-organization, are 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, disrupt industrial peace and hinder the promotion of
healthy and stable labor-management relations.
Consequently, unfair labor practices are not only violations of the civil
rights of both labor and management but are also criminal offenses against
the State which shall be subject to prosecution and punishment as herein
provided.
Subject to the exercise by the President or by the Secretary of Labor and
Employment of the powers vested in them by Articles 263 and 264 of this
Code, the civil aspects of all cases involving unfair labor practices, which
may include claims for actual, moral, exemplary and other forms of
damages, attorney’s fees and other affirmative relief, shall be under the
jurisdiction of the Labor Arbiters. The Labor Arbiters shall give utmost
priority to the hearing and resolution of all cases involving unfair labor

practices. They shall resolve such cases within thirty (30) calendar days
from the time they are submitted for decision.
Recovery of civil liability in the administrative proceedings shall bar
recovery under the Civil Code.
No criminal prosecution under this Title may be instituted without a final
judgment finding that an unfair labor practice was committed, having been
first obtained in the preceding paragraph. During the pendency of such
administrative proceeding, the running of the period of prescription of the
criminal offense herein penalized shall be considered interrupted:
Provided, however, that the final judgment in the administrative
proceedings shall not be binding in the criminal case nor be considered as
evidence of guilt but merely as proof of compliance of the requirements
therein set forth. (As amended by Batas Pambansa Bilang 70, May 1, 1980
and later further amended by Section 19, Republic Act No. 6715, March 21,
1989)
COMMENT:
UNFAIR LABOR PRACTICES
 Refers to those acts listed in Articles 248 and 249 of the Labor Code
 Acts that transgress the right of employees to self-organization
 Can be committed only against an employee who exercises or has
exercised his right to self-organization
o Cannot committed against managerial employees
 REASON: Managerial employees are not accorded
the right to form or join a labor organization
DEGREE OF PROOF TO ESTABLISH UNFAIR LABOR PRACTICE
 Substantial evidence
o May be direct or circumstantial
 A complaint for unfair labor dispute is no ordinary labor dispute and
therefore, it requires a more thorough analysis, evaluation and
appreciation of factual and legal issues involved
 Employer’s motive should be taken into account
 It is for the Labor Arbiter, in the first instance, to make the determination
to ‘weigh the employer’s motive in determining the effect on the
employees of management’s otherwise equivocal act’
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LABOR RELATIONS (Arts. 226-292, Labor Code of the Philippines) 30
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 The existence of a valid cause for dismissal will negate the charge of
unfair labor practice because the idea of dismissal by unfair labor
practice is incompatible with dismissal for just cause
CRIMINAL PROSECUTION
 The criminal aspect of unfair labor practice cannot be prosecuted during
the pendency of the administrative proceedings
o Can only commence when there is a final judgment in the
administrative proceedings declaring that unfair labor practice
has been committed
 Final judgment in the administrative proceedings is not binding in the
criminal case
o Cannot be considered an evidence of guilt
o Considered as proof of compliance with the procedural
requirements for the filing of the criminal case
 CRIMINAL LIABILITY
o Imposed only upon officers and agents of corporations,
associations or partnerships and officers, members of
governing boards, representatives or agents or members of
labor organizations who have actually participated in,
authorized or ratified the unfair labor practices
COMPROMISE
 An unfair labor practice charge can be the subject of a compromise or
amicable settlement
o In line with the declared policy of the State to promote and
emphasize mediation and conciliation as modes of settling
labor or industrial disputes
 If settled through compromise, the criminal aspect can no longer
prosper
ACTS NOT CONSTITUTIVE OF UNFAIR LABOR PRACTICE
1. Dismissal of an employee pursuant to a Closed-Shop Agreement
2. Dismissal of an employee responsible for the loss of the goods
consigned to another
3. Dismissal by reason of retrenchment
4. Closure of a department due to losses
5. Dismissal of a supervisor for organizing a labor union composed of men
under his supervision
6. Failure to comply with a reinstatement order

7. Refusal to hire security guards who do not post a bond
8. Refusal to extend CBA benefit due to an honest mistake
9. Reduction of working days
10. Exercising the option to retire employees
11. Filing of a petition for cancellation of union registration
12. Exacting a promise from the strikers not to destroy company property
13. Requiring returning strikers to fill up forms
1. DISMISSAL OF AN EMPLOYEE PURSUANT TO A CLOSED-SHOP
AGREEMENT
 An employer who dismisses an employer for violating the closed-shop
provision of a collective bargaining agreement does not commit unfair
labor practice
 REASON: This is one of the matters on which the matters on which
management and labor can agree in order to bring about harmonious
relations between them and maintain the cohesion and integrity of their
organization
 ANG MALAYANG MANGGAGAWA V. ANG TIBAY (102 PHIL. 669)
FACTS: Ang Tibay and the National Workers Brotherhood entered into
a CBA stipulating that the Union may recommend to the employer the
dismissal of any union member for any act of disloyalty to the union.
During its effectivity, 22 members organized another union resulting to
their expulsion from the union and demand from management that said
employees be dismissed from employement, which Ang Tibay complied
with.
ISSUE: Whether or not Ang Tibay is guilty of unfair labor practice for
dismissing the 22 employees
DECISION: No, Ang Tibay is not guilty of unfair labor practice for
dismissing the 22 employees.
RATIO: The stipulation providing that the employer may dismiss an
employee whenever the union recommends his separation for disloyalty
to the union is one of the matters on which management and labor can
agree in order to bring about harmonious relations between them and
maintain the cohesion and integrity of their organization. Ang Tibay
merely put in force their agreement.
Addie Celerian * Amor Venenoso * Draei Dumalanta * Ellan Cipriano * Ingrid Prado * Mary Ang * Rica Casiquin * Sam Santos
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2. DISMISSAL OF AN EMPLOYEE RESPONSIBLE FOR THE LOSS OF THE
GOODS CONSIGNED TO ANOTHER
 Employer had reasonable grounds to believe that the employee was the
person responsible for the disappearance and loss of certain valuable
goods consigned to employer’s customer
 Nature of the employee’s participation rendered him unworthy of the
trust and confidence demanded by his position
 Dismissed not only to punish him and deter a similar behavior on the
part of other employees, but also to protect the reputation of the
company
3. DISMISSAL BY REASON OF RETRENCHMENT
 REASON: An employer has the legal right to reduce its personnel due
to losses, lack of work or reduction in the volume of business
 LVN PICTURES EMPLOYEES V. LVN PICTURES INC. (35 SCRA
147)
FACTS: LVN Pictures Inc. was suffering heavy losses but continued to
operate with the expectation that it would recoup part of its losses and
investments. In order to avoid immediate closure of business and lay-off
of employees, it proposed to the Union a change in the payment of
salaries and wages from salary basis to pakiao basis, and subsequently
reduction of salaries paid to monthly paid workers. Both proposals were
rejected by the Union, leaving LVN no choice but to close its movie
production, resulting in the termination of all personnel employed in the
movie production.
ISSUE: Whether or not LVN is guilty of unfair labor practice
DECISION: No
RATIO: LVN incurred losses reducing it to a state of bankruptcy. An
employer has the right to lay-off or dismiss employees because of
losses in the operation of its business, lack of work, and considerable
reduction in the volume of its business.
4. CLOSURE OF A DEPARTMENT DUE TO LOSSES
 PHIL. AM. EMBROIDERIES V. EMBROIDERY & GARMENTS UNION
(26 SCRA 634)
FACTS: In 1956, the Philippine-American Embroideries Inc. opened its
machine-made department for scalloping handkerchiefs. From the time
it was opened, the company has been suffering from losses. In 1958,

the workers at the Machine-Made Department were informed about the
losses incurred by the company. In the last week of October 1958, the
workers at the department organized themselves into a union, and n
November, the Company received their collective bargaining proposals.
On the same day, the Company announced the opening of the closure
of the department, dismissing all the members of the union, but
announced the opening of the Knitting Gloves Department where the
dismissed can file their application for employment so that they can join
the company again. The dismissed employees collectively offered to
return to work but were refused because the Company wanted the
employees to apply individually. Despite the closure of the Machine-
Made Department, the company continued to make scalloped
handkerchiefs by transferring the pieces of machinery to various
contractors in the provinces.
ISSUE: Whether or not Philippine-American Embroideries Inc. is guilty
of unfair labor practices
DECISION: No
RATIO: The closure of the Machine-Made Department was not an act of
discrimination or means of dismissal but the result of continued losses
in operations, which is justified by law. The machine-made department
had been suffering financial reverses in its operations. The employees
had been forewarned of its closure unless the situation improved. The
presentation of the collective bargaining proposals could not have been
the motive for the closure of the department on the same day. There
was then no existing labor dispute.
5. DISMISSAL OF A SUPERVISOR FOR ORGANIZING A LABOR UNION
COMPOSED OF MEN UNDER HIS SUPERVISION
 A supervisor cannot lawfully organize a labor union composed of men
under his supervision
 FORTICH V. COURT OF INDUSTRIAL RELATIONS (93 SCRA 1)
FACTS: VF was employed as Chief Mechanical Engineer and Plant
Superintendent. He organized the union and became an active member,
which resulted to his dismissal.
ISSUE: Whether or not the company is guilty of unfair labor practice
DECISION: No
RATIO: Considering that VF was holding a supervisory position, he
cannot lawfully organize a labor union composed of men under his
supervision. For having done so, he could be validly dismissed from
without the company being held liable for unfair labor practice.
Addie Celerian * Amor Venenoso * Draei Dumalanta * Ellan Cipriano * Ingrid Prado * Mary Ang * Rica Casiquin * Sam Santos
LABOR RELATIONS (Arts. 226-292, Labor Code of the Philippines) 32
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6. FAILURE TO COMPLY WITH A REINSTATEMENT ORDER
 ARRASTRE SECURITY ASSOCIATION V. OPLE (127 SCRA 580)
FACTS: The Arrastre Security Association (ASA) is composed of
security personnel in the arrastre service at South Harbor and were
under the employ of Guacods Marine Terminal and E. Razon Inc. After
the declaration of martial law, the Commissioner of Customs issued a
memorandum declaring the Customs Police to take over the function of
ASA. Consequently, 350 security guards of ASA were barred from the
customs area. ASA filed a complaint for unfair labor practice against
Guacods and E. Razon, praying that the 350 security guards of ASA be
reinstated with full backwages.
ISSUE: Whether or not Guacods and E. Razon are guilty of unfair labor
practice
DECISION: No
RATIO: Since the termination of the employment of the security guards
was caused by a government directive to turn over ASA’s function to the
Customs Police, not the union activities of the security guards, it cannot
be unfair labor practice.
7. REFUSAL TO HIRE SECURITY GUARDS WHO DO NOT POST A BOND
 It is an exercise of a legitimate right to protect its interests, especially
where the guards in question had previously abandoned a ship they
were guarding without notice thereby exposing the ship to losses due to
theft and pilferage
 ASSOCIATED WATCHMEN V. LANTING (107 PHIL. 275)
FACTS: 38 affiliates of Republic Ships Security Agency, one of the
agencies employed by Macondray & Co. in guarding ships or vessels
arriving in Manila, belong to the Associated Watchmen and Security
Union. On February 18, 1956, the Associated Watchmen and Security
Union declared a strike against 19 shipping firms in Manila, but
eventually expressed their desire to return to work and maintain the
status quo. They also pressed for the reinstatement of 47 strikers who
claim to have been discharged. Macondray & Co. expressed its
willingness to employ them on the condition that the security agency
post a bond to respond for any negligence, misfeasance or malfeasance
in the part of any watchmen, which the agency refused. Consequently,
Macondray did not employ the watchmen.

ISSUE: Whether or not Macondray & Co. is guilty of unfair labor
practice for refusing the watchmen of Republic Ships Security Agency
who did not post a bond
DECISION: No
RATIO: The refusal to employ the watchmen was an exercise of a
legitimate right to protect its interests, especially where the guards in
question had previously abandoned a ship they were guarding without
notice thereby exposing the ship to losses due to theft and pilferage.
8. REFUSAL TO EXTEND CBA BENEFIT DUE TO AN HONEST MISTAKE
 An error in the interpretation of a CBA without malice or bad faith does
not constitute unfair labor practice
 Honest differences in construction may arise in the actual application of
contractual provisions
 SINGAPORE AIRLINES V. NLRC (130 SCRA 472)
FACTS: CM was employed by Singapore Airlines and became a
member of Singapore Airlines Local Employees Association which has
CBA with Singapore Airlines that grants hospitalization and maternity
benefits to employees. She underwent a caesarean operation and
sought reimbursement of expenses pursuant to the provision on
hospitalization benefits. Singapore Airlines refused to reimburse on the
ground that its liability in maternity cases is limited to maternity leave
benefit provision in the CBA which does not allow reimbursement. CM
argued that the maternity leave benefit under the CBA is separate and
distinct from the hospitalization benefits.
ISSUE: Whether or not Singapore Airlines is guilty of unfair labor
practice
DECISION: No
RATIO: Its refusal was not a willful evasion of its obligations under the
CBA but due to an honest mistake in the belief that the same is not
covered by the CBA. An error in the interpretation of a CBA without
malice or bad faith does not constitute unfair labor practice.
9. REDUCTION OF WORKING DAYS
 Cannot be regarded as union busting, therefore not unfair labor practice
10. EXERCISING THE OPTION TO RETIRE EMPLOYEES
 Not unfair labor practice
Addie Celerian * Amor Venenoso * Draei Dumalanta * Ellan Cipriano * Ingrid Prado * Mary Ang * Rica Casiquin * Sam Santos
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11. FILING OF A PETITION FOR CANCELLATION OF UNION
REGISTRATION
 Not per se an unfair labor practice
 Will only amount to unfair labor practice if it is established by substantial
evidence that the filing of the petition for cancellation of union
registration was aimed to oppress the Union
12. EXACTING A PROMISE FROM THE STRIKERS NOT TO DESTROY
COMPANY PROPERTY
 Not unfair labor practice
 Intended not to discourage union membership but to ensure peace and
order in the employer’s premises – an act of self-preservation
 PAGKAKAISANG ITINAGUYOD V. ANG TIBAY (20 SCRA 45)
FACTS: The Union declared a strike against Ang Tibay Inc. but was
settled the next day and the strikers agreed to return to work. When the
strikers returned to work, they were required to sign a pledge not to
damage company property and not to commit acts of reprisal against
union members who did not join the strike. Ang Tibay took back the
strikers except those who did not refused to make the pledge.
ISSUE: Whether or not Ang Tibay is guilty of unfair labor practice in
requiring the strikers to sign a pledge as a condition for their re-
admission
DECISION: No
RATIO: The exaction by the Company from the strikers returning to
work of a promise not to destroy company property and not commit acts
of reprisal against union members who did not participate in the strike
cannot be considered as intended to encourage or discourage
membership in the union as it was actually intended to insure the
maintenance of peace and order in the company premises.
13. REQUIRING RETURNING STRIKERS TO FILL UP FORMS
 Not unfair labor practice
 REASON: The purpose is merely to enable the company to plan their
schedule of work and not to discriminate against them
 LAKAS V. MARCELO ENTERPRISES (118 SCRA 422)
FACTS: LAKAS staged two strikes, the second one resulting to the
complete paralysis of the business of the Marcelo group of companies.
Subsequently, Lakas advised the management that all striking workers
and employees will return to work upon the same terms and conditions
of employment before the strike. However, upon their return, the

reporting strikers were required to fill up a certain form to indicate their
availability for work in order that they may be scheduled. Strikers who
filled up the form were accordingly scheduled for work, while others
refused on the ground that it constituted screening and insisted that they
be admitted back to work without the requirement.
ISSUE: Whether or not Marcelo is guilty of unfair labor practice in
requiring returning strikers to fill up a form indicating their availability for
work, despite their unconditional offer to return to work
DECISION: No
RATIO: The requirement was only for purposes of proper scheduling of
the start of work for each returning striker since the businesses of the
Marcelo group of companies cannot resume operations at once and in
the same state or force before the strikes that paralyzed their
operations.
Chapter II
UNFAIR LABOR PRACTICES OF EMPLOYERS
Art. 248. Unfair labor practices of employers. – It shall be unlawful for an
employer to commit any of the following unfair labor practice:
a. To interfere with, restrain or coerce employees in the exercise of
their right to self-organization;
b. To require as a condition of employment that a person or an
employee shall not join a labor organization or shall withdraw from
one to which he belongs;
c. To contract out services or functions being performed by union
members when such will interfere with, restrain or coerce
employees in the exercise of their rights to self-organization;
d. To initiate, dominate, assist or otherwise interfere with the
formation or administration of any labor organization, including
the giving of financial or other support to it or its organizers or
supporters;
e. To discriminate in regard to wages, hours of work and other terms
and conditions of employment in order to encourage or discourage
membership in any labor organization. Nothing in this Code or in
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any other law shall stop the parties from requiring membership in
a recognized collective bargaining agent as a condition for
employment, except those employees who are already members of
another union at the time of the signing of the collective
bargaining agreement. Employees of an appropriate bargaining
unit who are not members of the recognized collective bargaining
agent may be assessed a reasonable fee equivalent to the dues
and other fees paid by members of the recognized collective
bargaining agent, if such non-union members accept the benefits
under the collective bargaining agreement: Provided, that the
individual authorization required under Article 242, paragraph (o)
of this Code shall not apply to the non-members of the recognized
collective bargaining agent;
f. To dismiss, discharge or otherwise prejudice or discriminate
against an employee for having given or being about to give
testimony under this Code;
g. To violate the duty to bargain collectively as prescribed by this
Code;
h. To pay negotiation or attorney’s fees to the union or its officers or
agents as part of the settlement of any issue in collective
bargaining or any other dispute; or
i. To violate a collective bargaining agreement.
The provisions of the preceding paragraph notwithstanding, only the
officers and agents of corporations, associations or partnerships who have
actually participated in, authorized or ratified unfair labor practices shall be
held criminally liable. (As amended by Batas Pambansa Bilang 130, August
21, 1981)
COMMENT:
INTERFERENCE IN THE RIGHT TO SELF-ORGANIZATION
TEST OF INTERFERENCE
 Whether the employer has engaged in conduct which it may reasonably
be said tends to hinder the free exercise of the employees’ right to self-
organization

 Success or purpose is not the criterion in determining whether or not a
prohibited act constitutes unfair labor practice
 Subjecting employees to a series of questioning regarding their
membership in the union or their union activities, in such a way as to
hamper the exercise of free choice on their part, constitutes interference
in the right to self-organization
THE TOTALITY OF CONDUCT DOCTRINE
 The culpability of an employer’s remarks are to be evaluated not only on
the basis of their implicit implications, but should be appraised against
the background of and in conjunction with collateral circumstances
ILLUSTRATIVE CASES
INSULAR LIFE ASSURANCE CO. LTD EMPLOYEES V. INSULAR LIFE (37
SCRA 244)
HELD: For an employer to offer reinstatement to striking employees individually,
when they are represented by a union, is equivalent to an attempt to break a
strike since the employees thus offered reinstatement are unable to determine
what the consequences of working would be. Indeed it is unfair labor practice for
an employer to conduct individual solicitation of the employees and urge them to
cease union activity or cease striking
SCOTY’S DEPARTMENT STORE V. MICALLER (99 PHIL. 762)
FACTS: X was employed as salesgirl in the Scoty’s Department Store. She
organized a union among the employees of the store and affiliated it with the
NLU. Later, NLU sent a petition to the store containing demands. X and other
employees were then called by the management for questioning about the union
and their membership, and were even threatened that the store would be closed
if they do not dissolve the union. X was later on dismissed from her employment.
ISSUE: Whether or not the act of subjecting X and her co-employees to a series
of questioning regarding their membership in the union or their union activities
constitutes unfair labor practice
DECISION: Yes
PHILSTEAM V. PMOG (15 SCRA 174)
FACTS: PHILSTEAM received a set of collective bargaining proposals from
PMOG. Immediately thereafter, PHILSTEAM, apart from requiring PMOG to
prove its majority representation, started interrogating and investigating its
employees to find out directly from them if they had joined PMOG r authorized
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PMOG to represent them. PMOG was then constrained to declare a strike on the
ground of refusal to bargain and other unspecified unfair labor practices.
ISSUE: Whether or not PHILSTEAM committed unfair labor practice in
interrogating and investigating its employees to determine whether they had
authorized PMOG to act as their bargaining agent
DECISION: Yes
RATIO: It interferes with or restrains the exercise of the employees’ right to self-
organization
VISTRANCO V. CIR (19 SCRA 426)
FACTS: VISTRANCO’s workers are supplied by the United Workers and
Farmers Association (UWFA) whose men have regularly worked as laborers of
the Company during every milling season. On November 11, 1955, the Company
refused to engage the services of 139 workers. They were told by the Company
Branch Manager to sever their connection with UWFA if they wanted to continue
working with the Company.
ISSUE: Whether or not the Company is guilty of unfair labor practice
DECISION: Yes
RATIO: The act of refusing the admission of 139 workers unless they sever their
connection with UWFA is tantamount to restraint or interference with the exercise
of the employees’ right to self-organization.
JUDRIC CANNING V. INCIONG (115 SCRA 887)
FACTS: X and 5 other employees were employees of Judric Canning who
actively engaged themselves in the organization of a union by soliciting
signatures of employees. When the Company learned of this activity, it removed
the time cards of the said employees from the rack, and they were not allowed to
work.
ISSUE: Whether or not the Company is guilty of unfair labor practice
DECISION: Yes
RATIO: By dismissing the employees merely because they solicited signatures
needed for the formation of the union, the Company in effect interfered with and
retaliated against the employees in the exercise of their right to self-organization
EAST ASIATIC CO. LTD. V. CIR (16 SCRA 820)
FACTS: X was employed by East Asiatic as Secretary. She became a member
of the Asiatic Employees Union and has been an active member thereof. After
which, she has been called as inefficient, less efficient than when she was not
yet a member of the union. Eventually, she was advised to resign allegedly
because she had become inefficient because of union activities. She was warned

that if she does not resign, the Company will terminate her services. When she
showed her reluctance to resign, the Company dismissed her from employment.
ISSUE: Whether or not the Company is guilty of unfair labor practice in
dismissing X from her employment
DECISION: Yes
RATIO: It was motivated by her union activities. Only after she joined the Union
was she called to account or reproached for something that under other
circumstances might have been overlooked.
VISAYAN BICYCLE V. NLU (14 SCRA 5)
FACTS: X and Y were the Vice President and Secretary of VIBEMWU which
later affiliated with the National Labor Union through the efforts of its Executive
Board headed by X. When this came to the knowledge of the Company, the
officers responsible for the affiliation were warned that if they will not withdraw
their affiliation, they will be dismissed from their employment. X and Y were later
dismissed from their employment for figuring a fight with two employees who
were hired only within that week. The dismissal was effected immediately without
conducting an investigation. It was established that X and Y were provoked by
the two employees into a pre-arranged fight pursuant to the strategy of the
Company to give semblance of a lawful cause for their dismissal
ISSUE: Whether or not the Company is guilty of unfair labor practice
DECISION: Yes
RATIO: X and Y were in reality dismissed because of their union activities and
not because of their violation of company rules against fights in the premises or
during working hours. Furthermore, it has been brought about by the company
itself, thru the recent employment of the two employees who provoked the fight.
YELLOW DOG CONTRACT
 An agreement which requires as a condition of employment, that the
person or employee:
1. Declare that he is not a member of a labor organization
2. Refrain from joining a labor organization
3. Withdraw his membership in a labor organization
4. Quit his employment upon joining a labor organization
 An unfair labor practice under Article 248(b) of the Labor Code, hence,
null and void for being contrary to law and public policy
 VELEZ V. PAV WATCHMEN’S UNION
FACTS: PV, the owner, operator and manager of the Pablo Velez
Special Watchmen’s Agency asked X whether he is a member of the
PAV Watchmen’s Union. When X answered in the affirmative, PV bade
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him to resign from the Union and signed a prepared resignation
presented to him. On another occasion, he told another employee to
resign from the union, else he would have no work assignment. The
employee then signed four copies of a prepared affidavit renouncing his
membership from the union.
ISSUE: Whether or not PV is guilty of unfair labor practice
DECISION: Yes
RATIO: He required X and Y to resign from the Union as a condition for
their continued employment
CONTRACTING OUT SERVICES OR FUNCTIONS PERFORMED BY UNION
MEMBERS
 Does not per se constitute unfair labor practice
 UNFAIR LABOR PRACTICE – only when it interferes with, restrains or
coerces employees in the exercise of their right to self-organization
ORGANIZING, ASSISTING OR SUPPORTING A LABOR ORGANIZATION
 Unfair labor practice
 Includes giving of financial or other support to it or its organizers or
supporters
 COMPANY UNION or COMPANY-DOMINATED UNION
o A labor organization, the formation or administration of which
has been initiated or assisted by the employer
 “COMPANY-TYPE” UNION
o A kind of labor organization composed of employees in the
same company
INDICATIONS OF A COMPANY-DOMINATED UNION
1. Several employees were forced by the officers of the company into
joining a union
2. No union member had been dismissed by the company despite the
alleged retrenchment policy which resulted to the dismissal of other
employees who are officers and members of another union
3. After dismissing the members of the union on the ground of
retrenchment, the company engaged the services of several laborers
PREJUDICIAL QUESTION
 A complaint for unfair labor practice charging the one or more unions
participating in the certification election are being aided or controlled by

the employer, may be considered a prejudicial question in a certification
election proceeding
 The unfair labor practice case should first be decided before conducting
the certification election
 REASON: To prevent the selection of a company-dominated union
DISESTABLISHMENT
 An order requiring an employer to withdraw its recognition of a
company-dominated union as the employees’ collective bargaining
agent and a bona fide and sufficient communication to the employees of
such withdrawal of recognition
DISMISSAL OR DISCRIMINATION BECAUSE OF TESTIMONY
 It is unfair labor practice to dismiss, discharge, or otherwise prejudice or
discriminate against an employee for having given or being about to
give testimony under the Labor Code
 Testimony should relate to matters involving the exercise of the right to
self-organization
o E.g. testimony in another unfair labor practice case or
certification election proceeding
 REASON: Unfair labor practice is a transgression of the right of
employees to self-organization
 Art. 248(f) equally applies to the dismissal of an employee whose
brother has given or is about to give testimony against an employer
 This is in line with the spirit and purpose of the law – to assure the
absolute freedom of employees to establish labor organizations and
prefer charges before the proper organs of the Government for violation
of our labor laws
 PACC FACTORY WORKERS UNION V. PHIL. AM. CIGAR (7 SCRA
375)
FACTS: X filed a complaint for unfair labor practice against Philippine
American Cigarette Mfg. Co. Upon learning that a case has been filed,
the manager of the Company advised the president of the Union that if
X will not withdraw his charge, his brother, Y will be dismissed. X did not
withdraw the case, hence, the company dismissed Y from his
employment
ISSUE: Whether or not the company is guilty of unfair labor practice
DECISION: Yes
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RATIO: It is true that the one dismissed was Y, the brother of the
employee who filed the case against the Company, but this does not
mean that the Company is no longer guilty of unfair labor practice. If
dismissal of an employee who files a case against his employer
constitutes unfair labor practice, with greater reason should it be when
the employer dismisses an employee by reason of the case filed by his
brother.
 ITUGON-SUYOC MINES VS. BALDO (12 SCRA 599)
FACTS: B who was employed by Itugon-Suyoc Mines as miner was
given a 30-day notice of termination on the ground that his services
were no longer needed by the company. When this was served, there
was pending certification election case filed by Sangilo-Itogon Workers
Union, of which B was a member. B then brought the matter of
separation to the grievance committee. While the case was pending in
the committee, the Plant Engineer asked B not to testify in the hearing
of the certification election case so that he would be reinstated to his
job. B testified against the Company resulting in the dropping of his plea
for reinstatement
ISSUE: Whether or not the Company is guilty of unfair labor practice
DECISION: Yes
RATIO: Considering that B’s case was pending before the grievance
committee when he was asked not to testify, and soon after he had
testified adversely to the Company, his case was dropped by the
grievance committee. It can be concluded that the Company had much
to do with the dropping of the case, and thus B was never reinstated to
his work. B has also not committed any serious offense that would
warrant his dismissal from service.
 H.G. HENARES & SONS V. NLU (3 SCRA 765)
FACTS: F requested another employee to take over his shift in order to
enable him to testify, as he did testify, in the unfair labor practice case
filed against the Company by one of its employees. The arrangement
was without the Company’s prior approval. When F’s immediate
superior learned of the unauthorized exchange of shift, he was
recommended for dismissal which was approved. F was dismissed
while the other employee was merely suspended.
ISSUE: Whether or not the Company was guilty of unfair labor practice
DECISION: Yes

RATIO: There is more reason to believe that F was dismissed from
work because he testified unfavorably against the Company in another
unfair labor practice case, as he was dismissed barely three days after
he testified. It is hardly convincing to say that this trivial infraction could
have been the immediate cause of his discharge. His action does not by
itself show any wanton disregard of the company rules.
VIOLATION OF THE DUTY TO BARGAIN COLLECTIVELY
DUTY TO BARGAIN COLLECTIVELY
 The performance of a mutual obligation to meet and convene promptly
and expeditiously in good faith for the purpose of negotiating an
agreement with respect to wages, hours of work and all other terms and
conditions of employment including proposals for adjusting any
grievances or questions arising under such agreement and executing a
contract incorporating such agreement if requested by either party, but
such duty does not compel any party to make any concession
 Neither party to the collective bargaining agreement shall terminate nor
modify such agreement during its lifetime
o Either party can serve a written notice to terminate or modify
the agreement at least 60 days prior to its expiration
o Both parties must keep the status quo and continue in full force
and effect the terms and conditions of the existing agreement
during the 60-day period and/or until a new agreement is
reached
ESSENTIAL ELEMENTS OF THE DUTY TO BARGAIN
 Employer-employee relationship
 WITHOUT EMPLOYER-EMPLOYEE RELATIONSHIP – no duty to
bargain
o Refusal to bargain is not unfair labor practice
 WITH EMPLOYER-EMPLOYEE RELATIONSHIP – the duty to bargain
collectively will arise only if the labor organization which seeks to
collectively bargain represents the majority of the employees in the
bargaining unit
o Without proof of majority representation, the employer can
validly refuse to collectively bargain
 Negotiating or attempting to negotiate with INDIVIDUAL employees in
connection with changes in the collective bargaining agreement is a
violation of the duty to bargain collectively
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o REASON: An employer is bound to bargain, not individually,
but collectively and only with the certified collective bargaining
agent of the employees
 Dismissing union members in order to ensure the defeat of the union in
the certification election is a violation of the duty to bargain
o REASON: It is a scheme to avoid bargaining with the union
ILLUSTRATIVE CASES
INSULAR LIFE ASSURANCE CO. LTD. EMPLOYEES V. INSULAR LIFE (37
SCRA 244)
FACTS: The Insular Life Assurance Co Ltd. Employees Association submitted to
the Company its proposals for the renewal of the collective bargaining
agreement. Collective bargaining negotiations were conducted but a deadlock
ensued, resulting to a strike. The following day, the Company sent letters to
individual strikers offering them reinstatement with promise of comfortable cots,
free coffee and occasional movies, overtime pay and arrangements for their
families.
ISSUE: Whether or not the Company violated its duty to bargain collectively
DECISION: Yes
RATIO: It is unfair labor practice for an employer operating under a collective
bargaining agreement to negotiate or attempt to negotiate with his employees
individually in connection with changes in the agreement. The basis is that
although the Union is on strike, the employer is still under obligation to bargain
with the Union as the employees’ bargaining representative.
SAMAVIM V. NORIEL (98 SCRA 507)
FACTS: SAMAVIM requested the Via Mare Catering Services to enter into a
collective bargaining with it. Instead of acceding to the request, Via Mare
terminated the services of four union members. SAMAVIM then filed a Notice of
Strike on the ground of harassment of union members. Conciliation meetings
were held by the Bureau of Labor Relations but Via Mare refused to negotiate a
collective bargaining agreement. As a result of conciliation efforts, the parties
agreed to hold a consent election among the employees to determine whether
the employees desire to be represented by a Union. Before the parties could
meet to set the date of election, Via Mare terminated 73 union members and
employed other persons to replace them.
ISSUE: Whether or not Via Mare violated its duty to bargain collectively, so as to
be held liable for unfair labor practice
DECISION: Yes

RATIO: The dismissal of the union members is highly suspect as a means to
frustrate the intention of Via Mare not to bargain collectively with SAMAVIM.
PAYING NEGOTIATION FEES OR ATTORNEY’S FEES TO THE UNION
 Unfair labor practice
VIOLATION OF THE COLLECTIVE BARGAINING AGREEMENT
 Must be gross in character
 A simple violation of the collective bargaining agreement is considered
an ordinary grievance to be resolved under the grievance machinery
provided for in the collective bargaining agreement
MEANING OF GROSS VIOLATION
 Flagrant and/or malicious refusal to comply with the ECONOMIC
PROVISIONS of the collective bargaining agreement
VIOLATION ARISING FROM AN HONEST MISTAKE
 Not unfair labor practice
 REASON: Honest differences in construction may arise in the actual
application of a contractual provision, particularly if the stipulation is
susceptible to varying interpretation
DISCRIMINATION
 One is denied privileges given to the other under identical or similar
conditions
 Not unfair labor practice per se
 Becomes unfair labor practice only when it is intended to encourage or
discourage membership in any labor organization
 Does not have to be against a specific employee or employees but may
be in favor of a union
ILLUSTRATIVE CASES
WISE AND CO., INC. V. WISE & CO., INC. EMPLOYEES UNION (178 SCRA
536)
FACTS: Wise & Co. introduced a profit sharing scheme for its managers and
supervisors. When the Union learned about the scheme, it requested
Management to extend such benefit to their members, but Management denied
the request on the ground that it had to adhere strictly to the collective bargaining
agreement. In the meantime, the Management and the Union sat down to
negotiate the renewal of the collective bargaining agreement. The negotiations
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resulted in a deadlock. Thereafter, the Management distributed the profit sharing
benefit not only to managers and supervisors but also to all non-union rank-and-
file employees.
ISSUE: Whether or not the grant of profit sharing benefits to employees not
covered by the collective bargaining agreement is discriminatory against
employees who are covered by the collective bargaining agreement
DECISION: No
RATIO: The situation covered by the collective bargaining agreement is different
and distinct from the employees not covered by the collective bargaining
agreement. Unlike the union employees, the non-union employees do not derive
and enjoy the benefits under the collective bargaining agreement. There can be
no discrimination where the employees concerned are not similarly situated.
RIZAL CEMENT V. MADRIGAL (10 SCRA 831)
FACTS: The Rizal Cement Workers Union staged a strike at the plant of the
Company in Biangonan, Rizal. The following day, the warehouseman at the
Bodega Tanque received a call from the Manager of the Company informing him
that the Union has staged a strike at the Binangonan Plant and advising him to
take precautionary measures in protecting the properties of the company stored
at the Bodega Tanque because the strikers caused damage to the factory in
Binangonan and sabotage may occur. For this reason, he was advised by the
manager to request the members of the Union to stay meanwhile outside the
premises of the Bodega Tanque. Thus, when the workers arrived for work, the
other members of the Union were not allowed to enter the gate. Only non-union
members were allowed to enter.
ISSUE: Whether or not the Company is guilty of unfair labor practice by
discrimination
DECISION: No
RATIO: The refusal on the part of the Company to allow the union members to
work and the requirement that they stay out of the premises in the meantime was
borne out of the Company’s justified apprehension and fear that sabotage might
be committed in the warehouse where the products, machinery and spare parts
were stored, as has been the case in Binangonan. It has never been shown that
the act of the Company was intended to induce the union members to renounce
their union membership or as a deterrent for non-members to affiliate therewith,
nor as a retaliatory measure for activities in the union or in the furtherance of the
cause of the union.

INSULAR LIFE ASSURANCE CO. LTD. V. INSULAR LIFE (37 SCRA 244)
FACTS: The Insular Life Assurance Co. Ltd. Employees Association went on
strike. Because of the writ of preliminary injunction as well as the ultimatum of the
Company for the strikers to return to their jobs or else be replaced, the striking
employees called off their strike and returned to work. However, before
readmitting the strikers, the Company required them to secure clearances from
the City Fiscal’s Office. They were also screend by a management committee.
The screening committee initially rejected 83 strikers with pending criminal
charges. However, all non-strikers with pending criminal charges which arose
from the violent incident during the strike were readmitted immediately without
being required to secure clearances from the City Fiscal’s Office. When
practically all strikers had secured clearances from the fiscal’s office, the
Company readmitted some but refused t admit 34 strikers who were most active
in the strike, on the ground that the acts were inimical to the interest of the
Company.
ISSUE: Whether or not the Company is guilty of unfair labor practice by
discrimination
DECISION: Yes
RATIO: It did not merely discriminate against all the strikers in general – they
separated the active from the less active unionists on the basis of their militancy,
or lack of it, on the picket lines. Discrimination undoubtedly exists where the
union activity of the hired strikers had been less prominent than that of the
strikers who were denied reinstatement.
UNION SECURITY AGREEMENTS
 The legal basis for entering into a union security arrangement is Article
248(e) of the Labor Code
TYPES OF UNION SECURITY AGREMENTS
1. CLOSED SHOP
o The employer binds himself to hire only members of the
contracting union who must continue to remain members in
good standing to keep their jobs
2. UNION SHOP
o The employer is allowed to hire non-members of the
contracting union on condition that they should join the
contracting union within a specified period of time and must
continue to remain members in good standing to keep their
jobs
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3. MAINTENANCE OF MEMBERSHIP
o Requires those who are members of the contracting union at
the time of the execution of the collective bargaining
agreement to maintain their membership in good standing
during the lifetime of the collective bargaining agreement as a
condition of continued employment
4. AGENCY SHOP
o Does not require union membership but only support from the
employees within the bargaining unit in the form of agency
fees, as a condition of continued employment
5. PREFERENTIAL HIRING
o The members of the contracting union are given preference in
engagement, all circumstances being equal, and for them to
maintain their membership in good standing during the lifetime
of the collective bargaining agreement as a condition of
continued employment
LIMITATIONS
 A closed shop agreement cannot be enforced against:
1. Employees who are already members of another union at the time
of the signing of the collective bargaining agreement
2. Employees whom the union refused admission to membership
without any reasonable ground therefor
3. Employees who are members of religious sects which prohibit their
members from joining a labor organization
CONSTRUCTION OF UNION SECURITY AGREEMENTS
 Strictly construed and any doubt must be resolved against its existence
 The stipulation to that effect must be clear and unequivocal as to leave
no room for doubt thereon
 Applies to closed shop, union shop and maintenance of membership
agreement
BINDING EFFECT
 A union security arrangement is binding even if the employees are not
aware of such an agreement

ENFORCEMENT
 To justify the dismissal of an employee pursuant to a closed shop
stipulation, the validity of said stipulation must first be shown
 To dismiss an employee for breach of a union security arrangement, the
employer should not merely rely on the request of the union. The
employer should conduct an investigation of its own because the
employee sought to be dismissed is entitled to due process of law
AGENCY SHOP
 Article 248(e)
 Applies only to non-union members who belong to the collective
bargaining unit
 Can be enforced only if and when the union covered by the bargaining
unit accepts the benefits under the collective bargaining agreement.
 Individual check-off authorization is not required to check-off agency
fees
CHAPTER 3
UNFAIR LABOR PRACTICES OF LABOR ORGANIZATIONS
ART. 249. Unfair Labor Practices of Labor Organizations. - It shall be unfair
labor practice for a labor organization, its officers, agents or
representatives:
(a) To restrain or coerce employees in the exercise of their rights to
self-organization. However, a labor organization shall have the
right to prescribe its own rules with respect to the acquisition or
retention of membership.
(b) To cause or attempt to cause an employer to discriminate against
an employee, including discrimination such organization has been
denied or to terminate an employee on any ground other than the
usual terms and conditions under which membership is made
available to other members;
(c) To violate the duty, or refuse to bargain collectively with the
employer, provided it is the representative of the employees;
(d) To cause or attempt to cause an employer to pay or deliver or
agree to pay or deliver any money or other things of value, in the
nature of an exaction, for services which are not performed,
including the demand for fee for union negotiations;
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(e) To ask for or accept negotiation or attorney’s fees from employers
as part of the settlement of any issue in collective bargaining or
any other dispute; or
(f) To violate a collective bargaining agreement
The provisions of the preceding paragraph notwithstanding, only
the officers, members of governing boards, representatives or agents or
members of labor organizations who have actually participated in,
authorized or ratified unfair labor practices shall be held criminally liable.
COMMENT:
1. Coercion/Restraint on the Right to Self-Organization
This is exemplified by a labor organization who recommends the
dismissal from employment of an employee who cancels his membership
with the union during the freedom period. During the freedom period, a union
member is free to exercise his right to self-organization. He may therefore
resign from the contracting union or join another union of his choice without
being subjected to sanctions. The reason is that the union security
agreement is deemed suspended during the freedom period.
A labor organization also commits unfair labor practice if it expels a
union member who initiates a petition for audit of union funds considering
that union members are entitled to a full and detailed reports from their
officers of all financial transactions.
MD Transit v. De Guzman
7 SCRA 726
FACTS: 3 members of the MD-CAM Local 3 PTGWO secured the
signatures of their co-employees to a petition to the DOLE for an audit of the
mutual aid fund of the Union. The petition for audit was granted and took
place on October 27, 1958, where it was discovered that the mutual aid fund
was short of P22k. The matter was referred to the City Fiscal of Quezon
City for appropriate action. The President of the Union suspended the 3
members and several days later, the BOD expelled them from the Union. Is
the Union guilty of ULP?

HELD: The Union is guilty of ULP. The suspension and subsequent expulsion
of the union members is ULP because it was motivated by the charges they
preferred against the officers of the Union which led to the discovery of the
shortage in the Mutual Aid Fund.
2. Causing an Employer to Discriminate Against an Employee
It is unfair labor practice for a labor organization, its officers, agents or
representatives to:
(a) Cause or attempt to cause an employer to discriminate against an
employee;
(b) Discriminate against an employee with respect to whom
membership in such organization has been denied; or
(c) Terminate an employee on any ground other than the usual terms
and conditions under which membership is made available to other
members.
Salunga v. Court of Industrial Relations
21 SCRA 216
FACTS: S tendered his resignation from the Union. The Union transmitted
the resignation letter to the company with a request for implementation of the
close-shop agreement. Upon being informed by the Company that his
resignation would result in the termination of his employment, S wrote the
Union a letter withdrawing his resignation. The Union refused to honor the
withdrawal because of S’ critical attitude towards certain measures taken by
the Union. Instead, the Union pressed the company to dismiss S on the basis
of the closed-shop agreement. The Company was then constrained to
dismiss S. Is the Union guilty of ULP?
HELD: The Union is guilty of ULP. The Union cannot validly invoke the close-
shop agreement to justify the dismissal of S whom it refused to re-admit as
member without any reasonable ground. Having been denied readmission
into the Union and having been dismissed from service owing to an unfair
labor practice on the part of the Union, S is entitled to reinstatement as
member of the Union and as employee.
3. Violation of the Duty to Bargain Collectively
It is ULP on the part of a labor organization, its officers, agents or
representatives to violate the duty to bargain collectively or refuse to bargain
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collectively with the employer, provided it is the representative of the
employees.
If there is a pending representation issue, it is ULP on the part of a labor
organization to stage a strike to compel the management to sit down with it
for collective bargaining.
LakasngManggagawangMakabayan v. Marcelo Enterprises
HELD: The court held that there existed no duty to bargain collectively with
complainant LAKAS on the part of said companies. Proceeding from this
basis, it follows that all acts instigated by complainant LAKAS such as the
filing of the Notice of Strike on June 13, 1967 and the two strikes of
September 4, 1967 and November 7, 1967 were calculated, designed and
intended to compel the respondent Marcelo Companies to recognize or
bargain with it notwithstanding that it was an uncertified union, or in case of
respondent Marcelo Tire and Rubber Corporation, to bargain with it despite
the fact that the MUEWA of PaulinoLazaro was already certified as the sole
bargaining agent in said respondent company. These concerted activities
executed and carried into effect at the instigation and motivation of LAKAS
are all illegal and violative of the employer’s basic right to bargain collectively
only with the representative supported by the majority of its employees in
each of the bargaining units.
4. Featherbedding
Featherbedding is the act of causing or attempting to cause an
employer to pay or deliver any money or other things of value for services
which were not performed or not to be performed.
5. Demanding/Accepting Negotiation Fees
It is ULP for a labor organization, its officers agents, or representatives
to ask for or accept negotiation or attorney’s fees from employers as part of
the settlement of any issue in collective bargaining or any other dispute.
If the labor organization asks an employer to give negotiation fees or
attorney’s fees, then it is guilty of ULP, regardless of whether the proposal
was accepted by the employer. If the employer agrees to the proposal and
gives negotiation or attorney’s fees to the labor organization, then it is equally
guilty of ULP under Art. 248(h).

