FAC FORTIA ET PATERE

LABOR LAW REVIEW • What is a federation?

o An umbrella organization – a group of local unions forming the
Lecture/recitation notes national level (there are industry unions, ex. Banking unions;
Atty. Marlon Manuel while there are national federation from different industries)
• An independent union is not part of a federation. T or F?
RIGHT TO SELF-ORGANIZATION
o False. An independent union can join a federation, after
independently organizing itself.
• Who can join a union?
• A chartered local is not an affiliate. T or F?
o Anyone, whether for profit or not, and regardless of nature
o True, because it has to be created by the federation. See
(commercial, industrial, charitable, educational, etc.)
below for the types of affiliates.
o Exceptions:
▪ managerial • Can a chartered local register as an independent union while
▪ supervisory – only by themselves within the federation?
o Yes. It becomes an affiliate.
• What is a union?
o There are two types of affiliates:
o See definition
▪ 1. Independent first, then joined federation.
• How do you form a union?
▪ 2. Part of federation, then became independent but
o Identify the bargaining unit
did not leave the union.
o Register the union –
• What can a federation do versus other types?
▪ 20% of members of bargaining unit
o ONLY a federation can create another labor organization.
▪ Constitution and by-laws
o An independent union cannot create another union. A
• If you do not have 20% of the membership of the bargaining unit,
chartered local cannot, as well.
you cannot organize. T or F?
o N.B. A Trade union is not a legitimate labor organization.
o False. You can still have a union, although not a legitimate
• What’s the difference between procedure for acquisition of legal
labor organization.
personality of an independent union and a chartered local?
o You can still receive a charter from a federal union – you do
o Independent union:
not need to meet the 20% requirement to become a chartered
▪ Obtain a certificate of registration
local.
o Chartered local:
o What is the significance of removing the 20% requirement
▪ Issuance of charter certificate – has limited legal
for chartered locals?
personality (to apply for certification election)
▪ Consistent with policy that makes it easier to self-
▪ Do you need submission, or does legal
organize.
personality vest upon issuance of the certificate?
o But why is an independent union still required to have the
20%? Why only make it easier for chartered locals? • Just upon the moment of issuance of charter
▪ You privilege chartered locals. You want unions that certificate. No need for submission or filing.
are attached to parent federations, which already ▪ Why is the personality limited?
have systems and support in place. • Personality is only to apply for certification
election.

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▪ What documents must be submitted?
• 1. Chapter’s officers, addresses, principal
office of the chapter
• 2. Constitution, by-laws
▪ Upon submission, what happens?
• You obtain all rights and privileges of a
legitimate labor organization.
• What’s the reason behind the difference in requirements?
o Note that you need to wait for the certificate for independent
union; while for a chartered local, you just need to submit.
(IMPT!)
o Because you are not encountering an entirely new
organization; the chartered local is merely the creature of an
existing union.
• How do you illustrate “limited legal personality” of a chartered
local?
o They do not possess all the rights of legitimate labor
organizations (which a chartered local becomes after
submission of documents):
▪ Ex. Cannot conduct a strike
• All chartered locals, upon filing for petition for certification
election have limited legal personality. T or F?
o False. Limited legal personality is an option that can be
exercised by a chartered local. Meaning, you can either
acquire full legal personality first before filing for certification
election (by submitting the documents: a) list of officers, b)
constitution and by-laws); or you can do it the “normal way”
and obtain limited legal personality first.
• In the amendment introduced by RA 9481, R&F and supervisors
can be part of the same union. T or F?
o False. Only same federation, not same union.
o RA 9481 removed the prohibition against the joining together
of supervisory and R&F unions in a federation. It overturned
Atlas. This is not in Art. 245, but merely a jurisprudential
prohibition. So they can now mix in the same federation.
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▪ N.B. De La Salle qualified the Atlas doctrine by
providing qualifications (direct professional
relationship between supervisors and R&F, etc.).
▪ So when Atlas was killed, the De La Salle
qualifications also died.
• Did RA 9481 allow comingling between R&F and supervisors?
o Yes. Allow within the same federation, without the
qualifications set in law before.
o But no comingling within union or chartered local, because this
is prohibited by the Labor Code.
o What is the effect of this comingling?
▪ Those not supposed to be part of the union are
deemed to be not included or part of the union.
▪ BUT it is not a ground for cancellation of the
registration of the union. The Labor Code only
provides three grounds for cancellation of a union’s
registration – comingling is not one of these.
