Labor Panic Booklet2

UP WOMEN IN LAW
For there must be courage in wisdom, grace in strength.
PANIC BOOKLET and QUIZZER

Labor Law and Social Legislation
UP WINLAW Executive Board (2007-2008)

President: Angel Manalaysay
VP-Academics: May Caniba
VP-Externals: Suz Ojeda
VP-Finance: Jan Lee
VP-Internals: Miles Malaya
VP-Publicity: Cha Valdez
4th year Rep: Len Abellar
3rd Year Rep: Weng Salonga
2nd Year Rep: Arianne Reyes
Bar Ops Head: Karra dela Paz
Updated by: Allelu de Jesus

TABLE OF CONTENTS
INTRODUCTION
A. General Principles 6
B. Labor and the Constitution 12
C. Interpretation of Labor Laws 15
LABOR STANDARDS
A. Work Relationship 16
1. Employer-Employee Relationship 16
2. Contracting Arrangements 20
B. Employee Classification 24
1. Regular 24
2. Casual 25
3. Project 26
4. Seasonal 30
5. Fixed Term 30
6. Probationary 31
C. Recruitment and Placement 32
1. Employment Agencies 33
2. Prohibited Entities 33
3. Techniques of Regulation 34
4. Illegal Recruitment 35
D. Alien Employment 38
E. Working Conditions and Rest Periods 38
1. Hours of Work 39
2. Meal Periods 40
3. Rules on Compensable Hours of Work 40
4. Night Shift Differential 42
5. Overtime Work 43
6. Weekly Rest Periods 44
7. Holiday Pay 45
8. Leaves 47
F. Wages 50
1. Payment of Wages 52
2. Prohibition Re Wages 52
3. Other Forms of Remuneration 54
a. Service Charge
b. 13th month pay (PD 851)
c. Bonus
4. Non-Diminution Rule 57
5. Wage Recovery, Liabilities and Worker Preference 58
6. Minimum Wages 62
a. Wage Order 62
b. Wage Distortion 63
G. Special Workers 65
1. Handicapped Workers
2. Learners/ Apprentices
H. Women Workers 68
1. Nightwork Prohibition
2. Prohibited Acts 70
3. Classification of Certain Women Workers 71
4. Anti-Sexual Harassmetn Law (RA 7877) 72
I. Minors 76
J. Househelpers 79
K. Homeworkers 80
L. Termination of Employment 82
1. Termination by Employee (Resignation) 82
2. Termination by Employer 82
a. Substantive Due Process 83
i. Just Causes 83
ii. Authorized Causes 91
iii. Disease 98
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b. Procedural Due Process 99
c. Effect of dismissal without procedural due process
but with cause (Agabon doctrine) 103
d. Effect of Illegal dismissal (i.e., without cause) 104
3. Employment Not Deemed Terminated (Art. 286) 112
M. Retirement 114
LABOR RELATIONS
A. Right to Self-Organization 116
1. Coverage
Workers with right for purposes of collective bargaining 118
i. Government Employees (EO 180; CSC Memo Circular 6)
ii. Supervisory Employees
iii. Aliens
iv. Security Guards
Workers without right for purposes of collective bargaining 121
i. Managerial Employees
ii. Confidential Employees
iii. Workers-Members of a Cooperative
iv. Employees of International Organizations
v. Non-employees
B. Labor Organization 125
1. Labor Organization v. Worker’s Association 126
2. Requirements of Registration 126
a. Independent Labor Organization
b. Federation/ National Union
c. Worker’s Association
3. Grounds for Cancellation of Union Registration 128
4. Rights and Conditions of Membership in a Labor Org 129
a. Political Rights
b. Deliberative and decision-making rights
c. Right to be informed
d. Rights over money matter
i. Valid Levy
ii. Valid Check-off
5. Rights of Legitimate Labor Orgs 133
C. The Appropriate Bargaining Unit 134
D. Union Representation: Establishing Majority Status 135
a. Exclusive Bargaining Agent
b. Selection Sole And Exclusive Bargaining Agent (SEBA) 137
i. Voluntary Recognition by ER
ii. Certification Election (CE)
iii. Consent Election
iv. Run-off Election
c. Certification Election (CE) 138
E. Collective Bargaining 147
a. Procedure 148
b. CBA 148
F. Unfair Labor Practice (ULP) 154
a. ULP of Employers 155
i. Union Security Clause 158
b. ULP of Labor Orgs 161
G. Union Concerted Activities
a. Labor Dispute 162
b. Strike/ Lockout 162
i. Grounds 163
ii. Procedure 164
iii. Assumption of Jurisdiction by the Sec. of Labor/
Certification to NLRC for compulsory arbitration 166
c. Picketing 169
d. Prohibited Activities 169
e. Consequences of Concerted Actions on the Employment Status 170
f. When Is A Strike Illegal 172
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g. Improved Offer Balloting 173
h. Labor Injunction On Labor Disputes 174
SUMMARY OF JURISDICTION
A. Voluntary Arbitrators 176
B. National Conciliation and Mediation Board (NCMB) 178
B. National Labor Relations Commission (NLRC) 178
C. Bureau of Labor Relations (BLR) 180
D. Administration and Enforcement of Labor Laws (Arts. 128 and 129) 182
SOCIAL LEGISLATION
A. Salient Features of Social Security Act (RA 8282) and
Government Service Insurance Act (RA 8291) 187
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GENERAL PRINCIPLES
LABOR LAW—the law governing the rights and duties of the employer and employees:
(1) with respect to the terms and conditions of employment and
(2) with respect to labor disputes arising from collective bargaining respecting such terms and conditions
- labor law is a regulatory device seeking to regulate the relationship between two factors of production – ER (capital) and EE (labor)
LAW CLASSIFICATION
(1) Labor Standards (Books 1, 2, 3, 4 & 6)
- provide minimum terms and conditions of employment, below which it cannot be allowed to fall. (statutory floor)
CASE: Maternity Children’s Hospital v. Sec. of Labor, 1989

 Labor standards are the minimum requirements prescribed by existing laws, rules and regulations relating to wages, hours of
work, cost-of-living allowance, and other monetary and welfare benefits, including occupational safety, and health standards.
(2) Labor Relations (Book 5)

- regulate the institutional relationship between the workers organized into a union and the employers.
(3) Welfare Laws/ Social Legislation (Social Security Act of 1997, RA 8282; Government Service Insurance System of 1997, RA
8291; Employment Compensation and State Insurance Fund; National Health Insurance Act of 1995, RA 7875)
- designed to take care of the contingencies which may affect the workers, e.g., where there is loss of income for reasons beyond
control, i.e., sickness, death, accident, etc.
TEST YOURSELF
Q: Differentiate labor standards law from labor relations law. Are the two mutually exclusive? (1997 Bar Question)
Q: How do the provisions of the law on labor relations interrelate, if at all, with the provisions pertaining to labor standards? (2003 Bar
Question)
Suggested Answer:
Labor relations law focuses its provisions on the collective aspects of employer-employee relationship. Its legal provisions deal with
employees organizing unions and how through these unions, employees are able to have collective bargaining with their employer.
On the other hand, labor standards law focuses on the terms and conditions of employment of employees as individual employees or those
provisions dealing with wages, hours of work and other terms and conditions of employment.
There may be instances when the provisions of labor relations law may interrelate with provisions of labor standards law. Thus, a CBA which
is dealt with in labor relations law may have provisions that improves upon the minimum terms and conditions of employment prescribed in labor
standards law, like a CBA providing for a higher minimum wage, or for the computation of a higher overtime pay or the payment of holiday pay
not only for regular holidays but also for certain special holidays.
TEST YOURSELF
Q: What is the purpose of labor legislation?
Suggested Answer:
There are these state policies and mandates dealing with labor in the 1987 Constitution: (1) the State affirms labor as a primary social
economic force. It shall protect the rights of workers and promote their welfare; (2) the State shall afford full protection to labor, local and
overseas, organized and unorganized. It is the purpose of labor legislation to implement the aforesaid state policies and mandates enunciated in
the Constitution.
Another suggested answer:

The purpose of labor legislation is to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex,
race or creed, and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization,
collective bargaining, security of tenure, and just and humane conditions of work.

Purpose of labor legislation
1. Labor Standards Law- to provide minimum terms and conditions of employment necessary to maintain decent living conditions, safety and
welfare of workers and their families.
2. Labor Relations Law- to regulate the relationships of
a. Employer and employees organized into a union
b. Union and its members
c. State and the unions
d. Unions as institutions
The purpose of labor legislation is social justice, which was defined in Calalang v. Williams as the humanization of laws and the equalization
of social and economic forces by the State so that justice in its rational and objectively secular conception may at least be approximated. (Anflo
Management and Investment Corp et al. v. Bolanio) (2006 Bar Question)
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LAW AND WORKER
CASE: Cebu Royal Plant v Deputy Minister of Labor, 1987
 The SC reaffirmed its concern for the lowly worker who, often at the mercy of his employer must look up to the law for his
protection. Fittingly, the law regards him with tenderness and even favor and always with faith and hope in his capacity to help
in shaping the nation’s future.
MANAGEMENT PREROGATIVE
Rule: Employers are free to regulate, according to their discretion and best judgment, all aspects of employment, including work
assignment, working methods, processes to be followed, working regulations, transfer of employees, work supervision, lay-off
of workers and the discipline, dismissal and recall of workers.
CASES: Great Pacific Employees Union v. Great Pacific Life Assurance, 1999
 (Management) prerogative flowed from the established rule that labor laws do not authorize substitution of judgment of the
employer in the conduct of his business.
Duncan Association etc. v. Glaxo Wellcome Phils, Inc, 2004

 Glaxo’s policy of prohibiting an employee from having a relationship with an employee of a competitor company is a valid
exercise of management prerogative... The challenged company policy does not violate the equal protection clause of the
Constitution... Glaxo does not impose an absolute prohibition against relationships between its employees and those of
competitor companies. What the company merely seeks to avoid is a conflict of interest between the employee and the company
that may arise out of such relationships.
Limitations:
CASES: DOLE Phils. V. Pawis ng Makabayang Obrero, 2003
 The exercise of management prerogative is not unlimited. It is subject to the limitations found in law, a CBA, or the general
principles of fair play and justice.
Great Pacific Employees Union v. Great Pacific Life Assurance, 1999;

Valiao v. CA, 2004
Requisites for valid exercise of management prerogatives:
 The employer can exercise this prerogative without fear of liability so long as:
1. it is done in good faith;
2. for the advancement of his interest; and,
3. not for the purpose of defeating or circumventing the rights of the employees under special laws or valid agreements
QUITCLAIMS
Rule: Quitclaims, waivers or releases are looked upon with disfavor and are commonly frowned upon as contrary to public policy and
ineffective to bar claims for the measure of a worker’s legal rights. (Phil. Employ Services and Resources, Inc. v. Paramio, 2004)
 Deeds of release of quitclaim cannot bar employees from demanding benefits to which they are legally entitled or from contesting
the legality of their dismissal, and their acceptance of those benefits would not amount to estoppel. (EMCO Plywood Corporation
v. Abelgas, 2004)
Requisites for validity of waiver/compromise agreement

1. clear and unequivocal language showing intention of a party to give up a right or benefit w/c legally pertains to him
2. compliance with labor standards, particularly amounts involved in the EE’s money claims
3. relative equality n the bargaining positions of the parties
4. voluntariness, esp. on the part of the EE
CASE: Periquet v. NLRC, 1990

 Not all waivers and quitclaims are invalid as against public policy.
 It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of the
settlement are unconscionable on its face, that the law will step in to annul the questionable transaction.
 Where it is shown that the person making the waiver did so (1) voluntarily, (2) with full understanding of what he was doing,
and (3) the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as valid and binding.
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TEST YOURSELF
Q: Jose applied with Mercure Drug Company for the position of Sales Clerk. Mercure Drug Company maintains a chain of drug stores that are
open everyday till late at night. Jose was informed that he had to work on Sundays and holidays at night as part of the regular course of
employment. He was presented with a contact of employment setting for this compensation on an annual basis with an express waiver of extra
compensation for work on Sundays and holidays, which Jose signed.
Is such a waiver binding on Jose? Explain.
Suggested Answer:
As long as the annual compensation is an amount that is not less than what Jose should receive for all the days that he works, plus the
extra compensation that he should receive for work on his weekly rest days and on special and regular holidays and for night differential pay for
late night work, considering the laws and wage orders providing for minimum wages, and the pertinent provisions of the Labor Code, then the
waiver that Jose signed is binding on him for he is not really waiving any right under the Labor law. It is not contrary to law, morals, good
customs, public order or public policy for an employer and employee to enter into a contract where the employees’ compensation that is agreed
upon already includes all the amounts that he is to receive for overtime work and for work on weekly rest days and holidays and for night
differential pay for late night work..
Alternative Answer:
The waiver of benefits provided for by law is void. Art 6 of the New Civil Code provides that rights may be waived, unless the waiver is
contrary to law, morals, good customs, public order or public policy. (1996 Bar Question)
Q: Can a final and executory judgment be compromised under a “Release and Quitclaim” for a lesser amount?
Suggested Answer:
Yes, as long as the “Release and Quitclaim” is signed by the very same person entitled to receive whatever is to be paid under the final and
executory judgment that was the subject of the compromise agreement and that the “Release and Quitclaim” was signed voluntarily.
In Alba Patio de Makati v. NLRC: A final and executory judgment can no longer be altered, even if the modification is meant to correct what
is perceived to be an erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the court
rendering it or by the highest court of the land. Moreover, a final and executory judgment cannot be negotiated; hence, any act to subvert it is
contemptuous.
It was incumbent upon the counsel for the complainant to have seen to it that the interest of all complainants was protected. The quitclaim
and the release in the preparation of which he assisted clearly worked to the grave disadvantage of the complainants. To render the decision of
this Court meaningless by paying the backwages of the affected EE in a much lesser amount clearly manifested a willful disrespect of the authority
of this Court as the final arbiter of cases brought to it.
Final and executory judgment cannot be compromised under a “Release and Quitclaim” if said “Release and Quitclaim” is clearly to the
grave disadvantage of the affected EEs by paying them much lesser amounts than what they were entitled to receive under the judgment. (See
Alba Patio de Makati vs. NLRC, 201 SCRA 355) (1999 Bar Question)
Q: Can the quitclaim be annulled on the ground of “dire necessity”? Why?
Suggested Answer:
A quitclaim case can be annulled on the ground of its being entered into involuntarily by EEs because of “dire necessity.” Thus, if it was dire
necessity that forced a worker to sign a quitclaim even if the mount of money given to him by the ER was very much less that what the workers
was entitled to receive, then the quitclaim was not voluntary, and thus, the said quitclaim is null and void. In a case (Veloso v. DOLE, 200 SCRA
201) the Supreme Court held that “dire necessity” is not an acceptable ground for annulling the releases, especially since it has not been shown
that the EEs had been forced to execute them. It has not been proven that the considerations for he quitclaims were unconscionably low and
that the petitioners had been tricked into accepting them. (1999 Bar Question)
SOURCES OF LAW
A. The Constitution
B. Statutory Sources (Labor Code, IRR, and related special legislation)
C. Contract – Art. 1305- 1306
D. Collective Bargaining Agreement – like any other contract in civil law which gives rise to obligations between parties
E. Past Practices – practices observed by ERs which grant benefits to EEs, but which are not embodied in law or a formal instrument
Requisites: 1. must have been done over a long period of time and must have been shown to be consistent and deliberate
2. must have been instituted by the ER voluntarily and without compulsion of law
CASES: Davao Fruits Corp. v. Associated Labor Union, 1993

 Benefits being enjoyed by EEs arising from an established company practice favorable to them cannot be diminished,
discontinued, or removed by their ER by virtue of Sec. 10 of the Rules and Regulations Implementing PD 851, and Art. 100,
LC, which prohibit the diminution or elimination by the ER of the EEs’ existing benefits.
American Wire and Cable Daily Rated EEs Union v. American Wire and Cable Co. Inc, 2005
 To be considered regular practice, the giving of the bonus should have been consistent and deliberate. The downtrend in
the grant of the two bonuses over the years demonstrates that there is nothing consistent about it.
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F. Company Policies – written or oral policies of the ER with respect to labor management relations are generally valid and binding
unless contrary to law or are grossly oppressive.
TEST YOURSELF
Q: Little Hands Garment Company. An unorganized manufacturer of children’s apparel with around 1,000 workers suffered losses for the first
time in history when its US and European customers shifted their huge orders to China and Bangladesh. The management informed its EEs that
it could no longer afford to provide transportation shuttle services. Consequently, it announced that a nominal fare would be charged depending
on the distance traveled by the workers availing of the service.
Was the Little Hands Garments Company within its rights to withdraw this benefit which it had unilaterally been providing to its EEs? Select
the best answer(s) and briefly explain your reason(s) therefor.
(a) Yes, because it can withdraw a benefit that is unilaterally given;
(b) Yes, because it is suffering losses for the first time;
(c) Yes, because this is a management prerogative which is not due to any legal or contractual obligation
(d) No, because this amounts to a diminution of benefits which is prohibited by the Labor Code;
(e) No, because it is a fringe benefit that has already ripened into a demandable right or entitlement.
Suggested Answer:
(c) Yes, because this is a management prerogative which is not due to any legal or contractual obligation. The facts of the case do not state
the circumstances through which the shuttle service may be considered as a benefit that ripened into a demandable right. Ther e is no showing
that the benefit has been deliberately and consistently granted, i.e. with the ER’s full consciousness that despite its not being bound by law or
contract to grant it, it just the same granted the benefit.
Another Suggested Answer:

(c) Yes, because this is a management prerogative which is not due to any legal or contractual obligation.
An ER cannot be forced to continue giving a benefit, which is unilaterally given as a management prerogative, when it can no longer afford
to pay for it. To hold otherwise would be to penalize the ER for his past generosity. [Producers Bank of the Phils. V NLRC, 355 SCRA 489 (2001)].

(a) Yes, because it can withdraw a benefit that is unilaterally given. The shuttle service was not payable pursuant to a contract.
In the Manila Bank case, it was held that there is nothing to compel the ER to be liberal and generous to its EEs in granting benefits when
the ER is suffering losses. (2005 Bar Question, similar to a 2002 Bar Question)
Q: XYZ Employees Association filed a complaint against ABC Bank for wrongful diminution of benefits. It alleged that the bank had been providing
for a mid-year bonus equivalent to one-month basic pay and a Christmas bonus equivalent to one-month basic pay since 1971. Upon the
effectivity of Presidential Decree (P.D.) No. 851 in 1975 which granted the 13th month pay, the bank started giving its employees a one-month
basic pay as mid-year bonus, one-month basic pay as Christmas bonus, and one-month basic pay as 13th month pay. In 1980, the bank was
placed under conservatorship and by virtue of a monetary board resolution of the Central Bank, the bank only gave one month basic pay
mandated by P.D. 851, and it no longer gave its employees the traditional mid-year and Christmas bonuses. Could ABC Bank be compelled,
given the circumstances, to continue paying its employees the traditional mid-year and Christmas bonuses in addition to 13th month pay?
Suggested Answer:
No. The grant of a bonus is a prerogative, not an obligation, of the employer. (Traders Royal Bank v. NLRC, 189 SCRA 274 [1990]). The matter
of giving a bonus over and above that which is required by law is entirely dependent on the financial capability of the employer to give it.
(Businessday v. NLRC, 221 SCRA 9 [1993]).
Hence, given the circumstances, ABC Bank cannot be compelled to continue paying its employees the traditional mid-year and Christmas
bonuses in addition to the 13th month pay. (2003 Bar Question)
LABOR AND THE CONSTITUTION

 Constitutional foundations of labor law are found in
 Art. II, Section 10, Section 18
 Art. XIII, Section 3
 7 Cardinal Rights of Workers (SCoPe, THuLiP)
Right to
(1) Self-Organization
(2) Collective Bargaining and negotiations
(3) Peaceful concerted activities including the right to strike in accordance with law
(4) Security of Tenure
(5) Humane conditions of work
(6) Living Wage
(7) Participate in policy and decision-making processes affecting their rights and benefits as may be provided by law
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Q: What are the salient features of the protection to labor provision of the Constitution?
Suggested Answer:
The salient features of the protection to labor provision of the Constitution (Art XIII, Sec 3) are as follows:
1. Extent of Protection- full protection to labor;
2. Coverage of protection- local and overseas, organized and unorganized;
3. Employment policy- full employment and equality of employment opportunities for all;
4. Guarantees
a. Unionism and Method of Determination Conditions of Employment – Right of all workers to self-organization, collective bargaining
and negotiations
b. Concerted Activities- right to engage in peaceful concerted activities, including the right t strike in accordance with law.
c. Working Conditions- Right to security of tenure, humane conditions of work and a living wage.
d. Decision Making Process- Right to participate in policy and decision-making processes affecting their rights and benefits as way to
provided by law.
e. Share in Fruits of Production- Recognition of right of labor to its just share in fruits of production.

The Constitution (in Article XIII, Section 3) provides that the State shall afford protection to labor, local and overseas, organized and
unorganized.
The State shall afford protection to labor by promoting full employment and equality of employment opportunities for all.
Workers are entitled to security of tenure, humane conditions of work and a living wage.
The State shall guarantee the right of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted
activities, including the right to strike, in accordance with law.
Workers shall participate in policy and decision making processes affecting their rights and benefits as may be provided by law.
The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes
in settling labor disputes, including conciliation, and shall enforce mutual compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production
and the right of enterprises to reasonable returns on investment, and to expansion and growth. (1996 Bar Question)
*Related Question
Q: What are the rights of an employer and an employee?
Suggested Answer:
The Constitution in Article XIII, Section provides for the following rights of employers and employee:
A. ER’s Right to a reasonable return on investments, and to expansion and growth.
B. To a just share in the fruits of production;
C. Right to self-organization, collective bargaining and negotiations and peaceful concerted activities, including the right to strike in accordance
with law;
D. To security of tenure, humane conditions of work, and a living wage; and
E. To participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. (1996 Bar Question)
Q: what property right is conferred upon an employee once there is an employer-employee relationship?
Suggested answer:
The right to employment and the right to continue in one’s employment constitute the property right conferred upon an employee once
there is an employer-employee relationship. Thus, the very important constitutional right that “no person may be deprived of life, liberty or
property without due process of law” is violated when an employer terminates the employment of an employee without due proces s of law
because said employment is a property right of the latter.

In Callanta v. NLRC. The Court ruled: “it is a principle in American jurisprudence which, undoubtedly, is well recognized this jurisdiction that
one’s employment, profession, trade or calling is a “property right,” and the wrongful interference therewith is an actionable wrong. The right is
considered to be property within the protection of a constitutional guaranty of due process of law.” (2006 Bar Question)
Nature of Constitutional Provisions

Social Justice and Protection to Labor
- the purpose of the law is to place the workingman on an equal plane with management – with all its power and influence – in negotiating
for the advancement of his interests and the defense of his rights.
CASE: Philippine Airlines, Inc. v. Santos, 1993

 The sympathy of the court is on the side of the laboring classes not only because the Constitution imposes such sympathy, but
because of the one-sided relation between labor and capital. The constitutional mandate for the protection of labor is as explicit
as it is demanding.
Limits of Use
-protection should be equally and evenly extended to all groups as a combined force in our social and economic life
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CASE: PLDT Co, NLRC, 1988
 The policy of social justice is not intended to countenance wrongdoing simply because it is committed by the underprivileged.
 Only those with clean hands and blameless motives may invoke social justice and not merely because they happen to be poor.
Agabon v. NLRC
 The constitutional policy to provide full protection to labor is not meant to be a sword to oppress ERs. The commitment of the
courts to the cause of labor does not prevent them from sustaining the ER when it is in the right.
Q: May social justice as a guiding principle in labor law be so used by the courts in sympathy with the working man if it collides with the equal
protection clause of the Constitution? Explain.
SUGGESTED ANSWER:
Yes. The state is bound under the Constitution to afford full protection to Labor; and when conflicting interests collide an d they are to be
weighed on the scales of social justice, the law should accord more sympathy and compassion to the less privileged workingman. (Fuentes v.
NLRC, 266 SCRA 24 [1997]) However, it should be borne in mind that social justice ceases to be an effective instrument for the “equalization of
the social and economic forces” by the State when it is used to shield wrongdoing. (Corazon Jamer v. NLRC, 278 SCRA 632 [1997])
ANOTHER SUGGESTED ANSWER:

No, social justice as a guiding principle in law may not be used by the courts if it collides with the equal protection clause of the Constitution.
Social justice is not a magic and wand applicable in all circumstances. Not all labor cases will be automatically decided in favor of the worker.
Management of has also rights which are entitled to recognition and protection; justice must be dispensed according to facts and law; and social
justice is not designed to destroy or oppress the employer.

Social justice as a guiding principle in Labor law can be implemented side by side with the equal protection clause of the Constitution.
In the implementation of the principle of social justice, the Constitution commands that the State shall afford protection to labor. Thus Labor
Law may be pro-labor in the sense that labor is given certain benefits not given to management. But this is not necessarily violative of the equal
protection clause of the Constitution because said clause allows reasonable classification. (2003 Bar Question)
INTERPRETATION OF LABOR LAWS

 2 provisions of law govern the interpretation of labor laws:
- Art. 4, Labor Code
- Art. 1702, Civil Code
 Both provisions are of the tenor that labor laws (as well as labor contracts) should be liberally construed in favor of labor
Q: What is the concept of liberal approach in interpreting the Labor Code and its Implementing Rules and Regulations in favor of labor?
Suggested answer:
In carrying out and interpreting the Labor Code’s provisions and its implementing regulations, the workingman’s welfare should be the
primordial and paramount consideration, this kind of interpretation gives meaning and substance to the liberal and compassionate spirit of the
law as provided in Art 4, LC, as amended, which states that “ all doubts in the implementation and interpretation of the provisions of the Labor
Code including its implementing rules and regulations shall be resolved in favor of labor,” as well as the Constitutional man date that the State
shall afford full protection to labor and promote full employment opportunities for all. (PLDT v. NLRC) (2006 Bar Question)
LABOR STANDARDS
Part 1
WORK RELATIONSHIP
Employer— includes any person acting directly or indirectly in the interest of an employer in relation to an employee [Art.97 (b)]
Employee— includes any individual employed by an employer. [Art. 97 (c)]

Also, it includes any individual whose work has ceased as a result of or in connection with any current labor dispute or because
of any ULP if he has not obtained any other substantially equivalent and regular employment. [Art. 212 (f)]
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EMPLOYER-EMPLOYEE RELATIONSHIP
 The existence of an employer-employees relation is a question of law and being such, it cannot be made the subject of
agreement. (Tabas v. California Manufacturing Co. 1990)
 It has long been established that in administrative and quasi-judicial proceedings, substantial evidence is sufficient as a basis
for judgment on the existence of employer-employee relationship. No particular form of evidence is required to prove the
existence of such. (Domasig v NLRC, 1996)
Jurisprudential Tests
(1) Four-fold Test
(a) Does the ER have the power over the selection and engagement of the EE?
(b) Does the ER pay wages?
(c) Does the ER have the power to discipline and dismiss the EE?
(d) Does the ER have control over the EE’s conduct? (Control Test)
i. control over both the results to be achieved and the means to be used to achieve such results
ii. does not require the actual exercise of control but only the mere existence of the right to control
 The so-called “control test” is the most important element… The greater the supervision and control the hirer exercises, the
more likely the worker is deemed an employee. The less control the hirer exercise, the more likely the worker is considered an
independent contractor. Applying the control test, Sonza is not an employee but an independent contractor. ABS-CBN did not
exercise control over the means and methods of performance of Sonza’s work. (Sonza v. ABS-CBN Broadcasting Corp., 2004)
(2) Economic Relations Test

- In addition to the standard right of control, the existing economic conditions prevailing between the parties, like the inclusion
of the EE in the payrolls, had been considered in determining the existence of ER-EE relations. (Sevilla v. CA, 1988)
-Rationale: The application of a strict test such as the four-fold test may result in the mischief of an injustice to the EE.
TEST YOURSELF
Q: Metro Grocery Inc. arranged with Mr. Juan Dado, a Barangay Chairman, to provide the grocery with workers who will work as cashiers, bag
boys, shelf counter helpers and sanitation workers. The grocery will pay Mr. Dado an amount equivalent to the direct and hidd en costs of the
wages of each worker assigned, plus 10% to cover the administrative costs related to their arrangement. Mr. Dao, in turn, will pay directly the
workers their wages. As far as the workers are concerned, Mr. Dado is their employer. A group of concerned workers consulted you if Mr. Dado
is really under the law their law their employer.
a. How will you analyze the problem in order to formulate your answer?
b. What is the legal significance, if any, of the question of the concerned workers as to who is their employer?
Suggested answer:
I will analyze the problem by applying four-fold test of employer-employee relationship. I will examine if Mr. Dado exercises power of control
or supervision over the worker’s manner and method of doing their work. Control is the most important factor in examining employer-employee
relationship. The other factors are hiring, payment of wages, and power to dismiss. I will also examine whether there was job co ntracting or
labor-only contracting.

My analytical framework will be an analysis of the law on independent contractor and labor only contracting.
If there is a valid independent contractor situation, Mr. Dado will be the direct employer, and the Metro Grocery will be the indirect employer.
If there is a labor—contractor only relationship, the Metro Grocery will be the employer as it directly hired the employees.
The legal significance is the determination of employer-employee relationship, which gives rise to certain to certain obligations of both
employer and employee, such as SSS membership, union membership, security of tenure, etc. (2000 Bar Question)
* Related Question:
Q: When does an employer-employee relationship exist? (1996 Bar Question)
Q: Ruben Padilla entered into a written agreement with Gomburza College to work for the latter in exchange for the privilege of studying in said
institution. Ruben’s work was confined to keeping clean the lavatory facilities of the school. One school day, Ruben got into a fistfight with a
classmate, Victor Monteverde, as a result of which the latter sustained a fractured arm.
Victor Monteverde filed a civil case for damages against Ruben Padilla, impleading Gomburza College due to the latter’s alleged liabilities as
employer of Ruben Padilla.
Under the circumstances, could Gomburza College be held liable by Victor Monteverde as an employer of Ruben Padilla?
Answer:
Gomburza College is not liable for the acts of Ruben Padilla because there is no employer-employee relationship between them. As provided
in the Rules and Regulations implementing the Labor Code “there is no employer-employee relationship between students on one hand, and
schools, colleges, or universities on the other, where students work with the latter in exchange for the privilege or study free of charge, provided
the students are given real opportunity including such facilities as may be reasonable and necessary to finish their chose courses under such
arrangements.”
Page 11 of 107
Alternative Answer:
Gomburza College can be held liable by Victor Monteverde as an employer of Ruben Padilla.
Applying the control test, the College is the employer of Padilla because in the latter’s work of keeping clean the lavatory facilities of the
school, he is under the control of the College as regards his employment.
However, Ruben Padilla was not acting within is assigned tasks. Art 2180, CC provides: “The obligation imposed by Art. 2176 (Quasi-delicts)
is demandable xxx (also from) employers (who) shall be liable for the damages caused by their employees xxx acting within the scope of their
assigned tasks, even though the former are not engaged in any business or industry.” It could be argued that Ruben Padilla was not acting
within the scope of his assigned tasks; thus, his employer, Gomburza College is not liable. (1997 Bar Question)
Q: TRX, a local shipping firm, maintains a fleet of motorized boats plying the island barangays of AP, a coastal town. At day’s end the boat
operators/crew members turn over to the boat owner their cash collections from cargo fees and passenger fares, less the expen ses for diesel,
fuel, food, landing fees and spare parts.
Fifty percent (50%) of the monthly income or earnings derived from the operations of the boats are given to the boatmen by way of
compensation. Deducted from the individual shares of the boatmen are their cash advance and peso value of their absences, if any.
Are these boatmen entitled to overtime pay, holiday pay, and 13 th month pay?
Suggested Answer:
If the boatmen are considered employees, like the jeepney drivers paid on a boundary system, the boatmen are not entitled to overtime
and holiday pay because they are workers who are paid by results. Said workers, under the Labor Code are not entitled to overtime and holiday
pay.
In accordance with the Rules and Regulations implementing the 13 th month pay law, however, the boatmen are entitled to the 13 th month
pay.

No. The arrangement between the boat owner and the boat operators/crew members partook of the nature or a joint venture. The boatmen
did not receive fixed compensation as they shared only in the cash collections from cargo fees and passenger fares, less expenses for fuel, food,
landing fees and spare parts. It appears that there was neither right of control nor actual exercise of such right on the part of the boat owner
over the boatmen. It is clear that there was no employer-employee relationship between the boat owner and the boatmen. As such, these
boatmen are not entitled to overtime pay, holiday pay and 13 th month pay. (2004 Bar Question)
Q: Pandoy, an electronics technician, worked within the premises of perfect Triangle, an auto accessory shop. He filed a complaint for illegal
dismissal, overtime pay and other benefits against Perfect Triangle, which refused to pay his claims on the ground that Pando y was not its EE
but was an independent contractor. It was common practice for shops like Perfect Triangle to collect the service fees from customers and pay
the same to the independent contractors at the end of the week. The auto shop explained that Pandoy was like a partner who worked within its
premises, using parts provided by the shop, but otherwise Pandoy was free to render service I the other auto shops. On the other hand, Pandoy
insisted that he still was entitled to the benefits because he was loyal to Perfect Triangle, it being the fact that he did no work for anyone else.
Is Pandoy correct? Explain briefly.
Suggested Answer:
Pandoy is not correct.
He is not an EE because he does not meet the four fold test for him to be an EE of Perfect Triangle. All that he could claim is: he worked
within the premises of Perfect Triangle. Pandoy was NOT engaged as an EE by Perfect Triangle. He was NOT paid wages by Perfect Triangle.
Perfect Triangle does NOT have the power to dismiss him although Perfect Triangle may not continue to allow him to work within its premises.
And most important of all, Pandoy was NOT under the control of Perfect Triangle as regards the work he performs for customers.
The Supreme Court has ruled: “In stark contrast to the Company’s regular EEs, there are independent, free lance operators who are
permitted by the Company to position themselves proximate to the Company premises. These independent operators are allowed by the Company
to wait on Company customers who would be requiring their services. In exchange for the privileges of favorable recommendation by the
Company and immediate access to the customers in need of their services, these independent operators allow the Company to collect their
service fee from the customer and this fee is given back to the independent operator at the end of the week. In effect they do not earn fixed
wages from the Company as their variable fees are earned by them from the customers of the Company. The Company has no control over and
does not restrict the methodology or means and manner by which these operators perform their work. These operators are not su pervised by
any EE of the Company since the results of their work is controlled by the customers who hire them. Likewise, the Company has no control as
an ER over these operators. They are not subject to the regular hours and days of work and may come and go as they wish. They are not subject
to any disciplinary measures from the Company, save merely for the inherent rules of general behavior and good conduct.” [Ushio Marketing v.
NLRC, 294 SCRA 673 (1998)] (2002 Bar Question)
CONTRACTING ARRANGEMENTS (Arts. 106-109) (DO 18-02 is the present administrative regulation implementing these provisions.
It only enumerates what it prohibits and does not itemize what it allows.)
Prohibited Contracting
 Labor-only contracting
 Arrangements that violate public policy (e.g., contracting with a “cabo”, contracting because of a strike or lockout, contracting
that terminates employment of regular EEs or reducing their working hours, etc)
 Contracting between the principal and the contractor that are exploitative of the contractual workers per Sec. 6 (c) of the DO
Page 12 of 107
Labor-only contracting
Elements:
1. the contractor or subcontractor merely recruits, supplies or place workers to perform a job, work or service for a principal
(essential element), and
2. any of these are present (confirming elements):
(a) - The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service
to be performed and
- the EEs recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly
related to the main business of the principal; or
(b) The contractor does not exercise the right to control over the performance of the work of the contractual EE
Substantial capital or investment— capital stock, tools, equipment, implements, machineries actually and directly used by the
contractor in the performance or completion of the job.
Substantial capital need not be coupled with investment. If one has capital although without investment in tools and
equipment, it is not a labor-only contracting (Neri v. NLRC, 1993)
Control— right to determine not only the end to be achieved but also the means to be used
Legitimate contracting
 The principal agrees to put out the performance or completion of a specific job, work, or service within a definite or
predetermined period, regardless of whether such job, work, or service is to be performed or completed within or outside the
premises of the principal
 Job contractor must be properly registered in accordance with DO 18-02 (if not registered, he is presumed by law as labor-only
contractor)
Q: Distinguish between “job contracting” and “labor-only contracting.”
Answer:
When a person, not being an ER, contracts with an independent contractor for the performance of any work, task, job or project, there is
“job contracting.” When the independent contractor does the work that is contracted out, he is not under the control of the person who contracted
out the work to be done.
In “labor-only contracting”, a person supplies workers to an ER. Said person does not have substantial capital or investments in the form of
tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities
related to the principal business of the ER to whom the workers are supplied. (1997 Bar Question)
Liability
Labor-only Contracting
› principal is directly responsible to the EEs as if such EEs had been directly hired by him
› contractor is merely an agent of the principal hence there is ER-EE relationship between the principal and the EEs
› the law creates an ER-EE relationship between the principal and the EE for a limited purpose – to ensure that EEs are paid
their wages. The principal becomes solidarily liable with the job contractor only for the payment of the EEs’ wages (including
SIL and other benefits provided by law) whenever the contractor fails to pay the same.
Legitimate Contracting
› In legitimate contracting, there exists a trilateral relationship --Parties: principal, contractor/ subcontractor, contractual
workers
› A contract for a specific job exists between the principal and the contractor/ subcontractor and a contract of employment
exists between the contractor and its workers.
› Principal ER and job contractor are solidarily liable for all the rightful claims (includes wages, SIL, other benefits provided
by law, separation pay and backwages in case of illegal dismissal) of the EEs.
› Principal EE may be held solidary liable if found that he conspired with the contractor in the illegal dismissal.
Rights of Contractual EEs

— same with other EEs of the principal or of the contractor/ subcontractor (e.g., SIL, rest day, OT pay, holiday pay, social security
benefits, self-org, collective bargaining, security of tenure)
TEST YOURSELF
Q: Sta. Monica Plywood Corp. entered into a contract with Arnold for the milling of lumber as well as the hauling of waste wood products. The
company provided the equipment and tools because Arnold had neither tools nor capital for the job. Their wages were paid by S ta. Monica
Plywood to Arnold based on their production or the number of workers and the time used in certain areas of work. All work activities and
schedules were fixed by the company.
Page 13 of 107
A. Is Arnold a job contactor? Explain briefly.
B. Who is liable for he claims of the workers hired by Arnold? Explain briefly.
Suggested Answer:
A. No. in two cases decided by the Supreme Court, it was held that there is “job contracting” where (1) the contractor carries on an independent
business and undertakes the contract work in his own account, under his own responsibility according to his own manner and method, free from
the control and direction of is ER or principal in all matters connected with the performance of the work except as to the results thereof; and (2)
the contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials which are
necessary in the conduct of his business. [Lim v. NLRC, 303 SCRA 432 (1999); Baguio v. NLRC, 202 SCRA 465 (1991)].
In the problem given, Arnold did not have sufficient capital or investment for one. For another Arnold was not free from the control and
direction of Sta. Monica Plywood because all work activities and schedules were fixed by the company.
Therefore, Arnold is not a job contractor. He is engaged in labor-only contracting.
B. Sta. Monica Plywood is liable for the claims of the workers hired by Arnold. A finding that Arnold is a labor only contractor is equivalent to
declaring that there exists an ER-EE relationship between Sta. Monica Plywood and workers hired by Arnold. This is so because Arnold is
considered a mere agent of Sta. Monica Plywood Corp. [Lim v. NLRC, 303 SCRA 432, (1999); Baguio et. al. v. NLRC, 202 SCRA 465 (1991)]
(2002 Bar Question)
*Related Questions:
1999 Bar Question – contract bet. security agency and hotel for former to supply the latter with security guards; Answer: apply the four-fold
test
2001 Bar Question – Company X provides Company Y with janitorial services; Answer: considered the fact that Co. Y possesses necessary
capital & equipments
Alternative answer: considered “control test” as the most impt. Factor in determining ER-EE relationship. Apply Traders Royal Bank v.
NLRC (1999) and Religious of the Virgin Mary v. NLRC (1999)
2005 Bar Question – Ms. Vartan is a radio-TV talk show host; argue both sides
Answer: For Network (no ER-EE rel.)- apply Sonza v. ABS-CBN (2004)
For Ms. Vartan (ER-EE rel. exists) – apply Art. 280, LC and the four-fold test
Q: Antonio Antuquin, a security guard, was caught sleeping on the job while on duty at the Yosi Cigarette Factory. As a result, he was dismissed
from employment by the Wagan Security Agency, an independent contractor. At the time of his dismissal, Antonio had been serving as a
watchman on he factory for many years, often at stretches of up to 12 hours, even on Sundays and holidays, without overtime, nighttime and
rest day benefits. He thereafter filed a complaint for illegal dismissal and non-payment of benefits against Yosi Cigarette Factory, which he
claimed was his actual and direct ER.
As the Labor Arbiter assigned to hear the case, how would you correctly resolve the following:
(a) Antonio’s charge of dismissal; and

(b) Antonio’s claim for overtime and other benefits.
Suggested Answer:
(a) This is a case involving permissible job contracting. Antonio’s charge of illegal dismissal against Yosi Cigarette Factory will not prosper.
Wagan Security Agency, an independent contractor, is Antonio’s direct ER. Yosi is only Antonio’s indirect ER (Art 109, LC). By force of law, there
is in reaity no ER-EE relationship between Yosi and Antonio (Baguio, et al. v. NLRC)
(b) Antonio’s claim for overtime and other benefits should be paid by Yosi Cigarette Factory. The Labor Code provides that in the event
that the contractor or subcontractor fails to pay the wages of his EEs, the ER shall be jointly and severally liable to the extent of the work
performed under the contract in the same manner and extent that he is liable to EEs directly employed by his contractor or subcontractor for any
violation of any provision of the Labor Code. (2005 Bar Question)
Q: Clean Manpower Inc. (CMI) had provided janitorial services to the National Economic Development Authority (NEDA) since April 1988. Its
service contract was renewed every three months.. However, in the bidding held on July 1992, CMI was disqualified and excluded. In 1993, six
janitors of CMI formerly assigned to NEDA were impleaded as respondents for failure to comply with NCR Wage Order Nos. 01 an d 02, which
took effect on November 1, 1990 and January 2, 1992, respectively.
Should NEDA, a government agency subject to budgetary constraints, be held liable solidarily with CMI for the payment of salary differentials
due the complainants? Cite the legal basis for your answer.
Suggested Answer:
NEDA shall be held solidarily liable with CMI for the payment of salary differentials due to the complainants. The Labor Code provides that xxx(a)
person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of
any work, task, job or project” xxx “shall be jointly and severally liable with his contractor to such employees (of the contractor) to the extent of
work performed under the contract xxx.” (Arts. 106 and 107, LC) (2004 Bar Question)
Q: Banco de Manila and the Ang Husay Janitorial and Pest Control Agency entered into an Independent Contractor Agreement with th e usual
stipulations; specifically, the absence of ER-EE relationship, and the relief from liability clauses. Can the Bank, as a client, and the Agency, as an
independent contractor, stipulate that no ER-EE relationship exists between the Bank and the EEs of the Agency who may be assigned to work
in the Bank? Reason.
Page 14 of 107
Suggested answer:
They can so stipulate if the relationship is indeed job contracting. Yet the stipulation cannot prevail over the facts and the laws. The existence
of ER-EE relationship is determined by the facts and law and not by stipulation of the parties. (Insular life Assurance Co., Ltd. V. NLRC (1998))

Yes, they can stipulate provided that the contract of independent contractor is valid in accordance with Art 106, LC. (2000 Bar Question)
PART 2
EMPLOYEE CLASSIFICATION
(1) REGULAR
(a) EE engaged to perform activities which are usually necessary and desirable in the usual business or trade of the ER
(Art. 280, 1st par.);
Hacienda Fatima v. National Federation of Sugarcane Workers, 2003

 Primary standard of determining a regular employment is the reasonable connection between the particular activity performed
by the EE in relation to the usual business or trade of the ER.
 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.
 The test is whether it is usually necessary or desirable in the usual business or trade of the ER.
(b) A casual EE who has rendered at least 1 year of service, whether continuous or broken, shall be considered a regular EE with
respect to the activity in w/c he is employed and his employment shall continue while such activity exists (Art. 280, 2nd par.)
› It is not the nature of his work but the passage of time that gives him a regular status.
› IMPT: the one-year period in Art. 280, 2nd par. applies only to casual EEs.
(c) A project or work pool EE who has been:

1. continuously re-hired (as opposed to intermittently) by the same employer, for the same tasks or nature of tasks; and
2. these tasks are vital, necessary and indispensable to the usual business or trade of the ER. (Maraguinot v. NLRC, 1998)
(d) Regular seasonal EEs

Manila v. CIR, 1963; Tacloban Sagkahan Rice, et al v. NLRC, 1990
› Those called to work from time to time
› The nature of their relationship is such that during off-season they are temporarily laid off.
› Strictly speaking, they are not separated from service but are merely considered as on leave of absence without pay until
re-employed.
› Their employment relationship is never severed but only suspended. As such those EEs can be considered as in the
regular employment of the ER.
› they are regular EEs because of the nature of their work and not because of the length of time the have worked
(e) A probationary employee who is allowed to work after the probationary period (Art. 281, last sentence);
(f) All learners who has been allowed or suffered to work during the first 2 months shall be deemed regular EEs if training is
terminated by the ER before the end of the stipulated period through no fault of the learner [Art. 75(d)].
Special Rule for Private School Teachers

UST, et al v. NLRC, (1990),
The ff. are the legal requisites for their acquisition of permanent employment or security of tenure:
1. the teacher is a full-time teacher;
2. the teacher must have rendered 3 consecutive years of service; and
3. such service must have been satisfactory.
(2) CASUAL (Art. 280, 2nd par.)— activity performed is not usually necessary or desirable in the usual business or trade of the ER (not
regular); not project; not seasonal.
› He is uniquely regular because his “regularness” attaches only to the particular activity that he has been doing while still a
casual.
(AM Oreta & Co., Inc v. NLRC, 1989)

 What determines regularity or casualness is not the employment contract, written or otherwise, but the nature of the job. If the
job is usually necessary or desirable to the main business of the ER, then employment is regular.
Page 15 of 107
(3) PROJECT (Art. 280, 1st par.) — those workers hired
(1) for a specific project or undertaking; and
(2) the completion or termination of such project or undertaking has been determined at the time of engagement of the employee.
› the period is not the determining factor, so that even if the period is more than 1 year, employee does not necessarily
become regular
› The 2nd paragraph of Art. 280, providing that an employee, who has rendered service for at least 1 year, shall be considered
a regular employee, pertains to casual employees and not to project employees. (Palomares v. NLRC, 1997)
 Under Policy Instruction No. 20 of the Secretary of Labor, project EEs are those employed in connection with a particular project.
Non-project or regular EEs are those employed without reference to any particular project.
 In Maraguinot v. NLRC (1998), it was held that a project or work pool EE becomes regular when:
(1) continuously re-hired (as opposed to intermittently) by the same ER, for the same tasks or nature of tasks; and
(2) these tasks are vital, necessary and indispensable to the usual business or trade of the ER.
› The length of time during which the EE was continuously rehired is not controlling, but merely serves as a badge of regular
employment.
 An employment ceases to be coterminous with specific projects when the EE is continuously rehired due to the demands of the
ER’s business and re-engaged for many more projects without interruption. (Chua v. CA, 2004)
 BUT in CE Construction Corp v Cioco (2004), it was held that the re-hiring of the construction workers on a project-to-project
basis did not confer upon them regular employment status. The re-hiring was based on practical consideration that experienced
construction workers are more preferred.
Work pool
(Ocampo v. NLRC, 1990)
 It was stressed that contract workers are not regular EEs, their services being needed only when there are projects to be
undertaken.
 The rationale of this rule is that if a project has already been completed, it would be unjust to maintain these EEs in the
payroll while they are doing nothing except waiting for another project.
 In effect, these stand-by workers would be collecting payment for work not done. This can only lead to a coddling of labor
at the expense of management which is not fair by any standard
(Aguilar Corp. v. NLRC, 1997)

 However, members of a work pool from which a construction company draws its project EEs, if considered EEs of the
construction company while in the work pool, are non-project EEs, or EEs for an indefinite period.
 If they are employed in a particular project, the completion of the project or any phase thereof will not mean severance of
the ER-EE relationship.
Q: Distinguish the project employees from regular employees?
Suggested Answer:
A regular EE is one engaged to perform activities which are usually necessary or desirable in the usual business or trade of the ER. On the
other hand, project EE is one whose employment is fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the EE. (Art 280, LC) (1996 Bar Question)
Q: How is a project worker different from a casual or contractual worker? Briefly explain your answer.
Suggested Answer:
A project worker is employed for a specific project or undertaking the completion or termination of which is determined at the time of his
engagement. His work need not be incidental to the business of the ER. His employment may exceed 1 year without necessarily making him a
regular EE.
A casual EE is engaged to perform a job, work, or service which is incidental to the business of the ER; moreover, the definite period of his
employment is made known to him at the time of his engagement. His continued employment after the lapse of 1 year makes him a regular EE.
Under the Social Security Law, employment that is purely casual and not for the purpose of occupation or business of the ER is not under the
coverage of the aforesaid law.
A “project worker”, on the other hand, is a specific term used to designate workers in the construction industry hired to perform a specific
undertaking for a fixed period which is co-terminus with a project or phase thereof determined at the time of the engagement of the EE (policy
Instruction No. 19, DOLE), and it is mandatorily required that a termination report be submitted to the nearest public employment of fice upon
the completion of the constriction project [Aurora Land Projects Corp. v. NLRC, 266 SCRA 48 (Jan. 2, 1997)]. There is no such requirement for
an ordinary contractual worker. (2005 Bar Question)
Q: Asia Security & Investigation Agency (ASIA) executed a one-year contract with the Baron Hotel (Baron) for the former to provide the latter
with 20 security guards to safeguard the persons and belongings of hotel guests, among others. After the expiration of the contract with Asia,
Page 16 of 107
Baron did not renew the same and instead executed another contract for security services with another security agency. Asia placed the affected
security guards on “floating status” on “no work, no pay” basis.
Assuming that ASIA is the ER, is the act of ASIA in placing the security guards on “floating status” lawful? Why?
Suggested Answer:
It is lawful for a private security guard agency to place its security guard on a “floating status” if it has no assignment to give to said security
guards.
But if the security guards are placed on a “floating status” for more than months, the security guards may consider themselves as having
been dismissed. (1999 Bar Question)
Q: A Construction Group hired Engineer A as a Project Engineer in 1987. He was assigned to five successive separate projects. All 5 Contracts of
Employment he signed specified the name of the project, its duration, and the temporary- project nature of the engagement of his services.
Upon completion of the 5th project in August 1998, his services were terminated. He worked for a total of 10 years (1987-1998) in the 5 separate
projects.
Six months after his separation, the Group won a bid for a large construction project. The Group did not engage the services of Engineer A
as a Project Engineer for this new project; instead, it engaged the services of Engineer B. Engineer A claims that by virtue of the nature of his
functions, i.e. Engineer in a Construction Group, and his long years of service he had rendered to the Group, he is a regular EE and not a project
engineer at the time he was first hired. Furthermore, the hiring of Engineer B showed that there is a continuing need for his services.
Is the claim of Engineer A correct?
Suggested answer:
The claim of Engineer A that he is a regular EE and not a project EE is not correct. The Labor Code provides:
“Art 280. Regular and casual employment. –An employment shall be deemed to be regular where the EE has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the ER, except, where the employment has been fixed for a
specific project or undertaking the completion of which has been determined at the time of the engagement of the EE.”
In all the 5 successive contracts of employment of Engineer A, the name of the project, its duration, and the temporary project nature of
the engagement of his services are clearly stated; hence, engineer A falls within the exemption of Art 280.
The Supreme Court has ruled as follows:
Manansag v. NLRC (1993) “The fact that the petitioners worked for several projects of private respondent company is no basis to consider
them as regular EEs. By the very nature of their ER’s business, they will always remain project EEs regardless of the number of projects in which
they have worked.
De Ocampo v. NLRC (1990) “(Project EEs) are not considered regular EEs, their services, being needed only when there are projects to be
undertaken. The rationale for this rule is that if a project has already been completed, it would be unjust to require an ER to maintain them in
the payroll while they are doing absolutely nothing except waiting for another project.