If the labor organization did not ask for negotiation fees or attorney’s
fees, but nevertheless accepted such fees from an employer, then it is
likewise guilty of ULP under Art. 249(e), while the employer would be guilty
under Art. 248(h).
COMMENT:
6. Violation of Collective Bargaining Agreement
It is ULP for a labor organization, its officers, agents or representatives
to violate a CBA.
To constitute ULP, the breach of CBA must be gross in character, i.e.,
flagrant and/or malicious refusal to comply with the economic provisions of
the CBA. Thus, a strike staged by a labor organization in violation of the no-
strike stipulation in the CBA is not ULP but it will be adjudged as an illegal
strike.
TITLE VII
COLLECTIVE BARGAINING AND ADMINISTRATION OF AGREEMENTS
ART. 250. Procedure in Collective Bargaining. – The following procedures
shall be observed in collective bargaining:
(a) When a party desires to negotiate an agreement, it shall
serve a written notice upon the other party with a statement
of its proposals. The other party shall make a reply thereto
not later than 10 calendar days from receipt of such notice.
(b) Should differences arise on the basis of such notice and
reply, either party may request for a conference which shall
begin not later than 10 calendar days from the date of
request.
(c) If the dispute is not settled, the Board shall intervene upon
request of either or both parties or at its own initiative and
immediately call the parties to conciliation meetings. The
Board shall have the power to issue subpoenas requiring
the attendance of the parties to such meetings. It shall be
the duty of the parties to participate fully and promptly in the
conciliation meetings the Board may call.
(d) During the conciliation proceedings in the Board, the parties
are prohibited from doing any act which may disrupt or
impede the early settlement of the disputes; and
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(e) The Board shall exert all efforts to settle disputes amicably
and encourage the parties to submit their case to a
voluntary arbitrator.
1. Collective Bargaining
The term collective bargaining denotes in common usage as
well as in legal terminology, negotiations toward a CBA. Collective
bargaining is one of the democratic frameworks under the Labor Code
designed to stabilize the relation between labor and management and to
create a climate of sound and stable industrial peace.
Collective bargaining is not equivalent to an adversarial
litigation where rights and obligations are delineated and remedies
applied. It is simply a process of finding a reasonable solution to a
conflict and harmonizing opposite positions into a fair and reasonable
compromise.
In the absence of grave abuse of discretion, the disposition of
the labor agency will not be disturbed in a certiorari proceeding.
2. The Collective Bargaining Process
The collective bargaining process technically starts when the
employees within an appropriate bargaining unit organize themselves
into a labor organization.
After obtaining registration with the DOLE, the labor
organization either requests the employer for voluntary recognition or
files a petition for certification election.
After, the labor organization serves its written proposals to the
employer, after which the employer submits its written counterproposals
within 10 days from receipt of the proposals.
Collective bargaining negotiations then follow.
2.1 Jurisdictional Preconditions of Collective Bargaining
(a) proof of majority representation on the part of the labor
organization.

(b) voluntary recognition by the employer or certification of the
labor organization as the collective bargaining representative
of the employees covered by the bargaining unit; and
(c) Demand to bargain under Art. 250(a) of the Labor Code.
3. Multi-Employer Bargaining
Legitimate labor organizations and employers may agree in
writing to come together for collective bargaining purposes under the
following conditions:
(a) The legitimate labor organizations must be incumbent
exclusive bargaining agents;
(b) The employers must have counterpart legitimate labor
organizations who are incumbent bargaining agents; and
(c) The legitimate labor organizations of employer units must
consent to multi-employer bargaining.
Each employer or concerned labor organization shall express
in writing its willingness or unwillingness to participate in multi-employer
bargaining, addressed to its exclusive bargaining agent or employer.
Negotiations may commence only with regard to employers and labor
organizations that consent to participate in multi-employer bargaining.
3.1. Pre-Requisites of Multi-Employer Bargaining
Legitimate labor organizations who desire to collectively negotiate with
the employers shall execute among themselves awritten agreement
containing the following:
(a) Names of the labor unions who desire to avail of multi-employer
bargaining;
(b) Names of each labor union in the employer unit;
(c) Statement that each of the labor unions are the incumbent
exclusive bargaining agents of their respective employer units;
(d) Duration of the collective bargaining agreements, if any, between
each labor organization and their respective employers.
3.2 Procedure
Legitimate labor unions who desire to bargain with multi-employers shall
send a written notice to each employer concerned. The written notice shall be
accompanied by any of the following documents:
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(a) written agreement among the labor organizations as regards their
desire for multi-employer bargaining; or
(b) certificates of registration of the federation, national union or
industry union.
Employers who desire to engage in multi-employer bargaining shall
send to each of their counterpart legitimate labor unions a written notice
indicating the following:
(a) Names of employers who desire to avail of multi-employer
bargaining;
(b) Their corresponding legitimate labor organizations;
(c) Statement that each corresponding legitimate labor organization is
an exclusive bargaining agent;
(d) The duration of the current collective bargaining agreement, if any,
of each employer with the counterpart legitimate labor organization.
4. Remedies in Case of Deadlock
(a) Call upon the National Conciliation and Mediation Board
to assist them in arriving at an amicable settlement;
(b) Submit the matter for compulsory arbitration by filing a
complaint with the National Labor Relations Commission;
(c) Submit the matter for resolution by a coluntary arbitrator;
or
(d) Declare a strike or lockout.
Art. 251. Duty to Bargain Collectively in the Absence of Collective Bargaining
Agreement. – In the absence of an agreement or other voluntary
arrangement providing for a more expeditious manner of collective
bargaining, it shall be the duty of the employer and the representative of
the employees to bargain collectively in accordance with the provisions of
this Code.
COMMENT:
1. The Duty to Bargain Collectively – A Mutual Obligation
One of the major aims of the law is to make the process of
collective bargaining on of the most effective means for ensuring
harmonious labor-management relations. It should be noted,
however, that while the duty to bargain collectively is a mutual
obligation of both employer and employees, the employer is not
under obligation to initiate the collective bargaining negotiations.

2. Essential Elements of the Duty to Bargain Collectively
The duty to bargain collectively arises only when the union
which seeks to represent the collectively bargaining unit is:
(a) a legitimate labor organization
(b) composed of employees of the supposed employer; and
(c) chosen or designated by the majority of the employees
within the bargaining unit as their collective bargaining
representative.
2.1. Union Must Be a Legitimate Labor Organization
If the labor organization is not registered with the DOLE, the
duty to bargain collectively does not exist because the labor
organization does not have the legal personality to act as the collective
bargaining representative.
2.2. Union Must be Composed of Employees
The duty to bargain collectively arises only between “employer”
and its “employees.” Where neither party is an “employer” nor an
“employee” of the other, the duty to bargain collectively does not exist.
Singer Sewing Machine Company v. Drilon
193 SCRA 270
The court finds that since private respondents are not employees of the
company, they are not entitled to the constitutional right to join or form a
labor organization for purposes of collective bargaining. Accordingly,
there is o constitutional and legal basis for their “union” to be granted
their petition for direct certification.
Allied Free Workers v. Cia. Maritima
19 SCRA 258
FACTS: MARITIMA is a local corporation engaged in the shipping
business. It entered into an “ARRASTRE AND STEVEDORING
CONTRACT” with AFWU, a legitimate labor organization. MARITIMA
complained of unsatisfactory and inefficient service by the laborers. To
remedy the situation, AFWU was forced to hire extra laborers. AFQU
then presented to MARITIMA a written proposal for a CBA. MARITIMA
did not reply. Thereafter, AFWU filed a petition praying that it be
certified as the sole and exclusive bargaining agent. MARITIMA
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terminated the contract with AFWU. AFWU filed a complaint for ULP for
refusal to bargain. Is MARITIMA duty bound to bargain with AFWU?
HELD: 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.
MARITIMA was not the employer of the workers of AFWU. Under the
ARRASTRE AND STEVEDORING CONTRACT, AFWU was an
independent contractor of MARITIMA.
2.3 Union Must Be Recognized or Certified as Bargaining Agent
If the union has not been designated or selected by the
majority of the employees in the bargaining unit as their collective
bargaining representative, the duty to bargain does not exist.
If two or more unions claim to hold the majority of the
employees in the bargaining unit, the duty to bargain does not exist until
the issue on majority representation is finally settled.
3. No Duty to Bargain With Minority
The duty to bargain does not exist with regard to a minority
group of employees. Neither does the duty to bargain exist with regard
to individual employees.
It should be noted, however, that while the law prohibits
individual bargaining or bargaining with a minority group of employees,
there is no prohibition against an employer sitting down with an
individual employee or a group of employees for the purposes of
hearing and discussing their grievances.
ART. 252. Meaning of the Duty to Bargain Collectively. - The duty to bargain
collectively means the performance of a mutual obligation to meet and
convene promptly and expeditiously in good faith for the purpose of
negotiating an agreement with respect to wages, hours of work and all
other terms and conditions of employment including proposals for
adjusting any grievances or questions arising under such agreements and
executing a contract incorporating such agreements if requested by either
party but such duty does not compel any party to agree to a proposal or to
make any concession.

COMMENT:
1. The Essence of the Duty to Bargain Collectively
The duty to bargain collectively does not impose upon the
employer the obligation to initiate contract negotiation. Neither does
it compel the parties to agree to a proposal or to make any
concession, much less to reach an agreement. All that is required is
for the parties to approach the negotiations with an open mind and
exert reasonable effort to reach a common ground of agreement.
Proposals, if unacceptable, should be matched with
counterproposals.
To offer the union a contract saying “Take it or leave it” is not in
consonance with good faith bargaining. Feigning negotiations
through empty gestures is not bargaining in good faith.
The Philosophy of Collective Responsibility
An employer who bargains in good faith is entitled to rely on
the promises and agreements of the union representatives with
whom he must deal under the compulsion of law and contract.
ART. 253. Duty to Bargain Collectively When There Exists a Collective
Bargaining Agreement. – When there exists a collective bargaining
agreement, the duty to bargain collectively shall also mean that neither
party shall terminate nor modify such agreement during its lifetime.
However, either party can serve a written notice to terminate or modify the
agreement at least 60 days prior to its expiration date. It shall be the duty of
both parties to keep the status quo and to continue in full force and effect
the terms and conditions of the existing agreement during the 60-day
period and/or until a new agreement is reached by the parties.
COMMENT:
1. Duty to Bargain After Execution of CBA
The duty to bargain does not end with the execution of the
CBA. It is a continuous process. This does not mean, however,
that either party can ask for modification of the collective
bargaining agreement at any time during its effectivity.
The continuous process means that the parties, during the
term of the agreement, are mutually obliged to meet and confer
promptly and expeditiously and in good faith for the purpose of
adjusting any grievance or question arising under the CBA.
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After the execution of the CBA, the duty to bargain
collectively obliges the parties:
(a) not to terminate or modify the CBA during
its lifetime;
(b) to ask for modification of the CBA only
during the 60-day period prior to its
expiration date; and
(c) to observe the terms and conditions of the
CBA during the 60-day period and until a
new agreement is reached.
2. The Freedom Period
The freedom period is the 60-day period prior to the
expiration of the collective bargaining agreement.
It is called the freedom period because it is the time when the
bargaining agent can validly serve notice to renegotiate the
existing CBA.
It is the time when a union member can validly resign from
the union and the time for a local union to disaffiliate from its
mother federation without being subjected to sanctions.
It is also the time for challenging the majority status of the
incumbent collective bargaining agent through a petition for
certification election.
3. The Hold-Over Principle
In the absence of a new CBA, the parties must maintain the
status quo and must continue in full force and effect the terms and
conditions of the existing agreement until a new agreement is
reached.
ART. 253-A. Terms of a Collective Bargaining Agreement. - Any Collective
Bargaining Agreement that the parties may enter into shall, insofar as the
representation aspect is concerned, be for a term of 5 years. No petition
questioning the majority status of the incumbent bargaining agent shall be
entertained and no certification election shall be conducted by the DOLE
outside of the 60-day period immediately before the date of expiry of such
five year term of the CBA. All other provisions of the CBA shall be

renegotiated not later than 3 years after its execution. Any agreement on
such other provisions of the CBA entered into within 6 months from the
date of expiry of the term of such other provisions as fixed in such CBA,
shall retroact to the day immediately following such date. If any such
agreement is entered into beyond six months, the parties shall agree on the
duration of effectivity thereof. In case of a deadlock in the renegotiation of
the CBA, the parties may exercise their rights under this Code.
COMMENT:
1. Collective Bargaining Agreement
Collective bargaining agreement is a contract by and
between an employer and the collective bargaining representative
of the employees within an appropriate bargaining unit, concerning
wages, hours of work, and all other terms and conditions of
employment. It is the law of the plant.
The primary purpose of the CBA is the stabilization of labor-
management relations in order to create a climate of a sound and
stable industrial peace.
2. Coverage of a Collective Bargaining Agreement
A CBA applies to and is binding on all employees covered by
the collective bargaining unit – whether they be union members or
not. To accord the benefits under the CBA only to union members
without any valid reason would constitute undue discrimination
against non-members.
3. Construction of a Collective Bargaining Agreement
A CBA is not an ordinary contract but one impressed with
public interest. As such it must be construed liberally rather than
narrowly and technically.
Only provisions embodied in the CBA may be interpreted or
enforced. The Minutes of the Collective Bargaining Negotiations
cannot be invoked because it does not form part of the CBA. The
Minutes merely reflects the proceedings and discussions
undertaken in the collective bargaining process.
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4. Term of a Collective Bargaining Agreement
The term of a CBA, insofar as the representation aspect is
concerned, is 5 years reckoned from the date of its effectivity.
During the 6-year period, the majority status of the incumbent
collective bargaining agent cannot be challenged except during the
last 60 days of the 5-year period.
5. Renegotiation Within the 5-Year Period
Except the representation status of the incumbent bargaining
agent, all provisions of the CBA, whether economic or non-
economic, may be renegotiated not later than 3 years after its
execution.
5.1. Effectivity of the Renegotiated Agreement
The effectivity of the renegotiated CBA will depend upon the
following situations:
(a) If the parties are able to come to an agreement within 6
rd
months from expiry of the 3 year of the CBA, the
effectivity of the renegotiated agreement shall retroact to
rd
the day immediately following the expiry of the 3 year.
(b) If the agreement was arrived at after 6 months of
negotiations, the parties – not anybody else – are given
the discretion to fix the effectivity thereof.
(c) If 6 months have elapsed and the negotiations result in a
deadlock, and to resolve the impasse, the matter is
submitted for arbitration, the effectivity of the renegotiated
CBA shall be the date when the arbitrator renders his final
decision.
Manila Electric v. Quisumbing
302 SCRA 173
FACTS: On September 7, 1995, MEWA informed MERALCO of its
intention to re-negotiate the terms and conditions ofhteir existing 1992-1997 CBA
covering the remaining period of 2 years starting December 1, 1995 to November
30, 1997. Negotiations proceeded but it resulted in a deadlock. MEWA filed a
notice of strike against MERALCO. The Secretary of Labor and Employment
assumed jurisdiction over the disputes and on December 28, 1996, an Order was

issued resolving the controversies. The effectivity of the CBA was set to retroact
to December 1, 1995. Was the Secretary of Labor and Employment correct in
retroacting the effectivity of the renegotiated CBA?
HELD: There is no sufficient legal ground to justify the retroactive
application of the renegotiated agreement. Significantly the law does not
specifically cover the situation where 6 months have elapsed but no agreement
has been reached with respect to effectivity. The parties must maintain the status
quo and must continue in full force and effect the terms and conditions of the
existing agreement until a new agreement is reached. Another legal principle that
should apply is that in the absence of an agreement between the parties, then an
arbitrated collective bargaining agreement takes on the nature of any judicial or
quasi-judicial award; it operates and may be executed only retrospectively unless
there are legal justifications for its retroactive application. The agreement should
be effective for a term of 2 years counted from December 28, 1996 (Date when
the Sec of DOLE denied the parties’ motion for reconsideration) up to December
27, 1999.
6. Ratification of Collective Bargaining Agreement
The CBA will be deemed ratified if it is approved by the
majority of the employees covered by the bargaining unit. Without
ratification the CA cannot be registered.
Ratification of a CBA does not validate a void election of union
officers because what the membership ratified were the terms of
the new CBA and not the issue of union leadership.
7. Ten-Year Suspension of CBA Valid
Under exceptional conditions, the parties can agree to suspend
their CBA. The right to free collective bargaining includes the right
to suspend it.
Rivera v. Espirity
G.R. No. 135547, January 23, 2002
FACTS: On June 5, 1998, the Airline Pilots Association of the Philippines
(ALPAP) composed of pilots of Philippine Airlines, Inc. (PAL) went on a 3-week
strike, causing serious losses to the financially beleaguered flag carrier. Faced
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with bankruptcy, PAL adopted a rehabilitation plan and downsized its labor force
by more than one-third.
On July 22, 1998, the Phiilippine Airlines Employees Association
(PALEA), composed of ground employees of PAL went on strike to protest the
reduction of personnel which affected 1,899 union members. The strike ended 4
days later, when PAL and PALEA agreed to a more systematic reduction in
PAL’s work force and the payment of separation benefits to all retrenched
employees.
7. 10-year suspension of CBA
 The parties can agree to suspend their CBA under exceptional
circumstances
 The right to free Collective Bargaining (CB) includes the right to
suspend it
 SC upheld the validity of an agreement to suspend the CBA for 10 years
in the case of Rivera v. Espiritu (Jan. 23, 2002)
FACTS:
- PAL was suffering from a difficult financial situation in 1998. It was faced
with bankruptcy and was forced to adopt a rehabilitation plan and
downsized its labor force by more than 1/3.
- PAL pilots went on a three-week strike in June 1998. PALEA (PAL
Employees Association) went on a four-day strike to protest
retrenchment measures in July 1998.
- President Estrada issued A.O. No. 16, creating an Inter-Agency Task
Force (Task Force) to address PAL’s problems. Espiritu, then Sec of
Finance, was chairman of the Task Force. Task Force was empowered
to summon all parties concerned for conciliation, mediation for the
purpose of arriving at a total and complete solution of the problem.
- PAL management submitted to the Task Force an offer by Lucio Tan,
which was subsequently rejected.
- PAL then informed the Task Force that rehabilitation was no longer
feasible and there was no alternative but to close shop.
- PAL ceased operations on Sep 23, 1998.
- PALEA board wrote President Estrada to seek his intervention on Sep
25, 1998. PALEA offered a 10-year moratorium on strikes and similar
actions and a waiver of some of the economic benefits in the existing
CBA. Tan, however, rejected this counter-offer.

- PALEA board again wrote the President on Sep 28, 1998. Among
others, it proposed the suspension of the PAL-PALEA CBA for a period
of ten years, subject to certain conditions.
- PALEA members accepted such terms through a referendum on Oct 2,
1998.
- PAL resumed domestic operations on Oct 7, 1998.
- Seven officers and members of PALEA filed instant petition to annul the
Sep 27, 1998 agreement entered into between PAL and PALEA.
ISSUE/S: WON CBA negotiations may be suspended for 10 years?
HELD: The primary purpose of CBA is the stabilization of labor-management
relations in order to create a climate of sound and stable industrial peace. Hence,
in construing a CBA, courts must be practical and realistic and give due
consideration to the context in which it was negotiated and the purpose which it
is intended to serve.
- The assailed PAL-PALEA agreement was the result of voluntary
collective bargaining negotiations undertaken in the light of the severe
financial situation faced by the employer, with the peculiar and unique
intention of not merely promoting industrial peace at PAL, but
preventing the latter's closure.
- There is no conflict between said agreement and Article 253-A of the
Labor Code. Article 253-A has a two-fold purpose. One is to promote
industrial stability and predictability. Inasmuch as the agreement sought
to promote industrial peace at PAL during its rehabilitation, said
agreement satisfies the first purpose of Article 253-A. The other is to
assign specific timetables wherein negotiations become a matter of right
and requirement. Nothing in Article 253A, prohibits the parties from
waiving or suspecting the mandatory timetables and agreeing on the
remedies to enforce the same.
- It was PALEA, as the exclusive bargaining agent of PAL 's ground
employees, that voluntarily entered into the CBA with PAL. It was also
PALEA that voluntarily opted for the 10-year suspension of the CBA.
Either case was the union's exercise of its right to collective bargaining.
The right to free collective bargaining, after all, includes the right to
suspend it.
- The acts of public respondents in sanctioning the 10-year suspension of
the PAL-PALEA CBA did not contravene the “protection to labor” policy
of the Constitution. The agreement afforded full protection to labor;
promoted the shared responsibility between workers and employers;
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and they exercised voluntary modes in settling disputes, including
conciliation to foster industrial peace.
**
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).
1. No-injunction Policy
 GR: Injunction not favoured in law considering that it generally has not
proved to be an effective means of settling labor disputes.
 Policy of the State: encourage the parties to use non-judicial process of:
 Negotiation
 Compromise
 Mediation &
 Arbitration
 EXCEPTION: Injunctions may be issued only in cases of extreme necessity
based on legal grounds, after due considerations/hearing and when all
efforts at conciliation are exhausted.
2. When Injunction in Labor Disputes May Issue
 In case of actual or threatened commission of any prohibited or unlawful
acts, or when necessary to require the performance of a particular act, which
if not restrained or performed forthwith, may cause grave or irreparable
damage to any party or render ineffectual any decision in favour of such
party; or
 In case of a labor dispute causing or likely to cause a strike or lockout in an
industry indispensable to national interest.
3. Who May Issue Injunction in Labor Disputes
 Only by the ff. Can issue such:
 NLRC
 In ordinary disputes
 Cases arising from violation of Art. 264, LC

 Sec. Of Labor and Employment – in labor dispute causing or likely to
cause a strike or lockout in an industry indispensable to the national
interest.
 Ordinary courts cannot issue injunction in cases involving or growing out of a
labor dispute
 Civil court cannot issue such injunction to restrain execution of a final
and executor judgement of the NLRC; Nor such civil court can enjoin
striking EEs from obstructing the free ingress/egress of an
establishment
 Case: Associated Labor Union (ALU) v. Borromeo (166 S 99)
FACTS:
- As a result of a strike staged by ALU, Belyca Corp. filed with the RTC a
complaint for injunction alleging that the strikers obstructed the free
ingress/egress to the establishment, preventing workers of Belyca farms
from attending to the hogs (7, 500) and fowls (8, 000) which are
maintained and could be killed if not attended to.
- Judge immediately issued a TRO
ISSUE/S: WON the issuance of the TRO by RTC judge is proper
HELD: Issuance of TRO was improper. Courts of law have no jurisdiction to act
on labor cases or various incidents arising therefrom. Fact that poultry and
piggery required close care and attention does not warrant the RTC judge’s
assumption of jurisdiction. It does not confer on him the competence he did not
have. Jurisdiction is conferred by law and not by demands of emergency.
**
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
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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).
COMMENT:
1. Right of EEs to participate in Policy and Decision-Making
 Such right extends only to matters that directly affect their rights, benefits
and welfare.
 Right not extend to matters pertaining to business
operations/management aspect of the business nor to matters covered
by CBA or those failing within traditional areas of CB
 Right can be exercised thru a Labor-management council to be formed
jointly by the ER and the EEs.
 Unionized establishments  Ees’ representatives to council shall be
nominated by the exclusive bargaining representative.
 NON -Unionized establishments  Ees’ representatives to council shall
be elected directly by the Ees at large.
 Case: PAL v. NLRC (225 S 301)
FACTS:
- PAL completely revised its 1966 code of discipline and thereafter
circulated such among the EEs and immediately implemented. PALEA
challenged such on the ground that it was done withour prior notice and
hearing but PAL claimed that it was a prerogative of the management
and thus, there’s no need to discuss such with the union.
ISSUE/S: WON PAL may be compelled to share with the union (PALEA) or its
Ees its prerogative of formulating a code of discipline
HELD: A close scrutiny of the objectionable provisions of the Code reveals that
they are not purely business-oriented nor do they concern the management
aspect of the business of the company. The provisions of the Code clearly have
repercusions on the employee's right to security of tenure. The implementation of
the provisions may result in the deprivation of an employee's means of livelihood
which, as correctly pointed out by the NLRC, is a property right. In view of these
aspects of the case which border on infringement of constitutional rights, we
must uphold the constitutional requirements for the protection of labor and the
promotion of social justice, for these factors, according to Justice Isagani Cruz,
tilt "the scales of justice when there is doubt, in favor of the worker". 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 action. PAL asserts that all its employees
have been furnished copies of the Code. Public respondents found to the
contrary, which finding, to say the least is entitled to great respect. Such
provision in the collective bargaining agreement 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 mater is the formulation of a code of discipline. Indeed, industrial peace
cannot be achieved if the employees are denied their just participation in the
discussion of matters affecting their rights.
2. Collective Bargaining Unit (CBU)
2.1. Definition
 CBU– refers to a group of EEs sharing mutual interests within a given ER
unit, comprised of all or less than all the entire body of EEs in the ER unit or
any specific occupational or geographical grouping within such ER unit
2.2. Appropriate Bargaining Unit (ABU)
 ABU – a group of EEs of a given ER, comprised of all or less than all the
entire body of EEs, which the collective interest of all the EEs, consistent
with equity to the ER, indicate to the best suited to serve the reciprocal rights
and duties of the parties under the CB provisions of law.
 To be considered “appropriate” – it must effect a grouping of EEs who have
substantial, mutual interests in wages, hrs. Of work, working conditions and
other subjects of collective bargaining.
 Bargaining unit (BU) composed of a mixture of rank-and-file and supervisory
EEs  not ABU!
 No mutuality of interest between supervisory and Rank-and-file EEs
considering that the former, while in the performance of their functions,
become alter ego of management in the making and implementing of
key decisions at sub-managerial level.
 BU composed of EEs with entirely different working conditions, hrs. Of work,
rates of pay, categories of positions and employment status  not ABU!
 CASES:
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Phil. Phosphate v. Torres (231 S335)
FACTS:
- PMPI sought to be certified as sole and exclusive CBAgent of
superintendents, professionals (engineers, analysts, mechanics,
accountants, nurses, midwives, etc.), technical and confidential EEs of
PHILPHOS.
- Such “appropriateness” was challenged because it includes
professional, technical and confidential EEs.
ISSUE/S:WON proposed BU is an ABU
HELD: Not an ABU! No community of interest between the supervisiors and the
professional/technical EEs. Quite obviously, these professional/technical
employees cannot effectively recommend managerial actions with the use of
independent judgment because they are under the supervision of
superintendents and supervisors. Because it is unrefuted that these
professional/technical employees are performing non-supervisory functions,
hence considered admitted, they should be classified, at least for purposes of
this case, as rank and file employees. Consequently, these professional/technical
employees cannot be allowed to join a union composed of supervisors.
Conversely, supervisory employees cannot join a labor organization of
employees under their supervision but may validly form a separate organization
of their own. This is provided in Art. 245 of the Labor Code, as amended by R.A.
No. 6715
Toyota Motor Corp. v. TMCPLU (268 S 573)
FACTS: Respondent filed a petition for certificate election praying that it be
certified as sole and exclusive Bargaining representative of EEs composed of
rank-&-file and supervisory EEs of petitioner. But such petition was challenged
on the ground of “appropriateness” of the BU since supervisory and rank-&file
were lumped together.
ISSUE/S: WON the BU is an ABU
HELD: No. Because supervisory and rank-&file were lumped/mixed together. No
mutuality or unity of interests in the BU of such mixture.
Belyca Corp. v. Ferrer-Calleja (168 S 184)
FACTS: ALU sought to be certified as the sole and exclusive bargaining
representative of all the workers in the integrated business of Belyca Corp
comprising piggery, poulty, agricultural crops, supermarket and cinemas
ISSUE/S: WON the BU composed of , poulty, agricultural crops, supermarket
and cinemas is an ABU

HELD: No. It is beyond question that the employees of the livestock and agro
division of petitioner corporation perform work entirely different from those
performed by employees in the supermarts and cinema. Among others, the noted
difference are: their working conditions, hours of work, rates of pay, including the
categories of their positions and employment status. As stated by petitioner
corporation in its position paper, due to the nature of the business in which its
livestock-agro division is engaged very few of its employees in the division are
permanent, the overwhelming majority of which are seasonal and casual and not
regular employees (Rollo, p. 26). Definitely, they have very little in common with
the employees of the supermarts and cinemas. To lump all the employees of
petitioner in its integrated business concerns cannot result in an efficacious
bargaining unit comprised of constituents enjoying a community or mutuality of
interest.
2.3. Fixing the ABU
 Labor laws did not provide criteria for fixing ABU (apart from the descriptive
word in Art. 255 “appropriate”)
 Baic test of BU’s acceptability: WON it is fundamentally the combination
which will best assure to all EEs the exercise of their CB rights.
 Rothenberg’s fundamental factors:
 (1) will of employees (Globe Doctrine);
 The express will/desire of the EEs may be considered in
determining the ABU
 It sanctions the holding of series of elections, not for the purpose of
determining the CBAgent but for the specific purpose of permitting
the EEs in each of the several categories to selct the group which
chooses as the CBU.
 Case: Kapisanan v. Yard Crew Union (109 Phil. 1143)
FACTS: Kapisanan filed a petition praying that it be certified as the exclusive
Bargaining Agent in Manila Railroad Co. (MRR). CIR promulgated a decision
declaring 3 units appropriate: engine crew, train crew and the unit of all the rest
of the company (to which Kapnisanan was certified). Both Kapisanan and MRR
opposed the separation of the units. CIR thus issued an order to hold a plebiscite
among the 3 grps. To determine WON they desire to be separated from the unit
of all the rest of the co. personnel.
ISSUE/S: Is the order of the CIR contrary to law?
HELD: No. "the desires of the employees" is one of the factors in determining the
appropriate bargaining unit. The respondent Court was simply interested "in the
verification of the evidence already placed on record and submitted wherein the
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workers have signed manifestations and resolutions of their desire to be
separated from Kapisanan." Certainly, no one would deny the respondent court's
right of full investigation in arriving at a correct and conclusive finding of fact in
order to deny or grant the conclusive findings of fact in order to deny or grant the
petitions for certification election. On the contrary, all respondent court, or any
court for that matter, to investigate before acting, to do justice to the parties
concerned. And one way of determining the will or desire of the employees is
what the respondent court had suggested: a plebiscite — carried by secret ballot.
A plebiscite not to be conducted by the Department of Labor, as contemplated in
a certification election under Sec. 12 of the Magna Charter of Labor, R.A. No.
875, but by the respondent court itself. As well as observed by the respondent
court, "the votes of workers one way or the other, in these cases will not by any
chance choose the agent or unit which will represent them anew, for precisely
that is a matter that is within the issues raised in these petitions for certification".
 (2) affinity and unity of employee's interest, such as substantial similarity
of work and duties or similarity of compensation and working conditions;
(Community of interest rule)
 The proper Bargaining unit may be fixed on the basis of the affinity
and the unity of the EEs’ interest, such as substantial similarity of
work and duties or similarity of compensation and working
conditions.
 Cases
Alhambra Cigar v. Kapisanan (107 S 23)
FACTS: Alhambra Employees' Association (AEA) filed a petition praying that it be
certified as the sole and exclusive bargaining agent for all the employees in the
administrative, sales and dispensary departments. Alhambra Cigar and
Kapisanan Ng Manggagawa sa Alhambra (FOITAF) opposed the petition on the
ground that the unit sought to be represented by AEA is not an appropriate CBU
since it is the employer unit which is the appropriate CBU and not the smaller unit
sought by the AEA
ISSUE/S: WON the separate bargaining unit composed of EEs in the
administrative, sales and dispensary departments would constitute an
appropriate CBU
HELD: The SC held that the employees in the administrative, sales and
dispensary departments can form their own bargaining unit separate and distinct
from those involved in the production and maintenance. They have a community
of interest which justifies their formation or existence as a separate appropriate
collective bargaining unit. The existing CBA covers only those in the production
and maintenance.

UP v. Ferrer-Calleja (211 S 451)
FACTS: ONAPUP filed a petition for certification election among the non-
academic EEs of UP; thereafter another union (all UP workers union) intervened
in the proceedings alleging that its membership covers both academic and non-
academic personnel and it aims to unite all UP rank-&-file EEs in 1 union. UP
expressed it’s view that there should be separate unions.
ISSUE/S: WON it is proper to create separate bargaining units for academic and
non-academic EEs
HELD: In the case at bar, the University employees may, as already suggested,
quite easily be categorized into two general classes:
one, the group composed of employees whose functions are non-academic, i.e.,
janitors, messengers, typists, clerks, receptionists, carpenters, electricians,
grounds-keepers, chauffeurs, mechanics, plumbers;
two, the group made up of those performing academic functions, i.e., full
professors, associate professors, assistant professors, instructors — who may be
judges or government executives — and research, extension and professorial
staff.
Not much reflection is needed to perceive that the community or mutuality of
interests which justifies the formation of a single collective bargaining unit is
wanting between the academic and non-academic personnel of the university. It
would seem obvious that teachers would find very little in common with the
University clerks and other non-academic employees as regards responsibilities
and functions, working conditions, compensation rates, social life and interests,
skills and intellectual pursuits, cultural activities, etc. On the contrary, the
dichotomy of interests, the dissimilarity in the nature of the work and duties as
well as in the compensation and working conditions of the academic and non-
academic personnel dictate the separation of these two categories of employees
for purposes of collective bargaining. The formation of two separate bargaining
units, the first consisting of the rank-and-file non-academic personnel, and the
second, of the rank-and-file academic employees, is the set-up that will best
assure to all the employees the exercise of their collective bargaining rights.
 (3) prior collective bargaining history; and
 It is also a factor but not a decisive factor
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 It can be disregarded/brushed aside in the ff cases (and thus, only
the prevailing factors should control the determination of the
bargaining unit):
 Where circumstances had been so altered
 Where the reciprocal relationship of the ER and particular
bargaining agent has been so changed that the past mutual
experience can no longer be considered as a reliable guide to
the present determination of the bargaining unit
 CASE:NAFTU v. Mainit Lumber (192 S 598)
Even if for several years, the sawmill and the logging division have always been
treated as separate units in the company (MALDECO), a single unit can still be
created in the basis of “community of interests” rule. Moreover, while the
existence of a bargaining history is a factor that may be reckoned with in
determining the appropriate bargaining unit, the same is not decisive or
conclusive. Other factors must be considered. The test of grouping is community
or mutuality of interests. This is so because "the basic test of an asserted
bargaining unit's acceptability is whether or not it is fundamentally the
combination which will best assure to all employees the exercise of their
collective bargaining rights." Certainly, there is a mutuality of interest among the
employees of the Sawmill Division and the Logging Division. Their functions
mesh with one another. One group needs the other in the same way that the
company needs them both. There may be difference as to the nature of their
individual assignments but the distinctions are not enough to warrant the
formation of a separate bargaining unit.
 (4) employment status, such as temporary, seasonal and probationary
employees (Similarity of employment status rule)
 This rule requires that temporary, seasonal and probationary
employees be grouped as 1 category and treat them separately
from permanent employees.
 Case: PLASLU v. CIR (110 Phil. 176)
FACTS: AWA and PLASLU are contending unions. CIR ordered to hold a
certification election to determine which will be the sole bargaining agent of the
ER (San Carlos Milling Co.) PLASLU question 242 ballots on the ground that
they were cast by stevedores and piece-rate workers who were employed on
casual/day to day basis, who could not properly be included in the bargaining unit
it seeks to represent

ISSUE/S: Is PLASLU correct?
HELD: Yes. CIR should’ve excluded the 242 votes cast by by stevedores and
piece-rate workers who were employed on casual/day to day basis, who could
not properly be included in the bargaining unit PLASLU seeks to represent. Note
that these temporary workers had a work of different nature from those labourers
permitted to vote; they have no reasonable basis for continued or renewed
employment for any appreciable substantial time- not to mention the nature of
work they perform – they cannot be considered to have such mutuality of interest
as to justify in the bargaining unit composed of regular EEs.
2.4 The One Company-One Union Policy
 GR: LC discourages proliferation of unions in an establishment, unless
circumstances otherwise require
 RATIO: greater mutual benefits which the parties could derive,
especially in case of EES whose bargaining strength could undeniably
be enhanced by their unity and solidarity but diminished by their
disunity, division and dissension.
 Mere fact that certain group of EEs perform functions different from the
other EEs does not warrant the formation of a separate bargaining unit
 Variety of tasks is to be expected
 It would not be in the interest of sound labor-management relations
if each group of EEs assigned to a specialized function or section
would decide to break away from their fellow-workers and form their
own separate bargaining unit - this could only lead to confusion,
discord and labor strife, there being no substantial differences in
their functions.
 EXCEPTIONS
 (1) When supervisory EES organize themselves into a bargaining unit
separate and distinct from bargaining unit of rank-&-file EES (basis: art.
245, LC – prohibitjng the supervisory EEs from joining rank-&-file EEs)
 (2) Where the ER unit has to give way to other bargaining units, like
craft unit, plant unit or subdivision unit. (e.g. In Airline company – cabin
attendants and pilots different from ground personnel; In Educational
institution – teaching and non-teaching personnel)
 (3) When a certain class of EEs are excluded from the coverage of the
bargaining unit. (Ratio: separate bargaining unit must be formed so as
not to unduly deprive them of the right to collectively bargain; e.g.
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exclusion of the daily paid EEs from bargaining unit of those monthly
paid.)
 CASES:
Knitjoy Manufacturing, Inc. v. Ferrer-Calleja (214 S 174)
FACTS: CFW is the certified CR of daily-paid rank-&-file EEs of Knitjoy. While
later and CFW were negotiating for renewal of their CBA, KMEU filed a petition
for certification election among the monthly-paid rank-&-file EEs of knitjoy. CFW
challenged such.
ISSUE/S: WON monthly-paid rank-&-file EEs of Knitjoy can constitute an ABU
separate and distinct from existing unit composed of daily-paid rank-&-file EEs
HELD: Yes. There can be separate bargaining unit on the basis of this. The
regular monthly-paid rank-&-file EEs of Knitjoy were never included in the scope
of the bargaining unit of the daily-paid rank-&-file EEs of Knitjoy
San Miguel Corp. EEs Union v. Confessor (262 S 81)
FACTS: SMCEA is the collective bargaining agent of the rank-&-file EEs of SMC
in its 4 operating divisions (beer, packaging, feeds & livestock, Magnolia and
agri-business). The last 2 divisions became 2 separate and distinct corporations
–Magnolia Corp and San Miguel Foods Corp. SMCEA insisted that bargaining
unit should still include the EEs of the spun-off corporations. SMC claimed that
EEs who moved to Magnolia Corp., can no longer be included because they
automatically cease to be EEs of SMC.
ISSUE/S: WON the bargaining unit at SMC should include the EEs of Magnolia
Corp. and San Miguel Foods, Inc.
HELD: No. There are 2 distinct corporations in the case at bar. Indubitably,
therefore, Magnolia and the feeds and livestock divisions became distinct entities
with separate juridical personalities. Thus, cannot be joined in a single bargaining
unit.
2.5. Separate Bargaining Units for Every Corporation
 2 corporations cannot be treated as a single bargaining unit.
 RATIO: 2 companies are distinct entities with separate juridical
personalities
 Not a justification for piercing the corporate veil:
 Mere fact that their business are related and that some of EEs
of 1 corp. were original EEs of the other

 Mere fact that some EEs of 1 corporation are the same
persons manning and providing auxiliary services to other
corp. and that physical plants, offices are situated in same
compound
3. THE CBAgent
 3 modes of determining CBAgent:
 Voluntary Recognition
 Certification Election
 Run-off Election
3.1 Voluntary Recognition
 Is the process by which legitimate labor organization is acknowledged by the
ER as the exclusive bargaining agent in a unit
 It is proper only in Unorganized establishments with 1 legitimate labor
organization operating within the bargaining unit.
3.1.1. Notice of Voluntary Recognition
 It is required of the ER and the union to submit, within 30 days from
recognition, a NOTICE OF VOLUNTARY RECOGNITION tot he regional
office of the DOLE which issued the union’s certificate of registration or
certificate of creation of chartered local.
 Documentary requirements accompanying the notice (which shall be
certified under oath by the ER and President of the Labor Union):
 A. A joint statement under oath of voluntary recognition attesting to the
fact of voluntary recognition
 B. Certificate of posting of the joint statement of voluntary recognition for
15 consecutive days in at least 2 conspicuous places in the
establishment or bargaining unit where the union seeks to operate
 C. Statement on the approximate number of employees in the
bargaining unit, accompanied by the names of those who support the
voluntary recognition comprising of at least a majority of the members of
the bargaining unit
 D. A statement that the labor union is the only Legitimate Labor
Organization (LLO) operating within the BU
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3.1.2. Recording of Voluntary Recognition
 Fact of Voluntary Recognition shall be recorded in the roster of LLO by the
Labor Relations Division of the Regional Office of the DOLE
 Upon such recording, the recognized labor union shall enjoy rights,
privileges and obligations of an existing bargaining agent.
 Entry of voluntary recognition shall bar the filing of petition for
certification election by any labor organization for a period of 1 year
from date of entry of voluntary recognition
 Upon expiration of the 1 year period, any LLO may file petition for
certification election in the same bargaining unit, UNLESS a collective
bargaining agreement was executed and registered with the DOLE
3.2. Certification Election
 Is the process of determining through secret ballot the sole and exclusive
CBrepresentative of the EEs in an appropriate bargaining unit.
 Can be done through:
 Order of DOLE
 Agreement of parties (called Consent Election)
3.3. Run-Off Election
 If none of the contenders in a certification election (with atleast 3 choices)
obtains a majority of the valid votes cast, the labor unions receiving 2
highest number of votes shall be subjected to an election to determine which
of them should be the CBrepresentative.
3.3.1. Conditions for Holding a Run-off Election
 Conditions:
 (a) Certification Election should have at least 3 choices
 (b) None of the choices obtained a majority of the valid votes cast
 (c) Total # of votes for ALL contending unions is at least 50 % of the
numbers votes cast
 (d) There are no challenged ballots, which can materially alter the
results
 Only 2 labor unions receiving the highest # of votes can participate in a run-
off election
 “no union”  shall not be a choice of a run-off election