▪ N.B. Art 245 speaks of eligibility of employees to
become union members. Even before RA 9481, the
SC clarified that because the LC speaks of “eligibility
of employees” and not “legitimacy of unions.” So it
should not adversely impact the union, just the
employees.
▪ What are these three grounds?
• 1. Misrepresentation, false statement, or
fraud in adoption/ratification of constitution or
by-laws or amendments to such; minutes of
ratification, or list of members taking part in
the ratification
• 2. Misrepresentation, false statement, or
fraud in election of officers, minutes of
election, and list of voters
• 3. Voluntary cancellation
o 2/3 of general membership
o In a meeting duly called for that
purpose
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o Submitted by labor organization’s ▪ Report to Med-Arbiter, who will note it in the minutes.
board, attested by president of org Undergo with normal conduct of elections. But actual
• Can an opposition be filed by another union or party, alleging any exclusion/inclusion only happens after the elections.
of the grounds for cancellation against another union during the ▪ But what if they agree? Can there be removal
filing for certification election? during pre-election?
o No. You cannot attack the validity of an organization • Yes.
collaterally in a procedure for certification election. You have ▪ Normally, what’s the status of the challenged
to directly attack it. names?
o Is this an absolute rule? • They can vote. But the Med-Arbiter decides
▪ No. Wait for this in the part on certification elections. after certification election.
• But how can you exclude them?
Extra questions o You segregate their votes, in
separate envelopes, because their
• What is a trade union? votes are otherwise anonymous.
o It is the “third level.” It is a group of federations. This is why is
• Election proceedings
it not a legitimate labor organization. It’s just a grouping of
o If there are 500 voters, how many must vote for there to be
different federations.
valid elections?
• If a chartered local disaffiliates, does it lose its legal personality? ▪ At least 251.
o Yes. Because its existence is dependent on the federation. o What if there is a failure of election?
The legal personality is “tacked” on the point of creation, which ▪ This happens when there is 50% or less valid votes
is the federation issuing a charter certificate. (Consistent with from the voters in the bargaining unit.
policy of RA 9481 on encouraging membership in federations) ▪ You DON’T have to file another petition. You can just
• What if a petition for cancellation is filed against the federation and request through a motion to repeat the conduct of a
the federation’s personality is indeed cancelled? certification election.
o It also erases the legal personality of all the chartered locals. o What are you voting on?
o OLD EXCEPTION (does not apply anymore… this is missing in ▪ Either you vote for a union (“Union A” or “Union B”), or
the new DO): if there is an existing CBA and the chartered vote for “no union.”
local is the administrator of the CBA, the chartered local will ▪ If there is just one union, it’s “yes” or “no” in favor of
not exist only until after the CBA expires. Union X.
o How do you determine the winner?
BARGAINING AGENT AND CERTIFICATION ELECTION
▪ Get the majority of those who actually voted with valid
votes.
• Pre-election proceedings
▪ What do you mean “valid votes”?
o Includes matters such as exclusion and inclusion of voters
▪ Ex. when there is no employer-employee relationship; • Those which are not spoiled ballots.
when he is not a member of the bargaining unit • For instance, of the 500 voters, 400 voted. 390 are valid votes.
o How do you do undergo inclusion/exclusion? o Union A – 150
o Union B – 200

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o No Union – 40 o N.B. In this situation, even if “no union” got most of the votes,
o Spoiled – 10 ONLY unions can participate in run off elections.
o …Is there a winning Union? • For instance, of the 500 voters, 400 voted. 390 are valid votes.
▪ Yes. Union B got majority of 390 votes (at least 196 o Union A – 150
votes). o Union B – 95
• For instance, of the 500 voters, 400 voted. 390 are valid votes. o No Union – 195
o Union A – 150 o Spoiled – 10
o Union B – 150 o …Is there a winner?
o No Union – 90 ▪ No. Nobody got a majority.
o Spoiled – 10 o Is there a run-off election?
o …Is there a winning Union? ▪ No, because the two unions did not get at least 50%
▪ No. There will be a run-off election. of ALL the votes (200 out of 400).
o What is your basis for determining whether there should o Is there a valid election?
be a union, even if there is no majority? ▪ Yes.