The claim of Engineer A is not correct.
The fact that he has been working for Construction Group for a total of 10 years does not make him a regular EE when it is very clear from
the Contracts of Employment he signed, that he was always being engaged as a project EE.
The tenure of a project EE is co-terminus with the project in connection with which his services were engaged. Thus, after the end of the
project, the ER-EE relationship ceases to exist. Such project employee has no legal right to insist that he should be employed by the Construction
Group for a subsequent project of said Group. (1998 Bar Question)
*Related Questions:
2002 Bar Question – Hired for a 2-year contract for construction. Contract was extended for 9mos. Regular EE?
Answer: Yes, apply Philex Mining Corp. v. NLRC, 312 SCRA 119 (1999) [ER’s duty to inform EE of duration and scope] and Aurora Land
Projects Corp. v. NLRC, 266 SCRA 48 (1997) [re-hiring]
Alternative Ans.: No, A project EE who is hired for a specific project only is not a regular EE notwithstanding an extension of the
project provided that the contract of project employment clearly specifies the project and the duration thereof. [Palomares v. NLRC,
277 SCRA 439 (1997)]
2005 Bar Question – regularization after 1 year applies only to casual EEs
2005 Bar Question (again) – re-hiring: basis for regularization
Q: Tomas and Cruz have been employed for he last 22 years in various capacities on board the ships of BARKO Shipping Company. Their
employment was made through a local manning company. They have signed several 10-month employment contracts with BARKO Shipping. The
NLRC ruled that they were contractual EEs and that their employment was terminated each time their contracts expired. Is the ruling of the NLRC
correct? Explain your answer fully.
Suggested Answer:
Yes. A contract of employment for a definite period terminates by its own terms at the end of such period. Since Tomas and Cruz signed
10-month contracts, their employment terminates by its own terms at the end of each 10-month period.
The decisive determinant in term employment should not be the activities that the EE is called upon to perform but the day certain agreed
upon by the parties for the commencement and termination of their employment relation (not the character of his duties as being “usually
necessary or desirable in the usual business of the ER”).
Page 17 of 107
Stipulation in the employment contracts providing for “term employment” or “fixed period employment” are valid when the period are agreed
upon knowingly and voluntarily by the parties without force, duress, improper pressure exerted on the EE; and when such stipulations were not
designed to circumvent the laws on security of tenure. [Brent School v. Zamora (1990)]
Moreover, in Brent School v. Zamora the Supreme Court stated that Art. 280, LC does not apply to overseas employment.
In Pablo Coyoca v. NLRC, 243 SCRA 190 (1995) the Supreme Court also held that a seafarer is not a regular EE and Filipino seamen are not
governed by the rules and regulations governing overseas employment and the said rules do not provide for separation or termination pay.
From the foregoing cases, it is clear that seafarers are considered contractual EEs. they cannot be considered as regular EEs under Art. 280,
LC. Their employment is governed by the contracts they sign every time they are rehired and their employment is terminated when their contract
expires. Their employment is contractually fixed for a certain period of time. They fall under the exception of Art. 280 whos e employment has
been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of engagement of the
EE or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. We need not
depart from the rulings of this court in the two aforementioned cases which indeed constitute stare decisis with respect to the employment status
of seafarer. [Milares v. NLRC, (2000)]
Therefore, Tomas and Cruz are contractual EEs. The ruling of the NLRC is correct.

No. the ruling of the NLRC is not correct. Such repeated re-hiring, which continued for twenty years cannot but he appreciated as sufficient
evidence of the necessity and indispensability of petitioner’s service to the ER’s trade. Verily, as petitioners had rendered 20 years of service,
performing activities that were necessary and desirable in the trade of the ER, they are, by express provision of Art. 280, LC, considered regular
EEs. [Millares v.NLRC (2000)] (2002 Bar Question)
(4) SEASONAL (Art. 280, 1st par.)— one whose work or services to be performed is seasonal in nature and the employment is for the
duration of the season.
(5) FIXED TERM

— As held in Brent School v. Zamora (1990), it is valid when:
(1) a fixed period of employment was agreed upon knowingly and voluntarily by the parties; or
(2) where it satisfactorily appears that the ER and EE dealt with each other on more or less equal terms with no moral dominance
whatever being exercised by the former over the latter; or
(3) it was not intended to defeat workers’ rights (otherwise, it will not be considered valid where it is apparent that periods have
been imposed to preclude acquisition of tenurial security of employee)
(6) PROBATIONARY (Art. 281)

Gen. Rule: probationary employment should not exceed 6 months
› A probationary EE allowed to work beyond the probationary period is deemed regular even without formal appointment
› Abbreviation of probationary period is allowed since there is no provision prohibiting the same
› Lengthening of period is valid only under the ff. circumstances:
(a) if covered by an apprenticeship agreement stipulating a longer period
(b) voluntary agreement of the parties, esp. when it is a company policy or when the nature of the work requires a longer
period. (Buiser v. Leogardo, 1984) (this is a recognition of the exercise of managerial prerogatives in requiring a longer
period of probationary employment)
(c) the ER gives the EE a second chance to pass the probation standards (Mariwasa Mfg., Inc., v. Leogardo, 1989)
Grounds for Termination

(1) for just or authorized cause; or
(2) when he fails to qualify as a regular EE in accordance with reasonable standards made known by the ER to EE at the
time of his engagement [Orient Express Placement Phils. v. NLRC (1997)]
* The ER is not required to finish the entire period of probation. He may pre-terminate services as long as there is compliance
with the abovementioned grounds.
Q: What limitations, if any, do the law and jurisprudence impose on an ER’s right to terminate the services of a probationary EE? (2001 Bar
Question)
Q: The services of an EE were terminated upon the completion of the probationary period of employment for failure to qualify for the position.
The EE filed a complaint for Illegal Dismissal on the ground that the ER failed to inform him in writing the reasonable standards for regular
employment.
Will the complaint for Illegal Dismissal prosper? (1998 Bar Question)
Suggested answer:
Yes, the Complaint for Illegal Dismissal will prosper. The Labor Code provides:
Art 281. Probationary employment.- xxx The services of an employee who has been engaged on a probationary basis may be terminated
xxx when he fails to qualify as a regular employee in accordance with reasonable standards made known to an employee at the time of his
engagement.
The Supreme Court in A.M. Oreta and Co., inc. v. NLRC (1989), ruled:
Page 18 of 107
“The law is clear to the effect that in all cases involving employees engaged on probationary basis, the employer shall make known to the
employee at the time he is hired, the standards by which he will qualify as a regular employee.”
The failure of the ER to inform the EE of the qualifications for regularization is fatal. The failure violates the rules of fair play which is a
cherished concept in labor law.

The complaint for illegal dismissal will prosper.
The Labor Code (in Art 281) provides that a probationary EE may be terminated when he fails to qualify as a regular EE in accordance with
reasonable standards made known by the ER to the EE at the time of the latter’s engagement. In the question, the probationary EE was not
informed of such reasonable standards at the time he was employed. Thus, if he is to be legally terminated, it should be because of gross and
habitual neglect of duties.
PART 3
RECRUITMENT AND PLACEMENT
RECRUITMENT AND PLACEMENT [Art. 13 (b)]

Basic rule: any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers, and includes referrals,
contact services, promising or advertising for employment, locally or abroad, for profit or not; (mnemonic: CETCHUP includes CRAP)
Proviso: PROVIDED, that any person or entity which, in any manner, offers or promises, for a fee, employment to two or more
persons shall be deemed engaged in recruitment and placement.
Acts No. of Worker Consideration
Basic rule canvassing, enlisting, contracting, transporting, utilizing, At least 1 for profit or not
hiring, or procuring workers, and includes referrals, contact
services, promising or advertising for employment
Proviso offers or promises employment 2 or more for a fee
 The number of persons dealt with is not the basis of determining WON an act constitutes recruitment and placement. Any of the
acts in Art. 13 (b) will constitute recruitment and placement.
 The proviso merely lays down a rule of evidence:

fee + promise or offer of employment + 2 or more persons = individual dealing with them shall be deemed (presumption) engaged
in the act of recruitment and placement. (Ppl v Panis, 1986)
EMPLOYMENT AGENCIES
Document issued
Entity Act by DOLE for
operation
Private fee-charging Engaged in recruitment License
employment agency and placement for a fee [Art. 13(d)]
[Art. 13(c)]
Private recruitment entity Engaged in recruitment Authority
[Art. 13(e)] and placement without [Art. 13(f)]
charging
PROHIBITED ENTITIES
Private recruitment – except as provided in Ch. II, of this title, no person or entity, other than the public employment offices and the
POEA for overseas employment shall engage in the recruitment and placement of workers. (Art. 16)
Ban on direct hiring – No ER may hire a Filipino worker for overseas employment except through the Boards and entities authorized
by the DOLE. Direct hiring by members of the diplomatic service, officials, and EEs of international organizations and such other ERs as
may be allowed by the DOLE is exempt from this provision. (Art. 18)
Travel Agencies prohibited to recruit – Travel agencies and sales agencies of airline companies are prohibited from engaging in the
business of recruitment and placement of workers for overseas employment whether for profit or not. (Art. 26)
Q: Wonder Travel and Tours Agency is a well-known travel agency and an authorized sales agent of the Philippine Air Lines. Since majority of its
passengers are overseas workers, WTTA applied fpor a license for recruitment and placemnt activiuties. It stated in its application that its purpose
is not for profit but to help Filipinos find employment abroad.
Page 19 of 107
Should the application be approved?
Suggested answer:
The application should be disapproved. Despite WTTA’s noble purpose, travel agencies and sales agencies of airline companies are prohibited
form engaging recruitment and placement of workers for overseas employment, whether for profit or not. (Art 26, LC) (2006 Bar Question)
TECHNIQUES OF REGULATION
Licensing
Citizenship requirement – limited to Filipino citizens or Corporations, partnerships or entities 75% of which is Filipino-owned
Q: Is a corporation, 70% of the authorized and voting capital of which is owned and controlled by Filipino citizens, allowed to engage in the
recruitment and placement of workers, locally or overseas? Explain briefly.
Suggested Answer:
No. A corporation, 70% of the authorized and voting capital stock of which is owned and controlled by Filipino citizens cannot be permitted
to participate in the recruitment and placement of workers, locally or overseas, because Art. 27, LC requires at least 75%. (2002 Bar Question)
Capitalization – applicants for authority to hire or renewal of license to recruit are required to have such substantial capitalization
as determined by the Secretary of Labor.
Non-Transferability – no license or authorization may be used, directly or indirectly by any person other than the grantee
- license or authority may not be transferred, conveyed, or assigned
- transfer of business address, appointment or designation of agent, including establishment of additional officers shall be
subject to prior approval of the DOLE.
Q: A Recruitment and Placement Agency declared voluntary bankruptcy. Among its assets is its license to engage in business.
Is the license of the bankrupt agency an asset which can be sold in public auction by the liquidator?
Suggested answer:
No, because of the non-transferability of the license to engage in recruitment and placement.
The Labor Code (in Art 29) provides that no license to engage in recruitment and placement shall be used directly or indirectly by any
person other than the pone in whose favor it was issued nor may such license be transferred, conveyed, or assigned to any o ther person or
entity.
It may be noted that the grant of a license is a governmental act by the DOLE based on personal qualifications, and citizensh ip and
capitalization requirements. (Art 27-28, LC) (1998 Bar Question)
Registration Fees and Bonds – requisites for issuance of license/ authority
Suspension and/or Cancellation – power is lodged in the Secretary of Labor
Q: Concerned Filipino Contract workers in the Middle East reported to the Department of Foreign Affairs (DFA) that XYZ, a private recruitment
and placement agency, is covertly transporting extremists to terrorist training camps abroad. Intelligence agencies of the government allegedly
confirmed the report.
Upon being alerted by the DFA, the Department of Labor and Employment issued orders canceling the licenses of XYZ, and imposing an
immediate travel ban on its recruits to the Middle East. XYZ appealed to the Office of the President to reverse and set aside the DOLE orders,
citing damages from loss of employment of its recruits, and violations of due process including lack of notice and hearing by the DOLE. The
DOLE in its answer claimed the existence of an emergency in the Middle East which required prompt measures to protect the lif e and limb of
OFWs from clear and present danger posed by the ongoing war against terrorism.
Should the DOLE orders be upheld or set aside?
Suggested Answer:
The DOLE order canceling the licenses of XYZ is void because a report that an agency is covertly transporting extremists is not a valid ground
for cancellation of a Certificate of Registration (Art. 239, LC) and there is failure of due process as no hearing was conducted prior to the
cancellation (Art. 238, LC).
The DOLE order imposing the travel ban is valid because it is a valid exercise of police power to protect the national interest (Sec. 3, Art.
XIII, Constitution on full protection to labor safety of the workers) and the rule making authority of the Secretary of Labor (Art. 4, LC; Phil. Assn.
of Service Exporters v. Drilon).

The DOLE orders should be set aside. It is true that the Migrant Workers and Overseas Filipinos Act, particularly its Section 5, could be the
basis of the power of DOLE to effect a ban on the deployment of OFWs by XYZ. If the ban, however, is for the purpose of preventing XYZ from
transporting extremists to terrorist training camps abroad, this is a police and national security problem better dealt with by the police or the
Office of the National Security Adviser.
Page 20 of 107
More importantly, the cancellation of the license of XYZ requires notice and hearing. Absent such notice and hearing, the order of cancellation
of the Secretary of Labor and Employment is null and void because of the denial of due process. (2004 Bar Question)
ILLEGAL RECRUITMENT
Any of these acts constitutes illegal recruitment [Art. 38 of the LC, as amended by Sec. 6, RA 8042 (Migrant Workers and Overseas
Filipinos Act of 1995)]:
 Doer: A non-licensee or non-holder of authority

(a) commission of any of the recruitment activities in Art. 13 (b), LC
 Doer: Whether a non-licensee or non-holder of authority or a licensee or holder of authority

(a) commission of the prohibited practices under Art. 34 of the LC;
(b) failure to deploy its recruits without valid reason;
(c) failure to reimburse documentation and processing expenses incurred by the worker who is not deployed without his fault
Illegal recruitment committed by a syndicate

Elements:
(1) any of the abovementioned acts of illegal recruitment (take note of the doer); and
(2) carried out by a group of 3 or more persons conspiring or confederating with one another.
Illegal recruitment committed in large scale

Elements:
(1) any of the abovementioned acts of illegal recruitment (take note of the doer); and
(2) committed against 3 or more persons individually or as a group.
 Illegal recruitment, when committed by a syndicate or in large scale, shall be considered an offense involving economic sabotage.
Q: What qualifying circumstances will convert “illegal recruitment” to “economic sabotage”, thus subjecting its perpetrator or perpetrators to a
penalty of life imprisonment and a fine of at least P500,000.00?
Suggested answer:
Art. 38(b) of the LC, as amended by RA 8042 (migrant Workers’ Act) provides that illegal recruitment shall be considered an offense involving
economic sabotage if any of the following qualifying circumstances exists”
(a)When illegal recruitment is committed by a syndicate. A syndicate exists when three or more persons conspire or confederate w ith one
another in carrying out any unlawful or illegal transaction, enterprise or scheme;
(b) When illegal recruitment is committed in large scale, as when it is committed against three or more persons individually or as a group.
[People v. Navarra, 352 SCRA 84 (Feb. 19, 2001)]. (2005 & 2002 Bar Questions)
Q: Mayrose Ganda’s application for the renewal of her license to recruit workers for overseas employment was still pending with the POEA.
Nevertheless, she recruited Alma, and her three sisters, Ana, Joan and Mavic for employment as housemaids in Saudi Arabia. Mayrose represented
to the sisters that she had a license to recruit workers for overseas employment. Mayrose also demanded and received P30,000 from each of
them for her service. However, Mayrose’s application for the renewal of her license was denied, and consequently failed to employ the four sisters
in Saudi Arabia.
The sisters charged Mayrose with large scale illegal recruitment. Testifying in her defense, Mayrose declared that she acted in good faith
because she believed that the application for the renewal of her license will be approved. Mayrose adduced in evidence the Affidavits of Desistance
which the four private complainants had executed after the prosecution rested its case. In the said affidavits, they acknowledged the receipt of
the refund by Mayrose of the total amount of 120,000 and indicated that they were no longer interested to pursue the case against Mayrose.
Resolve the case with reasons.
Suggested answer:
Mayrose is still criminally liable for large scale illegal recruitment. Good faith is not a defense in illegal recruitment as defined in Sec. 6, RA
8042. illegal recruitment is malum prohibitum.
Refund of the P120,000 she received does not likewise extinguish her criminal liability. If at all, it satisfies only her civil liability.
The affidavit of desistance, moreover, does not bar Mayrose’s prosecution. The criminal offense is not extinguished by such d esistance.
Besides, affidavit of desistance, as a rule, is frowned upon. (2005 Bar Question)
Venue
A criminal action arising from illegal recruitment shall be filed with the RTC of the province or city where the offense was committed or
where the offended party actually resides at the time of the commission of the offense. (Sec. 9, RA 8042)
Prescriptive period (Sec. 12, RA 8042)

Illegal recruitment: 5 yrs
If involving economic sabotage: 20 yrs
Page 21 of 107
Remittance
Q: Can an overseas worker refuse to remit his earnings to his dependents and deposit the same in the country where he works to gain more
interest? Explain.
Suggested answer:
No. Art 22, LC provides that it shall be mandatory for all Filipino workers abroad to remit a portion of their foreign exchan ge earnings to
their families, dependents and or beneficiaries in the country in accordance with rules and regulations prescribed by the Secretary of Labor and
Employment.

The answer must be qualified. While Art 22, LC provides that it shall be mandatory for all Filipino workers abroad to remit a portion of foreign
exchange earnings to beneficiaries in the Philippines, such an imposition can be implemented “in accordance with rules and regulations prescribed
by the Secretary of Labor.” There are currently no rules issued by the Secretary pertaining to Art 22. There was a mandatory remittance provision
in the 1991 POEA Rules and Regulations, but such provision was deleted in the 2002 POEA Rules and Regulations.
The answer is likewise, “no” if the overseas worker signs an employment contract with a mandatory remittance provision. Such us the case
for seafarers, where the standard practice is to have a provision on mandatory remittance amounting to 80% of their salary.

No. Art 22, LC provides that it shall be mandatory for all Filipino workers abroad to remit a portion of their foreign exchange earnings to
their families, dependents, and/or beneficiaries in the country in accordance with the rules and regulations prescribed by the Secretary of Labor
and Employment.
EO 857 prescribes the percentage of foreign exchange remittance from 50% to 80% of the basic salary, depending on the worker’s kind of
job.
An overseas worker, therefore, cannot refuse to remit the earnings. (2006 Bar Question)
PART 4
ALIEN EMPLOYMENT
ALIEN EMPLOYMENT REGISTRATION CERTIFICATE (AERC)

The ff. should secure AERC:
(1) All foreign nationals seeking admission to the Phils. for the purpose of employment
(2) All nonresident foreign nationals already working in the Phils.
(3) Nonresident foreign nationals admitted to the Phils. on nonworking visas and who wish to seek employment; and
(4) Missionaries or religious workers who intend to engage in gainful employment
 The AERC may be issued after a determination of the non-availability of a person in the Philippines who is competent, able and
willing at the time of the application to perform the services for which the alien is desired. (Art. 40)
PART 5
WORKING CONDITIONS
AND REST PERIODS
Coverage (Art. 82): this Title (Title I: Working Conditions and Rest Periods) shall apply to employees in all establishments and
undertakings whether for profit or not
Exempt:
(1) Government EEs
- These refer only to employees of government agencies, instrumentalities or political subdivisions and of government corps.
that are not incorporated under the Corporation Code
- Those incorporated under the Corp. Code are covered by the LC; and thus, are not exempt
(2) Managerial EEs

- those whose primary duty consists of the management of the establishment in which they are employed
- also, the other officers or members of the managerial staff [cf. definition of managerial EEs in labor relations (Art. 212 (m)]
(3) Members of the employer’s family dependent on him for support
(4) Domestic helpers (cf. Arts. 141-152)
(5) Persons in the personal service of another
(6) Field personnel regularly performing duties away from office

- refer to non-agricultural employees who regularly perform their duties away from the principal place of business and whose
actual hours of work in the field cannot be determined with reasonable certainty
Page 22 of 107
- Field personnel are employees whose time and performance is unsupervised by the employer. (Salazar v. NLRC, 1996)
(7) Workers paid by results, as determined by the Sec. of Labor

- their pay is dependent on the unit of product finished, not on the time spent working
- 2 categories:
(1) those who are paid piece rates which are prescribed in Piece Rate Orders of DOLE (they are not covered by the rules on
hours of work and overtime pay)
(2) those who are paid output rates which are prescribed by the ER and not yet approved by DOLE.
-Piece-rate EEs are entitled to these benefits:

a. Holiday pay
b. Applicable statutory minimum daily rate
c. Night differential pay
d. Service incentive leave
e. Meal and rest periods
f. Overtime pay (conditional)
g. Premium pay (conditional)
h. 13th month pay
i. other benefits granted by law, individual or CBA or company policy
HOURS OF WORK (Arts. 83-84)
Normal Hours—shall not exceed 8 hours
Hours Worked (hence compensable) — shall include:

(1) all time during which an employee is required to be on duty or to be at a prescribed workplace, and
(2) all time during which an employee is suffered or permitted to work
(3) also, rest period of short duration during working hours shall be counted as hours worked
Q: Under what conditions may a “compressed work week” schedule be legally authorized as an exception to the “eight-hour a day” requirement
under the Labor Code?
State your answers and your reasons therefor.
Suggested Answer:
A “compressed work week” schedule may be authorized under the following conditions:
i. The EE voluntarily agrees to it.
ii. There is no diminution in their weekly or monthly take home pay or fringe benefits.
iii. The benefits are more than or at least commensurate or equal to what is due the EEs without the compressed work week.
iv. Overtime pay will be due and demandable when they are required to work on those days which should have ceased to be working days
because of the compressed work week schedule.
v. No strenuous physical exertion or that they are given adequate rest periods.
vi. It must be for a temporary duration as determined by the DOLE. (2005 Bar Question)
MEAL PERIODS (Art. 85)

Rule: ER should give his EEs not less than 60 mins. time-off for regular meals (this is not compensable. Less than a 60-min meal
time is compensable.)
RULES ON COMPENSABLE HOURS OF WORK

(Book III, Rule I of the IRR)
Not compensable
Compensable working time
working time
If waiting is an integral part of
Waiting
the work or the EE is required
Time
or engaged by the ER to wait
If required to remain on call in If EE is not required to
the ER’s premises or close leave word at his home or
EE is on call thereto that he cannot use his with company officials
time effectively for his own where he may be reached
purpose
Attendance If all these conditions are met:
at lectures, 1. attendance is outside of
meetings, the EE’s regular working
training hours;
programs 2. voluntary attendance; and
Page 23 of 107
3. the EE does not perform
any productive work
during such attendance
If meal period of not less than
20 mins. is given by the ER in
the ff. cases:
- Non-manual work or does
not involve strenuous
physical exertion;
- establishment regularly
operates not less than 16
Meal and
hrs/day
rest periods
- actual or impending
emergencies or urgent
work is to be performed on
machineries to avoid
serious loss to ER
- work is necessary to
prevent serious loss of
perishable goods
Rest periods
or coffee If 5-20 mins only
breaks
Q: Lito Kulangkulang and Bong Urongsulong are employed as truck drivers of Line Movers, Inc. Usually, Lito is required by the personnel manager
to just stay at head office after office hours because he could be called to drive the trucks. While at the head office, Lito merely waits in the
manager’s reception room. On the other hand, Bong is allowed to go home after office hours but is required to keep his cellphone on so that he
could be contacted whenever his services as driver become necessary.
Would the hours that Lito and Bong are on call be considered compensable working hours?
Answer:
The hours of Lito and Bong while on call can be considered compensable hours. The applicable rule is: “An EE who is required to remain on
call in the ER’s premises or so close thereto that he cannot use the time effectively and gainfully or his own purpose shall be considered as
working while on call. An EE who is not required to leave word at his home or with company officials where he may be reached is not working
while on call.” Here, Bong is required to stay at the office after office hours so he could be called to drive the cars of the Company. As for Bong,
he is required to keep his cellphone on so that he could be contacted whenever his services as driver are needed. Thus, the waiting time of Lito
and Bong should be considered as compensable hours.
Note: It could be argued that in the case of Bong who is not required to stay in the office but is allowed to go home, if he is not actually
asked by cellphone to report to the office to drive, he can use his time effectively and gainfully to his own purpose, thus, the time that he is at
home may mean that they are not compensable hours. (1997 Bar Question) (*similar question: 2004 Bar Question)
NIGHT SHIFT DIFFERENTIAL (Art. 86)

Rule: not less than 10% of regular wage for every hour of work performed from 10pm-6am*
*If 10pm-6am is overtime work, the 10% should be based on overtime rate
Does not apply to

(1) Government EEs
(2) Retail businesses with less than 5 workers
(3) Domestic helpers
(4) Managerial EEs
(5) Field personnel
Q: A. As a tireman in a gasoline station, open 24 hours a day with only 5 EEs, Game worked from 10:00pm until 7:00am of the following day.
He claims he is entitled to night shift differential. Is he correct? Explain briefly.
B. On orders of his superior, Efren, a high-speed sewing machine technician, worked on May 1, Labor Day. If he worked 8 hours on that
day, how much should he receive if his daily rate is P400?
Suggested Answer:
A. Yes. Under Art. 86, LC, night shift differential shall be paid to every EE for work performed between 10:00 in the evening to 6:00 in the
morning.
Therefore, Goma is entitled to night shift differential for work performed from 10:00pm until 6:00am of the day following, but not from
6:00am to 7:00am of the same day.
Page 24 of 107
Another Suggested answer:
The Omnibus Rules Implementing the Labor Code (in Book III, Rule II dealing with night shift differential) provides that its provisions on
night shift differential shall NOT apply to EE of “retail and service establishments regularly employing not more than five workers.” Because of
this provision, Goma is not entitled to night shift differential because the gasoline station where he works has only 5 EEs.
Suggested Answer:
B. Efren should receive P800. Art. 92, LC provides that the ER may require an EE to work on any regular holiday but such EE shall be paid
a compensation equivalent to twice his regular rate. (2002 Bar Question)
OVERTIME WORK (Arts. 87-89) — work performed beyond 8 hours

Premium rate
Overtime on a
 normal workday - 25% of reg. rate/hr
 holiday/rest day - 30% of holiday/rest day rate/hr
 special day - 30% of rate/hr of a special day
Emergency OT work (Art. 89; Book III, Rule I)

1. country is at war/ national or local emergency
2. necessary to prevent loss of life/ property or in case of imminent danger to public safety
3. urgent work to be performed on machines to avoid serious loss or damage to employer
4. necessary to prevent loss or damage to perishable goods
5. completion of work started before the 8th hour and is necessary to prevent serious obstruction or prejudice to business
6. necessary to avail of favorable weather or environmental condition
Offsetting
 Undertime work on any particular day shall not be offset by overtime work on any other day. (Art. 88)
Q: Danilo Flores applied for the position driver in the motorpool of Gold Company, a multinational corporation. Danilo was informed that he would
frequently be working overtime as e would have to drive for the company’s executives beyond the ordinary 8-hour wok day. He was provided
with a contract of employment wherein he would be paid a monthly rate equivalent to 35 times his daily wage, regular sick and vacation leaves,
5-day leave with pay every month and time off with pay when the company’s executives using the cars do not need Danilo’s service for more
than 8 hours a day, in lieu of overtime.
Are the above provisions of the contract of employment in conformity with, or violative of, the law?
Answer:
Except for the provision that Danilo shall have time off with pay when the company’s executives using the cars do not need Danilo’s service
for more than eight hours a day, in lieu of overtime, the provisions of the contract of employment of Danilo are not violative of any labor law
because they instead improve upon the present provisions of pertinent labor laws.
Thus, the monthly rate equivalent to 35 times daily wage may be sufficient to include overtime pay.
There is no labor law requiring the payment of sick and vacation laves except the provision for five-day service incentive leave in the Labor
Code.
As for the provision in Danilo’s contract of employment that he shall receive time off with pay in lieu of overtime, this violates the provision
of the Labor Code which states that undertime work on any particular day shall not be offset by overtime work on an other day. Permission
given to the employer to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation
required by the Labor Code. (1997 Bar Question) (*Similar Question -- 2003 Bar Question)
Proof
 Entitlement to overtime pay must first be established by proof that said overtime work was actually performed, before an employee
may avail of said benefit. (Lagatic v. NLRC, 1998)
Waiver
 As a rule, the right to overtime pay cannot be waived. The right is intended for the benefit of the laborers and employees. BUT
when the alleged waiver is in consideration of benefits and privileges which may even exceed the overtime pay, the waiver may
be permitted.
Computation
 For purposes of computing overtime and other additional remunerations, the “regular wage” of an EE shall include the cash wage
only, w/o deduction of facilities provided by the ER. (Art. 90)
Q: Socorro is a clerk-typist in the Hospicio de San Jose, a charitable institution dependent for its existence on contributions and donations from
well-wishers. She renders work 11 hours a day but has not been given overtime pay since her place of work is a charitable institution. Is Socorro
entitled to overtime pay? Explain briefly.
Suggested Answer:
Page 25 of 107
Yes. Socorro is entitled to overtime compensation. She does not fall under any of the exceptions to the coverage of Art. 82, under the
provisions of Hours of Work. The Labor Code is equally applicable to non-profit institutions. A covered EE who works beyond 8 hours is entitled
to overtime compensation. (2002 Bar Question)
WEEKLY REST PERIODS (Arts. 91-93)

Rule: not less than 24 consecutive hours after every 6 consecutive normal work days
Premium Pay on a rest day (Art. 93)

Work performed on a
 Scheduled rest day - 30% of reg. wage
 Sundays (only if it is his established rest day; or if he has no reg. - 30% of reg. wage
workdays and rest days)
 Special holiday, not rest day - 30% of reg. wage
 Special holiday and rest day - 50% of reg. wage
For special day: NO WORK, NO PAY
Authorized Work on a Rest day

1. Actual impending emergency
2. Urgent work to be performed on machinery
3. Abnormal pressure of work and ER cannot resort to other measures
4. Prevent loss/ damage to perishable goods
5. Nature of work requires continuous operation
6. Analogous circumstances
Q: A Ladies Dormitory run or managed by a charitable non-profit organization claims that it is exempt from the coverage of the Weekly rest
Period provision of the Labor Code.
Is the claim valid?
Suggested answer:
No. the claim is not valid.
The provisions on weekly rest periods in the Labor Code cover every ER, whether operating for profit or not. (See Art 91, LC) (1998 Bar
Question)
HOLIDAY PAY (Art. 94)

Premium Pay
 If worked - 200% of reg. rate
 If unworked (compare this - 100%
with a special day)
 If also a rest day - 230%
 Double holiday, unworked - 200%

 Double holiday, worked - 300%
Who cannot avail

Those who are not covered (Book III, Rule IV)
 Government employees
 Retail and service establishments employing less than 10 workers
 Domestic helpers and those in the personal service of others
 Managerial employees
 Field personnel
Those who are covered but (Book III, Rule IV)

- are absent without pay on the day preceding the holiday unless he works on the regular holiday
- In case the holiday is preceded by a non-working day or rest day, EEs who are absent on the day preceding that nonworking
day or rest day
Page 26 of 107
Legal/ Regular Holidays (EO 203, Jun 20, 1987)
1. New Year’s Day - Jan 1
2. Holy Thursday - movable date
3. Good Friday - movable date
4. Araw ng Kagitingan - Apr 9
5. Labor Day - May 1
6. Independence Day - Jun 12
7. National Heroes Day - last Sun of Aug
8. Bonifacio Day - Nov 30
9. Christmas Day - Dec 25
10. Rizal Day - Dec 30
Nationwide Special Days

1. All Saints Day - Nov 1
2. Last day of the year - Dec 31
Muslim Holidays
- dates shall be determined by the Office of the President
- Both Muslims and Christians working within the Muslim areas may not report for work on these days.
Q: This year, National Heroes Day (Aug. 25) falls on a Sunday. Sunday is a rest day of Bonifacio whose daily rate is P500.
A. If Bonifacio is required by his ER to work on that day for 8 hours, how much should he be paid for his work? Explain.
B. if he works for 10 hours on that day, how much should he receive for his work? Explain.
Suggested Answer:
A. For working on his scheduled rest day, according to Art. 93 (a) Bonifacio should be paid P500 (his daily rate) plus P150 (30% of his daily
rate = P650. This amount of P650 should be multiplied by 2 = P1,300. This is the amount that Bonifacio as EE working on his scheduled rest day
which is also a regular holiday, should receive. Art. 94(c) of the Labor Code provides that an EE shall be paid a compensation equivalent to twice
his regular rate for work on any regular holiday. The “regular rate” of Bonifacio on May 1, 2002 is with an additional thirty percent because the
day is also his scheduled rest day.
B. P1,300 which is the amount that Bonifacio is to receive for working on May 1, 2002 should be divided by 8 to determine his hourly rate
of P162.50. this hourly rate should be multiplied by 2 (the number of hours he worked overtime). Thus, the amount that Bonifacio is entitled to
receive for his overtime work on May 1, 2002 is P325. (2002 Bar Question)
*Similar Question:
2005 Bar Question: 2 holidays falling on the same day; how much will EE receive?
Answer: If he does not work – 200% of his daily wage
If he works – 400% of his daily wage [Asian Transmission Corp. v. CA, 425 SCRA 478 (2004)
LEAVES
Note: These are the leaves required by law
- Mandatory/ statutory benefits:
 Service Incentive Leave (SIL)
 Paternity Leave and
 Maternity Leave
- The grant of vacation leave (VL) or sick leave (SL) depends on voluntary ER policy or collective bargaining.
(1) Service Incentive Leave (Art. 95)

- 5 days with pay for EEs who has rendered at least 1 year* of service
*1 year = 12 months service, continuous or broken, from time EE started working
 Commutable to its money equivalent if not used at the end of the year (Book III, Rule V, IRR)
 Does not apply to

1. Those who are already enjoying the benefit
2. Those enjoying vacation leave with pay for 5 days
3. Those employed in establishments employing less than 10 EEs
4. Or in establishments exempted by the Sec. of Labor
5. Government EEs
6. Domestic helpers and those in the personal service of another
7. Managerial EEs
Page 27 of 107
8. Field personnel including those in contract basis
(2) Paternity Leave [RA 8187(Jul 8, 1996)]

- 7 days with full pay to married male EEs in the public and private sectors
Conditions for entitlement

1. The claimant, a married male EE, is employed at the time of delivery of his child
- “delivery” shall include childbirth or any miscarriage
2. He is cohabiting with his spouse at the time she gives birth or suffers a miscarriage;
3. He has applied for paternity leave; and
4. His wife has given birth or suffered a miscarriage (available for the first 4 deliveries only)
- “Wife” refers to the woman who is legally married to the male EE
(3) Maternity Leave [Art. 133, as amended by RA 7332 and RA 8282, amending RA 1161 (SSS law)]
- 100% of average daily salary credit for 60 days, or 78 days in case of caesarian delivery
Pre-requisite:
- that the female member has paid at least 3 monthly contributions in the 12-month period preceding the semester of her
childbirth or miscarriage
Conditions
1. The EE notified her ER of her pregnancy and the probable date of childbirth, which notice shall be transmitted to the SSS
2. Full payment shall be advanced by the ER within 30 days from the filing of maternity leave application
3. Payment of daily maternity benefits is a bar to the recovery of sickness benefits for the same period for which daily maternity
benefits have been received
4. Maternity benefits shall be paid only for the first 4 deliveries or miscarriages
5. SSS shall immediately reimburse the ER 100% of the maternity benefits; and
6. ER shall pay damages to SSS if the EE did not have the required contributions having been remitted for her by her ER or if
ER did not notify the SSS of the time of EE’s pregnancy
(4) Vacation Leave and Sick Leave

- depends on voluntary ER policy or on a collective bargaining agreement
- these are voluntary benefits.
Q: Mans Weto had been an EE of Nopolt Assurance Company for the last ten (10) years. His wife of six (6) years died last year. They had
four children. He then fell in love with Jovy, his co-EE, and they got married.
In October this year, Weto’s new wife is expected to give birth to her first child. He has accordingly filed his application for paternity leave,
conformably with the provisions of the Paternity Leave Law which took effect in 1996. The HRD manager of the assurance firm denied his
application, on the ground that Weto had already used up his entitlement under that law. Weto argued that he has a new wife who will be giving
birth for the first time, therefore, his entitlement to paternity leave benefits would begin to run anew.
(a) Whose contention is correct, Weto or the HRD manager?
Suggested Answer:
The contention of Weto is correct. The law provides that every married male is entitled to a paternity leave of seven (7) days for the first
four (4) deliveries of the legitimate spouse with whom he is cohabiting (Sec. 2, RA 8187). Jovy is Weto’s legitimate spouse with whom he is
cohabiting. The fact that Jovy is his second wife and that Weto had 4 children with his first wife is beside the point. The important fact is that
this is the first child of Jovy with Weto. The law did not distinguish and we should therefore not distinguish.
The paternity leave was intended to enable the husband to effectively lend support to his wife in her period of recovery and/or nursing of
the newly-born child (Sec. 3, RA 8187). To deny Weto this benefit would be to defeat the rationale of the law.

The HRD manager is correct. Since it is conceded that Weto earlier availed of four (4) paternity leaves when his first wife gave birth to their
four children, he clearly “already used up his entitlement under the law”. His new wife’s giving birth for the first time would not matter as the
benefit granted to a father “for the first 4 deliveries of the legitimate spouse with whom he is cohabiting”.
(b) Is Jovy entitled to maternity leave benefits?
Suggested Answer:
Yes, if Jovy, as a female EE, has paid at least 3 monthly contributions in the twelve-month period immediately preceding the semester of
her childbirth (Sec. 14-A, RA 1161, as amended); otherwise, she is not entitled to the benefit. (2005 Bar Question)
-o0o0o0o-
Page 28 of 107
Q: Ms. Sara Mira is an unwed mother with three children from three different fathers. In 1999, she became a member of the Social Security
System. In August 2000, she suffered a miscarriage also out of wedlock, and again by a different father. Can Ms. Mira claim maternity benefits
under the Social Security of 1997? Reason.
Suggested answer:
Yes, she can claim maternity benefit. Entitlement thereto is not dependent on the claimant’s being legally married. (Sec 14-A, Social Security
Act of 1997) (2000 Bar Question)
-o0o0o0o-
Q: How many times may a male EE go on Paternity Leave? Can he avail himself of this benefit, for example, 50days after the first delivery by his
wife?
Suggested Answer:
A male EE may go on Paternity Leave up to 4 children. (Sec. 2 , RA 8187) On the question of whether or not he can avail himse lf of this
benefit 50 days after the delivery of his wife, the answer is : Yes, he can because the Rules Implementing Paternity Leave Act says that the
availment should not be later than 60days after the date of delivery. (2002 Bar Question)
PART 6
WAGES
WAGES [Art. 97(f)]

› the remuneration of earnings, however designated,
› capable of being expressed in terms of money,
› whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same,
› which is payable by an ER to an EE under a written or unwritten contract of employment
› for work done or to be done, or for services rendered or to be rendered
› and includes the reasonable value, as determined by the Sec. of Labor, of board and lodging or other facilities customarily
furnished by the ER to the EE.
 “fair reasonable value” shall not include any profit to the ER.
 IRR provides that the Sec. of Labor shall fix the fair and reasonable value of facilities furnished to EEs.
Facilities v. Supplements
Criterion: purpose of the item (not its kind)
Facilities - items of expense necessary for wage-deductible
the EE’s and his family’s
existence and subsistence (such
as board and lodging);
- does not include articles or
services primarily for the benefit
of the ER.
Supplements - extra remuneration or special not wage-deductible
privileges or benefits given to or
received by the laborers over
and above their wages
Legal requirements (before deduction)

(1) Proof must be shown that such facilities are customarily furnished by the trade
(2) Provision of deductible facilities must be voluntarily accepted by the EE
(3) Facilities must be charged at fair and reasonable value
Wages v. Salary (Gaa v CA, 1985)

Distinction important for purposes of Art. 1708 of the New Civil Code (Laborer’s
wages are not subject to execution or attachment except for debts for food,
shelter, clothing, medical attendance)
Wages applies to the compensation for manual labor, skilled or
unskilled, paid at stated times, and measured by the day, week,
month, or season.
indicates considerable pay for a lower and less responsible
character of employment.
Salary denotes a higher degree of employment, or a superior grade of
services, and implies a position of office.
Page 29 of 107
suggestive of a larger and more important service.
Payment by results
- The Secretary of Labor and Employment shall regulate the payment of wages by results including pakyao, piecework, and other
non-time work, n order to ensure the payment of fair and reasonable wage rates, preferably through time and motion studies or
in consultation with representatives of workers’ and ERs’ organizations. (Art. 101, LC)
-
Q: Nemia earns P7.00 for every manicure she does in the barber shop of a friend which has 19 EEs. At times she takes home P175 a day and at
other times she earns nothing. she now claims holiday pay. Is Nemia entitled to this benefit? Explain briefly.
Suggested Answer:
No, Nemia is no entitled to holiday pay.
Art. 82, LC provides that workers who are paid by results are, among others, not entitled to holiday pay. Nemia is a worker who is paid by
results. She earns P7.00 for every manicure she does.