 Labor union that garners majority of the valid votes cast shall be the
exclusive collective bargaining agent of the EEs covered by the bargaining
unit.
3.4 Scope of Representation
 CBAgent – represents not only union members but also non-union members
within the bargaining unit.
 Since it voluntarily assumes the responsibility of representing all the
EEs in the bargaining unit.
4. The Substitutionary Doctrine
 In cases where the contract-bar principle is not applicable (as when the CBA
was not duly registered) the EEs may change their CBAgent, but the CBA
continues to bind them up to the expiration date.
 The doctrine: EEs cannot revoke a validly executed CBA by the simple
expedient of changing their bargaining agent.
 The new agent is obliged to respect the CBA, although it could
negotiate for the shortening of the life of the said agreement.
**
Article 256. Representation Issue in Organized Establishments. - In organized
establishments, when a verified petition questioning the majority status of
the incumbent bargaining agent is filed by any legitimate labor organization
including a national union or federation which has already issued a charter
certificate to its local chapter participating in the certification election or a
local chapter which has been issued a charter certificate by the national
union or federation before the Department of Labor and Employment within
the sixty (60)-day period before the expiration of the collective bargaining
agreement, the Med-Arbiter shall automatically order an election by secret
ballot when the verified petition is supported by the written consent of at
least twenty-five percent (25%) of all the employees in the bargaining unit
to ascertain the will of the employees in the appropriate bargaining unit. To
have a valid election, at least a majority of all eligible voters in the unit
must have cast their votes. The labor union receiving the majority of the
valid votes cast shall be certified as the exclusive bargaining agent of all
the workers in the unit. When an election which provides for three or more
choices results in no choice receiving a majority of the valid votes cast, a
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run-off election shall be conducted between the labor unions receiving the
two highest number of votes: Provided, That the total number of votes for
all contending unions is at least fifty percent (50%) of the number of votes
cast. In cases where the petition was filed by a national union or federation,
it shall not be required to disclose the names of the local chapter’s officers
and members.
At the expiration of the freedom period, the employer shall continue to
recognize the majority status of the incumbent bargaining agent where no
petition for certification election is filed. (As amended by Section 23, Republic
Act No. 6715, March 21, 1989 and Section 10, Republic Act No. 9481 which
lapsed into law on May 25, 2007 and became effective on June 14, 2007).
COMMENT:
1. Purpose of Certification Election
 To ascertain the wishes of the majority of the EEs in the bargaining unit on
whether to be represented by a labor organization and which labor
organization.
 Intended to give EEs true representation in their collective bargaining
with their ER
2. Significance of Certificate Election
 It is the fairest and most effective way of determining which labor
organization can truly represent the working force in the ABU.
 Thru such, EEs are given the opportunity to make known their choice on
who shall represent them in CB
 Freedom to form labor organizations would be rendered nugatory if EEs
could not choose their own leaders to speak on their behalf and to
bargain for them.
3. Nature of the Certification Proceedings
 Not a litigation in the sense the term is commonly understood where
conventional rules of evidence are strictly observed.
 It is an investigation of non-adversary, fact-finding character in which the
Med-Arbiter plays the part of a disinterested investigator seeking merely to
ascertain the desires of EEs as to the matter of their representation,

especially so where the petition for certification election and the claim of
majority representation are uncontested.
 When adversarial?  2 rival unions claim representation, hence, it has
to be decided according to lawful evidence.
4. Venue of Certification Proceedings
 Filed with the Regional Office of the DOLE which issued the petitioning
union’s certificate of registration or certificate of creation of chartered local.
5. Who May File A Petition For Certification Election
 GR: LLO can file
 EXCEPTION: ER can also file when it is requested by a LLO to bargain
collectively.
6. The Proper Time for Filing a Petition for Certification
 Absence of CBA or if CBA has not been duly registered in accordance with
Art. 231, LC
 Such may be filed anytime
 If there is a duly registered CBA
 Petition for Certification Election can be filed only during the freedom
period (60 days prior to expiry of such agreement)
 Cases:
Associated Labor Unions v. Ferrer-Calleja (179 S 127)
FACTS: ALU had a CBA with PASAR due to expire on April 1, 1987. On March
23, 1987, NAFLU filed a petition for certification election. ALU sought dismissal
on the ground that it failed to present necessary signatures. Med-Arbiter
dismissed and NAFLU appealed. During the pendency of appeal, ALU and
PASAR executed a new CBA. Then ALU sought to dismiss the appeal on the
grounds that there is a new CBA; but instead of dismissing appeal, BLR ordered
a certification election.
ISSUE/S: WON it was proper for BLR to order Certification Election despite a
new CBA was entered by ALU and PASAR
HELD: It was proper. Petition filed within the 60 days freedom period and hence,
merely filing within that time is a sufficient basis for ordering certification election.
Mere fact that CBA has already ratified and EEs are already enjoying benefits
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under CBA does not alter the situation. More so because the CBA was not yet in
existence when the petition for certification election was filed.
NACUSIP v. Ferrer-Calleja (205 S 478)
FACTS: NFSW and DSR Milling Co.’s 3 year CBA expired on Nov. 14, 1987.
They renewed such. On Dec. 5, 1988, NACUSIP filed a petition for certification
election. NSFW sought the dismissal of such
ISSUE/S: WON petition should be dismissed since such was filed outside the
freedom period
HELD: Yes. Petition for Certification Election in organized establishments can
only be entertained within the 60 days prior to the expiry date of an existing CBA
and a petition filed after freedom period should be dismissed outright.
United Aluminum Fabricators v. Drilon (211 S 104)
FACTS: United and UAFW had a CBA which expired on April 29, 1989. During
freedom period (April 3, 1989), the two renegotiated and executed a new CBA.
After the lapse of 69 days from expiry of the former CBA, KAMPIL filed a petition
for certification election. United moved to dismiss. Med-Arbiter dismissed but
Sec. Of Labor and Employment ordered the holding of certification election.
ISSUE/S: WON secretary was correct
HELD: No. 69 days after the expiry was beyond the freedom period set by law.
7. Form and Contents of Petition
 Petition for certification shall be in writing and verified by the president of the
petitioning union.
 Allegations need to be contained:
(a) the name of petitioner, its address, and affiliation if appropriate, the date and
number of its certificate of registration. If the petition is filed by a federation or
national union, the date and number of the certificate of registration or certificate
of creation of chartered local;
(b) the name, address and nature of employer's business;
(c) the description of the bargaining unit;
(d) the approximate number of employees in the bargaining unit;
(e) the names and addresses of other legitimate labor unions in the bargaining
unit;
(f) a statement indicating any of the following circumstances:
1) that the bargaining unit is unorganized or that there is no registered
collective bargaining agreement covering the employees in the
bargaining unit;
 LABOR RELATIONS (Arts. 226-292, Labor Code of the Philippines) 58
Atty. Paulino Ungos

2) if there exists a duly registered collective bargaining agreement, that 10. Employer’s Defenses
the petition is filed within the sixty-day freedom period of such
agreement; or a. Lack of employer- employee relationship;
3) if another union had been previously recognized voluntarily or b. Lack of legal personality on the part of the petitioning union;
certified in a valid certification, consent or run-off election, that the c. Lack of 25% written consent;
petition is filed outside the one-year period from entry of voluntary d. Inappropriate bargaining unit;
recognition or conduct of certification or run-off election and no appeal is e. Contract bar rule;
pending thereon. f. Voluntary recognition bar rule;
(g) in an organized establishment, the signature of at least twenty-five percent g. Election bar rule;
(25%) of all employees in the appropriate bargaining unit shall be attached to the h. Negotiation bar rule; and
petition at the time of its filing; and i. Deadlock bar rule.
(h) other relevant facts.
10.1 Lack of Employer- Employee Relationship
8. Intervention
 Failure to establish E-E relationship means ineligibility to file and vote
 Labor unions with substantial interest in the certification election have for certification election.
the right to intervene and take part in the certification proceedings.  Singer Sewing Machine Company v. Drilon:
 Intervention is done by filing a MOTION FOR INTERVENTION with the o Private respondent are not employees of the company, they
Med-Arbiter assigned to the case. are not entitled to the constitutional right to join and form a
 Organized establishment: filed during freedom period labor organization for purposes of CB.
 Unorganized establishment: filed at any time prior to the decision of the
Med-Arbiter. 10.2 Lack of Legal Personality on the Part of the Union
 Incumbent CBA automatically becomes a forced intervenor.
 GR: Forms and contents of a motion for intervention shall be the same A labor union lacks legal personality:
as petition for Certification election,
o It need not be supported by the written consent of 25% of the a. If it is not registered with the DOLE; or
employees within the bargaining unit. b. If its registration has been cancelled by virtue of a final judgment.
o The 25% consent applies only to petitions for certification
election.  Only legitimate labor organization may file for certification.
 During the pendency of application for registration, al LO may be
9. The By- Stander Principle allowed to file petition for certification election.
 U.E. Automotive Employees v. Noriel (74 SCRA 72)
 GR: In certification proceeding, the employer is a mere by- stander o In absence of any fatal defect to the application for registration,
because the proceeding is the sole concern of workers. there is no justification for withholding it from petitioner to
 EXP: When the employer files a petition for certification election enable it to exercise fully its constitutional right to freedom of
pursuant to Art 258 of the LC because it was requested to bargain association.
collectively.  Cancelled registration by virtue of final judgment, loses legal
o After the filing of the petition, the role of the employer ceases. personality, hence it cannot file a petition for CE.
 When the employer invokes certain valid defenses.

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o Mere pendency of the cancellation proceeding does not
disqualify LO from filing a petition for certification election
because during pendency the legal personality subsists.
10.3 Lack of 25% Consent Requirement
 Organized establishment: petition must be supported by written consent
of at least 25% of all the employees in the bargaining unit.
o If the CE is supported by the written consent of 25% of the
employees within the bargaining unit, it is MANDATORY on the
part of the Med-Arbiter to order a CE. (Art. 256)
 Failure to submit 25% written consent is a ground for dismissal.
 The 25% requirement should not be applied strictly; prima facie showing
of compliance will suffice.
 However, if the written consent falls short of the 25%, it is no longer
mandatory, but discretionary on the part of the med- Arbiter to call a CE.
10.3.1 Effect of Withdrawal of Consent
 Before filing of petition for CE: the Med- Arbiter may not order the
holding of CE.
 La Suerte Cigar and Cigarette Factory v. Dir of Labor Relations:
o Withdrawals made before the filing of the petition are
presumed voluntary, unless there is convincing proof to the
contrary.
o Withdrawals made after the filing are deemed involuntary.
 After filing of petition for CE: the Med- Arbiter can still order the holding
of CE.
 George & Peter Linea Inc. v. ALU:
o Withdrawal of 80% of the membership which the union claims
to be involuntary, the best forum to determine if there was
undue pressure exerted upon employees to retract their
membership is the CE itself.
Effect of Withdrawal of Consent
- If the withdrawal or retraction of consent was made before the filing of
the petition for certification election, the Med-Arbiter may not order the
holding of a certification election.
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Case: La Suerte Cigar and Cigarette Factory vs. Director of Bureau of Labor
Relations (123 SCRA 679)
HELD: “xxx whether or not the withdrawal of 31 union members from NATU
affected the petition for certification election insofar as the 30% requirement is
concerned, We reverse the Order of respondent Director of the Bureau of Labor
Relations, it appearing undisputably that the 31 union members had withdrawn
their support to the petition before the filing of said petition. It would be otherwise
if the withdrawal was made after the filing of the petition for it would then be
presumed that the withdrawal was procured through duress, coercion or for
valuable consideration. In other words, the distinction must be that withdrawals
made before the filing of the petition are presumed voluntary, unless there is
convincing proof to the contrary, whereas withdrawals made after the filing of the
petition are deemed involuntary.”
- If the withdrawal or retraction of consent was made after the filing of the
petition for certification election, the Med-Arbiter can still order the
holding of a certification election.
Case: George & Peter Lines Inc. vs. ALU (134 SCRA 82)
HELD: “xxx Certification election is the best and most appropriate means of
ascertaining the will of the employees as to their choice of an exclusive
bargaining representative… Even if the withdrawals of the employees concerned
were submitted after the Petition for the Direct Certification had been filed the
doubt as to the majority representation has arisen, and it is best to determine the
true sentiment of the employees through a certification election.”
- Reason for distinction:
o If the withdrawal or retraction is made before the filing of the
petition, the names of employees supporting the petition are
supposed to be held secret to the opposite party.
o When the withdrawal or retraction is made after the petition is
filed, the employees who are supporting the petition become
known to the opposite party since their names are attached to
the petition at the time of filing.
Inappropriate Bargaining Unit
- A bargaining unit is not an appropriate bargaining unit:
a) If it fragments the employer unit;
b) If the composition thereof is a mixture of rank-and-file and
supervisory employees, or a mixture of supervisory and
managerial employees;
c) If it is composed of managerial employees; or

d) If it is composed of members of a cooperative
- If the bargaining unit sought to be represented by the petitioning union
is not an appropriate bargaining unit, the employer can move for the
dismissal of the petition for certification election.
The Contract-Bar Rule
- If there is a duly registered collective bargaining agreement, no petition
questioning the majority status of the incumbent bargaining agent shall
be entertained.
- No certification election shall be conducted outside of the sixty-day
period immediately before the expiry of the five-year term of the
collective bargaining agreement.
The Voluntary Recognition Bar Rule
- Voluntary recognition duly entered in the roster of legitimate labor
organization shall bar the filing of a petition for certification election for a
period of one (1) year from the date of entry of voluntary recognition.
o An employer can ask for the dismissal of a petition for
certification election filed within one (1) year from entry of
voluntary recognition.
- Upon expiration of the one-year period, any legitimate labor
organization may file a petition for certification election in the same
bargaining unit represented by the voluntarily recognized union, unless
a collective bargaining agreement between the employer and the
voluntarily recognized labor union has been executed and registered.
The Election-Year Bar Rule
- No petition for certification election may be filed within one (1) year from
the date of a valid certification election, consent election or run-off
election.
- In case of appeal, the running of the one-year period is suspended until
the decision on the appeal has become final and executory.
Case: R. Transport Corp. vs. Laguesma (227 SCRA 826)
FACTS: CLOP filed a petition for certification election but the same was
dismissed by the Med-Arbiter because the bargaining unit sought to be
represented did not include all the eligible employees but only drivers,
conductors and conductresses to the exclusion of the inspectors,
dispatchers, mechanics and washer boys. CLOP rectified its mistake by
filing a second petition for certification election, which included all the rank-
and-file employees of the company. The Company moved for the dismissal
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LABOR RELATIONS (Arts. 226-292, Labor Code of the Philippines) 60
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of the second petition on the ground that it was filed within one (1) year from
the dismissal of the first petition.
ISSUE: Whether or not CLOP was barred from filing the second petition for
certification election?
HELD:NO. CLOP was not barred from filing the second petition for
certification election. The one-year prohibition imposed by the election-year
bar rule does not apply because no certification election was ever
conducted. The first petition was merely dismissed because of certain
defects. The election-year bar rule will apply only when there is actual
conduct of election.
The Negotiation-Bar Rule
- No representation question may be entertained if, within the one-year
period from the date of entry of voluntary recognition, certification
election, or run-off election, the duly recognized or certified union has
commenced negotiations with the employer in accordance with Article
250 of the Labor Code.
Case: KAMPIL vs. Trajano( 201 SCRA 453)
FACTS: By virtue of a Resolution of the Bureau of Labor Relations dated
February 27, 1981, NAFLU was declared as the exclusive bargaining
representative of all the rank-and-file workers of Viron Garments. Four (4) years
had lapsed without any collective bargaining agreement being entered into
between NAFLU and Viron.
ISSUE: Can another labor organization file a petition for certification election?
HELD: YES. A petition for certification election can be filed by another union. The
one-year period during which the certified union is required to negotiate with the
employer has long expired.
The Deadlock-Bar Rule
- No representation question may be entertained if, before the filing of a
petition for certification election, a bargaining deadlock to which an
incumbent or certified bargaining agent is a party, had been submitted
to conciliation or arbitration or had become the subject of a valid notice
of strike or lockout.
o Purpose: To ensure stability in the relationship of the workers
and the management.
Case: NACUSIP vs. Trajano (208 SCRA 18)
FACTS: NACUSIP is the certified bargaining representative of the rank-and-file
employees of Calinog Refinery Corporation. A collective bargaining deadlock

ensued between it and the corporation, for which they agreed to submit the
deadlock for compulsory arbitration. A month after the deadlock was submitted
for compulsory arbitration, FUR filed a petition for certification election alleging
that about 45% of the employees had joined FUR; and that while NACUSIP had
been certified as the sole and exclusive bargaining representative, it had been
unable to conclude a collective bargaining agreement despite the lapse of more
than one year.
ISSUE: Will the petition prosper?
HELD: NO. The petition will not prosper because when FUR filed the petition for
certification election, a bargaining deadlock was already submitted for arbitration.
Under the deadlock-bar principle, a petition for certification election can only be
entertained if there is no bargaining deadlock submitted to conciliation or
arbitration or had become the subject of a valid notice of strike or lockout.
QUESTIONS PERTAINING TO VALIDITY OF REGISTRATION
 QUESTIONS THAT CANNOT BE RAISED IN A MOTION TO DISMISS
THE PETITION FOR CERTIFICATION ELECTION
1. Validity of the registration of the collective bargaining
agreement
2. Validity of the union’s registration
 REMEDY – File an independent petition for cancellation of registration
with the Regional Director of the Department of Labor and Employment
 PENDING RESOLUTION OF THE PETITION FOR CANCELLATION
OF REGISTRATION
o The proper party can ask for the suspension of the certification
election proceedings
 It would have been more prudent for the Med-Arbiter and public
respondent to have granted petitioner’s request for the suspension of
proceedings in the certification election case until the issue of the
legality of the Union’s registration shall have been resolved. Grave
abuse of discretion. (Progressive Development Corporation – Pizza Hut
v. Laguesma)
EFFECT OF UNFAIR LABOR PRACTICE CHARGE
 GENERAL RULE – A complaint for unfair labor practice file against the
union will not affect the holding of a certification election
o REASON: It should not be allowed to lend itself as a means to
prevent a truly free expression of the will of the labor group as
to the organization that will represent it
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LABOR RELATIONS (Arts. 226-292, Labor Code of the Philippines) 61
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 EXCEPTION – A complaint for unfair labor practice charging a labor
organization to be company-dominated
o REASON: If there is a union dominated by the company to
which some of the workers belong, an election among the
workers and the employees of the company would not reflect
the true sentiment and wishes of the said workers and
employees from the standpoint of their welfare and interest
 An unfair labor practice complaint charging a labor organization to be
company dominated is a prejudicial question in a petition for a
certification election
o Must first be decided before ordering a certification election
o May render the election process nugatory if the company-
dominated union wins and would later on be decertified
EFFECT OF STRIKE
 None. Certification election is still valid
CONDUCT OF CERTIFICATION ELECTION
QUALIFIED VOTERS
 All employees covered by the appropriate bargaining unit at the time of
issuance of the order granting the holding of a certification election
 Probationary employees
 Strikers
o REASON – They continue to enjoy employee status during the
strike
o EXCEPTION – They are declared to have lost their employee
status
 Employee dismissed from work but has contested the legality of
dismissal in a forum of appropriate jurisdiction at the time of issuance of
the order for the conduct of a certification election
o EXCEPTION – His dismissal was declared valid in a final
judgment at the time of the holding of the certification election
 Members of Iglesia ni Kristo
o No law, administrative rule or precedent prescribes forfeiture of
the right to vote by reason of neglect to exercise the right in the
past certification elections
o The fact Iglesia ni Kristo members are forbidden by their
religious belief from forming, joining or assisting labor
organizations does not disqualify them from voting in a
certification election

SEGREGATION OF VOTES
 In case of disagreement over the voter’s list or over the eligibility of
voters, all contested voters shall be allowed to vote
o Their ballots shall be segregated and sealed in individual
envelopes
NOTICE OF ELECTION
 Election Officer to cause posting of notice of election at least ten (10)
days before the actual date of election in two most conspicuous places
in the company premises
 CONTENTS OF THE NOTICE
1. Date and time of election
2. Names of all contending unions
3. Description of the bargaining unit
 Cannot be waived by the contending union or employer
 One day deficiency will not nullify the election if a substantial number of
employees voted accordingly on the election day
CHALLENGING OF VOTES
 The authorized representative of any of the contending unions and the
employer may challenge a vote before the ballot is deposited in the
ballot box
 Grounds
 When a vote is properly challenged
o Election Officer to place the ballot in an envelope and seal in
the presence of the voter and representative of the contending
unions and employer
o Indicate voters name
o Envelope to be signed by the Election Officer and
representatives of all contending unions and employer
o Election Officer to note all the challenges in the minutes of the
election and consolidate all the envelopes of the challenged
votes
o Envelopes hall be opened and the question of elegibility shall
be passed only if the number of segregated voters will
materially alter the results of the election
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Election Protest
 Any party-in-interest may file a protest based on the conduct or
mechanics of the election.
- The protest must be recorded in the minutes of the
proceedings.
- Protests not so raised are deemed WAIVED.
 A Labor Organization which did not take part in the certification election
cannot file a protest.
 The protesting party must:
- Formalize its protest with the Med-Arbiter
- With specific grounds, arguments and evidence therefor
- Within five (5) days after the close of the election proceedings.
[The phrase “close of the election proceedings” refers to that
period from the closing of the polls to the counting and
tabulation of votes].
 The PROTEST shall be DEEMED DROPPED, IF the protest is not
recorded in the minutes of the proceedings or if not formalized
within the prescribed period.
 A certification election may be declared invalid if certain irregularities
were committed during the election. BUT a mere general allegation of
duress is not sufficient to invalidate a certification election.
Example of Irregularities:
 If the workers of the night shift and afternoon shift were not able to
vote
 The secrecy of ballots was not safeguarded
 The election supervisors were remiss in their duties and were
apparently intimidated by a union representative and the
participating unions were overzealous in wooing the employees to
vote in their favorby resorting to such tactics as giving free tricycle
rides and T-shirts.
Failure of Election
- is present when LESS THAN a majority of all eligible voters
have cast their votes.
- it shall not bar the filing of a motion for the immediate holding
of another certification/consent election within six (6) months
from the declaration of failure of election.

Proclamation
The Med-Arbiter shall proclaim the union which obtained the majority of
the valid votes cast if the following conditions are met:
a. No protest has been filed, OR if one was filed, the same was not
perfected within the 5 day period for perfection of the protest;
b. No challenge or eligibility issue was raised, OR if one was raised, the
resolution of the same will not materially change the result.
-In a certification election, the authority of the Med-Arbiter or election officer is
LIMITED to certifying the winner as the sole and exclusive bargaining agent.
Direct Certification
- This is no longer allowed as a method of selecting the
exclusive bargaining agent.
- The present law affirms the superiority of certification election
over direct certification.
ART. 257. Petitions in unorganized establishments. - In any establishment
where there is no certified bargaining agent, a certification election shall
automatically be conducted by the Med-Arbiter upon the filing of a petition
by a legitimate labor organization.
COMMENT:
1. Unorganized Establishment
- is a firm or company where there is no certified or recognized
collective bargaining agent for a particular bargaining unit.
2. Certification Election in Unorganized Establishment
- The mere filing of a petition for certification election by a
legitimate labor organization is enough to order the holding of a
certification election.
ART. 258. When an employer may file petition. - When requested to bargain
collectively, an employer may petition the Bureau for an election. If there is
no existing certified collective bargaining agreement in the unit, the Bureau
shall, after hearing, order a certification election.
All certification cases shall be decided within twenty (20) working days.
The Bureau shall conduct a certification election within twenty (20) days in
accordance with the rules and regulations prescribed by the Secretary of
Labor.
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COMMENT:
Employer as Petitioner
- If a legitimate labor organization requests an employer to
bargain collectively there are 2 options available to the
employer, namely:
a. Voluntarily recognize the representation status of the labor
organization; or
b. File a petition for certification election.
Case: Ilaw at Buklod Ng Manggagawa v. Ferrer-Calleja(182 SCRA 561)
FACTS: On September 7, 1987, IBM requested San Miguel Corporation (SMC)
for voluntary recognition as the sole and exclusive bargaining representative of
all monthly and daily paid employees of the Calasiao Sales Office. SMC denied
the request. Instead, it filed a petition on the ground that it did not ask SMC to
bargain collectively with it.
HELD: IBM’s request for voluntary recognition as bargaining representative was
in effect a request to bargain collectively. Hence, SMC’s petition for certification
election was proper under Article 258 of the Labor Code.
ART. 259. Appeal from certification election orders. - Any party to an election
may appeal the order or results of the election as determined by the Med-
Arbiter directly to the Secretary of Labor and Employment on the ground
that the rules and regulations or parts thereof established by the Secretary
of Labor and Employment for the conduct of the election have been
violated. Such appeal shall be decided within fifteen (15) calendar days.
COMMENT:
Remedy From a Decision in a Petition for Certification Election
In Unorganized Establishments
a. Order Dismissing a Petition for Certification Election
- may be appealed to the Office of the Secretary of Labor and
Employment within ten (10) days from receipt thereof.
b. Order Granting a Petition for Certification Election
- is NOT appealable.
- any issue arising therefrom may be raised by means of protest
on the conduct and results of the certification election.

HOWEVER, under certain EXCEPTIONAL SITUATIONS, appeal may be
resorted to if the Med-Arbiter orders the holding of a certification election despite
the:
a. Lack of employer-employee relationship with the members of the
bargaining unit;
b. Lack of legal personality on the part of the petitioning union either
because it is not listed in the registry of legitimate unions or because its
registration has been cancelled; or
c. Improper composition of the bargaining unit.
In Organized Establishments
The ORDER DISMISSING or GRANTING the Petition for Certification
Election
- may be appealed to the Office of the Secretary of Labor and
Employment within ten (10) days from receipt.
Form of Appeal
- under oath
- shall consist of a memorandum of appeal
- specifically stating the grounds for appeal
- supporting arguments and evidence
Where to File Appeals
- in the Regional Office of the Department of Labor and
Employment where the petition originated.
Effect of Appeal
- the filing of appeal STAYS the holding of certification election
Title VII-A
GRIEVANCE MACHINERY AND VOLUNTARY ARBITRATION
ART. 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
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Bargaining Agreement and those arising from the interpretation or
enforcement of company personnel policies.
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.
COMMENT:
Grievance
- is a dispute or controversy between an employer and the
collective bargaining agent, individual employee or group of
employees, arising from interpretation or implementation of the
collective bargaining agreement or interpretation or
enforcement of company personnel policies.
Grievance Machinery
- where grievances are processed which the parties to a
collective bargaining agreement are required to establish under
Article 260 of the Labor Code.
If NO Grievance Machinery provided in the Collective Bargaining
Agreement
- the parties are required to create, within ten (10) days from
signing of the collective bargaining agreement, a grievance
committee to be composed of at least two(2) representatives
from the members of the bargaining unit(which shall be

designated by the union) and at least two(2) from the
employer.
Grievance Procedure
The following procedures shall be observed, UNLESS a different procedure is
prescribed in the collective bargaining agreement:
a. - An employee shall present his grievance or complaint orally or in
writing to the shop steward.
- Upon receipt thereof, the shop steward shall verify the facts and
determine whether or not the grievance is valid.
b. - if the grievance is VALID, the shop steward shall immediately bring the
complaint to the employee’s immediate supervisor.
- the shop steward, the employee and his immediate supervisor shall
exert efforts to settle the grievance at their level.
c. if No settlement is reached, the grievance shall be referred to the
grievance committee which shall have ten (10) days to decide the case.
Grievance Handling - Part of the Collective Bargaining Process
- it is a continuous process
- the duty to bargain collectively imposes upon the parties during
the term of their agreement to meet and confer promptly and
expeditiously ad in good faith for the purpose of adjusting any
grievance or question arising under such agreement.
Voluntary Arbitration
- is a system whereby the parties agree to refer their dispute to
an impartial third person for a final and binding resolution,
UNLIKE in compulsory arbitration in which the third party is
appointed by the government.
ART.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
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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.
COMMENT:
Voluntary Arbitrator
- is a person accredited as such by the National Conciliation and
Mediation Board;or
- any person chosen or designated by the parties in the
collective bargaining agreement;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 who 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, whose
function is to resolve the disputes submitted to it by the parties.
Jurisdiction of Voluntary Arbitrators
Original and Exclusive Jurisdiction
a. unresolved grievance arising from interpretation or implementation of a
collective bargaining agreement;
b. unresolved grievance arising from interpretation or enforcement of
company personnel policies;
c. disputes arising from wage distortion caused by the application any
wage order in organized establishments; and
d. disputes arising from interpretation and implementation of the
productivity incentive programs under RA No. 6971
Jurisdictional Preconditions
A voluntary arbitrator can acquire jurisdiction over the foregoing
disputes only when the following conditions have been complied with:

a. the dispute has been brought to the grievance machinery for
resolution;
b. the grievance machinery failed to resolve the dispute; and
c. the parties agree to submit the dispute for voluntary arbitration.
Jurisdiction Over Termination Disputes
General Rule:
Disputes over the validity of dismissal or severance of employment do not fall
within the jurisdiction of voluntary arbitrators BUT within the original and
exclusive jurisdiction of the Labor Arbiter.
Exception:
Disputes over the validity of dismissal or severance of employment will fall within
the jurisdiction of voluntary arbitrators only when the issue pertains to
interpretation or implementatation of a collective bargaining agreement or
company personnel policy.
Case involving “interpretation or implementation of collective bargaining
agreemen or company personnel policies” vs. case involving “termination”
 Where the dispute is just in the interpretation, implementation or
enforcement stage, it may be referred to the GRIEVANCE
MACHINERY set up in the collective bargaining agreement OR to
VOLUNTARY ARBITRATION.
 Where there was already actual termination, i.e., violation of rights,
it is already cognizable by the LABOR ARBITER.
CASE: Sanyo Philippines Workers Union v. Canizares 211 SCRA 361
FACTS:PSSLU had an existing collective bargaining with Sanyo Philippines, Inc.
which contains a union security clause. On account of anti-union activities,
disloyalty and for joining another union, PSSLU expelled twelve (12) employees
from the Union. As a result, PSSLU recommended the dismissal of said
employees pursuant to the aforequoted union security clause in the CBA. Sanyo
approved the recommendation and considered the said employees dismissal.
The dismissed employees filed with the Arbitration Branch of the NLRC a
complaint for illegal dismissal. PSSLU maintained that the jurisdiction belonged
to the voluntary arbitrator.
ISSUE: Whether or not the voluntary arbitrator has jurisdiction over the case.
HELD: The voluntary arbitrator has no jurisdiction over the case. There is no
grievance between the union and management which could be brought to the
grievance machinery. The dispute is between PSSLU and Sanyo, on the one
hand, and the dismissed union members, on the other hand. The dispute,
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therefore, does not involve interpretation or implementation of a collective
bargaining agreement.
CASE: Pantranco North Express Inc. v. NLRC 259 SCRA 161
FACTS: X, who was a member of Pantranco Employees Association-PTGWO,
was employed by PNEI as bus conductor. He continued in the employ of PNEI
until August 12, 1989, when he was retired at the age of 52 and after having
rendered 25 years of service. The basis of his retirement was the compulsory
retirement provision in the collective bargaining agreement between PNEI and
the Pantranco Employees Association-PTGWO. Claiming that his retirement was
tantamount to dismissal, X filed with the Arbitration Branch of the NLRC a
complaint for illegal dismissal. PNEI challenged the jurisdiction of the Labor
Arbiter on the ground that the dispute concerns a provision of the CBA and its
interpretation, the jurisdiction of which falls under the voluntary arbitrator.
ISSUE: Whether or not the voluntary arbitrator has jurisdiction over the case.
HELD:The voluntary arbitrator has no jurisdiction over the case. No dispute
exists between the Union and PNEI, so as to create a grievance, because both
have previously agreed the compulsory retirement of X as embodied in the CBA.
It was only X on his own who questioned the compulsory retirement. Thus, this
case is properly denominated as “termination dispute” which comes under the
original and exclusive jurisdiction of labor arbiters.
CASE: Maneja v. NLRC 290 SCRA 603
FACTS: X was employed as Telephone Operator of Manila Midtown Hotel. She
was dismissed from her employment for committing the following violations of
Offenses Subject to Disciplinary Actions (OSDA), namely: falsifying official
documents and culpable carelessness-negligence or failure to follow specific
instructions or established procedures. X filed a complaint for dismissal with the
Arbitration Branch of the NLRC. The Hotel challenged the jurisdiction of the
Labor Arbiter on the ground that the case falls within the jurisdictional ambit of
the grievance procedure and voluntary arbitration under the CBA.
ISSUE: Whether or not the Labor Arbiter has jurisdiction.
HELD: The Labor Arbiter has jurisdiction. The dismissal of X does not call for the
interpretation or enforcement of company personnel policies but is a termination
dispute which comes under the jurisdiction of the Labor Arbiter.
ART. 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.

COMMENT:
The Import of the Phrase “all other labor disputes”
- May include termination disputes, provided that the parties
conform to the submission of termination disputes to voluntary
arbitration.
- There is a need for an express stipulation in the collective
bargaining agreement that the termination disputes should be
resolved by a Voluntary Arbitrator or Panel of Voluntary
Arbitrators, considering that termination disputes fall within a
special class of disputes that are generally within the exclusive
original jurisdiction of Labor Arbiters by express provision of
law.
- Without such express stipulation, the phrase “all disputes”
should be construed as limited to the areas of conflict
traditionally within the jurisdiction of Voluntary Arbitrators, i.e.,
disputes relating to contract-interpretation, contract-
implementation, or interpretation or enforcement of company
personnel policies.
- Termination disputes – not falling within any of these
categories – should then be considered as a special area of
interest governed by a specific provision of law.
Agreement of the Parties is Necessary to Confer Jurisdiction
- The jurisdiction of the voluntary arbitrator over the
dispute(particular labor dispute) is acquired upon receipt of the
Submission Agreement duly signed by both parties(express
and specific agreement).
- HOWEVER, even WITHOUT an express agreement between
the parties, no one can arrogate into the powers of Voluntary
Arbitrators the original and exclusive jurisdiction of Labor
Arbiters over unfair labor practices, termination disputes, and
claims for damages.
CASE: San Miguel Corporation v. NLRC 255 SCRA 133
FACTS:SMC terminated the services of several mechanics, machinists, and
carpenters on the ground of redundancy. As a result, the Union filed with the
Arbitration Branch of the NLRC a complaint for unfair labor practice and illegal
dismissal against SMC. SMC moved for the dismissal of the complaint on the
ground that the Labor Arbiter has no jurisdiction over the subject matter of the
complaint. SMC’s thesis is that the dispute as to the termination of the union
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members and the unfair labor practice should be settled by voluntary arbitration,
and not by the labor arbiter following the provision of the CBA, which ought to be
treated as the law between the parties. Additionally, SMC theorized that since the
Union questioned the discharges, the main question is whether SMC had the
prerogative to effect the discharges on the ground of redundancy, and this
necessarily calls for the interpretation or implementation of Article III (Job
Security) in relation to Article IV (Grievance Machinery) of the CBA.
HELD: SMC’s contention is not meritotious because:
a. There is no agreement whatsoever between SMC and the Union that
would state in unequivocal language that they conform to the
submission of termination disputes and unfair labor practice to voluntary
arbitration.
b. SMC cannot validly invoke Section 2, Article III to show that the dispute
is proper subject of grievance because the Union did not exercise its
right to seek reconsideration of SMC’s move to terminate the services of
the employees concerned.
c. There is no connection whatsoever between SMC’s management
prerogative to effect the discharges and the interpretation or
implementation of Article III and IV of the CBA.
Hence, the Union acted well within its right in filing the complaint for illegal
dismissal with the Labor Arbiter. The termination disputes are matters falling
under the original and exclusive jurisdiction of the Labor Arbiter.
ART. 262-A. Procedures. - The Voluntary Arbitrator or panel of Voluntary
Arbitrators shall have the power to hold hearings, receive evidences and
take whatever action is necessary to resolve the issue or issues subject of
the dispute, including efforts to effect a voluntary settlement between
parties.
All parties to the dispute shall be entitled to attend the arbitration
proceedings. The attendance of any third party or the exclusion of any
witness from the proceedings shall be determined by the Voluntary
Arbitrator or panel of Voluntary Arbitrators. Hearing may be adjourned for
cause or upon agreement by the parties.
Unless the parties agree otherwise, it shall be mandatory for the Voluntary
Arbitrator or panel of Voluntary Arbitrators to render an award or decision
within twenty (20) calendar days from the date of submission of the dispute
to voluntary arbitration.

The award or decision of the Voluntary Arbitrator or panel of Voluntary
Arbitrators shall contain the facts and the law on which it is based. It shall
be final and executory after ten (10) calendar days from receipt of the copy
of the award or decision by the parties.
Upon motion of any interested party, the Voluntary Arbitrator or panel of
Voluntary Arbitrators or the Labor Arbiter in the region where the movant
resides, in case of the absence or incapacity of the Voluntary Arbitrator or
panel of Voluntary Arbitrators, for any reason, may issue a writ of
execution requiring either the sheriff of the Commission or regular courts
or any public official whom the parties may designate in the submission
agreement to execute the final decision, order or award.
COMMENT:
Scope of Arbitration Awards
- The power and authority of voluntary arbitrators to decide a
case is limited to those matters which have been submitted to
them for arbitration.
Judicial Review of Arbitration Awards
- Decisions or awards of voluntary arbitrations are appealable to
the Court of Appeals.
- The state of our present law relating to voluntary arbitration
provides that “the award or decision of the Voluntary Arbitrator
x xx shall be final and executory after 10 calendar days from
receipt of the copy of the award or decision by the parties,”
while the “decisions,awards, or orders of the Labor Arbiters are
final and executory unless appealed to the Commission by any
or both parties within 10 calendar days from receipt of such
decisions, awards, or orders.”
- Hence, while there is an express mode of appeal from the
decision of labor arbiter, RA No. 6715 is silent with respect to
an appeal from the decision of a voluntary arbitrator.
Power to Enforce Arbitration Awards
- The Voluntary Arbitrator has the power to:
a. Issue writ of execution
b. May require the sheriff of the NLRC or the regular courts
or any public official whom the parties may designate in
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the submission agreement, to execute the arbitration
award.
- In the ABSENCE of Voluntary Arbitrator or in case of his
INCAPACITY, the motion for issuance of writ of execution may
be filed with the Labor Arbiter in the region having jurisdiction
over the workplace.
ART. 262-B. Cost of voluntary arbitration and Voluntary Arbitrator’s fee. - The
parties to a Collective Bargaining Agreement shall provide therein a
proportionate sharing scheme on the cost of voluntary arbitration including
the Voluntary Arbitrator’s fee. The fixing of fee of Voluntary Arbitrators,
whether shouldered wholly by the parties or subsidized by the Special
Voluntary Arbitration Fund, shall take into account the following factors:
a. Nature of the case;
b. Time consumed in hearing the case;
c. Professional standing of the Voluntary Arbitrator;
d. Capacity to pay of the parties; and
e. Fees provided for in the Revised Rules of Court.
COMMENT:
Voluntary Arbitrator’s Fee and Arbitration Cost
- Unless the parties agree otherwise, the cost of voluntary
arbitration proceedings and voluntary arbitrator’s fee shall be
shared EQUALLY by the parties.
- If their funds is INSUFFICIENT, they may avail of the subsidy
under the Special Voluntary Arbitrator’s Fund.

Title VIII
Strikes and Lockouts and Foreign Involvement in Trade Union Activities
CHAPTER I
Strikes and Lockouts
Art. 263. Strikes, Picketing and Lockouts. – (a) It is the policy of the State to
encourage free trade unionism and free collective bargaining.
(b) Workers shall have the right to engage in concerted activities for
purposes of collective bargaining or for their mutual benefit and protection.
The right of legitimate labor organizations to strike and picket and of
employers to lock-out, consistent with the national interest, shall continue
to be recognized and respected. However, no labor union may strike and
no employer may lockout on grounds involving inter-union and intra-union
disputes.
(c) In cases of bargaining deadlocks, the duly certified or recognized
bargaining agent may file a notice of strike or the employer may file a
notice of lockout with the Ministry at least 30 days before the intended date
thereof. In cases of unfair labor practice, the period notice shall be 15 days
and in the absence of a duly certified or recognized bargaining agent, the
notice of strike may be filed by any legitimate labor organization in behalf
of its members. However, in case of dismissal from employment of union
officers duly elected in accordance with the union constitution and by-
laws, which may constitute union busting where the existence of the union
is threatened, the 15-day cooling off period shall not apply and the union
may take action immediately.
(d) The notice must be in accordance with such implementing rules and
regulations as the Minister of labor and Employment may promulgate.
(e) During the cooling-off period, it shall be the duty of the Ministry to exert
all efforts at mediation and conciliation to effect a voluntary settlement.
Should the dispute remain unsettled until the lapse of the requisite number
of days from the mandatory filing of the notice, the labor union may strike
or the employer may declare a lockout.
(f) A decision to declare a strike must be approved by a majority of the total
union membership in the bargaining unit concerned, obtained by secret
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ballot in meetings or referenda called for the purpose. A decision to declare
a lockout must be approved by the majority of the board of directors of the
corporation or association or of the partners in a partnership, obtained by
secret ballot in a meeting called for the purpose. The decision shall be valid
for the duration of the dispute based on substantially the same grounds
considered when the strike or lockout vote was taken. The Ministry may, at
its own initiative or upon the request of any affected party, supervise the
conduct of the secret balloting. In every case, the union or the employer
shall furnish the Ministry the results of the voting at least seven days
before the intended strike or lockout, subject to the cooling-off period
herein provided.
(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 impending strike or lockout as
specified in the assumption or certification order. If one has already taken
place at the time of the assumption or certification, all striking or locked
out 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 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
force 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 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 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.
(h) Before or at any stage of the compulsory arbitration process, the parties
may opt to submit their dispute to voluntary arbitration.
(i) The Secretary of Labor and Employment, the Commission or the
voluntary arbitrator shall decide or resolve the dispute, as the case may be.
The decision of the President, the Secretary of Labor and Employment, the
Commission or the voluntary arbitrator shall be final and executor ten (10)
calendar days after receipt thereof by the parties.
COMMENT
1. Right to Engage in Concerted Activities
Workers shall have the right to engage in concerted activities for
purposes of collective bargaining or for their mutual benefit and protection. The
more common forms of concerted activities are: a.) strikes; b.) picketing; and c.)
boycotts.
2. Strike
Strike is any temporary stoppage of work by the concerted action of
employees as a result of an industrial or labor dispute.
The requisites of a strike are as follows:
a.) temporary; and
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1
b.) the result of a labor dispute.
Mass resignation of employees in protest of the dismissal of an
employee is not a strike because the stoppage of work, although resulting from a
labor dispute, is not temporary. The refusal of employees to work for the purpose
of joining a mass demonstration to protest police abuses likewise does not
constitute a strike.
CASES
ALPAP vs. CIR
76 SCRA 274
The members of ALPAP staged a strike against PAL, the result of which the
President of the Philippines certified the labor dispute to the Court of Industrial
Relations. The CIR then issued a return-to-work order. The strikers returned to
work except for two, one of whom was Capt. FG. PAL terminated his services. In
reaction, a substantial majority of ALPAP members threatened to resign en
masse, which they eventually did. Later on 21 pilots filed a petition praying for
readmittance or at least be allowed to retire with benefits, stating that the mass
resignation was a strike.
Issue: W/N the mass resignation was a strike.
Held: NO. The law defines strike as any temporary stoppage of work by the
concerted action of employees resulting from an industrial dispute. A strike
means only a temporary stoppage of work. What the pilots contemplated was
evidently a permanent cut-off of employment relationship with their employer,
PAL.
PBMEO vs. Philippine Blooming Mills
51 SCRA 189
PBMEO decided to stage a mass demonstration at the Malacañang to protest the
abuses of the Pasig police. Workers from the first, second and third shifts were to
participate. PBM objected against the utilization of the workers in the first shift,
but PBMEO still included these workers among the protestants. The Company
filed a complaint against PBMEO for the violation of the No Strike-No Lockout
clause of the CBA.
Issue: W/N the mass demonstration is a strike.
1
Labor dispute is 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.