▪ At least 50% of ALL votes, including spoiled ballots, o What is the effect of this particular certification election?
voted for unions, ▪ The one-year bar applies. The certification election
• For instance, of the 500 voters, 400 voted. 390 are valid votes. has ended. It is as if “no union” won.
o Union A – 90 • NOTE: Different base figures based on example:
o Union B – 100 o 500 (for total amount of voters – need 251 for valid elections)
o No Union – 200 o 390 (for majority – need 196 which is 50%+1)
o Spoiled – 10 o 400 (whether there will be a run-off elections – just 50%, not
o …Is there a winner? 50%+1)
▪ Yes. “No Union” won. • For instance, of the 500 voters, 400 voted. 390 are valid votes.
• For instance, of the 500 voters, 400 voted. 390 are valid votes. o Union A – 150
o Union A – 100 o Union B – 95
o Union B – 100 o No Union – 195
o No Union – 190 o CHALLENGED (not spoiled) – 10
o Spoiled – 10 o …what happens here?
o …Is there a winner? ▪ You put Challenged person’s X in one envelope and
▪ No, no choice got the magic number of 196. put his/her name. You put Challenged person’s Y in
o Will there be a run-off? another SEPARATE envelope and put the name.
▪ Yes, because the two unions got 50% of ALL the o Do you open the segregated envelopes immediately after
votes (200 out of 400). (You count the spoiled ballots elections?
in the total, but you don’t care about what their ▪ Only if it will materially affect the result of the
contents are [G’s question]) elections.
o What happens? o In this case, does it apply?
▪ “No union” choice will be removed.

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▪ Yes, because there is no winner and any of those
challenged votes could lead to a winner.
▪ Also, if none of the 10 votes is for “no union” it can
also help the two unions reach 200 votes to enable
run-off elections.
▪ N.B. When they are qualified as valid votes, 196 will
not be the majority number, because the base
number will increase.
o What is the reason why challenged ballots are treated this
way?
▪ So you don’t unduly expose their votes to scrutiny if
there is no need to do so.
• Aside from the one-year bar from certification election, is there any
other bar for certification election?
o 1. Certification election bar <this>
▪ - one year bar
o 2. Contract bar
▪ Wait for the 60-day freedom period before the 5 year
period expires
o 3. Deadlock bar
o 4. Negotiation bar
▪ Once negotiations are started within the 1st year, even
if there is no CBA at the end of the 1-year period, it
bars a subsequent CE
• There is no incumbent EBR. So there was a certification election
(or consent election).
o From the CE, you have 1 year bar. This protects the union that
won the CE, through a one-year protection to give it a chance
to negotiate with the employer as regards a CBA.
o After 1 year, the ideal situation is that there is CBA. This
extends the 1 year period to a 5-year period.
▪ There is a short window period (60 day freedom
period before the expiration of the 5 year term of the
CBA)
o N.B. (very important) – If you don’t have a CBA and you are
nearing the end of the first year, in the past, you need a
deadlock to bar subsequent CE. NOW, there is no more need
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for a CBA or a deadlock, because as long as you have started
negotiations and you have sustained negotiations beyond the
first year, you are still protected.
• What are the two kinds of consent elections?
o If Union A and B decide to have elections without participation
of DOLE, it has no effect of a valid CE. It only determines the
majority.
o But if Union A and B agree to have elections, but involve the
Med-Arbiter and the DOLE, then it has effect of valid CE.
COLLECTIVE BARGAINING
• What is collective bargaining?
o Agreement between employer and employee as to terms of
employment (benefits, conditions of work), and dispute
settlement (ex. grievance machinery).
• How do you start collective bargaining?
o Submission of the EBR to the employer of notice to collectively
bargain, along with proposal
o Then the employer will submit a counterproposal
• What next?
o They will negotiate (do not proceed to the NCMB immediately,
contrary to what the provision of law suggests!). You can meet
several times, over a period, until you have discussed each
provision.
o If you have exhausted all efforts, you will reach a point where
there can be no agreement or movement in the positions of the
parties as to particular provisions.
• What if the employer refuses to respond to the EBR’s proposal?
o There is Unfair Labor Practice – violation of the duty to bargain
collectively.
o It can be submitted to the Labor Arbiter.
o The penalty for management for refusing to bargain – the
proposal becomes the new CBA
• What if you refuse to go to the labor arbiter?
o You can use it as a ground to file a notice of strike.
o You cannot do both. These two remedies are mutually
exclusive.