Yes. Nemia is entitled to holiday pay.
The Supreme Court has ruled: “As to the other benefits, namely, holiday pay, premium pay, 13 th month pay, and service incentive leave
which the labor arbiter failed to rule on but which the petitioners prayed for in their complaint, we hold that petitioners are so entitled to these
benefits. 3 factors lead us to conclude that petitioners, although piece rate workers, were regular EEs of private respondents. First as to the
nature of the petitioner’s tasks, their job of repacking snack food as necessary or desirable in the usual business of private respondents, who are
engaged in the manufacture and selling of such food products; second, petitioners worked for private respondents throughout t he year, their
employment not having been dependent on a specific project or season; and third, the length of time that petitioners worked for private
respondents. Thus, while petitioner’s mode of compensation was on a “per piece basis” the status and nature of their employment was that of
regular EEs.”[Labor Congress of the Phils. v. NLRC, 290 SCRA 509 (1998)] (2002 Bar Question)
PAYMENT OF WAGES
Rule (Art 105): Wages shall be paid directly to the workers
Exceptions:
(1) In cases of force majeure (FM), payment to another person with written authority from the EE
(2) In case the EE died, payment to the heirs
› The IRR requires every ER to pay his EEs through payroll which should show the EE’s pay rate, deductions made, and the
amount actually made (Book III, Rule X)
Form (Art 102)

- legal tender only
- other forms, e.g., promissory notes, vouchers, etc., are prohibited even when expressly requested by the EE
EXCEPTIONS (where payment by checks or money order is allowed):
(1) Such manner of payment is customary on the date of effectivity of the LC; or
(2) Necessary because of special circs. as specified in appropriate regulations of the Sec. of Labor
Time (Art. 103)

Rule: wages shall be paid at least once every 2 weeks or twice a month at intervals not exceeding 16 days
Exceptions:
(1) In cases of force majeure (FM), provided that ER shall pay immediately after cessation of FM
(2) The payment of EEs whose tasks cannot be completed in 2 weeks is subject to these conditions:
(a) Payments at intervals not exceeding 16 days, in proportion to the amount of work completed;
(b) Final settlement is made upon completion of the work
Page 30 of 107
Place (Art. 104)
- at or near the place of undertaking EXCEPT if otherwise provided by regulations of the Sec of Labor
- payment of wages through ATMs is now allowed under a labor advisory dated Nov 25, 1996
PROHIBITION RE WAGES
(1) ER shall not interfere with the freedom of any EE to dispose of his wages. (Art. 112)
(2) No ER shall make any deduction except (Art. 113)

a. Where worker is insured and deduction is to recompense ER for the amount he paid as a premium on the insurance
b. For union dues -- where the right to check-off by union has been recognized by ER or individual EE has given written
authorization. [cf. Art. 241 (o)]
c. ER is authorized by law or regulations of Sec. of Labor.
i. EE has due debt to ER (Art. 1706, NCC)
ii. In court awards, wages may be attached for debts incurred for food, shelter, clothing, and medical attendance (Art.
1708, NCC)
iii. Withholding tax
iv. Salary deductions of a member of a legally established cooperative (RA 6398)
v. Deductions for payment to 3rd persons, with written authority of the EE (Book III, Rule VIII, IRR)
vi. Agency fee (Art. 248)
vii. Deductions for value of meals and other facilities
viii. Deductions for loss or damage (Art. 114)
ix. SSS, Medicare, Pag-IBIG premiums.
CASE: (Jardin v NLRC, 2000)

› With regard to the amount deducted for washing of the taxi units, we view the same as not illegal in the context of the
law. We note that after a tour of duty, it is incumbent upon the driver to restore the unit he has driven to the same clean
condition when he took it out. Car washing after a tour of duty is indeed a practice in the taxi industry and is in fact
dictated by fair play. The drivers are not entitled to reimbursement of the washing charges.
(3) No EE shall make deposits to reimburse loss of or damage of tools, materials supplied by the ER except
a. when ER is engaged in such business where deductions or making deposits is a recognized practice
b. when necessary or desirable as determined by the Sec. of Labor. (Art. 114)
(4) No deduction from the deposits for the actual amount of loss or damage unless
a. the EE is shown to be responsible for the loss or damage
b. the EE is given ample opportunity to show cause why deduction should not be made;
c. the amount of deduction is fair and reasonable and shall not exceed the actual loss or damage; and
d. the deduction does not exceed 20% of the EE’s wage in a week. (Art 115; Book III, Rule VIII, IRR)
(5) Withholding any amount from EE’s wages by force, stealth, intimidation, threat etc. (Art. 116)
- The wages must be paid on time and in full.
- Violation of an EE of a company violation is not a valid ground for refusing to pay him his wages. Such violation can be acted
upon in some ways, not by withholding his wages.
(6) Deduction from the wages for the benefit of the ER as consideration of a promise of employment or retention in employment.
(Art. 117)
(7) Refusal of payment of wages and benefits of or to discharge or discriminate an EE who:

 has filed any complaint or instituted any proceeding under this Title (Title II: Wages); or,
 has testified or is about to testify in such proceedings. (Art. 118)
(8) Making any statement, report, or record filed knowing such statement, report or record to be false. (Art. 119)
CASE: South Motorist Enterprises v. Tosoc, 1990
› All employment records of the EEs of an ER shall be kept and maintained in or about the premises of the workplace (i.e.,
the main or branch office or establishment).
› The keeping of the employee's records in another place is prohibited.
OTHER FORMS OF REMUNERATION

(1) Service Charge (Art. 96; Book III, Rule VI, IRR)
 Distribution scheme
for all covered EEs (equally distributed among them,
85%
regardless of position or employment status)
Page 31 of 107
for management (this share may answer for the losses
15%
and breakages, or may be distributed to managers)
 Coverage
Covered ERs: establishments collecting service charges such as hotels, restaurants, lodging houses, casinos, night clubs, etc.,
including those entities operating primarily as private subsidiaries of the Government.
Covered EEs: to all EEs of the covered ERs except those receiving more than P2,000/month
 Frequency of Distributions— not less than once every 2 weeks or twice a month of intervals not exceeding 16 days
 In case service charge is abolished, the share shall be considered integrated in the EEs’ wages.
- basis of the amt to be integrated: ave. monthly share of each EE for the past 12 months immediately preceding the
abolition
 Service charge ≠ Tip

Tips— dependent on the will and generosity of the customer. It is paid by the customer, not the ER. (Ace Navigation Co. Inc.,
v. CA, 2000)
(2) 13th-Month Pay [PD 851; Revised Guidelines on the Implementation of PD 851 (Nov 16, 1987)]
Min. Amt. of 13th-month pay = 1/12 x total basic salary earned within a
calendar year
Basic Salary = includes all remunerations or earnings paid by ER for services

rendered BUT does not include allowances and monetary
benefits which are not considered or integrated as part of the
regular or basic salary, such as cash equivalent of unused
vacation and sick leave credits, OT premium, night differential,
holiday pay, and COLA unless these items are treated as part
of the basic salary by individual or collective agreement,
company practice or policy
Nature
- an additional income based on wage but is not part of the wage
- demandable as a legal obligation
- not computed as additional benefits
Who are entitled

(a) all rank-and-file EEs who worked at least 1 month
(b) those with multiple ERs
(c) EEs paid by results
(d) Private school teachers who have rendered service for at least 1 month
(e) Resigned or separated EEs (proportional)
ERs who are exempted

(a) Government
(b) ERs already paying 13th month pay or its equivalent*
 “its equivalent”
- shall include Christmas bonus, mid-year bonus, cash bonuses and other payments amounting to not less than 1/12
of the basic salary
- but shall not include cash/ stock dividends, COLA, and other allowances regularly enjoyed by EEs.
 If the amount of such benefits less than 1/12 of the EE’s basic salary, ER shall pay the difference.
(c) ERs of household helpers and persons who are in the personal service of another
(d) ERs of those who are paid on commission, boundary, or task basis
Time of payment
- Rule: not later than Dec 24.
- However, ER may give ½ of the 13th-month pay before the opening of the regular schoolyear and the other half on or before
Dec 24. Frequency of payment may be the subject of agreement between the ER and EE
Page 32 of 107
Q: What would be your advice to your client, a manufacturing company, who asks for your legal opinion on whether or not the 13 th Month Pay
Law (PD 851) covers a casual employee who is paid a daily wage?
Suggested answer:
I will advise the manufacturing company to pay the casual employee 13 th Month Pay if such casual employee has worked for at least 1
month during a calendar year.
The law on the 13th Month Pay provides that employees are entitled to the benefits of said law regardless of their designation or employment
status.
The Supreme Court ruled in Jackson Building Condominium Corp. v. NLRC (1995) interpreting PD 851, as follows:
“xxx employees are entitled to the 13 th month pay benefits regardless of their designation and irrespective of the method by which their
wages are paid. (1998 Bar Question)
(3) Bonus— an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employer's
business and made possible the realization of profits. (Luzon Stevedoring Corporation v. CIR 1965)
Nature
- it is not a demandable and enforceable obligation
- it is only a gratuity on the part of the ER
When demandable
- If made a part of the wage or salary or compensation (Luzon Stevedoring Corporation v. CIR 1965)
- WoN a bonus forms part of wages would depend on the circumstances and the conditions for its payment. If it is promised
without any conditions imposed, then it is part of wages. But if it is paid only if profits are realized or if a certain level of
productivity is achieved, it is not part of wages. (PNCC. v. NLRC, 1999)
- Given for a long period of time (Liberation Steamship Co. Inc. v. CIR, 1968)
- Giving of such bonus has been the company's long and regular practice. ( to be considered “regular practice," the giving of the
bonus should have been done over a long period of time, and must be shown to have been consistent and deliberate, per Manila
Electric Co. v. Quisumbing, 1999)
Q: Lita Cruz, a full time professor in San Ildefonso University, is paid on a regular monthly basis. Cruz teaches for a period of ten months n a
schoolyear, excluding the 2 months’ summer break.
During the semestral break, the University did not pay Lit her Emergency Cost of Living Allowance (ECOLA) although she received her regular
salary since the semestral break was allegedly not an integral part of the schoolyear and no teaching service were actually rendered by her. In
short, the University invoked the principle of “no work, no pay.”
Lita Cruz seeks your advice on whether or not she is entitled to receive her ECOLA during her semestral breaks. How would you respond to
the query?
Answer:
There is no longer any law making it the legal obligation of an ER to grant ECOLA. Effective 1981, the mandatory living allowances provided
for in earlier Presidential Decrees were integrated into the basic pay of all covered EEs.
Thus, whether the ECOLA will be paid or not during the semestral break now depends on the provisions of the applicable wage o rder or
contract, which may be a CBA, that may grant said ECOLA.
Alternative Answer:
The “no work, no pay” principle does not apply. The teachers receive their regular salaries during the semestral break. The law granting
ECOLA was designed to augment the income of EEs to enable them to cope with the rising cost of living and inflation. It was enacted pursuant
to the State’s duty to protect labor and to alleviate the plight of workers. To uphold the school’s interpretation of the law would run counter to
the intent of the law and constitution. (University of Pangasinan Faculty Union v. University of Pangasinan, 127 SCRA 691) (1997 Bar Question)
NON-DIMINUTION RULE (Art. 100)— benefits enjoyed by the EEs, at the time of the promulgation of the LC, cannot be taken back
or reduced unilaterally by the ER because the benefits are already part of the employment contract.
Q: Can an employer and employee enter into an agreement reducing or increasing the minimum percentage provided for night differential pay,
overtime pay, and premium pay?
Suggested answer:
An ER and EE can enter into a contract increasing night differential pay, overtime pay, and premium pay benefits, as this is beneficial to the
worker and no fraud or vice of consent could be inferred form it.
An ER and EE could not, however, enter into a contract reducing the minimum pay from the above-stated benefits, as these would be
against public policy and therefore void ab initio. (2006 Bar Question)
Page 33 of 107
WAGE RECOVERY, LIABILITIES, and WORKER PREFERENCE
(1) Principal’s Liabilities under Arts. 106-109
In Labor-only Contracting— the principal is directly responsible to the EEs as if such EEs had been directly hired by him.
- The contractor is merely an agent of the principal hence there is ER-EE relationship between the principal and the EEs
In Legitimate Contracting—in legitimate contracting, there exists a trilateral relationship.

- A contract for a specific job exists between the principal and the contractor/ subcontractor and a contract of employment
exists between the contractor and its workers.
- Parties: principal, contractor/ subcontractor, contractual workers
1. Payment of wages/ money claims of EEs— solidary liability with the contractor “to the extent of the work performed under
the contract”.
- The principal (indirect ER) cannot escape this liability even it has paid the wages of the EEs in accordance with his contract
with the contractor.
- The EEs are not privy to this contract.
- In any case, principal can recover from contractor based on their contract.
2. As to other violations—qualified or limited liability

- if for payment of min. wage, service incentive leave, or other benefits provided by law— solidarily liable with the
contractor, as if he were a direct ER
- if for payment of separation pay, backwages because of illegal dismissal (hence, punitive char.)— contractor is solely
liable, unless principal conspired with the contractor in the commission of illegal dismissal
(2) Worker’s Preference (bankruptcy)

(Art. 110 cf. Arts. 1707, 2241, 2242, 2244, NCC)—
- workers shall enjoy preference as regards their wages and other monetary claims in the event of bankruptcy or liquidation of
an ER’s business.
- Such unpaid wages and monetary claims shall be paid in full before the claims of the government and other creditors may be
paid.
* a declaration of bankruptcy or judicial liquidation must happen before the worker’s preference may be enforced
(DBP v. Sec. of Labor, 1989)

 Article 110 of the Labor Code cannot be viewed in isolation but must be read in relation to the Civil Code scheme on
classification and preference of credits…
 What Art. 110 establishes is not a lien, but a preference of credit in favor of EEs.
 During bankruptcy, insolvency or liquidation proceedings involving the properties of the ER, the EEs have the advantage of
having their unpaid wages satisfied ahead of certain other claims.
Q: Premiere Bank, a banking corporation, being the creditor-mortgagee of XYZ &Co., a garment firm, foreclosed the hypothecated assets of the
latter. Despite the foreclosure, XYZ & Co. continued its business operations. A year later, the bank took possession of the foreclosed property.
The garment firm’s business operations ceased without a declaration of bankruptcy. Jose Gaspar, an employee of XYZ & Co., was dismissed
from employment due to the cessation of business of the firm. He filed a complaint against XYZ & Co. and the bank. The Labo r Arbiter, after
hearing, so found the company liable, as claimed by Jose Gaspar, for separation pay. Premiere Bank was additionally found subsidiarily liable
upon the thesis that the satisfaction of labor benefits due to the employee is superior to the right of a mortgagee of property. Was the Labor
Arbiter correct in his decision?
Suggested Answer:
No. The preference of credits established in Art. 110 of the Labor Code cannot be invoked in the absence of any insolvency proceedings,
declaration of bankruptcy, or judicial liquidation. (DBP v. Santos, 171 SCRA 138 [1989]).

No. What Art. 110 of the Labor Code establishes is not a lien but a preference of credit in favor of the employees. Unlike a lien, a preference of
credit does not create a charge upon any particular property of the debtor.

The Decision of the Labor Arbiter holding the Premiers Bank (as foreclosing mortgagee-creditor) subsidiarily liable for a money obligation of XYZ
& Co. (as mortgagor) to Gaspar, its employee has no legal basis.
1. There is no privity of relationship between the Bank and Gaspar. The relationship, upon which the obligation to pay a sum of money is
based, is between XYZ (the mortgagor) and Gaspar as its employee arising from the Labor Code provision requiring an employer to pay
separation pay, re: other causes of employment.
2. At both times – Labor Arbiter Decision to pay separation pay an foreclose – XYZ & Co. was an existing business entity and neither bankrupt
or in liquidation, although its business operations after the foreclosure ceased.
3. The decision of the Labor Arbiter for XYZ & Co. to pay a sum of money to Gaspar was based on an action in personam, not in rem,
enforceable against any party. (Sundowner Corporation vS. Drilon, 180 SCRA 14 [1989])
Page 34 of 107
4. The reference in the decision to “labor benefits due to an employee is superior to the right of a mortgagee of the property” is misplaced.
The preferential claim rule has no basis and runs contrary to law and jurisprudence. (2003 Bar Question)
*similar to (1999 Bar Question) – see also Peralta v. Republic (1987)
(3) Wage Recovery and Atty’s Fees (Art. 111)— it is unlawful to demand or accept atty’s fees more than 10% of the amt of wages
recovered in proceedings for recovery of wages. (cf. Arts. 128, 129, 217)
Q: An explosion in a mine site resulted in the death of fifty miners. At the time of the accident:
1. the Mining Company has not yet pad the wages, overtime, holiday and rest day compensation of the deceased miners
2. all the deceased miners owed the Miners Cooperative Union sums of money
3. the Mining Company was served by a sheriff Writs of Garnishment of Wages of some of the deceased miners by virtue of final judgments
in several collection suits.
After the accident, the wives, paramours, brothers, sisters and parents of the deceased miners filed their claims for unpaid wages, overtime,
holiday and rest day compensation. The Company has acknowledged its obligations. However, it is in a quandary as to how to adjudicate the
conflicting claims; and whether it can deduct from the monies due the miners their unpaid debts with the credit union.
How will you advise the mining company on the following:
1. Can the Mining Company defer payment of the money claims until an appropriate court has ruled on the conflicting claims?
2. Can the Mining Company deduct from the amount due to each miner an amount equivalent to their debt and remit the same to the Credit
Union?
Suggested answer:
1. I will advise the Mining Company to pay to the respective heirs of the deceased miners whatever were the unpaid wages, overtime, holiday
and rest day compensation of said deceased miners without necessity of intestate proceedings. The claimants, if they are all of age, shall
execute an affidavit attesting to their relationship to the deceased and the fact that they are his heirs, to the exclusion of all other persons.
If any of the heirs is a minor, the affidavit shall be executed on his behalf by his natural guardian or next of kin. The aff idavit shall be
presented to the employer who shall make payment through the Secretary of Labor or his representative. The representative of the secretary
of Labor shall act as referee in dividing the amount paid among the heirs. (see Art 105 (b), LC)
2. I will advise the Mining Company not to deduct from the amount due to each miner the amount equivalent to his debt to the Credit Union.
The debt of a deceased worker to the Credit Union is not one of the allowable deductions under the Labor Code, or any rules and regulations
of the DOLE. (see Art 113, LC)

Yes, if pursuant to CBA provision or authorized by the worker in writing; otherwise, no. (1998 Bar Question)
Attorney’s Fees
“A”, an employee sued company “B” for unfair labor practice, illegal dismissal and damages as a consequence thereof. The Arbiter granted
A’s prayer for reinstatement, backwages and included an award for attorney’s fees. On appeal to the NLRC, the Commission affirmed the Arbiter’s
decision but delete the award for attorney’s fees since fees were not claimed in A’s complaint.
1. Who was correct, the Arbiter or the NLRC? Why?
Suggested answer:
The NLRC was correct in deleting the award for attorney’s fees if an employee did not include the attorney’s fees among his claims and,
therefore, did not give any evidence to support the payment of attorney’s fees.

The decision of the Arbiter to award attorney’s fees even if the same is not claimed is correct. Art 2208 of the New Civil Co de allows the
award of attorney’s fees when the defendant’s act or omission has compelled the plaintiff to litigate or incur expenses to protect his interest.
Attorney’s fees may be considered as a part of an equitable relief awarded in the concept of damages.
2. Would your answer be different if the attorney’s fees awarded by the Arbiter was over 15% of the total award? Why?
Suggested answer:
An award of attorney’s fees which is over 15% of the total award is not in conformity with the provision of the Labor Code (Art 111(a)) that
in cases of unlawful withholding of wages, the culpable party may be assessed attorney’s fees equivalent to 10% of the amount of wages
recovered.
Q: May the Labor Arbiter, NLRC or Court of Appeals validly award attorney’s fees in favor of complainant even if not claimed or proven in the
proceedings.
Suggested answer:
A Labor Arbiter, NLRC, and Court of Appeals may validly award attorney’s fees in favor of a complainant only if the claimant claimed and
proved that he is entitled to attorney’s fees.
Page 35 of 107
Art 2208 of the New Civil Code allows the award of attorney’s fees when the defendant’s act or omission has compelled the plaintiff to
litigate or incur expenses to protect his interest. Attorney’s fees may be considered as a part of an equitable relief awarded in the concept of
damages. (2001 Bar Question)
MINIMUM WAGES
Agencies for wage-fixing machinery (Arts. 120, 121, 122)
(1) National Wages and Productivity Commission (NWPC)
(2) Regional Tripartite Wages and Productivity Board (RTWPB)
 No injunction or TRO may be issued against any proceedings before the NWPC or RTWB. (Art. 126)
Per Nasipit Lumber Co. v. NLRC (1998)

NWPC power to prescribe the rules and guidelines for the determination of
minimum wage and productivity measures
RTWPB the power to issue wage orders under, subject to guidelines issued by
the Commission [Article 122 (b)] (hence, guidelines issued by RTWPB
without approval of NWPC are ineffectual)
In short, the NWPC lays down the guidelines which the RTWPB implements.
Wage Order (Art. 123-127)

Requirements of a valid wage order:
(1) public hearings/ consultations conducted by the RTWPB
(2) newspaper publication
* A wage order without following these requirements is null and void. (Cagayan Sugar Milling Co. v. Sec of Labor, 1998)
 No wage order shall provide for wage rates lower than the statutory minimum wage rates prescribed by Congress (Art. 127) and no
wage order shall prevent workers from bargaining for higher wages with their ERs. (Art. 125)
Remedy of aggrieved party (Art. 123): appeal to NWPC within 10 calendar days from publication of wage order.
- NWPC shall decide within 60 calendar days from filing.
- appeal does not stay the wage order unless the person appealing shall file with NWPC an undertaking with surety/sureties for
the payment to the EEs affected by the wage order, in case it is affirmed.
Criteria for Minimum Wage Fixing (Art. 124)

- regional min. wages shall be as nearly adequate as is economically feasible to maintain the min. standards of living.
- These are the relevant factors to be considered:
(1) Demand for living wages
(2) Wage adjustment vis-à-vis consumer price index
(3) Cost of living
(4) Needs of workers and their families
(5) Need to induce industries to invest in the countryside
(6) Improvements in standards of living
(7) Prevailing wage levels
(8) Fair return of the capital and ER’s capacity to pay
(9) Effects on employment generation and family income
(10) Equitable distribution of income
Wage Distortion
- a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional
quantitative differences in wage or salary rates between and among EE groups in an establishment as to effectively obliterate the
distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation.
- test: severe contraction or elimination of existing wage differentials
Q: when is there a wage distortion? (2006 Bar Question)

Q: Define wage distortion. (1997 Bar Question)
Suggested answer:
There is a wage distortion where an increase in prescribed wage rates results in the elimination or severe contraction of intentional
quantitative differences in wage or salary rates between and among employee groups in an establishment so as to effectively obliterate the
distinction embodied in such wage structure based on skills, length of service, or other logical bases of differentiation.
Page 36 of 107
Wage distortion arises when four (4) essential elements are present:
a. an existing hierarchy of positions with corresponding salary rate;
b. a significant change or increase in the salary rate of a lower pay class without a corresponding increase in the salary of a higher one;
c. the elimination of the distinction between two groups or classes; and
d. the distortion exists in the same region of the country (Prubankers Association v. Prudential Bank and Trust Co.)
Ilaw at Buklod ng Mangagawa v. NLRC, 1991

 Both the ER and EE cannot use economic weapons (ER cannot declare a lock-out; EE cannot declare a strike) because the law
has provided for a procedure for settling wage distortion.
Q: May a wage distortion, alleged by the employees but rejected by the employer to be such, be a valid ground for staging a strike?
Answer:
No. The existence of wage distortion is not a valid ground for a strike because Art. 124 of the Labor Code provides for a specific method of
procedure for correcting wage distortion. In Ilaw at Buklod ng Manggagawa vs. NLRC, the Court said—
“It goes without saying that these joint or coordinated activities may be forbidden or restricted by law or contract. For the particular instance
of “distortions of the wage structure within an establishment” resulting from the application of any prescribed wage increase by virtue of a law
or wage order, Section 3 of RA 6727 prescribes a specific, detailed, and comprehensive procedure for the correction thereof, thereby implicitly
excluding strikes or lockouts or other concerted activities as modes of settlement of the issue.”
Alternative Answer:
A wage distortion, alleged by the employees but rejected by the employer can be a valid ground for staging a strike if it happens that in
rejecting the allegation of wage distortion, the employer refuses to consider the issue under the grievance procedure provided for in the applicable
CBA, and later on through Voluntary Arbitration. These acts of the employer could be considered as a violation of its duty to bargain collectively
which is unfair labor practice (ULP). A ULP strike is legal. (1997 and 2006 Bar Question)
Prubankers Assn., v. Prudential Bank, 1999

 Wage-fixing has been regionalized by RA 6727 (Wage Rationalization Act).
 Each region has a regional wage board which, in fixing the wage-level, considers standards existing in the region.
 Hence, wage distortion involves comparison of jobs located in the same region of the same employer, and not comparison of
jobs in different regions.
 Comparison of salaries has to be intra-region, not inter-region.
 There is no wage-distortion when EEs in one branch have higher pay than their counterparts in other branches in other regions.
4 Elements of Wage distortion:
(1) an existing hierarchy of positions with corresponding salary rates
(2) significant change in the salary of a lower pay class without a concomitant increase in the salary rate of a higher one
(3) elimination of distinction between the 2 levels
(4) existence of distortion in the same region. (Prubankers Assn., v. Prudential Bank, 1999)
Procedure for Correcting Wage Distortion (pendency of a dispute from wage distortion shall not delay the applicability of
any increase in the wage order)
Organized Establishment Unorganized Establishment
Grievance procedure ER and workers will endeavor to correct

the distortion
Voluntary Arbitration (should NCMB

be decided (to settle any
within 10 days) dispute arising from the correction)
NLRC
(if it remains unresolved after 10 calendar
days from conciliation; NLRC will decide
within 20 days from submission)
Page 37 of 107
Q: How should a wage distortion be settled?
Suggested answer:
Any dispute arising from wage distortion shall be resolved through any grievance procedure as provided in the applicable collective bargaining
agreement and, if the dispute remains unresolved, then through voluntary arbitration. (Art. 124)
In cases where there are no collective bargaining agreements or recognized labor unions, the employers and workers shall endeavor to
correct such wage distortions. Any dispute arising therefrom shall be settled through the National Conciliation and Mediation Board and, if it
remains unresolved after 10 calendar days of conciliation, the issue of wage distortion shall be referred to the appropriate branch of the National
Labor Relations Commission. (2002 & 2006 Bar Question)
PART 7
SPECIAL WORKERS
HANDICAPPED WORKERS (Art. 78)

- workers whose earning capacity is impaired by age and physical/ mental defects
- Can be regular EE if work is usually or necessary or desirable to the business (Bernardo v. NLRC, 1999)
-
Q: Ana Cruz has a low IQ. She has to be told at least three times before she understands her daily work assignment. However, her work output
is at least equal to the output of the least efficient worker in her work section. Is Ms. Cruz a handicapped worker? Explain.
Suggested answer:
No, low IQ or low efficiency does not make the worker “handicapped” in the contemplation of law. Handicap means such physical or mental
infirmity that impairs capacity to work. The deficiency may also be due to age or injury. (Art 78, LC)
When Employable (Art. 79)

(1) Necessary to prevent curtailment of employment opportunities; and
(2) Does not create unfair competition in labor costs or impairing working standards
Employment Agreement shall include (Art. 80)

 Names and addresses of the handicapped workers to be employed
 Rate to be paid (not less than 75% of applicable legal minimum wage)
 Duration of employment period
 Work to be performed by handicapped (the agreement is always subject to inspection by Sec. of Labor or duly authorized
representative)
Eligibility for Apprenticeship (Art. 81)

- if their handicap is not such as to effectively impede the performance of job operations in the particular occupations for which they
are hired
Q: A lady worker was born with a physical deformity, specifically, hard of hearing, speech impaired and color blind. However, these deficiencies
do not impair her working ability.
Can the employer classify her as a handicapped worker so that her daily wage will only be seventy-five per cent (75%) of the applicable
daily minimum wage?
Suggested answer:
No, the employer cannot classify the lady worker as a handicapped worker because according to the facts in the question, her deficiencies
do not impair her working ability. If her earning capacity is therefore not also impaired, then she cannot be considered a handicapped worker.
Because of the above fact, the employer shall not pay her less than the applicable daily minimum wage. (Art 78, LC)

Yes, the employer can classify her as a handicapped worker because her earning capacity may be impaired by her physical deficiencies. As
such handicapped worker, the employer may enter into an employment agreement with her whereby the rate to be paid to her may be less than
the applicable legal minimum wage but not less than 75% of such wage. (1998 Bar Question)
Q: For humanitarian reasons, a bank hired several handicapped workers to count and sort out currencies. Their employment contract was for six
months. The bank terminated their employment on the ground that their contract has expired prompting them to file with the La bor Arbiter a
complaint for illegal dismissal.
Will their action prosper?
Suggested answer:
Yes, their action will prosper. They are doing necessary or desirable jobs and are qualified for the job, and therefore they should be treated
like other qualified able-bodied employees. (Bernardo v. NLRC and Far East Bank) They cannot be terminated simply because of the expiration
of the contract. The nature of their work gives them the status of regular employees. What determines regularity is not the employment contract
but the nature of the job. (AM Oreta and Co. Inc. v. NLRC)
Page 38 of 107
No, their action will not prosper. The employment contract in this case is an example of a fixed-term employment contract, i.e. one to which
the parties by free choice have assigned a specific date of termination. It is not per se illegal or against public policy. To be valid, it must be
shown that the fixed period was knowingly and voluntarily agreed upon by the parties. There should have been no force, duress or im proper
pressure brought to bear upon the employee. Neither should there be any other circumstance that vitiates the employee’s consent. Moreover,
the employer and employee must have dealt with each other on moiré or less equal terms with no moral dominance being exercise d by the
employer over the employee. Should the contract in the case at bar be shown to comply with the aforementioned requirements, the action for
illegal dismissal will not prosper; otherwise, it should. (Brent School v. Zamora) (2006 Bar Question)
LEARNERS/ APPRENTICES (Art. 59-73)

Learners Apprentices
Persons hired as trainees Persons hired as trainees in a highly skilled job or in a job found only in a highly
in semi-skilled and technical industry
other industrial
occupations which are *apprenticeable occupation
What
non-apprenticeable - any trade, form of employment or occupation which requires more than 3 mos.
of practical training on the job supplemented by related theoretical instruction
Duration Not exceeding 3 months Not exceeding 6 months

No experienced workers Only ERs in highly technical industries may employ apprentice; and
available; Only in apprenticeable occupations
Employment of learners is
necessary to prevent
curtailment of
employment
When may be
opportunities; and
hired
Employment does not
create unfair
competition in labor
costs and lower
working standards
Learnership agreements Apprenticeship program needs prior approval of DOLE

Approval of do not need approval of *if employed without a pre-approved apprenticeship program, he is deemed a
DOLE DOLE, but are subject regular EE
to DOLE’s inspection
Not below 75% of the Same
Compensation applicable min. wage *Sec. may authorize hiring of apprentices without compensation whose training on
the job is required by the school as requisite for graduation / board exam
There is commitment to No commitment
employ learners as an
EE after the training
period
*Learners allowed to work
ER’s during the first 2
commitment months shall be
to hire deemed regular EEs if
training is terminated
by the ER before the
end of the stipulated
period through no fault
of the learner
Page 39 of 107
PART 8
WOMEN WORKERS
NIGHTWORK PROHIBITION(Art. 130)

No woman shall be employed in:
1. Industrial Undertaking - 10pm-6am
2. Commercial or non-industrial - 12am-6am

or branch thereof, other than
agricultural
3. Agricultural undertaking - Nighttime, unless given a

period of rest not less
than 9 consecutive hours
Exceptions(Art. 131)
(1) Actual or impending emergencies to prevent loss of life/ property or force majeure or imminent danger to public safety
(2) Urgent work to be performed to avoid serious loss to ER
(3) Necessary to prevent serious loss of perishable goods
(4) Holds a responsible position of managerial or technical nature or engaged to provide health or welfare service
(5) Nature of work requires the manual skill and dexterity of women workers and the same cannot be performed with equal efficiency
by male workers
(6) Immediate members of the family operating the establishment or undertaking
(7) Other analogous cases
FACILITIES FOR WOMEN (Art. 132)

(1) To provide seats for women
(2) Establish separate toilet rooms and lavatories and provide at least a dressing room for women
(3) Establish a nursery in a workplace for the benefit of the women EEs
(4) Determine appropriate min. age and other standards for retirement and termination in special occupations such as those of flight
attendants and the like
MATERNITY LEAVE and PATERNITY LEAVE BENEFITS

-Pls. see discussion above under Hours of Work: Leaves
FAMILY PLANNING SERVICES, INCENTIVES FOR FAMILY PLANNING (Art. 134)

 Those establishments required to maintain a clinic or infirmary shall provide free family planning service
 Develop and prescribe incentive bonus schemes to encourage family planning among female workers in any establishment/ enterprise
DISCRIMINATION PROHIBITED (Art. 135)

Acts of Discrimination
 Payment of lesser compensation to a female as against the male, for work of equal value
 Favoring over promotion, training opportunities, study and scholarship grants solely on account of their sexes
 Institution of any criminal action under this shall not bar the aggrieved EE from filing an entirely separate and distinct action for
money claims, which may include claims for damages and other affirmative relief
 Actions authorized shall proceed independently of each other
STIPULATIONS AGAINST MARRIAGE (Art. 136)

- unlawful, either as a condition for employment or for continuing employment
PROHIBITED ACTS (Art. 137)

1. Deny benefits or discharge any woman employed to avoid giving benefits
2. Discharge such woman on account of her pregnancy or while on leave or in confinement due to her pregnancy
3. Discharge or refuse the admission of such woman upon returning to her work for fear she may again be pregnant
Q: At any given time, approximately 90% of the production workforce of a semi-conductor company are females. 75% of the female workers
are married and are of child-bearing years. It is imperative that the Company must operate with a minimum number of absences to meet strict
delivery schedules. In view of the very high number of lost working hours due to absences for family reasons and maternity leaves, the Company
adopted a policy that it will employ married women as production workers only if they are at least 35 years of age.
Is the policy violative of any law?
Page 40 of 107
Suggested answer:
Yes, it is violative of Art 140, LC which provides that no employer shall discriminate against any person in respect to terms and conditions
of employment on account of his age.

The policy of the company to employ married women as production workers only if they are at least 35 years of age is valid. T here is no
prohibition in the Labor Code for such an employer to exercise this management function. There is a justifiable basis for the company policy, i.e.,
the need for continuity of production with minimum absence because of the peculiar business conditions and needs of the company, i.e., very
tight delivery schedules. The company respects the institution of marriage as shown by the fact that it employs married women . There is no
violation of the stipulation against marriage (Art 136), and prohibited acts (Art 137) of the Labor Code.

It may be noted that the policy is directed only to married women. This may violate the spirit of Art 136 of the Labor Code which provides
that it shall be unlawful for an ER to require as a condition of employment or continuation of employment that a woman shall not get married.
(1998 Bar Question)
Q: An exclusive school for girls, run by a religious order, has a policy of not employing unwed mothers, women with live-in partners, and lesbians.
Is the policy violative of any provision of the Labor Code on employment of women?
Suggested answer:
No, the policy does not violate the Labor Code. The practice is a valid exercise of management function. Considering the nature and reason
for existence of the school, it may adopt such policy as will advance its laudable objectives. In fact, the policy accords with the constitutional
precept of inculcating ethical and moral values in schools. The school policy does not discriminate against women solely on account sex (Art 135,
LC) nor are the acts prohibited under Art 137, LC.

The school violated Art 137 (2) of the Labor Code which states that: “It shall be unlawful for any employer to discharge such woman on
account of pregnancy”. The pregnancy here could obviously have resulted from love and such only lends substance to the saying that “the heart
has reasons of its own which reason does not know”, a matter that cannot “be so casually equated with immorality”. [Chua-Qua v. Clave (1990)]
Q: The same school dismissed two female faculty members on account of pregnancy out of wedlock. Did the school violate any provision of the
Labor Code on employment of women?
Suggested answer:
No, because to tolerate pregnancy out of wedlock will be a blatant contradiction of the school’s laudable mission which, as already stated,
accords with high constitutional precepts.
This answer does not contradict the ruling in Chua-Qua where the teacher merely fell in love with a bachelor student and the teacher merely
fell in love with a bachelor student and the teacher, also single, did not get pregnant out of wedlock. (2000 Bar Question)
CLASSIFICATION OF CERTAIN WOMEN WORKERS (Art. 137)

- any woman permitted or suffered to work in a night club, cocktail lounge, massage clinic, bar or similar establishment, under
effective control or supervision of the ER for substantial period determined by the Sec. of Labor, shall be considered as EE of such
establishments
Q: Dinna Ignacio was hired by Stag Karaoke Club as guest relations officer. Dinna was also required to sing and dance with the guests of the
club.
In Dinna’s employment contract, which she signed, the ff. stipulations appeared:
Compensation : tips and commissions coming from the guests shall be subjected to 15% deductions
Hours of work : 5 pm up to 2a.m. daily including Sundays and holidays
Other conditions : Must maintain a body weight of 95 lbs., remain single. Marriage or pregnancy will be considered as a valid ground for
termination of employment.
A year later, Dinna requested to go on leave because she would be getting married to one of the club’s regular guests. The management of
the club dismissed her.
Dinna filed a complaint for illegal dismissal, night shift differential pay, backwages, overtime pay and holiday pay. Discuss the merits of
Dinna’s complaint.
Answer:
The first issue to be resolved is: Is Dinna an EE of the Star Karaoke Club? Yes, she is an EE as per the provision of the LC that states: “Any
woman who is permitted or suffered to work, with or without compensation, in an night club, cocktail lounge, massage clinic, bar, or similar
establishment under the effective control or supervision of the ER for a substantial period shall be considered an EE of such establishment for
purposes of labor and social legislation.” (Art. 138) And Dinna’s conditions of employment have all the aforesaid characteristics.
She had been illegally dismissed. The Labor Code expressly provides that “it shall be unlawful for an ER to require as a condition of
employment or continuation of employment that a woman EE shall not get married, or to stipulate expressly or tacitly that upon getting married
Page 41 of 107
a woman EE shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman EE merely
by reason of her marriage.” (Art. 136)
Because of her illegal dismissal, she is entitled to backwages from the time her compensation was withheld from her to the time of her
actual reinstatement.
Dinna is not entitled to night differential pay, overtime pay and holiday pay because she belongs to one of those classes of EEs who are not
covered by the provision of the Labor Code providing for these benefits. She is a worker paid by results since her compensation is determined
by the tips and commission that she receives from her guests. (1997 Bar Question)
ANTI-SEXUAL HARASSMENT LAW (RA 7877)

Committed in these situations only:
(1) Work-related or employment environment
(2) Education or training environment
Offender
- ER, EE, manager, supervisor, agent of the ER, teacher, instructor professor, coach, trainor, or any other person who has
authority, influence, or moral ascendancy over another (hence, victim may be male or female)
Q: Pedrito Masculado, a college graduate from the province, tried his luck in the city and landed a job as utility/maintenance man at the warehouse
of a big shopping mall. After working as a casual EE for six months, he signed a contract for probationary employment for six months. Being
well-built and physically attractive, his supervisor, Mr. Hercules Barak, took special interest to befriend him. When his probationary period was
about to expire, he was surprised when one afternoon after working hours, Mr. Barak followed him to the men’s comfort room. After seeing that
no one else was around, Mr. Barak placed his arm over Pedrito’s shoulder and softly said: “You have a great potential to become regular EE and
I think I can give you a favorable recommendation. Can you come over to may condo unit on Saturday evening so we can have a little drink?
I’m alone and I’m sure you want to stay longer with the company.”
Is Mr. Barak liable for sexual harassment committed in a work-related or employment environment?
Suggested Answer:
Yes, the elements of sexual harassment are all present.
The act of Mr. Barak was committed in a workplace.
Mr. Barak, as supervisor of Pedrito Masculado, has authority, influence and moral ascendancy over Masculado.
Given the specific circumstances mentioned in the question like Mr. Barak following Masculado to the comfort room, etc. Mr. B arak was
requesting a sexual favor from Masculado for a favorable recommendation regarding the latter’s employment.
It is not impossible for a male, who is a homosexual, to ask for a sexual favor from another male.

I do not see any sexual favor being solicited. Having a “little drink” in Mr. Barak’s condo unit, as a condition for a “favorable recommendation”
is not one of the prohibited acts enumerated in Sec. 3 (a) of RA 7877, otherwise known as the Anti-Sexual Harassment Act of 1995. (2004 Bar
Question)
How Committed
- offender 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
Q: Can an individual, the sole proprietor of a business enterprise, be said to have violated the Anti-Sexual Harassment Act of 1995 if he clearly
discriminates against women in the adoption of policy standards for employment and promotions in the enterprise? Explain.
Suggested Answer:
When an ER discriminates against women in the adoption of policy standards for employment and promotion in his enterprise, he is not
guilty of sexual harassment. Instead, the ER is guilty of discrimination against women employees which is declared to be unlawful by the Labor
Code.
For an ER to commit sexual harassment he – as a person of authority, influence or moral ascendancy – should have demanded, requested
or otherwise required asexual favor from his EE whether the demand, request or requirement for submission is accepted by the object of said
act.
In the question, no such act was committed by the sole proprietor. (2003 Bar Question)
Q: As a condition for her employment, Josephine signed an agreement with her ER that she will not get married, otherwise, she will be considered
resigned or separated from the service.
Josephine got married. She asked Owen, the personnel manager, if the company can reconsider the agreement. He told Josephine he can
do something about it, insinuating some sexual favors. She complained to higher authorities but to no avail. She hires you as her counsel. What
action or actions will you take? Explain.
Page 42 of 107
Suggested answer:
As counsel for Josephine, I will file a complaint for work-related sexual harassment which, as in the case at bar, occurs when a person who
has authority, influence or moral ascendancy over another demands, requests, or otherwise requires any sexual favor from the latter as a
condition for, inter alia, the continued employment of said individual. (Sec 3, RA 7877)
I will likewise file a complaint for illegal dismissal citing Art 136, LC which provides that it is unlawful for an employer to require as a condition
of continued employment or continuation of employment that a woman employee shall not get married, or to stipulate expressly or tacitly that
upon getting married a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge or discriminate or otherwise
prejudice a woman employee merely by reason of her marriage.

I shall advise my client to file a complaint with the grievance machinery (if the establishment is organized) or with the company’s Committee
on Decorum and Investigation (organized or unorganized) tasked to investigate sexual harassment cases. The personnel manager Owen can
definitely be helved administratively liable for his action.
I shall also advise my client to file a criminal case for sexual harassment pursuant to RA 7877.

I will not take any action at all because “insinuating sexual favor” is not an act of sexual harassment which require “demands, requests, or
otherwise require any sexual favor from the other” (Sec 3, RA 7877) (2006 Bar Question)
Q: A Personnel Manager, while interviewing an attractive female applicant for employment, stared directly at her for prolonged periods, albeit in
a friendly manner. After the interview, the manager accompanied the applicant to the door, shook her hand and patted her on the shoulder. He
also asked the applicant if he could invite her for dinner and dancing at some future time. Did the personnel manager, by the above acts, commit
sexual harassment? Reason.
Suggested answer:
Yes, because the personnel manager, a man, is in a position to grant or not to grant a favor (a job) to the applicant. Under the circumstances,
inviting the applicant for dinner or dancing creates a situation hostile or unfriendly to the applicant’s chances for a job i f she turns down the
invitation. (Sec 3(a)(3), RA 7877, Anti-Sexual Harassment Act)

There is no sexual harassment because there was no solicitation of sexual favor in exchange of employment. Neither was there any
intimidating, hostile or offensive environment for the applicant.
Q: In the course of an interview, another female applicant inquired fro the same personnel manager if she had the physical attributes required
for the position applied for. The personnel manager replied: “You will be more attractive if you will wear micro-mini dresses without the
undergarments that ladies normally wear.” Did the personnel manager, by the above reply, commit an act of sexual harassment? Reason.
Suggested answer:
No, the personnel manager’s reply to the applicant’s question whether she qualifies for the position she is applying for does not constitute
sexual harassment. The personnel manager did not ask for or insinuate a request for a sexual favor in return for a favorable action on her
application for a job. But the manager’s statement may be offensive if attire or physical look is not a criterion fro the job being applied for.