Held: NO. Although there was temporary stoppage of work, there was no labor
dispute involved. The mass demonstration was not directed against the employer
but against the police. This was an exercise of the workers’ freedom of
expression.
Gold City vs. NLRC
245 SCRA 628
Employees of Gold City who were members of the MLU-FFW stopped working,
th
walked out and gathered in a mass action to protest regarding wages, 13 month
pay and hazard pay. Gold City filed a complaint for illegal strike.
Issue: W/N the mass action was a strike or a mere protest action?
Held: THE ACTION WAS A STRIKE. The cessation of work resulted from a labor
dispute. The employees stopped working precisely to press for wages and
benefits.
The law does not favor strikes because of their disturbing and
pernicious effects upon social order and public interest. The employer company
is on the defensive and wants the strike stopped and the strikers back to work so
as to resume and continue production. Because of this threat or danger of loss to
the company, frequently it gives in to the demands of the strikers just so it can
maintain the continuity of production.
2.1 Kinds of Strikes.
In general:
a.) Unfair labor strike
b.) Economic strike
Unfair labor strike is a concerted activity staged as a result of the employer’s
unfair labor practice. To be considered as unfair labor strike, it is not necessary
that the employer should actually commit an unfair labor practice. It is enough
that the strikers believe in good faith that the employer has committed ULP.
Economic strike is a concerted activity staged to force wage or other concessions
from the employer which he is not required by law to grant.
An economic strike may subsequently turn into a ULP strike if in the process, the
employer commits ULP against the strikers.
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2.2 Forms of Strikes
By Manner of Execution
a.) Walk-out – a form of strike where the employees leave their
workplace and establish themselves outside the plant and refuse access to the
owners and other employees who want to work.
b.) Sit-down – a form of strike where the strikers establish themselves
within the plant, stop its production and refuse access to the owners and other
employees who want to work.
c.) Slowdown – a form of strike where strikers merely retard production
d.) Mass leave – a form of strike where the strikers take time-off from
work simultaneously.
e.) Wildcat – a strike staged without the sanction or authorization of the
union.
As To The Employer Directed Against
a.) Primary strike – directed against the employer because of a labor
dispute with him.
b.) Secondary strike – directed against the employer connected by
product or employment with alleged unfair labor conditions or practices. (E.g.,
where a manufacturer engages in ULP and the employees of its distributors
stage a strike against it.)
c.) Sympathy strike – a strike staged to make common cause with other
strikers in other establishments or companies, without the existence of any
dispute between the striking employees and their employer. There need not be a
connection of product or employment in this kind of strike.
d.) General strike – directed against all the employers, participated in by
the workmen irrespective of the employers for whom they are working.
e.) Particular strike – directed solely against the strikers’ employer.
2.3 Requisites of a Valid Strike
a.) It should be staged by a certified or duly recognized collective
bargaining representative or in the absence thereof, by a legitimate labor
organization;
b.) It should be declared only on grounds specified by law;
c.) It should comply with the requirements prescribed by law.
2.3.1 Employees in Unorganized Establishments cannot Strike
Only a certified or duly recognized collective bargaining representative
can declare a strike, whether an economic or ULP strike. In the absence of a duly
certified or recognized collective bargaining representative, a legitimate labor
 LABOR RELATIONS (Arts. 226-292, Labor Code of the Philippines) 72
Atty. Paulino Ungos

organization in the establishment can declare a strike but ONLY on grounds of Exception: When in case of ULP involving the dismissal from employment of a
ULP. Employees of establishments without unions cannot strike. union officer duly elected which may constitute union busting and the existence
of the union is threatened, the 15-day cooling-off period need not be observed
2.3.2 Legal Grounds for Declaring a Strike and the union may strike after the strike vote is conducted and reported to the
2
a.) Collective bargaining deadlock regional branch of the NCMB.
3
b.) Unfair labor practice
Any strike founded on other grounds is illegal. 2.6 Strike Vote
The decision to declare a strike must be approved by the majority of the
2.3.3 Legal Requirements of a Strike total union membership in the bargaining unit concerned, through secret ballot in
a.) Notice of strike a meeting or referendum called for the purpose.
b.) Strike vote The purpose of the strike vote is to ensure that the intended strike is a
c.) Strike vote report majority decision. A strike declared without the approval of a majority of the total
Failure to comply with any of these requirements will render the strike illegal. union membership is illegal.
The decision to declare a strike shall be valid for the duration of the
2.4 Notice of Strike dispute based on substantially the same grounds considered when the strike
Filed with the Regional Branch of the National Conciliation and Mediation Board vote was taken.
and served to the company, at least:
a.) 30 days before the intended date of strike – if the ground for strike is 2.7 Strike Vote Report
based on collective bargaining deadlock The report is filed with the regional branch of the NCMB at least 7 days
b.) 15 days before the intended date of strike – if the ground for strike is before the intended strike.
based on ULP. The purpose of the report is to give assurance that a strike vote has
been taken and also to enable the majority of the union members to take the
2.5 Cooling-off Period appropriate remedy before it is too late, if such report turns out to be false.
Cooling-off Period is the span of time allotted by law for the parties to settle their
disputes in a peaceful manner before declaring a strike. 2.8 7-Day Strike Ban
a.) 30 days from filing of the notice of strike – if the ground for the strike This is the 7-day period reckoned from the submission of the strike vote
is CBD report. The union cannot strike during this period. This is a reasonable exercise
b.) 15 days from filing of the notice of strike – if the ground for strike is of police power. In computing the period, the first day shall be excluded and the
ULP last day included.

Observance of the cooling-off period is mandatory. Strikes which violate the 2.9 Declaration of Strike
cooling-off period are illegal. The union may go on strike if after the lapse of the cooling-off period
and the 7-day strike ban, if the dispute remains unsettled. The NCMB shall
continue mediating and conciliating.

2
Collective bargaining deadlock the situation between the labor and management of the
company where there is failure in the collective bargaining negotiations resulting in a 2.10 Strikes in Medical Institutions
stalemate. There is a deadlock when there is a complete blocking or stoppage resulting
Strikes in medical institutions are strongly discouraged because of their
from the action of equal and opposed forces.
3
ULP are those enumerated in Arts 248 and 249. Violations of the collective bargaining effects on the life and health of patients. Should a strike be declared, the union
agreement is considered ULP only if it is flagrant and/or malicious refusal to comply with must provide and maintain an effective skeletal workforce whose movement and
the economic provisions of the CBA.

Addie Celerian * Amor Venenoso * Draei Dumalanta * Ellan Cipriano * Ingrid Prado * Mary Ang * Rica Casiquin * Sam Santos

services shall be unhampered and unrestricted. The Secretary of Labor and
Employment may immediately assume jurisdiction over the dispute or certify it to
compulsory arbitration within 24 hours from knowledge of the occurrence of the
strike.
2.11 Return-to-Work Order
Strikers are bound to immediate comply with the RTWO issued by the
Secretary even if an MR has been filed. A RTWO is immediately executor. It is a
matter of obligation. Strikers who defy a RTWO may be declared to have lost
their employment status. This does not violate the constitutional provision against
involuntary servitude.
2.12 Employment Status of Strikers
The mere participation of a worker in a lawful strike is not a ground for
termination of employment, even if the employer had hired a replacement during
such lawful strike.
2.13 Reinstatement of Strikers
General Rule: Striking employees are entitled to reinstatement, whether or not
the strike was the consequence of the employer’s ULP.
Exceptions:
a.) Union officers who knowingly participate in an illegal strike;
b.) Union officers or members who knowingly participate in the
commission of illegal acts during the strike;
c.) Strikers who defy a RTWO
2.14 Wages During Strike
General Rule: Strikers are not entitled to their wages during the period of the
strike even if the strike is legal, following the concept of ‘a fair day’s wage for a
fair day’s labor’.
Exceptions:
Backwages may be awarded:
a.) When the supposed strikers did not strike but were locked out;
b.) Where the strikers voluntarily and unconditionally offered to return to
work, but the employer refused to accept the offer without justifiable reason
2.15 Legality of a Strike
a.) If the purpose is lawful and the means employed are lawful, the
strike is LEGAL.
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b.) If declared for both a legal and illegal purpose, the strike is ILLEGAL
in its entirety.
c.) If the purpose is lawful but the means employed are unlawful, the
strike is ILLEGAL.
A strike is not rendered illegal by the mere fact that the demands of the
union are unreasonable. The legality of a strike does not depend upon the
reasonableness of the demands. If the demands cannot be granted, they should
be rejected. Also, the mere fact that the demands of the union were rejected
does not make the strike illegal.
A strike staged in good faith that the management committed ULP is not
illegal. It suffices if such belief in good faith is entertained by labor as the
inducing factor for staging a strike. An unsubstantiated claim of good faith is not
enough; it should be supported by factual basis.
However, the requirements of the notice of strike and the strike vote
must still be complied with, else the strike will be declared illegal even if the union
acted on good faith on the belief that management committed ULP.
2.16 Illegal Strike
The following strikes have been held illegal:
a.) Strike staged on grounds other than those prescribed by law{a.) CBD and b.)
ULP}
Arica vs. Minister of Labor
137 SCRA 267
“xxx Section 1 of PD 823 states: ‘However, any legitimate labor union may strike
and any employer may lock out in establishments not covered by General Order
No. 5 only on grounds of unresolved economic issues in collective bargaining, in
which case the union or the employer shall file a notice with the BLR at least 30
days before the intended strike or lockout. xxx”
The Union went on strike not on ‘grounds of unresolved economic issues in
collective bargaining.’ The Union struck against the alleged ULP of the
management for not paying 50% of the signing bonus; the Union’s strike cannot
be a ULP strike or an economic strike. The strike was illegal.
b.) Strike staged without complying with any of the legal requirements of the
strike {a.) notice of strike; b.) strike vote and c.) strike vote report; a strike is

illegal without complying with any of these requirements even if the deficiency is
only for one day}
Reliance Surety vs. NLRC
193 SCRA 365
“The strike in question was illegal, for failure of the strikers to comply with the
legal strike requirements: a.) as to the 15-day notice; b.) as to the 2/3 required
vote to strike done by secret ballot; c.) as to the submission of the strike vote to
the DOLE at least 7 days prior to the strike.”
c.) Strike declared before the lapse of the cooling-off period or the 7-day strike
ban {The requirement of the cooling-off period AND the 7-day strike ban is
mandatory. The strike vote may be taken and reported within the cooling-off
period.}
NFSW vs. Ovejera
114 SCRA 354
The NFSW declared the strike 6 days after a strike notice, i.e., before the lapse
of the mandatory cooling-off period. It also failed to file with the MOLE before
launching the strike a report on the strike vote when the report should have been
filed at least 7 days before the intended strike. The strike is illegal.
d.) Strike declared after the Secretary of Labor and Employment has assumed
jurisdiction over the dispute or certified the same for compulsory arbitration {This
is a violation of Art 264 (a) of the Labor Code.}
Union of Filipro vs. Nestle
192 SCRA 396
A strike undertaken despite the issuance by the Secretary of Labor of an
assumption or certification order becomes a prohibited activity and thus illegal,
pursuant to the second paragraph of Art 264 of the Labor Code, as amended.
e.) Strike declared after the notice of strike has been converted into preventive
mediation {This is illegal because the notice of strike has ceased to be such upon
its conversion; hence, it is as if no notice of strike has been filed.}
PAL vs. Secretary of Labor
193 SCRA 223
The NCMB declared the notice of strike as ‘appropriate for preventive mediation’.
The declaration was not moved for reconsideration or set aside by the PALEA.
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This dropped the case from the docket of notice of strikes as provided in Rule 41
of NCMB rules, as if there was no notice of strike. During the pendency of
preventive mediation, no strike could be legally declared.
f.) Strike carried out with the use of force, violence, physical injuries, sabotage
and unnecessary obscene language {This is illegal because it is violative of Art
264(e) of the Labor Code. The Constitution also only guarantees peaceful
concerted activities.}
Liberal Labor Union vs. Philippine Can Co.
91 Phil. 72
The strikers, particularly the top officials of the union, all committed coercion,
force, intimidation, violence with physical injuries, sabotage and used
unnecessary and obscene language. A strike under these circumstances cannot
be justified in a regime of law.
g.) Strike staged in violation of the no-strike stipulation of a CBA {A strike will be
illegal for violation of a no-strike stipulation only if it is an economic strike. If the
strike is based on ULP, the no-strike stipulation is not violated.}
Philippine Metal Foundries vs. CIR
90 SCRA 135
The strike declared by the Union was not considered a violation of the no-strike
clause of the CBA because it was due to ULP committed by the employer.
h.) Strike staged without giving the employer ample time to consider and act on
the demands of the union {Illegal because of unreasonableness.}
INSUREFCO Paper vs. INSUREFCO
95 Phil. 761
The walkout was declared premature because it was done without giving the
General Manager or the BoD of the company reasonable time within which to
consider and act on the demands submitted by the Union. The strike staged by
the Union was unfortunate, ill-considered, considering the great damage caused
to the business of the refinery resulting from the complete paralyzation of its
operations. The strike was rightly declared illegal.
i.) Strike without exhausting or availing of the grievance machinery under the
CBA {The illegality of such a strike will be declared even if management failed to
do its duty in connection with the formation of the grievance committee. A Union

is duty bound to exhaust all available means within its reach before resorting to
force.}
Liberal Labor Union vs. Philippine Can Co.
91 Phil. 72
The strike staged on March 14, 1949 was illegal. The main purpose of the parties
for adopting a procedure in the settlement of disputes is to prevent a strike. Even
if the management failed to do its duty in connection with forming the grievance
committee, still the union did not have the right to declare a strike for its duty is to
exhaust all available means within its reach before resorting to force.
j.) Strike staged without first resorting to pacific means provided by law {Illegal
because it is unreasonable.}
National Labor Union vs. Philippine Match Factory
70 Phil. 300
When the petitioners declared a strike even before the outcome of the
investigation had been announced and without previously resorting to the pacific
means provided by law, they have acted unreasonably.
k.) Strike declared to correct wage distortion {Strike is not the remedy prescribed
by law to correct wage distortion.}
Ilaw at Buklod ng Manggagawa vs. NLRC
198 SCRA 586
The legislative intent that solution of the problem of wage distortion shall be
sought by voluntary negotiation or arbitration and not by strikes, lockouts or other
concerted activities of the employees or management, is made clear in the IRR
of RA 6727. The Union was thus prohibited to declare and hold a strike or
otherwise engage in non-peaceful concerted activities for the settlement of its
controversy with SMC in respect of wage distortions, or for that matter; any other
issue ‘involving or relating to wages, hours of work, conditions of employment
and/or employee relations’.
l.) Strike staged to compel an employer to negotiate a collective bargaining
agreement during the pendency of a petition for certification election {This is
illegal because during the pendency of a certification election proceeding, the
duty to bargain collectively does not exist.}
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LAKAS vs. Marcelo
118 SCRA 422; 449
There was a legitimate representation issue confronting respondent company.
There was no duty to collectively bargain with LAKAS. All the acts instigated by
LAKAS such as filing the notice of strike and the two strikes of September 4,
1967 and November 7, 1967 were calculated, designed and intended to compel
respondent to recognize or bargain with it notwithstanding that it was an
uncertified union.
m.) Strike staged by a minority union to compel the employer to bargain with it
despite the existence of a certified bargaining agent {This is illegal because no
labor dispute can exist between an employer and a minority union.}
n.) Strike declared for trivial, unjust or unreasonable purpose {Illegal because of
its unlawful purpose.}
o.) Strike on a simple violation of the CBA {An LO cannot strike on a simple
violation of the CBA because such violation does not constitute ULP.}
p.) Strike on grounds involving inter-union or intra-union disputes {This is illegal
because this violates Art 263(b) of the Labor Code. Only gross violations of the
CBA are treated as ULP.}
q.) Strike declared without first having bargained collectively {Illegal because it
violates Art 264(a) of the Labor Code.}
2.16 Sanction for Illegal Strike
The Current Doctrine
An Illegal strike does not automatically warrant the wholesale dismissal of
strikers. Only the following strikers can be penalized with loss of employment
status:
a.) Union officers who knowingly participate in an illegal strike;
b.) Union officers or members who knowingly participate in the
commission of illegal acts during a strike.
Illegal acts include violence, physical injuries, coercion, intimidation,
possession of deadly weapon, obstruction of the free ingress to and egress from
the employer’s premises and defiance of RTWO or assumption/certification
order.

The law is permissive upon granting to the employer the option of
declaring a union officer who participated in an illegal strike and any striker who
committed illegal acts during the strike as having lost their employment status.
If the strike is illegal, the employer cannot be restrained or enjoined from
imposing the appropriate sanctions against the union officers who knowingly
participated in the illegal strike and against any striking employee who committed
illegal acts during the strike.
CASE
PAL vs. Secretary of Labor and Employment
193 SCRA 223
PALEA filed with the NCMB a notice to strike on the grounds of CBD and ULP. It
was found that the real issues involved: a.) determination of the minimum entry
rate; b.) wage adjustment; c.) retroactive pay. PALEA was informed that the
issues were appropriate only for preventive mediation. PALEA went ahead to
conduct a strike vote. PAL filed with the Secretary of Labor a petition for
assumption of jurisdiction, which was not acted upon soon enough. PALEA was
able to strike. Then the Secretary declared the strike valid and admonished PAL
against taking retaliatory measures against the strikers.
Issue: W/N the Secretary could rule on the validity of the strike and prevent PAL
from taking retaliatory action against the erring strikers.
Held: NO on both accounts. Art 263 of the Labor Code only authorizes the
Secretary to rule on the issues involved in the labor dispute and not the legality
or illegality of the strike that occurred. This jurisdiction is vested with the Labor
Arbiters. Also, since the strike was illegal, PAL had the right to take disciplinary
action against its guilty employees.
2.17 Liability for Damages Arising from an Illegal Strike
The best evidence obtainable must be presented to hold the union and
the strikers liable for damages. Actual or compensatory damages cannot be
presumed, but must be duly proved.
The local union and not the federation are liable for damages resulting
from an illegal strike. This is because the local union is the principal and the
federation is a mere agent of the union.
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2.18 Injunction Against Strikes
General Rule: A strike cannot be enjoined even if it may appear to be illegal.
Exceptions:
a.) If a strike is declared against an industry indispensable to national
interest, wherein the Secretary of Labor may assume jurisdiction or certify the
dispute for compulsory arbitration. The assumption or certification automatically
enjoins the strike;
b.) If the strike is staged by employees who are not accorded the right to
strike or employees of government-owned or controlled corporations with original
charters;
c.) If the strike is staged because of an intra-union or inter-union
dispute.
2.19 The Innocent Bystander Doctrine
The doctrine provides that the right to strike and picket may be
regulated at the instance of third parties or innocent bystanders if it appears that
the inevitable result of its exercise is to create an impression that a labor dispute
to which they have no connection or interest exists between them and the
picketing union or constitute an invasion of their rights.
The courts can confine or localize the sphere of communication or the
demonstration to the parties to the labor dispute, including those with related
interest and to insulate establishments or persons with no industrial connection
or having interest totally foreign to the context of the dispute.
Requisites
1.) Rule 58 of the Rules of Court on Preliminary Injunction
- That the applicant is entitled to the relief demanded, and the whole
part of such relief consists in restraining the commission or continuance of the
act or acts complained of, or in requiring the performance of an act or acts, either
for a limited period or perpetually;
- That the commission, continuance or non-performance of the act or
acts complained of during the litigation would probably work injustice to the
applicant; or
- That a party, court, agency or a person is doing, threatening, or is
attempting to do, or is procuring or suffering to be done, some act or acts
probably in violation of the rights of the applicant respecting the subject of the
action or proceeding, and tending to render the judgment ineffectual.
2.) The applicant is entirely different from, without any connection whatsoever to,
either party to the dispute

3.) Its interests are totally foreign to the context thereof.
CASES
MSF Tire & Rubber vs. CA
311 SCRA 784
PTWU declared a strike against PHILTHREAD. Thereafter, PHILTHREAD
entered into an agreement with Siam Tyre. PHILTHREAD’s plant was sold to
MSF Tire, 80% of which is owned by Siam Tyre and 20% owned by
PHILTHREAD. The land on which the plant was located was sold to Sucat Land,
60% of which was owned by PHILTHREAD and 40% by Siam Tyre. MSF then
asked the Union to desist from picketing. MSF filed a complaint for Injunction,
invoking the innocent bystander doctrine.
Issue: W/N MSF Tire is entitled to an Injunction?
Held: NO. The contract of sale and transactions between PHILTHREAD and
Siam Tyre reveals a legal relation between them. MSF has close ties to
PHILTHREAD. MSF cannot be considered an innocent bystander.
PAFLU vs. Cloribel
27 SCRA 465
Metrobank and Galang were lessees of Wellington Building. PAFLU declared a
strike and picketed the premises of Metrobank. Wellington complained that the
picketers were blocking the common passageway of the building. Thereafter
Wellington and Galang filed a complaint for Injunction.
Issue: W/N Wellington and Galang are entitled to an Injunction?
Held: YES. There exists no labor dispute between PAFLU, Wellington and
Galang. The strike was against Metrobank, an entity entirely different and
separate and without any connection whatsoever with Wellington and Galang.
Liwayway Publications vs. Permanent Concrete Workers
108 SCRA 161
Petitioner is a sublessee of the premises of Permanent Concrete. The employees
of Permanent Concrete declared a strike and the strikers picketed, stopped and
prohibited petitioner from entering the compound. Petitioner thus filed for an
Injunction.
Issue: W/N Liwayway is entitled to an Injunction
Held: YES. There is no connection whatsoever between the strikers and
Liwayway Publications apart from the fact that Liwayway is a sublessee of the
employer.
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3. Picketing
Picketing is the marching to and fro before the premises of an establishment
involved in a dispute, generally accompanied by the carrying and display of a
sign, placard or banner bearing statements in connection with the dispute.
Picketing is a freedom guaranteed by the Constitution. If peacefully
carried out, it cannot be enjoined even in the absence of employer-employee
relationship. But the courts can confine or localize the demonstrations to the
disputants and insulate establishments with no industrial connection or interest to
the dispute.
3.1 Injunction Against Picketing
General Rule: Picketing cannot be enjoined because it is part of the freedom of
speech.
Exceptions:
a.) If necessary to protect the rights of third parties or innocent
bystanders;
b.) If the picketing is carried out through the use of illegal means;
c.) If the picketing is carried out through the use of violence or illegal
acts.
4. Boycott
Boycott is a combination formed for the purpose of restricting the market of an
individual or group of individuals.
a.) Primary boycott – one which is applied directly and alone to the offending
person by withdrawing from him all business relations on the part of the
organization that initiated the boycott.
b.) Secondary boycott – a combination to exercise coercive pressure upon the
customers of an employer, actual or prospective, in order to cause them to or
withhold or withdraw patronage from him through fear of loss or damage to
themselves should they deal with him.
- Usually held to be illegal because of the principle that one not a party
to an industrial strife cannot, against his will, be made an ally of one of the parties
for the purpose of accomplishing the destruction of the other.
5. Lockout
Lockout is the temporary refusal of an employer to furnish work as a result of an
industrial or labor dispute.
Requisites:
 LABOR RELATIONS (Arts. 226-292, Labor Code of the Philippines) 78
Atty. Paulino Ungos

The refusal to furnish work must be:

a.) Temporary; and 5.7 Lockout Vote
b.) The result of a labor dispute. The decision to declare a lockout must be approved by the majority of
the BoD, in case of a corporation, or the partners in the case of a partnership,
The refusal of an employer to accept the offer of the strikers to return to through secret ballot in a meeting called for the purpose.
work pending resolution of the legality of the strike does not constitute lockout. The employer shall furnish the regional branch of the NCMB the notice
A strike cannot be converted into a lockout by the mere expedient filing of meeting at least 24 hours before the holding of such meeting. The NCMB may
of a notice of offer to return to work during the pendency of a labor dispute. also supervise the secret balloting at its own initiative or upon instance of any
affected party.
5.1 Lockout vs. Shut-down
Lockout Shut-down 5.8 Lockout Vote Report
- In a lock out, the plant - In a shut-down, the plant The employer must report the results of the voting at least 7 days before
continues to operate. ceases to operate. the intended lockout.
- A shut-down is the willful act
of the employer himself 5.9 7-day Lockout Ban
following a complete lockout. The 7-day period is reckoned from the submission of the lockout vote
report. Observance is mandatory.
All shutdowns are lockouts, but not all lockouts constitute shutdowns.
5.10 Declaration of Lockout
5.2 Requisites of a Valid Lockout The employer may declare a lockout if after the cooling-off period and
a.) It should be declared only on grounds specified by law; and the 7-day lockout ban, the dispute remains unsettled. The NCMB shall continue
b.) It should comply with the requirements prescribed by law. mediating and conciliating.

5.3 Legal Grounds for Declaring a Lockout 5.11 Lockout in Medical Institutions
a.) Collective bargaining deadlock (CBD) The employer must provide and maintain an effective skeletal workforce
b.) Unfair labor practice (ULP) of medical and health personnel whose movement and services shall be
unhampered and unrestricted.
5.4 Legal Requirements of a Lockout The Secretary may immediately assume jurisdiction over the dispute or
a.) Notice of lockout; certify the same for compulsory arbitration within 24 hours from knowledge of the
b.) Lockout vote; occurrence of the lockout.
c.) Lockout vote report
5.12 Illegal Lockouts
5.5 Notice of Lockout a.) Lockouts on grounds other than those prescribed by law
Filed with the NCMB and served to the union, at least: b.) Lockouts without complying with any of the legal requirements
a.) 30 days before intended date – if the ground is CBD c.) Lockout before the lapse of the cooling-off period or the 7-day lockout ban
b.) 15 days before the intended date – if the ground is ULP d.) Lockout declared after the Secretary of Labor and Employment has assumed
jurisdiction over the dispute or certified the same for compulsory arbitration
5.6 Cooling-off Period e.) Lockout declared without first having bargained collectively
a.) 30 days from the filing of notice of lockout – for CBD
b.) 15 days from filing the notice of lockout – for ULP 5.13 Sanction for Illegal Lockout

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An employer guilty of illegal lockout may be held liable for backwages.
6. National Interest Disputes
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 may assume jurisdiction over the dispute and decide it or certify the
same to the NLRC for compulsory arbitration.
Recommendation of the Undersecretary is not a condition.
The Secretary may assume jurisdiction over a labor dispute or certify it
for compulsory arbitration even if there is no actual strike or lockout. The
existence of a labor dispute likely to cause a strike or lockout is enough basis for
the Secretary to assume jurisdiction or to issue a certification.
Such powers are not undue delegation of legislative power. It is not an
interference with the workers’ right to strike. It simply regulates such right.
6.1 Extent of Authority
General Rule:
- Encompasses only the issues in the dispute.
- Cannot rule on the legality of the strike; this authority and power is with
the original and exclusive jurisdiction of the Labor Arbiter.
- Cannot restrain the employer from taking disciplinary action against
the strikers.
Exception
(Contrast of International Pharmaceutical and the Philippine Airlines case)
- Before the Secretary may take cognizance of an issue which falls within
the jurisdiction of the Labor Arbiters, the same must be involved in the
labor dispute itself, or otherwise submitted to him for resolution. (This is
the ruling in the PAL case. Otherwise, the general rule, the ruling in
International Pharmaceutical, applies.)
- This is one instance where the Secretary exercises concurrent
jurisdiction with the Labor Arbiter.
6.2 Constitutionality of Article 263(g) of the LC
Articles 263(g) was enacted pursuant to the police power of the State.
The police power need not be expressly conferred by the Constitution.
6.3 Industries Indispensable to the National Interest
The law does not define ‘industries indispensable to the national
interest’. The President and the Secretary of Labor and Employment have
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unlimited discretion to determine such industries. The courts cannot review this
exercise of discretion.
a.) Airline Company
b.) Educational Institutions
c.) Drug Company
d.) Medical Institution
e.) Export-Oriented Enterprise
f.) Tire Manufacturing Company
g.) Mining Company
h.) Brokerage Firm
6.3 Enforcement of Assumption/Certification Orders
- Such orders are immediately executory and are to be strictly complied with
even during the pendency of an MR or a petition questioning its validity.
- Upon issuance, the striking workers must therefore cease and desist from any
and all acts that undermine the authority of the Secretary regardless of the
validity of their claims or motives.
6.4 Effect of Defiance of Assumption/ Certification Orders
- An assumption/certification order automatically carries a RTWO even if the
directive to return to work is not expressly stated in the order.
- Strikers commit an illegal act if they defy the order. Consequently, they may be
declared to have lost their employment status.
- The moment a worker defies an assumption/certification order, he is deemed to
have abandoned his employment. The worker may then be validly replaced.
CASE
St. Scholastica’s College vs. Torres
210 SCRA 565
NAFTEU filed a Notice of Strike against SSC on the ground of collective
bargaining deadlock. The Secretary assumed jurisdiction over the dispute.
Instead of returning to work, the Union filed an MR for the assumption order. The
MR was denied, but the strikers did not comply with the directive to return to
work.
Issue: W/N SSC can be compelled to accept the strikers who defied the
directive.
Held: NO. By defying the directive for them to return the work, the strikers were
deemed to have abandoned their employment.

Liability for Staging Illegal Strike Liability for Defying Assumption/
Certification Order
- Loss of employment status is - Loss of employment status is
imposed on union officers imposed upon all strikers, regardless
who knowingly participated n of the legality of the strike.
he strike.
- Loss of employment is
imposed on union officers or
members who committed
illegal acts during the strike.
Art. 264. Prohibited activities. – (a) 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.
(b) 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.
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(c) No employer shall use or employ any strike-breaker, nor shall any
person be employed as a strike-breaker.
(d) 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)
(e) No person engaged in picketing shall commit any act of violence,
coercion or intimidation or obstruct the free ingress to or egress from the
employer’s premises for lawful purposes, or obstruct public
thoroughfares. (As amended by Batas Pambansa Bilang 227, June 1, 1982)
COMMENT:
1. Limitations on the right to strike or lockout:
A strike or lockout cannot be declared:
A. Without first having bargained collectively
B. Without first having filed the notice of strike/lockout
C. Without the necessary strike or lockout vote first having been
obtained reported to the DOLE
D. After the SOLE assumes jurisdiction or certifies the dispute to
compulsory or voluntary arbitration
E. During the pendency of cases involving the same grounds for the
strike or lockout.
2. Limitations on the right to picket:
Persons or employees engaged in picketing are forbidden from:
A. committing any act of violence, coercion or intimidation
B. obstructing the free ingress to and egress from the employer’s premises
and
C. Obstructing public thoroughfares.

Removal of Illegal Blockade:
 Obstruction in public properties, such as streets, sidewalks, alleys, may
be summarily removed by the local governments, through their
respective law enforcement authorities without consulting with the
DOLE, because these obstructions are considered as nuisance per se.
Obstructions in points of egress and ingress of private properties during
a labor dispute may be removed only in accordance with proper orders
issued by the Office of the SOLE or by the NLRC or its arbitration
branches. They cannot be summarily demolished by law enforcement
authorities.
3. Employment of Strike, Breakers Prohibited
 A strike-breaker is a person who obstructs, impedes, or interferes with
by force, violence, coercion, threats, or intimidation any peaceful
picketing by employees during any labor controversy affecting wages,
hours or conditions of work or in the exercise of the right to self-
organization or collective bargaining. Employment of strike breakers is
prohibited under Article 264 (c) of the Labor Code.
4.) Escorting of Replacements
 Article 264 (d) prohibits public officers of personnel of the Armed Forces
of the Philippines, PNP or any armed person from bringing in or
escorting any individual in entering or leaving the premises of a strike
area to replace striking employees.
 Prohibition only extends to: the escorting of individuals in entering or
leaving the strike area to replace the striking employees. If the person
escorted will not replace the strikers, Article 264 (d) is NOT violated.
 Example: If the persons escorted are non-striking employees, no
violation is committed because non-striking employees have the right to
enter the company premises and work, and they will work not as
replacements but as non-striking employees.
 Likewise, Article 264(d) is not violated if the escorting of replacements
was done beyond the premises of the strike area.
 What the law prohibits is the escorting of replacements WITHIN the
striking area.
 Striking area - the establishment, warehouses, depots, plants or
offices, sites or premises used as runaway shops and the immediate
vicinity actually used by the picketing strikers in moving to and from
before all points of entrance to and exit from said establishment.
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ROLE OF POLICE PERSONNEL IN LABOR DISPUTES
 The PNP may be called upon to perform the limited role of enforcing the
laws and legal orders of duly constituted authorities and maintaining
peace and order to protect life and property during strikes, lockouts and
other labor disputes.
 The peace keeping personnel should not be stationed in the picket or
confrontation line, but in such place as their presence may deter the
commission of criminal acts from either side. They should maintain
themselves at a distance of 50 meters from the picket line, except, if the
50-m radius includes a public thoroughfare, in which case, they may
station themselves in such public thoroughfare for the purpose of
insuring the free flow of traffic.
SERVICE of LAWFUL ORDERS OR WRITS
 The primary concern of the representative of DOLE, sheriff or
representative of the government agency issuing the order. The role of
police is only supportive. Only when specifically stated and requested in
the order or writ should police personnel enforce such orders or writs.
REMEDIES
 For violation of Article 264 (a), remedy is TO FILE with the arbitration
branch of the NLRC a PETITON TO DECLARE THE STRKE OR
LOCKOUT ILLEGAL.
 For violation of Article 264 b, c, d and e - FILE A PETITON FOR
INJUNCTION WITH THE NLRC.
 Criminal action may be filed for any violation of Article 264 , the
penalties of which are set forth in Art. 272 of the Labor Code.
Art. 265. Improved offer balloting. – In an effort to settle a strike, the
Department of Labor and Employment shall conduct a referendum by
secret ballot on the improved offer of the employer on or before the 30th
day of the strike. When at least a majority of the union members vote to
accept the improved offer the striking workers shall immediately return to
work and the employer shall thereupon readmit them upon the signing of
the agreement.
In case of a lockout, the Department of Labor and Employment shall
also conduct a referendum by secret balloting on the reduced offer of the
union on or before the 30th day of the lockout. When at least a majority of
the board of directors or trustees or the partners holding the controlling

interest in the case of a partnership vote to accept the reduced offer, the
workers shall immediately return to work and the employer shall thereupon
readmit them upon the signing of the agreement. (Incorporated by Section
28, Republic Act No. 6715, March 21, 1989)
COMMENT:
1.) Referendum on Improved Offer
 Improved offer balloting - a referendum conducted by the DOLE
wherein the strikers vote by secret ballots on whether to accept the
improved offer of management.
2.) Referendum on Reduced Offer
 Reduced offer balloting - a referendum conducted by the DOLE
wherein the BOD or trustees or the partners holding the controlling
interest in the case of partnership, vote by secret ballot on whether to
accept the reduced offer of the strikers.
Art. 266. Requirement for arrest and detention. – Except on grounds of
national security and public peace or in case of commission of a crime, no
union members or union organizers may be arrested or detained for union
activities without previous consultations with the Secretary of Labor.
COMMENT:
1.) Arrest or Detention of Union Officers/Members
GENERAL RULE: union officers, members or organizers cannot be
arrested or detained for union activities without previous consultations
with the SOLE.
 Consultation is not necessary if the arrest is made:
A. on grounds of national security and public peace or
B. In case of commission of a crime
 Thus, any person who obstructs the free ingress to and egress from the
employer’s premises or who obstructs public thoroughfares may be
arrested without such consultation. Similarly, any person who shall have
in his possession deadly weapons such as knives, bolos, blunt or
pointed instruments and firearms or explosives may be arrested and
charged accordingly in court without consultation with the SOLE/
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2.) Filing of Criminal Cases
 Before filing a criminal case relating to or arising out of a labor dispute,
clearance must first be obtained from the DOLE or office of the
President. An injunction order issued in a labor case is considered as
compliance with the clearance requirement.
Chapter II
ASSISTANCE TO LABOR ORGANIZATIONS
Art. 267. Assistance by the Department of Labor. – The Department of
Labor, at the initiative of the Secretary of Labor, shall extend special
assistance to the organization, for purposes of collective bargaining, of the
most underprivileged workers who, for reasons of occupation,
organizational structure or insufficient incomes, are not normally covered
by major labor organizations or federations.
Art. 268. Assistance by the Institute of Labor and Manpower Studies. – The
Institute of Labor and Manpower Studies shall render technical and other
forms of assistance to labor organizations and employer organizations in
the field of labor education, especially pertaining to collective bargaining,
arbitration, labor standards and the Labor Code of the Philippines in
general.
COMMENT:
1.) Labor education
 It is the duty of every legitimate labor organization to implement a labor
education program for its members on their rights and responsibilities as
unionists and as employees.
 It is mandatory for every labor organization to conduct seminars and
similar activities on existing labor laws, collective agreements, company
rules and regulations and other relevant matters. The union seminars
and similar activities may be conducted independently or in cooperation
with the DOLE or other labor educational institutions.

Chapter II
ASSISTANCE TO LABOR ORGANIZATIONS
Art. 267. Assistance by the Department of Labor. – The Department of
Labor, at the initiative of the Secretary of Labor, shall extend special
assistance to the organization, for purposes of collective bargaining, of the
most underprivileged workers who, for reasons of occupation,
organizational structure or insufficient incomes, are not normally covered
by major labor organizations or federations.
Art. 268. Assistance by the Institute of Labor and Manpower Studies. – The
Institute of Labor and Manpower Studies shall render technical and other
forms of assistance to labor organizations and employer organizations in
the field of labor education, especially pertaining to collective bargaining,
arbitration, labor standards and the Labor Code of the Philippines in
general.
COMMENT:
1.) Trade Union Activities of Aliens
Aliens and foreign organizations are prohibited from engaging to all
forms of trade union activities. However, alien employees with valid working
permits issued by the DOLE may exercise the right to self-organization and
join or assist labor organization, if they are nationals of a country which
grants the same or similar rights to Filipino workers, as certified by the DFA.
2) Trade Union Activities
1. Organization, formation, and administrator of labor organizations;
2. Negotiation and administration of collective bargaining agreements
3. All forms of concerted union action
4. Organizing, managing, or assisting union conventions, ,meetings,
rallies, referenda, teach-ins, seminars, conferences and institutes
5. Any form of participation or involvement in representation proceedings,
representation elections, consent elections, union elections and
6. Other activities or actions analogous to the foregoing.
Art. 270. Regulation of foreign assistance. – (a) No foreign individual,
organization or entity may give any donations, grants or other forms of
assistance, in cash or in kind, directly or indirectly, to any labor
organization, group of workers or any auxiliary thereof, such as
cooperatives, credit unions and institutions engaged in research,
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education or communication, in relation to trade union activities, without
prior permission by the Secretary of Labor.
"Trade union activities" shall mean:
(1) organization, formation and administration of labor
organization;
(2) negotiation and administration of collective bargaining
agreements;
(3) all forms of concerted union action;
(4) organizing, managing, or assisting union conventions,
meetings, rallies, referenda, teach-ins, seminars,
conferences and institutes;
(5) any form of participation or involvement in representation
proceedings, representation elections, consent elections,
union elections; and
(6) other activities or actions analogous to the foregoing.
(b) This prohibition shall equally apply to foreign donations, grants or
other forms of assistance, in cash or in kind, given directly or indirectly to
any employer or employer’s organization to support any activity or
activities affecting trade unions.
(c) The Secretary of Labor shall promulgate rules and regulations to
regulate and control the giving and receiving of such donations, grants, or
other forms of assistance, including the mandatory reporting of the
amounts of the donations or grants, the specific recipients thereof, the
projects or activities proposed to be supported, and their duration.
COMMENT:
 Prior permission from the SOL is required before a foreign individual,
organization or entity can give donations, grants or other forms of
assistance, in cash or in kind to any labor organization or any auxiliary
thereof.
 Legitimate L.O. should make a disclosure of donations, donors and their
purposes in their annual financial reports.

Art. 271. Applicability to farm tenants and rural workers. - The provisions of
this Title pertaining to foreign organizations and activities shall be deemed
applicable likewise to all organizations of farm tenants, rural workers, and
the like: Provided, That in appropriate cases, the Secretary of Agrarian
Reform shall exercise the powers and responsibilities vested by this Title
in the Secretary of Labor.
COMMENT:
1.) Regulatory Body for Farm Tenants
 The regulatory functions with respect to foreign assistance for farm
tenants and rural workers shall be exercised by the Secretary of
Agrarian Reform.
Chapter IV
PENALTIES FOR VIOLATION
Art. 272. Penalties. – (a) Any person violating any of the provisions of
Article 264 of this Code shall be punished by a fine of not less than one
thousand pesos (P1,000.00) nor more than ten thousand pesos (P10,000.00)
and/or imprisonment for not less than three months nor more than three (3)
years, or both such fine and imprisonment, at the discretion of the court.
Prosecution under this provision shall preclude prosecution for the same
act under the Revised Penal Code, and vice versa.
(b) Upon the recommendation of the Minister of Labor and
Employment and the Minister of National Defense, foreigners who violate
the provisions of this Title shall be subject to immediate and summary
deportation by the Commission on Immigration and Deportation and shall
be permanently barred from re-entering the country without the special
permission of the President of the Philippines. (As amended by Section 16,
Batas Pambansa Bilang 130 and Section 7, Batas Pambansa Bilang 227)
COMMENT:
1.) Offenses Penalized Under 272
Art. 272 of the labor code penalizes the following violations of ART. 264:
1. Declaring a strike or lockout without having first bargained collectively
2. Declaring a strike or lockout without complying with the legal
requirements
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3. Declaring a strike or lockout after an assumption or certification order
has been issued or after the dispute has been submitted to compulsory
voluntary arbitration or during the pendency of cases involving the same
grounds for the strike or lockout;
4. Obstructing or interfering with by force, violation, coercion, threats or
intimidation any peaceful picketing during any labor controversy or
aiding or abetting such obstruction or interference
5. Using or employing strike-breakers
6. Brining in, introducing or escorting on the part of an armed person,
public officer, personnel of the AFP or PNP, any person who seeks to
replace strikers, in entering or leaving the premises of a strike area
7. Committing acts of violence, coercion or intimidation while engaged in
picketing.
8. Obstructing the free ingress to and egress from the employer’s
premises while engaged in picketing and
9. Obstructing public thoroughfares
BOOK SIX
POST EMPLOYMENT
Title I
TERMINATION OF EMPLOYMENT
Art. 278. Coverage. – The provisions of this Title shall apply to all
establishments or undertakings, whether for profit or not.
COMMENT:
Expanded Coverage of the Law on Dismissal
 Under the previous law, the provisions of the Labor Code on termination
of the employment are extended to employees of entitites which are not
operated for profit or gain, such as educational, medical, religious, or
charitable institutions and organizations.
 Purpose: to extend the employees of such entitites the same rights and
benefits granted to workers of industrial and commercial enterprises.