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• What is the term of the CBA?
o It can be fixed by the parties. It can be 20 years, whatever, but
subject to the five-year period.
o What happens after five years?
▪ There is a freedom period (60-days before the end of
the five years) to possibly hold another CE.
o What happens before the end of the third year?
▪ N.B. Use the term underlined to be precise.
▪ You can renegotiate the economic provisions of the
CBA.
▪ How do you do the renegotiation?
• The terms of the CBA will be reexamined.
• Who will start it?
o The union. You will not expect the
employer to start it.
o The union submits a proposal for
modification. The same
principle/penalty for management
refusing to bargain will apply – the
proposal becomes the new CBA if
management refuses to respond.
• What if the union does not submit a
proposal?
o Then the existing CBA will persist.
o Can the parties renegotiate on the first year? The second
year?
▪ Yes, but only if the parties both agree.
▪ But on the third year, the law mandates bargaining.
• This is valid:
o There is a CBA that covers five years, giving wage increases
for the first, second, and third years, leaving the fourth and fifth
years open.
o Or it can provide for wage increases in years four and five, but
subject to renegotiation.
• A CBA expires after five years. You commence negotiations for a
new CBA. (Alternatively, renegotiations, if the CBA is not yet
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expiring, but after 3 years.) What is the relevance of the six month
period?
o Agreement between the parties on the new CBA will retroact to
the beginning of the first date after expiration, if they agree
within 6 months from expiration.
▪ Here, the law mandates retroactivity.
o If they agree after six months post expiration of the CBA, the
parties will determine when the CBA is deemed to have
commenced.
▪ There can still be retroactivity, but optional.
• Does the six month period apply to mid-term renegotiation period?
o No. The six month period only applies to a new CBA. The
provision only speaks of “expiration” so it must involve a new
CBA.
• If there is no agreement on retroactivity, what must the Secretary
of Labor do after he assumes jurisdiction?
o There is an SC case that says the CBA must retroact to the
first after the end of the six month period. BUT there is no
basis for this. This seems like an invention of the SC.
• In case you have a situation when there is a new CBA entered into
after the six month period and there is no retroactivity. So there is
a gap (ex. 10 months). What happens?
o There is a hold-over principle where the first CBA will be
deemed to exist in the meantime.
o What if there is a four month interim instead?
▪ In the interim, the first CBA will hold-over for the
meantime.
▪ But since there is an agreement within six months, the
new CBA retroacts to replace the effects of the first
CBA. (Ex. “Back pay” of wage differentials)
STRIKES
• How are strikes related to CBA?
o One of the grounds for strike is a bargaining deadlock
• T/F – You cannot strike before negotiation.
o False, you can strike on ULP.
• T/F – You cannot strike before certification election.
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o False. If there is no EBR, an LLO can strike on ULP and LLO.
• T/F – You cannot strike before you register in the DOLE.
o True. Because an LLO has to be registered with DOLE.
• T/F – If you are not an independent union, hence a chartered union,
you cannot strike without having registered with DOLE.
o True. Because the charter certificate only gives your
personality to file for certification.
• T/F – If you are a chartered local, and you submitted all
requirements, can you strike?
o Yes. Upon submission, you have all the rights of an LLO. (No
need to wait for approval)
• When can you strike?
o There are only two. No other:
o 1. ULP
o 2. Deadlock in collective bargaining
• What is ULP?
o Acts of the employer or the labor organization that violate the
right to organize.
o You’re not being paid OT pay. Is this ULP?
▪ No, not in itself. It must be done in order to
discourage membership in a labor organization.
▪ TEST: It must be related to the exercise of an
employee’s right to self-organize.
• Can the employer only commit ULP when there is a union?
o No. [GT: I think, grounds B and F in 247]
• Can ULP be committed only by the employer?
o No. The labor organization can commit it too (248).
• Can there be a strike when there is no union?
o No. There has to be a union.
• What if the temporary work stoppage becomes permanent?
• What is the definition of strike?
o Temporary stoppage of work by concerted action arising from
a labor dispute between employer and employee.
o Requisites?
▪ 1. Temporary stoppage of work
▪ 2. Concert action
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▪ 3. From labor dispute between employer and
employee
o What does concerted action mean?
▪ Group of employees. At least two.
o 10 employees – can there be a valid strike?
▪ As long as initiated by the labor union.
o If not initiated by a labor union, is it still a strike?
▪ Yes, but it’s not a valid strike.