Yes, the remarks would result in an offensive or hostile environment for the employee. Moreover, the remarks did not give due regard to
the applicants’ feelings and it is a chauvinistic disdain of her honor, justifying the finding of sexual harassment. (Villarama v. NLRC (1994)) (2000
Bar Question)
Duty/ Liability of ER or Head of Office

 Duty— to prevent or deter the commission of acts of sexual harassment and to provide for the resolution, settlement or
prosecution of acts of sexual harassment
 Liability— solidarily liable for damages arising from the acts of sexual harassment if s/he is informed of such acts by the offended
party and no immediate action is taken thereon.
Independent Action for Damages

- the victim is not precluded from instituting a separate and independent action for damages and other affirmative relief
Q: xxx Carissa… filed a complaint for sexual harassment against Mr. Winkle with the DOLE. In his counter-affidavit… he also alleged that the
complaint was premature because Carissa failed to refer the matter to the Committee on Decorum and Discipline for investigation and resolution
before the case against him was filed. In her reply affidavit, Carissa claimed that there was no need for a prior referral to the Committee on
Decorum and Discipline of her complaint.
Resolve the case with reason.
Page 43 of 107
Suggested Answer:
xxx
Carissa is correct in stating that there was no need for a prior referral of her complaint to the Committee on Decorum and Discipline because
nothing in the law shall preclude the victim of sexual harassment from instituting a separate and independent action for damages and other
affirmative relief. (Sec. 6, RA 7877) (2005 Bar Question) *the first part was omitted bec. it deals with an issue similar to the Bar Questions
previously quoted, i.e. elements of Sexual Harrassment.
 Commission of sexual harassment is a valid reason to dismiss an EE. (Villarama v. NLRC, 1994)
 Certain acts, like caressing the nape of the secretary, amount to sexual harassment “as generally understood by the public” which
justifies the dismissal of the harasser. (Libres v. NLRC, 1999)
PART 9
MINORS
MINIMUM EMPLOYABLE AGE (Arts. 139-140)
Below 15 yrs Gen. Rule: shall not be employed

old Exceptions*: (RA 7610, as amended by RA 7658)
(1) If working under parent’s responsibility and where only members of the ER’s family are employed:
Requisites:
a. His employment does not endanger his life, safety, health and morals, nor impair his normal development;
and
b. The parent or legal guardian shall provide said minor with the prescribed primary and/or secondary
education
(2) Working in public entertainment

Requisites:
a. Child’s employment in public and entertainment or information through cinema, theater or radio or radio
or television is essential;
b. Employment contract is concluded by child’s parents or guardian with express agreement of child, if
possible, and with DOLE approval; and
c. Strictly compliance with the ff:
(i) ER ensures child’s protection, health, safety and morals
(ii) ER institutes measures to prevent the exploitation of the child; and
(iii) ER implements a continuing program for training and skills of the child
*in these cases, ER shall first secure a work permit from the DOLE before engaging the child
15-below 18 Can be employed in undertakings which are not hazardous or deleterious (i.e., EE is not exposed to any risk which
yrs old constitutes an imminent danger to his safety and health)
These are hazardous and deleterious:

Exposes workers to dangerous environmental elements, contaminations or work conditions including ionizing
radiations, chemicals, fire, flammable substances, noxious components and the like
Engaged in construction work, logging, fire-fighting, mining, quarrying, blasting, stevedoring, dock work, deep-
sea fishing and mechanized farming
Engaged in the manufacture or handling of explosives and other pyrotechnic products
Exposed to or use of heavy or power-driven machinery or equipment
Use or are exposed to power-driven tools
18 yrs No prohibition
Q: Determine whether the following minors should be prohibited from being hired and from performing their respective duties indicated
hereunder:
1. a 17-year old boy working as a miner at the Walwaldi Mining Corporation

Suggested answer:
Yes, he should be prohibited from being hired and from performing the duties of a miner because such constitutes hazardous work under
D.O. No. 04 Series of 1999. Art 139 (c), LC expressly prohibits the employment of persons below 18 years of age in an undertaking which is
hazardous or deleterious in nature as determined by the Secretary of Labor. (similar to a 2002 Bar Question)
2. an 11-year old boy who is an accomplished singer and performer in different parts of the country.
Suggested answer:
No, he should not be prohibited form being hired and from performing as a singer. Under Art VIII Sec 12 par 2 of RA 7610 as amended by
RA 7658, this constitutes an exception to the general prohibition against the employment of children below 15 years of age, provided that the
Page 44 of 107
following requirements are strictly complied with: (a) the employer shall ensure the protection, health, safety and morals of the ch ild; (b) the
employer shall institutes measures to prevent the child’s exploitation or discrimination taking into account the system and level of remuneration,
and the duration and arrangement of working time; and (c) the employer shall formulate and implement, subject to the approval and supervision
of competent authorities, a continuing program for training and skill acquisition of the child. Moreover, the child must be directly under the sole
responsibility of his parents or guardian and his employment should not in any way interfere with his schooling.
3. a 15-year old girl working as a library assistant in a girl’s high school.

Suggested answer:
No, she should not be prohibited from working as a library assistant because the prohibition in the Labor Code against employment of
persons below 18 years of age merely pertains to employment in an undertaking which is hazardous or deleterious in nature as identified in the
guidelines issued by the DOLE Secretary. Working as a library assistant is not one of the undertakings identified to be hazardous under D.O. No.
04 Series of 1999.
4. a 16- year old girl working as a model promoting alcoholic beverages.

Suggested answer:
Yes, she should be prohibited form working as a model promoting alcoholic beverages. RA 7610 categorically prohibits the employment of
child models in all commercial or advertisements promoting alcoholic beverages and intoxicating drinks, among other things.
5. a 17-year old boy working as a dealer in a casino.

Suggested answer:
Yes, he should be prohibited from working as a dealer in a casino because Art 140, LC prohibits the employment of persons below 18 years
of age in an undertaking which is hazardous or deleterious in nature as identified in the guidelines issued by DOLE Secretary. Working as a dealer
in a casino is classified as hazardous under D.O. No. 04 Series of 1999 as it exposes children to physical, psychological or sexual abuses. (2006
Bar Question)
o0o0o0o
Q: A spinster school teacher took pity on one of her pupils, a robust and precocious 12-year old boy whose poor family could barely afford the
cost of high schooling. She lives alone at her house near the school after her housemaid left. In the afternoon, she lets the boy do various
chores as cleaning, fetching water and all kinds of errands after school hours. She gives him rice and P30.00 before the boy goes home at 7:00
every night. The school principal learned about it and charged her with violating the law which prohibits the employment of children below 15
years of age. In her defense, the teacher stated that the work performed by her pupil is not hazardous, and she invoked the exception provided
in the Department Order of DOLE for the engagement of persons in domestic and household service.
Is her defense tenable? Reason.
Suggested Answer:
No, her defense is not tenable. Under Article 139 of the Labor Code on “minimum employable age”, no child below 15 years of age shall be
employed except when he works directly under the sole responsibility of his parents or guardian, the provisions of the alleged Department Order
cannot prevail over the express prohibitory provisions of Labor Code.
[Note: Sec. 3, RA9231 allows a child below 15 years of age to work for not more than 20 hours a week; provided, that the work sha ll not be
more than 4 hours at any given day; provided further, that he does not work between 8 o’clock in the evening and 6 o’cloc k in the morning of
the following day; and provided finally, that the work is not hazardous or deleterious to his health or morals. THIS IS A RECENT LAW APPROVED
ONLY ON JULY 28, 2003, which is beyond the cut-off period of the Bar Exams.] (2004 Bar Question)
PART 10
HOUSEHELPERS
EMPLOYMENT OF HOUSEHELPERS (Arts. 141-152; cf. Arts 1689-1699, NCC)
Coverage: shall apply to all persons rendering services in the household for compensation
 Domestic or household service

- shall mean services in the ER’s home which are usually necessary or desirable for the maintenance and enjoyment thereof
- includes ministering to the personal comfort and convenience of the members of the ER’s household
- also includes the services of family drivers
 “Househelper” is synonymous to the term “domestic servant”. (Apex Mining Co., v. NLRC, 1991)
Pertinent provisions
(1) Original contract— not more than 2 years but may be renewed upon agreement of the parties
(2) If assigned to work in a commercial, industrial, or agricultural enterprise, must not be paid lower than agricultural or non-
agricultural workers
(3) If househelper is under 18 years of age, must be given opportunity to finish at least elementary schooling. The cost of education
shall be a part of compensation
(4) Should be treated in a just and humane manner
Page 45 of 107
(5) Free: sanitary and suitable living quarters, adequate food and medical attendance
(6) If period of household service is fixed, neither the parties may terminate contract prior expiration of term; if not fixed, either of
the parties may terminate by giving notice 5 days before the intended termination
(7) If EE is unjustly dismissed, indemnity = compensation earned + compensation for 15 days; if EE leaves without justifiable
reason, s/he shall forfeit any unpaid salary not exceeding 15 days.
Q: The weekly work schedule of a driver is as follows:

Monday, Wednesday, Friday- Drive the family car to bring and fetch the children to and from the school.
Tuesday, Thursday, Saturday- Drive the family van to fetch merchandise from suppliers and deliver the same to a boutique in a mall owned
by the family.
Is the driver a househelper?
The same driver claims that for work performed on Tuesday, Thursday and Saturday, he should be paid the minimum daily wage of a driver
of a commercial establishment.
Is the claim of the driver valid?
Suggested answer:
The driver is a househelper. A person is a househelper or is engaged in domestic or household service if he/ she renders services in the
employer’s home which are usually necessary or desirable fro the maintenance and enjoyment thereof and includes ministering to the employer’s
household including the service of family drivers.
A family driver who drives the family van to fetch merchandise form suppliers and delivers the same to a boutique in a mall owned by the
family for whom he works should be paid the minimum daily wage of a driver in a commercial establishment.
The Labor Code (in Art 143) provides that no househelper shall be assigned to work in a commercial, industrial or agricultural enterprise at
a wage or salary rate lower than that provided by law for agricultural or non-agricultural workers. (1998 Bar Question)
PART 11
HOMEWORKERS
EMPLOYMENT OF HOMEWORKERS (Arts. 153-155; Dept. Order No. 5, 1992)
Coverage: shall apply to any person who performs industrial homework for an employer, contractor or sub-contractor.
Industrial Homework—a system of production under which work for an employer or contractor is carried out by a homeworker
at his/her home. Materials may or may not be furnished by the employer or contractor.
Employers of Homeworkers
(1) Delivers, or causes to be delivered, any goods, articles or materials to be processed or fabricated in or about a home and
thereafter to be returned or to be disposed of or distributed in accordance with his directions; or
(2) Sells any goods, articles or materials for the purpose of having such goods or articles processed or fabricated in or about a
home and then repurchases them after such processing or fabrication, either himself or through some other person.
 The IRR allows the formation and registration of labor organization of industrial homeworkers.
 It also makes explicit the ER’s duty to pay SSS, Medicare and ECC premiums.
Q: 1. Nova Banking Corporation has a rest house and recreational facility in the highlands of Tagaytay City for the use of its top executives and
corporate clients. The rest house staff includes a caretaker, two cooks and a laundrywoman. All of them are reported to the Social Security
System as domestic or household employees of the rest house and recreational facility and not of the bank. Can the bank legally consider the
caretaker, cooks, and laundrywoman as domestic employees of the rest house and not of the bank?
2. Mrs. Josie Juan is the confidential secretary of the Chairman of the Board of the Bank. She is presently on maternity leave. In an
arrangement where the Chairman of the Board can still have access to her services, the bank allows her to work in her residence during her
leave. For this purpose, the bank installed a fax machine in her residence and gave her a cellphone and a beeper. Is Mrs. Juan a homeworker
under the law?
Suggested answer:
1. No, they are not domestic employees. They are bank employees because the rest house and recreational facility are business facilities as
they are for the use of the top executives and clients of the bank. [Art 141, LC, Apex Mining Co., Inc. v. NLRC (1991); Traders Royal Bank v.
NLRC (1999)]
2. No, she is actually an office worker. She is not an industrial homeworker who accepts work to be fabricated or processed at h ome for a
contractor, which work, when finished, will be returned to or repurchased by said contractor. (Art 155, LC) (2000 Bar Question)
Page 46 of 107
PART 12
TERMINATION OF EMPLOYMENT
SECURITY OF TENURE (Art. 279; Art. XIII, Sec. 3, Const.)

- in cases of regular employment, the ER shall not terminate the services of an EE except for a just cause or when authorized
- Although the provision states only regular employment, right to security of tenure is also available to non-regular EE (e.g., fixed-
term employment, probationary EE, project EE). The ER cannot terminate before the end of the agreed period unless there is a just
cause.
TERMINATION BY EMPLOYEE (RESIGNATION)

Without cause [Art. 285 (a)]
- EE must serve notice to ER at least 1 month in advance
- if no such notice, EE may be liable for damages
With just cause [Art. 285 (b)]

- no notice is needed
Grounds:
a. Serious insult on the honor and person of the EE by the ER or his representative
b. Inhumane and unbearable treatment accorded to the EE
c. Commission of a crime against the person of the EE or any of the immediate members of his family
d. Analogous cases
Voluntary Resignation— act of an EE who finds himself in a situation where he believes that personal reasons cannot be sacrificed
in favor of the exigency of the service and he has no other choice but to disassociate himself from his employment (Habana v. NLRC,
1998)
TERMINATION BY EMPLOYER
2 Facets of a valid termination (Orlando Farms Growers v. NLRC, 1998; Salaw v. NLRC, 1991);
1. Substantive due process—legality of the act of the dismissal, i.e., the dismissal must be under any of the just causes or
authorized causes (Arts 279, 281, 282-284)
2. Procedural due process—the legality of the manner of dismissal
For just causes
- there must be observance of the requirements of the two-notice rule:
i. a written notice containing a statement of the cause for termination and to afford him opportunity to be heard and to
defend himself; and
ii. to notify the worker in writing of the decision to dismiss him, stating clearly the reasons therefore
For authorized causes

- written notice to EE and DOLE Secretary at least 1 month before intended date
Q: Distinguish between dismissal of an employee for just cause and termination of employment for authorized cause. Enumerate examples of
just cause and authorized cause.
Suggested answer:
Dismissal for a just cause is founded on faults or misdeeds of the employee. Separation pay, as a rule, will not be paid. Examples: serious
misconduct, willful disobedience, commission of crime, gross and habitual neglect, fraud and other causes analogous to the foregoing. (Art 282,
Labor Code)
Termination for authorized causes is based on business exigencies or measures adopted by the employer, not constituting fault s of the
employee.
Payment of separation pay at varying amounts is required. According to Art. 283, LC, the lawful or authorized causes for the termination of
an EE are:
1. installation of labor saving devices
2. redundancy
3. retrenchment to prevent losses or;
4. closing or cessation of operation of the establishment or undertaking, unless the closing is for the purpose of circumventing the provisions of
the Labor Code.
Art. 284 also provides that an ER may terminate the services of an EE who has been found to be suffering from any disease and whose
continued employment is prohibited or prejudicial to his health as well as to the health of his co-EEs. (2000, 2002 and 2004 Bar Questions)
Page 47 of 107
Substantive due process
Just Causes (Art. 282) - an ER may terminate an employment for any of the ff. causes:
1. Serious misconduct or willful disobedience by the EE of the lawful orders of ER/ his rep in connection with his work
“Serious Misconduct”
- improper or wrong conduct
- the transgression of some established and definite rule of action
- a forbidden act, a dereliction of duty, willful in character, and implies a wrongful intent and not mere error in judgment.
*NB: Such misconduct, however serious, must nevertheless be in connection with the work of the EE
Elements of Misconduct as just cause:

 it must be serious;
 must relate to the performance of the employee’s duties; and
 must show that the employee has become unfit to continue working for the employer. (Phil. Aeolus Automotive United
Corp. v. NLRC, 2000)
Q: Sergio, an EE of Encarnado Philippines Inc. (EPI), was at the company canteen when Corazon, a canteen helper, questioned him for his use
of somebody else’s ID. Sergio flared up and shouted at Corazon “Wala kang pakialam! Kung gusto mo, itapon ko itong mga pagkain nyo!” When
Sergio noticed that some people were staring at him rather menacingly, he left the canteen but returned a few minutes later t o remark
challengingly “Sino ba nagagalit?” Sergio then began smashing some food items that were n display for sale in the canteen, after which she
slapped Corazon which caused her to all and suffer contusions. The incident prompted Corazon to file a written complaint with Gustavo, the
personnel manager of EPI against Sergio.
Gustavo required Sergio to explain in writing why no disciplinary action should be taken against him. In his written explanation, Sergio
admitted his misconduct but tried to explain it away by saying that he was under the influence of liquor at the time of the i ncident. Gustavo
thereafter issued a letter of termination from the employment of Sergio for serious misconduct.
Sergio now files a complaint for illegal dismissal, arguing that his acts id not constitute serious misconduct that would justify his dismissal.
Decide.
Suggested Answer:
The acts of Sergio constituted serious misconduct. Thus, there was just cause for his termination.
The fact that he was under the influence of liquor at the time that he did what he did does not mitigate, instead it aggravates, his misconduct.
Being under the influence of liquor while at work is by itself a serious misconduct.
Alternative Answer:
The dismissal is not justified because the serous misconduct committed by the EE is not in connection with his work. Art. 282 (g), LC was
interpreted by the Supreme Court in Arts Philippines, Inc. v. NLRC, as follows:
“It is not disputed that private respondent has done, indeed he admitted to have committed, a serious misconduct. In order to constitute a
“just cause” for dismissal, however, the act complained of must be related to the performance of the duties of the EE such as would show him
to be thereby unfit to continue working for the ER.” (1996 Bar Question)
Q: Marimar was a teacher in the high school and Sergio was a student. She taught him remedial lessons after regular class hours. They fell in
love and later got married. Marimar is 31 years old while Sergio is 16. The high school wants to terminate the employment of Marimar fro abusive
and unethical conduct unbecoming of a dignified schoolteacher and that her continued employment is inimical to the best interest would
downgrade the high moral values of the school. According to the school, Marimar recklessly took advantage of her position as a teacher by luring
a graduating student under her advisory section and 15 years her junior into an amorous relationship, I violation of he Code of Ethics for teachers
which states, among others, that a “school official or teacher should never take advantage of his/her position to court a pupil or student.” While
no one directly saw Marimar and Sergio doing any intimate acts inside the classroom, the school nonetheless maintains that the marriage between
the two is the best proof which confirms the suspicion that Marimar and Sergio indulged in amorous relations inside the classroom after class
hours.
Marimar, on the other hand, contends that there is nothing wrong with a teacher falling in love with her pupil and consequently, contracting
marriage with him. Decide the case.
Suggested Answer:
The fact that they got married is not by itself sufficient proof that Marimar, as a 31-year-old teacher, took advantage of her position to court
Sergio, a 16-yar old student, when she was tutoring after regular class hours. Thus, Marimar could not be considered as violating the school’s
Code of Ethics which could have been a valid use for her termination. Marimar’s falling in love with her student cannot be c onsidered serious
misconduct which is just cause for termination for employment.
Of course, if t is proven that Marimar and Sergio indulged in amorous relations inside the classroom after class hours, this would constitute
serious misconduct on the part of Marimar as a teacher and could be just cause of the termination of her employment.
Alternative Answer:
The case should be decided in favor of Marimar, the school teacher. Te school failed to adduce evidence in support of its claim of immoral
conduct on the part of Marimar; hence, its claim that “the marriage between the two is best proof which confirms the suspicion that Marimar and
Sergio indulged in amorous relation inside the classroom after office hours” is a gratuitous statement. Furthermore, marriage between two
parties of disparate ages, even a between an older teacher and a younger student is not an immoral act.
In Chua Qua v. Clave, a case which is exactly similar to the problem, the Supreme Court ruled:
Page 48 of 107
Where there is no substantial evidence of the imputed immoral acts, it follows that the alleged violation of the Code of Ethics would have
no basis. If the two eventually fell in love, despite the disparity on their ages and academic levels, this only lends substance, to the truism that
the heart has reasons of its own which reason does t know. But, definitely yielding to this gentle and universal emotion is not to be casually
equated with immorality. The deviation of the circumstances of their marriage from the usual societal pattern cannot be considered as a defiance
of contemporary social norms. (1996 Bar Question)
Elements of Willful Disobedience as just cause:

 the EE's assailed conduct must have been willful or intentional, the willfulness being characterized by a wrongful and
perverse attitude; and
 the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which
he has been engaged to discharge. (Westin Phil. Plaza Hotel v. NLRC, 1999)
Elements of orders of ER:

(1) Reasonable and lawful;
(2) Sufficiently known to the EE; and
(3) In connection with the duties which the EE has been engaged to discharge
 The EE’s disobedience, to justify his dismissal, must relate to substantial matters and that the disobedience to be considered
willful must be resorted to without regard to its consequence.
Willful Disobedience
Q: Oscar Pimentel was an agent supervisor, rising from the ranks, in a corporation engaged in real estate. In order to promote the business,
the company issued a memorandum to all agent supervisors requiring them to submit feasibility study within their respective areas of operation.
All agent supervisors complied except Oscar. Reminded by the company to comply with the memorandum, Oscar explained that being a drop-
out in school and uneducated, he would be unable to submit the required study. The company found the explanation unacceptable and terminated
his employment. Aggrieved, Oscar filed a complaint for illegal dismissal against the company. Decide the case.
Suggested Answer:
For failure to comply with the memorandum to submit a feasibility study on his area of operation, Oscar can not be terminated (presumably for
insubordination or willful disobedience) because the same envisages the concurrence of at least two requisites: (1) the employee’s assailed
conduct must have been willful or intentional, the willingness being characterized by a wrongful and perverse attitude.; and (2) the order violated
must have been reasonable, or lawful, made known to the employee and must pertain to the duties which he had been engaged to discharge.
In the case at bar, at least two requisites are absent, namely: (1) Oscar did not willfully disobey the memorandum with a perverse attitude; and
(2) the directive to make a feasibility study did not pertain to his duties. Hence, the termination from employment of Oscar Pimentel is not
lawful. (2003 Bar Question)
2. Gross and habitual neglect by the EE of his duties

- Neglect of duties must not only be gross but also habitual
- Single acts of negligence is not a just cause for the dismissal of the EE
- It is not necessary to show that ER incurred actual loss/ damage.
- It is sufficient that the neglect of the EE tends to prejudice the interest of ER.
- Abandonment is a form of neglect of duty
To constitute abandonment, these must concur:

a. the failure to report for work or absence without valid or justifiable reason, and
b. clear intention to sever the ER-EE relationship.
* 2nd element is the more determinative factor. Mere absence is not sufficient (Labor et al, v. NLRC, 1995)
Q: During their probationary employment, eight (8) employees were berated and insulted by their supervisor. In protest, they walked out. The
supervisor shouted at them to go home and never to report back to work. Later, the personnel manager required them to explain why they
should not be dismissed from employment for a abandonment and failure to qualify for the positions applied for. They filed a complaint for illegal
dismissal against their employer. As a Labor Arbiter, how will you resolve the case?
Suggested Answer:
I will rule in favor of the management.
First of all, there was no abandonment because there was no intention not to return to work. It was just that the 8 employees were berated
and insulted and even told never to report back to work. It was but natural for them to feel demoralized, but there was never an indication to
abandon their employment.
Page 49 of 107
The probationary workers could, however, be terminated for failing to meet probationary standards. If the reason for the supervisor’s
berating and insulting behavior were poor or substandard performance on the part of the workers, their probationary employment could be
legally terminated.

I will rule against the employer. The probationary employees are entitled to security of tenure and may not be dismissed except for cause,
and are entitled to be hired as regular employees if they are qualified for the position.
There is no abandonment, because the absence of the employees has valid and justifiable cause, and they did not intend to sever
employment or lose the intention to return to work.

As Labor Arbiter, I will rule that the complaint for illegal dismissal is premature.
What the supervisor did- he told eight employees to go home and never to report back to work- did not have the effect of terminating the
employment of said employees. As supervisor, he is not a managerial employee with the power, among others, to discharge employees. (2006
Bar Question)
3. Fraud or willful breach by the EE of the trust reposed in him by his ER/ rep
- The fraud must be committed against the ER or his rep, not against third person
- Basic premise of dismissal: EE concerned holds a position of trust and confidence.
- For rank-and-file EEs, there must be an overt/actual act, furthermore, the worker should have been entrusted with the custody
of money or property of the ER. Mere accusations by the ER will not suffice.
- For managerial/ confidential EEs, acts are not necessary; mere circumstances tending to show loss of confidence are enough.
Q: “A” worked for company “B” as a rank and file employee until April 1990 when A’s services were terminated due to loss of confidence in A.
However, before effecting A’s dismissal, B accorded A due process including full opportunity to answer the charges against him in the course of
the investigation. Was B justified in dismissing A after the investigation? Why?
Suggested answer:
In the case of PLDT v. NLRC, the Supreme Court ruled that the basic requisite for dismissal on the ground of loss of trust and confidence is
that the employee concerned must be one holding a position of trust and confidence.
Rank and file employees may only be dismissed for loss of confidence if the same is because of a willful breach of trust by a rank and file
employee of the trust reposed in him by his employer or duly authorized representative. (Art 286 (c ), LC)

“B” is justified in dismissing “A” for loss of confidence after according him the right to procedural due process. However, the following
guidelines must be observed, as ruled in Nokom v. NLRC:
a. loss of confidence should not be simulated;
b. it should not be used as a subterfuge for causes which are improper, illegal or unjustified;
c. it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and
d. it must be genuine, not a mere afterthought to justify their action. (2001 Bar Question)
Q: May an ordinary rank-and file EE be terminated for loss of trust and confidence? If so, what proof is required? If not, why not?
Suggested Answer:
An ordinary rank-and-file EE may be terminated for loss of trust and confidence as long as loss of trust and confidence is brought about
objectively due to a willful breach by the EE of the trust reposed in him by his ER or duly authorized representative, and said willful breach is
proven by substantial evidence.
When adequately proven, the dual grounds of breach and loss of confidence constitute valid and ample bases to warrant termination of an
errant EE. As a general rule, however, ERs are allowed a wider altitude of discretion in terminating the employment of managerial personnel or
those of similar rank performing functions which by their nature requires the ER’s full trust and confidence, than in case of an ordinary rank-and-
file EE, whose termination on the basis of these same grounds requires proof of involvement in the events in question; mere u ncorroborated
assertions and accusations by the ER will not suffice. (Manila Midtown Commercial Corp. v. Nuwhrain, 159 SCRA 212) (1999 Bar Question)
4. Commission of a crime or offense by the EE against the person of his ER or any immediate member of his family or duly authorized
rep
- A criminal case need not be actually filed. Commission of acts constituting a crime is sufficient.
- “Immediate member”— spouse, ascendants, descendants, or legitimate, natural, or adopted brothers or sisters of the ER or
of his relative by affinity in the same degrees, and those by consanguinity within the 4th civil degree.
5. Analogous cases
 Would depend upon the circumstances of each case. They must be work-related.
 Conviction of a crime involving moral turpitude against a third person, if not work-related, is not a just cause for dismissal
(IRRI v. NLRC, 1993)
Page 50 of 107
 Immorality— for private sector EEs, it can only be a ground if it is work-related but for public sector EEs, immorality is sufficient
cause for termination
 Sexual harassment is serious misconduct. (Villarama v. NLRC, 1994)
 Being quarrelsome/Bossy (analogous to serious misconduct/ insubordination, per Cathedral School of Tech. v. NLRC, 1992)
 Gross inefficiency (analogous to gross neglect, per Lim v NLRC, 1996)
 Violation of a company rule prohibiting the infliction of harm or physical injury against any person under particular
circumstances (analogous to serious misconduct, per Oania v. NLRC, 1995)
 Acquittal of the employee in the criminal case is not a bar to his dismissal on the ground of loss of confidence. (Ramos v.
NLRC, 1998)
- But in Quiambao v. NLRC (1996), this rule was qualified, saying that acquittal in the criminal case will bar dismissal on
the ground of loss of confidence if the charges against the EE were not substantiated by evidence
- as long as there is substantial evidence that EE is guilty, not proof beyond reasonable doubt (hence the acquittal),
dismissal is warranted. If none, then EE should not be dismissed based on the acquittal.
Q: President FX, head of a newly formed labor union composed of 1/3 of the total number of rank-and-file employees in Super Stores, Inc.,
agitated his fellow employees to demand from management pay increases and overtime pay. His supervisor summoned him to explain his
tardiness and refusal to obey regulations. Feeling threatened, he gathered 20 of his members and staged a 2-day picket in front of the shopping
mall. Security staff arrived and dismantled the placards and barricades blocking the employees’ entry to the mall. In retaliation, FX threw stones
at the guards, but the other striking workers just stood by watching him. Seven days after the picket, FX who had gone absent without leave
returned to the mall and announced that he had filed a complaint for illegal dismissal and unfair labor practices.
SSI learned that FX’s group was not registered. No strike vote and strike notice were filed prior to the picket. The guards were told not to
allow FX entry to the company premises as management considered him effectively terminated. Other union members were accepted back to
work by SSI.
Was the dismissal of FX for a valid cause? Was due process observed?
Suggested Answer:
There is a valid cause for the dismissal of FX, but due process was not observed.
Peaceful picketing is part of the constitutional freedom of speech. The right to free speech, however, has its limits, and picketing as a
concerted activity is subject to the same limitations as a strike, particularly as to lawful purpose and lawful means. But it does not have to comply
with the procedural requirements for a lawful strike, like the notice of strike or strike vote. However, in the problem given, picketing became
illegal because of unlawful means, as barricades blocked the employees’ entry to the mall, and violence, ensued when FX threw stones at the
guards. There was thus, valid cause for the dismissal of FX, however, due process was not observed because SSI did not comply with the twin
requirements of notice and hearing. (2004 Bar Question)
Q: FACTS: Mariet Demetrio as a clerk-typist in the Office of the President of a multi-national corporation. One day she was berated by the
President of the company, the latter shouting invectives at her in the presence of EEs and visitors for a minor infraction sh e committed. Mariet
was reduced to tears out of shame and felt so bitter about the incident that she filed a civil case for damages against the company president
before the regular courts. Soon thereafter, Mariet received a memorandum transferring her to the Office of the General Manager without demotion
in rank or diminution in pay. Mariet refused to transfer.
With respect to the civil suit for damages, the company lawyer filed a Motion to Dismiss for lack of jurisdiction considering the existence of
an ER-EE relationship and therefore, it is claimed that the case should have been filed before the Labor Arbiter.
1. Will Mariet’s refusal to transfer constitute the offense of insubordination? Explain briefly.
Suggested Answer:
Mariet Demetrio’s refusal to transfer constitutes the offense of insubordination. The transfer is a lawful order of the ER.
It is the ER’s prerogative, based on its assessment and perception of its EEa’ qualification, aptitudes and competence, to move its EEs around
in the various areas of its business operations in order to ascertain where they will function with maximum benefit to the company. An EE’s right
to security of tenure does not give him such vested right in his position as would deprive the company of its prerogative to change his assignment
or transfer him where he will be most useful. When his transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it does not
involve a demotion in rank or diminution in his salaries, benefits and other privileges, the EE may not refuse to obey the order of transfer.
[Philippine Japan Active Carbon Corp. v. NLRC, 171 SCRA 164] (1999 Bar Question)
Authorized Causes(Art. 283)

- Authorized causes generally entail payment of separation pay. Just causes generally do not.
1. Installation of labor saving devices (Automation)

- reduction of the number of workers in a company’s factory made necessary by the introduction of machinery in the
manufacture of its products
2. Redundancy
- where services of an EE are in excess of what is reasonably demanded by the actual requirements of the enterprise.
- It only requires superfluity, not duplication of work
When is a position redundant?
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 When it is superfluous as an outcome of a number of factors, e.g., overhiring of workers, decreased volume of business,
dropping of a particular product line previously manufactured.
 The ER has no legal obligation to keep in its payroll more EEs than are necessary for the operation of its business (Wiltshire
File Co., Inc., v. NLRC, 1991)
Q: FACTS: Harvester Independent Ventures (HIV) adopted a redundancy program to streamline operations Positions which overlapped each
other, or which are in excess of the requirements of the service, were declared redundant. This program resulted in the reduction of manpower
complement and consequent termination of 15 EEs, which included the secretary of the local union and the company’s Pollution Control Officer.
Ilaw at Buklod ng Manggagawa (IBM), questioned the termination of the 15 EEs, contending that the same constituted union bust ing and
therefore, illegal, if the same is undertaken without prior union approval.
1. Is IBM correct in its contention that redundancy can be implemented by HIV only upon prior union approval? Why?
Suggested Answer:
The Labor Code (in Art. 283) very clearly gives the ER the right to terminate any of its EEs for redundancy.
2. Can the position of Pollution Control Officer be declared redundant? Why?
Suggested Answer:
If there is a law requiring companies to have a Pollution Officer, then HiV cannot declare such office redundant.
If there is no such law, then the Pollution Officer could be considered redundant.
Panel: Consider case of Escareal. A position created by law cannot be declared redundant. (1999 Bar Question)
Q: 1. Can redundancy exist where the same is due to the company’s failure to properly forecast its manpower requirements?
2. Can redundancy exist where the work performed by 12 workers can be performed as efficiently by 10 workers by increasing the speed of
a machine without detriment to the health and safety of the workers?
Suggested answer:
1. Yes, redundancy exists when a position has become an excess or superfluous which, in turn, may be caused by reorganization , closure
of a section or department, or adoption of labor-saving arrangements. Poor forecasting does not invalidate redundancy. Forecasting after all is
not fail-free. (Wiltshire File Co., Inc. v. NLRC)
2. Yes, redundancy can exist where work efficiency has been improved mechanically thus resulting in excessive or superfluous manpower.
(Wiltshire File co., Inc. v. NLRC (1991)) (2000 Bar Question)
3. Retrenchment to prevent losses

Requisites for a valid retrenchment:
(1) It is intended to prevent losses;
(2) Written notices are served on the workers and DOLE at least 1 month before the retrenchment; and
(3) Separation pay is paid to affected workers (Fuentes v. NLRC, 1992)
4 standards/justification of retrenchment
(1) the losses expected should be substantial and not merely de minimis in extent
(2) the substantial loss apprehended must be reasonably imminent, and such imminence can be perceived objectively and
in good faith by the ER
(3) reasonably necessary and likely to effectively prevent the expected losses
* the ER should have taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs than
labor costs
(4) the alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proven by
sufficient and convincing evidence (Lopez Sugar Corp., v. FFW, 1990)
Procedure for retrenchment to be valid:

(1) 1-month prior notice to the EE; and
(2) use of a fair and reasonable criteria in carrying out the retrenchment program, such as less preferred status (as in the
case of temporary EEs), efficiency rating, seniority, and proof of claimed financial losses
Q: Soon after the Asian meltdown began in October 1997, ABC Realty and Management Corporation undertook a downsizing program and
terminated nearly a third of its regular workforce. The affected employees questioned their termination arguing that the action was precipitate
in that ABAC had not proved that it sustained any losses. Is the claim of the employees correct? Explain your answer.
Suggested answer:
The claim of the employees may or may not be correct.
Page 52 of 107
When the corporation undertook its downsizing” program, it may have terminated its employees on either one of two grounds, namely,
redundancy or retrenchment.
For redundancy, there is no requirement of losses, whereas in retrenchment, substantial loss, actual or anticipated, is a requirement. (Art
283, LC) in Atlantic Gulf and Pacific Company v. “…it is necessary to distinguish redundancy from retrenchment… Redundancy exists when the
services of an employee are in excess of what is required by the enterprise. Retrenchment on the other hand… is resorted to primarily to avoid
or minimize business losses.”
In Escareal v. NLRC (1992), the Supreme Court ruled that the law does not require financial loss as a basis for redundancy.
Q: What conditions must prevail and what requirements, if any, must an employer comply with to justify/ effect a valid retrenchment program?
Suggested answer:
In the case of Asian Alcohol Corp v. NLRC (1999), the Supreme Court stated that the requirements for a valid retrenchment must be proved
by clear and convincing evidence: (1) that the retrenchment is reasonably necessary and likely to prevent business 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 served written notice both to the employees and to DOLE at least one mon th prior to
the intended date of retrenchment; (3) that the employer pays the retrenched employees separation pay equivalent to one month pay for every
year of service, whichever is higher; (4) that the employer exercise 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; and (5) that the employer used fair and reasonable criteria
in ascertaining who would be dismissed and who would be retained among the employees, such as status (whether they are temporary, casual,
regular or managerial employees), efficiency, seniority, physical fitness, age and financial hardship for certain workers.
Q: what conditions must prevail and what requirements, if any, must an employer comply with to justify/ effect a valid redundancy program?
Suggested answer:
In the case of Asian Alcohol Corp v. NLRC (1999), the Supreme Court stated that redundancy exists when the service capability of the work
is I excess of what is reasonably needed to meet the demands of the enterprise. A redundant position is one rendered superfluous by any number
of factors, such as overhiring or workers, decreased volume of business, dropping of a particular line previously manufactured by the company
or phasing out of a service activity previously undertaken by the business. Under these conditions, the employer has no legal obligation to keep
in its payroll more employees than are necessary for the operation of its business.
For the implementation of a redundancy program to be valid, the employer must comply with the following requisites: (1) writt en notice
served on both the employees and DOLE at least one month prior to the intended date for retrenchment; (2) payment of separation pay equivalent
to at least one month pay or at least one month pay for every year of service whichever is higher; (3) good faith in abolishing the redundant
positions; and (4) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished.
Q: Is the seniority rule or “last in, first out” policy to be strictly followed in effecting a retrenchment/ redundancy program?
Suggested answer:
Again, in Asian Alcohol Corp., the Supreme Court stated that with regard to the policy of “first in, last out” in choosing wh ich positions to
declare as redundant or whom to retrench to prevent further business losses, there is no law that mandates such a policy. The reason is simple
enough. A host of relevant factors come into play in determining cost efficient measure and in choosing the employees who will be retained or
separated to save the company form closing shop. In determining these issues, management plays a pre-eminent role. The characterization of
positions as redundant is an exercise of business judgment on the part of the employer. It will be upheld as long as it passes the test of
arbitrariness. (2001 Bar Question)
Q: The Company Legal Counsel advised the Board of Directors as follows: “A company cannot retrench to prevent losses until actual losses occur.
The Company must wait until the end of the Business Year when its Books of Accounts, Profit and Loss Statement showing the actual loss and
Balance Sheet have been audited by an independent auditing firm.”
Is the legal advice of counsel correct?
Suggested answer:
The legal advice is not correct.
The Labor Code (in Art 283) provides that retrenchment may be resorted to “to prevent losses”. Thus, there could be legal basis for
retrenchment even before actual losses as long as the losses are imminent and serious.

The advice of the Company Legal Counsel that an employer cannot retrench to prevent losses until actual losses occur is not correct. The
Labor Code provides:
Art 283. Closure of establishment and reduction of personnel.- The employer may also terminate the employment of any employee xxx
retrenchment to prevent losses.
The law does not require that retrenchment can be undertaken by an employer only after an actual business loss occurs. The Supreme Court
in Lopez Sugar Corp. v. Federation of Free Workers (1990), said:
“In its ordinary connotation, the phrase “to prevent losses” means that the retrenchment or termination of some employees is authorized to
be undertaken by the employer sometime before the losses anticipated are actually sustained or realized. It is not, in other words, the intention
of the lawmaker to compel the employer to stay his hand and keep all his employees until sometime after losses shall have in fact materialized;
Page 53 of 107
if such an intent were expressly written into law, the law may well be vulnerable to constitutional attack as taking pro perty from one man to
another. (underscoring supplied) (1998 Bar Question)
Q: Daisy’s Department Store hired Leo as a checker to apprehend shoplifters. Leo later became Chief of the Checkers Section and acquired the
status of a regular employee. By way of cost-cutting measure, Daisy’s decided to abolish the entire Checkers Section. The services of Leo, along
with those of his co-employees working in the same section, were terminated on the same day. A month after the dismissal of Leo, Daisy’s
engaged the services of another person as an ordinary checker with a salary much lower than that which Leo used to receive. Given the above
factual settings (nothing more having been established), could the dismissal of Leo be successfully assailed by him?
Suggested Answer:
Yes. Given the factual setting in the problem, and since “nothing more have been established”, the dismissal of Leo can be successfully assailed
by him. This is so because the burden of proof is upon the employer to show compliance with the following requisites for reduction of personnel:
1. Losses or expected losses should be substantial and not merely de minimis;
2. The expected losses must be reasonably imminent, and such imminence can be perceived objectively and in good faith by the employer.
3. It must be necessary and likely to prevent the expected losses. The employer must have taken other measures to cut costs other than labor
costs; and
4. Losses if already realized, or the expected losses must be proved by sufficient and convincing evidence. (Lopez Sugar Corp. v. Federation
of Sugar Workers, 189 SCRA 179 [1990]).
Moreover, the notice requirements to be given by Daisy’s Department Store to DOLE and the employees concerned 30 days prior to the intended
date of termination, as well as the requisite separation pay, were not complied with.

Yes. The authorized cause to dismiss due to redundancy or retrenchment under Art. 283 of the Labor Code has been disproved b y Daisy’s
engaging the services of a substitute checker at a salary lower than that which Leo used to receive. Also, it appears that the one (1) month
notice rule required in the said law was not complied with. Such being the case, the twin requirements for a valid dismissal under Arts 277(b)
and 283 of the Code have clearly not been complied with. That no separation pay was paid Leo, in violation of Art. 283 of the Code, his dismissal
can all the more be successfully assailed. (2003 Bar Question)
4. Closure or cessation of operations

Closure may be:
(a) due to business losses; or
(b) not due to business losses
Requirements (if not due to losses):
a. Written notice to EE and DOLE 1 month before closure
b. Cessation of business operations must be bona fide character; and
c. Payment to the EEs of separation pay
- 1/2 month pay, or 1 month pay for every year of service, whichever is higher
- if closure is due to losses, there is no need to pay separation pay
 It is management’s prerogative to close or cease its business operations even though t is not suffering from any loss. (Cattista
v. NLRC, 1995)
Q: ABC Tomato Corporation, owned and managed by three (3) elderly brothers and two (2) sisters, has been in the business for 40 years. Due
to serious business losses and financial reverses during the last five (5) years, they decided to close the business.
1. As counsel for the corporation, what steps will you take prior to its closure?
Suggested Answer:
As counsel for the corporation, I will see to it that the corporation shall serve a written notice on its intended date of closing or cessation of
operation on the workers of the corporation and the DOLE at least one month before the intended date of the closure or cessation of operation.
2. Are the employees entitled to separation pay?
Suggested Answer:
The employees of the corporation are not entitled to separation pay because Art. 283 of the LC expressly provides that if the closure or
cessation of operation of an establishment is due to serious business losses or financial reverses, the employees are not ent itled to separation
pay. In the case of National Federation of Labor v. NLRC (2000), the Supreme Court ruled that there is no obligation to pay separation pay if the
closure is not a unilateral and voluntary act of the employer.
Q: If the reason for the closure is due to old age of the brothers and sisters:
1. Is the closure allowed by law?
Suggested Answer:
Page 54 of 107
Yes, the closure is allowed by law. For bona fide reason, an employer can lawfully close shop at any time. Just as no law forces anyone to
go into business, no law can compel anybody to continue the same. It would be stretching the intent and spirit of the law if the Court interferes
with management’s prerogative to close or cease its business operations just because the business is not suffering from any loss or because of
the desire to provide workers continued employment (Alabang Country Club, Inc v. NLRC)
2. Are the employees entitled to separation benefits?
Suggested Answer:
The EEs of the corporation are entitled to separation pay because the Labor Code expressly provides that the only time that they are not
entitled to separation pay is when the closure or cessation of operation is due to serious business losses or financial reverses. (2006 Bar
Question with similar 2001 Bar Question))
Disease (Art. 284)—

(1) When EE suffers from a disease; and
(2) continued employment is prohibited by law or prejudicial to his health or to the health of his co-EEs
- IRR requires a certification by a competent public health authority that the disease is of such nature or at such a stage that
it cannot be cured within 6 months even with proper medical treatment before an EE is dismissed.
- Company’s own physician is not a “competent public health authority” hence his medical certificate is not in compliance
with the requirement. (Cebu Royal Plant v. NLRC, 1987)
Q: Gabriela Liwanag has been working as bookkeeper at Great Foods, Inc., which operates a chain of high-end restaurants throughout the
country, since 1970 when it was still a small eatery at Binondo. In the early part of the year 2003, Gabriela, who was already 50 years old,
reported for work after a week-long vacation in her province. It was the height of SARS (Severe Acute Respiratory Syndrome) scare, and the
management learned that the first confirmed SARS death case in the Philippines, a “balikbayan” nurse from Canada, is a townmate of Gabriela.
Immediately, a memorandum was issued by management terminating the services of Gabriela on the ground that she is a probable carrier of
SARS virus and that her continued employment is prejudicial to the health of her co-employees.
Is the action taken by the employer justified?
Suggested Answer:
The employer’s act of terminating the employment of Gabriela is not justified. There is no showing that said employee is sick with SARS, or
that she associated or had contact with the deceased nurse. They are merely townmates. Furthermore, there is no certification by a competent
public health authority that the disease is of such nature or such a stage that it cannot be cured within a period of six (6) months even with
proper medical treatment. (Implementing Rules and Regulation, Book VI, Rule 1, Sec. 8, LC) (2004 Bar Question)
Q: FACTS: International Motors Corporation (IMC) undertook a reorganization of the company and right-sizing of its personnel complement due
to the current financial crisis. The affected EEs were given the option to resign with corresponding generous benefits attending such option. The
said EEs opted for resignation on account of this negotiated benefits; and after receipt of which, they executed quitclaims in favor of IMC.
Immediately thereafter, the EEs voluntarily resigned for valuable consideration and that, in any case, they have executed quitclaims in favor and
that, in any case, they have executed quitclaims in favor of the company. The EEs, however, claimed that they were forced to resign, and that
they executed the quitclaims only because of dire necessity.
1. Is company guilty of illegal dismissal? Why?
Suggested Answer:
No. The company is not guilty of illegal dismissal since the facts clearly indicate that the “EEs were given the option to resign with
corresponding generous benefits attending such option” and that these EEs “opted for resignation on account of these negotiat ed benefits.”
Nothing in the facts indicate that their consent to the waiver of benefits under the Labor Code was vitiated by fraud, violence, undue influence
or any other vice or defect.
Alternative Answer:
The company is not guilty of illegal dismissal.
According to the facts of the case, the EEs opted to resin voluntarily, considering the generous benefits given to them in connection with
such resignation.
Voluntary resignation cannot be considered as illegal dismissal. (Samaniego v. NLRC, 198 SCRA 111) (1999 Bar Question)
Separation Pay (Authorized Causes/Disease)

(1) Installation of labor-saving
devices 1 month pay or 1 month pay for every year of service, whichever is higher
(2) Redundancy
Page 55 of 107
(3) Retrenchment to prevent losses
(4) Closure or cessation of
operations or undertaking NOT 1 month pay or at least ½ month pay for every year of service, whichever is higher
due to serious business losses or
financial reverses
(5) Disease
*in every case, a fraction of at least 6 months shall be considered as 1 whole year
Procedural Due Process

For just causes
- there must be observance of the requirements of the two-notice rule:
(i) a written notice containing a statement of the cause for termination and to afford him opportunity to be heard and to
defend himself; and
(ii) to notify the worker in writing of the decision to dismiss him, stating clearly the reasons therefore
For authorized causes

- written notice to EE and DOLE Secretary at least 1 month before intended date
Q: Assuming the existence of valid grounds for dismissal, what are the requirements before an employer can terminate the services of an
employee?
Suggested answer:
The employee being terminated should be given due process by the employer.
For termination of employment based on any of the just causes for termination, the requirements of due process that the employer must
comply with are:
A written notice should be served on the employee specifying the ground or grounds for termination and giving to said employee reasonable
opportunity within which to explain his side.
A hearing or conference should e held during which the employee concerned, with the assistance of counsel if the employee so desires, is
given the opportunity to respond to the charge, present his evidence and present the evidence presented against him.
A written notice of termination, if termination is the decision of the employer, should be served on the employee indicating that upon due
consideration of all the circumstances, grounds have been established to justify his termination.
For termination of employment based on authorized causes, the requirements of due process shall be deemed complied with upon service
of written notice to the employee and the appropriate Regional Office of the DOLE at least 30 days before the effectivity of the termination
specifying the ground or grounds for termination.