Art. 279. Security of tenure. – In cases of regular employment, the employer
shall not terminate the services of an employee except for a just cause or
when authorized by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to
his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement. (As amended by Section 34, Republic Act No. 6715, March
21, 1989)
COMMENT:
Security of Tenure Construed
 Employee shall not terminate the services of an employee except for a
just or authorized cause.
 Security of tenure is an act of social justice. It is intended to protect an
employee against any arbitrary and unjust deprivation of his job.
Coverage
 Security of tenure is principally intended to protect employees who are
holding regular employment. However, this does not mean that
employees who are holding non-regular employment, such as project
employees, seasonal employees or fixed term employees are not
entitled to security of tenure. They are entitled to security of tenure
although in a qualified manner, in the sense that they cannot be
terminated without just cause prior to the completion of the project,
season or term of employment.
 Probationary employees are also entitled to security of tenure, in a
sense that during their probationary employment, they cannot be
dismissed except for just cause or authorized cause.
 Managerial employees are likewise entitled to security of tenure
although they are subject to stricter norm or discipline than ordinary
rank-and-file employees.
 Even casual employees who have rendered at least 1 year of service
are accorded the right to security of tenure in the sense that their
employment cannot be terminated without just cause, as long as the
activity in which they are employed exists.
Extent of the Rights
 Security of tenure protects an employee not only against arbitrary or
unjust dismissal, but also against other personnel actions, which are
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calcuteed to force an employee to give up his employment without valid
reason.
Limitation
 Security of tenure is not a guarantee of perpetual employment because
our law, while affording protection to the employee does not authorize
oppression or destruction of an employer. It has been held that while
security of tenure is constitutionally guaranteed, it cannot be used to
deprive an employer of its prerogatives. The law is solicitous of the
welfare of the employees, but is also protects the right of an employer to
exercise what are clearly management prerogatives.
Managerial Prerogatives
 An owner of a business enterprise is given considerable leeway in
managing his business because it is deemed important to society as a
whole that he should succeed. The exercise of managerial prerogatives
belongs solely to the employer. The employer is free to determine,
according to his own discretion and business judgment, all aspects of
employment, including hiring, work assignment., working methods, time,
place and manner of work, tools to be used, processes to be followed,
etc.
 These prerogatives of management can be availed of without liability
provided they are exercised in good faith for the advancement of the
employer’s interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under
valid agreements and provided further that such prerogatives are not
exercised in a malicious, harsh, oppressive, vindictive, or wanton
manner or out of malice or spite.
 The Labor Code does not authorize the NLRC or the Labor Arbiter to
interfere with or substitute their judgment for that of the employer in the
conduct of his business.
NATIONAL LABOR UNION VS. INSULAR YEBANA TOBACCO
CORPORATION
National Labor Relations Act was not intended to empower the National Labor
Relations Board to substitute its judgment for that of the employer in the conduct
of its business and did not deprive the employer of the right to select or dismiss
his employees for any cause except where the employee was actually
discriminated against because of his union activities or affliation. It did not

authorize the Board to absolve employees from compliance with reasonable
regulations for their government and guidance.
 It is within their power to inquire on whether or not the exercise of
managerial prerogatives was tainted with bad faith or grave abuse of
discretion.
 Thus, if the Labor Artbiter, the NLRC or the higher courts find that the
penalty of dismissal is grossly disproportionate, harsh or too severe,
they may reduce the sanction to a lighter penalty. This can be done by
ordering the reinstatement of the employee without backwages or with
limited backwages, and the period he was out of work or the period not
covered by the backwages will be considered as the penalty. However,
in the absence of bad faith or grave abuse of discretion, the exercise by
the employer of is inherent prerogatives should be upheld.
The Prerogatives to choose whom to hire
 The right to select and appoint employees is the prerogative of an
employer-- the privilege of management because such right inheres in
the conduct and operation of the business by the employer.
 Corollary to this right is the prerogative to place new employees on
probationary status. The employer has the right or is at liberty to choose
whom to hire that the employer may set or fix a probationary period in
order to test and observe the conduct of the employee before hiring
them permanently.
The prerogative to promote employees
 Promotion - advancement from one position to another with an increase
in duties and responsibilities and usually accompanied by an increase in
salary.
 Essence of promotion : the advancement from one position to another
with an increase in duties and responsibilities, and usually accompanied
by an increase in a salary.
 Usually - not all promotions may be accompanied by a corresponding
salary increase, nothwithstanding the increase in duties and
responsibilites of the employee.
 Promotion of employees to supervisory, managerial or executive
positions rests upon the discretion of the management because such
positions are offices that can be held by persons who have the trust of
the corporation and its officers.
 A promotion that is manifestly beneficial to the employee should not
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give rise to a gratuitous speculation that such a promotion was made
simply to deprive the union of membership of the promoted employee,
who after all appears to have accepted the promotion.
 An employee has the right to decline a promotion. There is no law that
compels an employee to accept a promotion. An employee cannot be
subjected to disciplinary action if he refuses to accept the promotion.
 However, the moment an employee accepts a promotion to a
managerial position or to an office requiring full trust and confidence, he
gives up some of the rigd guarantees available to ordinary workers.
Upon promotion, he would now be subjected to stricter norm of
discipline than ordinary rank-and-file emplyees.
Dosch vs. NLRC
FACTS: HD was the resident manager of northwest airlines in the Philippines.
He was promoted to the position of Director-International Sales and he was to
hold office at the Northwest’s general office in USA. HD declined the promotion
for personal reasons. He made it known that he preffered to remain as manager
in the Philippines. As a result, Northwest considered him resigned, although later
on, Northwest took the position that HD was guilty of insubordination.
ISSUE: Is HD guilty of subordination?
HELD: No, HD is not guilty of subordination. While northwest has the prerogative
to promote an employee, HD also has the right to decline the promotion and he
cannot be punished for it. There is no law that compels an employee to accept a
promotion. A manage in a private concern has the right to be secure in his
position, to decline a promotion where, although the promotion carries an
increase in salary and rank but results in his transfer to a new place of
assignment or station away from his family.
(F) Dismissal for soliciting signatures to form a union
Case: JUDRIC CANNING V. INCIONG
FACTS: NP and other 5 EEs of JCC were found to have solicited membership in
a union yet to be organized. JCC removed timecards from rack- hence, EEs
could not work anymore and thus they filed a complaint for ULP and illegal
dismissal
ISSUE/S: WON JCC is guilty of dismissal by ULP
HELD: Under Article 248(a) of the Labor Code of the Philippines, "to interfere
with, restrain, or coerce employees in their exercise of the right to self-
organization" is an unfair labor practice on the part of the employer. Paragraph
(d) of said Article also considers it an unfair labor practice for an employer "to

initiate, dominate, assist or otherwise interfere with the formation or
administration of any labor organization, including the giving of financial or other
support to it. In this particular case, the private respondents were dismissed or
their services were terminated, because they were soliciting signatures in order
to form a union within the plant. Consequently, dismissal is illegal.
(G) Dismissal for refusing to join the union favoured by the employer
Case: PROGRESSIVE DEV’T. CORP. V. CIR
FACTS: ACEA (legit. Labor org/LLO) formally informed PDC of its existence and
sent also its CB proposals. But supervisors of PDC assisted in the formation of
another union (PEU) and persuaded members of ACEA to transfer to such.
ACEA members were not given work schedules, working days lessened until
they were dismissed from service. PDC contended that ACEA members were not
dismissed but simply they had no work to do- since they were just
casuals/temporary EEs whose services depended upon availability of work.
ISSUE/S: WON PDC’s contention has merit
HELD: This contention is without merit. As testified to by President of the
Progressive Employees Union, their members were also casual employees but
are now regulars. This fact shows that the casual status of the members of ACEA
could not have been the cause of their dismissals. Moreover, as testified to by
Concordia Araiza, a witness for petitioners, it was the Personnel Manager who
was in charge of assigning ushers and usherettes every time there were
scheduled shows; and that while the Araneta Coliseum maintained only such
number of ushers, usherettes and janitors, if their services were needed, every
time there was a scheduled show or during show days, the Coliseum hired
additional personnel. 11 It is, therefore, clear that the services of the members of
the ACEA were also needed, their casual status notwithstanding.
It appears that the individual complainants, during show days, were always
scheduled to work until June 1962 when they were not included in the schedule
anymore.12 This virtually amounted to dismissal, without prior notice. Their not
being included in the list of schedule since June 1962 could only be the result of
petitioners' earlier threat of dismissal should said complainants refuse to heed
petitioners' admonition for them to resign from the ACEA.
There is reason to believe that had the individual complainants agreed to resign
from the ACEA and to transfer to the PEU, they would not have been separated
from their work and would even have been made permanent employees. Thus, a
Mrs. Concordia Araiza who was a casual employee of the petitioner corporation,
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upon her suspension for four (4) hours on representation of the ACEA, became a
permanent employee after she handed her resignation from the ACEA Union
personally to Jose E. Belmonte, the General Manager of the Progressive
Development Corporation.
From the facts of record, it is clear that the individual complainants were
dismissed because they refused to resign from the Araneta Coliseum
Employees Association and to affiliate with the Progressive Employees Union
which was being aided and abetted by the Progressive Development
Corporation.
7. Remedy for Illegal or Unjust Dismissal
- Complaint for Illegal Dismissal (ID) filed with Labor Arbiter (LA) only
recourse available to EE who is illegally or unjustly dismissed
- Art. 277 as the basis
- Petition for injunction NOT THE REMEDY
o It is not a cause of action in itself but only a provisional
remedy- adjunct to the main suit.
o Art. 218 emphasizes that the power of the NLRC to issue
injunctive writ originates from “any labor dispute”
 Without a complaint filed of ID before the LA, there is
no labor dispute
- Case: PAL Inc. v. NLRC
FACTS: FP and GC were flight stewards of PAL who were dismissed because of
currency smuggling. Instead of filing a complaint for ID before the LA, they
directly filed with the NLRC a petition for injunction praying PAL to be enjoined
from dismissing them and to reinstate them to their former position. NLRC issued
injunction.
ISSUE/S: WON NLRC is correct
HELD: No. Power of the NLRC to issue an injunctive writ originates from “any
labor dispute”. Without a complaint filed of ID before the LA, there is no labor
dispute. This case, there’s no complaint.
8. Relief for unjust or illegal dismissal
8.1. Migrant Workers (MW)
- Those MW unjustly/illegally dismissed is entitled to:
o Full reimbursement of his placement fee with 12% interest per
annum

o Salaries for the unexpired portion of his employment contract,
or 3 mos. Salary for every yeas of the unexpired term,
whichever is less.
- Choice of which amount to award an illegally dismissed MW (WON his
salaries for unexpired term, whichever is less, comes into play when
employment contract has a term of atleast 1 year.
o Evident from words “for every year of the unexpired term”
which follows the words “salaries xxx for 3 months.”
o To say that worker is only entitled to 3 mos. Salary simply
because it is lesser amount is to completely disregard/overlook
some words used in statute while giving effect to some
 This is contrary to well-established rule in legal
hermeneutics that in interpreting a statute, care
should be taken that every part or word thereof be
given effect since the lawmaking body is presumed to
know the meaning of the words employed by statute
and to have used them advisedly.
8.2. Locally employed workers (LEW)
- If unjustly or illegally dismissed, is entitled to:
o Reinstatement without loss of seniority rights and other
privileges
o Backwages, inclusive of allowances, and to his other benefits
or their monetary equivalent computed from time his
compensation was withheld from him up to the time of actual
reinstatement
o Moral and exemplary damages if dismissal was tainted with
malice/BF
o Separation pay, under certain conditions
9. Reinstatement
- Relief separate and distinct from Backwages
o Usually is a concomitant of Backwages; but the two are not
necessarily complements nor award of one is a condition
precedent to an award of the other
- Simply means, restores the lost position (while Backwages restores
lost income)
Addie Celerian * Amor Venenoso * Draei Dumalanta * Ellan Cipriano * Ingrid Prado * Mary Ang * Rica Casiquin * Sam Santos
LABOR RELATIONS (Arts. 226-292, Labor Code of the Philippines) 88
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9.1. Meaning of reinstatement
- Restoration to state from which one has been removed/separated
- Return to position from which he was removed
- NO reinstatement in cases:
o To a position EE which never occupied
o To a permanent position of an originally temporary EE
- A reinstated EE may be required to undergo physical/medical
examination in order to determine fitness to work but such should not be
a precondition for reinstatement
- Case: Phil-Am Drug v. CIR
FACTS: AC was employed by PADC as sales supervisor. He was one of the 40
EES terminated because of business losses. Dismissal upheld by CIR but the
validity was upon the condition that PADC terminated EEs should be given first
priority should it thereafter employ addt’l personnel. FG was appointed branch
manager in place of another dismissed, AF. AC contested such and claimed that
he should be given first priority. Lower court ruled in favor of AC.
ISSUE/S: WON PADC can be compelled to appoint AC as branch manager
HELD: No. AC’s position when he was terminated is a sales supervisor and thus
he cannot claim to be appointed as branch manager even though there is
preferential hiring. Because such privilege does not carry with it the right to be
appointed to higher position.
- Case: San Miguel Brewery vs. Santos
FACTS: Temporary guard of petitioner was recommended by union to be hired
but instead of hiring him, petitioner dismissed him. Union filed a complaint for
ULP against company. Lower court find ULP and ordered company to reinstate
temporary guard as permanent guard
ISSUE/S: WON lower court was correct
HELD: No. On the date of his separation from service, guard was occupying
position of temporary guard. In order to be reinstated (restoration to a state from
which he was generally removed), he must be reinstated to his former position-
temporary guard.
9.2 Meaning of Reinstatement “without loss of seniority rights”
- That upon reinstatement, EE is to be treated in matters involving rank,
position and continuity of employment as though he has not been
absent from work.

9.3. Alternative Relief if reinstatement is no longer possible
- Cases where reinstatement is no longer possible:
o Position no longer exist at time of reinstatement
 EE should be given substantially equivalent position
o Position previously occupied by EE is already filled up
 EE should be given substantially equivalent position
 To insist on reinstatement would merely
compound the injustice- ER to terminate the
services of the new hire who replaced the
illegally dismissed EE just for latter to
assume former position
- Cases where reinstatement is rendered impossible and Substantially
equivalent position is not available  REMEDY: separation pay in lieu
of reinstatement
o ER has closed down business
o ER undertook reorganization resulting to abolition of position
previously occupied by EE
o ER undertook retrenchment measures or drastic reduction of
personnel
- UNFEASIBLE reinstatement EE dismissed has reached retirement
age of 60
o Relief separation pay is not available
o EE entitled only to Backwages up to time when he reached
retirement age plus retirement pay
- Case: Philippine Engineering Corp. V. CIR
FACTS: Petitioner is engaged with purchase, sale and installation and repair of
machinery and maintained a machine at Raon Quiapo. But on 1965, such
operation machine closed down and was dismantled and transferred resulting to
termination of 57 EEs, mostly mechanics and mechanic helpers. Union filed
complaint for ULP and lower court ordered for reinstatement of 57 EEs
ISSUE/S: WON lower court was correct in ordering reinstatement of 57 EEs
HELD: No. AC’s Reinstatement presupposes that the previous position from
which one has been removed still exists, or that there is an unfilled position more
or less of similar nature as the one previously occupied by the EE. With machine
shop being dismantled and transferred, some sold, dismissed EEs could not be
returned for reinstatement becomes impossible.
Addie Celerian * Amor Venenoso * Draei Dumalanta * Ellan Cipriano * Ingrid Prado * Mary Ang * Rica Casiquin * Sam Santos
LABOR RELATIONS (Arts. 226-292, Labor Code of the Philippines) 89
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9.4. Propriety of Reinstatement
- Relief is available only to EEs who is unjustly/illegally dismissed.
o If not, as when severance of employment was brought by
abandonment/refusal to work, reinstatement cannot be
properly ordered.
9.5. Effect of Employment Elsewhere
- Unjustly dismissed EE cannot be denied the right to reinstatement
simply because he has obtained employment elsewhere
o RATIO: dismissed EE cannot be expected to remain idle while
his claim is pending adjustment, particularly if he has
dependents looking to him for sustenance. If ever he obtained
employment elsewhere, it was out of necessity rather than
choice. It would be against all justice and equity to force EE to
choose between starvation and loss of reinstatement.
- As long as reinstatement order had not been carried out, dismissed EE
is free to seek employment anywhere including in a foreign country.
o His departure from Philippines cannot be considered as waiver
of his rights to reinstatement
o Bare fact of his being actually employed elsewhere in any
capacity cannot affect his right to reinstatement, for option on
whether to return to his employment or not, is upon EE to
decide. If he opts to return, he has to be reinstated, if refuses
to return/imposes uncalled for conditions, then and only then
would his rights to reinstatement cease.
9.6. Circumstances that preclude reinstatement
- Transfer of Business Ownership
o If ER sells business during pendency of ID case and EE is
adjudged to have been illegally dismissed  reinstatement is
precluded
o Reason: New owner/buyer is not obliged to absorb the EEs of
old owner/seller
 Unless there is an expressed assumption of liabilities
by the new owner

- Business reverses
o If between time of wrongful discharge and proposed order of
reinstatement, ER’s commercial or financial circumstances
have changed, ER (even if guilty of ULP) cannot be compelled
to reinstate such # of EEs as may exceed his needs under the
altered conditions
o Reason: ER cannot be compelled by an order of reinstatement
to give employment to greater # of persons that economic
operations of business required.
o But even though reinstatement is not possible, such condition
does not justify refusal or denying Backwages
- Abolition of Position
o Position of ID EE has already been abolished, or there’s no
substantially equivalent position  reinstatement cannot be
carried out
- Closure of business
o Reinstatement presupposes that the previous position from
which one has been removed still exists, or that there is an
unfilled position more or less of similar nature as the one
previously occupied by the EE
o If establishment closed its operations  reinstatement
impossible
- Incapacity of EE
o Fairness dictates that ER should not be compelled to reinstate
an EE who is no longer physically fit for the job from which he
was illegally ousted.
- Attainment of Retirement Age
o EE held to be ID cannot be reinstated if he has reached
retirement age of 60 y/o
- Conviction in Criminal case
o If EE was dismissed for offense constituting a crime (e.g. theft
of company property) and dismissal was held unjust,
consequence of which he was reinstated, subsequent
conviction will preclude his reinstatement and (payment of
Backwages)
 Reason: subsequent conviction is a supervening
event that rendered unjust and inequitable the
reinstatement of EE and conviction affirmed the
existence of a valid ground for the dismissal
Addie Celerian * Amor Venenoso * Draei Dumalanta * Ellan Cipriano * Ingrid Prado * Mary Ang * Rica Casiquin * Sam Santos
LABOR RELATIONS (Arts. 226-292, Labor Code of the Philippines) 90
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- Laches
o If reinstatement is not demanded within reasonable time, such
will be barred.
o This is to give justice to ER too; to allow the management to
conduct its business and affairs, considering the dismissal and
possibility of the dismissed EE resorting to court action to
vindicate his right to continue his employment
 E.g. within reasonable time, say 1 year, management
may keep the post vacant by not filling it or cover it
with temporary EE, giving the latter to understand that
should the management be later ordered to make
reinstatement, temporary EE should vacate his post
 this period of uncertainty should not be allowed to
continue indefinitely
 Cases:
 NASSCO v. CIR – EE guilty of laches
because action for reinstatement was filed
after lapse of 17 mos.
 Gutierrez v. Bachrach Motor Co. – action for
reinstatement barred by laches since it ws
filed only after lapse of 17 mos.
 Litton Mills Workers Union v. Litton Mills Inc.
– 5-year delay was held to be barred by
laches.
- Prescription
o Action for reinstatement filed after 4 years from date of
dismissal will be barred by prescription
- When complaint merely prays for separation pay
o When EE merely prays for separation pay, he forecloses his
right to reinstatement
- Strained Relations
o Even if dismissal is found to be unjust/illegal, reinstatement
should not be ordered anymore if the relationship between the
parties has become so strained and ruptured as to preclude a
harmonious working relationship
o Instead, EE should be afforded separation pay
 This way, EE is spared the agony of having to work
anew with his ER under the atmosphere of antipathy
and antagonism while ER does not have to endure

the continued services of an EE whom it has lost
confidence
o Reinstatement is not practical for EE who is no longer welcome
and imposing the EE’s position in the company where he is no
longer welcome would only poison their relations to their
mutual prejudice  irritations would only recur if unwanted EE
has to be tolerated by the reluctant ER
 This is not conducive to industrial peace
o Case: Equitable Banking Corp. v. NLRC:
“While the Court agrees with private respondent that execution pending appeal
may be ordered by the NLRC it is equally true, however, that where the
dismissed employee's reinstatement would lead to a strained relation between
the employer and the employee or to an atmosphere of antipathy and
antagonism, the exception to the twin remedies of reinstatement and payment of
backwages can be invoked and reinstatement, which might become anathema to
industrial peace, could be held back pending appeal.”
9.7. When to Invoke Doctrine of Strained Relations
- Such matter of strained relations should be raised and proved before
the LA
o UNLESS: strained relations arose after the filing of the case,
as when antagonistic feelings that stemmed from the filing of
the complaint deepened during the 8-year pendency of the
case
- Such doctrine should not be applied indiscriminately since every labor
dispute invariably results in strained relations
o Mere filing of complaint for ID  does not by itself justify the
application of the doctrine of strained relations
o Where differences of the ER with EE are neither personal nor
physical much less serious in nature  does not by itself justify
the application of the doctrine of strained relations
 Otherwise, reinstatement can never be possible
because some hostility is engendered between the
parties as a result of their disagreement
9.8. Remedy for Refusal to comply with reinstatement order
- Remedy for refusal to comply with a final order of reinstatement is not a
separate action for ID but a motion for issuance of writ of execution
Addie Celerian * Amor Venenoso * Draei Dumalanta * Ellan Cipriano * Ingrid Prado * Mary Ang * Rica Casiquin * Sam Santos
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o If ER still, despite issuance of writ, refuses to comply 
remedy is contempt proceeding (not additional Backwages)
- Case: Christian Literature v. NLRC
FACTS: Petitioner filed an application for clearance to dismiss LDR on ground of
incompetence. Pending resolution, LDR was placed under preventive
suspension. Labor Arbiter (LA) rendered decision ordering reinstatement of LDR
with 3 years Backwages. Decision became final and executor and hence a writ of
execution was issued. Petitioner complied except for the reinstatement part. After
5 mos, lapse, LDR filed motion for issuance of Alias Writ of Execution
th
(reinstatement, Backwages, allowances and 13 mo. Pay from date of dismissal
up to present). LA issued such aside from the 3 year Backwages that has been
satisfied.
ISSUE/S: WON LDR is entitled to additional backwages
HELD: No. LDR is not entitled to additional Backwages because that would in
effect amend the decision sought to be enforced. Once judgement has become
final and executor, it may no longer be amended, modified or altered. It must be
noted that decision sought to be enforced merely awarded 3 years Backwages.
Said award has already been fully satisfied. CLC refused to reinstate LDR and
the remedy of such is not the grant of alias writ of execution for
additional/continuing Backwages because that would have no basis in the
decision sought to be reinforced. Remedy must be contempt proceedings.
- Case: Medina v. Consolidated Broadcasting System
o SC held that unjustified refusal of an ER to reinstate an illegally
dismissed EE entitles the EE to Backwages, effective from the
date the ER failed to reinstate despite an executor writ of
execution served upon him.
o Ruling here is quite in apparent conflict with Christian
Literature v. NLRC which involved refusal to comply with
reinstatement order that has become final and executory
(whereas in Medina, such involved refusal to comply with
reinstatement order pending appeal)
o SC held thus:
Petitioners would have us rule on whether or not the refusal of the private
respondent to reinstate them would make it liable to pay their salaries pursuant to
Republic Act No. 6715:

Article 223 of the Labor Code, as amended by Republic Act 6715, pertinently
provides:
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 the bond shall not stay the execution for reinstatement
provided herein. (Emphasis supplied)
xxx
Petitioners construe the above paragraph to mean that the refusal of the
employer to reinstate an employee as directed in an executory order of
reinstatement would make it liable to pay the latter's salaries. This interpretation
is correct. Under Article 223 of the Labor Code as amended, an employer has
two options in order for him to comply with an order of reinstatement, which is
immediately executory, even pending appeal. Firstly, he can admit the dismissed
employee back to work under the same terms and conditions prevailing prior to
his dismissal or separation or to a substantially equivalent position if the former
position is already filled up as we have ruled in Union of Supervisors (RB) NATU
vs. Sec. of Labor, 128 SCRA 442 [1984]; and Pedroso vs. Castro, 141 SCRA
252 [1986]. Secondly, he can reinstate the employee merely in the payroll.
Failing to exercise any of the above options, the employer can be compelled
under pain of contempt, to pay instead the salary of the employee. This
interpretation is more in consonance with the constitutional protection to labor
(Section 3, Art. XIII, 1987 Constitution). The right of a person to his labor is
deemed to be property within the meaning of constitutional guaranty that no one
shall be deprived of life, liberty and property without due process of law.
Therefore, he should be protected against any arbitrary and unjust deprivation of
his job (Bondoc vs. People's Bank and Trust Co., Inc., 103 SCRA 599 [1981]).
The employee should not be left with any remedy in case the employer
unreasonably delays reinstatement. Therefore, we hold that the unjustified
refusal of the employer to reinstate an illegally dismissed employee entitles the
employee payment of his salaries, effective from the date the employer failed to
reinstate despite an executory writ of execution served upon him. Such ruling is
in accord with the mandate of the new law awarding full backwages until actual
reinstatement (Article 279 of the Labor Code as amended.)
Addie Celerian * Amor Venenoso * Draei Dumalanta * Ellan Cipriano * Ingrid Prado * Mary Ang * Rica Casiquin * Sam Santos
LABOR RELATIONS (Arts. 226-292, Labor Code of the Philippines) 92
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10. Backwages
- It is not the principal cause of action in an illegal dismissal case
- Merely one of the reliefs extended to an EE who is unjustly dismissed
- In illegal dismissal case  Principal cause of action is the unlawful
deprivation of one’s employment by the employer in violation of the right
of security of tenure
10.1 Meaning of Backwages
- A form of relief that restores the income that was lost by reason of
unlawful dismissal
- RATIO: an EE whose dismissal is found to be illegal is considered as
not having left his office so that he is entitled to all the rights and
privileges that accrue to him by virtue of the office that he held
10.2 Distinction between Backwages and Unpaid wages
- Backwages  compensation which an EE would have earned had he
not be unjustly dismissed
- Unpaid wages  compensation for services already rendered by the
withheld by the ER
10.3 Amount of Backwages that may be awarded
- Art. 279 of the LC provides that an unjustly dismissed EE is entitled to
full Backwages from time his compensation was withheld up to the time
of his actual reinstatement
o This must not mean that unjustly dismissed EE is auto-entitled
to full Backwages
o LA and NLRC have discretion to determine how much
Backwages should be awarded taking into account the facts
and circumstances of each case
o Note that dismissal could be illegal or unjust because the EE
was dismissed:
 On grounds specifically prohibited by law (Art. 118,
248(f) and 286 of LC)
 Without any cause whatsoever (EE not committed an
offense)

 Without just cause (EE committed an offense but
penalty of dismissal was not commensurate)
10.4 Full Backwages
- Entitles EE who was dismissed on grounds specifically prohibited by law
o Under Art. Art. 118, 137, 248(f) and 286 of LC
o Ratio: EE should not have been dismissed in the first place
- Entitles EE who was dismissed without any cause
o Ratio: EE does not deserve any penalty considering he has not
committed any offense
10.5. Limited Backwages
- In situation where EE was dismissed without just cause like EE
committed an offense and the penalty of dismissal was found to be too
harsh, full Backwages should not be awarded because that would in
effect absolve the EE from his wrongdoing
- Awarded also when there is delay in filing of the complaint of ID (e.g. 2
years lapse)
o Period of delay in instituting the action for reinstatement may
be deducted from liability for Backwages
o A ruling that would permit a dismissed laborer to earn back
wages for all time, or for a very long period of time, is not only
unjust to the employer but the same would foster indolence on
the part of the laborers. The laborer is not supposed to be
relying on a court judgment for his support, but should do
everything a reasonable man would do; he should find
employment as soon as an employment has been lost,
especially when the employment has to depend on a litigation.
He should try to minimized the loss that may be caused to the
employer by looking for other work in which he can be
employed
10.6 No Backwages
- Backwages may not be awarded in any of the following circumstances:
o GF on part of ER – as e.g.
Addie Celerian * Amor Venenoso * Draei Dumalanta * Ellan Cipriano * Ingrid Prado * Mary Ang * Rica Casiquin * Sam Santos
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 ER honestly believed that dismissal was the proper
penalty for offense committed, reinstatement without
Backwages would be appropriate relief
 When ER honestly believed that it could dismiss EE
based on a closed shop provision of the CBA
o Cessation of employment brought about neither by dismissal
nor abandonment
 Where the EE’s failure to work was caused neither by
his abandonment nor by dismissal, burden of eco.
Loss is not rightfully shifted to ER
 Each party must bear his own loss and
hence, ER not to be liable for bckwages.
 Case: Chong Guan v. NLRC
FACTS: JC was employed by CGT as Sales Manager. A customer who
borrowed the telephone directory accidentally dropped it on the top of glass of
the store’s showcase causing it to break- but JC covered up for the customer.
CGT owner got angry and hurled “unprintable words and invectives” and told JC
“lumayas ka rito”. Hence, JC did not report to work anymore. JC filed a complaint
for ID. Defense of CGT was that it expressed its willingness to accept JC back to
work but it was the latter who stopped. LA ruled reinstatement without
Backwages.
ISSUE/S: WON LA was correct in not awarding backwages
HELD: Yes. the Court is convinced that private respondent was never dismissed
by the petitioner. Even if it were true that Mariano Lim ordered private respondent
to go and that at that time he intended dismiss private respondent, the record is
bereft of evidence to show that he carried out this intention. Private respondent
was not even notified that he had been dismissed. Nor was he prevented from
returning to his work after the incident. The only thing that is established from the
record, and which is not disputed by the parties, is that private respondent did
not return to his work after his heated argument owners. Moreover, petitioner has
consistently manifested its willingness to reinstate private respondent to his
former position. This negates any intention on petitioner's part to dismiss private
respondent. Petitioner first expressed its willingness to reinstate private
respondent during the initial hearing of the case before the Labor Arbiter.
Therefore, considering the Court's finding that private respondent was never
dismissed by the petitioner, the award of three years backwages was not proper.
Backwages, in general are granted on grounds of equity for earnings which a
worker or employee has lost due to his illegal dismissal from work. Where the
employee was not dismissed and his failure to work was not due to the
employer's fault, the burden of economic loss suffered by the employee should

not be shifted to the employer. In this case, private respondent's failure to work
was due to the misunderstanding between the petitioner's management and
private respondent. As correctly observed by the Labor Arbiter, private
respondent must have construed the October 28 incident as his dismissal so that
he opted not to work for many days thereafter and instead filed a complaint for
illegal dismissal. However, there was no intent to dismiss private respondent
since the petitioner is willing to reinstate him. Nor was there an intent to abandon
on the part of private respondent since he immediately filed a complaint for illegal
dismissal soon after the October 28 incident. It would be illogical for private
respondent to abandon his work and then immediately file an action seeking his
reinstatement.
o Cessation of employment due to EE’s refusal to work
 If cessation of employment was not caused by
dismissal but by EE’s refusal to work, ER should not
be held liable for Backwages.
 E.g. EE who stops working because of her
erroneous belief that she was being
harassed and persecuted
 Case: Dangan v. NLRC
FACTS: AD was employed by TFC as Purchasing Clerk. On may 1, 1980, she
was promoted as secretary to the manger of financial services department. In
1981, her boss resigned as clerk-typist in Logistics department. After 3 mos., she
was pulled out of the Logistics department and temporarily assigned as billing
clerk in the accounting department. After AD’s maternity leave, TFC transferred
her to Bicutan as Secretary to Technical Senior Manager. AD viewed this as
demotion- that she was harassed for being the secretary of the finance manager
whom the management hated. Complaint for illegal demotion was filed and AD
told the management that she will not report for work until case has been decided
and terminated. NLRC ordered reinstatement but without Backwages.
ISSUE/S: WON NLRC was correct in not awarding backwages
HELD: Yes. the employer cannot be compelled to pay her backwages during a
period when she was not working because of a sincere but mistaken belief that
she was being harassed and persecuted for having worked as private secretary
to an executive who resigned. The petitioner has the option of accepting a
reassignment to the respondent's Bicutan offices without any backwages.
Otherwise, she may avail herself of the separation pay to which an employee laid
off due to retrenchment is entitled under the law.
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LABOR RELATIONS (Arts. 226-292, Labor Code of the Philippines) 94
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10.7. Determination of amount due the EE
- How should the amount due to EE be determined?
o “Deduction of earning elsewhere” doctrine
 Earnings obtained by the EE elsewhere should be
deducted from Backwages awarded to EE pursuant to
the principle that EEs should not be permitted to
enrich themselves at the expense of their ER and also
because of the law’s abhorrence for double
compensation
o Mercury drug doctrine
 Doctrine after the “Deduction of earning elsewhere”
doctrine was discarded
 Enunciated in the case of Mercury Drug v. CIR
 The Backwages due an illegally dismissed EE is fixed
at a certain amount (usually 3 years where the case is
not terminated sooner) without deduction or
qualification
 such formula was a realistic, reasonable, and
mutually beneficial solution for it relieve(s) the
employees from proving their earnings during their
lay-offs and the employer from submitting counter-
proofs, and thus obviate(s) the twin evils of idleness
on the part of the employees and attrition and undue
delay in satisfying the award on the part of the
employer.
o Bustamante doctrine
 Backwages to be awarded to an illegally dismissed
EE should not, as GR, be diminished/reduced by the
earnings derived by him elsewhere during the period
of his illegal dismissal
 Ratio: EE while litigating the matter of his
dismissal, must still earn a living to support
himself and family, while full bacwages have
to be paid by the ER as part of the
price/penalty he has to pay for illegally
dismissing his EE.

10.8. Computation of Backwages of Irregular Workers
- Only fair way to fix Backwages of irregular workers, like piece-
rate/seasonal, would be to determine what these workers would have
normally earned had they not been dismissed, using basis for that
purpose the wages actually earned by other irregular workers doing the
same kind of work who have not been dismissed.
o Considering such workers do not work continuously throughout
the year, it would not be fair to fix their Backwages as if they
had worked without interruption, otherwise, they would be
receiving compensation greater than those actually earned by
other irregular workers who were not separated from service
10.9 Circumstances that forestall the running of Backwages
- Death
o EE dies during pendency of case, Backwages cannot extend
beyond time of death
o Ratio: worker can only earn wages only when alive
- Physical/mental Incapacity
o EE becomes physically/mentally incapacitated during
pendency of case, Backwages will extend only up to the date
of such incapacity because a worker can earn wages only
when not totally and permanently incapacitated
- Attainment of retirement age
o Backwages cannot go beyond the retirement age
- Permanent closure of establishment
o Backwages cannot go beyond the date of permanent closure
of business
- Temporary closure of establishment
o Backwages cannot accrue in this case
 E.g. plant did not operate because of electrical power
interruptions/lack of materials/machine repair
- Confinement in Prison
o Backwages cannot accrue during the time when EE was
confined in prison (for such worker could not possibly render
service to ER and could not earn salary while under detention)
- Re-Employment of the dismissed EE
Addie Celerian * Amor Venenoso * Draei Dumalanta * Ellan Cipriano * Ingrid Prado * Mary Ang * Rica Casiquin * Sam Santos
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o Once dismissed EE is re-employed, right to Backwages auto-
ceases, otherwise double compensation would result.
10. 10 Other Benefits
- Art. 279, LC provides an EE who is unjustly dismissed shall be entitled
“to his full Backwages, inclusive of allowances, and to his other benefits
or their monetary equivalent”
- “Other benefits” include:
o Transportation and emergency allowances
o Vacation leave or Service Incentive leave
th
o 13 month pay
- “Other benefits” DO NOT include:
o Facilities that are used only during official tour of duty and not
for private or personal purpose- uniform, shoes, helmets, and
ponchos
o Benefits that are enjoyable only if approved by the ER, such as
free trip passes.
 Reason: because the grant thereof is not a matter of
right but subject to discretion of the ER
11. Separation Pay (SP)
- Intended to provide the EE money during period in which he will be
looking for another employment
- Distinct from”Backwages” (which is designed to restore income that was
lost by reason of unjust dismissal)
11.1 Concept of SP
- An aid given to an EE upon his separation from service so that he may
have something on which to fall back when he loses his means of
livelihood.
- Amount designed to provide him with the wherewithal during the period
that he is looking for employment.
11.2 Purpose of SP
- a social legislation, to alleviate the difficulties which confront a
dismissed employee thrown into the streets to face the harsh
necessities of life. It is for this reason that the said statute compels the

employer to dole out money, reasonable under circumstances, to
cushion the adverse effects of sudden separation from employment.
This gives the employee a leeway, commensurate to his years of
service, to tide him and his family over in the meantime that he goes job
hunting. To one who has been accustomed to a certain type of job in
one company, adjustment to other job opportunities becomes a
problem. Advanced age, too, may reduce him to a low priority in the
labor market
11.3 When SP is Proper
- Awarded to EE’s who are terminated by reason of:
o Redundancy
o Installation of labor-saving devices
o Retrenchment
o Closure of establishment not due to serious business losses
o Disease
o Lay-off/suspension of operations for more that 6 mos.
- If EE have been unjustly dismissed, is SP proper?
o Exceptional circumstances entitling such EE to SP:
 If the reinstatement of the EE has been rendered
impossible by supervening events (such as:
 closure of establishment,
 sale/transfer of business ownership,
 abolition of position
 reduction of personnel
 physical incapacity of EE)
 If the reinstatement of the EE is no longer feasible
 Doctrine of Strained Relations
 No substantially equivalent position is
available
- If EE was dismissed for a just and valid cause, is he entitled to SP?
o GR: Such worker is not entitled
o EXCEPTION: SC held that SP may be awarded as measure of
social justice even if the dismissal is found to be valid and
justified, but only in those instances where EE was validly
dismissed for a cause other than serious misconduct or
offenses reflecting on his moral character.
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 Case: Phil. Long Distance Telephone Company v.
NLRC
“xxx henceforth separation pay shall be allowed as a measure of social justice
only in those instances where the employee is validly dismissed for causes other
than serious misconduct or those reflecting on his moral character. Where the
reason for the valid dismissal is, for example, habitual intoxication or an offense
involving moral turpitude, like theft or illicit sexual relations with a fellow worker,
the employer may not be required to give the dismissed employee separation
pay, or financial assistance, or whatever other name it is called, on the ground of
social justice.
A contrary rule would, as the petitioner correctly argues, have the effect, of
rewarding rather than punishing the erring employee for his offense. And we do
not agree that the punishment is his dismissal only and that the separation pay
has nothing to do with the wrong he has committed. Of course it has. Indeed, if
the employee who steals from the company is granted separation pay even as he
is validly dismissed, it is not unlikely that he will commit a similar offense in his
next employment because he thinks he can expect a like leniency if he is again
found out. This kind of misplaced compassion is not going to do labor in general
any good as it will encourage the infiltration of its ranks by those who do not
deserve the protection and concern of the Constitution”
- EE resigned from employment, is he entitled to SP?
o GR: NO
o EXCEPTION: it is stipulated in the employment contract, CBA
or established employer practice/policy
- EE retires from employment, entitled to SP?
o GR: NO
 He is only entitled to retirement pay, which is different
for SP.
 Retirement  result of a bilateral act of parties, a
voluntary agreement between ER and EEs whereby
latter after reaching a certain age agrees and/or
consents to sever his employment with the former.
 Dismissal  refers to unilateral act of ER in
terminating the services of an EE.

12. Damages
- Damages, specifically moral and exemplary damages in unjust
dismissal are reliefs prescribed not by the Labor Code but by the Civil
Code.
- Entitlement thereto should be established along the principles
established by the Civil Code.
- It is not enough for an employee to just prove that he was dismissed
without just or due process. Additional facts must be pleaded and
proven to warrant the grant of moral damages.
- The employee should prove that his dismissal was attended by bad faith
or fraud, or constituted an act contrary to morals, good customs or
public policy, and of course, that social humiliation, wounded feelings,
grave anxiety, and similar injury resulted therefrom.
- With regard to exemplary damages, the employee should prove that his
dismissal was effected in a wanton, oppressive or malevolent manner.
Philippine Airlines, Inc. vs. NLRC
Held: “Not every employee who is illegally dismissed or suspended is entitled to
damages. As a rule, moral damages are recoverable only where the dismissal of
the employee was attended by bad faith or fraud, or committed an act oppressive
to labor, or was done in a manner contrary to morals, good customs or public
policy. Bad faith does not simply mean negligence or bad judgment. It involves a
state of mind dominated by ill will or motive. It implies a conscious and intentional
design to do a wrongful act for a dishonest purpose or some moral obliquity. The
person claiming moral damages must prove the existence of bad faith by clear
and convincing evidence for the law always assumes good faith.”
13. Relief When There is Neither Dismissal nor Abandonment
- If the employee stops working without him being dismissed and without
any intention on his part to abandon his employment, the only relief that
could be accorded to the employee would be reinstatement.
- The employee would be entitled neither to back wages nor to separation
pay. Under this situation, each party must bear his own loss.
Leonardo vs. NLRC
FACTS: AF was employed by RMC as supervisor. RMC informed AF that he
would be transferred to the Sucat Plant because of his failure to meet his
sales quota and that his supervisor’s allowance would be withdrawn. AF
reported for work at the Sucat Plant. However, stopped reporting for work
and filed a complaint for illegal dismissal on the premise that his transfer was
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violative of his security of tenure. RMC claimed that it never terminated the
services of AF. It merely demoted AF pursuant to company policy. NLRC,
finding that AF was not dismissed, ordered his reinstatement but without
backwages. Was the NLRC correct?
HELD: The NLRC was correct because the demotion of AF was valid and
justified. An employer, RMC is entitled to impose productivity standards for
its workers, and in fact, non-compliance may be visited with a penalty even
more severe than demotion. But the mere fact that AF did not report for work
after his demotion should not be construed as abandonment, considering
that he immediately filed a complaint for illegal dismissal. The filing of a
complaint for illegal dismissal is inconsistent with the idea of abandonment.
Accordingly, given that AF may not be deemed to have abandoned his job
and neither was he dismissed, the NLRC did not err in ordering his
reinstatement without backwages. In a case where the employee’s failure to
work was occasioned neither by his abandonment nor by a termination, the
burden of economic loss is not rightfully shifted to the employer; each party
must bear his own loss.
14. Liability of Corporate Officers
- General rule: Corporate officers cannot be held personally or solidarily
liable with the corporation for backwages, damages or other money
claims of employees, even if they were impleaded in the complaint.
- Obligations incurred by them, acting as such corporate agents, are not
heirs but the direct accountabilities of the corporation they represent.
- This is so because a corporation is invested by law with a personality of
its own, separate and distinct from that of its stockholders and officers
who manage and run its affairs.
- Exception: corporate directors and officers can be held personally or
solidarily liable with the corporation for backwages, damages or other
money claims of employees:
a) If the corporate officer acted in bad faith; or
b) If the corporation is no longer existing and unable to satisfy the
judgment in favor of the employee, in which case, the officers
should be held liable for acting on behalf of the corporation.
- Usually, solidary liability is imposed upon the highest and most ranking
officer of the corporation.
- In Aurora Land Projects vs. NLRC, solidary liability was imposed upon
the Administrator/Manager, he being the most ranking officer of the
corporation at the time of the dismissal of the employee.

- In Naguiat vs. NLRC, solidary liability was imposed upon the President
of the corporation, he being the highest ranking officer who actively
managed the business.
- Solidary liability, however, does not extend to the Vice President, unless
the VP happens to be the highest ranking officer, as when the President
of the corporation is the complainant himself.
- To justify solidary liability, it must be shown that the officers of the
corporation deliberately or maliciously designed to evade the financial
obligation of the corporation to its employees, or a showing that the
officers indiscriminately stopped its business to perpetrate an illegal act,
as a vehicle for the evasion of existing obligations, in circumvention of
statutes, and to confuse legitimate issues.
A.C. Ransom Labor Union vs. NLRC
FACTS: The employees of RANSOM went on strike that was lifted after 15 days.
Notwithstanding the lifting of the strike, RANSOM refuse to reinstate 22 strikers,
prompting the said strikers to file a complaint for ULP. The lower court ordered
the reinstatement of the 22 strikers with backwages. In the meantime, ROSARIO
corporation was organized and RANSOM closed down its business. Several
motions for execution were filed to enforce the award of backwages, but all of
them could not be implemented for failure to find leviable assets of RANSOM. In
its last motion for execution, the UNION asked that the officers and agents of
RANSOM be held personally liable for the backwages. The LA granted the
motion and ordered the issuance of a writ of execution against RANSOM and its
7 officers and directors.
HELD: The Labor Arbiter is correct. Under Art. 212 C of the Labor Code, the
term “employer” is defined as “any person acting in the interest of an employer,
directly or indirectly.” Since RANSOM 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 RANSOM. The corporation is the employer only in the technical sense.
The responsible officer of an employer corporation can be held personally liable
for non-payment of backwages. If the policy of the law were otherwise, the
corporation employer can have devious ways for evading payment of
backwages. In the instant case, it would appear that RANSOM, foreseeing the
possibility of being held liable for backwages to the 22 strikers, organized
ROSARIO to replace RANSOM, with the latter to be eventually phased out if the
22 strikers win their case. RANSOM actually ceased operations after the decision
of the lower court was promulgated against RANSOM. In the absence of definite
proof as to who is the officer of RANSOM directly responsible to pay the
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backwages of the 22 strikers, it should be presumed that it is the President of the
corporation who can be deemed the chief operation officer.
Yuseco vs. Simmons
FACTS: HZY was employed by the National City Bank of New York, a foreign
banking corporation doing business in the Philippines pursuant to a contract of
employment which stipulates: “I understand that I am being hired as a single
female employee. In the event of my marriage you may terminate this
employment in which case I shall be entitled to no other benefits except my
salary through the last day on which I worked.” HZY intended to marry soon. She
submitted a resignation letter. Thereafter, HZY filed a complaint for damages
against the Manager of the Bank alleging that the manager forced her to resign in
implementation of the aforementioned illegal and immoral agreement. The trial
Court dismissed the complaint on the ground that HZY was not an employee of
the Manager, but of the Bank, hence the cause of action should have been
directed against the Bank. Was the trial Court correct?
HELD: The trial court was correct. HZY does not have the right to compel the
Manager of the Bank to pay damages by reason of her separation. Admittedly,
the Manager merely acted as agent of the Bank. There is no allegation that the
Manager exceeded his power. Therefore, her remedy should have been to sue
the Bank. Such reasoning is in line with well-known principles of agency. “The
agent who acts as such is not personally liable to the party with whom he
contracts, unless he expressly binds himself or exceeds the limits of his
authority.” The principal must comply with all the obligations which the agent may
have contracted within the scope of his authority.”
Mindanao Motor Line Inc. vs. CIR
“xxx respondents Enrique Ponce and Jesus Moraga who were included as such
should not be made solidarily responsible for the payment of backwages,
together with their employer, the Mindanao Motor Line Inc., for it clearly appears
from the record that they were merely agents who acted within the scope of their
corporate positions as resident manager and general manager, respectively, of
the aforesaid company. Since they were impleaded merely as officers of the
company and have acted only as such within the scope of their authority, if any
one should be held responsible for the consequences of their acts as such
officers, it is their employer, unless of course, it is shown that they have acted
negligently or in bad faith. It is a well-known principle of law that an agent who
acts in behalf of a disclosed principal within the scope of his authority cannot be
held liable to third persons.”