• Is a violation of a CBA an ULP?
o If it amounts to ULP (Economic provision + malice).
o All other violations are just grievances – it’s still an actionable
wrong, but not ULP. You go to the grievance machinery.
o If you strike on the basis of a grievance, what happens?
▪ It is not a valid strike.
• N.B. The distinction between “gross” and simple violations only applies
to violations of the CBA. Do not get confused.
• T/F – If there is no dispute with the employer, there can be no
strike.
o True.
o Is a welga ng bayan a strike?
▪ No. There is no employer-employee dispute. It is a
mere sympathy strike.
▪ It’s a mass action that could lead to possible
dismissal.
o Is it proper to call it an illegal strike?
▪ No. Because it’s not a strike in the first place, so you
don’t even go into the inquiry whether it’s a legal or
illegal strike.
▪ “If it’s not an egg, do not call it a rotten egg. It’s not
an egg.” The SC is guilty of doing this a lot.
▪ Although jurisprudence calls it a “strike.” Be careful.
But in the Bar exam, follow this classification.
• The SC has upheld certain actions by employees, ex. wearing
armbands, having placards as valid expressions. But after the Dusit
case, it seems unclear if these will already be considered as work
stoppage or mass action. (NUWHRAIN Dusit Hotel Nikko Chapter v.
CA, November 11, 2008)
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• There was a case where the employees did not apply for a permit to
strike, but just applied for a mayor’s permit to hold a rally, on the theory
that it is not a strike, but a mass action.
o But the SC held that it is a strike because there is work
stoppage; because they applied for work leaves, and there is a
dispute existing.
• Is a prayer rally a strike?
o No, as long as it does not disrupt the work of those in duty. A
hot tip is to include as well non-members of the union. And it is
no question, valid, if done after work hours. If done during
work hours, do not disrupt.
• T/F – If there is no actual ground for a strike, there is no legal
strike.
o False. You can have a good faith strike, when the union in
good faith believed there is a ground to strike, even if it is
found not to have actually existed.
o There must be actions done by the employer that would justify
the belief that there was ULP committed.
• What do you do?
o 1. File notice to strike stating that you intend to hold a strike on
the stated ground to the Regional Office of the DOLE
▪ *TAKE NOTE of the cooling off period below
▪ What if you don’t have an intended date?
• It’s not required in the IRR.
• So in this case, how do you peg 15 and
30 days?
o [no answer]
o 2. Inform the NCMB (DOLE) at least 24 hours before the strike
vote
▪ This is the second notice. The purpose is to inform
the NCMB and give it a chance to supervise the strike
vote, and give it ample time to deploy personnel
▪ When do you file this?
• Anytime after notice to strike.
▪ Should the union wait for a DOLE representative?
• No, because it is not mandatory.
o 3. Hold strike vote
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▪ It has to be done after filing notice of strike. There is
no specific period.
▪ Majority vote of whom?
• Union members only
• This is different from the eligible voters in a
certification election
▪ Third notice: notice of result of strike vote
o 4. 7 day strike ban
▪ Count this 7-day ban from the time you submitted the
strike-vote results
▪ Can it be counted within the cooling off period?
• It can be wholly within, partly within, or
entirely outside the cooling off period.
• Just use the submission of the results of the
strike-vote as the starting point.
▪ What is the purpose of this?
• Allow DOLE to confirm the results of the
vote, and allow any party to contest the
results.
▪ Can they wait several weeks after to conduct the
actual strike?
• Yes.
• What is the cooling off period?
o At least 30 days before intended date of strike for CBA
deadlock
o At least 15 days for ULP
▪ Exception: No cooling-off period for union-busting,
such as dismissal of union officers who are duly-
elected officers (take note of the “duty elected” part)
▪ Does termination of an appointed officer fall
within this exception?
• No.
o What is the reason for 30 and 15 days?
▪ To give the parties chance to cool-off, in order to
reconcile.
• What if the strike ban is over but the cooling off period is not?
o You cannot strike yet. Wait for the cooling off period to end.
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• What if the cooling off period is done, but the strike ban is not?
o Same. Wait for the strike ban to end.
• How many notices all-in-all do you need for a valid strike?
o Three – notice of strike, notice of conduct of strike vote, notice
of strike vote results
• [Class question] What if the employer commits ULP against the
minority union but the EBR doesn’t strike on behalf of the minority
union. Can the minority strike?
o Sir. MM – Yes they should be able to, based on ULP.