Assuming that there is a valid ground to terminate employment, the employer must comply with the requirement of procedural due process-
written notice of intent to terminate stating the cause for termination; Hearing; and Notice of Termination.
Notice and Hearing: (Art 277(b))

The Supreme Court ruled in Salaw v. NLRC (1991)
“Xxx Not only must the dismissal be for a valid or unauthorized cause as provided by law xxx but the rudimentary requirements of due
process- notice and hearing- must also be observed before an employee must be dismissed.”
Two Notice Requirement

The Supreme Court in Tanala v. NLRC (1996) ruled:
“xxx This Court has repeatedly held that to meet the requirements of due process, the law requires that an employer must furnish the workers
sought to be dismissed with 2 written notices before termination of employment can be legally effected, that is (1) a notice which apprises the
employee of the particular acts or omissions for which his dismissal is sought; and (2) subsequent notice, after due hearing, which informs the
employee of the employer’s decision to dismiss him.” (1998 Bar Question; similar to 2006 Bar Question)
Q: FACTS: Joseph Vitriolo (JV), a cashier of Seaside Sunshine Supermart (SSS), was found after an audit, to have cash shortages on his monetary
accountability covering a period of about 5 months in the total amount of P48,000. SSS served upon JV the written charge agai nst him via a
memorandum order of preventive suspension, giving JV 24 hours to submit his explanation within the given period. As soon as JV submitted his
written explanation within the given period, the same was deemed unsatisfactory by the company and JV was peremptorily dismis sed without
any hearing.
The day following his termination from employment, JV filed a case of illegal dismissal against SSS. During the hearing before the Labor
Arbiter, SSS proved by substantial evidence JV’s misappropriation of company funds and various infractions detrimental to the business of the
company. JV, however, contended that his dismissal was illegal because the company did not comply with the requirements of due process.
1. Did SSS comply with the requirements of procedural due process in the dismissal from employment of JV? Explain briefly.
Suggested Answer:
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In connection with the right to due process in the termination of an EE, the Labor Code [in Art. 277 (b)] requires that the ER fu rnish the
worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford
ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires.
SSS did not comply with the above described requirements for due process. The memorandum order was for the preventive suspens ion of
JV, not a notice for his termination and the causes of his termination. (1999 Bar Question)
2. If you were the Labor Arbiter, how would you decide the case? Explain briefly.
Suggested Answer:
I will decide that the termination of JV was legal. It was for just cause. JV’s misappropriation of funds and various infractions detrimental to
the business of the company duly proven by substantial evidence constitute a willful breach by JV of the trust reposed in him by his ER which is
a just cause for termination. (See Art. 282)
But I will award him indemnity of, say P1,000, for the failure of the ER to give him due process. (1999 Bar Question)
Q: FACTS: On Sept. 3, 1998, the National Bureau of Investigation extracted from Joko Diaz – without the assistance of counsel – a sworn
statement which made it appear that Joko, in cahoots with another EE, Reuben Padilla, sold 10 cash registers which had been f oreclosed by
North-South Bank for P50,000 and divided the proceeds therefrom in equal shares between the two of them.
On Sept. 10, 1998, Joko was requested by Rolando Bato, the bank manager, to appear before the Disciplinary Board for an investigation in
the following tenor: ‘You are requested to come on Thursday, Sept. 14, 1998, at 11:00am the Board Room, without counsel or representative,
in connection with the investigation of the foreclosed cash registers which you sold without authority.”
Mr. Bato himself conducted the investigation, and two days thereafter, de dismissed Joko. The Bank premised its action in dismissing Joko
solely on the latter’s admission of the offense imputed to him by the NBI in its interrogation on Sept. 3, 1998. Aside from this sworn statement,
no other evidence was presented by the bank to establish the culpability of Joko in the fraudulent sale of the bank’s foreclosed properties.
1. Is the dismissal of Joko Diaz by North-South Bank legally justified? Explain briefly.
Suggested Answer:
The dismissal of Joko Diaz by the Bank is not legally justified.
Diaz was not given the required due process by the Bank. He should have been given a written notice that he was being terminated and a
statement of the causes for his termination.
He was instead given a just notice about an investigation relative to the incident.
It was also contrary to law for the Bank to tell Diaz that he should attend the investigation “without counsel or representative.” Instead, he
should have been afforded as provided in the Labor Code [in Art. 277(b)] ample opportunity to be heard and to defend himself with the assistance
of his representative if he so desires.
If the evidence that was the basis for the termination of Joko Diaz was only his own statement “extracted” from him by the NBI when Joko
was without assistance of counsel, then the statement cannot be substantial evidence for Joko’s termination.
Alternative Answer:
No. Under Sec. 12 of Art. III of the 1987 Constitution any “confession or admission obtained in violation of Sec. 12 and 17 shall be inadmissible
in evidence against him.” Since the sole basis for his dismissal was the confession procured by the NBI in violation of his right to counsel which
is inadmissible for any purpose and any proceeding including an administrative case, his dismissal is illegal. Diaz’s termination is likewise illegal
because he was deprived of his right to due process since during the investigation he was required to attend without counsel or representative.
2. Can Reuben Padilla’s participation in the fraudulent sale of the bank’s foreclosed properties be made to rest solely on the unilateral
declaration of Joko Diaz? Why?
Suggested Answer:
No. The unilateral declaration of Joko, where Joko has not been subjected to cross-examination cannot be considered as substantial evidence;
it is just hearsay.
Alternative Answer:
No. The unilateral declaration of Joko is not enough. Such declaration must be corroborated by other competent and convincing evidence.
At the very least, what the Bank should do should be to confront Reuben Padilla with the declaration of Joko. (Century Textile Mills, Inc. vs.
NLRC, 161 SCRA 628) (1999 Bar Question)
Effect of dismissal without procedural due process but with cause (substantive process)
Serrano Doctrine
› Termination due to authorized cause without giving the notice required under the Labor Code is not a violation of due process.
› It is valid although declared irregular/ ineffectual.
› He shall however be entitled to SEPARATION PAY AND BACKWAGES subject to the ff. rules:
1. When the dismissal is for a cause (just or authorized), without prior notice the EE is entitled to full backwages from the
time he was terminated until the decision finding cause becomes final.
2. When the dismissal is without just or authorized cause, backwages shall be computed from the time of his dismissal until
his actual reinstatement. (Serrano v. NLRC, 2000)
Agabon doctrine (modifying Serrano)
Page 57 of 107
› Dismissal for an authorized or just cause, without procedural due process, is not an illegal dismissal which warrants backwages;
employee is entitled only to nominal damages.
› Here, the Court interpreted Art. 279 to the effect that termination is illegal only if it is not for any of the just or authorized causes
provided by law.
› Payment of backwages and other benefits, including reinstatement, is justified only if the employee was unjustly dismissed.
› The Court decided to follow the Wenphil doctrine that where the dismissal is for a just cause, the lack of statutory due process
should not nullify the dismissal or render it illegal.
› However, the ER should indemnify the EE for violation of his rights.
› The indemnity should be in the form of nominal damages, which is stiffer than that provided in Wenphil to discourage the abhorrent
practice of “dismiss now, pay later”.
* in Wenphil, the ER is only required to indemnify the EE P1,000 for failure to give a formal notice. (Agabon v. NLRC, 2004)
Q: The general manager of Junk Food Manufacturing Corporation dismissed Andrew Tan, a rank-and-file EE, on the ground of insubordination.
The general manager served on Andrew Tan the letter of termination effective upon receipt which was on 8 March 1992. Shocked by his
unexpected dismissal, Andrew Tan confronted the general manager and hit the latter on the head with a leap pipe.
Junk Food Manufacturing filed a complaint in court against Andrew Tan for less serious physical injuries. Somehow, Andrew Tan was
acquitted by the court assigned to hear the criminal case. A few days following his acquittal, or on 1 March 1996, Andrew Tan filed a complaint
against the company for illegal dismissal, reinstatement and the payment of backwages and damages.
(a) Was the complaint filed by Andrew Tan for illegal dismissal within the reglementary period granted by law?
(b) What reliefs may Andrew Tan be entitled to if the Labor Arbiter finds just cause for termination but that the requirements of notice and
hearing are not complied with.
Answer:
(a) Yes. The complaint was filed within 4 years from the date Andrew was dismissed by his ER. Illegal dismissal, as a cause of action,
prescribes after 4 years from the time the cause of action, namely, illegal dismissal took place. This is pursuant to the Civil Code which provides
that actions upon an injury to the rights of a person should be initiated within 4 years from the time the right of action accrues. [Art. 1146, CC]
(b) Andrew would be entitled to an indemnity of P1,000 to P10,000 from his ER for the latter’s non-compliance of the requirements of notice
and hearing in cases of termination of employment. [Wenphil Philippines v. NLRC, 176 SCRA 66] (1997 Bar Question)
Q: FACTS: The Labor Arbiter dismissed the complaint for illegal dismissal filed by Genevieve Cruz against Bulag Optical Inc. (BOI) which denied
her prayer for reinstatement but awarded financial assistance in her favor. BOI appealed the decision of the Labor Arbiter to the NLRC within the
reglementary period. Genevieve fled an opposition to the appeal. The NLRC affirmed in toto the decision of the Labor Arbiter. Both the BOI and
Genevieve are not satisfied with the decision of the NLRC.
1. What is the remedy, if any, of BOI and before what forum? Explain briefly.
Suggested Answer:
BOI can file a Motion for Reconsideration with the NLRC after 10 days from receipt of the decision.
If the NLRC denies the Motion for Reconsideration, BOI can file a petition for certiorari with the Court of Appeals under Rule 65 of the Rules
of Court since the decision of the NLRC is final and executory. (1999 Bar Question)
2. Can Genevieve Cruz avail herself of the same remedy as that of BOI? Why?
Suggested Answer:
Genevieve Cruz can avail herself of the same remedy as that of the BOI. The remedies described for the BOI are also the same remedies
available to Genevieve Cruz as a party to the case, pursuant to the Labor Code (Art. 233) and the Rules of Court (Rule 65).
Panel: But the facts of the case indicate that Genevieve did not appeal. She therefore cannot avail of the remedy. (1999 Bar Question)
Effect of illegal dismissal (i.e., without cause)

(1) Entitled to REINSTATEMENT without loss of seniority rights and other privileges
- or payment of SEPARATION PAY, if reinstatement is not possible
When is reinstatement not possible?

(1) Strained relations doctrine
- happens because of EE’s and ER’s bad faith imputations against each other but this applies only if EE occupies a position
where he enjoys the trust and confidence of his ER (Globe-Mackay v. NLRC, 1992)
(2) Position has been abolished

- applies to both managerial and rank-and-file EEs
 ER is granted the option to merely reinstate the EE in the payroll but not actually admit him back to work pending the appeal
of the dismissal case
 NB: per Art. 223, a reinstatement order is immediately executory
Page 58 of 107
(2) Entitled to FULL BACKWAGES, inclusive of allowances and other benefits or their monetary equivalent
- Backwages are punitive in relation to the ER. Hence, they must be paid in full from the time of illegal dismissal. It must be
paid regardless of WON the EE has since found work elsewhere. (Bustamante v. NLRC, 1996)
› NOTE: Reinstatement and backwages are 2 reliefs given to an illegally dismissed EE. They are separate and distinct from each
other.
› In other words, an illegally dismissed EE is entitled to either (1) reinstatement, if viable, or separation pay if reinstatement is no
longer viable; and (2) backwages (Torillo v Leogardo, 1991)
Q: FACTS: In the illegal dismissal case filed by Sharon Cometa against Up & Down Company, the Labor Arbiter rendered a decision directing her
immediate reinstatement and payment of full backwages. The Company appealed to the NLRC. Following her lawyer’s advice that the
reinstatement aspect of the decision is immediately executory, Sharon went to the HRD Office of the Company and demanded immediate
reinstatement. When the Company refused, her lawyer, Atty. Maximiano Anunciacion, filed a motion to cite the ER in contempt. Acting on the
motion, NLRC ordered payroll reinstatement of Sharon Cometa.
1. Can the company or any of its officials be cited for contempt for refusing to reinstate Sharon Cometa? Why?
Suggested Answer:
Yes. The Company or any of its officials can be cited for contempt. It is noted that in his decision the Labor Arbiter specifically directed the
immediate reinstatement of Sharon Cometa. This directive under the Labor Code (Art. 223) is immediately executory, even pending appeal.
(Pioneer Texturizing Corp. v. NLRC, 280 SCRA 806)
Alternative Answer:
Yes. Under Art. 223, LC, an ER has two options in order for him to comply with an order for reinstatement which is immediately executory,
even pending appeal. Firstly, he can admit the dismissed EE 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 is already filled up. Secondly, the EE can be reinstated in the payroll. Failing
to exercise any of the above options, the ER can be compelled under PAIN or CONTEMPT, to pay instead the salary of the EE effective from the
date the ER failed to reinstate despite an executory writ of execution served upon him. Under Art. 218, LC the NLRC has the power to cite persons
for direct and indirect contempt.
Another Alternative Answer:

In a case (Maranaw Hotel Corp. v. NLRC, 238 SCRA 191), the Supreme Court said that although the reinstatement aspect of a Labor Arbiter’s
decision was immediately executory, it does not follow that it is self-explanatory. There must still be a writ of execution issued motu propio or
upon motion of the interested party. (See Art. 224)
2. May the NLRC order the payroll reinstatement of Sharon Cometa? Why?
Suggested Answer:
The NLRC may NOT order the payroll reinstatement of Sharon. The Labor Code (Art. 223) provides that in the immediate reinstatement of
a dismissed EE, the EE shall be admitted back to work under the same terms and conditions prevailing prior to the EE’s dismissal or, at the option
of the ER, merely reinstated in the payroll. Thus, the reinstatement of the EE in the payroll is at the option of the ER and not of the NLRC or the
Labor Arbiter who have the power only to direct reinstatement. (1999 Bar Question)
Q: What is meant by “payroll reinstatement” and when does it apply?
Suggested Answer:
Payroll reinstatement is a form of reinstatement which an ER may opt to exercise in lieu of an actual reinstatement. Here, the illegally
dismissed EE is to receive his basic pay without the obligation of rendering any service to the ER. This occurs when a Labor Arbiter decides that
an EE was illegally dismissed and as a consequence awards reinstatement, pursuant to Art. 279, LC. Such award of reinstatement, according to
Art. 223, LC, is immediately executory even pending appeal. (2005 Bar Question)
Q: A, an employee of Company B, was found to have been illegally dismissed and was ordered to be reinstated and paid backwages from the
time of dismissal until actual reinstatement. The case was elevated all the way to the Supreme Court. By the time the Supreme Court’s decision
became final and executory, B had closed down and was in the process of winding up. Nonetheless, B paid A his backwages and separation pay.
A complained that B’s computation was erroneous in that A’s allowance was not included. Is A correct in his claim? For what reason/s?
Suggested answer:
A is correct. After its amendment by RA 6715, the backwages that an employees who has been unjustly dismissed is entitled to receive is
not limited to his full backwages but also includes his allowances and the other benefits or their monetary equivalent.

In the case of Consolidated Rural Bank v. NLRC (19999), the Supreme Court ruled that the allowances of the employee should be included
in the computation of backwages. (2001 Bar Question with similar 1997 Bar Question)
Q: An EE was ordered reinstated with backwages. Is he entitled to the benefits and increases granted during the period of his lay-off? Explain
briefly.
Page 59 of 107
Suggested Answer:
Yes. An EE who is ordered reinstated with backwages is entitled to the benefits and increases granted during the period of his lay-off. the
Supreme Court has ruled: “ Backwages are granted for earnings a worker lost due to his illegal dismissal and an ER is obliged to pay an illegally
dismissed EE the whole amount of salaries plus all other benefits and bonuses and general increases to which the latter should have been
normally entitled had he not been dismissed. [Sigma Personnel Services v. NLRC (1993)] (2002 Bar Question)
Q: What economic components constitute backwages for a rank and file employee? Are these components equally applicable to a managerial
employee?
Suggested answer:
The Labor Code (Art 279) provides that an employee who is unjustly dismissed form work is entitled to reinstatement and also 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 his actual reinstatement.
An employee is entitled to all the above benefit regardless of whither he is a rank and file employee or a managerial employee.
However, backwages may also include the 13 th month pay which are paid to rank and file employee, as well as benefits arising form a CBA
given only to employees in the bargaining unit. Managerial employees cannot be given the same since they are ineligible to join a labor
organization.
Q: “A” was hired by company “B” in January 1980 until A was illegally dismissed on April 30, 1990 as found by a Labor Arbiter who ordered
reinstatement and full backwages from April 30, 1990 until A’s reinstatement. The Arbiter’s decision was promulgated on April 29, 1995. B
appealed claiming, among others, that the award for backwages was excessive in that it went beyond the three-year rule set forth in Mercury
Drug v. CIR. Is B’s contention tenable? Why?
Suggested answer:
No, the contention of “B” is not tenable.
RA 6715, which was enacted in 1989, in effect set aside the three-year rule set forth in Mercury Drug v. CIR when it provided that the full
backwages that an unjustly dismissed employee shall be computed from the time his compensation was withheld from him up to the time of his
actual reinstatement.
The word “Actual” was inserted in the law by RA6715. thus, in accordance with the aforesaid law, an unjustly dismissed employee shall
receive his full backwages computed form the time his compensation was withheld from him up to the time of his actual reinstatement even if
this period is more than three years.

No, the contention of “B” is not tenable. The Supreme Court in Ferrer v. NLRC abandoned the Mercury Drug rule and in 1996 Bustamante
v. NLRC, the Supreme Court said:
(Quoting Art 279, LC) Under the above quoted provision, it became mandatory to award backwages to illegally dismissed regular employees.
The law specifically declared that the award of backwages was to be computed from time the compensation was withheld from the employee up
to the time of his reinstatement.
xxx
The clear legislative intent of the amendment in RA 6715 is to give more benefits to the workers than what was previously given them under the
Mercury Drug Rule. In other words, the provision calling for ”Full backwages” to illegally dismissed EEs is clear, plain and free from ambiguity,
and, therefore, must be applied without attempted or strained interpretation. (2001 Bar Question)
(3) Damages
a. Moral damages— if the dismissal is in bad faith, attended by fraud, is against public policy, good customs, morals, or
oppressive to labor (based on Art. 2220 of the NCC, not on the LC, per Cruz v. NLRC, 2000)
b. Exemplary damages— if the dismissal is wanton, oppressive or malevolent. (based on Arts. 2229 and 2232 of the NCC, per
Nueva Ecija Electric Cooperative, Inc. v. NLRC, 2000)
Q: What damages can an illegally dismissed employee collect from his employer?
Suggested answer:
An illegally dismissed may collect from his employer actual or compensatory damages, moral damages and exemplary damages, as well as
attorney’s fees as damages.

Moral and exemplary damages are only proper where the employee has been harassed ad arbitrarily terminated by the employer. Nueva
Ecija v. Electric Cooperative Employees Association (2000) (2001 Bar Question)
Page 60 of 107
(4) Separation pay as financial assistance
- As a general rule, for termination based on just cause, no separation pay need be paid (Book VI, Rule I, Sec. 7) but the SC
ruled that separation pay (or financial assistance) may be required in instances where the EE is validly dismissed for causes
other than serious misconduct or those reflecting in the EE’s moral character.
- Due consideration can be given to EE’s long years of service or age, if the reason for termination does not relate to the EE’s
moral character (PLDT v. NLRC, 1988).
- Note: this separation pay as financial assistance is different from separation pay under authorized causes (Arts. 283-284) and
separation pay in lieu of reinstatement of an EE who was illegally dismissed
Q: Daisy, the branch manager of Tropical Footwear Inc., was dismissed for serious misconduct. She filed a complaint for illegal dismissal and
damages. The Labor Arbiter sustained Daisy’s dismissal but awarded her separation pay based on social justice and as an act o f compassion
considering her 10-year service with he company.
Was the award of separation pay proper? Explain.
Suggested Answer:
No, the award of separation pay is not proper because the employee was terminated for serious misconduct and payment of separation pay
will be to reward an employee for a wrongdoing. (PLDT v. NLRC)
We hold that 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 his moral character.
The policy of social justice is not intended to countenance wrongdoing. Compassion for the poor is an imperative of every hum an society
but only when the recipient is not a rascal claiming an undeserved privilege those who invoke social justice may do so only if their ands are clean
and their motives blameless.
A contrary rule would have the effect of rewarding rather than punishing the erring employee for his offense.
Alternative Answer:
The award of separation pay was not proper.
According to the Labor Code, separation pay s to be paid to an employee whose employment is to be terminated 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.
When an employer terminates the services of an employee who has been found to be suffering from any disease, the employee is also to be paid
separation pay.
But on the basis of equity, the Supreme Court has ruled that an employee whose employment has been terminated for just cause may
nevertheless, for humanitarian reasons, be granted financial assistance in the form of separation pay. But also according to the Supreme Court,
a terminated employee is not deserving of said financial assistance if her termination is due to serious misconduct.
In the case, Daisy was dismissed because of serious misconduct. Thus, she should no be paid separation pay. (1996 Bar Question)
Corporate liability
Rule: Company officials cannot be held personally liable for damages for an illegal dismissal
Unless it is shown that they deliberately or maliciously designed to evade financial obligations of the corp. to its EEs (piercing the
corporate veil). (Reahs Corp. v. NLRC, 1997)
Q: FACTS: Teofilo Lacson was one of more than 100 EEs who were terminated from employment due to the closure of LBM Construction
Corporation (LBM).
LBM was a sister company of Lastimoso Construction, Inc. and RL Realty & Development Corporation. All 3 entities formed what came to
be known as the Lastimoso Group pf Companies. The 3 corporations were owned ad controlled by members of the Lastimoso Family; their
incorporators and directors all belonged to the Lastimoso family. The 3 corporations were engaged in the same line of business, under one
management, and used the same equipment including manpower services.
Teofilo Lacson and his co-EEs filed a complaint with the Labor Arbiter against LBM, RL Realty and Lastimoso Construction to hold them
jointly and severally pay.
Lastimoso Construction, Inc. and RL Realty & Development Corp. interposed a Motion to Dismiss contending that they are juridical entities
with distinct and separate personalities from LBM Construction Corp. and therefore, they cannot be held jointly and severally liable for the money
claims of workers who are not their EEs.
Rule on the Motion to Dismiss. Should it be granted?
Suggested Answer:
It is very clear that even if LBM Construction company, Lastimoso Construction Co., Inc. and RL Realty & Dev’t Corp. all belong to the
Lastimoso family and are engaged in the same line of business under one management and used the same equipment including manp ower
services, these corporations were separate juridical entities.
Thus, only the LBM Const. Corp. is the ER of Teofilo Lacson. The other corporations do not have any ER-EE relations with Lacson.
The case in question does not include any fact that would justify piercing the veil of corporate fiction of the other corporations in order to
protect the rights of workers.
In a case (Concept Builders, Inc. v. NLRC, 257 SCRA 149), the Supreme Court ruled that it is a fundamental principle of corporation law that
a corporation is an entity separate and distinct from its stockholders and from other corporations to which it may be connected. But this separate
and distinct personality of a corporation is merely a fiction created by law for convenience and to promote justice. So, when the notion of separate
juridical personality is used to defeat public convenience, justify wrong, protect fraud or defend crime, or is used as a device to defeat the labor
laws, this separate personality of the corporation may be disregarded or the veil of corporate fiction pierced.
Page 61 of 107
Alternative Answer:
Motion to Dismiss should be denied. In the case at bar, the Labor Arbiter would be justified in piercing the corporate veil and considering
the 3 corporations as one and the same entity as the ER of Teofilo Lacson because based on the facts “the three corporations were owned and
controlled by members of the Lastimoso family; their incorporators and directors all belonged to the Lastimoso family. The 3 corporations were
engaged in the same line of business, under one management and used the same equipment including manpower services.” The facts show that
“the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, the law will regard the corporation
as an association of persons, or in the case of two corporations, will merge them into one.” (1999 Bar Question)
Q: Are the principal officers of a corporation liable in their personal capacity for non-payment of unpaid wages and other monetary benefits
due its EEs?
Answer:
As a general rule, the obligations incurred by the principal officers and EEs of a corporation are not theirs but the direct accountabilities of
the corporation they represent. However, solidary liabilities may at times be incurred but only when exceptional circumstances warrant such as,
generally, in the following cases: when directors and trustees or, in appropriate cases, the officers of a corporation: (a) a vote for or assent to
patently unlawful acts of the corporation; (b) act in bad faith or with gross negligence in directing the corporate affairs; (c) are guilty of conflict
of interest to the prejudice of the corporation , its stockholder or members, and other persons.
In labor cases, the Supreme Court has held corporate directors and officers solidarily liable with the corporation for the termination of
employment of EEs done with malice or bad faith. (Sunio v. NLRC, 127 SCRA 390; General Bank and Trust Co. v. CA, 135 SCRA 659).
Alternative Answer:
No. Unless they are guilty of malice or bad faith in connection with the non-payment of unpaid wages and other monetary benefits due to
EEs. (1997 Bar Question)
Q: May the general manager of a company be held jointly and severally liable for backwages of an illegally dismissed EE?
Suggested Answer:
Yes. If it shown that he acted in bad faith, or without or in excess of authority, or was motivated by personal ill-will in dismissing the EE,
the general manager may be held jointly and severally liable for the backwages of an illegally dismissed EE. [ARB Construction v. Court of Appeals
(2000), Lim v. NLRC (1999)]

Yes. The General Manager may be held jointly and severally liable for backwages of an illegally dismissed EE if he or she actually authorized
or ratified the wrongful dismissal of the EE under the rule of respondeat superior. In case of illegal dismissal, corporate directors and officers are
solidarily liable with the corporation where termination of employment is done with malice or bad faith. [Bogo-Medellin Sugar Planters Assoc.,
Inc. v. NLRC (1998)] (2002 Bar Question)
Preventive Suspension (Book V, Rule XXIII, Sec. 9)

 The ER’s authority to put an EE under preventive suspension is not in the LC but in the IRR.
 Maximum period = 30 days. Beyond that, EE becomes entitled to his pay and benefits.
 Preventive suspension is incident to investigation. It is not itself the penalty for the offense. This is justified where the EE’s continued
employment poses a serious and imminent threat to the life or property of the ER or his co-workers. Without this threat, preventive
suspension is improper.
Instances of Constructive Dismissal

Constructive dismissal
- involuntary resignation to when continued employment becomes impossible, unreasonable or unlikely
- Unwarranted transfer or demotion
- Status is changed from regular to casual
- Floating status beyond 6 months (Art. 286)
EMPLOYMENT NOT DEEMED TERMINATED (Art. 286)

(1) Bona fide suspension of the operation of a business for a period not exceeding 6 months (temporary lay-off).
 if this exceeds 6 months, this would be tantamount to constructive dismissal hence the EE is entitled to benefits for their
separation
(2) Fulfillment by the EE of a military or civic duty
 In these instances, the ER shall reinstate the EE to his former position without loss of seniority rights if he indicates his desire
to resume his work not later than 1 month from resumption of operations or from relief from military or civic duty.
Q: Mansueto was hired by the Philippine Packing Company (PPC) sometime in 1960 as an hourly paid research field worker at its pineapple
plantation in Bukidnon. In 1970, he was transferred to the general crops plantation in Misamis Oriental. Mansueto was promoted to the position
of a monthly paid regular supervisor four years after.
Subsequently, research activity in Misamis Oriental was phased out in March of 1982 for having become unnecessary. Mansueto thereafter
received a written memorandum from he PPC reassigning him to the Bukidnon plantation effective April 1, 1982, with assurance that is position
of supervisor as still there for him to hold.
Page 62 of 107
Mansueto tried to persuade the PPC management to reconsider his transfer and if this was not possible, to at least consider s position as
redundant so that he could be entitled to severance pay. PPC did not accept Mansueto’s proposal.
Mansueto claims that his reassignment is tantamount to an illegal constructive dismissal.
Do you agree with Mansueto? Explain.
Suggested Answer:
There is no constructive dismissal by the mere act of transferring an employee. The employee’s contention cannot be sustained simply
because a transfer causes inconvenience. There is no constructive dismissal where, as in Philippine Japan Active Carbon Corp., vs. NLRC,
constructive dismissal means:
A quitting because continued employment is rendered impossible, unreasonable or unlikeable; as, an offer involving a diminution in pay.
The transfer will not substantially alter the terms and conditions of employment of the supervisor. The right to transfer an employee is part
of the employer’s managerial function.
Furthermore, the Court ruled that an employee has no vested right to a position, and in justifiable cases employment may be terminated.
An employer’s right to security of tenure does not give him such a vested right to the position as would deprive the company its prerogative
to change his assignment or transfer him where he will be most useful. When his transfer is not unreasonable, not inconvenient, nor prejudicial
to him and it does not involve a demotion in rank or diminution of his salaries, benefit, and other privileges the employee may not complain that
it amounts to a constructive dismissal. (1996 Bar Question)
Q: RS, a security guard, filed a complaint for illegal dismissal against Star Security Agency. He alleged he was constructively dismissed after 10
years of service to the Agency. Having been placed on “off-detail” and “floating status” for 6 months already, he claimed the agency just really
wanted to get rid of him because it required him to take a neuro-psychiatric evaluation test by Mahusay Medical Center. RS said he already
submitted the result of his evaluation test by Brent Medical Clinic as precondition to his new assignment, but the report was rejected by the
Agency. RS added that Mahusay Medical had close ties with Star’s president. It could manipulate tests to favor only those guards whom the
agency wanted to retain. Star defended its policy of reliance on Mahusay Medical Center because it has been duly accredited by the Philippine
National Police. It is not one of those dubious testing centers issuing ready-made reports. Star cited its sad experience last year when a guard
ran amuck and shot an employee of a client-bank. Star claimed management prerogative in assigning its guards, and prayed that RS’ complaint
be dismissed.
What are the issues? Identify and resolve them.
Suggested Answer:
The facts in the question raise these issues:
1. When RS was placed on “off-detail” or “floating” status for more than six months, can RS claim that he was terminated?
2. Is there a valid reason for the termination of RS?
On the first issue, based on prevailing jurisprudence, RS can be considered as terminated because he has been placed “off-detail” or “floating
status” for a period which is more than six (6) months.
On the second issue, it is true that disease is a ground for termination. But the neuro-pyschiatric evaluation test by Mahusay Medical Center
is not the certification required for disease to be a ground for termination. T Rules and Regulations implementing the Labor Code require a
certification by a public health authority that the disease is of such nature or at such a stage that it cannot be cured with in a period of six (6)
months even with proper medical treatment.

The issues involved are as follows:
1. Is there constructive dismissal?
2. Is there a valid exercise of management prerogative?
On the first issue, there is constructive dismissal. RS cannot be placed on “off-detail” and “floating status” indefinitely. If it lasts for more
than 6 months, RS shall be deemed to have been constructively dismissed thus entitling him to separation benefits. (Superstar Security Agency
v. NLRC)
On the second issue, there is no valid exercise of management prerogative. Star’s claim of management prerogative in assigning its guards
cannot be exercised to defeat or circumvent RS’ right to security of tenure. (2004 Bar Question)
PART 13
RETIREMENT
RETIREMENT [Art. 287, implementing RA 7641 (Retirement Pay Law)]

With CBA If without retirement plan
or agreement
Retirement Age established in the CBA Rule: 60-65 y/o (65:
age or employment contract compulsory retirement age)
and has served at least 5 yrs
in the establishment
EXCEPT:
Underground mining EEs— 50-
60 years old (60: compulsory
Page 63 of 107
retirement age) and has
served at least 5 yrs in the
establishment (RA 8558,
1998)
Retirement Retirement benefits he is ½ month

pay/ entitled under existing laws salary for every year of service
benefits or CBA or other agreements, (1/2 mo. salary= 15 days +
provided these are not less 1/12 of the 13th-mo.pay +
than those provided in Art. cash equivalent of not more
287 than 5 days SIL)
*fraction of at least 6 mos. =

1yr
Not covered
(1) Retail, service and agricultural establishments
(2) Operations employing not more than 10 EEs
 The retirement pay under Art. 287 is apart from the retirement benefit claimed by the qualified EE under the social security law
 Sec. 2, RA 7641 states: “Nothing in this Act shall deprive any EE of benefits to which he may be entitled under existing law or
company policies or practices”
Q: B. Ukol was compulsorily retired by his employer, Kurot Bottling Corp., upon the former’s reaching 65 years of age, having rendered 30 years
of service. Since there was no CBA, B. Ukol was paid his retirement benefits computed 15 days pay for every year of service, based on his highest
salary during his year of employment. Not satisfied, B. Ukol filed action with the Arbitration Branch of the NLC claiming that his retirement benefits
were not computed properly. Is B. Ukol’s claim meritorious? What are the components of his retirement benefits?
Suggested answer:
Ukol’s claim is meritorious. His retirement benefit is to be computed in accordance with Art 287, which reads: “In the absence of a retirement
plan or agreements providing for retirement benefits of employees in the establishment, an employee may retire… and shall be entitled to
retirement pay equivalent to at least ½ month salary for every year of service, a fraction of at least 6 months being considered as one whole
year. The same article then explains that the term one-half ½ month salary means 15 days plus 1/12 of the 13 th month pay and the cash
equivalent of not more than 5 days of service incentive leaves.
The components of retirement pay are:
1. 15 days pay
2. 1/12 of the 13th month pay, and
3. cash equivalent of not more than 5 days of service incentive leave.
Q: What exception(s) do(es) the law on retirement benefits provide(s) if any?
Suggested answer:
Retail, service and agricultural establishments or operations employing not more than 10 employees or workers are exempted from the
coverage of the provision on retirement benefits in the Labor Code.
Also, where there is a retirement plan of the employer that grants more than what the Labor Code grants. (2001 Bar Question)
o0o0o0o
Q: Ricky Marvin had worked for more than 10 years in IGB Corp. under the terms of the personnel policy on retirement, any EE who had reached
the age of 65 and completed at least 10 years of service would be compulsorily retired and paid 30 days’ pay for every year of service.
Ricky Marvin, whose immigrant visa to the USA had just been approved, celebrated his 60 th birthday recently. He decided to retire and move
to California where the son who petitioned him had settled. The company refused to grant him any retirement benefits o n the ground that he
had not yet attained the compulsory retirement age of 65 years as required by its personnel policy; moreover, it did not have a policy on optional
or early retirement.
Taking up the cudgels for Ricky Marvin, the union raised the issue in the grievance machinery as stipulated in the CBA. No settlement was
arrived at, and the matter was referred to voluntary arbitration.
If you were the Voluntary Arbitrator, how would you decide? Briefly explain the reasons for your award.
Suggested Answer:
I will grant Ricky Marvin the retirement benefits under Art. 287, LC.
Art. 287, LC as the minimum standard in law, allows an EE an optional retirement upon reaching the age of 60 years provided he rendered
at last 5 years of service – requirements that Ricky Marvin met under the facts of the case. (2005 Bar Question)
Page 64 of 107
LABOR RELATIONS
PART 1
RIGHT TO SELF-ORGANIZATION
7 CARDINAL RIGHTS OF WORKERS (1987 Const., Art. 13, Sec. 3)

(1) self-organization
(2) collective bargaining and negotiations
(3) peaceful concerted activities, including the right to strike in accordance with law
(4) security of tenure
(5) humane conditions of work
(6) a living wage
(7) participate in policy and decision-making processes affecting their rights and benefits as may be provided by law
COVERAGE OF RIGHT TO SELF-ORGANIZATION [Art. 243-245, 269; DO 40-03 (Rules Implementing Book V)]
 All persons may organize for a lawful purpose but not all may form labor unions (i.e., forming or joining labor organizations for the
purpose of collective bargaining)
 The right to self-organization includes the right not to exercise it. An employee may, as he pleases, join or refrain from joining an
association. (Reyes v. Trajano, 1992)
Q: Do workers have a right not to join a labor organization?
Suggested answer:
Yes, when workers decide whether they will or will not become members of a labor organization. That is why a union’s constitution and by-
laws need the members’ adoption and ratification. Moreover, if they are members of religious group whose doctrine forbids union membership,
their right not to be compelled to become union members has been upheld. However, if the worker is not a “religious objector” and there is a
union security clause, he may be required to join the union if he belongs to the bargaining unit. (Reyes v. Trajano) (2000 Bar Question)
Q: Mang Bally, owner of a shoe repair shop with only 9 workers in his establishment, received proposals for collective bargaining from the Bally
Shoe Union. Mang Bally refused to bargain with the workers for several reasons. First, his shoe business is just a service establishment. Second,
his workers are paid on a piecework basis (ie per shoe repaired) and not on a time basis. Third, he has less than 10 EEs in the establishment.
Which reason or reason/s is/are tenable? Explain briefly.
None. First, Mang Bally’s shoe business is a commercial enterprise, albeit a service establishment. Second, the mere fact that the workers are
paid on a piece-rate basis does not negate their status as regular EEs. Payment by piece is just a method of compensation and does not define
the essence of the relation. [Lambo v. NLRC, 317 SCRA 420 (1999)]. Third, the EEs’ right to self organization is not delimited by their number.
The right to self-organization covers all persons employed in commercial, industrial and agricultural enterprises and in religious, charitable,
medical, or educational institutions whether operating for profit or not. [Art. 243, LC] (2002 Bar Question)
General Rule (To whom the right is available)

Right Purpose
All persons employed in commercial, form, join, or Collective
industrial and agricultural enterprises assist labor bargaining
and in religious, charitable, medical, orgs of their
or educational institutions, whether own
operating for profit choosing
Ambulant, intermittent and itinerant form Mutual aid and
workers, self-employed people, rural labor orgs protection and
workers and those without any other legitimate
definite employers purposes other
than collective
Ambulant— moving about, “palipat- bargaining
lipat”
Intermittent— temporary
Itinerant— travels from place to place
Specific EEs With Right to Self-Organization for purposes of collective bargaining
(1) Government EEs

(a) For govt EEs of govt corps established under the Corp. Code (LC governs them)— right to organize and bargain collectively
(b) For EEs of all branches ,subdivisions, instrumentalities of govt, including GOCCs with original charters from Congress —EO 180
governs them
Page 65 of 107
EXECTUIVE ORDER 180
(June 1, 1987)
Applies to all EEs of all branches, subdivisions, instrumentalities and agencies of the government including EEs of GOCCs with original
charters
Rights
(1) can form, join or assist EEs’ organizations for furtherance and protection of interest
(2) can engage in concerted activities, including the right to strike
(3) may negotiate collective negotiation agreements (CNA) or memorandum of agreement (MOA) with their ERs
Limitations
(1) the concerted activities must be exercised in accordance with law, i.e., subject to Civil Service Law and rules and any
legislation that may be enacted by Congress
(2) negotiations should only involve terms and conditions of employment that are not fixed by law
(3) the resolution of complaints, grievances, and cases involving government EEs is not ordinarily left to collective bargaining
or other related concerted activities but to Civil Service Law and labor laws and procedures whenever applicable
(4) in case any dispute remains unresolved after exhausting all available remedies under existing laws and procedures, the
parties may jointly refer the dispute to the Public Sector Labor-Management Council (the EO provided for the composition
of this) for appropriate action
Employees’ Org
 The appropriate organizational unit is the unit consisting of rank-and-file EEs unless circumstances otherwise require
 Govt EEs organizations shall register with the CSC and the BLR
 The duly registered EEs’ organization having the majority support of the EEs in the appropriate organizational unit shall be
designated as the sole and exclusive representative of the EEs
Not Covered
(1) High-level EEs (those whose functions are policy-making or managerial or highly-confidential cannot join the org of rank-
and-file EEs)
(2) AFP
(3) Police officers
(4) Policemen
(5) Firemen
(6) Jailguards
 BUT Memorandum Circular No. 6 of CSC, dated April 21, 1987, enjoins strikes by government officials and EEs (Arizala v CA, 1990)
Thus, to sum up the government EEs covered by EO 180:

(1) may organize and unionize
(2) they can negotiate, but not bargain (negotiate only on matters not fixed by law)
(3) they cannot strike
Q: How does the government employees’ right to self-organization differ from that of the employees in the private sector?
Suggested Answer:
There is no substantial difference of the right of self-organization between workers in the private sector and those in the public sector. In
the public sector, Executive Order No. 180, the purpose of self-organization is stated as “for the furtherance and protection of their interest.” In
the private sector, Art 243 o the Labor Code states “for the purpose of collective bargaining”, and “for the purpose of enhancing and defending
their interests and for their mutual aid and protection.”
Alternative Answer:
In government, managerial employees shall no be eligible to join the organization of rank and file employees per EO 180 but said law does
not provide that they are not eligible to join, assist, or form any labor organization, meaning they could join, assist of form any labor organization
of their own. In the private sector, managerial employees are not eligible to join, assist, or form any labor organization. (See At. 243, LC and
Sec. 3, EO 10) (1996) (1996 Bar Question)
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(2) Supervisory EEs [Art. 245; Art. 212 (m)]— those who, in the interest of the employer
(a) Effectively recommends such managerial actions
(b) If the exercise of such authority is not merely routinary or clerical in nature
(c) But requires the use of independent judgment.
 What determines the nature of employment is not the employee's title, but his job description.
 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.
 To maintain the segregation, a supervisor’s union is not allowed to affiliate with the same federation as that of the rank-and-file
union under these conditions:
(1) The rank-and-file EEs are directly under the authority of the supervisory EEs
(2) The national federation is actively involved in union activities in the company (Atlas Lithographic v. Laguesma, 1992; De
la Salle University Medical Center v. Laguesma, 1998)
(3) Aliens (Art. 269)—Aliens, generally, have no right to self organize for purpose of collective bargaining unless (the following must
concur):
(a) They have valid permits issued by DOLE; and
(b) That said aliens are nationals of a country which grants the same or similar rights to Filipino workers (reciprocity
(4) Security Guards

 EO 111 has eliminated the disqualification of security guards from forming labor unions.
 They may now join a rank-and-file organization or that of the supervisory union, depending on their rank. (Manila Electric v.
Sec. of Labor, 1997)
Q: Do the following workers have the right to self-organization? Reasons/ basis

1. employees of non-stock, non-profit organizations?
2. alien employees?
Suggested Answer:
1. Even EEs of non-stock, non-profit organizations have the right to self-organization. This is explicitly provided for in Art 243 of the Labor
Code.
A possible exception, however, are EE members of non-stock, non-profit cooperatives.
2. Alien EEs with valid work permits in RP may exercise the right to self-organization on the basis of parity or reciprocity, that is, if Filipino
workers in the alien’s country are given the same right. (Art 269, LC) (2000 Bar Question)
Workers Without Right to Self-Organization For purposes of collective bargaining
(1) Managerial Employees [Art. 245; Art. 212 (m)]

- one who is vested with powers or prerogatives
a. To lay down and execute management policies and/ or
b. To hire , transfer, suspend, layoff, recall, discharge, assign, or discipline employees
- NOT eligible to join, assist or form any labor organization

 “labor organization” is a technical term
 it is formed for the purpose of collective bargaining concerning terms and conditions or dealing with employment concerning
terms and condition of employment
 Hence, managerial EEs are not prohibited from forming an association
- The prohibition of unionization of managerial EEs does not violate the Phil. Consti. (UPSU v. Laguesma, 1998)
- National Sugar Refineries Corp v NLRC (1993)
› the definition of a managerial employee in Labor relations [Art. 212 (m)] is not exactly the same as the definition under
labor standards (Art. 82).
› Art. 82 is much broader in scope than Art. 212 (m).
› It was held that for purposes of forming and joining unions, certification elections, collective bargaining, supervisory EEs
are considered not managerial EEs hence they can unionize.
› However, in terms of working conditions and rest periods and entitlement to the questioned benefits, they are officers or
members of the managerial staff (which are managerial EEs per Art. 82,) hence they are not entitled thereto.
- Who are rank-and-file EEs? EEs who are not managerial nor supervisory EEs.
Q: A, B, C and D (treasurer, accountant, elementary department Principal, and secretary of the Director, respectively), regular employees of a
private educational institution, were administratively charged for their participation in a picket held in front of the campus after office hours.
Several faculty members, non-academic staff and students joined the peaceful prayer rally organized by the disgruntled employees to protest
certain alleged abuses of the incumbent school director. Subsequently, the rank and file employees succeeded in forming the first and only union
of the School.
Page 67 of 107
During the investigation, the administration discovered that two (2) days prior to the rally, A, B, C and D attended the meeting of the School’s
employees’ association which planned the protest activity. Two well-known organizers/leaders of a national federation were also present.
A, B, C and D were dismissed by the School on the ground of violating the Labor Code which prohibits managerial employees to “join, assist,
or form any labor organization.”
Is the contention of the School tenable? Is the dismissal of A, B, C and D valid? Explain.
Suggested Answer:
The dismissal of A, B, C and D on the ground that they violated the Labor Code provision which states that managerial employees “are not
eligible to join, assist or form any labor organization” is not valid. The Labor Code doe not provide for any sanction for the aforesaid acts. These
acts could not be considered as just cause for the termination of employment, either.