ART 280. Regular and casual employment. – The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or service to be performed is seasonal in nature and the employment
is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which
he is employed and his employment shall continue while such activity
exists.
COMMENT:
1. Significance of the Law
- Article 280 reinforces the Constitutional mandate to protect the interest
of labor.
- Its language evidently manifests the intent to safeguard the tenurial
interest of the worker who may be denied the rights and benefits due a
regular employee by virtue of lopsided agreements with the
economically powerful employer who can maneuver to keep an
employee on temporary or casual status for as long as convenient.
- To carry out this objective, the law generally considers an employment
as regular when the activities performed by the employee are usually
necessary or desirable in the usual business or trade of the employer,
contrary agreements notwithstanding.
- This is significant because under Article 279 of the Labor Code, in
cases of “regular employment,” the employer cannot terminate the
services of an employee except for a just cause or for an authorized
cause.
2. Construction of Article 280
- Article 280 should not be interpreted in such a way as to deprive
employers of the right and prerogative to choose their own workers if
they have sufficient basis to refuse an employee a regular status.
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- Considering that Article 280 is intended to prevent circumvention of the
employee’s right to be secure in his employment, the clause in the said
article indiscriminately and completely ruling out all written or oral
agreements in conflict with the concept of regular employment should
be construed to refer only to the substantive evil the Labor Code itself
has singled out – agreements entered into precisely to circumvent
security of tenure.
- It should have no application to instances where a fixed period of
employment was agreed upon knowingly and voluntarily by the parties,
without force, duress or improper pressure being brought to bear upon
the employee and absent any other circumstance vitiating his consent,
or where it appears that the employer and employee dealt with each
other on more or less equal terms with no moral dominance whatever
being exercised by the former over the latter.
Pantranco North Express vs. NLRC
FACTS: In 1971, PNEI hired RP as driver. In 1973, RP was dismissed from
his employment for being absent without leave for 107 calendar days. 15
years after his dismissal, RP reappeared and implored PNEI to reconsider
his dismissal that PNEI initially denied. But due to insistent appeals by RP,
PNEI eventually acceded and hired him as driver, but on contractual bases
for 1 month. PNEI did not renew the employment contract because of RP’s
involvement in a vehicular mishap in Nueva Vizcaya. Is the employment
contract valid?
HELD: The employment contract is valid. It should be noted that the re-
hiring of RP was merely an act of generosity on the part of PNEI and not
because PNEI was impressed with the credentials of RP. What Article 280
seeks to prevent is the practice of some unscrupulous and covetous
employers who wish to circumvent the law that protects lowly workers from
capricious dismissal from their employment. The said provision, however,
should not be interpreted in such a way as to deprive employers of the right
and prerogative to choose their own workers if they have sufficient basis to
refuse an employee a regular status. In the present case, the services of RP
was validly terminated 15 years before he was re-hired as contractual driver
for just 1 month. Definitely, his re-hiring cannot be construed to mean that
RP reacquire his former permanent status.

3. Article 280 – Not a Test of Employer-Employee Relationship.
- Article 280 merely establishes the classification of employment – it is
not the yardstick for determining the existence of an employment
relationship.
- The existence of EER should be established along the four-fold test laid
down in Viana vs. Al-Lagadan, to wit:
a) Selection and engagement
b) Payment of wages
c) Power of dismissal
d) Power to control the employees’ conduct
4. Classification of Employment
- Article 280 classifies employment into 3 types:
a) regular or permanent
b) non-regular or temporary
c) casual
5. Regular or Permanent Employment
- An employment is deemed regular where the employee has been
engaged to perform activities that are usually necessary or desirable in
the usual business or trade of the employer
- As to whether or not an employment is regular should be determined
neither by the employment contract nor by the nomenclature given to it
by the employer, but by the nature of the job.
- The primary standard in determining whether an employment is regular
or not, is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of
the employer. The connection can be determined by considering the
nature of the work performed and its relation to the scheme of the
particular business or trade in its entirety. If the job is usually necessary
or desirable to the main business of the employer, then the employment
is, as a general rule, regular.
- In some cases, repeated rehiring and the continuing need for the
employee’s service may indicate that the activity is usually necessary or
desirable in the usual business or trade of the employer.
Pure Foods Corporation vs. NLRC
FACTS: PFC is a corporation engaged in the export of canned tuna fish.
Employees performed the task of receiving, skinning, loining, packing and
casing-up of tuna fish. Upon expiration of the 5-month contract, the said
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employees were terminated and replaced with another set of employees.
Claiming that they were regular employees who cannot be dismissed without just
cause, the affected employees filed a complaint for illegal dismissal with the
NLRC. PFC claimed that the complainants were non-regular employees because
they were employed for a specific period, hence they are estopped from
questioning their separation from service because they had expressed their
conformity with the 5-month duration of their employment contracts. Are the
complainants regular employees?
HELD: The complainants held regular employment, considering that the activities
they performed were usually necessary or desirable in the business or trade of
PFC which was the processing and canning of tuna fish for export. The mere fact
that they were hired on a 5-month contract basis does not mean that their
employment was for a specific project or undertaking. The term “specific project
or undertaking” contemplates an activity which is not commonly or habitually
performed or such type of work which is done on a daily basis but only for a
specific duration of time or until completion. The fact that PFC repeatedly and
continuously hired workers to do the same kind of work as that performed by
those whose contracts had expired indicates that the said employees were not
hired for a specific project or undertaking only. The scheme of PFG was
apparently designed to prevent the terminated employees from attaining the
status of regular employees. It was a clear circumvention of the employees’ right
to security of tenure and to other benefits. The 5-month period should be struck
down or disregarded as contrary to public policy and morals. To uphold the
contractual arrangement would in effect permit PFC to avoid hiring permanent or
regular employees by simply hiring them on a temporary or casual basis.
Baguio Country Club vs. NLRC
FACTS: BCC is a recreational establishment certified by the DOLE as
“entertainment service” establishment. It employed JC on a day-to-day basis in
various capacities as laborer and dishwasher for a period of 10 months.
Thereafter, JC was hired as gardener and rehired for 1 month and 20 days and
his services were thereafter terminated. JC challenged the validity of the
termination of his employment. He argued that he could not be dismissed without
just cause because he was holding a regular employment. On the other hand,
BCC maintained that JC was a contractual employee whose employment was for
a fixed and specific period as evidenced by the contracts of employment. Was JC
a regular employee?
HELD: Considering that JC was repeatedly re-hired to perform tasks ranging
from dishwashing and gardening, he held regular employment. Such repeated
rehiring and the continuing need for his services are sufficient evidence of the

necessity and indispensability of his service to BCC’s business or trade. The law
demands that the nature and entirety of the activities performed by the employee
be considered. It is not tenable to argue that the aforementioned tasks of JC are
not necessary as a recreational establishment, just as it cannot be said that only
those who are directly involved in providing entertainment service may be
considered as necessary employees. Otherwise, there would be no need for the
regular maintenance section of the company. It is of no moment that JC was told
when he was hired that his employment would only be on a day-to-day basis for
a temporary period may be terminated at any time subject to the company’s
discretion. Precisely, the law overrides such conditions which are prejudicial to
the interest of the worker.
Beta Electric Corporation vs. NLRC
FACTS: LP was hired by BEC as clerk typist III for a period of 1 month. Her
employment contract was extended 5 times for 1-month each. BEC terminated
the services of LP. On the same day she went to the Labor Arbiter on a
complaint for illegal dismissal. BEC argued that LP was merely hired on a
temporary basis for the purpose of meeting the seasonal or peak demands of the
business, hence, hence she may be terminated at will after the accomplishment
of her task. Was LP a regular employee?
HELD: LP was a regular employee. The fact that her employment has been on a
contract-to-contract basis cannot alter the regular character of her employment
because contracts cannot override the mandate of the law. Hence, by operation
of law, she has become a regular employee. BEC cannot rightfully say that since
LP’s employment hinged from contract-to-contract, ergo, it was “temporary.”
Under the Labor Code, an employment may only be said to be “temporary”
where [it] has been fixed for a specific undertaking the completion of or
termination of which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal in nature
and the employment is for the duration of the season. Quite to the contrary, LP’s
work is far from being “specific” or “seasonal” but rather, one which is usually
necessary or desirable in the usual business or trade of BEC.
6. Non-Regular or Temporary Employment
- General rule: an employment is deemed regular where the employee
has been engaged to perform activities that are usually necessary or
desirable in the usual business or trade of the employer.
- Exceptions:
a. Project employment
b. Seasonal employment
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c. Fixed-term employment
- The activities performed by the employee are usually necessary or
desirable in the usual business or trade of the employer, but the law
does not consider them a regular employment because the engagement
of the employee is only for a limited period.
6.1 Project Employment
- Project employment is a job that is confined to a specific project or
undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee, regardless
of the number of years that it would take to finish the undertaking.
- The mere fact that the employment of employees engaged to perform a
specific project has gone beyond 1 year does not detract from, or legally
dissolve, their status as project employees.
- The term “specific project or undertaking” contemplates:
a. An activity which is not commonly or habitually performed
b. A type of work which is done on a daily basis but only for a
specific duration of time until completion.
- The term “project” could refer to one or the other of at least 2
distinguishable types of activities:
a. A project could refer to a particular job or undertaking that is
within the regular or usual business of the employer, but which
is distinct and separate, and identifiable as such, from the other
undertakings of the company. Example: construction of a
residential condominium.
b. A project could also refer to a particular job or undertaking that
is not within the regular business of the employer. Such job or
undertaking must also be identifiably separate and distinct from
the ordinary or regular business operations of the employer.
Example: Five-year expansion program of the National Steel
Corporation.
- Length of service is not the controlling test of project employment.
- The test of project employment is whether or not the engagement of the
employee has been fixed for a specific project or undertaking, the
completion or termination of which has been determined at the time of
the engagement of the employee.
- The proviso “any employee who has rendered at least one year of
service shall be considered a regular employee” relates only to casual
employment and not to project employment.

- In project employment, the duration of employment is coterminous with
the work to which the employee was assigned. Once the project is
completed, the employment terminates.
- The employees affected cannot compel the employer to keep them in
the payroll because it is unjust to require the employer to maintain them
in the payroll while they are doing absolutely nothing except waiting until
another project is begun, if at all.
- If the employment of project employees is terminated by reason of
completion, they are not entitled to separation pay.
6.2. Seasonal Employment
- Seasonal employment is a job that is limited to the duration of particular
season.
- Example: additional department store employees during Christmas.
- The employment of seasonal employees is co-terminus with the
duration of the season.
- However, if the same employees are repeatedly engaged every season,
they become regular seasonal employees, in which case, they cannot
be terminated without just cause.
- During off-season, the employment of regular seasonal employees is
not severed but merely suspended.
- The fact that during off-season, the regular seasonal employees are
able to get employment elsewhere does not by itself cut their
employment relations. Neither can the fact of subjecting them to medical
examinations at the beginning of each season make them new
employees, because such medical examination is nothing but a mere
precautionary measure for the benefit of both the employer and
employee.
6.3. Fixed-Term Employment
- Temporary employment is not limited to those by nature seasonal or for
specific projects with pre-determined dates of completion.
- It also includes those to which the parties by free choice have assigned
a specific date of termination.
- In an employment for a fixed period, the determining factor is not the
activity that the employee is called upon to perform but the day certain
agreed upon by the parties.
- A day certain means that which must necessarily come, although it may
not be known when.
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- If there is no intent to circumvent the law, the validity of the temporary
employment should be upheld.
- By way of resume, employment contracts for a fixed period cannot be
said to be in circumvention of security of tenure:
a. If the fixed period of employment was knowingly and voluntarily
agreed upon by the parties without any force, duress or
improper pressure being brought to bear upon the employee
and without any other circumstances vitiating consent.
b. If it satisfactorily appears that the employer and employee dealt
with each other on more or less equal terms with no moral
dominance whatever being exercised by the former on the
latter.
- Example: overseas employment contracts, appointments to the
positions of dean, assistant dean, college secretary, principal, and other
administrative offices in educational institutions.
- DOLE implicitly recognizes through its Policy Instructions No. 8 that
certain company officials may be elected for what would amount to fixed
periods, at the expiration of which they would have to step down,
because the stockholders or the board of directors for one reason or
another did not reelect them.
Brent School vs. Zamora
FACTS: DA was engaged by Brent School as Athletic Director under a contract
which fixed a specified term of 5 years. 3 months before the expiration of the
stipulated period, Brent School advised DA that his employment will be
terminated on the expiration date of the employment contract. DA protested the
termination of his employment. He argued that although his contract did stipulate
th
that the same would terminate on the 5 year, he could not be dismissed
because he had acquired the status of a regular employee considering that his
services were necessary and desirable in the usual business of his employer and
that he has already served for 5 years. Is DA correct?
HELD: DA is not correct. Considering that there is an employment contract
validly entered into without any indication that it was intended to deny DA his
right to security of tenure, the employment of DA was validly terminated. The
expiration of the employment contract automatically terminated the employment
of DA without the necessity of notice.
Philippine Village Hotel vs. NLRC
FACTS: PVH closed down its operations due to serious financial and business
reverses. As a result, the services of its employees were terminated. Thereafter,

the Union filed a complaint for separation pay, ULP and illegal lockout. NLRC
upheld the validity of the closure after finding the losses suffered by PVH to be
actual, genuine and of such magnitude as to validly terminate the services of the
employees. However, the NLRC directed PVH to give them priority in the hiring
of personnel should the operations resume. After almost 3 years, PVH decided to
have a 1-month dry-run operation to ascertain the feasibility of resuming its
business operations. PVH hired the workers whose employments were
terminated for 1 month. After which, PVH terminated their services. They claimed
that their employment could not be terminated because they were regular
employees. Is the contention correct?
HELD: The contention is not correct. Their engagement was only for a period of
1 month, which they voluntarily and knowingly agreed. The fact that they were
required to render services usually necessary or desirable in the operation of the
business during the 1-month dry-run operation does not in any way impair the
temporary nature of their employment. In a fixed-term employment, the decisive
determinant is not the activities that the employee is called upon to perform, but
the day certain agreed upon by the parties – day certain being understood to be
that which must necessarily come although it may not be known when.
Panaligan vs. General Milling Corporation
FACTS: GMC is engaged in the production and sale of livestock and poultry. It
employs hundreds of employees, some on a regular basis and others on a
casual basis, as “emergency workers.” On different dates, GMC employed
emergency workers at its poultry plant under separate “temporary/ casual
contracts of employment” for a period of 5 months. Upon expiration of their
respective contract, their services were terminated. Claiming that they are regular
employees because the work they performed was usually necessary or desirable
in the usual business of GMC, the said workers filed a complaint for illegal
dismissal. Were the workers regular employees?
HELD: The employment of said workers is non-regular. While their employment
was necessary in the usual business of GMC, they were employed on a mere
temporary basis, since their employment was limited to a fixed period. There was
no illegal dismissal when their services were terminated upon the expiration of
their contracts. Lack of notice is of no consequence, because when the contract
specifies the period of its duration, it terminates on the expiration of such period.
7. Casual Employment
- Casual employment is a job wherein the activities performed by the
employee are not usually necessary or desirable in the usual business
or trade of the employer.
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- Casual means occasional, coming without regularity.
- Example: In a sawmill, if a power unit running the mill gets out of order
and a mechanic is contracted to fix the engine, the work of the
mechanic would be considered as casual because the reparation of the
mill is not the actual business of the sawmill but the sawing of lumber.
- A person hired to repair and paint a building being leased by a company
engaged in leasing buildings is not a casual employee because the job
is usually necessary or desirable in the business of leasing buildings.
7.1. Casual Employment on Regular Status
- A casual employee who has rendered at least 1 year of service, whether
such service is continuous or broken, is considered a regular employee
with respect to the activity in which he is employed.
- The regular status attaches to the casual employee on the day
immediately after the end of the first year of service.
- The significance of this is that his employment cannot be terminated
without just cause while such activity exists.
8. Article 280 vis-à-vis Article 106
- Article 106 applies to employees hired through a contractor.
- Article 280 applies to employees directly hired by an employer.
DEPARTMENT ORDER NO. 19
(Series of 1993)
GUIDELINES GOVERNING THE EMPLOYMENT OF WORKERS IN THE
CONTRUCTION INDUSTRY
In the interest of stabilizing and promoting harmonious EER in the construction
industry and in order to ensure the protection and welfare of workers employed
therein, the following guidelines are hereby issued for all concerned:
Section 1. Coverage
- This issuance shall apply to all operations and undertakings in the
construction industry and its subdivisions, namely:
1. General building construction
2. General engineering construction and
3. Special trade construction
4. To companies and entities involved in demolition works

5. To those falling within the construction industry as
determined by the Secretary of Labor and Employment
Section 2. Employment Status
2.1 Classification of employees
a. project employees – those employed in connection with a
particular construction project or phase thereof and whose
employment is coterminous with each project or phase of the
project to which they are assigned.
b. non-project employees – those employed without reference to
any particular construction project or phase of a project.
c.
2.2 Indicators of project employment
a. The duration of the specific/ identified undertaking for which the
worker is engaged in reasonably determinable.
b. Such duration, as well as the specific work/service to be
performed, is defined in an employment agreement and is
made clear to the employee at the time of hiring.
c. The work/service performed by the employee is in connection
with the particular project/ undertaking for which he is engaged.
d. The employee, while not employed and awaiting engagement,
is free to offer his services to any other employer.
e. The termination of his employment is reported to the DOLE
Regional Office having jurisdiction over the workplace within 30
days following the date of his separation from work, using the
prescribed form on employees’ terminations/
dismissals/suspensions.
f. An undertaking in the employment contract by the employer to
pay completion bonus to the project employee as practiced by
most construction companies.
2.3 Project completion and rehiring of workers
a. The employees of a particular project are not separate from
work at the same time.
b. Upon completion of the project or a phase thereof, the project
employee may be rehired for another undertaking provided that
such rehiring conforms with the provisions of law and this
issuance. In this case, the last day of service in the preceding
project should be indicated in the employment agreement.
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2.4 Types of non-project Employees
a. Probationary employees
b. Regular employees
c. Casual employees
2.5 Contracting and subcontracting
Section 3. Conditions of Employment
3.1 Security of Tenure
3.2 Project employees not entitled to separation pay – if services are
terminated as a result of the completion of the project or any phase
thereof.
3.3 Project employees entitled to separation pay
a. Project employees whose aggregate period of continuous
employment in a construction company is at least 1 year in the
absence of a “day certain” agreed upon.
b. If the project or phase of the project has not yet been
completed and his services are terminated without just cause
or authorized cause, and there is no showing his services are
unsatisfactory, the project employee is entitled to reinstatement
with backwages to his former position or substantially
equivalent position. If reinstatement is no longer possible, the
employee is entitled to his salaries for the unexpired portion of
the agreement.
3.4 Completion of the project
- project employees who are separated from work as a result of
completion are entitled to the pro-rata completion bonus if there
is undertaking for the grant of such bonus.
- based on industry practice which is at least ½ month salary
for 12 months service.
3.5 Statutory Benefits
- monetary and non-monetary
3.6 Payment by results
- based of not less than the minimum wage applicable in the
region.

Section 4. Preventive Suspension
- Project employees may be preventively suspended if their continued
employment poses a serious and imminent threat to the life or property
of the employer or of their co-workers.
- Shall not last longer than 15 days.
- May extend period provided that during the period of extension, he pays
the wages and other benefits due to the worker.
- Notice to the employee to hold a fact- finding investigation
Section 5. Self-Organization and Collective Bargaining
- The Department encourages the formation of “trade” unions provided
that the formation or activities of a recognized trade union will not
prejudice existing bargaining units.
- Trade union refer to a combination of worker of the same trade or of
several allied trades, for the purpose of securing by united action the
most favorable conditions regarding wages, hours of labor and other
terms and conditions of employment for its members.
Section 6. Liabilities/Responsibilities of the Employer and the Workers
6.1 Requirements of labor and
social legislation
- The construction company and the general contractor and/or
subcontractor shall be responsible for the workers in its employ on
matters of compliance with the existing laws and regulations.
- The prime/general contractor shall exercise sound judgment and
discretion in contracting out projects to ensure compliance with labor
standards
- Project and non-project employees shall observe the requirements of
labor and social legislations and reasonable company rules and
regulations on matters pertaining to their obligations.
6.2 Implementation of safety and health standards
- Regional Offices shall strictly enforce the Occupational Safety and
Health Standards particularly Rule 1005 on Duties of Employers,
Workers and Others Persons, Rule 1410 on Construction Safety.
6.3 Wage Increases
- The wage rates shall be borne by the principals or clients of the
construction contractors and the contracts shall be deemed amended
accordingly.
- The wage rates shall depend on the skills or level of competence of
such employee as determined by NMYCT Trade and Standards
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subscribed to by the Philippine Construction Industry under the 5 Year
Construction Manpower Development Plan date Nov 1991
Section 7. Effect on Existing Issuances and Agreements
Department Order No. 19 series of 1993 applies only to the construction industry
and not to general services contractor.
ART 281. Probationary employment. – Probationary employment shall not
exceed six (6) months from the date the employee started working, unless
it is covered by an apprenticeship agreement stipulating a longer period.
The services of an employee who has been engaged on a probationary
basis may be terminated for a just cause or when he fails to qualify as a
regular employee in accordance with reasonable standards made known by
the employer to the employee at the time of his engagement. An employee
who is allowed to work after a probationary period shall be considered a
regular employee.
Art. 281. Probationary Employment. - Probationary employmentshall not
exceed six (6) months from the date the employee started working, unless
it is covered by an apprenticeship agreement stipulating a longer period.
The services of an employee who has been engaged on a probationary
basis may be terminated for a just cause or when he fails to qualify as a
regular employee in accordance with reasonable standards made known by
the employer to the employee at the time of his engagement. An employee
who is allowed to work after a probationary period shall be considered a
regular employee.
COMMENT:
Concept of Probationary Employment
- A situation where the employee upon his engagement is made to
undergo a trial period during which the employer determines his fitness
to qualify for regular employment, based on reasonable standards made
known to him at the time of engagement.
- Employment contract or appointment paper should expressly and
specifically state that the engagement of the employee is on
probationary basis
- Purpose of probationary employment: To allow the employer to test the
working habits and other personal traits of the employee with respect to
his fitness for regularization in its company.
- Prerogative of an employer to place new employees on probation.

o Prerogative an incident of the employers inherent right to
choose whom to hire and whom to decline.
Duration of Probationary Employment of Ordinary Employees
- Generally: Probationary period of employment of ordinary employees is
limited to six (6) months.
- Exceptions:
(a) When the parties to an employment contract or collective
bargaining agreement agree on a longer period;
(b) When a longer probationary period is established by company
policy; or
(c) When a longer period is required by the nature of work.
Case: Buiser vs. Leogardo (131 SCRA 151)
FACTS: B was hired by GDTC as Sales Representative whose job was to solicit
advertisements for inclusion in a telephone directory. In her employment
contract, B was placed on probationary status for a period of eighteen (18)
months. B maintained that her 18-month probationary employment is not valid,
considering that the Labor Code fixes the probationary employment as six (6)
months.
ISSUE: Is the 18-month probationary employment of B valid?
HELD: YES. While the Labor Code sets the probationary period of employment
at six (6) months, the parties to an employment contract may validly agree on a
longer period, such as when the same is established by company policy or when
the same is required by the nature of work is to be performed by the employee.
In the latter case, there is a recognition of the exercise of managerial
prerogatives in requiring a longer period of probationary employment, especially
where the employee must learn a particular kind of work such as selling, or when
the job requires certain qualifications, skills, experience or training. In the case at
bar, it has been shown that GTDC needs at least 18 months to determine the
character and selling capabilities of B as sales representative. Moreover, the 18-
month probationary period is recognized by the CBA.
- Where the work for which the employee has been engaged is learnable
or apprenticeable in accordance with the standards prescribed by the
DOLE, the period of probationary employment shall be limited to the
authorized learnerhsip or apprenticeship period.
o Upon graduation or upon completion of the learning period, an
apprentice or learner may not be put under probationary
employment in the same companyin which they trained.
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 In another company: may be placed on probationary
status for six (6) months.
Case: Holiday Inn Manila vs. NLRC (226 SCRA 417)
FACTS: EH applied for employment with HIM. On April 15, 1991, EH was
accepted for “on-the-job training” as a telephone operator for a period of three
weeks. On May 13, 1991, after completing her training, she was employed on a
“probationary basis” for a period of six (6) months ending November 12, 1991.
On November 8, 1991, four (4) days before the expiration of the stipulated
deadline, HIM terminated her probationary employment on the ground that her
performance had not come up to the standards. Claiming that she was not a
probationary employee but a regular employee, EH then filed a complaint for
illegal dismissal.
ISSUE: Whether or not EH was a probationary employee or a regular employee
at the time of her dismissal?
HELD: EH was already a regular employee at the time of her dismissal. She had
already undergone probationary employment during her “on-the-job training”.
Thus, when her services were continued after her training, HIM in effect
recognized that she had passed probation and was qualified to be a regular
employee. Her services were continued, presumably because they were
acceptable, although she was formally placed this time on probation. In effect,
therefore, EH was placed on probation twice, first during her 3-week on-the-job
training and second during another period of six (6) months. Her probation clearly
exceeded the period of six months prescribed by the Labor Code.
Duration of Probationary Employment of Teachers
- The standards set or promulgated jointly by the Department of
Education and the Department of Labor and Employment shall be
applied by the Department of Labor and Employment.
- The probationary period for teaching and academic non-teaching
personnel are as follows (DOLE-DECS-CHED-TESDA Order No. 1,
1996):
(a) For elementary and secondary level -- three (3)
consecutive school years of satisfactory service;
(b) For tertiary and graduate level – six consecutive
semesters of satisfactory service;
(c) For tertiary level on trimester service – nine (9)
consecutive trimesters of satisfactory service.
- The School, as employer, is the one who is to set the standards and
determine whether or not the services of an employee are satisfactory.

- It is the right of the employer to shorten the probationary period if he is
not impressed with the services of the employee.
- This prerogative is in accordance with academic freedom and
constitutional autonomy which give educational institution the right to
choose who should teach.
Case: Cagayan Capitol College vs. NLRC (188 SCRA 658)
FACTS: X was initially hired by C College as probationary instructor on a 10-
month contract basis which ended on March 31, 1982. Upon expiration of the
said contract, he re-applied and was given a new contract commencing on June
1, 1982 and ending March 31, 1983. Thereafter, he re-applied for employment
and was given a contract for a fixed period starting June 1, 1983 to March 31,
1984. Upon mutual agreement, the contract was extended to include the summer
of 1984 up to May 31, 1984 which is still part of the school year 1983-1984. Upon
expiration of said period X sent a letter re-applying for employment with the
School. His application, however, was turned down because of various
complaints from his students. X filed a complaint for illegal dismissal, claiming
that C College had no right to reject his employment on the ground that he had
become a regular employee. C College argued that there was no illegal dismissal
because it merely terminated the probationary employment of X for failure to
qualify for regular employment.
ISSUE: Whether or not the termination of X’s employment is valid.
HELD: YES. The termination of X’s employment is valid. His employment did not
automatically become regular and permanent because his services during the
probationary period were not satisfactory.
- With regard to teaching or academic personnel, only those employed on
full-time basis can acquire regular or permanent status.
- Part-time teaching or academic personnel are not eligible for regular or
permanent employment even if they have satisfactorily completed the
required number of years, semesters or trimesters of probationary
employement.
Extension of Probationary Employment
- Can be extended to give the employee a chance to improve.
- Such extension should be done on or before the expiration of the
prescribed period otherwise the employee will automatically become a
regular employee by operation of law.
Case: Mariwasa Manufacturing Inc. vs. Leogardo (169 SCRA 465)
FACTS: JAD was engaged by MMI as general utility worker on probationary
status for a period of six (6) months. Upon expiration of the probationary period,
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MMI informed JAD that his work was unsatisfactory and had failed to meet the
required standards. To give him a chance to improve his performance and qualify
for regular employment, instead of dispensing with his service then and there,
with his written consent MMI extended his probation period for another three (3)
months. His performance, however did not improve and on that account MMI
terminated the employement of JAD at the end of the extended period.
ISSUE: Whether or not the 6-month probationary period of employment may be
validly extended by agreement of the employer and employee?
HELD: YES. The extension of the 6-month probationary employment was valid.
The extension of JAD’s probation was an act of liberality on the part of MMI in
order to afford him a chance to make good after having initially failed to prove his
worth as an employee. Such an act cannot now unjustly be turned against MMI’s
account to compel it to keep on its payroll one who could not perform according
to its work standards. By voluntarily agreeing to an extension of the probationary
period, JAD in effect waived any benefit attaching to the completion of the said
period if he still failed to make the grade during the period of extension. There is
nothing in the law which by any fair interpretation prohibits such a waiver.
Termination of Probationary Employment
- The services of an employee who has been engaged on a probationary
basis may be terminated for:
(a) Any of the causes enumerated in Articles 282, 283 and
284 of the Labor Code; or
(b) Failure to qualify as a regular employee in accordance
with reasonable standards made known by the employer
at the time of his engagement.
- It is not necessary that the entire probationary period be exhausted
before the employment could be terminated.
o Termination may be done even before the expiration of the
probationary period.
Case: Manila Electric Co. vs. NLRC (178 SCRA 198)
FACTS: RM was hired by MERALCO as messenger on probationary status for
five (5) months. In the course of his employment, RM demonstrated a
performance that was not satisfactory. Because of this, MERALCO terminated
the probationary employment of RM on the fourth month.
ISSUE: Whether or not the dismissal was valid.
HELD: YES. RM was neglectful of his duties. He frequently “played hookey”,
taking the rest of the day off and not returning to the office after having performed
his errands. The fact that the dismissal was effected one (1) month before the

expiration of his probationary employment does not invalidate the dismissal. The
provision of Article 280 of the Labor Code that “probationary employment shall
not exceed six (6) months” means that the probationary employee may be
dismissed for cause anytime before the expiration of six (6) months after hiring. If
after working less than six months, he is found to be unfit for the job, he can be
dismissed. But if he continues to be employed longer than six months, he ceases
to be a probationary employee and becomes a regular or permanent employee.
Case: International Catholic Migration Commission vs. NLRC (169 SCRA
606)
FACTS: On January 24, 1983, ICMC engaged the services of BG as cultural
orientation teacher on probationary status for a period of six (6) months. Three
(3) months thereafter, ICMC terminated the employment of BG for failure to meet
the prescribed standards as reflected in the performance evaluation. Thereafter,
BG filed a complaint for illegal dismissal against ICMC. The Labor Arbiter upheld
the validity of the dismissal but ordered ICMC to pay BG her salaries for the
unexpired portion of her probationary employment on the ground that the six-
month probationary employment was for a definite period which the employer
should exhaust in order to give the employees the opportunity to meet the
required standards.
ISSUE: Whether or not BG is entitled to salaries for the unexpired portion of her
probationary employment?
HELD: NO. The legal basis of the Labor Arbiter is erroneous. A probationary
employee may be dismissed for cause anytime before the expiration of six
months after hiring. A probationary employee is one who is on trial by an
employer during which the employer determines whether or not he is qualified for
regular employment. A probationary appointment is made to afford the employer
an opportunity to observe the fitness of a probationer while at work, and to
ascertain whether he will become a proper and efficient employee. The word
“probationary” as used to describe the period of employment, implies the purpose
of the term or period, but not its length.
Limitations on the Right to Terminate a Probationary Employment
- The power of an employer to terminate a probationary employment is
subject to the following limitations:
(a) It must be exercised in accordance with the specific requirements
of the contract.
(b) The dissatisfaction of the employer must be real and in good faith,
not feigned so as to circumvent the contract or the law; and
(c) There must be no unlawful discrimination in the dismissal.
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Policy Instructions No. 11: Summary (pg. 545)
TO: All Regional Directors
SUBJECT: PROBATIONARY EMPLOYMENT
Under the Labor Code, six (6) months is the general probationary period, but the
probationary period is actually the period needed to determine fitness for the job.
This period, for lack of a better measurement, is deemed to be the period needed
to learn the job.
Thus, if the job is apprenticeable then the probationary period is the
apprenticeship period, which may be six (6) months, less than six (6) months, or
more than six (6) months, depending upon the nature of the job.
The probationary employment of professors, instructors and teachers shall be
subject to standards established by the Department of Education and Culture.
For purposes of determining regular employment, the probationary period served
or rendered shall be considered part of the service rendered.
The purpose of this policy is to protect the worker and at the same time enable
the employer to make a meaningful employee selection.
Art. 282. Termination by Employer. - An employer may terminate an
employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with his
work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust reposed in him by
his employer or duly authorized representative;
(d) Commission of a crime or offense by the employee against the person
of his employer or any immediate member of his family or his duly
authorized representatives; and
(e) Other causes analogous to the foregoing.
COMMENT:
Serious Misconduct
- “Misconduct”: improper or wrong conduct.
o The transgression of some established and definite rule of
action, a forbidden act, a dereliction of duty, wilful in character,
and implies a wrongful intent and not a mere error of judgment.
- To constitute a just cause for dismissal, the misconduct must be:
(a) Serious; and
(b) Related to or in connection with the employee’s work.

Misconduct Must Be Serious
- If not serious, it will merely warrant a penalty lesser than dismissal.
- The utterance of a slightly disrespectful language is a misconduct that is
not serious so as to call for the imposition of the penalty of dismissal.
Case: Samson vs. NLRC (330 SCRA 460)
FACTS: During the informal Christmas party of SPC’s Sales and Marketing
Division on December 17, 1993, RFS was heard to have uttered, “Si EDT
(referring to the General Manager and President of the company) bullshit yan,”
while making the “dirty finger” gesture. RFS likewise told his co-employees that
the forthcoming national sales conference would be “very bloody one”. For this,
RFS was dismissed from his employment on the ground of serious misconduct.
ISSUE: Whether or not RFS is guilty of serious misconduct to warrant his
dismissal from service?
HELD: NO. The misconduct of RFS is not of such serious and grave character as
to warrant his dismissal. First, RFS made the alleged offensive utterances and
obscene gesture during an informal Christmas gathering of the company’s district
sales managers and marketing staff. The gathering was just a casual get-
together of employees. Employees should be allowed wider latitude to express
their sentiments during these kinds of occasions which are beyond the
disciplinary authority of the employer. Second, RFS’ outburst was in reaction to
the decision of the management in the “Cua Lim” case. Admittedly, using the
words “bullshit” and making lewd gesture to express his dissatisfaction over said
management decision were clearly in bad taste but these acts were not intended
to malign or cast aspersion on the person of the president and general manager
of the company.
- The Samson vs. NLRC case should be distinguished from the following
cases where the use of insulting and offensive language was held to
constitute serious misconduct justifying the employee’s dismissal.
(a) In de la Cruz vs. NLRC, the dismissed employee shouted
“saying angpagka-professional mo!” and “putanginamo” at the
company’s physician when the latter refused to give him a
referral slip.
(b) In Autobus Workers’ Union vs. NLRC, the dismissed employee
called his supervisor “gagoka” and taunted the latter by saying
“bakitanong gusto mo, tang ina mo.”
- In these cases, the dismissed employees were held guilty of serious
misconduct because they personally subjected their respective
superiors to the foregoing verbal abuses. The utter lack of respect for
their superiors was patent.
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(c) In Asian Design & Manufacturing Corporation vs. Deputy
Minister of Labor, the dismissed employee made false
statements against the foreman (his superior).
(d) In Reynolds Philippines Corporation vs. Eslava, the dismissed
employee circulated several letters to the members of the
company’s board of directors calling the executive vice-
president and general manager a “big fool”, “anti-Filipino” and
accusing him of mismanagement.
- In these cases, the dismissed employees were held guilty of serious
misconduct because they made false and malicious statements against
their superiors.
Misconduct Must Be in Connection with Employee’s Work
- The act complained of must be related to the performance of the duties
of the employee such as would show him to be thereby unfit to continue
working with the employer.
Case: Aris Philippines vs. NLRC (238 SCRA 59)
FACTS: Inside the canteen of the company, EB, a canteen helper,
questioned AS about his use of somebody else’s identification card. AS
flared up and said: “Walakangpakialam! Kung gusto mo,
itaponkoitongmgapagkainninyo.” Forthwith, he began smashing some food
items on display for sale at the canteen and then slapped EB which caused
her to fall.
ISSUE: Whether or not the dismissal is valid?
HELD: NO. Although the misconduct committed by AS was serious, still it
was not in connection with his work. In order to constitute a just cause for
dismissal, the acts complained of must be related to the performance of the
duties of the employee such as would show him to be thereby unfit to
continue working for the employer. The penalty of dismissal is, therefore,
excessive.
- A series of irregularities when put together may constitute serious
misconduct.
- Fitness for continued employment cannot be compartmentalized into
tight cubicles of aspects of character, conduct and ability separate and
independent of each other.
Examples of Serious Misconduct
- The following offenses have been held as serious misconduct:

(a) Assaulting an agent of a person in authority committed by a
security guard.
(b) Assaulting a co-employee
(c) Drunken and disorderly and pugnacious behaviour.
(d) Fighting within company premises.
(e) Instigating labor unrest.
Willful Disobedience
- Wilful or intentional disobedience thereof, as a general rule, justifies the
peremptory dismissal of the employee.
- In order that disobedience to employer’s order can constitute a valid
cause for dismissal, the following requisites must be complied with:
(a) The disobedience must be wilful or intentional;
(b) The order must be reasonable and lawful;
(c) The order must be known to the employee; and
(d) The order must pertain to or must be in connection with
the duties which the employee had been engaged to
discharge.
Disobedience Must be Willful
- Wilfulness of disobedience is characterized by a wrongful and perverse
mental attitude rendering the employee’s act inconsistent with proper
subordination.
- Disobedience must be done intentionally, knowingly and purposely,
without justifiable excuse.
Order Must be Reasonable
- Reasonableness pertains to the kind or character of directives and
commands and to the manner in which they are made.
- Example: A directive prohibiting employees from using company
vehicles for private purpose without authority from management is a
reasonable order. However, a directive transferring an employee to a
position that is non-existent is an unreasonable order.
Order Must be Lawful
- An order is lawful if it is not contrary to law, morals, good customs,
public policy or public order.
- A directive obliging employees to purchase goods from the store owned
by the employer is an unlawful order because it is contrary to Art. 112 of
the Labor Code.
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o Hence, refusal on the part of the employee to comply with said
directive does not constitute wilful disobedience.
Order Must be Known to the Employee
- An employee cannot be expected to comply with an unknown order.
Order Must be in Connection with the Duties of the Employee
- If the order is not connected with the nature of the employee’s
engagement, refusal to obey will not constitute wilful disobedience.
Illustrative Cases of Willful Disobedience
(a) Refusal to obey a transfer order
Homeowners Savings & Loan Association vs. NLRC (262 SCRA 406)
FACTS: X was employed as Branch Accountant of the HSLA-San Carlos City
(Pangasinan) Branch. She was transferred to the HSLA-Urdaneta (Pangasinan)
Branch because of the “exigency to uplift the operational efficiency of the
branch.” However, after citing many reasons, X first requested the deferment of
her new assignment, but eventually refused to transfer alleging that the new
assignment would entail additional expenses and physical exhaustion as
Urdaneta is too far away to commute everyday. This prompted HSLA to
terminate X’s employment on the ground of wilful disobedience.
ISSUE: Is X guilty of wilful disobedience?
HELD: YES. X’s refusal to obey the transfer order constitutes wilful disobedience
of a lawful order of her employer, and therefore, a valid cause for her dismissal.
Castillo vs. CIR (39 SCRA 76)
FACTS: X was employed as lobby boy of a theatre. He was transferred by the
floor manager of the theatre from the day shift to the night shift, and at the same
time was assigned from Esquire Theater to the Savoy Theater pursuant to the
standard practice of rotating employees from one shift to another. X disliked the
new assignment because he did not report for work anymore. After three days, X
was dismissed from his employment for insubordination and abandonment of
work.
ISSUE: Is X guilty of insubordination and abandonment?
HELD: YES. His dismissal was justified.
Isabelo vs. NLRC (276 SCRA 141)
FACTS: X, Y & Z were workers at the cocoa plantation of UCPI in Balabagan,
Lanaodel Sur. They were directed to transfer to the other project sites at

Maguindanao and Sultan Kudarat to augment the undermanned workforce
thereat. As a matter of policy, UCPI offered to grant them relocation allowances,
relocation expense and living quarters with their family at the transfer site. They
refused to obey the transfer order, for which reason, UCPI dismissed them from
service.
ISSUE: Is the dismissal valid?
HELD: YES.Because X, Y and Z are guilty of wilful disobedience. It is perfectly
within the prerogative of UCPI to transfer its employees to other sites in order to
augment the workforce therein. Their dismissal was justified.
(b) Refusal to comply with an order requiring that food requirements should
be bought from a single source.
St. Lukes Hospital vs. Minister (116 SCRA 240)
FACTS: X was Chief Dietician of SLHI. As such, she was tasked with the
responsibility of purchasing the food supplies of SLHI. To meet its mounting
financial problems, SLHI adopted a policy of purchasing its foodstuffs from SFS
only. X was directed to comply with this policy. However, X refused to obey the
instruction and continued to purchase food supplies from the old suppliers. As a
result, SLHI dismissed X for insubordination.
ISSUE: Is X guilty of subordination?
HELD: YES. By and large, it is clear that her reaction was one of resistance
rather than dutiful obedience, which subordinates owe to orders of superiors. Her
dismissal is, valid and justified.
(c) Repeated disregard by a bank employee of an office order against
temporary overdrafts and drawings against uncollected deposits.
Associated Citizens Bank vs. Ople (103 SCRA 130)
FACTS: CBTC through its President, issued an office order directing that all
temporary overdrafts, whether secured or unsecured by assignment of deposits,
should be phased out by April 15, 1975. In disregard of the said order, X, the
manager of CBTC-Ayala Branch, allowed the current account of CV to be
overdrawn by P574,962.51 because the checks deposited were dishonoured. For
violating the office order, CBTC dismissed X from his employment.
ISSUE: Whether or not the dismissal is valid?
HELD: YES. The violation by X of the office order against temporary overdrafts is
insubordination. Hence, his dismissal was valid.
Gross and Habitual Neglect of Duty
- “Gross”: glaringly noticeable usually because of inexcusable badness or
objectionableness.
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- “Habitual”: connotes more than just a single or isolated act.
- Reason for authorizing the termination of an employee on the ground of
gross and habitual neglect of duty is because of the reciprocal
obligations entailed in an employer-employee relationship.
o i.e. for the employer to give a just wage and a just treatment
and for the employee to render good work, diligence and good
behaviour.
- The obligation to give just compensation and treatment carries with it
the corollary right to expect from the employee adequate work, diligence
and good behaviour.
Neglect Not the Same as Negligence
- “Neglect”: indicates that a person has not done that which it was his
duty to do – it does not indicate the reason for this failure.
- “Negligence”: a subjective state of the mind
o Indicates a particular reason why the man has failed to do his
duty, namely because he has not kept the performance of the
duty in his mind as he ought to have done.
Damage not Essential
- Not necessary for the employer to show that he has suffered damage or
prejudice as a result of the employee’s neglect of his duties.
o It is enough that the act tends to damage or prejudice the
employer.
Illustrative Cases of Gross and Habitual Neglect of Duty
(a) Prolonged absences
Philippine Geothermal vs. NLRC (236 SCRA 371)
FACTS: On May 31, 1989, X, who was employed as Steam Test Operator, was
accidentally injured when the steam-pressured chicksan swivel joint assembly
exploded while he was checking a geothermal well. As a result, X was confined
in a hospital from May 31, 1989 to June 3, 1989.
On July 29, 1989, X was certified by the doctor to be fit to return to work with the
qualification that he could only perform light work. On November 13, 1989, X was
again examined by a doctor who certified that he can go back to his previous job
on the sixth month. Despite this certification, X did not report for work and by the
end of 1989, he had used 10 days of vacation leave, 18 days of sick leave, 15
days of WCA leave and 4 days of emergency leave. On December 28, 1989, the
doctor certified that X’s injury had completely healed and that he could return to
his pre-injury work.