Especially when the EBR is in cahoots with the employer.
o Jurisprudence – No, they cannot.
• Can there be an illegal strike vote?
o No such thing; there is no requirement that should be complied
with.
o But what if there is absence of notice of strike vote?
▪ There is defect in notice, but the strike vote itself is
not illegal.
• After complying with all the four steps, what else do you have to
comply with?
o Cannot perform acts that would render a strike illegal.
o Ex. violence
• What are the prohibited acts of employer?
o Employing strike breakers
o Etc.
• Should the employer wait for a case to be filed in order to fire an
employee who committed an illegal act? Should the employer wait
for a determination that the strike is illegal?
o No. The act is illegal, independent of whether the strike is
illegal or not. So the employer just has to follow the regular
procedure of terminating an employee, independent of any
holding in a case.
• Recent case: statements or charges made by strikers against
management or company were considered illegal activities that would
convert an otherwise valid strike into an illegal strike.
o Ex. Libelous, statements against products or services
o Although general rule is that a strike is a conflict situation, so
the language used is expected to be strong.
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• So when does a strike change from valid to illegal due to the acts
of the strikers?
o It is a factual question. It is case-to-case basis.
o A single or isolated act of violence does not convert. Only if
the violence is pervasive.
• What is assumption of jurisdiction?
o The Secretary will decide the conflict him or herself.
o Without the assumption order, the dispute will not be decided
by government. Patagalan at patigasan. The parties have to
decide the conflict themselves.
• Distinguish from court jurisdiction over a case.
o In assumption, the parties do not initiate it; the Secretary steps
in.
o Is it still an assumption even if a petition is filed?
▪ Yes.
o What happens in an assumption order?
▪ Enjoin pending strike or ongoing strike. Workers have
to return to work or cannot pursue the strike.
• How different is assumption from certification order?
o Assumption: Secretary will decide the case. Certification:
refers the matter to the NLRC. The NLRC will decide the case.
o Both are interventions of government that convert the issue
into a case to be decided upon by the Secretary or NLRC
respectively.
• What are the implications/effects of assumption order?
o Immediately return to work.
o Secretary of Labor issues a Return to Work Order in addition to
the assumption order.
o Can you have an assumption order with a return to work
order? What if there is no return to work order?
▪ The return to work order is automatic with the
assumption order. It is necessarily implied.
Otherwise, it’s a free vacation for the laborers! Steel
Corp. v. SMP
o Go back to status quo ante. The employer must accept the
employees under the same terms and conditions as before.
• To whom do you serve the assumption order?
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o To the union, and to the employer.
o Serve to the president usually, as agent.
• What is the effect of declaration of illegality of a strike? What if the
union officers did not participate in the strike and were reporting
for work, but then the rest of the union were striking?
o Union members will not be terminated, unless they performed
illegal acts during the strike.
o Union officers can be terminated. Even if they did not actually
physically participate in the strike.
o When can you terminate all strikers?
▪ When there is a Return to Work Order and they
refused to comply with it.
▪ And this RWO only happens when there is an
Assumption or Certification.
▪ So mass termination cannot happen in ordinary
strikes – there has to be defiance of RWO, which can
only be issued in an Assumption or Certification
Order.
o Of course, if everyone committed illegal activities, everyone will
be terminated not because of the strike per se, but because of
individual actions, even if the strike per se is legal.
• When is there an award of backwages?
o There is no reward of backwages, even if the strikers win.
• Can employers hire replacement workers?
o Yes, employers can.
• In sum, what are the four grounds to make a strike valid
o 1. Ground
o 2. Procedure
o 3. Conduct
o 4. Compliance with return to work
Employer-employee relationship
• Why is it important to determine EER?
o It determines the legal relationship between the parties, and
their rights and obligations.
• How do you determine whether there is an EER?
o Four-fold test
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▪ 1. Selection and hiring
▪ 2. Payment of wages
▪ 3. Power to dismiss the employee
▪ 4. Control over how the employee performs his
functions
o How do you determine when there is control?
▪ Determine how the employee performs the functions,
not just the end product
▪ There is no control under the EER if the employer just
says the end product or goal
o What about employees working outside the facilities, are
they still under control of the employer?
▪ They still can be under the control of the employer.
Ex. taxi cab drivers.