The dismissal of the management employees because of union activities, no matter how erroneous or tenuous may be the basis fo r the
exercise, is a violation of the constitutional and statutory guaranteed rights of self-organization and an act of unfair labor practice. (Sec. 3, Art.
XIII, Constitution; Art. 243, LC. See also Art. 248(a), LC). (2004 Bar Question)
(2) Confidential EEs--those who:

(a) Assist or act in a fiduciary capacity
(b) To persons who formulate, determine, and effectuate management policies in the field of labor relations.
 The two criteria are cumulative, and both must be met if an employee is to be considered a confidential employee — that is,
the confidential relationship must exist between the employee and his superior officer and that the superior officer must handle
the prescribed responsibilities relating to labor relations (if not labor relations, then not confidential EE).
Sugbuanon Rural Bank vs. Laguesma, (2000)
› Art. 245 of the Labor Code does not directly prohibit confidential employees from engaging in union activities.
› However, under the doctrine of necessary implication, the disqualification of managerial employees equally applies to
confidential employees.
› The confidential-employee rule justifies exclusion of confidential employees because in the normal course of their duties they
become aware of management policies relating to labor relations.
Note: An EE may not be excluded from appropriate bargaining unit merely because he has access to confidential information
concerning employer’s internal business operations and which is NOT RELATED to the field of labor relations. If access is merely
incidental, you cannot classify them as confidential employees. Thus a phone operator or driver cannot be classified as a
confidential employee for the purpose of excluding them from joining a union. It is the policy of the law to encourage self-
organization, thus if you have to limit it, the limitation must strictly be construed and well justified.
Q: Malou is the Executive Secretary of the Senior Vice-President of a bank while Ana is the Legal Secretary of the bank’s lawyer. They and other
executive secretaries would like to join the union of rank and file EEs of the bank. Are they eligible to join the union? Why? Explain briefly.
Suggested Answer:
The following rules will govern the right of self-organization of Malou, Ana, and the other Executive Secretaries:
1. No right to self-organization – confidential EE who act in a confidential capacity to persons who formulate, determine, and effectuate
management policies in the field of labor-management relation. The two criteria are cumulative and both must be met. [San Miguel Corporation
Union v. Laguesma, 277 SCRA 370 (1997)]
2. With right to self-organization – when the EE does not have access to confidential labor relations information, there is no legal prohibition
against confidential EEs from forming, assisting, or joining a labor organization. [Sugbuanon Rural Bank, Inc. v Laguesma, 324 SCRA 425 (2000)]
No right of self-organization for Legal Secretaries – Legal Secretaries fall under the category of confidential EEs with no right to self-
organization. [Pier & Arrastre Stevedoring Services, Inc. v. Confessor, 241 SCRA 294 (1995)]
(2002 Bar Question)
(3) Workers-Members of a Cooperative

Cooperative— is an organization composed of small producers and of consumers who voluntarily join together to form business
enterprises which they themselves, own, control and patronize. (PD 175)
(a) An employee of such a cooperative who is a member and co-owner— no right to collective bargaining because an owner cannot
bargain with himself or co-owners. (BENECO v. Ferrer-Calleja, 1989)
(b) Employees who are NOT members or co-owners— such employees are entitled to exercise the rights of all workers to
organization, collective bargaining negotiations, and others. (San Jose Electric Service Coop. v. Min. of Labor, 1989)
Page 68 of 107
Q: Do EEs of a cooperative have a right to form a union? Explain briefly.
Suggested Answer:
EEs who are members of a cooperative cannot form a union because, as members, they are owners and owners cannot bargain with
themselves. However, EEs who are not members of a cooperative can form a union. [San Jose Electric Service Cooperatiev v. Ministry of Labor
(1989)] (2002 Bar Question)
(4) Employees of International Organizations

Certain international organizations, such as the Intl Rice Research Institute (IRRI) and the Intl Catholic Migration Commission (ICMC),
are by their charters given a grant of immunity from legal processes and thus are beyond the jurisdiction of the DOLE. A
certification election cannot be conducted in these international orgs.
(5) Non-Employees
- If there is no ER-EE relationship, then there is no right to collective bargaining
- but they still have the right to organize since this right is constitutionally protected, only that they cannot organize for the purpose
of collective bargaining.
Q: FACTS: Solar Plexus Bar and Night Club allowed by tolerance 50 Guest Relations Officers (GROs) to work without compensation in its
establishment under the direct supervision of its Manager from 8:00pm to 4:00am everyday, including Sundays and Holidays. The GROs,
however, are free to ply their trade elsewhere anytime but once they enter the premises of the night club, they are required to stay up to closing
time. The GROs earned their keep exclusively from commissions for food and drinks, and tips from generous customers. In time, the GROs
formed the Solar Ugnayan ng mga Kababaihang Inaapi (SUKI), a labor union duly registered with the DOLE. Subsequently, SUKI filed a petition
for certification election in order to be recognized as the exclusive bargaining agent of its members. Solar Plexus opposed the petition for
certification election on the singular ground of absence of ER-EE relationship between th GROs on the one hand and the night club on the other
hand.
May the GROs form SUKI as a labor organization for purposes of collective bargaining? Explain briefly.
Suggested Answer:
The GROs may form SUKI as a labor organization for purposes of collective bargaining. There is an ER-EE relationship between the GROs
and the night club.
The Labor Code (in Art 138) provides that any woman who is permitted or suffered to work, with or without compensation, in any night
club, cocktail lounge, massage clinic, bar, or similar establishment, under the effective control or supervision of the ER for a substantial period of
time as determined by the Secretary of Labor, shall be considered as an EE of such establishment for purposes of labor and social legislation.
In the case at bar, it is clearly stated that the women once they enter the premises of the night club would be under the direct supervision
of the manager from 8:00pm to 4:00am everyday including Sundays and holidays. Such is indicative of an ER-EE relationship since the manager
would be exercising the right of control. (1999 Bar Question)
PART 2
LABOR ORGANIZATION
LABOR ORGANIZATION—any union or association of EEs in the private sector which exists for collective bargaining purposes or of
dealing with ERs concerning terms and conditions of employment [Art. 212 (g)]
Q: What is the importance of labor organizations?
Suggested Answer:
A labor organization exists in whole or in art for the purpose of collective bargaining agreement or of dealing with employer s concerning
terms and conditions of employment. Employees may form labor organizations for their mutual aid and protection. (See Arts. 212 (a) and 243
of the Labor Code)
Alternative Answers:
The importance of labor unions are:
A. The enhancement of democracy and the promotion of social justice and development.
B. As instrumentalities trough which worker welfare may be promoted and fostered. (Mactan Workers Union v. Aboitiz)
C. It is the instrumentality through which an individual laborer who is helpless as against a powerful ER may, through concerted effort and
activity, achieve legal goal of economic well-being. (Gullano v. CIR) (1996 Bar Question)
Legitimate Labor Organization— any labor organization in the private sector registered or reported with the DOLE [Book V, Rule 1,
Sec. 1 (ee)] (if not registered, does not posses the rights of a LLO)
Union—any labor organization in the private sector organized for collective bargaining and for other legitimate purpose [Book V, Rule 1,
Sec. 1 (zz)]
Page 69 of 107
 Independent Union— labor organization operating at the enterprise level that acquired legal personality from independent
registration
 Chartered Local— labor organization at the enterprise level that acquired legal personality acquired through issuance of charter
certificate by a duly registered federation or national union
 National Union / Federation— labor organization with at least 10 locals/ chapters or affiliated unions, each of which must be
a duly certified or recognized collective bargaining agent.
 Company union— any labor organization whose formation, function or administration has been assisted by any act defined as
unfair labor practice
 Affiliate— refers to an independent union affiliated with a federation, national union or a chartered local which was subsequently
granted independent registration but did not disaffiliate from its federation, reported to the Regional Office and the Bureau
Affiliation/ Disaffiliation
 Affiliation by a duly registered union with a national federation does not cause the local union to lose its legal personality.
 The local union remains the basic unit that serves the common interest of its members.
 The union also has the right to disaffiliate from its mother union and join a new federation (exercise of right to self-organization),
in the absence of enforceable provisions in the federation’s constitution preventing disaffiliation.
 But when the union is not independently registered and it disaffiliates from a federation, it is not granted the rights and privileges
granted to a LLO. It cannot file a petition for CE or bargain with the ER or stage a strike (Villar v. Inciong, 1983)
 Affiliation/ disaffiliation is an affair between the parent and the daughter union. The ER is not involved and should not be
adversely affected. The CBA continues to bind the members of the disaffiliated union up to the CBA’s expiration date (Associated
Workers Union PTWGO v. NLRC, 1990)
WORKER’S ASSOCIATION — an association of workers organized for the mutual aid and protection or for any legitimate purpose
other than collective bargaining of its members. [Book V, Rule 1, Sec. 1 (ccc)]
 Legitimate Worker’s Association— an association of workers organized for the mutual aid and protection or for any
legitimate purpose other than collective bargaining of its members registered with the DOLE. [Book V, Rule 1, Sec. 1 (ff)]
LABOR ORGANIZATION V. WORKER’S ASSN

LABOR ORGANIZATION WORKER’S ASSN
Composition Employees Workers
Purpose collective bargaining or mutual aid and protection of its members or for any other
of dealing with employers concerning terms and legitimate purpose other than collective bargaining
conditions of employment.
REQUIREMENTS OF REGISTRATION
Independent Labor Org
1. Registration fee
2. Name of the applicant union, its principal address, names and addresses of its officers, approx. number of EEs in the BU where
it seeks to operate, with a statement that it is not reported as a chartered local of any federation or national union;
3. Minutes of the organizational meeting; list of workers who participated in the meetings;
4. Names of all its members comprising at least 20% of all EEs in the BU;
5. Annual financial report if the applicant has been in existence for one or more years, unless it has not collected any amount from
the members, in which case a statement to this effect shall be included;
6. Constitution and by-laws (CBL), minutes of its adoption and ratification, and the list of the members who participated
- list of the ratifying members may be dispensed with where the CBL was ratified or adopted during the organizational
meeting— factual circumstance of the ratification shall be recorded in the meeting
 All required documents shall be certified under oath by the Sec. or Treas. and attested to by the Pres.
 1 original copy and 2 duplicate copies of all documents accompanying the application or notice shall be submitted to the Regl
Office or the Bureau.
Federation/ National Union

In addition to 1,2,3,5 and 6 above:
- Resolution of affiliation of at least 10 LLOs, whether independent union or chartered locals (all duly recognized as collective
bargaining agents)
- Names and addresses of the companies where the affiliates operate plus list all members in each company involved.
Page 70 of 107
 LOs operating within an identified industry may also apply for registration as a federation or national union within the specified
industry by submitting to the Bureau the same set of documents
Worker’s Association
1. Registration fee
2. Name of the applicant association, its principal address, the name of its officers and their respective addresses
3. Minutes of the organizational meeting(s) and the names of individual members who attended such meetings
4. The financial reports of the applicant association if it has been in existence for one or more years, unless it has not collected
any amount from the members, in which case a statement to this effect shall be included in the application;
5. Constitution and by-laws (CBL) to which must be attached the names of the ratifying members, the minutes of adoption or
ratification of the CBL, and the date when the ratification was made, unless ratification was done in the organizational
meeting(s), in which case such fact shall be reflected in the minutes of the organizational meeting(s)
 Application for registration of a workers’ association operating in more than one region shall be accompanied, in addition to the
above requirements, by a resolution of membership of each member association, duly approved by its BOD.
Legal personality: cannot be attacked collaterally

 The labor union or worker’s association shall be deemed registered and vested with legal personality on the date of the issuance
of its certificate of registration or certificate of creation of chartered local.
 such legal personality may be questioned only through an independent petition for cancellation of union registration, and not by
collateral attack (Book V, Rule IV, Sec. 8)
Q: At what particular point does a labor organization acquire a legal personality?

(a) On the date of the agreement to organize the union is signed by the majority of all its members; or
(b) On the date the application for registration is duly filed with the Department of Labor; or
(c) On the date appearing on the Certificate of Registration; or
(d) On the date the Certificate of Registration is actually issued; or
(e) None of the above.
Choose the correct answer.
Suggested Answer:
On the date the Certificate of Registration is actually issued. Any applicant labor organization, association or group of unions or workers
shall acquire legal personality and shall be entitled to the rights and privileges granted by law to legitimate labor organizations upon issuance of
the certificate of registration.

(c) “On the date appearing on the Certificate of Registration.”
When the law provides that a “labor organization xxx shall acquire legal personality xxx upon issuance of the certificate of registration”, the
date appearing therein is legally presumed – under the rule on presumption or regularity – to be its date of issuance. Actual issuance is a
contentious evidentiary issue that can hardly be resolved, not mention that the law does not speak of the actual issuance. (2003 Bar Question)
GROUNDS FOR CANCELLATION OF UNION REGISTRATION
A. Failure to comply with the requirements of registration (see above)

B. Violation of any of the provisions of Art. 239. These are:
(1) Misrepresentation, false statement or fraud in connection with
a. the adoption or ratification of the CBL or amendments thereto, the minutes of ratification and the list of members who
took part in the ratification;
b. the election of officers, minutes of the election of officers, the list of voters
c. in the preparation of financial reports
(2) Failure to submit

a. the CBL or amendments thereto, the minutes of ratification and the list of members who took part in the ratification
within 30 days from adoption/ ratification
b. minutes of the election of officers, the list of voters within 30 days from election
c. annual financial report within 30 days after the closing of every fiscal year
d. list of individual members to the Bureau once a year or whenever required
(3) Acting as a labor contractor or engaging in the "cabo" system, or otherwise engaging in any activity prohibited by law
C. Entering into CBA which provide terms and conditions of employment below minimum standards established by law
D. Asking for or accepting attorney’s fees or negotiation fees from employers

Page 71 of 107
E. Checking off special assessments or any other fees without duly signed individual written authorizations of the members (Other
than for mandatory activities under the Labor Code)
F. Failure to comply with requirements under Articles 237 and 238 (requirements for unions and federations)
 Commission of any of the acts in Art. 241 (Rights and conditions of membership in a labor org)
Rule: Any party-in-interest may commence a petition for cancellation of registration except in actions involving violations of Art. 241,
which can only be commenced by members of the labor organization concerned.
- and if it involves the entire membership of the union, the complaint should be supported by at least 30% of the union members
RIGHTS AND CONDITIONS OF MEMBERSHIP IN A LO (Art. 241)

- violations of these shall be a ground for cancellation of union registration or expulsion of officer from office, whichever is
appropriate.
 Any EE, whether employed for a definite period or not, shall be eligible for membership in any labor organization beginning the 1 st
day of service. (Book V, Rule ii, Sec. 2)
 Union is an agent of its members.
Q: A labor union lawyer opined that a labor organization is a private and voluntary organization; hence, a union can deny membership to any
and all applicants.
Is the opinion of counsel in accord with law?
Suggested answer:
No, the opinion of counsel is not in accord with law.
The Labor Code (in Art 249 (a),(b)) provides that a labor organization has the right to prescribe its own rules for the acquisition or retention
of membership, but it is an unfair labor practice for a labor organization to restrain or coerce employees in the exercise of their right to self-
organization. Thus, a labor organization cannot discriminate against any employee by denying such employee membership in the labor
organization on any ground other than the usual terms and conditions under which membership or continuation of union membersh ip is made
available to other members.

Yes, the legal opinion of counsel, on the nature of a labor union and its admission policy is in accord with law, but must be qualified.
The Supreme Court ruled in Salunga v. CIR (1967) as follows:
“Generally, a state may not compel ordinary voluntary association to admit thereto any given individual, because membership therein may
be accorded or withheld as a matter of privilege.”
The same case further ruled that the law can compel a labor union to admit an applicant for membership when the union is-
“The rule is qualified in respect of labor unions holding a monopoly in the supply of labor, either in a given locality or as regards a particular
employer with which it has a closed-shop agreement. The reason is that (union security provisions) cause the admission requirements of trade
union to be affected with public interest.” (1998 Bar Question)
Q: On what ground or grounds may a union member be expelled from the organization?
Suggested Answer:
Union members may be expelled from the labor organization only on valid grounds provided for in the Union Constitution, By-Laws, or
conditions for union membership.

Whenever appropriate for any violation of the rights as:
1. refusal to pay union dues and special assessments;
2. disloyalty to the union; and
3. violation of the constitution and by-laws of the union (2002 Bar Question)
Political Rights
 Officers directly elected by secret ballot at intervals of 5 years
 No qualification requirement for candidacy to any position other than membership in good standing
 No person convicted of crime involving moral turpitude shall be eligible to be an officer of union
 Officers shall not be paid any compensation other than salaries and expenses due to their positions as authorized by CBL or written
resolution of majority
Deliberative and decision-making rights

 Determination by secret ballot any question of major policy
 No admission of individuals who are members of subversive organizations
Page 72 of 107
Right to be informed
 Full and detailed report of financial transactions
 All income and revenue evidenced by a record and every expenditure evidenced by a receipt
 Treasurer and officers render a true and correct account of all moneys received and paid since assuming office or since last
accounting:
- At least once a year within 30 days from close of fiscal year
- Other times as required by written resolution of majority
- Upon vacating his office
 Books of account and financial records open to inspection by officer/ member during office hours
 Members should be informed about the provisions of its constitution and by-laws, CBA, prevailing labor relations system and their
rights and obligations under existing labor laws (LLO may assess reasonable dues to finance labor relations seminars/ labor
education activities)
Rights over money matter

 No arbitrary, excessive, oppressive initiation fees, fines and forfeiture
 No collection of fees, dues nor disbursements unless duly authorized pursuant to CBL
 All payment of fees, dues, contributions evidenced by receipt and entered into records
 Funds shall not be applied for any purpose other than expressly provided in CBL or authorized by majority of members at general
meeting
 No special assessment or other extraordinary fees may be levied unless authorized by written resolution of majority (levy)
 Other than mandatory activities under the Code, no special assessment, atty’s fees, negotiation fees or any other extraordinary
fees may be checked off from any amount due to an EE without any individual written authorization (check-off) (cf. Art. 113)
Requisites for a valid levy (i.e., imposition of a certain amount)

 Authorization by a written resolution of majority of all members at the general membership meeting called for the purpose
Requisites for a valid check-off (i.e., collecting an amount through salary deduction)
 Authorization by a written resolution of majority of all members
 at the general membership meeting called for the purpose
 individual written authorization of the EE, specifying the amount, purposes, and beneficiary of the deduction
› EEs’ check-off authorization is only valid as long as they remain members of the union. When a local union disaffiliates from a
national union/ federation, the latter ceases to be entitled to check-off dues. The local union, which has validly disaffiliates will
be the one entitled to check off dues (Volkschel Labor Union v. BLR, 1985)
Q: What requisites must a Union comply with before it can validly impose special assessments against its members for incidental expenses,
attorney’s fees, representation expenses and the like?
Suggested answer:
The Labor Code (in Art 241 (n)) provides that “no special assessments or 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 at a general membership meeting duly called for the
purpose.”

In the ABS-CBN Employees Supervisors Union v. ABS-CBN Broadcasting Corp., and Union Officers (1999), the Supreme Court ruled that the
following are the requisites:
1. authorization by a written resolution of the majority of all the members at the general membership meeting duly called for the purpose;
2. secretary’s record of the minutes of the meeting; and
3. individual written authorization for check-off duly signed by the employee concerned. (2001 and 2002 Bar Questions)
Q: Atty. Facundo Velasco was retained by Welga Labor union to represent it in the Collective Bargaining Negotiations. It was agreed that Atty.
Velasco would be paid in the sum of P20,000 as attorney’s fees for his assistance in the CBA negotiations.
After the conclusion of the negotiations, Welga Labor Union collected from its individual members the sum of P100 each to pay for Atty.
Velasco’s fees and another sum of P100 each for services rendered by the union officers. Several members of the Welga Labor Union approached
you to seek advice on the ff. matters.
(a) Whether or not the collection of the amount assessed on the individual members to answer for the Attorney’s fees was valid.
(b) Whether or not the assessment of P100 from the individual members of the Welga Labor Union for services rendered by the union officers
in the CBA negotiations was valid.
Answer:
(a)The assessment of P100 from each union member as attorney’s fees – for union negotiation, is not valid. Art. 222(b), LC, reads:
“No attorneys fees, negotiation fees or similar charges of any kind arising from any collective bargaining negotiations or conclusion of the
collective agreement shall be imposed on any individual member of the contracting union; Provided, however, that attorneys fees may be charged
Page 73 of 107
against union funds in an amount to e agreed upon by the parties. Any contract, agreement or arrangement of any sort to the contrary shall be
null and void.”
(b) The assessment of P100as negotiation fees charged to each individual union member and payable to union officers is also not valid, for
the same reason as stated above. The assessment is an act violative of Art. 222(b).
(a) The collection of the amount assessed on the on individual members to members to answer for the attorney’s fees would be valid if it
was authorized by a written resolution of a majority of all the members in general membership meeting duly called for the purpose.
(b) The assessment of P100 from the individual members of the Welga Labor Union for services rendered by the Union officers in th e CBA
negotiations would be valid if it was authorized by a written resolution of a majority of all the members in a general member ship meeting duly
called for the purpose. [Art. 241(N)] (1997 Bar Question)
RIGHTS OF LEGITIMATE LABOR ORGS (Art. 242)

 To act as the representative of its members for the purpose of CB; (per Azucena: erroneous because only the LLO who has
majority status can represent the BU; minority LLO does not have this right)
 To be certified as the exclusive representative of all EEs in an appropriate collective bargaining unit for purposes of CB; (per
Azucena, this is only true if the union won the certification election or consent election)
 To be furnished by the ER with the annual audited financial statements after the union has been duly recognized by the ER or
certified as the sole and exclusive bargaining representatives of the EEs in the BU, or within 60 calendar days before the expiration
of the existing CBA, or during the CB negotiation;
 To own property, real or personal, for the use and benefit of the labor org 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
 The income and the properties, etc. of LLOs used actually, directly and exclusively for lawful purposes shall be free from taxes
PART 3
THE APPROPRIATE BARGAINING UNIT
APPROPRIATE BARGAINING UNIT (ABU)— group of EEs sharing mutual interest within a given ER unit, comprised of all or less
than all of the entire body of EEs in the ER unit or any specific occupational or geographical grouping within such ER unit.
Factors to be considered in determining the ABU

(1) Will of the EEs
(2) Affinity and unity of EEs’ interest, such as substantial similarity of works and duties or similarity of compensation & working
conditions,
(3) Prior collective bargaining history
(4) Employment status, i.e., temporary, seasonal, and probationary EEs
 Test of grouping: community or mutuality of interests because the basic test of an asserted bargaining unit’s acceptability is
whether it is fundamentally the combination w/c will best assure to all EEs the exercise of their collective bargaining rights.
 Globe Doctrine— determinative factor is the express will of the EEs. (The practice of the courts to hold a series of elections not
for the purpose of granting the right of representation to the group garnering the majority vote but to let employees select on several
units to represent them)
Q: What is an appropriate bargaining unit for purposes of collective bargaining?
Suggested answer:
An appropriate bargaining unit is a group of employees of a given employer comprised of all or less than all of the entire body of employees,
which the collective interest of all the employees, consistent with the interest of the employer, indicate to be best suited to serve reciprocal rights
and duties of the parties under the collective bargaining provisions of the law. [See UP v. Ferrer-Calleja (1992)] (1998 Bar Question)
Q: Can the 2 Managers be part of the bargaining unit?
Suggested Answer:
No, the 2 Managers cannot be part of the bargaining unit composed of supervisory EEs.
A bargaining unit must effect a grouping of EEs who have substantial, mutual interests in wages, hours, working conditions an d other
subjects of collective bargaining. (San Miguel Corp. Supervisors and Exempt EEs Union v. Laguesma, 227 SCRA 370)
The Labor Code (in Art. 245) provides that managerial EEs are not eligible to join, assist or form any labor organization.
The above provision shows that managerial EEs do not have the same interests as the supervisory EEs which compose the bargaining unit
where SMCT wishes to be the exclusive bargaining representative. (1999 Bar Question)
Page 74 of 107
PART 4
UNION REPRESENTATION:
ESTABLISHING MAJORITY STATUS
EXCLUSIVE BARGAINING AGENT [Art. 255; Book V, Rule 1, Sec. 1(t)] — the legitimate labor union duly recognized or certified as
the sole and exclusive bargaining agent (SEBA) of the EEs in a BU.
 Despite having a SEBA, an individual EE or group of EEs shall have the right at anytime to present grievances to their ERs. (Art. 255)
Q: The modes of determining an exclusive bargaining agreement (agent) are:

a. voluntary recognition
b. certification election
c. consent election
Explain briefly how they differ from one another.
Suggested Answer
a. There is voluntary recognition when in an unorganized establishment with only one legitimate labor organization, the employer
voluntarily recognizes the representation status of such a union. Within thirty (30) days from such recognition, the employer and union shall
submit a notice of voluntary recognition with the Regional Office of the Department of Labor and Employment which issued the recognized labor
union’s certificate of registration or certificate of creation of a chartered local.
b. Certificate election refers to the process of determining through secret ballot the sole and exclusive representative of the employees in
an appropriate bargaining unit for purposes of collective bargaining or negotiation. A certification election is ordered by the Department of Labor
and Employment, while a consent election is voluntarily agreed upon by the parties, with or without the intervention by the D epartment. (Art
256, 257, 258, LC)
c. When the process of determining through secret ballot the sole and exclusive representative of the employees in an appropriate
bargaining unit is not ordered by the DOLE, but has been voluntarily agreed upon by the parties with or without the intervent ion of the DOLE,
then the process is consent election. [Warren Manufacturing Workers Union v. BLR(1988)]
Q: When does a run-off election occur?
Suggested answer:
A “run-off” or second election occurs when an election which provides for three (3) or more choices result in no choice receiving a majority
if the valid votes cast, and no objections or challenges have been presented which, if sustained, can materially change the results; the election
officer shall motu propio conduct a run-off election within ten (10) calendar days from the close of election proceedings between the labor unions
receiving the (2) highest number of votes; Provided that, the total number of votes for all contending unions is at least fifty per cent (50%) of
the number of votes cast. (Art 256; LC Rule X, Dept Order 40-03) (2006 and 2000 Bar Questions)
PRE-CONDITION: ER-EE RELATIONSHIP

 An employer-employee relationship is a pre-condition before the conduct of a certification election since without such relationship,
there will be no duty to bargain on the part of either the employer or employee. Thus, it will be senseless to go on with a certification
election to choose their bargaining representative when there is no duty to collectively bargain anyway. (Allied Free Workers Union
v. Cia Maritima, 1967)
Q: Is it required that an employer-employee relationship exists between an employer and the employees in the appropriate bargaining unit before
a certification election can be ordered? If so, why?
Suggested answer:
Yes, it is required that an employer-employee relationship is existing between the employer and the employees in the appropriate bargaining
unit before a certification election can be ordered for the simple reason that a certification election is held for the purpose of determining which
labor organization shall be the exclusive collective bargaining representative of the employees in an appropriate bargaining unit. There could be
no collective bargaining between persons who do not have employer-employee relationship.

Yes, the Supreme Court has ruled that the existence of an employer-employee relationship is required before a certification election can be
held.
The Supreme Court in Allied Force Waters Union v. Compania Maritima (1967), ruled:
“xxx there being no employer-employee relationship between the parties disputants, there is neither a “duty to bargain collectively” to speak
of. And there being no such duty, to hold certification elections would be pointless. There is no reason to select a representative to negotiate
when there can be no negotiations in the first place. Where there is no duty to bargain collectively, it is not proper to hold certification elections
in connection therewith.” (1998 Bar Question)
SELECTION OF SOLE AND EXCLUSIVE BARGAINING AGENT (SEBA)
Page 75 of 107
(1) Voluntary Recognition by ER—allowed only
a. in an enterprise being unionized for the first time (unorganized establishment—if there exists no duly recognized or certified
bargaining agent of the concerned bargaining unit); and
b. where there is only one legitimate labor organization seeking recognition (Book V, Rule, VII, Sec. 1)
Note: If a union asks the ER to voluntarily recognize it as the bargaining agent of the EEs, it in effect asks the ER to certify it as
the SEBA—a certification which the ER has no authority to give. It is the EEs’ prerogative, not the ER’s, to determine
whether they want a union to represent them, and if so, which one it should be. (Samahan ng Manggagawa sa Permex v.
Sec. of Labor, 1998)
In Colgate Palmolive Phils v. Ople (1988), it was held that the Sec. of Labor cannot directly certify a union as the SEBA.
(2) Certification Election (CE)(Art. 256)—(see below)
(3) Consent Election— process of determining through secret ballot, voluntarily agreed upon by the parties, the SEBA of the EEs in
an ABU for purposes of CB or negotiation.
(4) Run-off Election (Art. 256)— election between the labor unions receiving the 2 highest number of votes provided:
(1) There are 3 or more choices in the CE;
(2) results of the CE: none of these choices received majority of the valid votes cast; and
(3) total number of votes for all contending unions: at least 50% of the total votes cast
 Presumption: there is a valid election, i.e., majority of the eligible voters voted
 “No Union” shall not be a choice in the run-off election
CERTIFICATION ELECTION— process of determining through secret balloting the sole and exclusive representative of the EEs in an
ABU for purposes CB or negotiation (this is different from union election which selects the officers of the union)
Q: There are instances when a certification election is mandatory. What is the rationale for such legal mandate?
Suggested Answer:
According to the Labor Code, 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.
In the above-described situation, a certification election is made mandatory because if there is no certified bargaining agent as determined
by a certification election, there could be no collective bargaining in the said unorganized establishment. (2003 Bar Question)
Q: Are probationary EEs entitled to vote in a certification election? Why?
Suggested Answer:
In a certification election, all rank-and-file EEs in the appropriate bargaining unit are entitled to vote. This principle is clearly stated in Art.
255, LC which states that the “labor organization designated or selected by the majority of the EEs in such unit shall be the exclusive representative
of the EEs in such unit for the purpose of collective bargaining.” Collective bargaining covers all aspects of the employment relation and the
resultant CBA negotiated by the certified union binds all EEs in the bargaining unit. Hence, all rank-and-file EEs, probationary or permanent, have
substantial interest in the selection of the bargaining representative. The Code makes no distinction as to their employment status as basis for
eligibility to vote in the petition for certification election. The law refers to “all” the EEs in the bargaining unit. All they need to be eligible to vote
is to belong to the “bargaining unit.” (Airtime Specialists, Inc. v. Ferrer-Calleja, 180 SCRA 749)
Alternative Answer:
Probationary EEs may not be entitled to vote in a certification election where only regular EEs belong t a bargaining unit and probationary
EEs do not belong to such bargaining unit. It is the belonging to a bargaining unit that entitles an EE to vote in a certification election.
Another Alternative Answer:

Yes. An EE, whether employed for a definite period or not, shall, beginning on his first day of service be considered an EE for purposes of
membership in any labor union. [Art. 277(c)] (1999 Bar Question)
Nature of CE proceedings
(1) Non-adversarial
(2) Non-litigious
(3) Administrative proceeding to determine the worker’s choice
“Organized Establishment”— an enterprise where there is a recognized or certified SEBA. The determination of “organized
establishment” status should be at the bargaining unit level. (Hence an establishment may be considered as organized insofar
as the rank-and-file BU is concerned but not organized insofar as the supervisor BU is concerned.)
Page 76 of 107
Freedom Period—last 60 days of the 5th year of the CBA
Valid Election— at least majority of the eligible voters voted (base: eligible voters in the BU)
Exclusive Bargaining Agent— labor union receiving the majority of the valid votes cast [base: valid votes (not the number of
voters); exclude the invalid votes first]
Petition for Certification Election (Arts. 256-258)

Organized Establishment Unorganized Establishment
What Verified petition— supported by a written consent of at least Verified petition—
25% of all EEs in the BU No 25% requirement
Who LLO or the ER (when requested to bargain collectively) LLO or the ER (when requested to bargain collectively)
files
When With CBA— within the 60-day freedom period Anytime except within 1 yr from a valid CE
filed
Without CBA— anytime except when barred (cf. bars to
petition for CE)
Where Regl Office which issued the petitioning union’s cert. of reg/ Regl Office which issued the petitioning union’s cert. of reg/
filed cert. of creation of chartered local (with the Med-Arbiter) cert. of creation of chartered local (with the Med-Arbiter)
2 positive requisites:
1. filed within the freedom period
2. with written consent of at least 25% of all EEs in the BU
25% signature requirement

› Submission of the 25% consent signature need not be simultaneous with the filing of the petition. The SC held that
the mere filing of a petition for CE within the freedom period is sufficient basis for the holding of a CE, subject to the
submission of the consent signatures within a reasonable period from such filing. (Port Worker’s Union of the Philippines
v. Laguesma, 1992)
› Even if 25% is not achieved, if Med-Arb feels there is a representation achievement, Med-Arb may still order CE.
(California Mfg. v. Laguesma, 1992)
› Labor Code: mandatory requirement (it becomes the ministerial duty of the Med-Arb to conduct the CE)
› IRR: absence of such ground is a ground for the dismissal of the petition for CE.
Procedure
Petition for CE is filed with Med-Arbiter
decides within 20 days

(if no appeal, order of Med-Arb is final;
order granting conduct of CE in an unorganized establishment is unappealable)
Appeal to Sec. of Labor

within 10 days from receipt of order
(but appeal is filed with the Regl Office, who later transmits
the records to the Sec.; reply to the appeal may be
filed with the Sec. within 10 days; appeal stays the conduct of the CE)
Sec. decides within 15 days
Decision of Sec. becomes final and executory in 10 days;

no MR is allowed from this decision; (but may be questioned before the CA
in a pet. for certiorari under Rule 65)
Page 77 of 107
Records remanded to the Regionall Office of origin
for implementation within 48 hrs from finality;
(implementation shall not be stayed unless restrained by appropriate court)
 The incumbent bargaining agent shall automatically be one of the choices in the CE as forced intervenor. (Book V, Rule VIII,
Sec. 7)
Q: Can a “no-union” win in a certificate election?
Suggested Answer:
Yes, because the objective in a certification election is to ascertain the majority representation of the bargaining representative, if the
employees desire to be represented at all by anyone. Hence, “no union” is one of the choices in a certification election.

No, a “no-union” cannot win in a certification election. The purpose of a certification election is to elect an exclusive bargaining agent and
a “no-union vote would precisely mean that the voter is not choosing any of the contending unions. If the “no union” votes constitute a majority
of the valid votes cast, this fact will all the more mean that no union won in the certification election. A one-year bay will consequently stop the
holding of another certification election to allow the employer to enjoy industrial peace for at least one year.
Q: As Human Resources Department (HRD) manager of EZ Components, an unorganized manufacturer of electric and electronic components for
household appliances, you are suddenly confronted with demands for recognition and collective bargaining negotiations from two competing
labor unions. They both claim to represent all the rank-and-file EEs. Union A is led by a moderate faction, while Union B is affiliated with a militant
federation identified with leftist ideology.
Which of the following courses of action should you take to best protect the interests of your company and EEs?
(a) Recognize Union A as the rightful bargaining representative because it will be more reasonable to deal with;
(b) Recognize Union B because you do not want to antagonize its leftist connections and foment inter-union conflicts;
(c) Ignore the demands of either union since you cannot be compelled legally to deal with them at this stage; or
(d) Petition the Bureau of Labor Relations to conduct a certification election to determine which union really represents the majority of the
EEs in the bargaining unit.
Suggested answer:
(d) Petition the BLR to conduct a certification election to determine which union really represents the majority of the EEs in the appropriate
bargaining unit.
Cite Art. 258.

(c) Ignore the demands of either union since you cannot be compelled legally to deal with them at this stage. The reason why I am opting
for (c) instead of (d) is because option (d) calls for the EZ Component’s filing of a petition for certification election with “the B ureau of Labor
Relations”. Book V, Rule VIII, Sec. 2 of the Omnibus Rules Implementing the Labor Code (amended by DO 40-03, Series of 2003), which
implements Arts. 257 and 258 of the Labor Code, is explicit that “a petition for certification election shall be filed with the Regional Office which
issued the petitioning union’s certificate of registration / certificate of creation of chartered local. The petition shall be heard and resolved by the
MED-Arbiter”. Filing it with the Bureau of Labor Relations rendered (d) a wrong answer.
Art. 258 of the Code, which empowers the “Bureau” to entertain the petition for certification election of an ER, must be read alongside Art.
212(b) of the Labor Code which defines “Bureau” to mean as the BLR and/or the Labor Relations Division in the regional offices … in the
Department of Labor, as well as Art. 259 of the Code which tells us that it is the MED-Arbiter of the Labor Relations Division in the regional offices
who hears and decides certification election and that appeal therefrom is not even to BLR but to the DOLE Secretary. (2005 Bar Question)
Q: PT&T Supervisory EEs Union filed a petition for the holding of a certification election among the supervisory EEs of the PT&T Company. The
company moved to dismiss the petition on the ground that union members were performing managerial functions and were not merely supervisory
EEs. The company also alleged that a certified bargaining unit existed among its rank and file EEs which barred the filing of the petition.
1) Does the company have the standing to file the motion to dismiss? Explain.
2) If you were the Med-Arbiter, how would you resolve the petition?
3) What is the proper remedy of an employer to ensure that the EEs are qualified to hold a certification election?
Page 78 of 107
Suggested Answer:
1) No, the company has no standing to file a Motion to Dismiss as the ER has no right to interfere in a purely union matter or concern.
[Philippine Fruits and Vegetable Industries, Inc. v. Torres, 211 SCRA 95 (1992)]
The Court would wish to stress once more the rule which has consistently pronounced in many earlier cases that a certificatio n election is
the sole concern of the workers and the ER is regarded as nothing more than a by-stander with no right to interfere at all in the election.
2) As the Med-Arbiter I will:

a. Deny, for lack of merit, the ER’s Motion to Dismiss the Union’s Petition for Certification Election.
b. Proceed to hear the merits of the petition, especially:
1. the appropriation of the claimed bargaining unit;
2. inclusion and exclusion of voters, or he proposed voter list; and
3. if the petition is in order, to set the date, time and place of the election.
3) The ER has no remedy. The petition for certification election was initiated by the Union; hence, the ER is a total stranger or a bystander
in the election process. (Philippine Fruits and vegetable Industries, Inc. v. Torres). To allow an ER to assert a remedy is an act of interference in
a mater which is purely a concern of the Union.
Alternative Answer:
1) The company does not have the standing to file a motion to dismiss the petition for certification election, but it could move for the
exclusion of the EEs it alleged to be managerial EEs from the bargaining unit for which a petition for certification election has been filed.
As a general rule, an employer has no standing in a petition for certification election because the purpose of a certification election is to
determine who should be he collective bargaining representative of the EEs. Thus, a certification is the concern of the EEs and not the ER.
But in the case at bar, the ER may have a standing because the petition for certification election involves personnel which the ER alleges to
be managerial EEs. And managerial EEs under the LC are not eligible to form, assist or join labor organizations, implying that they cannot be part
of the bargaining unit for which a petition for certification election has been filed.
2) As the Med-Arbiter, I will order the holding of the certification election. The fact that there is already a certified collective bargaining
representative of the rank and file EEs of the Company is not a bar to the holding of a certification election for the determination of the collective
bargaining representative of the supervisory EEs. But I will exclude those EEs found to be managerial from participating in the certification
election.
3) The proper remedy of an ER to ensure that only the EEs are qualified to hold a certification election is to move for the exclusion of those
whom he alleges to be managerial personnel. (1996 and 1999 Bar Questions)
Q: Can the Bureau of Labor Relations certify a union as the exclusive bargaining representative after showing proof of majority representation
thru union membership cards without conducting an election?
Suggested answer:
The Bureau of Labor Relations cannot certify a union as the exclusive collective bargaining representative after showing of proof of majority
representation thru union membership cards without conducting a certification election.
The Labor Code (in Arts 256, 257, 258) provides only for a certification election as the mode for determining the exclusive collective
bargaining representative if there is a question of representation in an appropriate bargaining unit.

No, the Bureau of Labor Relations cannot certify a union as the exclusive bargaining representative without conducting a certification election.
The Supreme Court, in Colgate Palmolive Phils., Inc. v. Ople (1988), ruled:
“The procedure for a representation case is outlined (in the) Labor Code… the main purpose of which is to aid in ascertaining majority
representation. The requirements under the law… are all calculated to ensure that the certified bargaining representative is the true choice of
the employees against all contenders. xxx When an… official bypasses the law on the pretext of retaining a laudable objective, the meaning or
purpose of the law will lose its meaning as the law itself is disregarded. When the (BLR) directly (certifies) a union, he in fact disregarded this
procedure and its legal requirements. There was therefore failure to determine with legal certainty whether the union indeed enjoyed majority
representation.” (1998 Bar Question)
Bars To A Petition For CE(negative requisites)

1. Certification year— no CE may be held within 12 months from a previous CE, or consent election, or a run-off election, or
voluntary recognition by ER
2. Negotiation/ Deadlock bar— no CE if a duly certified union has commenced and sustained negotiations with the ER within 1
year from its certification or there is a pending bargaining deadlock which has been submitted to conciliation or arbitration or
has become the subject of a valid notice of strike or lockout
3. Contract bar— no CE when there is an existing CBA which has been duly registered (a petition for CE may only be filed within
the last 60 days of the 5th year of the CBA— freedom period)
* If the legitimacy of the petitioner union is under question in a proceeding seeking to cancel its registration, such question must first be
filed before its petition for CE may be granted.
Page 79 of 107
Q: Distinguish between “contract bar rule” and “deadlock bar rule”.
Suggested Answer:
Under the “contract bar rule,” a certification election cannot be held if there is in force and in effect a CBA that has been duly registered
with the DOLE except during the freedom period of such CBA which is the 60-day period prior to the expiry date of said CBA. (See Articles 231,
253-A and 256)
Under the “deadlock bar rule” a certification election can not be held if a bargaining deadlock to which an incumbent or certified bargaining
agent is a party had been submitted to conciliation or mediation or had become a subject of a valid notice of strike or lockout. (See Sec. 3, Rule
XI, Book V of the IRR of the LC)
Q: in what instance may a petition for a certification election be filed outside the freedom period of a current CBA?
Suggested Answer:
As a general rule, in an establishment where there is in force and effect a CBA, a petition for certification election may be filed only during
the freedom period of such CBA.
But to have the above-mentioned effect, the CBA should have been filed and registered with the DOLE. (See Art 231, 253-A and 256)
Thus, a CBA that has not been filed and registered with the DOLE cannot be a bar to a certification election and such election an be held
outside of the freedom period of such CBA.
Alternative Answer:
A petition for certification election may be filed outside the freedom period of a current CBA if such CBA is a new CBA that has been
prematurely entered into, meaning, it was entered into before the expiry date of the old CBA. The filing of the petition for certification election
shall be within the freedom period of the old CBA which is outside the period of the new CBA that has been prematurely entered into. (1999
Bar Questions)
Grounds for denial of petition for CE

 Petitioning union is not a LLO (not registered as a LLO or legal personality has been revoked or cancelled)
 Petition violates any of the bars to CE
 Petitioning union in an organized establishment fails to submit the 25% support requirement for the filing of the petition for CE
Note: Any question pertaining to the validity of petitioning union’s certificate of registration or its legal personality as LLO, or validity of
registration and execution of CBA, shall be held and resolved by the Regl Director in an independent petition for cancellation of its
registration (not by the Med-Arb in the petition for CE), unless the petitioning union is not in the roster of LLO or the CBA is not
registered.
Q: UNIDAD, a labor organization claiming to represent the majority of the rank and file workers of BAGSAK Toyo Manufacturing Cor p. filed a
petition for certification election during the freedom period obtaining in said corporation. Despite the opposition thereto by SIGAW Federation on
the ground that UNIDAD was not possessed with all the attributes of a duly registered union, the Med-Arbiter issued an order calling for a
certification election on July 25, 2001.
This Order was promulgated and served on the parties on July 12, 2001. On July 14, 2001, UNIDAD submitted and served the required
documents for its registration as an independent union, which documents were approved by the DOLE on July 15, 2001.
During the elections, UNIDAD won over SIGAW. SIGAW questioned UNIDAD’s victory on the ground that UNIDAD was not a duly registered
union when it filed a petition for certification election. Shall SIGAW’s case prosper or not? Why?
Suggested answer:
No, SIGAW’s case will not prosper. The application of technicalities of procedural requirements in certification election disputes will serve
lawful objective or purpose. It is a statutory policy that no obstacles should be placed on the holding of a certification el ection, (Samahan ng
Manggagawa sa Pacific Plastic v. Laguesma (1997)) and that the law is indisputably partial to the holding of a certification election. (Western
Agusan v. Trajano (1991))
At any rate, UNIDAD completed all the requirements for union registration on July 14, n 2001, and legitimate union status was accorded on
July 15, 2000, or at least 10 days before the scheduled date for holding the certification election. (2001 Bar Question)
-o0o0o0o-
Q: Distinguish clearly but briefly between:
1. Sympathy strike and general strike
2. company union and union shop
3. lock-out and closed shop
4. consent election and certification election.
5. social security and union security
Suggested Answers:
1. In both sympathy strike and in a general strike, there is stoppage of work by the concerted action of employees. In both kinds of
strike, the strike is not the result of a labor or industrial dispute.
Page 80 of 107
As the name implies, workers go on sympathy strike to show their sympathy for certain workers who are on strike. On the other hand,
in a general strike, workers in the country or in a region, province, or city or municipality go on strike to publicly protest a certain policy or action
taken by the government. Thus, for instance, a general strike may be declared by workers to publicly protest the stand of President Arroyo that
she is against a increase of the minimum wage at this time.
2. A company union is a union of employees dominated or under the control of the employer of said employees. A union shop, on t he
other hand, refers to a union security clause in a collective bargaining agreement whereby the employer agrees to terminate the employment of
an employee who ahs not become a member of the union which is the exclusive bargaining unit within a certain period after the employment of
said employee or has ceased to become a union member.
3. Lockout refers to the temporary refusal of an employer to furnish work as a result of a labor or industrial dispute. Closed shop, on the
other hand, refers to a union security clause in a collective bargaining agreement whereby the employer agrees not to employ any person who
is not a member of the exclusive bargaining representative of the employees in a bargaining unit.
4. A certification election and a consent election are both elections held to determine through secret ballot the sole and exclusive
representative of the employees in an appropriate bargaining unit for the purpose of collective bargaining negotiations. There is this difference,
however. A certification election is ordered by the Department of Labor and Employment while a consent election is voluntarily agreed upon by
the parties, with or without the intervention of the Department of Labor and Employment.
5. Social Security is the protection given by social insurance programs such as the program of the SSS, GSIS and PHIC undertaken pursuant
to their respective charters, including the employees’ compensation program provided for in the Labor Code. The aforesaid pr ograms provide
income benefits and/or medical care when contingencies like sickness, (also maternity in the case of SSS) disability, death, or retirement, including
in the case of GSIS, separation and unemployment benefits.
On the other hand, union security refers to a clause in a collective bargaining agreement whereby the employer agrees to employ or continue in
employment only workers who are members of the exclusive collective bargaining representative of the employees of said employer in a
bargaining unit. (2004 Bar Question)
PART 5
COLLECTIVE BARGAINING
DUTY TO BARGAIN COLLECTIVELY (Art. 250-253) — performance of a mutual obligation of ER and EEs (through the SEBA):
When there is no CBA

(1) To meet and convene
a. Promptly and expeditiously
b. In good faith
- parties deal with each other with open and fair mind and sincerely endeavor to overcome obstacles between them
c. PURPOSE: Executing a contract with respect to (bargainable issues):
(i) Wages (but parties may not set a wage lower than minimum wage
(ii) Hours of work
(iii) All other terms and conditions of employment including proposals for adjusting any grievances or questions arising
under such agreement
(2) Executing a contract incorporating such agreements if requested by either party

(3) BUT such duty does not compel any party to
a. Agree to a proposal or
b. Make a concession.
When there is a CBA—all the foregoing PLUS

(4) Neither party to the CBA may modify nor terminate the CBA during its lifetime.
› While it is a mutual obligation of the parties to bargain, the ER is not under any legal duty to initiate contract negotiation. The
mechanics of collective bargaining are set in motion only when these jurisdictional preconditions are present:
1. Possession of the status of majority representation of the EEs’ representative;
2. Proof of majority representation; and
3. Demand to bargain under Art. 250 (a) (Kiok Loy v. NLRC, 1986)
› If these jurisdictional preconditions are present, the collective bargaining should begin within 12 months following the
determination and certification of the EEs’ SEBA. This is the certification year.
› Violation of the duty to bargain collectively = ULP (which is a ground for holding a strike by the EEs or declaration of a lockout of
ER).
› This is committed in these ways:
Page 81 of 107
1. failure or refusal to meet and convene
2. in evading the purposes of bargaining
3. in not observing good faith in bargaining
4. in grossly violating the economic provisions of the CBA
COLLECTIVE BARGAINING PROCEDURE

- Follow CBA procedure for collective bargaining.
- If no CBA or voluntary agreement providing for a more expeditious manner, follow this procedure (Art. 251, 250):
(a) Party desiring to negotiate shall serve a written notice upon the other party with a statement of its proposals.
(b) Other party shall reply later than 10 calendar days from receipt.
(c) If there are differences on the basis of notice and reply, either party may request for a conference which shall begin not later
than 10 calendar days from request
(d) If the dispute is not settled, the Board shall intervene and call the parties to conciliation meetings.
Parties are prohibited from doing any act which may disrupt or impede the early settlement of the disputes.
(e) The Board shall exert all efforts to settle disputes amicably and encourage the parties to submit their case to a voluntary
arbitrator.
COLLECTIVE BARGAINING AGREEMENT (CBA)— refers to the contract between legitimate labor organization and the ER
concerning wages, hours of work, and all other terms and conditions of employment in a BU
Terms of the CBA (Arts. 253- 253-A)

Political Aspect (representation)— 5 years
Economic Aspect— renegotiation of provisions other than the representations aspect shall not be later than 3 years after its execution
 At least 60 days prior to expiration date— either parties may serve a written notice to terminate or modify
 During the 60-day period or until a new CBA is reached— the parties shall keep the status quo (automatic renewal)
 Retroaction:
- If new CBA is reached within 6 months from expiration date— retroact to the day immediately following such date.
- If beyond 6 months— parties shall agree on duration of retroactivity
- If CBA resulting from an arbitration award— Sec. of Labor’s determination of retroactivity date shall control (MERALCO v.
Quisumbing, 2000)
Contents
(1) Enumeration or reservation of management rights
(2) Union recognition and security
(3) Wage and fringe benefits and their administration
(4) Physical working condition
(5) Selected personnel management and plant operation practices
(6) Grievance and arbitration (Art. 260)
(7) Duration of contract
Q: What matters are considered mandatory subjects of collective bargaining?
Suggested Answer:
Wages, hours of work, and all other terms an conditions o employment including proposals for adjusting any grievances arising from the
collective bargaining agreement are considered mandatory subjects of collective bargaining. (Art. 258, LC)
Q: What jurisdictional pre-conditions must be present to set in motion the mechanics of a collective bargaining?
Suggested Answer:
To set in motion the mechanics of collective bargaining, these jurisdictional requirements pre-conditions must be present, namely:
1. The employees in a bargaining unit should form a labor organization;
2. Te labor organization should be a legitimate labor organization;
3. As such legitimate labor organization, should be recognized or certified s he collective bargaining representative of the employees of t
bargaining unit; and
4. The labor organization as the collective bargaining representative should request the employee to bargain collectively. (Arts. 243, 24, 255
and 250, LC)
Alternative Answer:
The mechanics of collective bargaining are set in motion only when the following jurisdictional preconditions are met: (1) possession of the
status of majority representation of the employees’ representative in accordance with any of the means of selection or designation proved for by
the Labor Code; (2)proof of majority of representation; and (3) a demand to bargain under Art 251(g), LC. (Kiok Loy v.NLRC) (1996 Bar
Question)
Page 82 of 107
Q: What is the “automatic renewal clause” in a CBA?
Suggested Answer:
The “automatic renewal clause” in a CBA refers to that provision of the Labor Code (Art. 253) which states that “it shall be the duty of both
parties (to a CBA) 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.” (1999 Bar Question)
Q: Company A and union B negotiated the last two years of their five-year CBA on April 1, 1990 to expire on March 31, 1992 considering the
amicable relations between the parties, neither one moved for the extension or termination of the agreement.
Sometime in 199, some disgruntled employees filed a compliant demanding that they be paid annual salary increases and other r elated
annual increases specified in the CBA of April 1990, citing the provisions in Art 253, LC which requires the parties to “xxx 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”.
A, however, maintained that the annual salary increases and related benefits specifically provided for in the CBA were, pursuant to contract
and law, effective only for the term specified therein, namely, until March 31, 1992 only.
Who is correct? State the reason/s for your answer.
Suggested answer:
The disgruntled employees are correct in their claim that the expired CBA remains in full force and effect until a new CBA is signed in
accordance with Art 253, LC.
The SC ruled in New Pacific Timber and Supply Co., Inc. v. NLRC (2000)
“Art 253 of the Labor Code explicitly provided that until a new Collective Bargaining Agreement has been executed by band between the parties,
they are duty bound to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement. The law
does not provide for any exception or qualification as to which of the economic provisions of the existing agreement are to retain force and effect,
therefore, it must be understood as encompassing all the terms and conditions in the agreement.”