On the basis of the doctor’s finding, PGI directed X to report for work. But instead
of reporting for work, X sent a note to PGI stating to wait for the doctor’s medical
certificate. Notwithstanding the medical findings, X continued to incur numerous
absences. He did not report for work in the months of January and February
1990.
Thus, on February 7, 1990, PGI sent another letter to X directing him to report for
work with warning that failure to do so would subject him to disciplinary action.
Still, X did not report for work, prompting PGI to send another letter with a final
warning that failure to do so will result in the termination of his employment. Still
X failed to report for work; neither did he inform PGI of the reasons for his
continued absences. Hence, PGI was constrained to terminate the employment
of X.
ISSUE: Whether or not the dismissal of X was valid and justified?
HELD: YES. X is guilty of gross and habitual neglect of duty.
(b) Delivering newly approved credit cards on five (5) occasions to a person
hardly known to the employee.
Citibank N.A. vs. Gatchalian (240 SCRA 212)
FACTS: X was employed by Citibank as clerk-typist. Thirty-one (31) applications
for credit cards of alleged APBCI employees were approved by Citibank and the
corresponding new and unsigned credit cards were issued. On five (5) separate
occasions, upon request of Y, X personally picked up the new and unsigned
credit cards issued to seven APBCI employees. Yet at that time, she had not
personally met nor previously seen Y. On the mere description over the
telephone, X delivered the credit cards to Y.
It turned out that the credit card applications of the alleged APBCI employees
were fictitious. Some of the credit cards were used to purchase goods from
various establishments worth P200,000.00. Hence, Citibank dismissed X for
gross and habitual neglect of duty.
ISSUE: Is X guilty of gross and habitual neglect of duty?
HELD: YES. It was proved that she picked up the newly approved credit cards on
five (5) separate occasions and delivered them to Y and the latter’s messenger.
Certainly, these repetitive acts bespeak of habituality.
(c) Repeated and numerous infractions in the handling of monies.
Allied Banking Corporation vs. NLRC (156 SCRA 789)
FACTS: X was employed as teller of ABC Bank. During the last six months of her
employment, X was found to have committed the following offenses:
(1) Incurring a series of shortages;
(2) Incurring a long string of overages;
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(3) Violation of the procedures requiring verification of drawer’s signature
and approval of authorized officers prior to payment of checks
presented for encashment over the counter; and
(4) Failure to observe instructions of superiors to report to the Central Bank
Cash Units.
For committing the foregoing offenses, ABC Bank dismissed X from service.
ISSUE: Is the dismissal valid?
HELD: YES. The repeated and numerous infractions committed by her in
handling monies entrusted to her cannot be considered minor. Taking into
account the nature of the teller’s job, the infractions are too numerous to be
ignored or treated lightly.
D. Repeated anomalous transactions
NASUEFCO v. NLRC (286 SCRA 478)
FACTS: Pabiona was appointed as Sugar Accountant-Bookkeeper. She was
tasked to maintain records of all transactions pertaining to the Raw and Refined
Sugar Exchange Program, validate Raw Sugar Quedans submitted by Exchange
participants prior to issuance of the Refined Sugar Delivery Orders and prepare
and issue Refined Sugar Delivery Orders only after validation procedures have
been properly complied with. When the books of NASUREFCO were audited in
1990 anomalous and irregular transactions were uncovered in the Raw Sugar
Movement Report.
After the formal investigation, NASUREFCO terminated the services of Pabiona
for willful violation of company policies, gross and habitual neglect of duties, and
willful breach of trust.
ISSUE: Is SP Guilty of gross and habitual neglect of duty?
HELD: Pabiona’s neglect of duty was gross. As her position related to money
matters, she was expected and required to be extra vigilant in the
performance of her job as it involved the financial interest of the company.
She was also habitually remiss in her duties. he fact that NASUREFCO did not
suffer losses from the anomalies committed by Pabiona because of timely
discovery does not excuse the latter as she was very much aware that her acts
would be greatly prejudicial to NASUREFCO.
4. FRAUD
 Is the knowing misrepresentation of the truth

 Concealment of a material fact to induce another to act to his or her
detriment.
 To constitute a just cause for dismissal, the fraud must be:
a. Committed against the employer; and
b. In connection with the employee’s work.
 Fraud committed against third person without connection
whatsoever with work will not justify the dismissal of an
employee.
 Philippine Airlines v. NLRC (328 SCRA 273)
FACTS: X was employed as load controller. X reflected a lighter weight
of baggage Cominero's ticket to make it appear that the same was
within the allowable level. Cominero's excess baggage was pooled with
other passengers with lesser baggage weight or no baggage at all.
ISSUE: Whether X is guilty of Fraud?
HELD: Yes. That private respondent attempted to deprive petitioner of
its lawful revenue is already tantamount to fraud against the company,
which warrants dismissal from the service. It must be stressed that
actual defraudation is not necessary in order that an employee may be
held liable.
5. WILLFUL BREACH OF TRUST
 Breach is willful if it is done intentionally, knowingly and purposely,
without justifiable excuse.
 To constitute a valid cause for dismissal, the breach of trust must be:
a. Willful; and
b. Related to the performance of the employee’s functions.
 The basic premise for the dismissal on the ground of willful breach of
trust is that employee concerned holds a position of trust and
confidence.
 An employee holds a position of trust and confidence if he is entrusted
with responsibility involving:
a. Delicate matters
b. Where the employees has access to the employer’s property in
the form of articles or merchandise for sale.
 There must be basis for dismissal, mere suspicion or simple
apprehension of danger or prejudice is note enough.
 Proof beyond reasonable doubt is not required, it is enough that there is
reasonable grounds.
 Guidelines for the application of the doctrine of loss of confidence:
a. Loss of confidence should not be simulated;
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b. It should not be used as subterfuge for causes which are
improper, illegal or unjustified;
c. It may not be arbitrarily asserted in the face of over whelming
evidence to the contrary; and
d. It must be genuine, not mere afterthought to justify earlier
action taken in bad faith.
5.1 POSITIONS OF TRUST AND CONFIDENCE
 The following have been held as positions of trust and confidence:
a. Bank teller;
b. Cashier
c. Credit and collection supervisor
d. District sales supervisor
e. Salesman
f. Vice president for marketing
g. General manager
h. Warehouseman
i. Miner
j. Teachers
5.2 ILLUSTRATIVE CASES
A. Engaging in business competitive with that of the employer
ELIZALDE INT’L V. CA (103 SCRA 247)
FACTS: X was a salesman of Y Co. During the term of his employement X
formed an entity which sold competitive product of Tanduay Rhum. Y Co.
dismissed X for willful breach of trust.
ISSUE: Is X guilty of willful breach of trust?
HELD: Engaging in a business in competition with petitioner was not only an act
of disloyalty but more specifically a willful breach of the trust reposed in him by
petitioner as his employer, which is a just cause for termination. it was the duty of
Celestino Galan to promote and sell the products of petitioner, which duty is
incompatible with his undisclosed ownership of a company, found to be the
source of the new product with the label "TDY RHUM" manufactured by the
Mabuhay Distillery Inc., distributed and sold in Cebu, in competition with the
Tanduay Rhum" distributed by petitioner.
B. Rendering services to a business rival

ABS-CBN Employees Union v. NLRC (276 SCRA 123)
FACTS: A, a camera man of ABS-CBN did not report for the taping of an ABS-
CBN production, because he rendered service to another television station
PTV4. ABS_CBN terminated X on the ground of disloyalty and willful breach of
trust.
ISSUE: is X guilty of willful breach of trust?
HELD: Yes. He is guilty of disloyalty and serious misconduct of willful breach of
trust.
C. Using a chit already paid by one customer as a means to pocket the
payment of another customer.
Baguio Country Club v. NLRC (118 SCRA 557)
FACTS: X, who was employed as bartender pocketed the payment of the
customer and to conceal his misconduct, X utilized the chit that was already paid
by another customer.
ISSUE:Is X guilty of willful breach of trust?
HELD: X is guilty of willful breach of trust, dismissal valid.
D. Using double or fictitious requisition slips as a means to withdraw
company materials.
PLDT v. NLRC (129 SCRA 1630
We agree with the petitioner that private respondent Sevilla is guilty of acts
inimical to the interests of his employer. The records show that Sevilla took
advantage of his position as Cable Splicer Headcrew (Sj-5) to withdraw company
properties which should never have been issued to him on the strength of double
and/or fictitious requisition slips. The petitioner had valid and legitimate reasons
to lose its confidence in respondent Sevilla and to order his dismissal.
E. Failure to return service firearm
DI Security Services v. NLRC (264 SCRA 458)
FACTS: X was employed as security guard. He was issued a service firearm
which he failed to turn over to his employer at the end of his duty. When asked
to explain the whereabout of the firearm, X claimed that he gave it to the shift-in-
charge, which was denied under oath. X was dismissed.
ISSUE: Is the dismissal valid?
HELD: Yes, constitute dishonesty which calls for the corresponding penalty of
dismissal.
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F. Failure to return cash bond for unreasonable length of time.
San Miguel Corporation v. NLRC (125 SCRA 805)
FACTS: REBOLOS figured in a vehicular collision. A Criminal case was filed
against REBOLOS for Reckless Imprudence resulting in Damage to Property. A
bail bond in the amount of P7,000.00 being needed, SMC furnished the amount
in cash. REBOLOS posted the cash bond in his name. The case was dismissed
on November 22, 1977 when the insurance company paid for the damage
sustained. Sometime in May 1978, or six months after, REBOLOS withdrew the
cash bond without informing nor remitting the amount to SMC. REBOLOS
retained the amount for one year and three months. He was dismissed.
ISSUE: Is the dismissal valid?
HELD: that there was, indeed, breach of trust and confidence by REBOLOS. It
was incumbent upon him to have returned the amount of P7,000.00 upon
withdrawal knowing that it constituted company funds put up on his behalf only
because he was an employee and was driving a company vehicle at the time of
the accident. He was accountable for those funds. Instead, he clung to the
amount for the long period of one year and three months for reasons of his own.
The fact that he returned the amount to SMC upon demand does not exculpate
nor mitigate the delay. REBOLOS' act in withdrawing the cash bond and
retaining the same for one year and three months and merging it with his family
funds without justifiable reason constitutes willful breach of the trust resposed on
him.
G. Fomenting distrust and discontent in the company
Reynolds Phils v. Eslava (137 SCRA 259)
FACTS: Three anonymous letters were received by W. W. Dunkum, Jr.,
Reynolds' executive vice-president and general manager, and the members of its
board of directors. The first letter called Dunkum a "big fool", criticized his alleged
unfairness in giving salary increases and. The second letter was of the same
tenor as the first. The third letter informed Reynolds' president, chairman and
board of directors that the company was headed for destruction because of the
"mismanagement, inefficiency, lack of planning and foresight, petty favoritism,
dictatorial policies, one-man rule, contemptuous attitude to labor, anti-Filipino
utterances and activities of Mr. Dunkum, etc." The letter was written by the
personnel manager of the company. He was dismissed.
ISSUE: Is X guilty of willful breach of trust?

HELD: Yes. The company had reason to lose confidence in X because of his
misfeasance and malfeasance. His misconduct amounts to breach of trust.
H. Pilferage
Philippine Airlines v. NLRC (279 SCRA 553)
FACTS: X and two other station loaders were ordered to handle the loading of
cargoes and pieces of baggage in PAL Flight bound for Manila. The SG allegedly
noticed private respondent taking something from one of the loaded baggage
and wrapping the same in his PAL service polo shirt. He allegedly threw
something into a nearby canal which, when later retrieved, turned out to be a
lady's wallet. X was dismissed.
ISSUE: Is the dismissal valid?
HELD: Yes. The act of taking a wallet of a passenger is tantamount to breach of
trust.
I. Theft of company property.
Firestone v. Lariosa (148 SCRA 187)
FACTS: X was about to leave the company premises Lariosa submitted himself
to a routine check by the security guards at the west gate. He was frisked by
Security Guard while his personal bag was inspected sixteen [16] wool flannel
swabs, all belonging to the company, were found inside his bag, tucked
underneath his soiled clothes.
ISSUE: is the dismissal valid?
HELD: There is no gainsaying that theft committed by an employee constitutes a
valid reason for his dismissal by the employer.
J. QUALIFIED THEFT
United South Dockhandlers v. NLRC (267 SCRA 401)
FACTS: X ordered his subordinates to load the lamp posts into a cargo truck and
had them delivered to Adelfa Homeowners Association. X admitted he took the
subject lamp posts and manifested that it was unnecessary to conduct an
investigation. He returned the lamp posts upon USDI's demand. On May 25,
1993, he received his letter of dismissal.
ISSUE: Is X guilty of willful breach of trust?
HELD: YES. He occupied a position of trust and confidence. Petitioner relied on
him to protect the properties of the company. X betrayed this trust when he
ordered the subject lamp posts to be delivered to the Adelfa Homeowners'
Association. The offense he commits involves moral turpitude.
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K. Violation by a bank cashier of Sec 38 of the Banking Act regarding loans
to bank officers and directors.
Monte de Piedad v. minister of labor (122 SCRA 444)
FACTS: It appears that Mendiola was maintaining a personal savings account of
P4,000 with the bank's Fugoso Branch. On May 30, 1978 she deposited to her
account a check payable to herself amounting to P4,000 thereby increasing her
outstanding balance to P8,000. On June 1, 1978 she withdrew from her account
the amount of P5,000 even before her check for P4,000 could be cleared. On
June 5, 1978 her check for P4,000 was dishonored, which resulted in an
overdrawing of P1,000. However, instead of immediately debiting her savings
account she looked for the drawer who replaced the dishonored check on June
8, 1978.
ISSUE: guilty of willful breach?
HELD: Yes. Guilty of willful breach.
L. Concealment by bank manager of true balance of customer’s account.
Dela Cruz v. NLRC (210 SCRA 680)
FACTS: X was the branch manager of Y bank. He picked up a cash deposit of
200,000, he did not count the money, alleging it was not practicable. Later, the
teller discovered that the money was short of 5,000. To conceal the shortage, X
directed to offset the amount to another client of the bank.
ISSUE: Is X guilty of willful breach of trust?
HELD: X is guilty of breach of trust.
M. Repeated and numerous infractions by a bank teller in handling funds.
Allied bank v. NLRC (156 SCRA 789)
FACTS: X was employed as a teller off Y Bank. She was found guilty of a.
incurring a series of shortages; b. incurring a long string of overages; c. violation
of procedures and d. failure to observe instructions of superiors to report to the
CBU.
ISSUE: Is the dismissal valid?
HELD: YES, the acts committed amounts to willful breach of trust.
N. Misappropriation of Company Funds

San Miguel Corporation v. NLRC (128 SCRA 180)
FACTS: X, who was employed as budget clerk, received form acting plant
cashier the total amount of 278,805.43 for him to remit. X failed to remit.
ISSUE: Is the dismissal valid?
HELD: Yyes, breached of trust and confidence reposed in him by his employer.
O. Repeated incurrence of cash shortage
Piedad v. Lanao Electric Cooperative
FACTS: X was a bill collector. It was discovered that X’s collections were short,
later he remitted the shortage to the cashier.
ISSUE: Is the dismissal valid?
HELD: YES.
P. Engaging in an anomalous scheme to cover up past due accounts.
Gonzales v. NLRC (355 SCRA 195)
FACTS: His dismissal stemmed from alleged irregularities attributed to him as
Route Manager and concurrently as dealer of Pepsi Cola products. His
dealership contract with PCPPI started in 1990. Under the said contract,
petitioner was extended by PCPPI a credit line of P300,000.006 payable in thirty
(30) days. On November 25, 1992, petitioner as proprietor of RR Store
purchased Pepsi Cola products on credit amounting to P116,182.00. The credit
transaction was covered by Charge Invoice No. 365508. To cover this
transaction, petitioner Gonzales issued a post-dated check in the amount of
P116,182.00 payable on December 25, 1992. Petitioner calculated that his
receivables from respondent PCPPI by way of "concession" amounted to
P109,766.00. In another vain effort to undo the damage he had done, petitioner
on December 31, 1992 issued a third post-dated check dated January 15, 1993,
now covered with the supposed post-dated check receipt which, however, was
signed by the petitioner himself and not by the Sales Office Manager who has the
sole authority to issue the same.
ISSUE: Is X guilty of willful breach of trust?
HELD: YES. Private respondent PCPPI has sufficiently shown that petitioner has
become unworthy of the trust and confidence demanded of his position.
Petitioner betrayed his employer's trust and confidence when he instigated the
issuance by his subordinate salesman of an official receipt for his post-dated
check on December 22, 1992 whereby he (petitioner) could have evaded
payment to private respondent PCPPI of his debt amounting to P116,182.00.
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These acts committed by petitioner adversely reflected on his integrity. As Route
Manager he disregarded the private respondent company's rules and regulation
prohibiting the issuance of official receipt for post-dated check payment unless
the same is done by the Sales Office Manager.
6. COMMISSION OF A CRIME
 Commission of a crime is a ground for dismissal if it is committed
by an employee against the person of the:
a. Employer;
b. Immediate member of his family, or
c. Authorized representative of the employer
 Prior conviction is not required- mere commission of the crime is
enough justify the dismissal.
7. ANALOGOUS CAUSES
 The offense must have an element similar to those found in the
specific just causes enumerated under Art 282 of LC.
 Analogous causes contemplate an act that is due to voluntary or
willful act of employee.
 Illness is not analogous because it is neither voluntary nor willful.
 Conviction of a crime involving moral turpitude is not analogous to
commission of a crime by the employee or to fraud and willful
breach of trust.
7.1 ILLUSTRATIVE EXAMPLE OF ANALOGOUS CAUSES
a. Gross inefficiency
 Is closely related to gross neglect
b. Inflicting or attempting to inflict bodily injury on the job site on
company time
c. Unreasonable behavior, quarrelsome, bossy and difficult to
deal with
 Is closely related to just causes enumerated in Art
282 of the LC.
Cathedral School of Technology v. NLRC (214 SCRA 551)
FACTS: On January 29, 1988, private respondent formally applied for and was
appointed to the position of library aide with a monthly salary of P1,171.00. It was
at around this time, however, that trouble developed. The sisters began receiving
complaints' from students and employees about private respondent's difficult
personality and sour disposition at work.

Before the opening of classes, or more specifically on June 2, 1989, private
respondent was summoned to the Office of the Directress by herein petitioner
Sister Apolinaria Tambien, RVM, shortly after the resignation of the school's
Chief Librarian, Heraclea Nebria, on account of irreconcilable differences with
said respondent, for the purpose of clarifying the matter. Petitioner also informed
private respondent of the negative reports received by her office regarding the
latter's frictional working relationship with co-workers and students and reminded
private respondent about the proper attitude and behavior that should be
observed in the interest of peace and harmony in the school library.
Private respondent resented the observations about her actuations and was
completely unreceptive to the advice given by her superior. She reacted violently
to petitioner's remarks and angrily offered to resign, repeatedly saying, "OK, I will
resign. I will resign." Thereafter, without waiting to be dismissed from the
meeting, she stormed out of the office in discourteous disregard and callous
defiance of authority.
ISSUE: Whether the dismissal is valid?
HELD: YES. Her unreasonable behavior and unpleasant deportment is
analogous to the other “just causes” enumerated in ART 282 of the LC.
8. OTHER VALID CAUSES FOR DISMISSAL
a. Violation of company rules and regulations;
b. Breach of union security arrangements;
c. Participation in an illegal strike;
d. Commission of illegal acts during a strike;
e. Defiance of return-to-work order in a strike; and
f. Sexual harassment
8.1 Violation of company rules and regulations;
 An employer has the right to promulgate rules and regulations and
punish employees violating the same.
 Despite the employee’s right to self organization, the employers still
retains his inherent right to discipline his employees, his normal
prerogative to hire or dismiss them.
 Whether or not dismissal is an appropriate penalty for violation of
company rules and regulations will depend upon the surrounding facts
and circumstances of each case.
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 Factors such as gravity of the offense, position occupied, and
habitualness would have to be considered.
 In the case of Stanford Microsystems, Inc. v. NLRC:
 The imposable penalty is suspension for not more than 30 days,
but the SC upheld appropriateness of the penalty of dismissal
by the employer because the gravity of the offense.
 The following violations of the company rules have been held to
constitute valid cause for dismissal:
A. VIOLATION OF THE RULE AGAINST SLEEPING WHILE ON DUTY
OSCO Workers fraternity labor union v. Ormoc Sugar Co. (1 SCRA21)
FACTS: X was caught sleeping while on duty. He was warned that repetition
will result in his dismissal. on the next month, X was again caught sleeping.
HELD: Dismissal is valid.
B. VIOLATION OF THE RULE PROHIBITING DRINKING LIQUOR ON
COMPANY TIME AND COMPANY PREMISES AND ENGAGING IN
AN ADULTEROUS ACT OF SEXUAL INTERCOURSE WITH A
MARRIED FEMALE SECURITY GUARD ON COMPANY TIME AND IN
COMPANY PREMISES.
Standard Microsystems v. NLRC (157 SCRA 410)
FACTS: X was employed as security coordinator. X allowed two female SG
to come inside the security office and drinks with them. X also had sexual
intercourse with on of the female SG on the top of the desk of the security
head.
ISSUE: Is the dismissal proper?
HELD: Yes. No employer may rationally be expected to continue in
employment a person whose lack of morals, respect and loyalty to his
employer.
C. VIOLATION OF SAFETY RULES.
Northern Motors v. NLU (102 SCRA 958)
FACTS: It is company policy that smoking is prohibited. It has been proved
and is not disputed that Alcantara was an experienced painter and, having
worked with the petitioner for some time, he knew that smoking in a painting
booth is extremely hazardous.
ISSUE: Is the dismissal Valid?

HELD: YES. Such smoking has been shown to be dangerous, because the
painting booth contained inflammable dusts and materials and there were
painters who could proceed to take up a spray gun and paint without
warning, thereby multiplying the danger of conflagration from any flame.
Indeed, the petitioner insisted in the rule against smoking in the painting
booth to protect the very lives of its employees, especially those in the
painting booth.
D. VIOLATION OF RULES AGAINST ABSENTEEISM.
Manila Electric Co. vs. NLRC (263 SCRA 531)
FACTS: After such administrative investigation was conducted by petitioner, it
concluded that private respondent was found to have grossly neglected his
duties by not attending to his work as lineman from Aug. 2, 1989 to September
19, 1989 without notice to his superiors.
ISSUE: Valid dismissal?
HELD: Yes. An employee's habitual absenteeism without leave, which violated
company rules and regulations is sufficient cause to justify termination from
service.
E. VIOLATION OF AIRCRAFT PARKING PROCEDURE
Philippine Airlines Inc., v. NLRC (194 SCRA 139)
FACTS: On or about 12:55 in the afternoon, the aircraft was towed from the PAL
technical center to Bay 16 area at the NAIA. While the Boeing 747 was being
towed, the airplane collided with the bridge at Bay 16 causing damage to the
plane's left landing light and the left wing flop and scratching its No. 2 engine.
Consequently, on June 1, 1985, Pinuela was placed under preventive
suspension and was charged administratively. After investigation by the PAL
Administrative Board, he was dismissed from the service effective July 1, 1985.
The Labor Tribunal opined that "Pinuela could not be blamed for the accident as
he relied on the signal of the headsetman (Camina) who still signaled to him
despite the fact that the nose of the aircraft being towed was about to overshoot
the yellow line and the aircraft wing was about to hit the airbridge."
ISSUE: valid dismissal?
HELD: YES. towing an aircraft is a group activity necessitating group
coordination. This is explicit in petitioner's Engineering and Maintenance Manual
which states, "that the tug operator must undertake and/or continue on
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towing/pushing procedure only when positive visual contact with all guidemen is
possible." The use of, "all necessary guidemen" indicates plurality or group
coordination. Thus, instead of relying solely on the signals of Camina, Pinuela
should have also checked with the other ground crew personnel.
F. VIOLATION OF THE RULE PROHIBITING PILOTS FROM DRINKING
LIQUOR PRIOR TO A FLIGHT.
Philippine Airlines, Inc. v. NLRC (124 SCRA 538)
FACTS: The charge of petitioners against Gempis was “serious misconduct
(abuse of authority)” for forcing First Officers A. Barcebal and J. Ranches to drink
on February 27, 1980, at 10:30 in the evening at the coffee shop of the Triton
Hotel at Cebu, six (6) bottles of beer each, within thirty minutes. Unable to
consume the bottles of beer within the time limit set by private respondent
Salvador Gempis, the two pilots were ordered to stand erect and were hit on the
stomach by private respondent. The petition alleged that “the incident occurred
with the full knowledge of private respondent that the two (2) affected co-pilots
have flight duties the next day with initial assignments as early as 0710 H (7:10
a.m.) and as late as 1200H (12:00 p.m.).
HELD: Dismissal is valid. Needless to state, a pilot must be sober all the time for
he may be called upon to fly a plane even before his regular scheduled hours,
otherwise so many lives will be in danger if he is drunk. It would be unjust for an
employer like herein petitioner PAL to be compelled to continue with the
employment of a person whose continuance in the service is obviously inimical to
its interests.
G. VIOLATION OF THE RULE REQUIRING THAT THE TICKET- BOOTH
OF THE THEATER SHOULD BE CLOSED AT ALL TIMES AS A
PRECAUTION AGAINST HOLD-UPS
Castillo v. CIR (39 SCRA 76)
FACTS: Mayfair theater has a standing instruction that ticket booth should be
closed all the time. X was caught leaving the ticket booth open.
HELD: The dismissal is valid. X violated company policy.
8.2 BREACH OF UNION SECURITY ARRANGEMENT.
 The recognition of this ground is set forth in ART 248

a. “Nothing in this Code or in any other law shall stop the parties
from requiring membership in a recognized collective
bargaining agent as a condition for employment, except
those employees who are already members of another union
at the time of the signing of the collective bargaining
agreement.“
8.2.1 LIMITATIONS
A. Employees who are already members of another union at the time of
the signing of the CBA cannot be dismissed for refusing to join the
contracting union.
B. Employees who refuse to join the contracting union because of
prohibition imposed by their religion cannot likewise be dismissed.
C. If it was the contracting union itself who refused to accept the employee
as its member, the union cannot validly ask for the dismissal of the
employee.
D. If the employee resigns from the contracting union during freedom
period, the union cannot validly ask for the dismissal of the employee.
8.3 PARTICIPATION IN AN ILLEGAL STRIKE
 Any union officer or worker who knowingly participates in illegal strike
may be declared to have lost his employment
8.4 COMMISSION OF ILLEGAL ACTS DURING A STRIKE
 Any union officer or worker who knowingly participates in the
commission of illegal acts during a strike may be declared to have lost
his employment
8.5 DEFIANCE OF RETURN-TO-WORK ORDER
 If the strikers do not return to work, an illegal act is committed.
8.6 SEXUAL HARASSMENT
 Is committed by an employer, employee, manager, supervisor, or agent
of the employer who, having authority, influence or moral ascendancy
over another, demands, requests or otherwise requires any sexual favor
from another, regardless of whether the demand, request or
requirement is accepted.
 Sexual harassment is committed:
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a. The sexual favor is made as a condition in the hiring or in the
employment, re-employment or continued employment of said
individual, or in granting said individual favorable
compensation, terms, conditions, promotions, or privileges; or
the refusal to grant the sexual favor results in limiting,
segregating or classifying the employee which in any way
would discriminate, deprive or diminish employment
opportunities or otherwise adversely affect said employee;
b. The above acts would impair the employee’s rights or
privileges under existing labor laws; or
c. The above acts would result in an intimidating, hostile, or
offensive environment for the employee.
 The power emanates from the fact that the superior can remove the
subordinate from the workplace if the latter would refuse his amorous
advances.
 The act of an assistant manager in touching a female’s subordinate
hand, massaging her shoulder and caressing her nape, was considered
as sexual harassment.
VILLARAMA VS. NLRC (236 SCRA 283)
FACTS: X, a Materials Manager invited Y and the other female employees of the
Materials Department to a dinner. After taking them to dinner, Y thought that X
would bring her home, but instead brought her to a motel. Because of this, Y
resigned. The employer conducted an investigation and required an explanation
from X. for failure to submit, X was terminated.
ISSUE: W/n the dismissal was valid and justified
HELD: YES. As a managerial employee, X is bound by a more exacting work
ethics. He failed to live up to this higher standard of responsibility when he
succumbed to his moral perversity. And when such moral perversity is
perpetrated against his subordinate, he provides a justifiable ground for his
dismissal for lack of trust and confidence.
ADDITIONAL CAUSES FOR TERMINATING SCHOOL PERSONNEL
1. Gross inefficiency and incompetence in the performance of his duties,
such as, but not necessarily limited to habitual and inexcusable
absences and tardiness from his classes, willful abandonment of
employment or assignment
2. Negligence in keeping school or student records, or tampering with or
falsification of the same

3. Conviction of a crime, or an attempt on or a criminal act against the life
of any school official, personnel, or student, or upon the property or
interest of the school
4. Notoriously undesirable
5. Disgraceful or immoral conduct
6. Selling tickets or the collecting of any contributions in any form or for
any purpose or project whatsoever, whether voluntary or otherwise,
from pupils, students and school personnel, except membership fees of
pupils and students in:
a. Red Cross
b. Girl Scouts of the Philippines
c. Boy Scouts of the Philippines
7. In the event of phasing out, closure or cessation of the educational
program or course or the school itself
8. Other causes analogous to the foregoing as may be provided by
Secretary of Education, Technical Education and Skills Development
Authority (TESDA), or in the school rules or in a collective bargaining
agreement
REPUBLIC ACT No. 7877
AN ACT DECLARING SEXUAL HARASSMENT UNLAWFUL IN THE
EMPLOYMENT, EDUCATION OR TRAINING ENVIRONMENT, AND FOR
OTHER PURPOSES.
Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:
Section 1. Title. - This Act shall be known as the "Anti-Sexual Harassment Act of
1995."
Section 2. Declaration of Policy. - The State shall value the dignity of every
individual, enhance the development of its human resources, guarantee full
respect for human rights, and uphold the dignity of workers, employees,
applicants for employment, students or those undergoing training, instruction or
education. Towards this end, all forms of sexual harassment in the employment,
education or training environment are hereby declared unlawful.
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Section 3. Work, Education or Training -Related, Sexual Harassment Defined. -
Work, education or training-related sexual harassment is committed by an
employer, employee, manager, supervisor, agent of the employer, teacher,
instructor, professor, coach, trainor, or any other person who, having authority,
influence or moral ascendancy over another in a work or training or education
environment, demands, requests or otherwise requires any sexual favor from the
other, regardless of whether the demand, request or requirement for submission
is accepted by the object of said Act.
(a) In a work-related or employment environment, sexual harassment is
committed when:
(1) The sexual favor is made as a condition in the hiring or in
the employment, re-employment or continued employment of
said individual, or in granting said individual favorable
compensation, terms of conditions, promotions, or privileges;
or the refusal to grant the sexual favor results in limiting,
segregating or classifying the employee which in any way
would discriminate, deprive ordiminish employment
opportunities or otherwise adversely affect said employee;
(2) The above acts would impair the employee's rights or
privileges under existing labor laws; or
(3) The above acts would result in an intimidating, hostile, or
offensive environment for the employee.
(b) In an education or training environment, sexual harassment is
committed:
(1) Against one who is under the care, custody or supervision
of the offender;
(2) Against one whose education, training, apprenticeship or
tutorship is entrusted to the offender;
(3) When the sexual favor is made a condition to the giving of a
passing grade, or the granting of honors and scholarships, or

the payment of a stipend, allowance or other benefits,
privileges, or consideration; or
(4) When the sexual advances result in an intimidating, hostile
or offensive environment for the student, trainee or apprentice.
Any person who directs or induces another to commit any act of sexual
harassment as herein defined, or who cooperates in the commission
thereof by another without which it would not have been committed,
shall also be held liable under this Act.
Section 4. Duty of the Employer or Head of Office in a Work-related, Education
or Training Environment. - It shall be the duty of the employer or the head of the
work-related, educational or training environment or institution, to prevent or
deter the commission of acts of sexual harassment and to provide the
procedures for the resolution, settlement or prosecution of acts of sexual
harassment. Towards this end, the employer or head of office shall:
(a) Promulgate appropriate rules and regulations in consultation with
and joint1y approved by the employees or students or trainees, through
their duly designated representatives, prescribing the procedure for the
investigation of sexual harassment cases and the administrative
sanctions therefor.
Administrative sanctions shall not be a bar to prosecution in the proper
courts for unlawful acts of sexual harassment.
The said rules and regulations issued pursuant to this subsection (a)
shall include, among others, guidelines on proper decorum in the
workplace and educational or training institutions.
(b) Create a committee on decorum and investigation of cases on
sexual harassment. The committee shall conduct meetings, as the case
may be, with officers and employees, teachers, instructors, professors,
coaches, trainors, and students or trainees to increase understanding
and prevent incidents of sexual harassment. It shall also conduct the
investigation of alleged cases constituting sexual harassment.
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In the case of a work-related environment, the committee shall be
composed of at least one (1) representative each from the
management, the union, if any, the employees from the supervisory
rank, and from the rank and file employees.
In the case of the educational or training institution, the committee shall
be composed of at least one (1) representative from the administration,
the trainors, instructors, professors or coaches and students or trainees,
as the case may be.
The employer or head of office, educational or training institution shall
disseminate or post a copy of this Act for the information of all
concerned.
Section 5. Liability of the Employer, Head of Office, Educational or Training
Institution. - The employer or head of office, educational or training institution
shall be solidarily liable for damages arising from the acts of sexual harassment
committed in the employment, education
or training environment if the employer or head of office, educational or training
institution is informed of such acts by the offended party and no immediate action
is taken.
Section 6. Independent Action for Damages. - Nothing in this Act shall preclude
the victim of work, education or training-related sexual harassment from
instituting a separate and independent action for damages and other affirmative
relief.
Section 7. Penalties. - Any person who violates the provisions of this Act shall,
upon conviction, be penalized by imprisonment of not less than one (1) month
nor more than six (6) months, or a fine of not less than Ten thousand pesos
(P10,000) nor more than Twenty thousand pesos (P20,000), or both such fine
and imprisonment at the discretion of the court.
Any action arising from the violation of the provisions of this Act shall prescribe in
three (3) years.

Section 8. Separability Clause. - If any portion or provision of this Act is declared
void or unconstitutional, the remaining portions or provisions hereof shall not be
affected by such declaration.
Section 9. Repealing Clause. - All laws, decrees, orders, rules and regulations,
other issuances, or parts thereof inconsistent with the provisions of this Act are
hereby repealed or modified accordingly.
Section 10. Effectivity Clause.- This Act shall take effect fifteen (15) days after its
complete publication in at least two (2) national newspapers of general
circulation.
Approved: February 14, 1995
(Sgd.) FIDEL V. RAMOS
President of the Philippines
Art. 283. Closure of establishment and reduction of personnel. – The employer
may also terminate the employment of any employee due to the installation
of labor-saving devices, redundancy, retrenchment to prevent losses or the
closing or cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the provisions of
this Title, by serving a written notice on the workers and the Ministry of
Labor and Employment at least one (1) month before the intended date
thereof. In case of termination due to the installation of labor-saving
devices or redundancy, the worker affected thereby shall be entitled to a
separation pay equivalent to at least his one (1) month pay or to at least
one (1) month pay for every year of service, whichever is higher. In case of
retrenchment to prevent losses and in cases of closures or cessation of
operations of establishment or undertaking not due to serious business
losses or financial reverses, the separation pay shall be equivalent to one
(1) month pay or at least one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.
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COMMENT:
ECONOMIC JUSTIFICATIONS FOR TERMINATING AN EMPLOYMENT
1. Installation of labor saving devices
2. Redundancy
3. Retrenchment to prevent losses
4. Closing or cessation if operation of the establishment
 Grounds for terminating an employment that are not attributable to the
fault of the employee
 Although the employee is not at fault, the law nevertheless authorizes
the termination of employment in recognition of certain business
realities, particularly, the prerogative of every business concern to
institute appropriate measures to ensure increased productivity,
economic viability and competitiveness
INSTALLATION OF LABOR SAVING DEVICE
 Right of the employer to effect more economy and efficiency in its
method of production
 Employer’s right to follow economic policies that would insure profit to
itself
o PURPOSE: To mechanize or modernize its business even in
the process, it results in the dismissal of a number of
employees
REDUNDANCY
 The services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise
 A position is superfluous
o FACTORS:
o Overhiring of workers
o Decreased volume of business
o Dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise
 Exercise of business judgment, the wisdom or soundness of which is
beyond the discretionary view of the labor courts
 Does not necessarily refer to duplication of work
 Can exist even if there is no other person holding the same position as
that held by the employee declared to be redundant

 REASON: An employer cannot be compelled to give employment to a
greater number of person than the economic operations of his business
requires
REQUISITES OF A VALID REDUNDANCY PROGRAM
1. Good faith in abolishing the redundant positions
2. Faith and reasonable criteria in ascertaining what positions are to be
declared redundant and accordingly abolished
3. Written notice served in both the employees and the Department of
Labor and Employment (DOLE) at least one (1) month prior to the
intended date of termination
 The employer’s good faith in implementing a redundancy program is not
necessarily destroyed by the engagement of an independent contractor
to replace the services of the terminated employees
RETRENCHMENT
 Reduction of personnel due to actual or anticipated losses, lack of work,
or reduction in the volume of business
 “Retrenchment to prevent losses”
o Art. 283, Labor Code
o An employer can adopt retrenchment measures even before
the anticipated losses are actually sustained
o Resorted to by an employer primarily to avoid or minimize
business losses
o The lawmaker did not intend that the losses shall have in fact
materialized before adopting retrenchment measures
 Potential losses that are speculative cannot justify retrenchment
THE FOUR STANDARDS OF RETRENCHMENT (Substantive Requirements
of Retrenchment)
1. The expected losses should be substantial and not merely de minimis in
extent
2. That substantial loss apprehended must be reasonably imminent, as
such imminence can be perceived objectively and in good faith by the
employer
3. It must be reasonably necessary and likely to effectively prevent the
expected loss. It must be resorted to as a means of last resort, after less
drastic means, have been tried and found wanting or insufficient
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4. The alleged losses already realized and the expected imminent losses
sought to be forestalled, must be proven by sufficient and convincing
evidence
REQUISITES OF VALID RETRENCHMENT
1. That the retrenchment is reasonably necessary and likely to prevent
losses which, if already incurred, are not merely de minimis but
substantial, serious, actual and real, or if only expected, are reasonably
imminent as perceived objectively and in good faith by the employer
2. That the employer exercises its prerogative to retrench employees in
good faith for the advancement of its interest and not to defeat or
circumvent the employees’ right to security of tenure
3. That the employer used fair and reasonable criteria in ascertaining who
would be dismissed and who would be retained among the employees,
such as:
a. Less preferred status, i.e., whether they are temporary, casual,
regular, or managerial employees
b. Efficiency
c. Seniority
d. Physical fitness
e. Age
f. Financial hardship for certain workers
4. That the employer served written notice both to the employee and the
Department of Labor and Employment at least one month prior to the
intended date of retrenchment
5. That the employer pays the retrenched employees separation pay
 Must be proved by clear and convincing evidence
CLOSURE OF ESTABLISHMENT
 Permanent closure
 Temporary closure – legal effect is governed by Art. 286 of the Labor
Code
 The right to close the entire establishment carries with it the right to
close a part thereof, hence, closure may be TOTAL or PARTIAL
 Can be exercised even if the employer is not suffering from serious
business losses or financial reverses
 Must be done in good faith or with no intent to lockout its employees as
a means to coercing them to its demands

REQUISITES OF VALID CLOSURE
1. The closure of business must be bona fide in character
2. A written notice must be served upon the employees and the DOLE at
least one month before the intended date of closure
3. The employer must give separation pay to the employees, if the closure
was not due to serious business losses
RELOCATION OF PLANT
 Relocation of plant may amount to closure
PROCEDURAL REQUIREMENT
 The employer should serve a written notice at least once (1) month in
advance to the:
1. Affected employees
2. Department of Labor and Employment
 Must be served personally upon the employee concerned
 The mere posting of the notice of termination of employment on the
employees’ bulletin board does not substantially comply with the
statutory requirement
 “One month” = thirty (30) days
 FAILURE TO COMPLY – Subject the employer to sanction in the nature
of indemnification or penalty, the amount of which will depend on the
facts of each case and the gravity of the omission committed by the
employer
PURPOSE OF NOTICE
 To obviate abrupt and arbitrary dismissal and to enable the employee to
survive while he is looking for another job
 EMPLOYEE – to give him some to prepare for the eventual loss of his
job
 DOLE – opportunity to ascertain the veracity of the alleged cause for
termination
AMOUNT OF SEPARATION PAY
 At least one (1) month pay or the following amount, whichever is higher
1. ONE (1) MONTH PAY FOR EVERY YEAR OF SERVICE
a. Installation of labor-saving device
b. Redundancy
2. ONE-HALF (½) MONTH PAY FOR EVERY YEAR OF
SERVICE
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a.
Retrenchment to prevent losses
b.
Closure of establishment NOT due to serious
business losses
 NO SEPARATION PAY – Closure of establishment due to losses
PHILOSPHY BEHIND THE GRANT OF SEPARATION PAY
 To enable the employee to have something on which to fall back when
he loses his job
COMPUTATION OF SEPARATION PAY
 The latest salary shall be used
o EXCEPTION – latest salary was reduced by the employer to
defeat the intention of the Labor Code
o Salary rate before deduction shall be used
 SEASONAL EMPLOYEES – one-half of their respective average
monthly pay during the last season multiplied by the number of years
they actually rendered service
o SEPARATION PAY = ½ of average monthly pay last season X
number of years they actually rendered service
o Worked at least 6 months
Art. 284. Disease as ground for termination. – An employer may terminate the
services of an employee who has been found to be suffering from any
disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his co-employees:
Provided, That he is paid separation pay equivalent to at least one (1)
month salary or to one-half (1/2) month salary for every year of service,
whichever is greater, a fraction of at least six (6) months being considered
as one (1) whole year.
COMMENT:
CONDITIONS FOR TERMINATING AN EMPLOYMENT DUE TO ILLNESS
1. That the continued employment of the sick employee is prohibited by
law or is prejudicial to his health or to the health of his co-employees
2. That there is a certification from a competent PUBLIC health authority
that the disease is of such nature or at such stage that it cannot be
cured within a period of six (6) months even with proper medical unit

 The mere fact that an employee is suffering from a disease does not
ipso facto make him a sure candidate for dismissal
 The required medical certificate cannot be dispensed with
Art. 285. Termination by employee. – (a) An employee may terminate without
just cause the employee-employer relationship by serving a written notice
on the employer at least one (1) month in advance. The employer upon
whom no such notice was served may hold the employee liable for
damages.
(b) An employee may put an end to the relationship without serving any
notice on the employer for any of the following just causes:
1. Serious insult by the employer or his representative on the honor
and person of the employee;
2. Inhuman and unbearable treatment accorded the employee by the
employer or his representative;
3. Commission of a crime or offense by the employer or his
representative against the person of the employee or any of the
immediate members of his family; and
4. Other causes analogous to any of the foregoing.
COMMENT:
TERMINATION OF EMPLOYMENT BY THE EMPLOYEE
1. Voluntary resignation
2. Constructive resignation (abandonment of employment)
3. Involuntary resignation (constructive dismissal)
VOLUNTARY RESIGNATION
 Formal renouncement or relinquishment of an office
 Voluntary act of severing an employment relation at the initiative of the
employee who finds himself in a situation where he believes that
personal reasons cannot be sacrificed in favor of the exigency of service
that he has no other choice but to dissociate himself from his
employment
 Must be unconditional and WITH INTENT to operate as such
 There must be an INTENTION TO RELINQUISH a portion of the terms
of the office accompanied by an act of relinquishment
 Can be inferred from the wordings of the letter or memorandum
 Inferred from the actuations of the employee
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PHILIPPINES TODAY V. NLRC (267 SCRA 202, 215)
 Incendiary words and sarcastic remarks negate alleged desire to
improve relations
 Allegre’s choice of words and the way of expression betray his
allegation that the memorandum was simply an ‘opportunity to open the
eyes of Belmonte to the work environment in petitioner’s newspaper
with the end of persuading her to take a hand at improving said
environment.’ Apprising his employer (or top-level) management of his
frustrations in his job is certainly not done in an abrasive, offensive and
disrespectful manner. A cordial or, at the very least, civil attitude,
according due deference to one’s superiors, is still observed, especially
among high-ranking management officers. Here, respondent Alegre was
anything but respectful and polite. His memorandum is too affrontive,
combative and confrontational. It certainly causes resentment, even
when read by an objective reader.
JOHN CLEMENTS CONSULTANTS, INC. V. NLRC (157 SCRA 635)
FACTS: X sent a telex message to the President of the company advising of his
desire to discuss terms of his separation from employment even by telex.
Thereafter, X and the President met whereupon X reiterated his desire to resign.
The President, however, advised him to first take a 2-week leave to meditate on
his future with the company. When his leave ended, X again met with the
President and for the third time expressed his wish to resign irrevocably. His
resignation was then accepted, and he was told that a written communication
was expected and should state that it would be effective immediately,
conformably with the usual practice. Unaccountably, X did not submit any
resignation letter. Thus, the President issued a memorandum announcing the
resignation of X. Three months later, X filed a complaint for illegal dismissal.
ISSUE: W/n X was dismissed from his employment
HELD: NO. He resigned voluntarily, his offer to resign being unconditional and
irrevocable.
RESIGNATION BECAUSE OF THREAT TO FILE CRIMINAL ACTION
 The voluntariness of resignation is not negated by the fact that the
resignation was brought about by the threat of the employer to file
criminal action for estafa against the employee who has
misappropriated company funds.
 A threat to enforce one’s claim through competent authority, if the claim
is just or legal, does not vitiate consent.