• Distinguish giving details on the work, supervision on the manner
of doing the work:
o Instructions, no matter how detailed, may not actually indicate
control. If the details pertain to the product itself, then you are
not controlling the work. (Ex. you say that you want a barong
that has gold buttons, long sleeves, made of a certain tela,
etc.)
o If the details pertain to the work itself, there is control.
o N.B. So reporting about collections, or progress of the chair
being construction  these reports are really just about the
end product, and do not indicate control. So even reports do
not always indicate control.
• Should the power be exercised?
o No, need not be. Just as long as it’s available.
o How can you prove it if it’s not exercised?
▪ If there is a written agreement, you can point to
certain provisions.
o What if there is no written contract or any proof of the
instructions given?
▪ Usually you can prove it by the fact that he is within
the company premises. That his presence is
permitted by the school, and he is given an ID, are
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strong indicators. Working in a place controlled by
the employer is a good indicator.
• In the above examples, there are only two parties. But if there are
multiple parties involved and there are multiple suspected
employers, how do you determine who the employer is?
o Control is the strongest factor. For instance, A hires, B fires, C
pays, and D controls. D is the employer.
Contracting arrangement
• What’s a contracting arrangement?
o There are three parties: the principal, the contractor, and the
employee
o There are two contracts – between the principal and
contractor, and the contractor and the employee
• What is the relationship between the principal and the worker?
o The principal is the indirect employer.
o Principle why this is so: the work is always for the principal. It
redounds to his benefit.
▪ N.B. This does not refer to all situations where there
is a complicated process/production line, where
ultimately, what is produced by employer goes to the
principal. For instance, some outsourcing
transactions are not contracting arrangements. Just
take note of this.
• The principal has no liability to the employee is you have a
legitimate contracting arrangement. T/F?
o False. The principal is solidarily liable for failure to pay wages.
• What are the rights of the parties in a legitimate contracting
arrangement?
o The principal is the indirect employer.
o Contractor is the direct employer.
o Employee is, well, the employee.
• In an illegitimate contracting relationship?
o Principal is the direct employer
o Contractor is the agent of the principal
o Employee is still the employee
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• How different are the responsibilities of the principal is the two
relationships?
o Legitimate – principal is solidarily responsible if the employer-
contractor cannot pay the wages due
o Illegitimate – principal is principally liable for the wages
• When is there solidary liability?
o In EITHER contractual arrangement.
o But in the illegitimate contractual arrangement, the solidary
liability is not as important, because they are targeting the
principal usually. But it is wrong to say that the contractor is
not solidarily liable. It is solidarily liable; otherwise it will be in a
better position than the legitimate contractor. But for all intents
and purposes they just go to the principal anyway.
• What is the difference though?
o In legitimate labor contracting, the principal is only liable if the
contractor fails to pay wages.
▪ NOTE: Under Art. 106, the principal is ONLY liable for
failure to pay wages by the contractor for work
performed, but the principal is NOT their employer for
any other purpose. Nothing else. Not even back-
wages stemming from illegal termination.
▪ Note: Under Art. 109, solidary liability is established
between principal and contractor. In 109, there is no
difference between legitimate and illegitimate
contractors, as to solidary liability.
o In illegitimate labor contracting, the principal is employer even
beyond this single circumstance. It is, for all intents and
purposes, just like any other employer. It is liable not just for
payment but for responsibilities of the employer.
o If the illegitimate contractor already paid the wages, is the
principal still liable?
▪ Not anymore, because the principal/employer’s agent
has paid.
• What if there a violation of the Labor Code?
o For legitimate contracting arrangement, the principal is
generally not liable, unless it has participated or connived in
the violation. Remember, the principal is just liable under one
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circumstance: payment of wages for work performed. Nothing

else.
o Take note of Rosewood case, which laid down that there must
be finding of fault in the principal to hold it liable for violation of
Labor Code.
• What is a legitimate contracting arrangement?
o 1. The contractor has sufficient capital
o 2. Employees do not perform work directly related to the
business of the principal
o 3. Contractor has control
• When does it become a labor-only contracting arrangement? Does
it have to violate all three grounds or just one?
o Do not be confused by the structure of the definition in Dept.
Order 18-02. You go back to Art. 100. “One disqualification
out of three” is the more reasonable interpretation.
o For legitimate contractor – you have to meet ALL
requirements.
o For illegitimate – you miss just one, you are illegitimate.
o N.B. In the old rules, there was a definition of an “independent
contractor.” We only have the definition of a labor-only
contractor.
•

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