With Art 253, LC as basis, the disgruntled employees should be paid the annual salary increases and other related annual increases provided
in the 1990-1992 CBA even after the expiration of said CBA as long as said CBA did not provide that said increases were to be paid only f or
certain specific years. (2001 Bar Question)
Registration of the CBA (Book V, Rule XVII)

When to File Within 30 days from execution of agreement
Who will file Parties to the CBA
Where to File Regional Office which issued the certificate of registration / certificate of creation of chartered local
If the certificate was issued by the BLR, CBA shall be filed with the Regl Office which has jurisdiction overt
he place where it principally operates
Multi-ER bargaining— filed with BLR
What to File 2 duly signed copies of (certified under oath):
(1) The CBA
(2) Statement that the CBA was posted in 2 conspicuous places in the establishment at least 5 days before
ratification
(3) Statement that the CBA was ratified by at least majority of the employees in the bargaining unit
Other Documents must be certified under oath by the representatives of the employer and labor organization.
requirements Payment of registration fee
 A registered CBA is a bar to a petition for CE (contract bar)
Q: The Ang Sarap Kainan Workers Union appointed Juan Javier, a law student, as bargaining representative. Mr. Javier is neither an employee
of the Ang Sarap Kainan Company nor a member of the union. Is the appointment of Mr. Javier as a bargaining representative in accord with
law? Explain.
Suggested answer:
Yes, the law does not require that the bargaining representative be an employee of the company nor an officer or member of the union (Art
212 (j), LC)
Q: A CBA was signed between the Ang Sarap Kainan Workers Union and the Ang Sarap Kainan Workers Union. Should the CBA be registered
with the Bureau of Labor Relations? If so, why?
Suggested answer:
So that the contract bar rule may apply, the CBA should be registered, assuming it has been validly ratified and contains the mandatory
provisions. (Art 232, LC)
Page 83 of 107
Q: The Samahan ng mga Manggagawa sa Pids and Co., Inc. lost its majority status in the bargaining unit one year after the signing of the CBA.
Bickering among all the three other unions in the bargaining unit was a daily occurrence, with each union asserting majority status. To resolve
this pestering problem, the Company and the three other unions agreed to hold a consent election under the supervision of the Bureau of Labor
Relations. In the consent election, Pids and Co. Workers Union won, and was accordingly recognized by the Company as the exclusive bargaining
representative in the bargaining unit. Is the Pids and co. Workers Union bound by the CBA signed between the Company and the Samahan ng
mga Manggagawa sa Pids and Co., Inc.? Explain.
Suggested answer:
Yes, because the CBA is not invalidated by the change of the bargaining agent while the CBA is still effective. (Benguet Consolidate Inc v.
BC Employees (1968))
Q: Shortly after the consent election, Pids and Co., Inc. sold the Groceries division to Metro Manila Grocery Inc. the employees of the sold division
formed part of the bargaining unit described in the CBA. And all were absorbed by Metro Manila Grocery Inc. is M Metro Manila Grocery Inc., as
the new employer, bound by the CBA existing at the time of the sale? Explain.
Suggested answer:
No. There are no indications that the sale is simulated or intended to defeat the employees’ right to organize. A bona fide sale termin ates
the employment relationship between the selling company and its employees. The CBA does not bind the purchaser in good faith because the
CBA is a contract in personam, unless the buyer agrees to be bound. (Associated Labor Union v. NLRC (1993)) (2000 Bar Question)
Effect of Substandard CBA—ground for cancellation of union registration
Beneficiaries of CBA—all EEs in the collective

bargaining unit, including those who do not belong to the labor organization (union).
Q: May a rank-and-file EE, who is not a member of the union representing his bargaining unit, avail of the wage increases which the union
negotiated for its members?
Suggested Answer:
Yes. The beneficiaries of a CBA include Non-Union members; otherwise, there will be discrimination which is prohibited by law. [New Pacific
Timber v. NLRC, 328 SCRA 424 (2000)]. (2005 Bar Question)
CBA Provision on Grievance Procedure (Art. 260)— machinery established by the CBA for the adjustment and resolution of grievances
arising from (“grievance” is limited to these only):
(1) the interpretation or implementation of the CBA and
(2) those arising from the interpretation or enforcement of company personnel policies.
 Grievances submitted to the machinery not settled within 7 calendar days from submission shall automatically be referred to voluntary
arbitration prescribed in the CBA.
 The CBA must designate in advance a Voluntary Arbitrator (VA) or panel of VAs, or include in the agreement a procedure for the
selection of such. In case the parties fail to select, the NCMB shall designate the VAs or panel of VAs.
 A grievance procedure is a “must” provision in any CBA and no CBA can be registered in the absence of such procedure.
CBA and 3rd Party Liability

 Unless expressly assumed, labor contracts (such as employment contracts and CBAs) are not enforceable against a transferee of an
enterprise; labor contracts being binding only between the parties.
General rule: There is no law requiring a bona fide purchaser of assets of an ongoing concern to absorb in its employ the employees
of the latter.
However, the parties are liable to the employees if the transaction is colored or clothed with bad faith. (Associated Labor Unions v NLRC,
1991)
Q: FACTS: Jensen & Jensen (J&J) is a domestic corporation engaged in the manufacturing of consumer products. Its rank-and-file workers
organized the Jenson EEs Union (JEU), a duly registered local union affiliated with PAFLU, a national union. After having been certified as the
exclusive bargaining agent of the appropriate bargaining unit, JEU-PAFLU submitted its proposals for a CBA with the company.
In the meantime, a power struggle occurred within the national union PAFLU between its National President, Manny Pakyao, and its National
Secretary General, Gabriel Miro. The representation issue within PAFLU is pending resolution before the Office of the Secretary of Labor.
By reason of this intra-union dispute within PAFLU, J&J obstinately and consistently refused to offer any counter-proposal and to bargain
collectively wioth JEU-PAFLU until the representation issue within PAFLU shall have been resolved with finality. JEU-PAFLU filed a Notice of Strike.
The Secretary of Labor subsequently assumed jurisdiction over he labor dispute.
1. Will the representation issue that has arisen involving the national union PAFLU, to which the duly registered local union JEU is affiliated,
bar collective bargaining negotiation with J&J? Explain briefly.
Page 84 of 107
Suggested Answer:
The representation issue that has arisen involving the national union PAFLU should not bar collective bargaining negotiation with J&J. it is
the local union that has the right to bargain with the ER J&J, and not the national union PAFLU.
It is immaterial whether the representation issue within PAFLU has been resolved with finality or net. Said squabble could not possibly serve
as a bar to any collective bargaining since PAFLU is not the real party-in-interest to the talks; rather, the negotiations are confined to the
corporation and the local union JEU. Only the collective bargaining agent, the local union JEU, possesses the legal standing to negotiate with the
corporation. A duly registered local union affiliated with a national union or federation does not lose its legal personality or independence.
[Adamson and Adamson, Inc. v. CIR and Adamson and Adamson Supervising Union (FFW), 127 SCRA 268 (1984)]
2. Can the Secretary of Labor decide the labor dispute by awarding JEU CBA Proposals as the CBA of the parties?
Suggested Answer:
Yes. The Secretary of Labor can decide the labor dispute by awarding the JEU CBA proposals as the CBA of the parties because when the
Secretary of Labor [under Art. 263 (g)] assumes jurisdiction over a labor dispute causing or likely to cause a strike or lockout in an industry
indispensable to the national interest, the Secretary of Labor exercises the power of compulsory arbitration over the labor dispute, meaning that
as an exception to the general rule, the Secretary of Labor now has the power to set or fix wages, rates of pay, hours of wor k or terms and
conditions of employment by determining what should be the CBA of the parties. (See Divine Word University vs. Secretary of Labor, 213 SCRA
759)
Alternative Answer:
What is involved in the case in the question is a corporation engaged in the manufacturing of consumer products. If the consumer products
that are being manufactures are not such that a strike against the company cannot be considered a strike in an industry indispensable for the
national interest, ten the assumption of jurisdiction by the Secretary of Labor is not proper. Therefore, he cannot legally exercise the powers of
compulsory arbitration in the labor dispute. (1999 Bar Question)
PART 6
UNFAIR LABOR PRACTICE
UNFAIR LABOR PRACTICES (Arts. 247-249)

- Violate the constitutional right of workers and employees to self-organization
- Disrupt industrial peace
- Violations of the civil rights of both labor and management and criminal offenses against the State
Q: Define unfair labor practice.
Suggested Answer:
Unfair labor practice means any unfair labor practice as expressly defined by the Labor Code (Arts. 248 and 249, LC). Essentially, an unfair
labor practice is any act committed by an employer or a labor organization, its officers, agents or representatives which has the effect of
preventing the full exercise byb employees of their rights to self-organization and collective bargaining.
Q: Give three examples of ULP on the part of the employer and 3 examples of ULP on the part of the labor union.
Suggested Answer:
Any three from the enumeration in Art. 248, ULP of employers and Art. 249 ULP of labor organizations. (1996 Bar Question)
Civil aspect
- may include claims for damages
- under Labor Arbiter’s jurisdiction.
- recovery of civil liability in the administrative proceedings shall bar recovery under the Civil Code.
Criminal prosecution
- needs final judgment (in the civil case) that ULP was committed before criminal prosecution
Who are criminally liable?

If ULP of ER—only the officers and agents of corps who have actually participated in, authorized or ratified ULPs shall be held
criminally liable.
If ULP of LOs— only the officers, members of governing boards, reps, or agents or members of LOs or associations who have
actually participated in, authorized or ratified ULPs shall be held criminally liable.
Q: Is the commission of an unfair labor practice by an ER subject to criminal prosecution?
Answer:
Yes, the 2nd paragraph of Art. 247, LC expressly so provides. The last paragraph of Art. 247 provides that no criminal prosecution for unfair
labor practice may be made without a prior final judgment in an unfair labor practice administrative case (filed before the Labor Arbiter of the
NLRC pursuant to Art. 217(a)(1), LC. And even with such final judgment in an administrative case, still, the final judgment would not be binding
Page 85 of 107
in t he criminal case. Neither would such final judgment be considered as evidence in the criminal case. At best, it would only serve as proof of
compliance of the required prior exhaustion of administrative complaint. (2005 Bar Question)
Elements of ULP
(1) ER-EE Relationship
(2) Act done must be specifically defined as ULP in the Code (Arts. 248-249).
* Not every unfair act is ULP. It has a technical meaning. It has to be related to the right to self-org and to the observance of the
CBA
ULP of ERs
Totality of Conduct Doctrine— culpability of an ER’s remarks is to be evaluated not only on the basis of their implications, but
against the background of collateral circumstances.
(1) Interference, restraint or coercion of EEs in their exercise of right to self-org— broadest of all the 9 proscriptions
 Subjection by the company of its EEs to questionings regarding their union memberships or activities, in such a way as to
hamper their exercise of free choice constitutes ULP (Philsteam v. Phil Marine Officers Guild, 1965)
 Espionage by an ER of union activities, or surveillance thereof constitutes ULP (Insular Life Assurance Employees Assn v. Insular
Life Assurance, 1971)
 Interference and restraint of demonstrations held purely as an exercise of freedom of expression and right of assembly constitute
ULP. (Phil Blooming Mills Employees Assn v Phil Blooming Mills, 1973)
Q: Around 100 workers of a mill in a coconut plantation organized themselves for the purpose of promoting their common interest and welfare.
The worker’s association prepared a petition for increasing the daily pay of its members in compliance with minimum wage rates for their sector
in the region, and for granting benefits to which they are entitled under the law.
However, the workers became restless and anxious after the owner-manager threatened them with mass lay-off if the association would
press for their demands. Most of its members have worked in the mill for 10 to 15 years with no improvement in working conditions and monetary
benefits.
The leaders of the workers’ association approached you and asked: What legal steps could they take to protect their security of tenure?
What advice could you give them?
Suggested Answer:
I would advise them to register the worker’s association with the Department of Labor and Employment. Then, have the workers’ association
file a ULP case against the employer.

The workers are entitled to the constitutional (Art XIII, Sec. 3, 1987 Constitution) and statutory (Art. 279, LC) guarantees of security of
tenure. When this right to security of tenure is violated, an action for illegal dismissal is an available remedy.
If they are dismissed because of union activities, an action for unfair labor practice can be filed (Sec. 3, Art. XIII; Art. 243,LC). If successful,
the workers will be entitled to full backwages, including money value of benefits, and reinstatement without loss of seniority (Art. 279, LC).
(2004 Bar Question)
(2) To require as a condition of employment that a person or an EE shall not join a labor org or shall withdraw from one which he
belongs (yellow dog contract) – non-union membership or withdrawal from membership as a condition of employment.
(3) Contracting out services or functions being performed by union members to discourage unionism (subcontracting)
 It is ULP when it is motivated by a desire to prevent his EEs from organizing and selecting a collective bargaining representative.
 Not ULP when it is for business reasons
Q: company “A” contracts out its clerical and janitorial services. In the negotiations of its CBA, the union insisted that, henceforth, the company
may no longer engage in contracting out these types of services, which services the union claims to be necessary in the compa ny’s business,
without prior consultation. Is the union’s stand valid or not? For what reason/s?
Page 86 of 107
Suggested answer:
The union’s stand is not valid. It is part of management prerogative to contract out any work, task, job or project that it is an unfair labor
practice to contract out services or functions performed by union members when such will interfere with, restrain , or coerce employees in the
exercise of their rights to self-organization. Art 248 (c), LC)

The union’s stand that there must be a prior consultation by the employer with the union before contracting out can be effected is valid. Art
XIII, Sec 3 of the Constitution, and Art 255, LC guarantee the right of workers to participate in policy and decision-making processes which affect
their rights and benefits. Job contracting will undoubtedly and directly affect their rights, benefits and welfare. (PAL v. NLRC) (2001 Bar
Question)
(4) To initiate, dominate, assist or otherwise interfere with the formation or administration of any labor org, including the giving of
financial or other support to it or its organizers or supporters (company-domination of union)
(5) Discrimination to encourage / discourage membership in any labor org
 If the discrimination is to influence the union activity of EEs, the discrimination is unlawful. But the discrimination is not
the same as differentiation or classification (e.g., management classifies jobs and grants them varying levels of pay of
benefits)
 Test WoN dismissal is discriminatory: look at the reason. The fact that a lawful cause for the dismissal is available is not
a defense where the EE is actually discharged because of his union activities. But if the dismissal was actually motivated
by a lawful reason, the fact that the EE is engaged in union activities will not prevent the ER from discharging the EE for
cause.
Union security clause— any form of agreement which imposes upon the EEs the obligation to acquire or retain union membership,
otherwise their employment will be terminated.
- It is discrimination favoring unionism. It is a valid kind of discrimination.
- But this union shop stipulation should be strictly construed.
- To validly dismiss an EE under this, there should be:
 a clear and unequivocal statement that loss of good standing in the union is a cause for dismissal; and
 ER must observe due process
- All EEs in the BU covered by a closed-shop agreement are subject to its term except:
(1) An EE who at the time the closed-shop agreement takes effect is a bona fide member of a religious org which prohibits its
members from joining labor unions based on religious grounds
(2) EE already members of a union other than the majority at the time the closed-shop agreement took effect; and
(3) EEs excluded from the closed-shop agreement by express terms (also, those who are not members of the BU)
Hiring Continued Ground for Termination

Employment
Union Shop EEs have access to labor After some time, EE must If the EE does not join the union
market; Can be hired even if not become a member after reasonable time, it will be a
union member. ground for termination
After due process is observed.
Closed Shop EE must become a member at Must be a member all through- If not a member at anytime,
the time of hiring out ground for termination
After due process is observed

Maintenance shop Already a member at the time Must maintain member-ship, If disaffiliates from union, grounds
of hiring otherwise ground for for termination
termination
After due process is observed
Closed Shop/ Agency Shop

Q: Describe a “closed shop agreement”. Does it differ from an “agency shop agreement”?
Are the above agreements legal?
Page 87 of 107
Answer:
A “closed shop agreement” is that agreement embodied in a collective bargaining agreement (CBA) whereby the employer binds itself not
to hire any person unless he is first a union member of the collective bargaining representative. An “agency shop agreement” is different from
a closed shop agreement in that under the former, the employer does not bind itself not to hire a person unless he is first a union member of
the collective bargaining representative. Instead, the employer binds itself to check off from those who are not union members of the collecting
bargaining representative reasonable fee equivalent to the des and other fees paid by union members I the non-union members accept the
benefits of the CBA.
The above agreements are legal or they are expressly allowed by the Labor Code. (1997 Bar Question)
Q: A group of EEs in XYZ Factory belonging to a religious sect, in conformity with the teachings and dictates of their religion, refused to join the
labor union in the factory. The labor union was able to negotiate a substantial wage increase in its collective bargaining agreement with the
management. A provision therein stated that the wage increase would be paid to the members of the union only in view of a “closed shop” union
security clause in the new agreement. The members of the sect protested and demanded that the wage increase be extended to them. The
officers of the union countered by demanding their termination from the company pursuant to the “closed shop” provision in the just-concluded
CBA.
(a) Is the CBA provision valid?
Suggested Answer:
No, the CBA provision is not valid.
The benefits of a CBA are extendible to all EEs regardless of their membership in the union, because to withhold the same from non-union
members would be to discriminate against them. [National Brewery & Allied Industries Labor Union of the Phils. V. San Miguel Brewey, 8 SCRA
805 (1963)].
(b) Should the company comply with the union’s demand of termination the members of the religious sect?
Suggested Answer:
No, the company should not comply with the union’s demand. In the case of Victoriano v. Elizalde Rope Workers’ Union, 59 SCRA 54 (1974)],
religious freedom is superior to the freedom to contract. In the hierarchy of values, religious freedom takes a preferred position and the right to
contract must yield; accordingly, the CBA provision which is contractual in nature must not prevail over the duty to respect the workers’
constitutional right to religious freedom. (2005 Bar Question)
Q: FACTS: In a certification election conducted by the Department of Labor, Associated Workers Organization in Laguna (AWOL) headed by
Cesar Montayo, won over Pangkat ng mga Manggagawa sa Laguna (PML), headed by Eddie Garciaa. Hence, AWOL was certified as the exclusive
bargaining agent of the rank-and-file EEs of the Laguna Transportation Company (LTC).
Shortly, thereafter, a CBA was conducted by LTC and AWOL which provided for a closed shop. Consequently, AWOL, demanded that Eddie
Garciaa and all the PML members be required to become members of AWOL as a condition for their continued employment; otherwise, they shall
be dismissed pursuant to the closed shop provision of the CBA.
The union security clause of the CBA also provided for the dismissal of the EEs who have not maintained their membership in the union. For
one reason or another, Francis Magallona, a member of AWOL, was expelled from the union membership for acts inimical to the interest of the
union. Upon receipt of the notice that Francis Magallona failed to maintain his membership in good standing with AWOL, LTC summarily dismissed
him from employment.
1. Can Eddie Garciaa and all the PML members be required to become members of the AWOL pursuant to the closed shop provision of the
CBA? Why?
Suggested Answer:
Eddie Garciaa and all the PML members can not be required to become members of AWOL pursuant to the closed shop provision of the
CBA.
According to the Labor Code [Art. 248 (e)], a closed shop provision cannot be applied to those EEs who are already members of another
union at the time of signing of the CBA.
2. Is the termination from employment of Francis Magallona by LTC lawful? Why?
Suggested Answer:
Pursuant to the closed shop provision of the CBA entered into by AWOL with LTC, membership in AWOL has become a condition of
employment in LTC.
As long as the expulsion of Francis Magallona from AWOL was done in accordance with applicable provisions of law and with the Constitution
and By-Laws of the AWOL, then it was lawful for LTC to terminate Magallona.
Panel: The termination is unlawful (Ferrer v. NLRC) (1999 Bar Question)
Q: MPH Labor Union is the duly certified bargaining representative of the rank and file employees of MM Park Hotel since the 197 0’s. The
collective bargaining agreement contained union shop security provisions. After signing of the 2000-2005 CBA, the Union demanded the dismissal
of 3 employees, XX, YY and ZZ, pursuant to the union security clause in the CBA.
The Hotel Management replied that it was legally impossible to comply with the demand of the Union. It might even be construed as unfair
labor practice. For it appeared that XX, YY and ZZ had been recently promoted as supervisors and resigned from the Union. But according to
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the Union, the three submitted their resignations outside the freedom period after the 1996-2000 CBA expired on June 30, 2000. The Union
argued that the Hotel Management could not skirt its obligation to respect and implement the union security clause by promoting the three
employees. That could be viewed as rewarding employees for their disloyalty to the union, said the union officers.
Does the union security clause sufficiently justify the demand for dismissal of the three employees or not? May the Hotel Management
validly refuse the Union’s demand?
Suggested Answer:
No. The union security clause does not justify the dismissal of the promoted supervisors who were formerly members of the rank and file
union.
Yes. The Hotel Management may validly refuse to dismiss the supervisors.
As supervisors, they are no longer covered by the CBA of the employer and the rank and file union. The law does not require a promoted
supervisor to resign upon promotion from their membership in the rank and file union; rather, by operation of law, they can no longer continue
their membership with the rank and file union.
Art. 245 of the Labor Code provides that 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. (2004 Bar Question)
(6) To dismiss, discharge, or otherwise prejudice or discriminate against and EE for having given or being about to give testimony under
this Code.
(7) To violate the duty to bargain collectively
(8) To pay negotiation or atty’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
(9) Violation of the CBA— to constitute ULP, violation must be gross, i.e., flagrant and malicious refusal to comply with the economic
provisions of the CBA (cf. Art. 261). If not gross, then it is not ULP.
ULP of Labor Orgs

(1) To restrain or coerce EEs in their exercise of right to self-org. However, a labor org shall have the right to prescribe its own rules re
membership.
(2) To cause ER to discriminate against an EE, including discrimination on the basis of membership/ non-membership in the org
(3) Violation of duty to bargain collectively
(4) To cause an ER to pay 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 (featherbedding/ make-work schemes)—spreading or creating employment by
unnecessarily maintaining or increasing the number of EEs used, or amount of time consumed, to work on a particular job.
(5) To ask for or accept negotiations or atty’s fees from ERs as part of the settlement of any issue in CB or other dispute (sweetheart
contract)— here, a CBA does not substantially improve the EEs’ wages and benefits. It is a juicy deal between the ER and the
bargaining agent.
(6) To violate a CBA—to constitute ULP, violation must be gross, i.e., flagrant and malicious refusal to comply with the economic
provisions of the CBA (cf. Art. 261). If not gross, then it is not ULP.
PART 7
UNION CONCERTED ACTIVITIES
(Arts. 263-266)
LABOR DISPUTE[(Art. 212 (l)]—— includes any controversy or matter concerning terms or conditions of employment or the association
or representation of persons in negotiating, fixing, maintaining, changing or arranging the terms and conditions of employment,
regardless of whether the disputants stand in the proximate relation of ER and EE.
STRIKE/ LOCKOUT
 The law treats strike and lockout similarly because both connote the temporary stoppage of work in relation to a labor dispute.
 The only difference is in the identity of the doer.
Strike [(Art. 212 (o)]—any temporary stoppage of work by the concerted action of EEs as a result of an industrial or labor dispute.
* if not based on a labor dispute= illegal strike
Lockout [(Art. 212 (p)]—any temporary refusal of an ER to furnish work as a result of an industrial or labor dispute.
Page 89 of 107
Q: a division manager of a company taunted a union officer two days after the union submitted to the DOLE the result of the strike vote. The
division manager said: “Your union threat of an unfair labor practice strike is phony or bluff. Not even the ten percent (10%) of your members
will join the strike.” To prove union members support for the strike, the union officer immediately instructed its members to crease working and
walkout. Two hours after the walk-out the workers voluntarily returned to work.
Was the walkout a strike? And if so, was it a valid activity?
Can the union officer who led the short walkout, but who likewise voluntarily led the workers back to work, be disciplined by the employer?
Suggested answer:
Yes, it was a strike because there was a work stoppage by concerted action and there is an existing labor dispute. It was not a valid activity
because the requisites for a valid strike were jot observed. (Art 212 (o), (l), LC)
Yes, the employer may discipline the union officer. An illegal strike is a cause for the union officer to be declared to have lost its employment
status. (Art 263 (c)(d)(e)(f); Art 264 (a), LC) (2000 Bar Question)
Q: Eaglestar Company required a 24-hour operation and embodied this requirement in the employment contracts of its EEs. The EEs agreed to
work on Sundays and Holidays if their work schedule required them to do so for which they would be paid additional compensation as provided
by law. Last March 2000, the union filed a notice of strike. Upon Eaglestar’s petition, the Secretary of Labor certified the labor dispute to the
NLRC for compulsory arbitrator. On April 20, 2000 (Maundy Thursday), while conciliation meetings were pending, the union officers and members
who were supposed to be on duty did not report for work. Neither did they report for work on April 21 (Good Friday) and on Ap ril 22 (Black
Saturday), disrupting the factory’s operations and causing it huge losses. The union denied it had gone on a strike because the days when its
officers and members were absent from work were legal holidays. Is the contention of the union correct? Explain briefly.
Suggested Answer:
The contention of the union is NOT correct.
In the case, it is clear that the EEs agreed to work on Sundays and Holidays of their work schedule required them to do so for which they
would be paid additional compensation as provided by law.
The above-mentioned agreement that the EEs voluntarily entered into is valid. It is not contrary to law. It is provided in the agreement that
if they will work Sundays or Holidays that they will be aid additional compensation as provided by law. Neither is the agreem ent contrary to
morals, good customs, public order or public policy.
Thus, when the workers did not report for work when by agreement they were supposed to be on duty, there was a temporary stoppage of
work by the concerted action of the EEs as a result of an industrial or labor dispute because they were on strike. [See Interphil Laboratories EEs
Union-FFW v. Interphil Laboratories Inc., Dec. 19, 2001] (2002 Bar Question)
Valid grounds for strike or lockout (Art. 263)

(1) Bargaining deadlock (economic strike)
(2) ULP
- When ULP is found to have been actually committed; or
- When the union/ ER believed in good faith that ULP was committed, although found subsequently as not committed (“good
faith strike”)
Procedure (Art. 263)

*Note: ER or labor org must have first bargained collectively
(1) filing notice of strike/ lockout (cooling-off period)
 If bargaining deadlock—30 days before intended date
- who files? Only the exclusive bargaining agent
 If ULP— 15 days before intended date except in case of union busting (i.e., where existence of union is threatened, e.g.,
dismissal from employment of union officers)
- who files? the exclusive bargaining agent; or if none, the LLO affected by the ULP (remember: only a legitimate labor
org can legally hold a strike)
 In case of union busting, the union may take action immediately (i.e, they can disregard the 15-day cooling-off period) but
only after the strike-vote is obtained and results submitted to the NCMB at least 7 days before the intended date of strike/
lockout (this 7-day period cannot be disregarded)
(2) Observance of the cooling-off period

 Duty of NCMB to exert all efforts at mediation and conciliation to effect a voluntary settlement.
 If still unsettled after cooling-off period, union may strike/ER may declare lockout.
Decision to declare a strike / lockout

- must be approved by a majority of the total union membership in the bargaining unit / majority of the board of directors of the
corporation
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- obtained by secret ballot in meetings for that purpose
› decision is valid for the duration of the dispute based on substantially the same ground as when the vote was taken.
› The union or ER shall furnish the NCMB the results of the voting (strike-vote) at least 7 days before the intended strike or lockout,
subject to the cooling-off period (hence strike/ lockout should only be after the appropriate cooling-off period PLUS 7 days; the
cooling-off period and the 7-day period are counted separately)
Q: Magdalo, a labor union in Oakwood, a furniture manufacturing firm, after failing in its negotiations with Oakwood, filed with the Department
of Labor and Employment (DOLE) a notice of strike. The DOLE summoned Magdalo and Oakwood for conciliation hearings to resolve the
deadlock. Unable to agree despite efforts of the DOLE, Magdalo called a strike participated in by its officers and union members including Cesar
Tinio, a rank and file employee, who led the “walk out.” Oakwood filed a petition to declare illegal the strike which Magdalo staged without
observing the seven-day ban under the Labor Code. Oakwood claimed that the strike being illegal, all those who participated therein, including
Cesar Tinio, could be dismissed as, in fact, they were so dismissed by Oakwood. Decide the case.
Suggested Answer:
When Oakwood dismissed all the officers and members of the union who participated in the strike which was declared illegal because it was
staged without observing the seven-day ban under the Labor Code, Oakwood illegally dismissed the union members, including Cesar Tinio. The
Labor Code provides that a union officer who knowingly participates in an illegal strike loses his employment status. Thus, the union officers
were legally dismissed. But for a union member to lose his employment status, he should have committed illegal acts during the strike, like acts
of violence, coercion or intimidation or obstruction of ingress to or egress from the employer’s premises for lawful purposes or obstruction of
public thoroughfares. The union members, including Cesar Tinio, did not commit any of these acts. Thus, it would be illegal to dismiss them.
(2003 Bar Question)
Q: What are the statutory requisites for a valid strike by the workers? Should these requisites be complied with substantially or strictly?
Suggested Answers:
1.The statutory requisites for a valid strike are the following:
A strike may be declared only in cases of bargaining deadlocks or unfair labor practices. Violations of collective bargainin g agreements,
except flagrant and/or malicious refusal to comply with its economic provisions, shall not be considered unfair labor practice and shall not be
strikeable. No strike or lockout may be declared on grounds involving inter-union and intra-union disputes.
No strike may be declared without first having filed a notice of strike or without the necessary strike vote having been obtained and reported
to the National Conciliation and Mediation Board. A strike may actually take place only after a 30-day waiting period after notice was filed for a
strike arising from a bargaining deadlock or after a 15-day waiting period for an unfair labor practice strike. Notice about a strike vote should be
given seven days before the intended strike.
No strike can be declared after assumption of jurisdiction by the Secretary of Labor and Employment or after certification or submission of
the dispute to compulsory or voluntary arbitration ar during the pendency of cases involving the same grounds for the strike or lockout.
The above requisites are to be complied with strictly. Thus, the Supreme Court has ruled that non-compliance of the requirements of notice
or a strike vote or of the waiting periods makes a strike an illegal strike.

1. Statutory Requirements for a Valid Strike
a. Status of Striking Union-
For a ULP strike or bargaining deadlock strike, only duly-certified or recognized bargaining representative may declare such strike.
b. Procedural Requirements
1. Notice of Intent. Filing of Notice of Intent to Strike with the NCMB
2. Cooling –off Period. Observance of Cooling-off period:
(a) ULP- 15 days before the intended date of strike
(b) Bargaining deadlock-30 days before intended date of strike
3. Strike Vote and Filing of the same with the NCMB and the observance of seven (7) days strike ban. (Art. 263 (c-f), LC)
4. Cause- The cause of a strike must be a labor or industrial dispute. (Art 212 (o), LC).
Compliance with all legal requirements is meant to be and should be mandatory. (National Federation of Sugar Workers v. Ovajera) (2004
Bar Question)
Assumption of Jurisdiction by the Sec. of Labor/ Certification to NLRC for compulsory arbitration— in cases of labor dispute
in an industry indispensable to national interest (as determined by the Pres. of the Phils)
Effect of AJ or certification:
 automatically enjoins the intended or impending strike or lockout as specified in the assumption or certification order.
 If one has already taken place at the time of assumption, all striking or locked out EEs shall immediately return-to-work and the
ER shall immediately resume operations and readmit all workers
 Before or at any stage of the compulsory arbitration, the parties may opt to submit the dispute to voluntary arbitration (VA); also,
the Pres. of the Phils is not precluded from intervening at anytime and assuming jurisdiction over the dispute
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 Sec., NLRC, or VA shall decide within 30 days. Decision of these or the Pres shall be final and executory 10 days from receipt of
the parties.
 The moment there is Presidential (or by Secretary of Labor) assumption of jurisdiction, whether a return-to-work order is issued
or not, the return-to-work order is an integral part of the assumption of jurisdiction. (Sarmiento v. Tuico, 1988)
Q: The Secretary of Labor assumed jurisdiction over a strike in Manila Airlines and eventually issued a return-to-work order. The Manila Airlines
EEs Union defied the return-to-work order and continued with their strike. The management of Manila Airlines then declared all the EEs who
participated in the strike dismissed from employment.
(a) Was the act of Manila Airlines’ management in dismissing the participants in the strike valid?
(b) What are the effects of an assumption of jurisdiction by the Secretary of Labor upon the striking EEs and Manila Airlines?
Answer:
(a) Yes. The act of Manila Airlines’ management in dismissing the participants in the strike is valid. In a number of Supreme Court decisions,
it has ruled that the defiance by workers of a return to work order of the Secretary of Labor issued when he assumes jurisdic tion over a labor
dispute is an illegal act and could be the basis of a legal dismissal. The return to work order imposes a duty; it must be discharged as a duty
even against the workers’ will.
(b) When the Secretary of Labor assumes jurisdiction over a strike, all striking EEs shall immediately return to work and the ER shall
immediately resume operations and readmit all workers under the same terms and conditions prevailing before the strike. (1997 Bar Question)
Q: The Secretary of Labor and Employment, after assumption of jurisdiction over a labor dispute in an airline issued a Return to Work Order.
The airline filed a Motion for Reconsideration of the Order and pending resolution of the motion deferred the implementation of the Order.
Can the airline defer the implementation of the return to work Order pending the resolution of the motion of reconsideration?
Suggested answer:
The airline cannot defer the implementation of the Return to Work Order on the basis of there being a pending Motion for Reconsideration
re: the assumption of jurisdiction by the Secretary of Labor and Employment of a labor dispute.
According to the Supreme Court, the Return to Work Order issued by the Secretary of Labor upon his assumption of jurisdiction over a labor
dispute in an industry indispensable for the national interest is immediately executory.

No, the airline cannot defer the implementation of a return to work order pending resolution of a Motion for Reconsideration. (See Art
263 (g), LC)
The Supreme Court, in Baguio Colleges Foundation v. NLRC (1995), ruled:
“xxx assumption and certification orders are executory in character and are to be strictly complied with by the parties even during the
pendency of any petition questioning their validity.
Being executory in character, there was nothing for the parties to do but implement the same.” (underscoring supplied) (1998 Bar
Question)
Q: In a labor dispute, the Secretary of Labor issued an “Assumption Order.” Give the legal implications of such an order.
Suggested Answer:
Under Art. 263(g) of the Labor Code, such assumption shall have the effect of automatically enjoining the intended or impending strike or lockout
as specified in the assumption order. If one had already taken place at the time of assumption, all striking or lockout employees shall immediately
resume operations and re-admit all workers under the same terms and conditions prevailing before the strike or lockout. The Secretary of Labor
and Employment 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. The mere issuance of an assumption order by the Secretary of Labor automatically carries with it a return-
to-work order, even if the directive to return to work is not expressly stated in the assumption order. Those who violate the foregoing shall be
subject to disciplinary action or even criminal prosecution.
Under Art. 264 of the Labor Code, no strike or lockout shall be declared after the assumption of jurisdiction by the Secretary. (2003 Bar
Question)
Q: Which of the following may be considered among industries most vital to national interest as to be subject of immediate assumption of
jurisdiction by the Secretary of Labor and Employment or certification for compulsory arbitration in case of strike or work stoppage arising from
a labor dispute?
(1) Bulletin daily newspaper publishing company
(2) Local franchise of Jollibee and Starbucks
(3) Shipping and port services in Cebu and Manila
(4) Enchanted Kingdom, Elephant Island and Boracay Resort
(5) LBC, DHL and FedEx centers
Justify your answer or choice.
Suggested Answer:
Page 92 of 107
Certification of labor dispute for immediate assumption of jurisdiction by the Secretary of Labor and Employment, as indispensable to national
interest. (Art. 263 (g), LC).
1. Bulletin Daily Newspsaper. Access to information, e.g. local. Foreign, or otherwise are requirements for an informed citizenry
2. Shipping and port services in Cebu and Manila. The country needs domestic sea transport due to our topography and for the smooth flow
of business and government operations.
3. LBC, DHL, FedEx Center. Couriers are essential to foreign and domestic government operations. (2004 Bar Question)
Not valid grounds for strike/ lockout

[RA 6727; Book V, Rule XXII, Sec. 5]
(1) Inter-union dispute— conflict between and among LLOs involving representation for purposes of CB or other conflict [Book V, Rule
I, Sec. 1 (x)]
(2) Intra-union dispute— conflict between and among union members (violation of rights and conditions of membership, disagreement
over the union’s consti and by-laws or those arising from chartering or affiliation of union) [Book V, Rule I, Sec. 1 (bb)]
(3) Wage distortion, per RA 6727 (Wage Rationalization Act) (Ilaw at Buklod ng Manggagawa v. NLRC, 1991)
PICKETING— walking and patrolling the vicinity of a place of business involved in a labor dispute (this may happen even if no strike or
work stoppage)
 Peaceful picketing is entitled to protection as an exercise of free speech but the courts are empowered to confine or localize the
sphere of demonstration to the parties to the labor dispute. Court may insulate establishments/ persons with no connection to
the dispute. (this is the “innocent by-stander” rule, giving third persons right to regulate the dispute)
PROHIBITED ACTIVITIES (hence making it an illegal strike/ lockout/ picketing) (Art. 264)
(1) Strike/ lockout without
(a) Bargaining collectively first
(b) Filing the notice required or
(c) Obtaining the necessary strike or lockout vote and reporting it to the NCMB
(2) Strike/ lockout after AJ by the Pres. or the Sec. 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.
(3) 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 (strike-beaker), or shall
aid or abet such obstruction or interference
(4) Employment of strike-breaker/ employed as strike-breaker
(5) Public official / employee, AFP or PNP officers / personnel bringing in, introducing, or escorting 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.
Rule: Police shall keep out of the picket lines unless
1. actual violence or other criminal acts occur; or
2. taking any measure necessary to maintain peace and order, protect life and property, and/or enforce the law and legal
order.
(6) Acts 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.
CONSEQUENCES OF CONCERTED ACTIONS ON THE EMPLOYMENT STATUS

(1) Lawful Strike/ Lockout
a. Dismissal in a lawful economic strike— reinstatement (no backwages because “no work, no pay”)
b. Dismissal in a lawful ULP strike
i. EEs who were discriminatorily dismissed because of union activities— reinstatement + backwages
ii. EEs who voluntarily went on strike because of such ULP— reinstatement only
 Court has still the discretion, despite the finding of ULP, WoN to grant backpay
 Any worker or union officer who knowingly participates in the commission of illegal acts during a lawful strike—justified
dismissal
 Mere participation of a worker in a lawful strike—not a ground for his dismissal, even if a replacement had been hired by the
ER during the lawful strike [Art. 264 (a)]
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Q: As a result of bargaining deadlock between ROSE Corporation and ROSE Employees Union, its members staged a strike. During the strike
several employees committed illegal acts. The company refused to give in to the union’s demands. Eventually, its members informed the
company of their intention to return to work.
Can ROSE Corporation refuse to admit all the strikers?
Suggested Answer:
Article 264 of the Labor Code provides that “mere participation of the worker in a lawful strike shall not constitute sufficient ground for
termination of employment even if a replacement had been hired by the employer during such lawful strike.”
On the other hand, the same Article of the LC also provides: “Any worker or union officers who knowingly participates in the commission of
illegal acts during a strike may be declared to have lost his employment status.”
Because of the above-quoted provisions of the Labor Code, ROSE Corporation cannot refuse to admit all the strikers who inform the company
of their intention to return to work, except those workers who may have committed illegal acts during the strike who can be declared as having
lost their employment status.
Q: Assuming the company admits all the strikers, can it later on dismiss those employees who committed illegal acts?
Suggested Answer:
Even if as its initial response, the company admitted all the strikers, the company is not estopped from afterwards dismissing those employees
who committed illegal acts during the strike. Article 264 of the Labor Code expressly states that “any worker xxx who knowingly participates in
the commission of illegal acts during strike may be declared to have lost his employment status.”
Q: If due to the prolonged strike, ROSE Corporation hired replacements, can it refuse to admit the replaced workers?
Suggested Answer:
ROSE Corporation cannot refuse to admit the strikers if they did not commit any illegal acts during a lawful strike. The Labor Code is very
clear: Workers who went on strike have not lost their employment status even if the company had hired their replacements. (2006 Bar
Question)
Q: A strike was staged in Mella Corporation because of a deadlock in CBA negotiations over certain economic provisions. During the strike, Mella
Corp. hired replacements for the workers who went on strike. Thereafter, the strikers decided to resume their employment.
Can Mella Corp. be obliged to reinstate the returning workers to their previous positions?
Answer:
Yes. Mella Corp. can be obligated to reinstate the returning workers to their previous positions. Workers who go on strike do not lose their
employment status except when, while on strike, they knowingly participated in the commission of illegal acts. The Labor Code expressly provides:
Mere participation of a worker in a lawful strike should not constitute sufficient ground for the termination of his employment even if a replacement
had been hired by the ER during such lawful strike. (1997 Bar Question)
(2) Unlawful Strike/ Lockout

a. Dismissal of EE in an unlawful lockout— reinstatement + full backwages [Art. 264 (a)]
b. Dismissal of EE in an unlawful strike
i. Union officer who knowingly participates in an illegal strike— justified dismissal
ii. Any worker or union officer who knowingly participates in the commission of illegal acts during an illegal strike—justified
dismissal
iii. Participation of a worker— not ground for dismissal. There must be proof that he committed illegal acts during the strike.
Note: The penalty imposable to erring strikers does not always have to be dismissal. It may be scaled down to suspension esp.
of there is a finding that both the ER and EEs contributed to the volatile atmosphere. (PAL v. Brilliantes, 1997)
WHEN IS A STRIKE ILLEGAL