CALLANTA V. NLRC (225 SCRA 526)
FACTS: During a spot audit, VC was found to have incurred a tentative shortage.
When he was showed the spot audit report, VC was handed a readymade
resignation letter and he was made to sign the same, otherwise an estafa case
will be filed against him. On the basis of this threat, he tendered his resignation.
He filed a complaint for illegal dismissal seven (7) months after.
ISSUE: W/N the resignation of VC was voluntary
HELD: YES. There is no showing that his resignation was obtained by means of
coercion and intimidation. The threat of his employer to file an estafa case
against him does not constitute intimidation because such threat is not an unjust
act, but rather a valid and legal act to enforce a claim.
RESIGNATION AS ALTERNATIVE TO DISMISSAL
 The voluntariness of resignation is not negated by the fact that the
employer persuades an employee to resign instead of being dismissed
for cause
 If a result of reorganization, the employee is given the option to resign
or be terminated with separation pay, and the employee chooses to
resign, the resignation is still voluntary
SAMANIEGO V. NLRC (198 SCRA 111)
FACTS: Because of serious financial crisis, the management resolved to
reorganize by streamlining its operations and eliminating middle management
positions. The management gave the affected employees the following option:
(a) termination of employment with separation pay or (b) voluntary resignation
with terms more financially advantageous than the first option. X chose the
second option and signed the company-prepared resignation letters. Accordingly,
he was paid the benefits under the second option. Later on, X changed his mind
saying that he received the benefits under protest, and thereafter filed a
complaint for illegal dismissal.
ISSUE: W/N the resignation of X was voluntary
HELD: YES. Notwithstanding the intended reorganization of the company, the
affected employees were given the option to resign from the company with
corresponding benefits attending such option. X and the other affected
employees opted for resignation on account of these negotiated benefits. In
termination cases, the employee is not afforded any option; the employee is
dismissed and his only recourse is to institute a complaint for illegal dismissal
against his employer, assuming that there are valid grounds for doing so. In this
particular case, X and the other affected employees were given the option to
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resign. It was the option they chose. Thus, there is no illegal dismissal to speak
of.
SICANGCO V. NLRC (235 SCRA 96)
FACTS: The Company informed RS that his position will be declared redundant.
He was assured of benefits due him under the law. He did not protest. In fact, he
negotiated for, and was able to get, higher separation benefits. In accordance
with his agreement with the company and before the declared redundancy of his
position took effect, RS tendered his resignation. Accordingly, the company paid
him separation benefits. Thereafter, he filed a complaint for illegal dismissal.
ISSUE: W/N the resignation of RS was voluntary
HELD: YES. He resigned from his employment after he was informed that his
position has become redundant. There is no indication that he was coerced into
resigning from the company. There is nothing illegal with the practice of allowing
an employee to resign instead of being separated for just cause, so as not to
smear his employment.
ONE MONTH NOTICE
 An employee who intends to voluntarily resign from his employment
should give his employer a written notice (resignation letter) at least one
(1) month in advance
 WITHOUT 1-MONTH NOTICE – employer can hold him liable for
damages
 The employer cannot compel him to render service during the period as
it amounts to involuntary servitude.
PURPOSE OF THE ONE-MONTH NOTICE
 To enable the employer to look for a replacement and therefore, prevent
a disruption of work
WAIVER OF THE ONE-MONTH RULE
 The one-month notice may be waived by the employer
 The rule requiring an employee to stay or complete the 30-day period
prior to the effectivity of his resignation is discretionary on the part of the
employer
PHIMCO INDUSTRIES V. NLRC (273 SCRA 286)
FACTS: On August 14, 1991, RC tendered his letter of resignation to take effect
on August 30, 1991. During the 15-day period, he continued to report for work. In
the meantime, no action was taken by the company with respect to his letter of

resignation. After the lapse of the 15-day period, the Human Resources Manager
directed RC, who was already in the US, to explain why he did not observe the
30-day notice requirement. Thereafter, the company terminated his services for
failure to observe the 30-day notice. It also forfeited his separation benefits.
ISSUE: W/N RC is entitled to separation benefits
HELD: YES. While RC failed to comply with company rules and regulations
regarding resignation, he did not outrightly disregard the same. Before the
expiration of the 15-day period, he still reported for work. Significantly, the fact
that his letter of resignation was acted only after he had left for the US opens
avenues for speculations and suspicions. While he continued to work to await the
acceptance of his resignation, he was not even informed of the status thereof or
that he had to stay for fifteen (15) days more. Evidently, there was bad faith in
the manner his resignation was resolved. The rule of requiring an employee to
stay or complete the 30-day period prior to the effectivity of his resignation
becomes discretionary on the part of management as an employee who intends
to resign may be allowed a shorter period before his resignation becomes
effective. In the instant case, the non-compliance with the period should not be
used by management as a subterfuge to avoid the payment of separation
(resignation) benefits due the employee.
EFFECT OF ACCEPTANCE OF RESIGNATION
 Resignation may not be withdrawn without the consent of the employer.
 The moment an employee resigns and his resignation is accepted, he
no longer has any right to the job
 IF EMPLOYEE CHANGES HIS MIND – he must ask for approval of the
withdrawal of his resignation from his employer
o EMPLOYER ACCEPTS – employee retains his job
o EMPLOYER DOES NOT ACCEPT – employee cannot claim
illegal dismissal
 REASON: Employer has the right to determine who
his employees will be
 This is in recognition of the contractual nature of employment which
requires mutuality of consent between the parties. An employment
contract is CONSENSUAL and VOLUNTARY
 A resigned employee who desires to take his job back has to re-apply
therefor, and he shall have the status of a stranger who cannot
unilaterally demand an appointment.
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ENTITLEMENT TO SEPARATION PAY
 GENERAL RULE: An employee who voluntarily resigns from his
employment is not entitled to separation
 EXCEPTION:
1. Stipulation in the employment contract
2. Collective bargaining agreement
3. Sanctioned by established employer practice or policy
CONSTRUCTIVE RESIGNATION (Abandonment of Employment)
 Deliberate, unjustified refusal of an employee to resume his work
 Voluntary act of the employee akin to voluntary recognition
 Employee just quits his employment without notice
 When an employee his employment, there is constructive resignation
2.7 Entitlement to Separation Pay
General Rule: An employee who voluntarily resigns from his employment is not
entitled to separation pay.
Exception:
- When stipulated in the employment contract
- When stipulated in the CBA
- If sanctioned by established employer practice or policy.
3. Constructive Resignation (Abandonment of Employment)
Abandonment of Employmentis the deliberate, unjustified refusal of an employee
to resume his work. When an employee abandons his employment, there is
constructive resignation. The difference between abandonment of employment
and voluntary resignation is that the employee quits his employment without
notice.
3.1 Elements of Abandonment of Employment
a.) Absence without notice, permission or justifiable reason
b.) Intent to sever the employer-employee relationship.
Mere absence does not by itself indicate abandonment of employment. There
must be overt acts unerringly pointing to the fact that the employee does not
want to work anymore.

Intent can be inferred from the following:
a.) Failure of the employee to comply with notices or directives for him to report
for work;
b.) Failure to report for work within a reasonable time after expiration of leave of
absence without pay;
c.) Failure to report for work despite disapproval of application for indefinite leave
of absence;
d.) Prolonged absences without justifiable reason
General Rule: Intent to abandon is negated by the immediate filing of a complaint
for illegal dismissal.
Exception: When the complaint for illegal dismissal does not pray for
reinstatement, but only for separation pay.
3.2 Abandonment and Absence Without Leave (AWOL)
Abandonment AWOL
- There is no intention to return - There is intent to return to
to work. work.
The issue of whether or not an employee abandoned his employment is a
question of fact. The burden is on the employer to show clear and deliberate
intent on the part of the employee to discontinue employment without intention of
returning.
An employee can still be sanctioned for absence without leave, in the event
abandonment is not proven.
4. Involuntary Resignation (Constructive Dismissal)
Involuntary resignationis a situation where an employee is constrained to quit his
job because continued employment is rendered impossible, unreasonable or
unlikely; when there is a demotion in rank, diminution in pay or when a clear
discrimination, insensibility or disdain by an employer becomes unbearable to the
employee.
Grounds Under Art 285(b)
a.) Serious insult by the employer or his representative on the honor and person
of the employee;
b.) Inhuman and unbearable treatment accorded the employee by the employer
or his representative;
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c.) Commission of a crime or offense by the employer or his representative
against the person of the employee or any of the immediate members of his
family; and
d.) Other causes analogous to any of the foregoing.
4.1 Serious Insult Upon the Honor and Person of the Employee
Where an employee who quits his employment after being demoted without just
cause.
CASES
Jarcia Machine Shop vs. NLRC
266 SCRA 97
AT was employed at JMS for 16 years. On January 11, 1993 he absented
himself from work to take care of his children. When he returned the next day, he
was informed that he was under suspension and the employer forthwith insulted
him. AT tried several times to return to work, but he was met with the same
circumstances. AT was constrained to quit his employment.
Issue: W/N AT was constructively dismissed?
Held: YES. AT was constructively dismissed because he was forced to quit his
employment as a result of his demotion without just cause.
Gaco vs. NLRC
230 SCRA 260
X was employed as Production Recorder in Orient Leaf Tobacco Corporation.
She held this position for 14 years. Then on April 1990 she returned for her
working season but found another employee occupied her position. She had
been demoted to the position of Picker.
Issue: W/N X was constructively dismissed?
Held: YES. Demotion without justifiable cause is tantamount to constructive
dismissal.
4.2 Inhuman and Unbearable Treatment
Where an employee quits his employment because of a legitimate desire for self-
preservation.

CASE
Singa Ship Management Phils.vs. NLRC
288 SCRA 692
MS worked on the vessel Crown Odyssey, which had Greek and Filipino
crewmembers. There were hostilities between the Greeks and Filipinos on board.
The Greek deck steward, constraining him to leave his employment, subjected
MS to several intimidation and scuffles.
Issue: W/N there was illegal dismissal?
Held: YES. MS quit his employment because he feared for his life and his fear
was well-founded.
4.3 Commission of a Crime
Where the employer or his representative commits rape, physical injuries,
mutilation, abortion, infanticide, homicide, murder, parricide, etc. against the
employee or the immediate members of his family.
4.4 One-Month Notice Not Required
The employee can leave his employment immediately.
4.5 Relief for Constructive Dismissal
The appropriate relief is separation pay plus indemnities in the form of nominal
damages or back wages. Reinstatement is not a proper relief because of strained
relations between the parties.
ART.286. When Employment Not Deemed Terminated.– The bona fide
suspension of the operation of a business or undertaking for a period not
exceeding six (6) months, or the fulfillment by the employee of a military or
civic duty shall not terminate employment.
In all such cases, the employer shall reinstate the employee to his
former position without loss of seniority rights if he indicates his desire to
resume his work not later than one (1) month from the resumption of
operations of his employer or from his relief from the military or civic duty.
COMMENT
1. Suspension of Business Operations
The standard by which to judge the validity of the exercise of the prerogative to
lay-off or suspend business operations is good faith. If done in bad faith, the
employment relationship is deemed uninterrupted. The affected employees are
entitled to their wages during the lay-off.
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Some grounds for lay-off
a.) Lack of work
b.) Lack of materials
c.) Reduction in volume of business
d.) Losses in business operations
e.) Repair and cleaning of machinery
f.) Year-end inventory
If the lay-off exceeds 6 months, constructive dismissal ensues. The employees
would be entitled to separation pay, except when there are serious business
losses.
1.1 Temporary Off-Detail/Floating Status
Temporary Off-Detailin security parlance means waiting to be posted. The
inactivity should not exceed six months, or the security agency is liable for
constructive dismissal.
CASES
Agro Commercial Security vs. NLRC
175 SCRA 790
Agro is a service corporation which provided security and janitorial services.
Subsequently, Agro’s contracts with clients were terminated because of
sequestration by the PCGG. The employees were put under floating status.
Issue: W/N being under floating status amounts to constructive dismissal?
Held: NO. Being put under floating status does not per se amount to dismissal.
But if it continues beyond 6 months, then it can be considered as such.
Valdez vs. NLRC
286 SCRA 87
NELBUSCO hired V as driver. Subsequently the bus driven by V suffered from
faulty air-conditioning. V was told to wait as the air-conditioning of the bus was
repaired. Several months later, V discovered that the bus he was previously
driving was assigned a new route as an ordinary bus under a new driver.
Issue: W/N there was constructive dismissal?
Held: YES. The floating status of V lasted beyond six months, hence he can be
considered dismissed from service.
2. Fulfillment of Military or Civic Duty
The worker’s employment is deemed suspended even if the service rendered to
military or civic duties exceed six months.
 LABOR RELATIONS (Arts. 226-292, Labor Code of the Philippines) 130
Atty. Paulino Ungos

Requisites: served at least five (5) years as underground mine worker, may retire and
a.) The employee must signify his desire to resume work not later than 1 month shall be entitled to all the retirement benefits provided for in this Article.
from his relief from said military or civic duty.
Retail, service, and agricultural establishments or operations
The payment of wages and benefits shall be subject to special laws, decrees and employing not more than ten (10) employees or workers are exempted from
to applicable individual or collective bargaining agreement and voluntary the coverage of this provision.
employer practice or policy.
Violation of this provision is hereby declared unlawful and subject
to the penal provisions under Article 288 of this Code.
Title II Nothing in this Article shall deprive any employee of benefits to
RETIREMENT FROM THE SERVICE which he may be entitled under existing laws or company policies or
practices.
ART. 287. Retirement.– Any employee may be retired upon reaching the
retirement age established in the collective bargaining agreement or other COMMENT
applicable employment contract. 1. Retirement
Retirementis a withdrawal from office, public station, business, occupation, or
In case of retirement, the employee shall be entitled to receive public duty upon reaching a certain age or after rendering a certain number of
such retirement benefits as he may have earned under existing laws and years of service.
any collective bargaining agreement and other agreements: Provided,
however; That an employee’s retirement benefits under any collective 2. Retirement vs. Resignation
bargaining and other agreements shall not be less than those provided Retirement Resignation
herein. - Bilateral act of the employer - Unilateral act of en employee.
and employee. - Terminates employment
In the absence of a retirement plan or agreement providing for - Puts an end to the relations with the employer for
retirement benefits of employees in the establishment, an employee upon employment relations upon personal reasons.
reaching the age of sixty (60) years or more, but not beyond sixty-five (65) reaching a certain age or after
years which is hereby declared the compulsory retirement age, who has rendering a certain number of
served at least five (5) years in the said establishment, may retire and shall years of service.
be entitled to retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6) months being 3. Retirement vs. Dismissal
considered as one whole year. Retirement Dismissal
- Bilateral act of both employer - Unilateral act of an employer
Unless the parties provide for broader inclusions, the term ‘one and employee. in terminating the services of
half (12) month salary’ shall mean fifteen (15) days plus one-twelfth (1/12) an employee for cause.
th
of the 13 month pay and the cash equivalent of not more than five (5) days
of service incentive leaves.
4. Retirement Law May be Given Retroactive Effect
An underground mining employee upon reaching the age of fifty The pertinent provisions of the Labor Code as amended by RA 7641, being
(50) years or more, but not beyond sixty (60) years which hereby declared social legislation, can be given retroactive effect. RA 7641, which amended
the compulsory retirement age for underground mine workers, who has Article 287 of the Labor Code, took effect on January 7, 1993.

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6
d.) Employees of agricultural establishments or operations regularly employing
Requisites for Retroactivity not more than 10 employees.
a.) The claimant for retirement benefits was still an employee when the law took
effect; and 6. Types of Retirement Under the Labor Code
b.) The claimant complies with the requirements for eligibility under the statute for a.) Optional
such retirement benefits. b.) Compulsory
c.) The conditions for eligibility must be met at the time of retirement at which
juncture the right to retirement benefit vests upon the claimant. 7. Optional Retirement
CASES 7.1 If there is NO Retirement Plan or Contract
Allied Investigation Bureau vs. Ople a.) For ordinary employees – at least 60 years old.
91 SCRA 265 b.) For underground mining employees – at least 50 years old.
“…The constitutional guarantee of non-impairment is limited by the exercise of
the police power of the State, in the interest of public health, safety, morals and The retirement option can only be exercised by the employee. The employee
general welfare.” must have served in the establishment for at least 5 years.

Oro Enterprises vs. NLRC 7.2 If there is a Retirement Plan or Contract

238 SCRA 105
X, who served in the company for 41 years, wished to retire. She filed a Claim for
Retirement Pay, indicating that the amount she was receiving from the SSS was
not enough to meet her daily subsistence. While the case was pending, RA 7641
took effect.
Issue: W/N RA 7641 can be applied to the case?
Held: YES. The said law is a curative social legislation designed to improve the
financial well-being of workers during the twilight years of their life.
5. Coverage of Article 287 of the Labor Code
General Rule: All employees in the private sector, regardless of their position,
designation or status and irrespective of the method by which their wages are
paid.
Exceptions:
a.) Domestic helpers and persons in the personal service of another;
4
b.) Employees of retail establishments regularly employing not more than 10
employees;
5
c.) Employees of service establishments regularly employing not more than 10
employees;
4
Retail establishment is a business entity principally engaged in the sale of goods to end-
users for personal or household use. It loses retail character if it engages in both retail and
wholesale of goods.
5 6
Service establishment is a business entity principally engaged in the sale of service to
individuals for their own or household use and is generally recognized as such.
The optional retirement age is that established in the retirement plan, CBA or
other employment contract.
Either the employee or the employer can exercise the option. In the exercise of
the option to retire an employee, the employer is not obliged to consult the
employee.
7.3 Basis of Optional Retirement
A retirement plan, CBA or employment contract, which provides for compulsory
retirement at a certain age is not violative of the right to security of tenure,
because the retirement plan forms part of the employment contract. Optional
retirement need not be based on age; length of service may also be used as a
criterion.
CASES
Pantranco North Express vs. NLRC
259 SCRA 161
X was hired by petitioner in 1964. He eventually joined the Pantranco Employees
Associatio, which had a CBA with PNEI. The CBA provides, among others, that
there is compulsory retirement when the employee reaches 60 years or renders
Agricultural establishment is a business entity engaged in farming activities in all its
branches.

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25 years of service, whichever comes first. Then on 1989, X was retired by the
company.
Issue: W/N the provision in the CBA for compulsory retirement is valid?
Held: YES. Article 287 of the Labor Code as worded permits employers and
employees to fix the applicable retirement age at below 60 years. Providing for
early retirement does not constitute diminution of benefits.
Philippine Airlines, Inc. vs. ALPAP
373 SCRA 302
PAL’s retirement plan states that a pilot can retire at his option or at the option of
the company, after having flown for 20,000 hours or served for 20 years as a
PAL pilot. Exercising the option, PAL retired Capt. AC.
Issue: W/N the retirement of Cap. AC is valid?
Held: YES. It was a valid exercise of the option given to PAL under the PAL-
ALPAP Retirement Plan.
8. Compulsory Retirement
a.) Ordinary employees – 65 years old
b.) Underground mining employees – 60 years old
9. Retirement Pay
9.1 If there is a Retirement Plan or Contract
General Rule:The retirement pay of an employee shall be that provided in the
retirement plan, CBA or employment contract.
Exception:
- If the retirement benefits are LESS than that provided for in the LC, the
employer shall pay the difference.
- If the retirement fund comes from the contribution of BOTH employer
and employee, the employer’s total contribution should not be less than
the total retirement benefits to which the employee would have been
entitled had there been no such retirement fund. In case the employer’s
contribution is less than that prescribed by the LC, the employer shall
pay the difference.
9.2 If there is NO Retirement Plan or Contract
The retirement pay is ½ month salary for every year of service, a fraction of at
least 6 months considered as 1 year. This equals to 22.5 days for every year of
service. This includes:
a.) 15 days salary based on the employee’s latest salary rate;
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b.) Cash equivalent of not more than 5 days of service incentive leave;
and
th
c.) 1/12 of the 13 month pay due the employee.
10. Computation of Length of Service
General Rule: Only actual service rendered should be counted.
Exception: The period covered by authorized leave of absences, regular holidays
and fulfillment of mandatory military and civic duties are included.
11. PAG-IBIG Fund Coverage as Substitute Retirement Plan
Effects:
a.) The retirement benefits should be more than or at least equal to the
retirement benefits under Art 287 of the LC.
b.) If the scheme provides less than what the employee is entitled to under the
LC, the employer must pay the difference.
c.) If both employer and employee contribute, only the employer’s contribution
and its increments shall be considered for full or partial compliance with the
retirement benefits under the LC.
d.) If the employee is the lone contributor, the employer being exempted, the
employer is bound to give the retirement benefits under the LC.
12. Extension of Services After Retirement
Services of the employee may be continued or extended on a case-to-case
basis. This is on the sound discretion of the employer.
13. Taxability of Retirement Pay
General Rule: Pensions, retirement and separation pay are subject to withholding
tax.
Exception:
1.) Retirement benefits received by officials and employees of private firms under
a reasonable private benefit plan maintained by the employer
Requisites:
a.) The benefit plan must be approved by the BIR
b.) The retiring official or employee must have been in the service of the
same employer for at least 10 years and not less than 50 years of age at the time
of retirement
c.) The retiring official shall not have previously availed of the privilege
under the retirement benefit plan of the same or another employer.

2.) Any amount received by an official or employee or by his heirs from the
employer as a consequence of separation of such official or employee from the
service of the employer because of death, sickness or other physical disability or
for any cause beyond the control of said official or employee.
3.) Social security benefits, retirement gratuities, pensions and other similar
benefits received by a resident or non-resident citizens of the Philippines or
aliens who come to reside permanently in the Philippines from foreign
government agencies and other institutions, private or public.
4.) Payments of benefits due or to become due to any person residing in the
Philippines under the laws of the USA administered by the US Veterans
Administration.
5.) Benefits received from or enjoyed under the SSS in accordance with RA
8282.
6.) Benefits received from the GSIS under RA 8291, including gratuity received
by government officials and employees.
14. Criminal Liability
The erring employer is liable for a fine of not less than 1,000 pesos nor more
than 10,000 pesos or imprisonment of not less than 3 months nor more than 3
years or both such fine and imprisonment at the discretion of the court.
BOOK SEVEN
TRANSITORY AND FINAL PROVISIONS
Title I
PENAL PROVISIONS AND LIABILITIES
Art. 288. Penalties. – Except as otherwise provided in this Code, or unless
the acts complained of hinge on a question of interpretation or
implementation of ambiguous provisions of an existing collective
bargaining agreement, any violation of the provisions of this Code declared
to be unlawful or penal in nature shall be punished with a fine of not less
than One Thousand Pesos (P1,000.00) nor more than Ten Thousand Pesos
(P10,000.00) or imprisonment of not less than three months nor more than
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three years, or both such fine and imprisonment at the discretion of the
court.
In addition to such penalty, any alien found guilty shall be summarily
deported upon completion of service of sentence.
Any provision of law to the contrary notwithstanding, any criminal offense
punished in this Code, shall be under the concurrent jurisdiction of the
Municipal or City Courts and the Courts of First Instance. (As amended by
Section 3, Batas Pambansa Bilang 70)
1. Criminal offenses under the labor code
 Not every violation of the Labor Code constitutes a criminal offense.
Only those violations which the Labor Code declares to be unlawful or
penal in nature are considered as criminal offenses.
2. Offenses Penalized under the General Penalty
 The ff.offenses are penalized under the general penalty clause set forth
in Article 288 of the Labor Code:
a) Taking up employment by a non-resident alien without an Alien
Employment Permit
b) Transferring to another job or changing employer by a non-
resident alien after the issuance of the Alien Employment
Permit without prior approval of the SOLE
c) Violation of Chapter II, Book two of the Labor Code regarding
the employment of learners
d) Demanding or accepting more than 10% attorney’s fees in any
judicial or administrative proceedings for recovery of wages
e) Withholding any amount from the wages of a worker; or
inducing him to give up any part of his wages by force, stealth,
intimidation, threat, or by any other means whatsoever without
the worker’s consent.
f) Making deductions from the wages of an employee for the
benefit of the employer or his representative or intermediary in
consideration of a promise of employment or retention of
employment
g) Refusal to pay or reducing the wages and benefits or,
terminating an employment or committing discriminatory acts
against an employee who has filed a complaint, testified or is
about to testify in proceedings under Title II, Book Three of the

Labor Code
h) Making false statement, report, or record filed or kept pursuant
to the Labor Code, knowing such statement, report or record to
be false in any material aspect.
i) Obstructing, impeding, delaying, or otherwise rendering
ineffective the orders issued by the SOL or his duly authorized
representative in the exercise of his visitorial or enforcement
power.
j) Discriminating against any woman employee with respect to
terms and conditions of employment solely on account of her
sex, by paying the woman employee a lesser compensation
than her male counterpart for work of equal value or by
favoring a male employee over a female employee with
respect to promotion, training opportunities, study and
scholarship grants solely on account of their sexes.
k) Requiring as a condition of employment that a woman
employee shall not get married or to stipulate expressly or
tacitly that upon getting married, a woman employee shall
deemed resigned or separated; or to actually dismiss,
discharge, discriminate or otherwise prejudice a woman
employee merely by reason of her marriage.
l) Denying any woman employee the benefits provided for in
Chapter I, Title III of the Labor Code
m) Discharging a woman employee for the purpose of preventing
her from enjoying any of the benefits provided by the labor
code
n) Discharging a woman employee on account of her pregnancy
or while on leave in confinement due to her pregnancy
o) Discharging or refusing the admission of a woman employee
upon returning to her work for fear that she may again be
pregnant
p) Restraining, coercing, discriminating against or unduly
interfering with employees in the exercise of their right to self-
organization
q) Unfair labor practices of employers
r) Unfair labor practices of Labor organizations
s) Violation of Article 287 of the Labor Code regarding retirement
of employees
4. Offenses with Specific Penalties
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 The Labor Code imposes specific penalties on the following offenses:
A. Illegal recruitment of workers for local employment
o Article 39 of the Labor Code
B. Demanding/charging fees for handling of employees
compensation cases or retaining/deducting any amount from the
compensation benefits of an employee in payment for handling the
compensation claim.
o Article 203 of the Labor Code
C. Fraud, collusion, falsification, misrepresentation of facts or any
other kind of anomaly in securing employees compensation.
o Penalty set forth: Article 207 of the Labor Code
D. Declaring a strike or lockout without first having bargained
collectively; declaring a strike or lockout without the necessary
strike or lockout vote or strike vote/lockout vote report; declaring a
strike or lockout after the assumption of jurisdiction or
certification of labor dispute for compulsory arbitration;
obstructing, impeding or interfering with by force, violence,
coercion threats or intimidation any peaceful picketing; or aiding
or abetting such obstruction or interference; using or employing a
strike-breaker; bringing in, introducing or escorting by a public
officer, any individual who seeks to replace strikers; engaging in
violence, coercion or intimidation during picketing; obstructing the
free ingress to or egress from the employer’s premises during
picketing; or obstructing public thoroughfares during picketing
o Penalties are set forth by Article 272
4. Illegal Dismissal is not a Criminal Offense
 Illegal dismissal - not an offense within the contemplation of Article 209
of the Labor Code despite the fact that it is a violation of the Labor
Code.
 Reason: illegal dismissal is not among those which the labor code
expressly declares to be unlawful or penal in nature. As held in the case
of Callanta vs. Carnation (p. 642-643):
“The dismissal without just cause of an employee from his employment
constitutes a violation of the Labor Code and its implementing rules and
regulations. Such violation, however, does not amount to an offense as

understood under Art. 290 of the Labor Code. In its broad sense, an
offense is an illegal act which does not amount to a crime as defined in
the penal law, but which by statute carries with it a penalty similar to
those imposed by law for the punishment of a crime.
Art. 289. Who are liable when committed by other than natural person. – If the
offense is committed by a corporation, trust, firm, partnership, association
or any other entity, the penalty shall be imposed upon the guilty officer or
officers of such corporation, trust, firm, partnership, association or entity.
Criminal Liability of Officers of Juridical Entities
COMMENT:
 Only those who actually committed the unlawful acts, authorized the
commission thereof, ratified the same or have conspired in the
commission thereof may be held to be criminally liable.
Title II
PRESCRIPTION OF OFFENSES AND CLAIMS
Art. 290. Offenses. – Offenses penalized under this Code and the rules and
regulations issued pursuant thereto shall prescribe in three (3) years.
All unfair labor practice arising from Book V shall be filed with the
appropriate agency within one (1) year from accrual of such unfair labor
practice; otherwise, they shall be forever barred.
1. Reckoning Date of the 3-year prescriptive period
 Offenses penalized under the labor code prescribe in 3 years. The labor
code is silent as to when the three-year period should be reckoned.
Such being the case, Sec. 2 of Act 3326, as amended, entitled “An act
to establish periods of prescriptions for violations penalized by special
acts and municipal ordinances and to provide when prescription shall
begin to run, should be applied.
The three-year period for offenses penalized by the Labor Code should be
reckoned :
a) From the day of the commission of the violation, if such commmission
be known; or
b) From discovery of the violation and institution of judicial procedings for
Addie Celerian * Amor Venenoso * Draei Dumalanta * Ellan Cipriano * Ingrid Prado * Mary Ang * Rica Casiquin * Sam Santos
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its investigation and punishment, if the commission of the violation was
not know at the time.
People vs. Duque
FACTS: Sometime in January 1986, ND representing to be a licensed recruiter,
recruited AU in Saudi Arabia. ND asked AU to prepare the amount of P20,000
and assured him that he could leave within two months. On the basis of this
representation, AU gave P20,000 to ND. However, despite the lapse of more
than two months and despite repeated promises to do so, ND failed to employ
AU at Saudi. As a result, AU demanded the return of his money but ND failed to
give the money back to AU. Consequently, AU sought the assistance of POEA in
December 1989 and it was only then that AU came to know that ND had no
license or authority to recruit workers for overseas employment. A criminal
complaint against ND for illegal recruitment was filed within the Prosecutor's
office and an information was filed by the prosecutor in court after the lapse of
more than 4 years. ND moved to quash the information on the ground that the
offense had prescribed.
HELD: ND is not correct. Sec 2 of Act No. 3326 sets two rules for determining
the beginnning of the prescriptive period; namely, 1.) from the day of commission
of the violation, if such commmission be known, and b.) from discovery thereof
and institution of judicial proceedings for investigation and punishment if the
commmission of the violation is not known at the time.
It was the lack of necessary license to recruit workers for overseas employment
that rendered the recruitment activities of ND unlawful and criminal. Such lack of
license was not known to AU in January 1986 when heas recruited. AU
discovered that ND did not possess license to recruit only in December 1989
when he went to the offices of the POE for the purpose of filing a claim for the
return of the money that he gave to ND. The offense of illegal recruitment has not
prescribed when the complaint was filed with the Prosecutor's office and when
the information was filed.
2. Prescriptive Period of Criminal Action for Unfair Labor Practices
 All unfair labor practices arising from Book V shall be filed with the
appropriate agency within one year from accrual of such unfair labor
practice; otherwise, they shall be forever barred.
 It would seem that the one-year will commence from the accrual of the
unfair labor practice. This is not the case. The one-year prescriptive
period for the criminal aspect of ULP will begin to run only when a final
judgment is rendered in the administrative proceedings. This is so
because the prescriptive period does not run during the pendency of the

administrative proceedings. This is expressly provided for in Art. 247 of
the Labor Code.
5.Prescriptive period of Criminal Action for Illegal Recruitment
a) Illegal recruitment under Art. 38 of the Labor code (which is still in force
insofar as recruitment for local employment is concerned), prescribes in
3 years, pursuant to the provisions of Art. 290 of the Labor Code
b) Illegal Recruitment under RA 8042, otherwise known as Migrant
Workers and Overseas Filipinos Act of 1995” which specifically applies
to overseas Filipino workers, prescribes as follows:
a. simple illegal recruitment - 5 years
b. illegal recruitment involving economic sabotage, i.e. When
committed by a syndicate or in a large scale- 20 years.
Art. 291. Money claims. – All money claims arising from employer-employee
relations accruing during the effectivity of this Code shall be filed within
three (3) years from the time the cause of action accrued; otherwise they
shall be forever barred.
All money claims accruing prior to the effectivity of this Code shall be filed
with the appropriate entities established under this Code within one (1)
year from the date of effectivity, and shall be processed or determined in
accordance with the implementing rules and regulations of the Code;
otherwise, they shall be forever barred.
Workmen’s compensation claims accruing prior to the effectivity of this
Code and during the period from November 1, 1974 up to December 31,
1974, shall be filed with the appropriate regional offices of the Department
of Labor not later than March 31, 1975; otherwise, they shall forever be
barred. The claims shall be processed and adjudicated in accordance with
the law and rules at the time their causes of action accrued.
COMMENT:
Prescriptive Period
1.1 Money claims
 All money claims arising from employer-employee relations
prescribe in 3 years from the time the cause of action accrued.
 Money claims recoverable under a Collective Bargaining
Agreement, employment contract or company policy, fall within the
coverage of Art 291 of the labor code because they arise form
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employer-employee relationship and therefore, should be filed
within 3 years from the time the cause of action accrued, otherwise,
they will be forever barred by prescription.
De Guzman vs. CA
FACTS: NL undertook a partial suspension of operations because of serious
business reverses. AS a result, 15 rank-and-file employees were placed on
forced leave for a period of 6 months. On November 16, 1992, the said
employees were finally dismissed. In May 1996, the affected employees filed with
the voluntary arbitrator a claim for retirement/separation benefits under the CBA.
NL move for the dismissal of the claim on the ground of prescription because the
claim was filed after lapse of 3 years. On, the other hand, the employees argued
that their claim has not prescribed because it is based on a written contract,
considering that it comes from the CBA, hence, the prescriptive period should be
10 years as provided in Art. 1144 of the Civil Code.
ISSUE: Is the contention of the employees correct?
HELD: No, the contention is not correct. The language of Art. 291 of the labor
code does not limit its application only to money claims specifically recoverable
under the labor code but covers all money claims arising from employer-
employee relations. Since the demand of the employees for
retirement/separation benefits is a money claim arising from their employment,
art. 291 is applicable. Their claim should be filed 3 years from the time their
cause of action accrued.
1.2. Action for Reinstatement
 An action for reinstatement prescribes in 4 years. Reason: action is
predicated upon an injury to the rights of the plaintiff which under Art
1146 of the Civil Code must be brought within 4 years.
 The 4-year prescriptive period should be reckoned from the date the
employee was unjustly dismissed. The filing of a criminal case against
the employee will not interrupt the running of the prescriptive period for
filing the action for reinstatement because the right to file an action for
illegal dismissal is not dependent upon the outcome of the criminal
case.
Pepsi Cola Bottling Co. Vs. Guanzon
FACTS: PCBCo., dismised JG from his employment for misappropriation of
money collcted from customers. A criminal complaint for Estaf through
Falsfication of commercial documents was also file against JG with the office of
the city fiscal. The criminal case was dismissed on May 25, 1984 based on the

finding that a charge invoice is not a commercial document. After the dismissal of
the complaint, JG filed a complaint for reinstatement before the Labor Arbiter.
PCBCo, moved for the dismissal of the complaint on the ground of prescriptive
because more than 4 years had elapsed since the dismissal. JG argued that the
complaint has not prescribed because the prescriptive period should be reckoned
not from the date of dismissal but from May 25, 1984.
ISSUE: Is JG Correct.
HELD: JG is not correct. The prescriptive period should be reckoned not from the
date of the dismissal of the criminal case but from the date of dismissal from
employment.
1.3 Action for Accounting of union funds
 Any action involving the funds of a labor organization prescribes after 3
years from the date of submission of the annual financial report to the
DOLE or from the date the same should have been submitted as
required by law, whichever comes earlier. Sec 5, Rule II, Book VII
provides so.
1.4 Claims for Employees’ Compensation
 Claims for employees’ compensation prescribe in 3 years from the time
the cause of action accrued. This is expressly provided by Art. 201 of
the labor code, as amended by PD 1921
1.5 Administrative Action for unfair labor practices
 ULP prescribe in 1 year from accrual of such ULP section 2, Rule II,
Book VII rules implementing the labor code.
1.6 Recruitment Violations involving overseas workers or seafarers
 Administrative recruitment violations involving landbased overseas
workers and seafarers prescribe in 3 years from the time the cause of
action accrued.
1.7 Disciplinary action cases against overseas principals or workers
 Disciplinary action cases against foreign principals/employers or
overseas landbased workers of seafarers prescribe in 3 years from the
time the cause of aciton accrued.
2. Laches
 a failure or neglect, for an unreasonable and unexplained length of time,
to do that which, by exercising due diligence, could or should have been
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done earlier;
 it is negligence or omission to assert a right within a reasonable time,
warranting a presumption that the party entitled to assert is either has
abandoned or declined to assert it.
For laches to attach, the ff elements must be present:
1. Conduct on the part of the defendant or one under whom he claims,
giving rise to the situation of which complaint is made and for which the
complaint seeks remedy.
2. Delay in asserting the complainant’s right, the complainant having had
knowledge or notice of the defendant’s conduct and having been
afforded an opportunity to institute a suit.
3. Lack of knowledge or notice on the part of the defendant that the
complainant would assert the right on which he bases his suit and
4. Injury or prejudice to the defendant in the event relief is accorded to the
complainant.
 The doctrine of laches or of “stale demands” is based upon grounds of
public policy which requires, for the peace of society, the
discouragement of stale claims, and unlike the statute of limitations, is
not a mere question of time but is principally a question of the inequity
or unfairness of permitting a right or claim to be enforced or asserted.
 In labor cases, laches may be applied only upon the most convincing
evidence of deliberate inaction, for the rights of laborers are protected
under the social justice provisions of the Constitution.
Litton Mills Workers Union vs. Litton Mills
FACTS: On April 15, 1963, the Litton Mills Workers union and its members
numbering 500, declared a strike against Litton. Allegedly, as a retaliatory act
agains the strikers, Litton dismissed 45 employees for chich reasonn, the Litton
Mills Workers union filed on May 27, 1963 a complaint for ULP against Litton
Mills. In Jan. 1970, the litton mills workers union sought to amend to have been
dismissed as a result of the strike. The CIR disallowed the amended complaint
on the ground of laches.
ISSUE: Is the amended complaint barred by laches?
HELD: The amended complaint is barred by laches. To begin with, it is to be
noted that the attempt to introduce the amendment in question came only in
January of 1970, that is, more than six and one-half years after the original
complaint was filed. That the original complaint was definite and specific not only
in the allegations of its main body but also in its prayer as to the extent of the
 LABOR RELATIONS (Arts. 226-292, Labor Code of the Philippines) 138
Atty. Paulino Ungos

unfair labor practice charged the Litton Mills Workers Union and the relief sought COMMENT:
by it in consequence thereof. The complaint specifies the names of the The appropriate entities having jurisdiction over money claims
employees, 46 all in all in number, who allegedly were dismissed because of  If there is a demand for reinstatement, money claims of workers should
union activities. If indeed there were more than 400 employees similarly situated be filed with the Regional Arbitration Branch of the NLRC regardless of
as those 46 specifically named, no plausible explanation was offered for their the amount involved.
omission. Under the circumstances, it is too late in the day to allow the desired  If there is no demand for reinstatement, the ff are the rules:
amendment. It is unreasonable and unjustified for an employee or worker to raise a) If the aggregate claim of each employee does NOT exceed
for the first time in court the issue of his alleged dismissal or improper dismissal P5,000, the money claim should be filed with the Regional
only after the lapse of more than 5 years. This is particularly true in the instant Director of the DOLE
case where there was an ongoing proceeding involving the alleged dismissal of b) IF the aggregate claim of each employee exceeds P5,000, the
other specified employees during the more than 6 years that the matter of the money claim should be filed with the Regional Arbitration of the
supposed illegal dismissal of the more than 400 employees in question could NLRC.
have been squarely raised. Thus, the amendment sought by the Litton Workers  Claims from employees’ compensation should be filed with the SSS (for
Union is already barred by laches. employees in the private sector) or with the GSIS (for employees in the
public sector), in accordance with the rules and regulations laid down by
Gutierrez vs. Bachrach Motor Co,, Inc. the Employees’ Compensation Commission.
We now come to the third important question for determination, namely, whether
or not plaintiff-appellee has filed the present suit for reinstatement and for back
pay within reasonable time after dismissal. In a long line of decision, this tribunal
has held that a government official of employees even under the protection of the
Constitution and Civil Service Law that secure him against dismissal without
cause, however meritorious his claim, must file his petition for reinstatement
within one year from the date of dismissal, otherwise it would be barred by
laches. In the present case, Gutierre was dismissed on July 13, 1951. He filed
the present action for reinstatement only on August 28, 1954, that is to say, after
the lapse of more than 3 years. Although we find this to be neither the time nor
occasion for applying the doctrine laid down with respect to government officials
and employees illegally and improperly dismissed, nevertheless, we find that the
plaintiff-appellee was guilty of laches, and that he filed his action too late.

Art. 292. Institution of money claims. – Money claims specified in the

immediately preceding Article shall be filed before the appropriate entity
independently of the criminal action that may be instituted in the proper
courts.

Pending the final determination of the merits of money claims filed with the
appropriate entity, no civil action arising from the same cause of action
shall be filed with any court. This provision shall not apply to employees
compensation case which shall be processed and determined strictly in
accordance with the pertinent provisions of this Code.

Addie Celerian * Amor Venenoso * Draei Dumalanta * Ellan Cipriano * Ingrid Prado * Mary Ang * Rica Casiquin * Sam Santos