 Contrary to statutory prohibition
- If EEs do not have the right to strike (e.g., govt EEs)
 Violates a specific requirement of law (procedural requirements)

- If did not observe the procedural requirements in Art. 263
 Validity of grounds
- If not because of bargaining deadlock or ULP
 Employing unlawful means

- If prohibited activities were committed such as:
 Violence, coercion or intimidation
 Obstruct the free ingress to or egress from the ER’s premises
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 Obstruct public thoroughfares
 Coercing or threatening non-srtiking EEs (amounts to ULP by labor org)
 If there is an injunction (in national interest strikes)
 Violation of agreement of the parties

- If there is a no-strike clause in the CBA (applies only to economic strikes)
Q: The day following the workers voluntary return to work, the Company Production Manager discovered an unusual and sharp drop in workers’
output. It was evidently clear that the workers are engaged in a work slowdown activity.
Is the work slowdown a valid form of strike activity?
Suggested answer:
A work slowdown is not a valid form of strike activity. If workers are to strike, there should be temporary stoppage of work by the concerted
action of employees as a result of an industrial or labor dispute. (See Art 212(o),LC)

No, a slowdown is no a valid form of strike activity. The Supreme Court in Ilaw at Buklod ng Manggagawa v. NLRC (1991) ruled:
“The Court is in substantial agreement with the petitioner’s concept of a slowdown as a “strike on the installment plan”, as a willful reduction
in the rate of work by concerted action of workers for the purpose of restricting the output of the employer, in relation to a labor dispute, as an
activity by which workers, without a complete stoppage of work retard production or their performance of their duties… The Court also agrees
that such slowdown is generally condemned as inherently illicit and unjustifiable, because while the employees “continue to work and remain at
their positions, and accept wages paid to them”, they at the same time select what part of their allotted tasks they care to perform of their own
volition or refuse openly, or secretly, to the employers damage, to do other work; in other words, they work on their own terms.”
Like wise, a slowdown is not a valid form of concerted activity, absent a labor dispute between the parties. (See Art 212 (o),LC) €

No. It is a prohibited activity. It can be said to be a violation of the duty to bargain collectively. The union is guilty of bad faith. The workers
should resume operations under the same terms and conditions prevailing prior to the strike. (1998 Bar Question)
IMPROVED OFFER BALLOTING (Art. 265)— referendum by secret balloting involving the union members on the improved offer of
the ER on or before 30th day of strike.
 If at least majority of the union members/ BOD, trustees, or the partners holding the controlling interest vote and accept the
improved/ reduced offer, the workers shall immediately return to work and the ER shall thereupon readmit them upon the signing
of the agreement.
Q: The Kilusang Kabisig, a newly-formed labor union claiming to represent a majority of the workers in the Microchip Corporation, proceeded to
present a list of demands to the management for purposes of collective bargaining. The Microchips Corporation, a multinational corporation
engaged in the production of computer chips for export, declined to talk to union leaders, alleging that they ha not as yet presented any proof
of majority status.
The Kilusang Kabisig then charged Microchip Corporation with unfair labor practice, and declared a “wildcat” strike wherein means of ingress
and egress were blocked and remote and isolated acts of destruction and violence were committed.
Was the strike illegal?
Answer:
Because what was declared is a “wildcat” strike, the strike is illegal. A “wildcat” strike is one that is one declared by a group of workers
without formal union approval. Thus, it is illegal because the Labor Code requires that for a strike to be legal, among others, the decision to
declare a strike must be approved by majority of the total union membership in the bargaining unit concerned, obtained by a s ecret ballot in
meetings or referenda called for that purpose.
1) The strike is illegal. The Labor Code recognizes only one of two (2) grounds for a strike to be legal: bargaining deadlock or unfair labor
practice. A strike to compel the employer to recognize a union is not allowed by law.
2) The strike is not illegal. For the strike to be illegal because of violence, it should be characterized by pervasive violence. Here, there were
only remote and violated acts of destruction and violence. But even if the strike is not illegal, those strikers who committed illegal acts, namely
those who blocked the ingress and egress and who committed acts of destruction and violence, these strikers can be legally dismissed.
Q: Was the company guilty of unfair labor practice when it refused to negotiate with the Kilusang Kabisig?
Suggested Answer:
No. It is not an unfair labor practice (ULP) not to bargain wit the union which has not presented any proof of its majority status. The Labor
Code imposes on an employer the duty to bargain collectively only with a legitimate labor organization designated or selected by the majority of
the employees in an appropriate bargaining unit. It is not ULP for an employer to ask a union requesting to bargain collectively that such union
first show proof of its being a majority union. (1997 Bar Question)
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Q: What is the rationale for the State regulation of strike activity and what are the interests involved that the State must balance and reconcile?
Q: Cite two examples on how the law regulates the use of strike as a from of concerted activity
Suggested answer:
1. the first rationale is the constitutional provision that the right to strike is to be exercised “ in accordance with law”. Another rationale is the
Civil Code provision that the relations between employer and employee are imbued with public interest and are subject to the provisions of special
law. A third rationale is the police power of the State.
The interests to be balanced are the rights of the workers, as primary socio-economic force, to protection of the law, to security of tenure, to
concerted activities, etc. these should be balanced with the right of the employer to reasonable, return on investment and to expansion and
growth. General welfare or the general peace and progress of society should also be considered. This is why assumption of jur isdiction and
certification to NLRC are allowed in “national interest”: cases. (Art 263, LC; Lapanday Workers Union v. NLRC (1995))
2. Examples: (1) procedural requirements should be observed, namely, filing of notice of strike, observance of cooling-off period, taking of strike
vote, and report of the strike vote, and report of the strike vote; (2) use of violence, intimidation or coercion and blockade of ingress-egress are
not allowed. (Art 263 (b)(c)(f)(g), LC) (2000 Bar Question)
LABOR INJUNCTION ON LABOR DISPUTES (Arts.254,218 (e), 264)

Issuing agency—NLRC
Rule: No temporary or permanent injunction or restraining order in any case involving labor dispute.
Except: Under Arts. 264 and 218 (e)
Procedure for issuance of injunction (not ex parte)

(1) Hearing of the testimony of witnesses,
(2) with opportunity for cross-examination, in support of the allegations of a complaint made under oath,
(3) and testimony in opposition thereto, if offered, and
(4) only after a finding of fact by the commission, to the effect:
(a) That prohibited or unlawful acts have been threatened and will be committed and will be continued unless restrained (no
injunction or TRO shall be issued except against those making the threat or committing the prohibited or unlawful act or
actually authorizing or ratifying the same after actual knowledge thereof);
(b) That substantial and irreparable injury to complainants property will follow;
(c) That greater injury will be inflicted upon complainant by the denial of relief than will be inflicted upon defendants by the
granting of relief;
(d) That complainant has no adequate remedy at law; and
(e) That the public officers charged with the duty to protect complainants’ property are unable or unwilling to furnish adequate
protection.
(5) Personal notice to:

- all known persons against whom relief is sought
- to the Chief Executive and
- other public officials of the province or city within which the unlawful have been threatened or committed charged with the
duty to protect complainant's property [Art. 218 (e)]
 With regard to allegations under Art. 264 (prohibited activities), follow the same procedure. [Art. 264 and 218 (e) differ only in
the allegations]
Conditions for Issuance of TRO ex parte

1. a substantial and irreparable injury to complainant's property will be unavoidable
2. there is testimony under oath, sufficient, if sustained, to justify the NLRC in issuing a temporary injunction upon hearing after
notice
3. the complainant shall first file an undertaking with adequate security in an amount to be fixed by the commission sufficient to
recompense those enjoined for any loss, expense or damage caused by the improvident or erroneous issuance of such order or
injunction; and
4. the TRO shall be effective for 20 days only. [Art. 218 (e)]
Q: Professor Juan dela Cruz, an author of the textbook Commentaries on the Labor Code of the Philippines, citing an American case, wrote: “It
is said that the prohibition against the issuance of a writ of injunction in labor cases creates substantive and not purely procedural law.” Is there
any statutory basis for the statement/ comment under Philippine law?
Suggested answer:
Page 96 of 107
Yes. The statutory basis is Art 254 of the Labor Code. It prohibits issuance of injunction, as a matter of policy, to resolve disputes except as
otherwise provided in Arts 218 and 264 of the Labor Code. (Caltex Filipino Managers and Supervisors Assn. V. CIR (1972)) (2000 Bar Question)
SUMMARY OF JURISDICTION
VOLUNTARY ARBITRATORS (VA) (Arts. 261-262)

 supervised by the National Conciliation and Mediation Board (NCMB)
Original and Exclusive jurisdiction

1. Unresolved grievances from the interpretation or implementation of the CBA except gross violation of the CBA (which is a ULP,
hence under LA’s jurisdiction)
2. Unresolved grievances arising from the interpretation or enforcement of company personnel policies
3. Any other labor dispute, upon agreement of the parties
Procedure
Grievances submitted to the
grievance machinery of the CBA,
if unresolved within 7 days from submission
voluntary arbitration
(to be decided within 20 cal. days)
Decision
(final and executory in 10 cal. daysfrom receipt of the parties)
Q: State the cases when a labor dispute would fall under the jurisdiction of voluntary arbitrators or panel of voluntary arbitrators.
Answer: A labor dispute falls under the jurisdiction of a voluntary arbitrator or a panel of voluntary arbitrators if a labor dispute arises from an
unresolved grievance which in turn arises from the interpretation or implementation of a CBA or of company personnel policies. (Art. 261). Upon
agreement of parties, a voluntary arbitrator or panel of voluntary arbitrators may also hear and decide all other labor disputes including unfair
labor practices and bargaining deadlock. (Art. 262) (1997 Bar Question)
Voluntary Arbitrator
Q: The employer company, in a directive to the union president, ordered the transfer of some of its employees, including a number of union
officials, to its plant offices. The order was opposed by the union. Ultimately, the union filed an unfair labor practice against the company
alleging that the purported transfer of its union officials was unjust and in violation of the Collective Bargaining Agreement (CBA). Pursuant to
the terms of the CBA, the dispute was referred to a voluntary arbitrator who later ruled on the issues raised by the parties. Could it later be
validly asserted that the “decision” of the voluntary arbitrator would have no “compulsory” effect on the parties? Explain.
Suggested Answer:
No. A voluntary arbitrator chosen under the Grievance Machinery of a CBA can exercise jurisdiction not only on disputes involving
interpretation/implementation of a CBA and/or company rules, personnel policies (Art. 261, LC) but also, upon agreement of the parties, “all
other labor disputes including unfair labor practice” (Art. 262, LC). As no objection was raised by any of the parties when “the dispute referred
to a voluntary arbitrator who later ruled on the issues raised by the parties”, it follows that what we is voluntary arbitration agreed upon by the
parties. His decision is binding upon the parties and may be enforced through any of the sheriffs, including those of the NLRC, he may deputize.

No. The award of voluntary arbitrators acting within the scope of their authority determines the rights of the parties, and their decisions have
the same legal effects as a judgment of the Court. Such decisions on matter of fact or law are conclusive, and all matters i n the award are
thenceforth res judicata on the theory that the matter has been adjudged by the tribunal which the parties have agreed to make final as tribunal
of last resort. (Volkschel Labor Union v. NLRC, 98 SCRA 314 [1980]). (2003 Bar Question)
Q: Company A and Union B had a 3-year CBA that expired on June 12, 1990. Negotiations proved futile so the unresolved issues were referred
to an Arbiter who rendered a decision on March 15, 1992 retroactive to December 1, 1990. is the Arbiter’s decision providing for retroactivity
tenable or not? Why?
Suggested answer:
The referral of he unresolved issues of the collective bargaining negotiations to an Arbiter is not within the jurisdiction of the Arbiter.
Page 97 of 107
But assuming that the unresolved issues in the collective bargaining negotiations were properly referred to the Arbiter pursuant to the
provision of the Labor Code (art 262) that states that a Voluntary Arbitrator may hear and decide any labor dispute, including bargaining
deadlocks, the Arbiter’s decision providing for retroactivity is tenable. Exercising his compulsory arbitration power, the Arbiter could decide the
issue of retroactivity in any way which is not contrary to law, morals, good customs, public order or public policy.
But in a case (Manila Electric Co. v. Quisumbing) the Supreme Court said that an arbitral award shall retroact to the first day after the six-
month period following the expiration of the last day of the CBA that was being re-negotiated.

The retroactive Order of the Labor Arbiter is void for want of jurisdiction. Jurisdiction is conferred by law. Nowhere in the Labor Code, more
specifically Art 217, is the Labor Arbiter given jurisdiction over unresolved issues in collective bargaining, including determining the period or
duration of a Collective Bargaining Agreement. (2001 Bar Question)
NATIONAL CONCILIATION AND MEDIATION BOARD (NCMB) [created by EO 251 (1987)]

 absorbed the conciliation, mediation, and voluntary arbitration functions of the Bureau of Labor Relations
Functions
(1) formulate policies/ guidelines pertaining to effective mediation and conciliation of labor disputes
(2) perform preventive mediation and conciliation functions
(3) formulate policies/ guidelines pertaining to the promotion of non-adversarial schemes, grievance handling, voluntary
arbitration, and other voluntary modes of dispute settlements
(4) administer the voluntary arbitration program, maintain/ update a list of VAs
(5) provide counseling and preventive mediation assistance
NATIONAL LABOR RELATIONS COMMISSION (NLRC) (Arts. 213, 217, 223)— the country’s labor court (principal government
agency that hears and decides labor-mgt disputes). The NLRC has regional arbitration branches or RABS. The labor arbiters or
executive labor arbiters are the NLRC representatives in the country’s various regions.
Original and exclusive jurisdiction of the Labor Arbiter (LA)-

Compulsory Arbitration
- ULP cases
- Termination disputes
- Cases involving wages, rates of pay, hours of work, and other terms and conditions of employment, if accompanied with a claim
for reinstatement
- Claims for damages arising from ER-EE relationship
- Cases arising from Art. 264, including questions involving the legality of strikes and lockouts
- Whether accompanied with claim for reinstatement, all other claims arising from ER-EE relationship, including those of persons
in domestic or household service involving an amount exceeding P5,000 (if not exceeding P5,000, Regl Dir of DOLE has
jurisdiction)
Note: these cases may be under the jurisdiction of the VA based on the agreement of the parties (without clear agreement, LA
has jurisdiction)
Exclusive appellate jurisdiction of the Commission over all cases decided by the LA— not any more compulsory arbitration
(Note: it is only in national interest strikes that the Commission conducts compulsory arbitration)
Powers of the NLRC (Arts. 218-219)

(1) Power to make rules and regulations pertaining to its functions;
(2) Power to administer oath and issue subpoena and summons;
(3) Power to investigate, hear, and decide disputes within its jurisdiction;
(4) The power to hold persons in contempt;
(5) The power to issue restraining orders and injunctions;
(6) Power to conduct ocular inspection;
(7) Power to decide appealed cases
Page 98 of 107
Procedure
Labor Arbiter
[Note: a decision of the LA reinstating a dismissed EE, insofar as the reinstatement
aspect is concerned, shall be immediately executory (readmitted to work or reinstated in the payroll at the option of the ER), pending appeal]
appeal to the NLRC

(within 10 calendar days
from receipt of the decision)
Commission shall decide

(within 20 calendar days
from receipt of answer
of the other party)
Finality of the decision of the Commission

(after 10 calendar days from
receipt of notice by the parties)
Remedies available to challenge final decision

1. MR within 10 calendar days from receipt of the decision based on palpable or patent errors; only 1 MR is allowed; or
2. Special civil action for certiorari under Rule 65 not later than 60 days from receipt of notice of judgment; filed with the CA (St.
Martin Funeral Homes v. NLRC).
BUREAU OF LABOR RELATIONS (BLR) and the Labor Relations Divisions in the Regl Offices of DOLE (Art. 226-233; DO 40-
03)
 Hearing Officer: Med-Arbiter in the BLR or Regl Office
 Jurisdiction is largely confined to union matters, CB registry, and labor education because of the creation of NCMB (BLR no longer
handles labor-mgt disputes).
Original and exclusive jurisdiction

- Inter-union/ Intra-Union disputes— may be filed only by a LLO
Inter-union conflicts (e.g., representation issue/ cancellation of registration)
Intra-union conflicts (e.g., election of officers of the union/ compliance with CBL/ violations of rights of union membership)
- Other related labor relations disputes between the union and the ER or any individual or group that is not a LO or worker’s assn
(e.g., cancellation of registration of unions/ petition for interpleader) (added by DO 40-03)— may be filed by any party-in-
interest
Procedure
File with DOLE Regl Office where registered (if independent File with the BLR
union/chartered local) (if federation/national union)
Bureau Dir
Regl Dir (20 days from last hearing within which to decide)
(if cancellation of registration) or
Med-Arb (other dispute)
(decide within 20 days from last hearing)
Appeal to Sec.
Appeal to Bureau
Page 99 of 107
(10 days from receipt of decision; Bureau will decide within 20 days from
receipt of records) Finality of decision of the Sec. after 10 days from
receipt of parties
Finality of decision of the Bureau after 10 days from receipt of parties
(appeal stays decision of Med-Arb/ Regl Dir.)

(appeal stays decision of Bureau Dir.)
 Relationships/ rights of the parties prior to the filing of the complaint or petition shall continue during pendency of the proceedings.
(Book V, Rule XI, Sec. 3)
 Pendency of an intra/ inter-union dispute and other related labor relations dispute is not a prejudicial question to any petition for CE
nor is it a ground for dismissal of such petition. (Book V, Rule XI, Sec. 3)
Q: The affected members of the rank and file elevated a labor arbiter’s decision to the NLRC via a petition for review filed after the lapse of the
10-day reglementary period for perfecting an appeal. Should the NLRC dismiss the petition outright or may the NLRC take cognizance thereof?
Suggested answer:
The NLRC should dismiss the appeal outright because the same was filed beyond the reglementary period of appeal. Art 223, LC reads:
“Decisions, awards, or orders of the Labor Arbiter 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.”

The NLRC could dismiss outright the appeal for being filed out of time. But if there are good reasons that may justifiably explain why there
was a delay in the filing of the appeal, substantial justice may be the basis for the NLRC to take cognizance of the appeal.
Q: Company A within the reglementary period appealed the decision of the Labor Arbiter directing the reinstatement of an employee and awarding
backwages. However, A’s cash bond was filed beyond the ten day period. Should the NLRC entertain the appeal? Why?
Suggested answer:
No, the NLRC should not entertain the appeal, as the same ws not perfected for failure to file a bond. Art 223, LC reads:
“In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety
bond… In the amount equivalent to the monetary award in the judgment appealed from.”
In Aba v. NLRC (1999), the Supreme Court ruled:
“An appeal bond is necessary….the appeal may be perfected only upon the posting of cash or surety bond issued by a reputable bonding
company duly accredited by the Commission in the amount equivalent to the monetary award in the judgment appealed from.”

The NLRC may still entertain the appeal.
It is true that the Labor Code (in Art 223) provides that the appeal is perfected only upon the posting of a cash or surety bond. But if
Company A filed a motion for the reduction of the bond, and said motion was only acted upon after the reglementary period, then, the NLRC, in
the interest of substantial justice, may still take cognizance of the appeal. (2001 Bar Question)
ADMINISTRATION AND ENFORCEMENT OF LABOR LAWS (Arts. 128-129)
Powers
Visitorial and enforcement powers (Art. 128)—no court/ entity can issue TRO or injunction against enforcement orders issued here
1. Inspection
a. Access to ER’s records and premises
b. Right to copy records
c. Right to question any EE
d. Investigate any fact, condition or matter which may be necessary to determine violations, or which may be necessary to aid
enforcement of the LC or any labor law or order
2. Issue compliance orders to give effect to labor law regulations based on the findings of inspection and issue writs of execution for
enforcement of the orders
3. To order suspension of operations of an establishment whose non-compliance with law poses grave danger to workers
Money Claims Adjudication under Art. 129— Summary Proceeding

4 Jurisdictional Requirements:
1. If claimant is an EE or person in domestic or household service;
2. Claim arises from ER-EE relationship
3. No claim for reinstatement;
Page 100 of 107
4. Aggregate claims of each EE or househelper does not exceed P5,000 (if there is a question of reinstatement or claim exceeds
P5,000, LA has jurisdiction)
Difference between Art. 128 and Art. 129

Art. 128 Art. 129
Nature Inspection of establishments and issuance of orders to Adjudication of money claims (labor
comply with labor legislation in general; proceedings here standards only); proceedings are
are offshoots of the inspection) initiated by complaints
Jurisdictional These do not apply here See above
requirements
Who exercises power Sec. of Labor or duly authorized reps (may or may not be Regl Dir or any Hearing Officer of DOLE
(officers designated) the DOLE Regl Dir.)
Appeal Appealable to Sec Appealable to NLRC
Q: the national council of X Union, the exclusive bargaining representative of all daily paid workers of Z Corp., called a general meeting and
passed a resolution which provides that each union member was to be assessed P1,000 to be deducted from the lump sum of P10,000 which
each EE was to receive under the CBA. Sergio, a Union member, protested and refused to sign the authorization slip for the deduction. X Union
then passed a resolution expelling Sergio from the Union. Sergio filed a complaint before the Labor Arbiter for illegal deduction and expulsion
from the union.
Will the complaint prosper? Explain.
Suggested Answer:
The complaint will not prosper before the Labor Arbiter because there is here an intra-union conflict which is under the jurisdiction of the
Med-Arbiter. (See Art. 226 and Rule V of Book V of the Rules and regulations Implementing the Labor Code). (1996 Bar Question)
Q: Mr. Jonathan Pe, a registered stockholder of New Wave Beauty Shop, Inc. was elected Vice-President of New Wage at a regular monthly
meeting.
At a subsequent meeting of the Board of Directors, it was resolved to dismiss Jonathan as VP due to loss of trust and confidence. Jonathan
Pe filed with the NLRC a complaint for illegal dismissal with damages against New Wage claiming that he was dismissed without due process.
New Wage filed a Motion to Dismiss based on lack of jurisdiction.
Resolve the motion.
Suggested Answer:
The Motion to Dismiss should be granted. The election of Jonathan Pe as VP of New Wave Beauty Shop, Inc., made him a corporate officer.
His subsequent dismissal as such corporate officer is considered an intra-corporate matter. Thus, the dismissal of Pe is not a case of
termination dispute which is under the jurisdiction of the NLRC. Instead it is under the jurisdiction of the Securities and Exchange Commission,
it having jurisdiction of the SEC, it having jurisdiction over intra-corporate matters. (1996 and 1997 Bar Questions)
Q: On 01 August 1992, Pro-Knit, a corporation engaged in the manufacture of textile garments, entered into a collective bargaining agreement
with the Kamao Union in representation of the rank and fie employees of the corporation.
The CBA was effective up to 20 June 1995. The contract had an automatic renewal clause which would allow the agreement after its expiry
date to still apply until both parties would have been able to execute a new agreement.
On 20 May 1995 Kamao Union submitted to Pro-Knits management their proposals for the renegotiation of a new CBA. The next day, Pro-
Knit suspended negotiations while Kamao Union sine Pro-Knit had entered into a merger with Eagle Garments, a corporation also engaged in the
manufacture of textile garments. Eagle Garments assumed al the assets and liabilities of Pro-Knit.
Kamao filed a complaint with the Regional Trial Court for specific performance and damages with a prayer for preliminary injunction against
Pro-Knit and Eagle Garments.
Pro-Knit and Eagle Garments filed a motion to dismiss based on lack of jurisdiction. How would you rule on the Motion to Dismiss?
Answer:
I will grant the motion to dismiss. The act of Pro-Knit suspending the negotiations with Kamao Union could be an unfair labor practice. It
could be a violation of the duty to bargain collectively. As such, the case is under the jurisdiction of a Labor Arbiter and not of a regular court.
Alternative Answer:
I will deny the Union’s Motion to Dismiss. There is no labor dispute between the parties; hence, the Regional Trial Court has jurisdiction
over the complaint. Art. 212 of the Labor Code, reads—
“Labor dispute includes any controversy or matter concerning terms and conditions of employment or the association or representation of
persons negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment regardless of whether the disputants
stand in the proximate relations of employer and employee.”
In addition, the Company can claim that labor contracts are contracts in personam and do not generally bind successors in interest except
under special circumstances. In Sundowner Development Corporation v. Drilon, the Court said:
Page 101 of 107

“The rule s that unless expressly assumed, labor contracts such as xxx collective bargaining agreements are not enforceable against a
transferee of an enterprise, labor contracts being in personam, thus binding only between the parties. (1997 Bar Question)
Q: Under a seaman’s contract of employment with a local manning agent of a foreign shipping company. Capt. TROY embarked on an ocean-
going vessel in good health. One stormy night at sea, he was drenched with rainwater. The following morning, he contracted fever which lasted
for days. He suffered loose bowel movement, lost his appetite, and eventually died before a scheduled airlift to the nearest port.
Subsequently, the widow of Capt. TROY complained against the local manning agent and its foreign principal before the Regional Arbitration
Branch of DOLE, for actual and exemplary damages and attorney’s fees. She invoked the Labor Code provision which requires the employer to
provide all necessary assistance to ensure the adequate and necessary medical attendance and treatment of the injured or sick employee in case
of emergency.
Respondents moved to dismiss the complaint on the ground that the Labor Arbiter has no jurisdiction over the complaint for damages arising
from illness and death of Capt. TROY abroad. Resolve the motion with reasons.
Suggested Answer:
In Tolosa v. NLRC, the Supreme Court held that what we have in this case is a claim arising from tort or quasi-delict. In such a situation, the
seaman who died on November 18, 1992, cannot sue before the Labor Arbiter. But this will not apply now, as under Sec. 10, RA 8042, (effective
June 7, 1995), what we have is a claim “arising out of an employer-employee relationship or by virtue of any law or contract involving Filipino
workers fro overseas deployment including claims for actual, moral, exemplary and other forms of damages”, cognizable by the “Labor Arbiters
of the National Labor Relations Commission (NLRC)” who have the original and exclusive jurisdiction thereon. (2004 Bar Question)
Q: FACTS: Polaris Drug Company had an existing CBA with Polaris Workers Union (PWU) which was due to expire on May 31, 1999. PWU had a
total membership of 100 rank-and-file EEs of the company. Mike Barela, a militant member of the union, suspected that the union officers were
misappropriating union funds as no financial report was given to the general membership during the union’s general assembly. Hence, Mike
Barela prepared a sworn written complaint and filed the same with the Office of the Secretary of Labor on May 10, 1999, petitioning for an
examination of the financial records of PWU.
1. Is the Secretary of labor authorized by law to examine the financial records of the union? If so, what power? If not, why not?
Suggested Answer:
The Secretary of Labor is expressly authorized by the Labor Code (in Art. 274) to examine the financial records of the unions to determine
compliance or non-compliance with the pertinent provisions of the Labor Code and to prosecute any violation of the law and the union constitution
and by-laws. But this authority may be exercised only upon the filing of a complaint under oath and duly supported by the written consent of at
least 20% of the total membership of the labor organization concerned.
Alternative Answer:
Among the rights and conditions of membership in a labor organization is the right implied by the proviso of the Labor Code [Art. 241(m)]
stating that 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.
As a union member, Mike Barela could file an intra-union case that may entail the act of the Secretary of Labor examining the financial
records of the union. (See La Tondeña Workers Union v. Secretary of Labor and Employment, 239 SCRA 117)
2. Under the facts given above, could an examination or audit of the financial records of the union be ordered? Why?
Suggested Answer:
Under the facts given in the question, an examination or audit of the financial records of the union can not be ordered becau se for such
examination or audit to take place, there should be a complaint under oath and duly supported by written consent of at least 20% of the total
membership of the labor organization concerned. In this case, the aforementioned requirement was not fulfilled. It was only a sworn written
complaint by one union member that was filed.
Also, the Labor Code provides that an examination of the books of a union shall not be conducted during the 60-day freedom period nor
within 30 days immediately preceding the date of election of union officials.
In the case, the complaint was filed on May 10, 1999 which is within the freedom period of the current CBA which was to expire on May 31,
1999. (1999 Bar Question)
NB- Jurisdiction is a favorite bar question.
PRESCRIPTIVE PERIODS
ULP 1 year
Money Claims 3 years
Offenses under LC 3 years
Illegal Dismissal 4 years
Page 102 of 107

Q: A. State your agreement or disagreement with the following statement and explain your answer briefly: A criminal case filed against an EE
does not have the effect of suspending or interrupting the running of the prescriptive period for the filing of an action for illegal dismissal.
Suggested Answers:
A. I agree. The 2 cases, namely: the criminal case where the EE is the accused; and the case for illegal dismissal, where the EE would be the
complainant, are 2 separate and independent actions governed by different rules, venues, and procedures. The criminal case is within the
jurisdiction of the regular courts of law and governed by the rules of procedure in criminal cases. The action for administrative aspect of illegal
dismissal would be fled with the NLRC and governed by the procedural rules of the Labor Code.

I agree. An action for illegal dismissal is an administrative case which is entirely separate and distinct from a criminal ac tion. Each may
proceed independently of each other.
The right to file an action for illegal dismissal is not dependent upon the outcome of the criminal case. Guilt or innocence in the criminal
case is not determinative of the existence of a just or authorized cause for dismissal. [Pepsi Cola Bottling Co. v. Guanzon, 172 SCRA 571 (1989)].
(2002 Bar Question)
B. State your agreement or disagreement with the following statement and explain your answer briefly: The period of prescription in Art. 291,
LC applies only to money claims so that the period of prescription for other cases of injury to the rights of EEs is governed by the Civil Code.
Thus, an action for reinstatement for injury to an EE’s rights prescribes in 4 years as provided in Art. 1146, CC.
Suggested Answer:
B. I agree with the statement.
A case of illegal dismissal filed by an EE who has been terminated without a just or authorized cause is not a money claim co vered by Art.
291, LC. An EE who is unjustly dismissed from work is entitled to reinstatement and backwages. A case of illegal dismissal is based upon an
injury to the right to security of tenure of an EE. Thus, in accordance with Art. 1146, it must be instituted within 4 years. [Callanta v. Carnation
Phil., 145 SCRA 268 (1986); Baliwag Transit v. Ople, 171 SCRA 250 (1989); International Harvester Macleod, Inc. v. NLRC, 200 SCRA 817 (1991)]
(2002 Bar Question)
SOCIAL LEGISLATION
SALIENT FEATURES
Social Security Act of 1997 Government Service Insurance Act of
(RA 8282) 1997 (RA 8291)
EMPLOYER Any person, natural or juridical, domestic or (1) The national government, its political
foreign, who carries on in the Philippines any subdivisions, branches, agencies or
trade, business, industry undertaking or activity of instrumentalities
any kind and uses the services of another person (2) GOCCs, and financial institutions with
who is under his orders as regards employment original charters
(3) The Constitutional Commissions and the
Exempt ERs: Judiciary
(1) Government and any of its political
subdivisions, branches and instrumentality,
including GOCCs
(2) Self-employed person who is both ER and EE
at the same time
EMPLOYEE (1) Any person who performs services for an ER (1) Any person receiving compensation
in which either or both physical or mental while in the service of an ER whether
efforts are used and who receives by election or appointment, irrespective
compensation for such services, where there of status of appointment;
is an ER-EE relationship (2) Barangay officials; and
(2) Self-employed person who is both ER and EE (3) Sanggunian officials
at the same time
DEPENDENT (1) Spouse— legal spouse entitled by law to (1) Spouse— legitimate and dependent for
receive support from member support upon member or pensioner
(2) Child— (2) Child—

(a) Legitimate; legitimated; legally adopted; (a) Legitimate; legitimated; legally
and illegitimate; adopted; and illegitimate;
(b) Not married; (b) Not married;
(c) Not gainfully employed; and (c) Not gainfully employed; and
(d) Has not reached 21 years of age, or if (d) Has not age of majority, or if over
over 21 years, is congenitally the age of majority but
incapacitated or while still a minor has incapacitated and incapable of self-
Page 103 of 107

been permanently incapacitated and support, due to mental or physical
incapable of self-support, physically or defect acquired prior to age of
mentally majority
(3) Parent— who is receiving support from the (3) Parent— who is dependent upon
member member for support
BENEFICIARIES
(1) Primary (a) Dependent spouse until remarriage; and (a) Legal, dependent spouse until
(b) Dependent legitimate and legitimated or remarriage; and
legally adopted and illegitimate children (b) Dependent children
(2) Secondary Dependent parents, in the absence or primary

beneficiaries (a) Dependent parents; and
(b) Legitimate descendants subject to
restrictions on dependent children
(3) Others
Absent primary and secondary beneficiaries, any
other person designated by member as secondary
beneficiary
BENEFITS (1) Monthly pension (1) All members

(2) Dependents’ pension (a) Life insurance
(3) Retirement (b) Retirement
(4) Death (if no beneficiary qualifies under the (c) Disability
Act, benefits shall be paid to legal heirs in (d) Survivorship
accordance with the law of succession) (e) Separation
(5) Permanent disability (f) Funeral
(6) Funeral
(7) Sickness (2) Judiciary and Const. Commissions— life
(8) Maternity (but only for the 1st 4 deliveries or insurance only
miscarriages)
All are tax-exempt
All are tax-exempt
COVERAGE
(1) Compulsory (1) All EEs not over 60 years of age and their ERs Compulsory for all EEs receiving
(2) Domestic helpers with monthly income not compensation who have not reached
less than P1,000 compulsory retirement age, irrespective of
(3) Self-employed EEs as may be determined by employment status
the Commission, including, but not limited to:
(a) All self-employed professionals Members of Judiciary and Constitutional
(b) Partners and single-proprietors of Commissions qualify for life-insurance only
business
(c) Actors and actresses, directors,
scriptwriters and news correspondents,
who do not fall within definition of EEs
(d) Professional athletes, coaches, trainers
and jockeys;
(e) Individual farmers and fishermen
Effectivity:
For EEs—first day of employment
For ERs—first day of his operation
For self-employed—upon their registration with
the SSS
(1) Filipinos recruited by foreign-based ERs for

employment abroad
(2) EE under compulsory coverage is separated
from employment
(3) Self-employed— realizes no income in any
given month
Page 104 of 107

(4) Spouse who devotes full time managing
household and family affairs unless employed
subject to mandatory coverage
Any foreign government, international organization

or their wholly- owned instrumentality employing
workers in the Philippines or employing Filipinos
outside the Philippines may enter into agreement
with Philippine govt for inclusion of such EEs in
SSS except those already covered by their
respective civil service retirement system.
(2) Voluntary
(3) By arrangement
EXCEPTIONS FROM (1) Employment purely casual and not for (1) Members of the AFP
COVERAGE purpose occupation, or business of ER (2) Members of the PNP
(2) Service performed by an EE on or in
connection with alien vessel, if employed (members of the judiciary and constitutional
when such vessel is outside of Phils commissions— life insurance only)
(3) EEs of Phil govt or instrumentality or agency
thereof
(4) Service performed in the employ of a foreign
government, or international organizations, or
their wholly-owned instrumentalities
(5) Services performed by temporary and other
EEs excluded by SSS regulation
(6) EEs of bona fide independent contractors shall
not be deemed EEs of the ER engaging the
services of an independent contractor
BASIS OF CLAIM Non-work connected disability, sickness, GSIS is exempt from liability where
maternity, death and old age and other permanent disability due to his grave
contingencies resulting in loss of income or misconduct, habitual intoxication, or willful
financial burden intention to kill himself or another
Q: State the respective coverages of (a) Social Security Law; (b) the Revised Government Service Insurance Act and (c) the Employees
Compensation Acts.
Answer:
(a) Coverage of SSS (Sec. 9, RA 8282) shall be compulsory upon all EEs not over 60 years of age and their ERs.
Filipinos recruited in the Philippines by foreign-based ERs for employment abroad may be covered by the SSS on a voluntary basis.
Coverage in the SSS shall also be compulsory upon all self-employed persons earning P1,800 or more per annum.
(b) Membership in the GSIS (Art. 3, RA 8291) shall be compulsory for all permanent EEs below 60 years of age upon appointment to
permanent status, and for all elective officials for the duration of their tenure.
Any person, whether elected or appointed, in the service of an ER is covered EE if he receives compensation for such service.
Page 105 of 107

(c) Coverage in the State Insurance Fund (Art. 168, LC) shall be compulsory upon all ERs and their EEs not over 60 years of age; Provided,
that an EE who is over 60 years of age and paying contributions to qualify for the retirement or life insurance benefit administered by the System
shall be subject to compulsory coverage.
The Employees Compensation Commission shall ensure adequate coverage of Filipino EEs employed abroad, subject to regulations as it may
prescribe. (Art. 170)
Any person compulsorily covered by the GSIS including the members of the Armed Forces of the Philippines, and any person employed as
casual, emergency, temporary, substitute or contractual, or any person compulsorily covered by the SSS are covered by the Employees
Compensation Program. (1997 Bar Question)
Q: how are the “portability” provisions of RA 7699 beneficial or advantageous to SSS and GSIS members in terms of their creditable employment
services in the private sector or the government, as the case may be, for purposes of death, disability or retirement?
Please explain your answers briefly.
A: The “portability” provisions of RA 7699 allow the transfer of funds for the account and benefit of the worker who transfers from one system
to another.
This is advantageous to the SSS and GSIS members for purposes of death, disability or retirement benefits. In the event the EEs transfer
from the private sector to the public sector, or vice-versa, their creditable employment services and contributions are carried over and transferred
from one system to the other. (2005 Bar Question)
Q: Efrenia Reyes was a classroom teacher assigned by the DECS in Panitan, Capiz. She has been in the government service since 1951 up to
Nov, 1985 when she retired at 55 due to poor health.
In March, 1982, while she was teaching her Grade 1 pupils the proper way scrubbing and sweeping the floors, she accidentally slipped. Her
back hit the edge of a desk. She later complained of weak lower extremities and difficult in walking. After an X-ray examination, she was founds
to be suffering from Pott’s disease and was advised to undergo an operation. In 1985, she filed with the GSIS a claim for disability benefits under
PD 626, as amended. The GSIS granted the claim and awarded Efrenia permanent partial disability benefits.
After she underwent a surgical operation on her spine in Nov, 1985, her condition worsened.
In 1990, Efrenia filed with the GSIS a petition for conversion of her disability status to permanent total disabilities with corresponding
adjustment of benefits. GSIS denied the claim stating that after Efrenia’s retirement, any progression of her ailment is no longer compensable.
Is the GSIS correct in denying the claim? Explain.
Suggested Answer:
Considering that the disability of Reyes is work connected, the provisions of the Labor Code dealing with EEs compensation should determine
her right to benefits.
According to said provisions, if any EE under permanent partial disability suffers another injury which results in a compensable disability
greater than the previous injury , the State Insurance Fund shall be liable for the income benefit of the new disability even after her retirement.
Was Reyes still an “employee” for the purpose of applying the above provision of the Labor Code? Liberally construing said provision, Reyes may
be considered still as an EE so that she could receive additional benefits for the progression of her ailment.
a) No. When an EE is constrained to retire at an early age due to his illness and the illness persists even after retirement, resulting in his
continued unemployment such condition amounts to total disability which should entitle him to the maximum benefits of the law. Her disability
which should entitle her to the maximum falls within the definition of permanent disability.
b) No, the GSIS erred in denying the claim. Note, that the original claim and grant of benefits was based on PD 626, or Book IV, Title II,
LC: Employees Compensation and State Insurance Fund. The same law does not provide for separation fee from employment as a basis for
denial of benefits.
The worsening of the school teacher’s condition I a direct result, or a continuing result of the first injury which was deemed work-connected
by the GSIS and hence compensable.
In Diopenes vs. GSIS, 205 SCRA 331 (1992), the Supreme Court cautioned against a too strict interpretation of the law which may be
detrimental to the claimants and advised the GSIS of the constitutional mandate on protection to labor and the promotion of social justice. Said
the Court:
The GSIS and the ECC should be commended for their vigilance against unjustified claims that will only deplete the funds inte nded to b
disbursed for the benefit only of deserving disabled EEs. Nevertheless, we should caution against too strict interpretation of the rules that will
result in the withholding of full assistance from those whose capabilities have been diminished if not completely impaired as a compensation of
their service in the government. A humanitarian impulse dictated by no less than the Constitution itself under the social justice policy, calls for a
liberal and sympathetic approach to the legitimate appeals of disabled public servants. Compassion for them is not a dole but a right. (1996 Bar
Question)
Q: The Collective Bargaining Agreement of the Golden Corporation, Inc. and the Golden Corporation Workers Union provides a package of welfare
benefits far superior in comparison with those provided for in the Social security Acts of 1997. The welfare plan of the company is funded solely
by the employer with no contributions from the employees. Admittedly, it is the best welfare plan in the Philippines. The company and the union
jointly filed a petition with the Social security System for exemption from coverage. Will the petition for exemption from coverage prosper?
Reason.
Page 106 of 107

Suggested answer:
No, because coverage under the SSS is compulsory where employer-employee relations exist however, if the private plan is superior to that
of the SSS, the plan may be integrated with the SSS plan. Still, it is integration and not exemption from SSS law. (Philippine Blooming Mills Co.,
Inc. v. SSS; RA 1161, as amended by RA 8282) (2000 Bar Question)
Q: Pablo was a farm-hand in a plantation owned by ABC & Co., working approximately 6 days a week for a good 15 years. Upon Pablo’s death,
his widow filed a claim for burial grant and pension benefits with the Social Security System (SSS). The claim was denied on the ground that
Pablo had not been a registered member-employee. Pablo’s widow filed a petition before the SSS asking that ABC & Co. be directed to pay the
premium contributions of Pablo and that his name be reported for SSS coverage. ABC & Co. countered that Pablo was hired to plow, harrow and
burrow, using his own carabao and other implements and following his own schedule of work hours, without any supervision from the company.
If proven, would this factual setting advance by ABC & Co. be a valid defense against the petition?
SUGGESTED ANSWER:
ABC and Co. has a valid defense.
Pablo should be an employee of ABC & Co. to be under the compulsory coverage of the SSS. To be an employee, Pablo should be under the
control of ABC & Co. as regards his employment. But the facts show that he was not under the control of ABC & Co. as regards his employment.
Among others, he had his own schedule of work hours without any supervision from the company. Thus, he is an independent con tractor and
not an employee. An independent contractor is not under the compulsory coverage of the SSS. He may be covered as a self-employed person.
But the as such, ABC & Co. has no legal obligation to report Pablo for coverage under the SSS because ABC & Co. is not Pablo’s employer.

It is not a valid defense, for Pablo could be considered an employee of ABC & Co. The element of hiring, payment of wages, power to dismiss
and power to control are presumed from the fact that Pablo is working six days a week, for fifteen years now. Pablo’s use of his plow, harrow,
burrow, carabao and other implements and his having his own schedule of work hours without any supervision from the company do not erase
the element of control on the part of ABC & Co. because under the “control test”, it is enough that the employer’s right to control exists. It is
not necessary thus the same be exercised by the employer, it is enough that such right to control exists. (Religious of the Virgin Mary v. NLRC)
(2003 Bar Question)
Credits
Prof. Disini’s Outline, LSG BarOps Reviewer 2006,
Everyone’s Labor Code (Azucena), UP Law Center Bar Q&A (1996-2006)
For there must be courage in wisdom, grace in strength.
Page 107 of 107

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UP WOMEN IN LAW

For there must be courage in wisdom, grace in strength.

PANIC BOOKLET and QUIZZER

UP WINLAW Executive Board (2007-2008)

Updated by: Allelu de Jesus

CASE: Maternity Children’s Hospital v. Sec. of Labor, 1989

(2) Labor Relations (Book 5)

Another suggested answer:

Another suggested answer:

Duncan Association etc. v. Glaxo Wellcome Phils, Inc, 2004

Great Pacific Employees Union v. Great Pacific Life Assurance, 1999;

Requisites for validity of waiver/compromise agreement

CASE: Periquet v. NLRC, 1990

Q: Can the quitclaim be annulled on the ground of “dire necessity”? Why?

CASES: Davao Fruits Corp. v. Associated Labor Union, 1993

Another Suggested Answer:

Another Suggested Answer:

LABOR AND THE CONSTITUTION

Another suggested answer:

Another suggested answer:

Nature of Constitutional Provisions

CASE: Philippine Airlines, Inc. v. Santos, 1993

ANOTHER SUGGESTED ANSWER:

ANOTHER SUGGESTED ANSWER:

INTERPRETATION OF LABOR LAWS

Employee— includes any individual employed by an employer. [Art. 97 (c)]

(2) Economic Relations Test

Another suggested answer:

Another Suggested Answer:

Q: Distinguish between “job contracting” and “labor-only contracting.”

Rights of Contractual EEs

(a) Antonio’s charge of dismissal; and

Another suggested answer:

Hacienda Fatima v. National Federation of Sugarcane Workers, 2003

(c) A project or work pool EE who has been:

(d) Regular seasonal EEs

Special Rule for Private School Teachers

(AM Oreta & Co., Inc v. NLRC, 1989)

(Aguilar Corp. v. NLRC, 1997)

Q: Distinguish the project employees from regular employees?

Another suggested answer:

Another Suggested Answer:

(5) FIXED TERM

(6) PROBATIONARY (Art. 281)

Grounds for Termination

Another suggested answer:

RECRUITMENT AND PLACEMENT [Art. 13 (b)]

Acts No. of Worker Consideration

 The proviso merely lays down a rule of evidence:

Registration Fees and Bonds – requisites for issuance of license/ authority

Suspension and/or Cancellation – power is lodged in the Secretary of Labor

Another Suggested Answer:

 Doer: A non-licensee or non-holder of authority

 Doer: Whether a non-licensee or non-holder of authority or a licensee or holder of authority

Illegal recruitment committed by a syndicate

Illegal recruitment committed in large scale

Prescriptive period (Sec. 12, RA 8042)

Another suggested answer:

Another suggested answer:

ALIEN EMPLOYMENT REGISTRATION CERTIFICATE (AERC)

(2) Managerial EEs

(3) Members of the employer’s family dependent on him for support

(4) Domestic helpers (cf. Arts. 141-152)